24th Oct 2006 07:01
BP PLC24 October 2006 BP p.l.c. Group Results Third Quarter 2006 London 24 October 2006 FOR IMMEDIATE RELEASE --------------------------------------------------------------------------- Third Second ThirdQuarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005 % ========================= ===================== 6,463 7,266 6,231 Profit for the period* 19,120 18,656 Inventory holding (2,053) (1,148) 744 (gains) losses (762) (3,774) ------------------------- --------------------- 4,410 6,118 6,975 Replacement cost profit 18,358 14,882 23 ========================= ===================== 11.86 16.59 18.76 - per ordinary share (pence) 50.01 38.08 21.04 30.28 35.08 - per ordinary share (cents) 91.02 70.07 30 1.26 1.82 2.10 - per ADS (dollars) 5.46 4.20 ========================= ===================== o BP's third quarter replacement cost profit was $6,975 million, compared with $4,410 million a year ago, an increase of 58%. For the nine months, replacement cost profit was $18,358 million compared with $14,882 million, up 23%. o The third quarter result included a net non-operating gain of $1,225 million compared with a net non-operating charge of $921 million in the third quarter of 2005. This includes significant gains on upstream asset disposals. For the nine months, the net non-operating gain was $1,214 million compared with a net non-operating charge of $1,201 million for the nine months of 2005. o Compared with a year ago, the third quarter trading environment reflected higher oil realizations and higher retail margins but lower refining margins and lower gas realizations. o Net cash provided by operating activities for the quarter and nine months was $5.1 billion and $23.2 billion compared with $6.4 billion and $22.5 billion a year ago. o The ratio of net debt to net debt plus equity was 16%. o The quarterly dividend, to be paid in December, is 9.825 cents per share ($0.5895 per ADS) compared with 8.925 cents per share a year ago. For the nine months, the dividend showed an increase of 10%. In sterling terms, the quarterly dividend is 5.241 pence per share, compared with 5.061 pence per share a year ago; for the nine months the increase was 8%. During the nine months, the company repurchased 1,024 million of its own shares at a cost of $12 billion. BP Group Chief Executive, Lord Browne, said: "The trading environment reflected higher oil realizations and retail margins but lower refining margins and gas realizations compared to a year ago. The third quarter result benefited from significant disposal gains and IFRS accounting effects. Results are being impacted by higher tax charges. The share buyback programme is continuing, with $3.5 billion of share repurchases during the quarter". * Profit attributable to BP shareholders. Summary Quarterly Results Exploration and Production's third quarter result benefited from higher liquidrealizations offset by lower gas realizations. In addition, it included higherproduction taxes and higher costs, reflecting the impacts of sector specificinflation, revenue investment and production growth. Furthermore, the resultincludes significant net gains on the sale of assets. BP's share of the TNK-BPresult benefited from a gain of $892 million on the sale of its interest in theUrdmurtneft assets. Compared with a year ago, the Refining and Marketing result, excluding TexasCity, reflects strong operating performance. The lower result reflects lowerrefining margins, reduced supply optimization benefits and the impact of higherlevels of refining turnaround activity. Retail margins improved stronglycompared with a year ago. The result includes a significant gain related toIFRS fair value accounting effects. In Gas, Power and Renewables, the lower third quarter result includes a chargefor non-operating items compared with a gain in the same period last year. Asignificant reduction in the contribution from gas and power marketing andtrading was partly offset by better operational performance in the natural gasliquids business and a lower charge related to IFRS fair value accounting. Finance costs and Other finance expense was $117 million for the quartercompared with $181 million in the third quarter of 2005. Increases in marketinterest rates were more than offset by higher capitalized interest and a higherreturn on pension assets due to the increased market value of the pension assetbase. The consolidation adjustment, which removes the margin on sales between