1Q07 Part 1 of 2
BP PLC
24 April 2007
BP p.l.c.
Group Results
First Quarter 2007
London 24 April 2007
FOR IMMEDIATE RELEASE
----------------------
First
First Fourth First Quarter
Quarter Quarter Quarter 2007 vs
2007 2006 2006 2006
=======================================
$million
Profit for the period* 4,664 2,880 5,623
Inventory holding (gains) losses (303) 1,015 (358)
---------------------------------------
Replacement cost profit 4,361 3,895 5,265 (17%)
=======================================
- per ordinary share (pence) 11.54 10.37 14.66
- per ordinary share (cents) 22.50 20.08 25.66 (12%)
- per ADS (dollars) 1.35 1.21 1.54
=======================================
• BP's first quarter replacement cost profit was $4,361 million, compared
with $5,265 million a year ago, a decrease of 17%.
• The first quarter result included a net non-operating gain of $363 million
compared with a net non-operating charge of $17 million in the first
quarter of 2006.
• Net cash provided by operating activities for the quarter was $8.0
billion compared with $8.9 billion a year ago.
• The effective tax rate on replacement cost profit of continuing
operations for the quarter was 35%; the rate was also 35% a year earlier.
• Net debt at the end of the quarter was $21.8 billion. The ratio of net
debt to net debt plus equity was 20% compared with 16% a year ago.
• Capital expenditure, excluding acquisitions, was $3.7 billion for the
quarter. Total capital expenditure and acquisitions was $4.8 billion, which
included $1.1 billion in respect of the acquisition of Chevron's Netherlands
manufacturing company. Capital expenditure excluding acquisitions is
expected to be around $18 billion for the year. Disposal proceeds were
$0.9 billion for the quarter.
• The quarterly dividend, to be paid in June, is 10.325 cents per share
($0.6195 per ADS) compared with 9.375 cents per share a year ago, an
increase of 10%. In sterling terms, the quarterly dividend is 5.151 pence
per share, compared with 5.251 pence per share a year ago, a decrease of 2%.
During the quarter, the company repurchased 238 million of its own shares
for cancellation at a cost of $2.5 billion.
* Profit attributable to BP shareholders.
The commentaries above and following are based on replacement cost profit and
should be read in conjunction with the cautionary statement on page 9.
Analysis of Replacement Cost Profit and Reconciliation to Profit for the Period
--------------------------------------------------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
===============================
$ million
Exploration and Production 6,043 5,063 6,823
Refining and Marketing 838 312 1,612
Gas, Power and Renewables 206 470 301
Other businesses and corporate (116) (276) (217)
Consolidation adjustment 83 (103) (8)
-------------------------------
RC profit before interest and tax 7,054 5,466 8,511
-------------------------------
Finance costs and other finance expense (171) (149) (143)
Taxation (2,440) (1,347) (2,929)
Minority interest (82) (75) (71)
-------------------------------
RC profit from continuing operations attributable to BP
shareholders(a) 4,361 3,895 5,368
===============================
Inventory holding gains (losses) for continuing operations 303 (1,015) 358
-------------------------------
Profit for the period from continuing operations attributable to
BP shareholders 4,664 2,880 5,726
Profit (loss) for the period from Innovene operations(b) - - (103)
-------------------------------
Profit for the period attributable to BP shareholders 4,664 2,880 5,623
===============================
RC profit from continuing operations attributable to BP 4,361 3,895 5,368
shareholders
RC profit (loss) from Innovene operations - - (103)
-------------------------------
Replacement cost profit 4,361 3,895 5,265
===============================
(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.
(b) See further detail in Note 3.
Results include Non-operating Items
-----------------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
================================
$ million
Exploration and Production 748 (177) (386)
Refining and Marketing (229) (53) 564
Gas, Power and Renewables 9 215 (55)
Other businesses and corporate 34 (188) 9
--------------------------------
562 (203) 132
Taxation (199) 51 (46)
--------------------------------
Continuing operations 363 (152) 86
--------------------------------
Innovene operations - - (96)
Taxation - - (7)
--------------------------------
Total for all operations 363 (152) (17)
================================
An analysis of non-operating items by type is provided on page 19.
