26th Jul 2005 07:01
BP PLC26 July 2005 BP p.l.c.Group Results2nd Quarter and Half Year 2005 London 26 July 2005 FOR IMMEDIATE RELEASE RECORD RESULT AND SHAREHOLDER DISTRIBUTIONS FOR THE HALF-YEAR --------------------------------------------------------------------------- Second First SecondQuarter Quarter Quarter First Half 2004 2005 2005 $ million 2005 2004 % ======================= ==================== 4,335 6,602 5,591 Profit for the period* 12,193 9,247 Inventory holding (462) (1,111) (610) (gains) losses (1,721) (1,110) ----------------------- -------------------- 3,873 5,491 4,981 Replacement cost profit 10,472 8,137 29 ======================= ==================== 9.83 13.55 12.67 - per ordinary share (pence) 26.22 20.32 17.69 25.61 23.42 - per ordinary share (cents) 49.03 36.99 33 1.06 1.54 1.40 - per ADS (dollar) 2.94 2.22 ======================= ==================== o BP's second quarter replacement cost profit was $4,981 million compared with $3,873 million a year ago, an increase of 29%. For the half year, replacement cost profit was a record $10,472 million compared with $8,137 million, up 29%. o The second quarter result includes a net non-operating charge of $826 millon compared with a net non-operating charge of $198 million in the second quarter of 2004, and a net non-operating gain of $535 million in the first quarter of 2005. For the half year, the net non-operating charge was $291 million compared with a net gain of $578 million for the first half of 2004. o The second quarter trading environment was generally stronger than a year ago with higher oil and gas realizations, higher refining and chemicals margins, but with lower retail marketing margins. o Net cash provided by operating activities for the quarter and half year was $6.7 billion and $16.1 billion, respectively, compared with $5.2 billion and $12.2 billion a year ago. o The ratio of net debt to net debt plus equity was 18% compared with 20% a year ago. o The quarterly dividend, to be paid in September, is 8.925 cents per share ($0.5355 per ADS) compared with 7.10 cents per share a year ago. For the half year, the dividend showed an increase of 26%. In sterling terms, the quarterly dividend is 5.119 pence per share, compared with 3.860 pence per share a year ago; for the half year the increase was 25%. During the first half, the company repurchased 396 million of its own shares at a cost of $4.1 billion. BP Group Chief Executive, Lord Browne, said: "Our record first half financial results could not have been delivered without the significant investments made over the last decade. These are capturing the benefit of the strong trading environment. Discipline in returning capital to shareholders after continuing to invest for the future is allowing us to reduce the number of shares outstanding, further improving per share performance." * Profit attributable to BP shareholders. Summary Quarterly Results Exploration and Production's second quarter result was up 38% on a year agoreflecting higher realizations in both liquids and gas and higher volumes,partially offset by higher operating costs and revenue investments. The Refining and Marketing result reflects improved refining margins, lowerretail marketing margins and a higher net charge for non-operating itemscompared with a year ago. In Gas, Power and Renewables the result decreased compared with a year ago dueto lower contributions from the gas marketing and natural gas liquidsbusinesses. Interest and Other finance expense was $162 million for the quarter comparedwith $201 million in the previous quarter. The decrease relates primarily to theabsence in the second quarter of costs associated with the early redemption offinance leases in the first quarter of 2005. The effective tax rate on replacement cost profit was 31.5%. Capital expenditure was $3.3 billion for the quarter. There were no acquisitionsin the quarter. Disposal proceeds were $0.4 billion. Net debt at the end of the quarter was $17.9 billion. The ratio of net debt tonet debt plus equity was 18%, and was also 18% at the end of the first quarter. During the second quarter, the company repurchased 203 million of its ownshares, at a cost of $2.1 billion. These shares are held in treasury. --------- The commentaries above and following are based on replacement cost