segmentsin respect of inventory at the period end, was a credit of $440 million in thethird quarter. This primarily reflects changes in the amount of BP equityproduction held in Refining and Marketing segment inventories. The effective tax rate on replacement cost profit of continuing operations was40% versus 34% a year earlier, reflecting the retroactive impact of the increasein the North Sea tax rate, enacted in July 2006. The effect of this change onthe Group's effective tax rate is partly mitigated by a sharp decline in pricesaround the end of the quarter. Capital expenditure was $4.8 billion for the quarter, including $1 billion inrespect of our investment in Rosneft. Disposal proceeds were $2.8 billion. Net debt at the end of the quarter was $16.8 billion. The ratio of net debt tonet debt plus equity was 16%. During the third quarter, the company repurchased 299 million of its own shares,at a cost of $3.5 billion. Of these, 48 million shares were purchased forcancellation and the remainder are held in treasury. Additionally, shares tothe value of $1.25 billion were issued to Alfa Group and Access Renova (AAR)being the last instalment of the deferred consideration for our investment inTNK-BP. The commentaries above and following are based on replacement cost profit. The financial information for 2005 has been restated to reflect the following,all with effect from 1 January 2006: (a) the transfer of three equity-accountedentities from Other businesses and corporate to Refining and Marketing followingthe sale of Innovene; (b) the transfer of certain mid-stream assets andactivities from Refining and Marketing and Exploration and Production to Gas,Power and Renewables; (c) the transfer of Hydrogen for Transport activities fromGas, Power and Renewables to Refining and Marketing; and (d) the change in thebasis of accounting for over-the-counter forward sale and purchase contracts foroil, natural gas, NGLs and power. See Note 2 for further details. Non-Operating Items Third Quarter$ million 2006 -------- Exploration and Production 2,466Refining and Marketing (431)Gas, Power and Renewables (85)Other businesses and corporate 78 -------- 2,028Taxation (803) --------Continuing Operations 1,225Innovene Operations -Taxation - - -------- --------Total for all operations 1,225 ======== Reconciliation of Replacement Cost Profit to Profit for the Period Third Second Third Quarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005============================= ================ 6,534 7,826 9,935 Exploration and Production 24,584 18,919 1,875 1,856 1,503 Refining and Marketing 4,971 4,559 347 453 152 Gas, Power and Renewables 906 948 Other businesses and (501) (193) (261) corporate (671) (828) Consolidation adjustments Unrealized profit in (285) (277) 440 inventory 155 (442) Net profit on transactions between continuing and 144 - - Innovene operations (a) - 399----------------------------- ---------------- RC profit before interest 8,114 9,665 11,769 and tax 29,945 23,555----------------------------- ---------------- Finance costs and other (181) (107) (117) finance expense (367) (546) (2,674) (3,441) (4,614) Taxation (10,984) (7,444) (68) (77) (63) Minority interest (211) (198)----------------------------- ---------------- RC profit from continuing operations attributable 5,191 6,040 6,975 to BP shareholders (b) 18,383 15,367============================= ================ Inventory holding gains (losses) for continuing 1,938 1,148 (744) operations 762 3,547----------------------------- ---------------- Profit for the period from continuing operations attributable to BP 7,129 7,188 6,231 shareholders 19,145 18,914 Profit (loss) for the period from Innovene (666) 78 - operations (c) (25) (258)----------------------------- ---------------- Profit for the period attributable to BP 6,463 7,266 6,231 shareholders 19,120 18,656============================= ================ RC profit from continuing operations attributable 5,191 6,040 6,975 to BP shareholders 18,383 15,367 RC profit (loss) from (781) 78 - Innovene operations (25) (485)----------------------------- ---------------- 4,410 6,118 6,975 Replacement cost profit 18,358 14,882============================= ================ (a) In the circumstances of discontinued operations, Accounting Standards require that the profits earned by the discontinued operations, in this case the Innovene operations, on sales to the continuing operations be eliminated on consolidation from the