3rd Jul 2006 07:02
BP PLC03 July 2006 July 3, 2006 BP Second Quarter 2006 Trading Update This trading update is aimed at providing estimates regarding revenue andtrading conditions experienced by BP in the second quarter ended June 30, 2006,and estimates of identified non-operating items expected to be included in thatquarter's result. The second quarter margin, price, realisation, cost,production and other data referred to below are currently provisional, somebeing drawn from figures applicable to the first month or so of the quarter. Allsuch data are subject to change and may differ quite considerably from the finalnumbers that will be reported on July 25, 2006. In particular, data is notavailable at this time that would allow an estimate of potential IFRS fair valueaccounting gains or charges, or of any potential consolidation adjustment. Thistrading update is produced in order to provide greater disclosure to investorsand potential investors of currently expected outcomes, and to ensure that theyall receive equal access to the same information at the same time. Exploration and Production Marker Prices 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06Brent Dated ($/bbl) 51.63 61.63 56.87 61.79 69.53WTI ($/bbl) 53.08 63.18 60.01 63.29 70.40ANS USWC ($/bbl) 50.10 60.91 57.89 60.89 68.78US gas Henry Hub first of month index($/mmbtu) 6.74 8.53 13.0 9.01 6.80UK gas price - National Balance Point(p/therm) 30.15 29.26 65.30 70.00 34.59Urals (NWE - cif) ($/bbl) 48.08 57.13 53.23 58.15 64.68Russian domestic Oil ($/bbl) 27.39 36.60 36.60 35.27 33.77 Overall BP production in 2Q'06 is expected to be around 4,010 mboed (thousandbarrels of oil equivalent per day). Excluding volumes from TNK-BP operations,production in 2Q'06 is expected to be around 3,010 mboed, versus 3,041 mboed in1Q'06. This reduction primarily reflects the impact of divestments. BP's netshare of production from TNK-BP is expected to be approximately 1,000 mboed,versus 994 mboed in 1Q'06. Refining and Marketing $/bbl 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06USA- West Coast 14.53 17.57 8.90 11.22 21.33- Gulf Coast 9.37 17.12 11.64 10.86 17.77- Midwest 7.45 13.40 7.91 4.89 14.72North West Europe 5.68 7.78 5.51 2.88 5.78Singapore 6.30 6.52 4.42 3.54 6.85Refining Global Indicator Margin 8.42 12.35 7.60 6.28 12.61 * 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 second quarter's Global Indicator Margin (GIM) was higher than the GIM forboth 1Q'06 and 2Q'05. The increase in BP's actual refining margins quarter onquarter is expected to be slightly lower than that suggested by the increase inthe GIM. Overall marketing margins are expected to be similar to those in 1Q'06.The phased re-commissioning of the Texas City refinery commenced at the end ofMarch. Gas, Power and Renewables GP&R margins for the quarter are expected to be higher than 1Q'06 largely due toimproved North American margins. Other Businesses and Corporate The charge in Other Businesses and Corporate is expected to be in line withguidance given in our February 2006 Strategy Presentation for an annual chargeof $900m +/- $200m. Identified Non-Operating Items (NOIs) Aggregate non-operating items in 2Q'06 are not expected to be material, withgains (primarily from asset sales) offsetting other items (including anincremental charge of around $500m with respect to the 2005 Texas City refineryincident). 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 36 per cent,slightly higher than in 1Q'06, due largely to rising oil prices. This does notinclude the impact of the yet-to-be enacted increase in the UK North Sea taxrate, which is currently expected to be recognised in 3Q'06. The anticipated2006 full year effective tax rate remains at around 39 per cent, as indicated inour February 2006 Strategy Presentation. Gearing Gearing for the quarter is expected to be similar to the 1Q'06 level of 16 percent. Distributions to Shareholders During the quarter the company bought back 376 million shares for a totalconsideration of $4.5bn. Shares outstanding at June 27th 2006, excludingtreasury shares, were 19,993 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 June30th. The 2Q'06 dividend of 9.375 cents per share announced at the time of our1Q'06 results was paid in June. The dividend to be paid in 3Q'06 will beannounced on July 25th in conjunction with our 2Q'06 Stock ExchangeAnnouncement. Rules of Thumb Important note: The rules of thumb shown below were provided with BP's strategyupdate on February 7th, 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 yearpre-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;refining and marketing margins; margins in the GP&R business; the charge inOther Businesses & Corporate; the amount of non-operating items; the totalconsolidated interest charge; the effective tax rate; and gearing. By theirnature, forward-looking statements involve risks and uncertainties because theyrelate to events and depend on circumstances that will or may occur in thefuture. Actual results may differ from those expressed in such statementsdepending 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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