Per Share Amounts
----------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
==================================
Results for the period ($ million)
Profit(a) 4,664 2,880 5,623
Replacement cost profit 4,361 3,895 5,265
----------------------------------
Shares in issue at period end (thousand)(b) 19,290,540 19,510,496 20,341,135
- ADS equivalent (thousand)(b) 3,215,090 3,251,749 3,390,189
Average number of shares outstanding (thousand)(b) 19,384,508 19,610,871 20,521,872
- ADS equivalent (thousand)(b) 3,230,751 3,268,479 3,420,312
Shares repurchased in the period (thousand) 237,916 310,385 349,079
Per ordinary share (cents)
Profit for the period 24.06 15.04 27.40
RC profit for the period 22.50 20.08 25.66
Per ADS (cents)
Profit for the period 144.36 90.24 164.40
RC profit for the period 135.00 120.48 153.96
----------------------------------
(a) Profit attributable to BP shareholders.
(b) Excludes treasury shares.
Dividends
--------
BP today announced a dividend of 10.325 cents per ordinary share to be paid in
June. Holders of ordinary shares will receive 5.151 pence per share and holders
of American Depository Receipts (ADRs) $0.6195 per ADS. The dividend is payable
on 4 June to shareholders on the register on 11 May. Participants in the
Dividend Reinvestment Plan (DRIP) or the DRIP facility in the US Direct Access
Plan will receive the dividend in the form of shares, also on 4 June.
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
=================================
Dividends paid per ordinary share
cents 10.325 9.825 9.375
pence 5.258 5.241 5.288
Dividends per ADS (cents) 61.95 58.95 56.25
=================================
Net Debt Ratio - Net Debt: Net Debt + Equity
-----------------------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
=================================
$ million
Gross debt 23,728 24,010 18,679
Cash and cash equivalents 1,956 2,590 2,939
---------------------------------
Net debt 21,772 21,420 15,740
=================================
Equity 85,749 85,465 80,881
Net debt ratio 20% 20% 16%
=================================
Exploration and Production
----------------------
First Fourth First
Quarter Quarter Quarter
$ million 2007 2006 2006
=================================
Profit before interest and tax(a) 6,054 5,057 6,816
Inventory holding (gains) losses (11) 6 7
---------------------------------
Replacement cost profit before interest and tax 6,043 5,063 6,823
=================================
By region:
UK 1,062 1,534 1,165
Rest of Europe 720 249 303
US 1,652 952 2,311
Rest of World 2,609 2,328 3,044
---------------------------------
6,043 5,063 6,823
=================================
Results include:
Non-operating items
UK 145 289 (394)
Rest of Europe 533 (13) -
US (8) (269) 2
Rest of World 78 (184) 6
---------------------------------
748 (177) (386)
=================================
Exploration expense
UK 20 6 7
Rest of Europe - - -
US 77 324 66
Rest of World 59 78 116
---------------------------------
156 408 189
=================================
Production (net of royalties)(b)
Liquids (mb/d) (net of royalties)(c)
UK 236 239 281
Rest of Europe 59 57 68
US 526 533 566
Rest of World 1,625 1,587 1,618
---------------------------------
2,446 2,416 2,533
=================================
Natural gas (mmcf/d) (net of royalties)
UK 907 888 1,196
Rest of Europe 41 90 94
US 2,163 2,196 2,485
Rest of World 5,391 5,082 4,938
---------------------------------
8,502 8,256 8,713
=================================
Total hydrocarbons (mboe/d)(d)
UK 393 392 487
Rest of Europe 66 73 83
US 899 912 995
Rest of World 2,554 2,463 2,470
---------------------------------
3,912 3,840 4,035
=================================
Average realizations(e)
Total liquids ($/bbl) 53.43 54.13 55.88
Natural gas ($/mcf) 4.86 4.38 5.54
Total hydrocarbons ($/boe) 41.06 40.13 44.20
=================================
(a) Profit from continuing operations and includes profit after interest and
tax of equity-accounted entities.
(b) Includes BP's share of production of equity-accounted entities.
(c) Crude oil and natural gas liquids.
(d) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
million barrels.
(e) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
Exploration and Production
----------------------
The replacement cost profit before interest and tax for the first quarter was
$6,043 million, a decrease of 11% over the first quarter of 2006. This result
was impacted by lower oil and gas realizations and lower reported volumes,
reflecting the impact of the divestment activity in 2006. In addition, it
included higher costs, reflecting the impacts of sector-specific inflation,
increased integrity spend and higher depreciation charges. BP's share of income
from TNK-BP was negatively affected by lower prices and the adverse effect of
lagged tax reference prices.
The result included a net non-operating gain of $748 million, with the most
significant items being the gain on the sale of our assets in the Netherlands,
which completed on 31 January, and fair value gains on embedded derivatives
relating to North Sea gas contracts. The corresponding quarter in 2006
contained a net non-operating charge of $386 million.