discontinued operations, and attributed to the continuing operations and vice versa. This adjustment has two offsetting elements: the net margin on crude refined by Innovene as substantially all crude for their refineries was supplied by BP and most of the refined products manufactured were taken by BP; and the margin on sales of feedstock from BP's US refineries to Innovene's manufacturing plants. The profits attributable to individual segments were not affected by this adjustment. Neither does this representation indicate the profits earned by continuing or Innovene operations, as if they were stand-alone entities, for past periods or likely to be earned in future periods. (b) Replacement cost profit reflects the current cost of supplies. The replacement cost profit for the period is arrived at by excluding from profit inventory holding gains and losses. BP uses this measure to assist investors to assess BP's performance from period to period. Replacement cost profit is not a recognized GAAP measure. Operating cash flow is calculated from the starting point of profit before taxation which includes inventory holding gains and losses. Operating cash flow also reflects working capital movements including inventories, trade and other receivables and trade and other payables. The carrying value of these working capital items will change for various reasons, including movements in oil, gas and products prices. (c) See further detail in Note 3. Per Share Amounts Third Second Third Quarter Quarter Quarter Nine Months 2005 2006 2006 2006 2005================================ ===================== Results for the period ($m) 6,463 7,266 6,231 Profit* 19,120 18,656 4,410 6,118 6,975 Replacement cost profit 18,358 14,882-------------------------------- --------------------- Shares in issue at20,984,851 19,993,613 19,815,830 period end (thousand)19,815,830 20,984,851 - ADS equivalent 3,497,475 3,332,269 3,302,638 (thousand) 3,302,638 3,497,475 Average number of shares outstanding21,007,316 20,171,546 19,818,106 (thousand) 20,167,945 21,238,117 - ADS equivalent 3,501,219 3,361,924 3,303,018 (thousand) 3,361,324 3,539,686 Per ordinary share (cents) 30.75 35.94 31.46 Profit for the period 94.80 87.84 RC profit 21.04 30.28 35.08 for the period 91.02 70.07 Per ADS (cents) 184.50 215.64 188.76 Profit for the period 568.80 527.04 RC profit 126.24 181.68 210.48 for the period 546.12 420.42-------------------------------- --------------------- * Profit attributable to BP shareholders. Exploration and Production Third Second ThirdQuarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005======================= =============== 6,535 7,827 9,929 Profit before interest and tax(a) 24,572 18,928 (1) (1) 6 Inventory holding (gains) losses 12 (9)----------------------- --------------- Replacement cost profit 6,534 7,826 9,935 before interest and tax 24,584 18,919======================= =============== Results include: Impairment and gain (loss) on sale (106) 330 1,962 of businesses and fixed assets 2,301 831 - - (17) Environmental and other provisions (17) - Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) on (53) 149 521 embedded derivatives 275 (887) 12 - - Other - 37----------------------- --------------- (147) 479 2,466 Total non-operating items 2,559 (19)======================= =============== 177 97 351 Exploration expense 637 476 Of which: 93 13 232 Exploration expenditure written off 359 224----------------------- --------------- Production (Net of Royalties)(b) 2,313 2,355 2,250 Crude oil (mb/d) 2,323 2,385 159 176 172 Natural gas liquids (mb/d) 172 176 2,472 2,531 2,422 Total liquids (mb/d)(c) 2,495 2,561 7,841 8,624 8,086 Natural gas (mmcf/d) 8,471 8,412 3,824 4,018 3,816 Total hydrocarbons (mboe/d)(d) 3,954 4,011======================= =============== Average realizations(e) 56.83 65.96 67.22 Crude oil ($/bbl) 63.73 49.07 36.70 37.80 40.08 Natural gas liquids ($/bbl) 37.81 31.30 54.80 62.86 64.15 Total liquids ($/bbl) 60.91 47.22 4.75 4.44 4.49 Natural gas ($/mcf) 4.83 4.45 41.68 44.58 45.47 Total hydrocarbons ($/boe) 44.74 36.97======================= =============== Average oil marker prices($/bbl) 61.63 69.59 69.60 Brent 67.02 53.68 63.18 70.46 70.44 West Texas Intermediate 68.09 55.43 60.91 68.84 69.02 Alaska North Slope US West Coast 66.28 52.08======================= =============== Average natural gas marker prices 8.53 6.80 6.58 Henry Hub gas price ($/mmbtu)(f) 7.45 7.19 UK Gas - National 29.26 34.55 33.72 Balancing