9th Jan 2007 07:01
BP PLC09 January 2007 press release January 9, 2007 BP Fourth Quarter 2006 Trading Update This trading update is aimed at providing estimates regarding revenue andtrading conditions experienced by BP in the fourth quarter ending December 31,2006. The fourth quarter margin, price, realisation, cost, production and otherdata referred to below are currently provisional, some being drawn from figuresapplicable to the first month or so of the quarter. All such data are subject tochange and may differ quite considerably from the final numbers that will bereported on February 6, 2007. In particular, data is not available at this timethat would allow quantification of potential IFRS fair value accounting gains orcharges, or of any potential consolidation adjustment. This trading update isproduced in order to provide greater disclosure to investors and potentialinvestors of currently expected outcomes, and to ensure that they all receiveequal access to the same information at the same time. Exploration and Production Marker Prices 4Q'05 1Q'06 2Q'06 3Q'06 4Q'06 Brent Dated ($/bbl) 56.87 61.79 69.59 69.60 59.60WTI ($/bbl) 60.01 63.29 70.46 70.44 59.90ANS USWC ($/bbl) 57.89 60.89 68.84 69.02 55.47US gas Henry Hub first of month index($/mmbtu) 13.00 9.01 6.80 6.58 6.56UK gas price - National Balance Point(p/therm) 65.30 70.00 34.55 33.72 29.92Urals (NWE - cif) ($/bbl) 53.23 58.15 64.73 65.90 56.06Russian domestic oil ($/bbl) 31.73 35.27 36.18 39.83 26.49 Overall BP production in 4Q'06 is expected to be around 3,820 thousand barrelsof oil equivalent per day (mboed). Excluding volumes from TNK-BP operations,production in 4Q'06 is expected to be around 2,890 mboed, slightly higher thanin 3Q'06. The recovery from the summer maintenance season (primarily in theNorth Sea and Alaska) and continued ramp up of new projects in Azerbaijan andNorth Africa is expected to be partly offset by weather related delays toAlaskan loadings, unusually low seasonal gas demand, OPEC quota restrictions,and reduced entitlements under Production Sharing Contracts. BP's net share ofproduction from TNK-BP is expected to be approximately 930 mboed, versus 948mboed in 3Q'06, with the reduction reflecting the impact of divestments.Relative to 3Q'06, the TNK-BP result is expected to be adversely affected by anincremental tax lag of around $300m, and the absence in 4Q'06 of the gain ondivestment which amounted to around $0.9bn in 3Q'06. Refining and Marketing $/bbl 4Q'05 1Q'06 2Q'06 3Q'06 4Q'06USA- West Coast 8.90 11.22 21.27 12.30 14.59- Gulf Coast 11.64 10.86 17.74 11.47 7.92- Midwest 7.91 4.89 14.75 11.50 5.42North West Europe 5.51 2.88 5.78 4.54 2.49Singapore 4.42 3.54 6.83 3.58 2.95Refining Global Indicator Margin* 7.60 6.28 12.59 8.40 6.30 * 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 fourth quarter's Global Indicator Margin (GIM) was lower than in both 3Q'06and 4Q'05. Marketing margins are also expected to be significantly lower than inboth 3Q'06 and 4Q'05. The costs of turnaround activity are expected to be higherthan in either of such prior periods. A significant negative impact related toIFRS fair value accounting is expected in 4Q'06, compared to a significantpositive impact in 3Q'06. The aggregate impact of IFRS fair value accounting onthe full year 2006 results is not expected to be material. Gas, Power and Renewables GP&R margins for the quarter are expected to be significantly lower than 3Q'06,due to weaker NGL, gas and power trading margins. Lower margins are expected tobe largely offset by a positive impact related to IFRS fair value accounting.The aggregate impact of IFRS fair value accounting on the full year 2006 resultsis not expected to be material. Other Businesses and CorporateThe 4Q'06 charge in Other Businesses and Corporate is expected to be in linewith guidance given in our February 2006 Strategy Presentation for an annualcharge of $900m +/- $200m. Identified Non-Operating Items (NOIs)Aggregate non-operating items in 4Q'06 are expected to amount to a small gain. Interest ExpenseThe total consolidated interest charge is expected to be around $150m. Tax RateThe effective tax rate for the quarter is expected to be around 25 per cent,reflecting a number of favourable 4Q items. GearingGearing for the quarter is expected to be around 21 per cent, an increase fromthe 3Q'06 level of 17 per cent due to the phasing of tax payments and normalseasonal working capital movements. Distributions to Shareholders During the quarter the company bought back 310 million shares for a totalconsideration of $3.5bn. Shares outstanding at December 29, 2006, excludingtreasury shares, were 19,510 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 on December 31. The 4Q'06 dividend of9.825 cents per share announced at the time of our 3Q'06 results was paid inDecember. The dividend to be paid in 1Q'07 will be announced on February 6, inconjunction with our 4Q'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 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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