5th Apr 2006 07:05
BP PLC05 April 2006 press release April 5, 2006 BP First Quarter 2006 Trading Update This trading update is aimed at providing estimates regarding revenue andtrading conditions experienced by BP in the first quarter ended March 31, 2006,and estimates of identified non-operating items expected to be included in thatquarter's result. The first quarter margin, price, realisation, cost, productionand other data referred to below are currently provisional, some being drawnfrom figures applicable to the first month or so of the quarter. All such dataare subject to change and may differ quite considerably from the final numbersthat will be reported on April 25, 2006. In particular, data is not available atthis time that would allow an estimate of potential IFRS fair value accountinggains or charges, or of any potential consolidation adjustment. This tradingupdate is produced in order to provide greater disclosure to investors andpotential investors of currently expected outcomes, and to ensure that they allreceive equal access to the same information at the same time. Note: Following the launch of BP Alternative Energy in November 2005 and thesale of Innovene in December 2005, certain assets have been transferred betweensegments to reflect the changed operational structure of the Group. Thesetransfers are effective from 1 January 2006. Financial information for 2005 and2004 has been restated to reflect these transfers. Full details are available atwww.bp.com/investors Exploration and Production Marker Prices 1Q'05 2Q'05 3Q'05 4Q'05 1Q'06Brent Dated ($/bbl) 47.62 51.63 61.63 56.87 61.79WTI ($/bbl) 49.88 53.08 63.18 60.01 63.29ANS USWC ($/bbl) 45.07 50.10 60.91 57.89 60.89US gas Henry Hub first of monthindex ($/mmbtu) 6.27 6.74 8.53 13.00 9.01UK gas price - National BalancePoint (p/therm) 37.96 30.15 29.26 65.30 70.00Urals (NWE - cif) ($/bbl) 42.54 48.08 57.13 53.23 58.15Russian domestic Oil ($/bbl) 19.14 27.39 36.60 31.73 34.41 Overall BP production in 1Q'06 is expected to be around 4,025 thousand barrelsof oil equivalent per day (mboed). Excluding volumes from TNK-BP operations,production in 1Q'06 is expected to be around 3,035 mboed, versus 2,995 mboed in4Q'05. This increase primarily reflects the progressive return of productionimpacted by Hurricanes Katrina and Rita. BP's net share of production from TNK-BP is expected to be approximately 990mboed, versus 1,027 mboed in 4Q'05. This reduction reflects the impact ofdisposals and of extremely cold weather in 1Q'06. The $270m contribution inrespect of gains on disposals in TNK-BP in 4Q'05 is not expected to recur in1Q'06. Refining and Marketing Refining Indicator Margins ($/bbl) 1Q'05 2Q'05 3Q'05 4Q'05 1Q'06USA - West Coast 12.88 14.53 17.57 8.90 11.22 - Gulf Coast 7.30 9.37 17.12 11.64 10.86 - Midwest 3.84 7.45 13.40 7.91 4.89North West Europe 2.84 5.68 7.78 5.51 2.88Singapore 4.98 6.30 6.52 4.42 3.54Refining Global Indicator Margin* 5.94 8.42 12.35 7.60 6.28 * The Refining Global Indicator Margin (GIM) is a generic indicator. Actualmargins realised by BP may vary significantly due to a variety of factors,including specific refinery configurations, crude slate and operating practices. The 1Q'06 average Global Indicator Margin (GIM) was lower than the GIM for4Q'05. Marketing margins in 1Q'06 are also expected to be lower than those for4Q'05. Compared to 4Q'05, the result in 1Q'06 is expected to benefit from strong supplyoptimisation, a lower level of refinery turnarounds (other than at Texas City)and seasonally lower costs. Together these factors are expected to offset lowerrefining and marketing margins. BP's Texas City Refinery remained shut-down to the end of 1Q'06. A phasedrecommissioning began at the end of March. 4Q'05 included a charge of $467m in respect of restructuring and efficiencyprograms. Charges in respect of these ongoing programs in 1Q'06 are not expectedto be material. Gas, Power and Renewables Margins in the GP&R business are expected to be significantly higher than in4Q'05 (excluding that quarter's $289m of IFRS fair value accounting gains), as aresult of strong North American trading margins and seasonality. Other Businesses and Corporate The charge in Other Businesses and Corporate is expected to be in line withguidance given in our February '06 investor webcast for an annual charge of$900m +/- $200m. Identified Non-Operating Items (NOIs) Non-operating items in 1Q'06 are expected to amount to an overall credit ofaround $100m. Interest Expense The total consolidated interest charge is expected to be around $100m. Tax Rate The effective tax rate for the quarter is expected to be around 35%. Theexpected 2006 full year effective tax rate remains at around 39%, as indicatedin our February 2006 Strategy Review. Gearing Gearing for the quarter is expected to be comparable to the year-end 2005 levelof 17%. Distributions to Shareholders During the quarter the company bought back 349 million shares for a totalconsideration of $4.0 bn. Shares outstanding at March 29, 2006, excludingtreasury shares, were 20,336 million. As in previous quarters, BP has enteredinto an arrangement that allows the share buy back programme to be continuedduring the closed period which commenced at close of business in London on March31, 2006. The 1Q'06 dividend of 9.375 cents per share announced at the time of our 4Q'05results was paid in March. The dividend to be paid in 2Q'06 will be announced onApril 25, 2006 in conjunction with our 1Q'06 Stock Exchange Announcement. Rules of Thumb Important note: The rules of thumb shown below were provided with BP's strategyupdate on February 7, 2006 and were intended to give directional indicators ofthe impact of changes in the trading environment relative to that of 2005 onBP's 2006 full year pre-tax results. These rules of thumb are approximate.Especially over short periods, changes in prices, margins, differentials,seasonal demand patterns, and other factors can be material. Particulardifferences may arise due to higher government shares of Exploration andProduction revenues in some jurisdictions at current price levels, as well asfrom variations between the refining Global Indicator Margin (GIM) and BP'srealised refining margins due to crude price levels and differentials, productprice movements and other factors. The GIM rule of thumb reflects thesensitivity to the overall group to changes in refining margins. Many otherfactors will affect BP's earnings quarter by quarter. Actual results inindividual quarters may therefore differ significantly from the estimatesimplied by the application of these rules of thumb. 2006 Operating Environment Rules of Thumb: impact on replacement cost pre-taxoperating profit per year of changes relative to 2005 environment Full YearOil Price - Brent +/- $1/bbl $500mGas - Henry Hub +/- $ 0.10/mcf $80mRefining - GIM +/- $ 1/bbl $950m This trading update contains forward looking statements, particularly thoseregarding oil and gas production; BP's net share of production from TNK-BP;refinery and marketing margins; the R&M result; the level of charges in respectof restructuring and efficiency programs; the charge in Other Businesses &Corporate; margins in the GP&R business; the amount of non-operating items; thetotal consolidated interest charge; the effective tax rate; and gearing. Bytheir nature, forward-looking statements involve risks and uncertainties becausethey relate to events and depend on circumstances that will or may occur in thefuture. Actual results may differ from those expressed in such statements,depending on a variety of factors, including the timing of bringing new fieldson stream; future levels of industry product supply, demand and pricing;operational problems; general economic conditions; political stability andeconomic growth in relevant areas of the world; changes in laws and governmentalregulations; exchange rate fluctuations; development and use of new technology;changes in public expectations and other changes in business conditions; theactions of competitors; natural disasters and adverse weather conditions; warsand acts of terrorism or sabotage; and other factors discussed elsewhere in thistrading update and in BP Annual Report and Accounts 2005. - ENDS - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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