Point (p/therm) 46.28 32.42======================= =============== (a) Profit from continuing operations and includes profit after interest and tax of equity-accounted entities. (b) Includes BP's share of production of equity-accounted entities. (c) Crude oil and natural gas liquids. (d) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. (e) Based on sales of consolidated subsidiaries only - this excludes equity- accounted entities. (f) Henry Hub First of the Month Index. Exploration and Production The replacement cost profit before interest and tax for the third quarter was$9,935 million, an increase of 52% over the third quarter of 2005. This resultbenefited from higher liquid realizations offset by lower gas realizations. Inaddition, it included higher production taxes and higher costs, reflecting theimpacts of sector specific inflation, revenue investment and production growth.Furthermore, BP's share of the TNK-BP result benefited from a gain of $892million on the sale of its interest in the Urdmurtneft assets. Netnon-operating gains for the third quarter were $2,466 million, mainly arisingfrom net gains on sale of assets of $1,985 million, primarily from the sale of apre-development asset in the Gulf of Mexico, and fair value gains of $521million on embedded derivatives relating to North Sea gas contracts. Thecorresponding quarter in 2005 contained a net non-operating charge of $147million. After adjusting for the effect of disposals, production increased by 3% comparedwith the third quarter of 2005. Actual production was broadly flat comparedwith the third quarter of 2005. The replacement cost profit before interest and tax of $24,584 million for thefirst nine months represented an increase of 30% over the same period of theprevious year. This result benefited from higher oil and gas realizationspartially offset by lower volumes, higher production taxes and higher costsreflecting the impacts of sector specific inflation, increased integrity spendand repairs, revenue investments and production growth. The nine months resultincluded net gains on sales of assets of $2,324 million and net fair value gainsof $275 million on embedded derivatives. The first nine months of 2005contained a net non-operating charge of $19 million. After adjusting for the effect of disposals, production for the first ninemonths was up around 1% compared with the first nine months of 2005 asunderlying production growth from major projects in the new profit centres andTNK-BP offset decline in existing profit centres. Actual production was down 57mboe/d from 2005. In September, we determined that the oil transit lines in the Eastern OperatingArea of Prudhoe Bay could be returned to service for the purposes of in-lineinspection. We have now returned to service all three flow stations previouslyshut down, and current production from Prudhoe Bay is around 400,000 barrels ofoil and natural gas liquids per day (BP has a 26% interest in the Prudhoe Bayfield). We are still committed to replacing the main oil transit lines (16miles) in both the Eastern and Western Operating Areas of Prudhoe Bay and expectto complete this next year. The effect of reduced production at Prudhoe Bay onaverage third quarter production was 27 mboe/d. Offshore commissioning work on the Thunder Horse platform is proceeding.Following a series of tests carried out over the past few months, which revealedmetallurgical failures in components of the subsea system, we plan to retrieveand replace all the subsea components we believe could be at risk. This workwill be done over the course of the next year and we do not expect productionfrom Thunder Horse to begin before the middle of 2008. It is too early toestimate the additional costs involved in replacing the affected systems. In our other major projects we continue to make good progress. In Azerbaijan,ACG and BTC continue to ramp up. The Shah Deniz gas field and East Azeri are ontrack to start up in the fourth quarter. In Angola, the FPSO for the Daliafield is now being moored. During the quarter, we made a significant oil exploration discovery on theKaskida prospect in approximately 5,900 feet of water in the Gulf of Mexico andin Angola, we announced the Titania discovery, our 11th discovery in Block 31.In addition we have been awarded the Birbhum coal bed methane licence in Indiaand have reached agreement to acquire acreage in the UK Central North Sea whichcontains two discovered fields and further exploration