profit. TNK-BP operational and financial information has been estimated. The financial information for 2004 has been restated to reflect the following,all with effect from 1 January 2005: (a) the adoption by the group ofInternational Financial Reporting Standards (IFRS) (see Note 1); (b) thetransfer of the aromatics and acetyls operations from the former Petrochemicalssegment to the Refining and Marketing segment; (c) the transfer of the olefinsand derivatives operations from the former Petrochemicals segment to Otherbusinesses and corporate; (d) the transfer of the Grangemouth and Laverarefineries from the Refining and Marketing segment to Other businesses andcorporate; (e) the transfer of the Mardi Gras pipeline from the Exploration andProduction segment to the Refining and Marketing segment; and (f) the transferof the Hobbs fractionator from the Gas, Power and Renewables segment to Otherbusinesses and corporate. Note 2 provides further detail of the resegmentation. Non-Operating Items Second Quarter$ million 2005 ======= Exploration and Production (652)Refining and Marketing (658)Gas, Power and Renewables 87Other businesses and corporate 17 ------- (1,206) Taxation(a) 380 ------- (826) ======= (a) Tax on Non-operating items is calculated using the effective tax rate on replacement cost profit. Reconciliation of Replacement Cost Profit to Profit for the Period Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 $ million 2005 2004 ============================= ================ 4,263 6,486 5,903 Exploration and Production 12,389 8,505 1,665 1,421 1,286 Refining and Marketing 2,707 2,585 189 404 174 Gas, Power and Renewables 578 390 Other businesses and (197) 207 175 corporate 382 897 (87) (153) (4) Consolidation adjustment (157) (153) ----------------------------- ---------------- RC profit before interest 5,833 8,365 7,534 and tax 15,899 12,224 ----------------------------- ---------------- Interest and other (171) (201) (162) finance expense (363) (345) (1,747) (2,612) (2,322) Taxation (4,934) (3,666) (42) (61) (69) Minority interest (130) (76) ----------------------------- ---------------- 3,873 5,491 4,981 RC profit(a) 10,472 8,137 ============================= ================ Inventory holding 462 1,111 610 gains (losses) 1,721 1,110 ----------------------------- ---------------- 4,335 6,602 5,591 Profit for the period* 12,193 9,247 ============================= ================ (a) 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. Per Share Amounts Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ================================ ===================== Results for the period ($m) 4,335 6,602 5,591 Profit* 12,193 9,247 3,873 5,491 4,981 Replacement cost profit 10,472 8,137 ------------------------------- -------------------- Shares in issue at21,789,115 21,367,827 21,174,934 period end (thousand)21,174,934 21,789,115 - ADS equivalent 3,631,519 3,561,305 3,529,156 (thousand) 3,529,156 3,631,519 Average number of shares oustanding21,906,318 21,441,285 21,270,485 (thousand) 21,355,418 21,997,057 - ADS equivalent 3,651,053 3,573,548 3,545,081 (thousand) 3,559,236 3,666,176 -------------------------------- --------------------- Per ordinary share (cents) 19.79 30.79 26.30 Profit for the period 57.09 42.03 RC profit 17.69 25.61 23.42 for the period 49.03 36.99 Per ADS (cents) 118.74 184.74 157.80 Profit for the period 342.54 252.18 RC profit 106.14 153.66 140.52 for the period 294.18 221.94 -------------------------------- --------------------- * Profit attributable to BP shareholders. Exploration and Production 2Q 1Q 2Q First Half 2004 2005 2005 $ million 2005 2004================= ============== 4,263 6,491 5,906 Profit before interest and tax(a) 12,397 8,513 - (5) (3) Inventory holding (gains) losses (8) (8) ----------------- -------------- Replacement cost profit4,263 6,486 5,903 before interest and tax 12,389 8,505 ================= ============== Results include: Impairment and gain (loss) on sale of (274) 940 (3) businesses and fixed assets 937 (249) - - - Environmental and other provisions - - Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) on - (160) (674) embedded derviatives (834) - - - 25 Other 25 - ----------------- -------------- (274) 780 (652) Total non-operating items 128 (249) ================= ============== 108 160 139 