After adjusting for the impact of divestments, production was flat compared with
the first quarter of 2006. Actual production was down 123 mboe/d. Full year
production in 2007 is expected to be in the range of 3.8 to 3.9 mmboe/d, in line
with the guidance given with our fourth quarter results.
During the quarter, we had our first lifting from the Dalia field in Angola,
with the field ramping up as planned, and the BTC pipeline celebrated the
loading of its 100 millionth barrel at the Ceyhan terminal. In Angola, the
Greater Plutonio FPSO has been successfully moored.
We continued our strong exploration track record in Angola with Miranda, our
13th successful well in Block 31, and made the Giza North gas discovery in
Egypt.
Since the end of the quarter, we have divested our interest in the Entrada field
in the deepwater Gulf of Mexico, and acquired an increased interest in the Badin
field in Pakistan in exchange for our ownership interest in the West Texas
Pipeline System.
Refining and Marketing
-------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
=================================
$ million
Profit (loss) before interest and tax(a) 1,129 (706) 2,038
Inventory holding (gains) losses (291) 1,018 (426)
---------------------------------
Replacement cost profit (loss) before interest and tax 838 312 1,612
=================================
By region:
UK (10) 190 (148)
Rest of Europe 298 336 564
US 122 (421) 637
Rest of World 428 207 559
---------------------------------
838 312 1,612
=================================
Results include:
Non-operating items
UK (163) 23 20
Rest of Europe (12) (89) 229
US (58) 25 96
Rest of World 4 (12) 219
---------------------------------
(229) (53) 564
=================================
Refinery throughputs (mb/d)
UK 148 188 111
Rest of Europe 640 660 639
US 1,152 1,052 976
Rest of World 292 294 296
---------------------------------
Total throughput 2,232 2,194 2,022
=================================
Refining availability (%)(b) 81.6 81.6 79.9
=================================
Oil sales volumes (mb/d)
Refined products
UK 335 354 345
Rest of Europe 1,246 1,368 1,315
US 1,564 1,541 1,599
Rest of World 624 601 567
---------------------------------
Total marketing sales 3,769 3,864 3,826
Trading/supply sales 2,026 1,920 2,204
---------------------------------
Total refined product sales 5,795 5,784 6,030
Crude oil 2,017 1,959 2,571
---------------------------------
Total oil sales 7,812 7,743 8,601
=================================
Global Indicator Refining Margin ($/bbl)(c)
NWE 4.16 2.49 2.88
USGC 10.14 7.92 10.86
Midwest 7.62 5.42 4.89
USWC 22.21 14.59 11.22
Singapore 4.84 2.95 3.54
BP Average 9.45 6.30 6.28
=================================
Chemicals production (kte)
UK 256 159 303
Rest of Europe 748 797 842
US 1,076 976 789
Rest of World 1,520 1,357 1,687
---------------------------------
Total production 3,600 3,289 3,621
=================================
(a) Profit from continuing operations and includes profit after interest and
tax of equity-accounted entities.
(b) Refining availability is defined as the ratio of units which are available
for processing, regardless of whether they are actually being used, to
total capacity. Where there is planned maintenance, such capacity is not
regarded as being available. During 2006, there was planned maintenance
of a substantial part of the Texas City refinery.
(c) The Global Indicator Refining Margin (GIM) is the average of 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.
Refining and Marketing
-------------------
The replacement cost profit before interest and tax for the first quarter was
$838 million compared with $1,612 million for the same period last year. The
quarter's result included a net non-operating charge of $229 million, primarily
in respect of asset impairments. This compares with a net non-operating gain of
$564 million for the same period last year.
Compared with the first quarter of 2006, our result benefited from a stronger
operating environment for both refining and marketing. However, the benefit of
higher refining throughput at Texas City during the quarter was more than offset
by the impact of operational issues at a number of our other refineries,
particularly in the US. In addition, the quarter's result reflects a significant
IFRS fair value accounting charge, lower supply optimization benefits and
greater integrity spend.
The refining throughputs for the quarter were 2,232 mb/d compared with 2,022 mb/
d for the same quarter last year. The improvement in throughputs was mainly due
to the partial resumption of operations at the Texas City refinery. Excluding
the Texas City refinery, refining availability for the first quarter of 2007 was
94.6% compared with 96.0% in the first quarter of 2006. Marketing sales were
3,769 mb/d compared with 3,826 mb/d for the corresponding period in 2006,
reflecting lower heating oil demand in Europe caused by relatively mild winter
weather.