potential. During the quarter, we completed the sale of our remaining Gulf of Mexico Shelfassets which have been subject to pre-emption rights. In July, we completed thesale of our 28% interest in the Shenzi discovery in the Gulf of Mexico toRepsol. To date we have received $3.8 billion of proceeds from our divestmentactivity in 2006. In August, TNK-BP completed the sale of its interest in theUrdmurtneft assets to Sinopec and we announced the sale of five onshoreproperties in South Louisiana. Refining and Marketing Third Second ThirdQuarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005======================= ============= 3,714 2,992 717 Profit before interest and tax(a) 5,747 7,999 (1,839) (1,136) 786 Inventory holding (gains) losses (776) (3,440)----------------------- ------------- Replacement cost profit 1,875 1,856 1,503 before interest and tax 4,971 4,559======================= ============= Results include: Impairment and gain (loss) on sale (14) 112 2 of businesses and fixed assets 678 34 (140) - (33) Environmental and other provisions (33) (140) Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) on - - - embedded derivatives - - - (576) (400) Other (976) (733)----------------------- ------------- (154) (464) (431) Total non-operating items (331) (839)======================= ============= Refinery throughputs (mb/d) 202 162 200 UK 158 192 687 671 622 Rest of Europe 644 668 1,328 1,200 1,213 USA 1,130 1,360 296 256 252 Rest of World 268 300----------------------- ------------- 2,513 2,289 2,287 Total throughput 2,200 2,520======================= ============= 92.6 86.4 82.2 Refining availability (%)(b) 83.2 93.6======================= ============= Oil sales volumes (mb/d) Refined products 369 354 370 UK 356 354 1,402 1,311 1,367 Rest of Europe 1,331 1,357 1,674 1,631 1,609 USA 1,613 1,660 599 579 578 Rest of World 575 608----------------------- -------------- 4,044 3,875 3,924 Total marketing sales 3,875 3,979 2,010 1,682 1,911 Trading/supply sales 1,932 2,112----------------------- -------------- 6,054 5,557 5,835 Total refined product sales 5,807 6,091 2,471 1,996 1,913 Crude oil 2,160 2,474----------------------- -------------- 8,525 7,553 7,748 Total oil sales 7,967 8,565======================= ============== Global Indicator Refining Margin ($/bbl)(c) 7.78 5.78 4.54 NWE 4.40 5.46 17.12 17.74 11.47 USGC 13.36 11.31 13.40 14.75 11.50 Midwest 10.38 8.28 17.57 21.27 12.30 USWC 14.93 15.02 6.52 6.83 3.58 Singapore 4.65 5.94 12.35 12.59 8.40 BP Average 9.09 8.93======================= ============== Chemicals production (kte) 284 298 230 UK 831 918 771 741 776 Rest of Europe 2,359 2,312 890 816 883 USA 2,488 3,215 1,674 1,728 1,682 Rest of World 5,097 4,225----------------------- -------------- 3,619 3,583 3,571 Total production 10,775 10,670======================= ============== (a) Profit from continuing operations and includes profit after interest and tax of equity-accounted entities. (b) Refining availability is defined as the ratio of units which are available for processing, regardless of whether they are actually being used, to total capacity. Where there is planned maintenance, such capacity is not regarded as being available. During the first nine months 2006, there was planned maintenance of a substantial part of the Texas City refinery. (c) The Global Indicator Refining Margin (GIM) is the average of regional indicator margins weighted for BP's crude refining capacity in each region. Each regional indicator margin is based on a single representative crude with product yields characteristic of the typical level of upgrading complexity. The regional indicator margins may not be representative of the margins achieved by BP in any period because of BP's particular refinery configurations and crude and product slate. Refining and Marketing The replacement cost profit before interest and tax for the third quarter was$1,503 million. This is compared to $1,875 million for the same period lastyear. The nine months' result was $4,971 million compared to $4,559 million forthe same period last year, up 9%. The quarter's result included a charge of $431 million for non-operating items.This includes a further provision of $400 million as a result of the ongoingreview of fatality and personal injury compensation claims associated with theincident in March 2005 at the Texas City refinery. In addition, non-operatingitems include impairment charges of $90 million, a charge of $33 million inrespect