Exploration expense 299 244 Of which: 22 84 47 Exploration expenditure written off 131 89 ----------------- -------------- Production (Net of Royalties)2,321 2,405 2,437 Crude oil (mb/d) 2,421 2,331 197 188 182 Natural gas liquids (mb/d) 185 1942,518 2,593 2,619 Total liquids (mb/d)(b) 2,606 2,5258,425 8,745 8,661 Natural gas (mmcf/d) 8,703 8,5123,971 4,101 4,112 Total hydrocarbons (mboe/d)(c) 4,107 3,993 ================= ============== Average realizations34.47 43.37 47.79 Crude oil ($/bbl) 45.60 32.8523.71 28.14 29.86 Natural gas liquids ($/bbl) 28.99 23.4333.27 41.74 45.95 Total liquids ($/bbl) 43.85 31.85 3.68 4.26 4.38 Natural gas ($/mcf) 4.32 3.7427.66 33.60 36.11 Total hydrocarbons ($/bbl) 34.86 27.06 ================= ============== Average oil marker prices($/bbl)35.32 47.62 51.63 Brent 49.64 33.6738.28 49.88 53.08 West Texas Intermediate 51.52 36.8036.99 45.07 50.10 Alaska North Slope US West Coast 47.64 35.61 ================= ============== Average natural gas marker prices 6.00 6.27 6.74 Henry Hub gas price ($/mmbtu)(d) 6.51 5.84 UK Gas - National20.70 37.96 30.15 Balancing Point (p/therm) 34.02 22.64 ================= ============== (a) Includes profit after interest and tax of equity-accounted entities. (b) Crude oil and natural gas liquids. (c) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. (d) Henry Hub First of the Month Index. Exploration and Production The replacement cost profit before interest and tax for the second quarter was$5,903 million, an increase of 38% over the second quarter of 2004. This resultbenefited from higher realizations in both liquids and gas and higher volumes,partially offset by higher operating costs and revenue investments. Netnon-operating losses for the second quarter total $652 million, primarilyarising from fair value losses on embedded derivatives relating to North Sea gascontracts. The corresponding quarter in 2004 contained charges for impairment of$160 million and losses on sales of assets of $114 million. Production for the quarter at 4,112 mboe/d was over 3.5% higher than the secondquarter of 2004. This reflects production growth from major projects in the newprofit centres and TNK-BP, partly offset by anticipated decline in existingprofit centres. The replacement cost profit before interest and tax of $12,389 million for thehalf year was a record and represented an increase of 46% over the same periodof the previous year. This result also benefited from higher realizations andvolumes partially offset by higher operating costs and revenue investments. Thehalf year result included net gains on sales of assets of $1,067 million, fairvalue losses of $834 million on embedded derivatives and charges for impairmentsof $130 million. In the deepwater Gulf of Mexico, efforts continue in response to the ThunderHorse platform incident. The facility is now stable and trim; freeboard anddisplacement are normal. Work continues to determine the cause. We will notbegin production, originally scheduled for end-2005, until any damage has beenidentified and repaired. Elsewhere, projects in the New Profit Centres remain ontrack. In Azerbaijan, line-fill of the Baku-Tbilisi-Ceyhan (BTC) oil exportpipeline commenced and the official inauguration ceremony was held on 25 May2005. In Angola, the Kizomba B development achieved first oil in early July,ahead of schedule. In Trinidad, both the Cannonball project and the Atlantic LNGTrain 4 remain on course for start-up of production in the second half of theyear. In addition, we approved our investment in a fifth LNG train in the NorthWest Shelf development in Australia during the second quarter. Projects in the Existing Profit Centres also remain on track. In Egypt, weextended two concessions in the Gulf of Suez: the Merged Concession Agreement(MCA) and South Garib, which will extend the life of the existing oil fields,increase the recovery of remaining reserves and provide a foundation for growththrough future exploration. During the quarter, BP Trinidad and Tobago LLC (BP 70%) reached agreement forthe sale of the Teak, Samaan and Poui fields in Trinidad. Completion of thetransaction is expected in the fourth quarter of 2005 subject to regulatory andother approvals. Customer Facing Segments Refining and Marketing 2Q 1Q 2Q First Half 2004 2005 2005 $ million 2005 2004 ======================= ============= 2,070 2,363 1,950 Profit before interest and tax(a) 4,313 3,543 (405) (942) (664) Inventory holding (gains) losses (1,606) (958) ----------------------- ------------- Replacement cost profit 1,665 1,421 1,286 before interest and tax 2,707 2,585 ======================= ============= Results include: Impairment and gain (loss) on sale 55 (27) 75 of businesses and fixed assets 48 (105) - - - Environmental and other provisions - - Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) on - - - embedded derivatives - - - - (733) Other (733) - ----------------------- ------------- 55 (27) (658) Total non-operating items (685) (105) ======================= ============= Refinery throughputs(b) (kb/d) 206 164 210 UK 187 202 729 647 671 Rest of Europe 659 720 1,370 1,400 1,350 USA 1,375 1,317 377 299 305 Rest of World 302 388 ----------------------- ------------- 2,682 2,510 2,536 Total throughput 2,523 2,627 ======================= ============= 94.9 95.2 93.1 Refining availability (%) 94.1 95.0 ======================= ============= Oil sales volumes (kb/d) Refined products 323 338 356 UK 347 310 1,318 1,323 1,346 Rest of Europe 1,335 1,335 1,687 1,648 1,656 USA 1,652 1,685 651 621 604 Rest of World 612 652 ----------------------- -------------- 3,979 3,930 3,962 Total marketing sales 3,946 3,982 2,262 2,196 2,129 Trading/supply sales 2,163 2,382 ----------------------- -------------- 6,241 6,126 6,091 Total refined product sales 6,109 6,364 3,761 3,635 4,123 Crude oil 3,879 3,909 ----------------------- -------------- 10,002 9,761 10,214 Total oil sales 9,988 10,273 ======================= ============== Global Indicator Refining Margin(c) ($/bbl) 5.29 2.84 5.68 NWE 4.27 4.01 9.18 7.30 9.37 USGC 8.34 8.05 9.01 3.84 7.45 Midwest 5.65 6.84 15.41 12.88 14.53 USWC 13.71 11.73 2.80 4.98 6.30 Singapore 5.64 3.11 8.28 5.94 8.42 BP Average 7.19 6.59 ======================= ============== Chemicals production (kte) 326 317 317 UK 634 629 814 806 735 Rest of Europe 1,541 1,611 1,144 1,218 1,107 USA 2,325 2,327 982 1,009 981 Rest of World 1,990 2,022 ----------------------- -------------- 3,266 3,350 3,140 Total production 6,490 6,589 ======================= ============== (a) Includes profit after interest and tax of equity-accounted entities. (b) Refinery throughputs exclude the Grangemouth and Lavera refineries which were transferred to Other businesses and corporate effective 1 January 2005. (c) The Global Indicator Refining Margin (GIM) is the average of six 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. The GIM data shown above excludes the Grangemouth and Lavera refineries. Customer Facing Segments Refining and Marketing The replacement cost profit before interest and tax for the second quarter andhalf year was $1,286 million and $2,707 million respectively. This compares with$1,665 million and $2,585 million respectively, for the equivalent periods in2004. The quarter's result includes a net charge of $658 million for non-operatingitems. Of this, $700 million is in respect of all fatality and personal injurycompensation claims associated with the incident at the Texas City refinery on23 March 2005. Non-operating items also include a gain of $75 million on thedisposal of retail assets and a charge of $33 million for the impairment of anequity-accounted entity. The total charge for non-operating items for the halfyear amounted to $685 million. The second quarter and half year results, compared with the prior year, reflectimproved refining margins, lower retail marketing margins and a higher netcharge for non-operating items. The average refining Global Indicator Margin(GIM) for both the second quarter and the first half of 2005 were higher than inthe equivalent periods of 2004 due to product demand strength and the benefitsof heavy/sour crude discounts. The margin realized by BP's refinery system alsoreflected the benefits of locational advantages and supply optimization. Retailmarketing margins were lower than last year for both the quarter and half yearas a result of rises in crude and product prices being faster than the increasein selling prices. Refining crude oil throughputs for the quarter and first half were 2,536 kb/dand 2,523 kb/d respectively, lower than last year primarily due to the impact ofdisposals. The quarter's