On 31 March 2007, BP completed its acquisition of Chevron's Netherlands
manufacturing company, Texaco Raffinaderij Pernis B.V., for $1.1 billion.
BP agreed to sell, subject to required regulatory approvals, its Coryton
Refinery in Essex, UK, to Petroplus Holdings AG for consideration of $1.4
billion, plus working capital. Furthermore, BP announced its intention to sell
its ethyl acetate and vinyl acetate monomer manufacturing units at Saltend, near
Hull, UK.
BP announced it had selected the University of California Berkeley, and its
partners the University of Illinois at Urbana-Champaign and the Lawrence
Berkeley National Laboratory, to join in the previously announced $500 million
research programme to explore how bioscience can be used to increase energy
production and reduce the impact of energy consumption on the environment.
Late in the quarter, operational issues at the Whiting Refinery have reduced
throughput to around 200,000 barrels per day, about half its capacity, and
limited the crude slate to primarily sweet grades. This will continue until we
complete the necessary repairs.
Gas, Power and Renewables
-----------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
===============================
Profit before interest and tax(a) 206 468 238
Inventory holding (gains) losses - 2 63
-------------------------------
Replacement cost profit before interest and tax 206 470 301
===============================
By region:
UK 48 147 (72)
Rest of Europe 7 143 1
US 26 114 178
Rest of World 125 66 194
-------------------------------
206 470 301
===============================
Results include:
Non-operating items
UK 7 56 (55)
Rest of Europe - 189 -
US 1 - -
Rest of World 1 (30) -
-------------------------------
9 215 (55)
===============================
(a) Profit from continuing operations and includes profit after interest and
tax of equity-accounted entities.
The replacement cost profit before interest and tax for the first quarter was
$206 million compared with $301 million a year ago. The non-operating gain for
the first quarter comprises fair value gains on embedded derivatives of $7
million and a net gain of $2 million on the sale of assets. The corresponding
quarter in 2006 included a fair value loss of $55 million on embedded
derivatives.
The first quarter's result was significantly lower than the same period in 2006,
primarily due to a lower contribution from the marketing and trading business,
partially offset by strong operating performance from the NGL's business,
particularly in Canada, a positive impact in respect of non-operating items and
a benefit due to the absence of last year's IFRS fair value accounting charge.
In March, BP Solar began construction of two mega cell plants, one at its
European headquarters in Madrid, Spain and the second at its joint venture
facility, Tata BP Solar, in Bangalore, India. Also, we expect to begin
construction of a wind power generation project in India and five wind power
generation projects in the US, located in California, Colorado, North Dakota and
Texas, in 2007. These projects are expected to deliver a combined generation
capacity of more than 500 megawatts. During the quarter, China's first LNG
terminal at Guangdong (BP 30%) reached the milestone of receiving 1 million
tonnes of LNG, which is supplied to power, industrial and residential customers
in Southeast China.
Other Businesses and Corporate
--------------------------
First Fourth First
Quarter Quarter Quarter
2007 2006 2006
===============================
$ million
Profit (loss) before interest and tax(a) (115) (265) (215)
Inventory holding (gains) losses (1) (11) (2)
-------------------------------
Replacement cost profit (loss) before interest and tax (116) (276) (217)
===============================
By region:
UK (46) 280 (141)
Rest of Europe 21 (97) (3)
US (114) (319) (104)
Rest of World 23 (140) 31
-------------------------------
(116) (276) (217)
===============================
Results include:
Non-operating items
UK - 13 -
Rest of Europe 28 (2) -
US 6 (199) 9
Rest of World - - -
-------------------------------
34 (188) 9
===============================
(a) Profit from continuing operations and includes profit after interest and
tax of equity-accounted entities.
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The first quarter's
result includes a net gain of $34 million in respect of non-operating items.
Cautionary Statement: The foregoing discussion contains forward looking
statements particularly those regarding capital expenditure, production and the
construction of wind power generation projects and their expected combined
generation capacity. By their nature, forward looking statements involve risk
and uncertainty 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;
operational problems; general economic conditions; political stability and
economic growth in relevant areas of the world; changes in laws and governmental
regulations; exchange rate fluctuations; development and use of new technology;
the success or otherwise of partnering; the actions of competitors; natural
disasters and adverse weather conditions; changes in public expectations and
other changes to business 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 2006 and our 2006 Annual Report
on Form 20-F filed with the US Securities and Exchange Commission.
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