of new, and revisions to existing, environmental and other provisionsand net disposal gains of $92 million. The non-operating charge for thecorresponding quarter in 2005 was $154 million. The third quarter's result included a significant gain related to IFRS fairvalue accounting effects. The third quarter of 2005 included a smaller gain. The results for both the third quarter and the first nine months of 2006,excluding Texas City, reflect strong operating performance. The reduction inthe result in respect of Texas City, including the impact on associatedbusinesses, was some $320 million compared to the third quarter of 2005 andaround $1,400 million compared with the first nine months of 2005. Thesefigures exclude the provisions for fatality and personal injury compensationclaims which are treated as non-operating items. The third quarter result alsoreflects the absence of hurricane activity which negatively impacted the thirdquarter of 2005. This quarter's result reflects lower refining margins and reduced supplyoptimization benefits driven by lower crude and product prices, particularlyaround the end of the quarter. The quarter's result also included the impact ofhigher levels of refining turnaround activity. Retail margins improved stronglycompared with the third quarter of 2005 due to the steady decline in wholesaleproduct prices. The result for the first nine months reflects higher marketingmargins and supply optimization benefits compared with the first nine months of2005. Refinery throughputs for the quarter and nine months were 2,287 mb/d and 2,200mb/d respectively, lower than in the corresponding periods of 2005. This isprimarily as a result of the phased start-up of production at our Texas Cityrefinery during 2006. The recommissioning of the Texas City refinery continues,with throughput for the quarter averaging 247 mb/d. Refining availability forthe quarter, excluding Texas City, was 96.3%, higher than in the correspondingperiod last year. Marketing sales were 3,924 mb/d for the third quarter and3,875 mb/d for the first nine months of the year, compared with 4,044 mb/d and3,979 mb/d for the corresponding periods in the previous year. During the quarter, BP announced that it has entered the final planning stage ofa $3 billion investment in Canadian heavy crude oil processing capability at itsWhiting refinery located in northwest Indiana. The intention is to reconfigurethe Whiting refinery so most of its feedstock can be heavy Canadian crude oil.Reconfiguring the refinery also has the potential to increase its production ofmotor fuels by around 15 percent, which is approximately 1.7 million additionalgallons of gasoline and diesel per day. Construction is tentatively scheduledto begin in 2007 and be completed by 2011, pending regulatory approval. Gas, Power and Renewables Third Second ThirdQuarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005======================= ============= 445 463 152 Profit before interest and tax(a) 853 1,046 (98) (10) - Inventory holding (gains) losses 53 (98)----------------------- ------------- Replacement cost profit 347 453 152 before interest and tax 906 948======================= ============= Results include: Impairment and gain (loss) on sale (2) (1) (65) of businesses and fixed assets (66) 81 6 - - Environmental and other provisions - 6 Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) 91 107 (20) on embedded derivatives 32 200 - - - Other - ------------------------ ------------- 95 106 (85) Total non-operating items (34) 287======================= ============= (a) Profit from continuing operations and includes profit after interest and tax of equity-accounted entities. The replacement cost profit before interest and tax for the third quarter andnine months was $152 million and $906 million respectively, compared with $347million and $948 million a year ago. Included in the result for the quarter wasa charge for non-operating items of $85 million arising from fair value lossesof $20 million on embedded derivatives related to long-term gas contracts, acharge of $70 million for the impairment of a North American NGL asset and a $5million gain on disposal. The corresponding quarter of 2005 included a netnon-operating gain of $95 million, largely comprising fair value gains of $91million on embedded derivatives. The third quarter result was 56% lower than the same quarter of 2005. Thedecrease was primarily due to a non-operating charge in the current