refining availability reduced to 93% compared with the95% we achieved consistently last year and in the first quarter. This reflectsthe full quarter impact of the Texas City incident. Marketing sales were 3,962kb/d in the second quarter and 3,946 kb/d for the half year. The sales were heldat similar levels to both the second quarter and first half of 2004 despite thesignificant increase in crude and product prices. Customer Facing Segments Gas, Power and Renewables 2Q 1Q 2Q First Half 2004 2005 2005 $ million 2005 2004 ======================= ============= 183 418 160 Profit before interest and tax(a) 578 374 6 (14) 14 Inventory holding (gains) losses - 16 ----------------------- ------------- Replacement cost result 189 404 174 before interest and tax 578 390 ======================= ============= Results include: Impairment and gain (loss) on sale - 63 20 of businesses and fixed assets 83 - - - - Environmental and other provisions - - Restructuring, integration and - - - rationalization costs - - Fair value gain (loss) - 42 67 on embedded derivatives 109 - - - - Other - - ----------------------- ------------- - 105 87 Total non-operating items 192 - ======================= ============= Gas sales volumes (mmcf/d) 4,489 5,413 4,699 UK 5,054 5,409 266 387 382 Rest of Europe 385 35412,477 14,188 14,501 USA 14,345 13,04712,079 15,628 14,933 Rest of World 15,279 12,991 ---------------------- -------------- 29,311 35,616 34,515 Total gas sales volumes 35,063 31,801 ======================= ============== NGL sales volumes (mb/d) 8 10 4 UK 7 6 3 13 12 Rest of Europe 12 2 334 371 317 USA 344 397 166 254 162 Rest of World 208 205 ----------------------- -------------- 511 648 495 Total NGL sales volumes 571 610 ======================= ============== (a) Includes profit after interest and tax of equity-accounted entities. The replacement cost profit before interest and tax for the second quarter andhalf year was $174 million and $578 million respectively, compared with $189million and $390 million a year ago. The second quarter result is lower than the same period in 2004 due to lowercontributions from the gas marketing and natural gas liquids businesses. Thefirst half result is higher than the same period in 2004 reflecting higher gainsfrom non-operating items and a similar contribution from the operatingbusinesses. Results reflect changes to fair value accounting following theintroduction of IFRS in 2005 which have created increased volatility in the Gas,Power and Renewables result, negatively impacting the second quarter and halfyear. Non-operating items in the second quarter include a gain on disposal of an NGLplant in the US and net fair value gains on embedded derivatives. In June, BP announced plans for the world's first industrial scale project togenerate electricity from hydrogen while reducing CO2 emissions and enhancingoil recovery in the North Sea. Other Businesses and Corporate 2Q 1Q 2Q First Half 2004 2005 2005 $ million 2005 2004 ====================== ============= Profit (loss) before (134) 357 132 interest and tax(a) 489 1,057 (63) (150) 43 Inventory holding (gains) losses (107) (160) ---------------------- ------------- Replacement cost profit (197) 207 175 before interest and tax 382 897 ====================== ============= Results include: Impairment and gain (loss) on sale (68) (24) 34 of business and fixed assets 10 1,189 - - 22 Environmental and other provisions 22 - Restructuring, integration and - (43) (28) rationalization costs (71) - Fair value gain (loss) on - (4) (14) embedded derivatives (18) - - - 3 Other 3 - ---------------------- -------------- (68) (71) 17 Total non-operating items (54) 1,189 ====================== ============== Analysis of replacement cost result before interest and tax(a) (11) 356 290 Olefins and Derivatives 646 (116) (186) (149) (115) Other (264) 1,013 ---------------------- -------------- (197) 207 175 382 897 ====================== ============== (a) Includes profit after interest and tax of equity-accounted entities. Other businesses and corporate comprises Olefins and Derivatives, Finance, thegroup's aluminium asset, interest income and costs relating to corporateactivities. The group's interests in PetroChina and Sinopec were divested inearly 2004. The second quarter's result includes a net gain of $17 million inrespect of non-operating items. This includes a charge in respect of theseparation of the Olefins and Derivatives business. The Olefins and Derivativesresult showed a marked increase over a year ago primarily as a result of highermargins and volumes. Dividends Payable September June September June and September 2004 2005 2005 2005 2004 ========================== ================= Dividends per ordinary share 7.10 8.50 8.925 cents 17.425 13.85 3.860 4.450 5.119 pence 9.569 7.667 42.6 51.0 53.55 Dividends per ADS (cents) 104.55 83.1 -------------------------- ---------------- BP today announced a dividend of 8.925 cents per ordinary share to be paid inSeptember. Holders of ordinary shares will receive 5.119 pence per share andholders of American Depository Receipts (ADRs) $0.5355 per ADS share. Thedividend is payable on 6 September to shareholders on the register on 12 August.Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility inthe US Direct Access Plan will receive the dividend in the form of shares, alsoon 6 September. Outlook BP Group Chief Executive, Lord Browne, concluded: "First half world economic growth has been sustained near its 10-year average of 3%, and is expected to remain so for the rest of 2005. "Oil prices averaged $51.63 per barrel (Dated Brent) in the second quarter, around $4.00 per barrel higher than in the first quarter. OECD commercial inventories have risen at above normal seasonal rates in the second quarter and remain above five-year average levels. Prices remain supported by strong world oil consumption growth and limited spare oil production capacity. "US natural gas prices averaged $6.74/mmbtu (Henry Hub first of month index) in the second quarter, up by around $0.50/mmbtu versus the first quarter. Gas inventories remain above year-earlier and five-year average levels but the surplus has been declining and the futures market continues to signal a supply-constrained market heading into the winter heating season. "BP's average refining Global Indicator Margin improved by nearly $2.50/bbl versus the first quarter to reach $8.42/bbl. So far in the third quarter, refining margins remain very firm in all regions, albeit below second quarter levels. The outlook for retail margins remains uncertain with continuing crude and product price volatility. Rising product prices have dampened margins over the past few weeks and have contributed to a weak start to the third quarter. "Our strategy is unchanged. We continue to execute it with discipline and focus. Our ability to capture the benefit of current prices and margin strength underpins continued dividend growth and further increases in share buybacks which we expect to be at least $6 billion in the second half of 2005 subject to market conditions and constraints. Capital expenditure is expected to be around $14.5 billion for the year and around $15 billion in 2006." ---------------------------------------------------------------------- The foregoing discussion, in particular the statements under "Outlook", contains forward looking statements particularly those regarding capital expenditure, costs, demand, dividends, future performance, growth and other trend projections, margins, prices, production, share buybacks, supply and the timing of projects. By their nature, forward looking statements involve risks and uncertainties and actual results may differ from those expressed in such statements depending on a variety of factors including the following: the timing of bringing new fields on stream; industry product supply; demand and pricing; currency exchange rates; operational problems; general economic conditions including inflationary pressures; political stability and economic growth in relevant areas of the world; changes in governmental regulations; exchange rate fluctuations; development and use of new technology and successful commercial relationships; the actions of competitors; natural disasters and other changes in business conditions; prolonged adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed in this Announcement. For more information you should refer to our Annual Report and Accounts 2004 and our 2004 Annual Report on Form 20-F filed with the 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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