4th Oct 2006 07:02
BP PLC04 October 2006 press release October 4, 2006 BP Third Quarter 2006 Trading Update This trading update is aimed at providing estimates regarding revenue andtrading conditions experienced by BP in the third quarter ending September 30,2006, and estimates of identified non-operating items expected to be included inthat quarter's results. The third 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 October 24, 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 3Q'05 4Q'05 1Q'06 2Q'06 3Q'06Brent Dated ($/bbl) 61.63 56.87 61.79 69.59 69.60WTI ($/bbl) 63.18 60.01 63.29 70.46 70.44ANS USWC ($/bbl) 60.91 57.89 60.89 68.84 69.02US gas Henry Hub first of monthindex ($/mmbtu) 8.53 13.00 9.01 6.80 6.58UK gas price - National BalancePoint (p/therm) 29.26 65.30 70.00 34.55 33.72Urals (NWE - cif) ($/bbl) 57.13 53.23 58.15 64.73 65.90Russian domestic Oil ($/bbl) 36.60 31.73 35.27 36.18 40.13 Overall BP production in 3Q'06 is expected to be around 3,800 thousand barrelsof oil equivalent per day (mboed). Excluding volumes from TNK-BP operations,production in 3Q'06 is expected to be around 2,850 mboed, versus 3,019 mboed in2Q'06. This reduction reflects the impact of divestments, maintenance andoperational downtime. BP's net share of production from TNK-BP is expected to beapproximately 950 mboed, versus 999 mboed in 2Q'06, with the reductionreflecting divestments. Refining and Marketing $/bbl 3Q05 4Q'05 1Q'06 2Q'06 3Q'06USA - West Coast 17.57 8.90 11.22 21.27 12.30 - Gulf Coast 17.12 11.64 10.86 17.74 11.47 - Midwest 13.40 7.91 4.89 14.75 11.50North West Europe 7.78 5.51 2.88 5.78 4.54Singapore 6.52 4.42 3.54 6.83 3.58Refining Global Indicator Margin* 12.35 7.60 6.28 12.59 8.40 * 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 third quarter's Global Indicator Margin (GIM) was lower than in 2Q'06.Stronger overall marketing margins are expected to be more than offset by lowersupply optimisation results. Gas, Power and Renewables GP&R margins for the quarter are expected to be lower than 2Q'06 largely due tosignificantly weaker gas and power trading margins in North America. 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 3Q'06 are expected to amount to a pre-tax gainof around $2bn, primarily reflecting gains on upstream asset disposals. 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 40%, reflectingthe enactment of the increase in the UK North Sea tax rate, partly offset bylower quarter end price effects. Gearing Gearing for the quarter is expected to be similar to the 2Q'06 level of 15%. Distributions to Shareholders During the quarter the company bought back 299 million shares for a totalconsideration of $3.5bn. Shares outstanding at September 28th 2006, excludingtreasury shares, were 19,863 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 onSeptember 30th. The 3Q'06 dividend of 9.825 cents per share announced at thetime of our 2Q'06 results was paid in September. The dividend to be paid in4Q'06 will be announced on October 24th in conjunction with our 3Q'06 StockExchange Announcement. 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 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;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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