quartercompared with a net non-operating gain in the same period last year. Asignificant reduction in the contribution from gas and power marketing andtrading was partly offset by better operational performance in the natural gasliquids business and a lower charge related to IFRS fair value accounting.Similarly, the nine month result was marginally lower than the same period in2005, largely reflecting a net charge for non-operating items compared with again in the same period last year and higher IFRS fair value accounting charges,partly offset by higher contributions from the operating businesses. In August, we purchased Greenlight Energy, Inc., a US-based developer of windpower generation projects. The purchase will further accelerate the rapidgrowth of BP's wind power business in North America. In Korea, K-power CompanyLimited (BP 35%) completed construction of a 1,074MW, LNG-fired combined cyclepower plant near Kwangyang City, which has began full commercial operation. Other Businesses and Corporate Third Second ThirdQuarter Quarter Quarter Nine Months 2005 2006 2006 $ million 2006 2005====================== ============= Profit (loss) before (501) (192) (213) interest and tax(a) (620) (828) - (1) (48) Inventory holding (gains) losses (51) - ---------------------- ------------- Replacement cost profit (loss) (501) (193) (261) before interest and tax (671) (828) ====================== ============= Results include: Impairment and gain (loss) on sale 4 21 (10) of businesses and fixed assets 12 38 (296) - 96 Environmental and other provisions 96 (274) Restructuring, integration and (6) - - rationalization costs - (77) Fair value gain (loss) on 8 5 (8) embedded derivatives 5 (10) - - - Other - 3---------------------- -------------- (290) 26 78 Total non-operating items 113 (320)====================== ============== (a) Profit from continuing operations and includes profit after interest and tax of equity-accounted entities. Other businesses and corporate comprises Finance, the group's aluminium asset,interest income and costs relating to corporate activities. The third quarter'sresult includes a net gain of $78 million in respect of non-operating items.This includes a net credit of $96 million in relation to new, and revisions toexisting, environmental and other provisions. Also included in the result, butnot treated as a non-operating item, is a charge resulting from new, andrevisions to existing, vacant space provisions. Dividends Payable June, SeptemberDecember September December and December 2005 2006 2006 2006 2005=========================== ================= Dividends per ordinary share 8.925 9.825 9.825 cents 29.025 26.35 5.061 5.324 5.241 pence 15.816 14.63 53.55 58.95 58.95 Dividends per ADS (cents) 174.15 158.10--------------------------- ----------------- BP today announced a dividend of 9.825 cents per ordinary share to be paid inDecember. Holders of ordinary shares will receive 5.241 pence per share andholders of American Depository Receipts (ADRs) $0.5895 per ADS share. Thedividend is payable on 4 December to shareholders on the register on 10November. Participants in the Dividend Reinvestment Plan (DRIP) or the DRIPfacility in the US Direct Access Plan will receive the dividend in the form ofshares, also on 4 December. Outlook BP Group Chief Executive, Lord Browne, concluded: "World economic growth has been sustained. US economic growth appears to haveslowed compared to the second quarter, but growth in Europe and Asia has beenrobust. The near-term global outlook is for slower but resilient growth. "Crude oil prices averaged $69.60 per barrel (Dated Brent) in the third quarterof 2006, similar to the second quarter average and nearly $8 per barrel abovethe same period last year. After peaking above $78 per barrel in early Augustprices have declined and in early October were below $60 per barrel. Ampleinventories, a perceived lessening of geopolitical tensions, and a lack ofhurricane-related disruptions have contributed to the decline. OPEC membershave announced an intent to reduce production. "US natural gas prices averaged $6.58/mmbtu (Henry Hub first of month index) inthe third quarter, $0.22/mmbtu below the second quarter average and nearly $2/mmbtu below the same period last year. Gas continued to trade at a discount toresidual fuel oil. Domestic production growth retained its momentum, andconsumption outside the power sector remained sluggish. Gas in storage at theend of September was 12% above the five-year average. Prices should besupported by seasonally rising winter demand. "UK gas prices (NBP day-ahead) in the third quarter averaged 33.72 pence pertherm, slightly below the second quarter but 15% above the same period lastyear. Since the peak in late July, prices have fallen significantly,facilitated by fewer North Sea maintenance closures, LNG imports, and mostrecently, the testing of the Langeled pipeline. Rough storage is full andimport capacity has increased, easing most concerns over winter supplyavailability. "The global average indicator refining margin fell to $8.40/bbl in the thirdquarter of 2006, down more than $4/bbl versus the second quarter and by asimilar amount versus the third quarter last year. Margins were strong in Julyand August but fell away sharply during September on the end of the US gasolineseason, limited hurricane activity and growing product inventory levels. So farin October, margins have averaged around $5/bbl, and should be underpinned inthe near term by the autumn refinery turnaround programme and demand fordistillates once colder weather arrives. "Retail margins increased significantly in August and September due to a steadyfall in the cost of product, leaving average retail margins for the thirdquarter above the previous two quarters. More stable raw material costs duringOctober to date and an increase in competitive pressures suggest that marketingmargins in the fourth quarter are likely to be weaker. "The UK Government's announced increase in the North Sea supplemental tax ratehas been enacted. This increase has two effects; first to create a one-timedeferred tax charge and second to increase current tax to reflect the 2006impact of the higher rate, which is retroactive to the start of the year. Thefull year aggregate effective tax rate is expected to be around 37%. "Our strategy is unchanged. We continue to execute it with discipline andfocus. Production for the year is expected to be around 3.950 mmboe/d, lowerthan in 2005 due principally to divestments and the impact of higher prices onentitlements under Production Sharing Contracts. Capital expenditure excludingacquisitions is expected to be around $16 billion for the year. Divestmentproceeds are expected to be around $6 billion." ---------------------------------------------------------------------------- Cautionary Statement: The foregoing discussion, in particular the statementsunder "Outlook", contains forward looking statements particularly thoseregarding retrieval and replacement of components of the sub-sea system at riskof metallurgical failure at Thunder Horse; the completion of offshorecommissioning work at, receipt of approvals for and start-up of production fromThunder Horse; return to service of replaced oil transit lines at Prudhoe Bay;recommissioning of the Texas City refinery and the timing of the realization ofits full financial potential; the growth of BP's windpower business and plannedinvestments in biofuels research, development and marketing; world economicgrowth; oil and gas prices; UK oil and gas inventories; refining margins;marketing margins; the effect of the increase in the North Sea supplemental taxrate; the aggregate effective tax rate; the sanctioning, timing and effect ofmajor projects; production; divestments and resulting adjustments to production;capital expenditure; and divestment proceeds. By their nature, forward lookingstatements involve risks and uncertainties and actual results may differ fromthose expressed in such statements depending on a variety of factors includingthe following: the timing of bringing new fields on stream; industry productsupply; OPEC policy decisions; demand and pricing; currency exchange rates;operational problems; general economic conditions including inflationarypressures; political stability; economic growth and outlook in relevant areas ofthe world; changes in governmental regulations; exchange rate fluctuations;development and use of new technology; the actions of competitors; naturaldisasters and other changes in business conditions; prolonged adverse weatherconditions; wars and acts of terrorism or sabotage; and other factors discussedin this Announcement. For more information you should refer to our AnnualReport and Accounts 2005 and our 2005 Annual Report on Form 20-F/A filed withthe US Securities and Exchange Commission. ---------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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