3rd Quarter & 9 Mths Results - 'Record Quarter'
BP Amoco PLC
8 November 1999
BP AMOCO ANNOUNCES RECORD QUARTER
Third quarter 1999 replacement cost profit, before exceptional items,
was $1,955 million, after adjusting for special charges of
$212 million. This is an increase of 72% on a year ago, reflecting the
higher oil price and underlying performance improvements. Return on
average capital employed was 16%, up six points on a year ago and four
points on the previous quarter.
The quarter's adjusted result is a record for BP Amoco. Against the
third quarter of 1998, performance improvements contributed around
$400 million, reflecting higher volumes and lower cash costs, with the
original BP Amoco merger prize of $2 billion per year before tax now
fully achieved.
The nine months' result, adjusted for special items, was
$4,083 million, up 15% on a year ago. Performance improvements have
more than compensated for the adverse effect of the environment.
Quarterly dividend 5 cents per share ($0.30 per ADS).
BP Amoco p.l.c. today reported its third quarter 1999 results. BP Amoco
Group Chief Executive, Sir John Browne, commented:
'This is a very strong third quarter result. It reflects the continuing
underlying improvement in our businesses - and the stronger crude price
- despite the adverse environment in the downstream businesses where
higher feedstock costs could not be fully passed on to customers.
'With the merger prize achieved over a year ahead of the original
expectation, we remain well on track to meet all the new targets laid
out in July.
'This gives me great confidence that we are positioned to take
advantage of the growth opportunities which we have for the new
century.'
Operating Results
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
Replacement cost
1,591 2,075 2,848 operating profit ($m) 6,169 5,522
----------------------- -------------
Replacement cost profit
1,089 1,226 1,743 before exceptional items ($m) 3,646 3,447
----------------------- -------------
Profit after exceptional items ($m)
1,671 1,063 1,205 Replacement cost 2,085 4,091
1,579 1,635 1,848 Historical cost 3,307 3,211
----------------------- -------------
Earnings per ordinary share+ (cents)
RC profit before
5.7 6.3 9.0 exceptional items 18.8 18.0
HC profit after
8.2 8.4 9.6 exceptional items 17.1 16.8
Earnings per ADS+ (cents)
RC profit before
34.2 37.8 54.0 exceptional items 112.8 108.0
----------------------- -------------
Dividends per ordinary share+
5.0 5.0 5.0 cents 15.0 14.8
3.0 3.1 3.0 pence 9.2 8.9
30.0 30.0 30.0 Dividends per ADS+ (cents) 90.0 88.8
======================= =============
+ Amounts for previous periods have been restated for the 2 for 1 share
split on 4 October 1999.
Income Adjusted for Special Items
Adjusted Adjusted
Results ------- 3Q 1999 --------- Results
3Q 2Q Adjusted Special Reported Nine Months
1998 1999 Results Items* Earnings $ million 1999 1998
===================================== =============
Exploration and
732 1,531 2,382 142 2,240 Production 4,817 2,947
680 593 662 21 641 Refining and Marketing 1,618 2,058
356 257 193 50 143 Chemicals 667 1,025
Other businesses and
(122) (109) (95) 81 (176) corporate (328) (295)
------------------------------------- -------------
1,646 2,272 3,142 294 2,848 RC operating profit 6,774 5,735
------------------------------------- -------------
(301) (328) (355) - (355) Interest expense (987) (854)
(190) (552) (783) (82) (701) Taxation (1,619) (1,270)
(16) (25) (49) - (49) MSI (85) (46)
===================================== =============
RC profit before
1,139 1,367 1,955 212 1,743 exceptional items 4,083 3,565
------------------------------------- -------------
Exceptional items
(501) before tax
Taxation on
(37) exceptional items
-----
RC profit after
1,205 exceptional items
643 Stock holding gains (losses)
-----
1,848 HC profit
=====
* The special items refer to non-recurring charges and credits reported in
the quarter.
Operating Results
Replacement cost profit, before exceptional items, was $1,955 million after
adjusting for special charges of $212 million in respect of an asset write
down and non-recurring charges principally relating to merger integration
costs. The adjusted result was up 72% on a year ago and up 43% compared to
the previous quarter, reflecting performance improvements and an increase in
oil and gas prices.
Exploration and Production replacement cost operating profit, after
adjusting for special charges of $142 million, was $2,382 million, over
three times higher than a year ago. This reflects the significant cost
savings that have been achieved following the merger and higher oil and gas
prices. The nine months' adjusted result was 63% higher. The quarter's
production was 4% higher than a year ago, with a significant increase in
natural gas. Future levels of production will be affected by the programme
of divestments of non-strategic assets started during the quarter.
In Refining and Marketing, replacement cost operating profit, after
adjusting for special charges of $21 million, was $662 million, down 3% on a
year ago. Cost reductions partially offset the pressure on marketing margins
from the rising oil price. The adjusted result for the nine months was 21%
down on the previous year with the severe deterioration in the environment
significantly offset by performance improvements.
Chemicals' replacement cost operating profit of $193 million, after
adjusting for special charges of $50 million, was down 46% on a year ago and
25% from the previous quarter. This decrease is the result of market
deterioration driven by rising feedstock prices and euro weakness, and the
effect of shutdowns. The nine months' result was down 35% on a year ago,
although the effect of the poor environment was partly offset by improved
operating performance.
Interest expense was $355 million compared with $328 million in the previous
quarter.
The effective tax rate on replacement cost profit, before exceptional items,
was 28%.
Capital expenditure was $1.6 billion, down 35% on a year ago, reflecting
increased focus in the capital programme and is on track for the year's
target of $7 billion. Divestment proceeds received amounted to $615 million.
Net debt at quarter-end was $14.8 billion. The ratio of net debt to net debt
plus equity was 25.0%, towards the bottom of the group's target range.
Net cash inflow in the quarter was $363 million, compared with $684 million
a year ago.
Operating Statistics
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
Crude oil and natural gas
liquids production (mb/d)
(Net of Royalties)
528 565 564 UK 572 499
89 98 100 Rest of Europe 101 106
813 794 791 USA 800 836
599 592 592 Rest of World 592 586
----------------------- -------------
Total crude oil and
2,029 2,049 2,047 liquids production 2,065 2,027
----------------------- -------------
Natural gas production (mmcf/d)
950 1,132 1,040 UK 1,219 1,228
127 146 112 Rest of Europe 166 178
2,288 2,380 2,359 USA 2,391 2,384
1,979 2,286 2,406 Rest of World 2,201 1,956
----------------------- -------------
5,344 5,944 5,917 Total natural gas production 5,977 5,746
----------------------- -------------
Oil sales volumes (mb/d)
Refined products
265 231 236 UK 235 259
752 785 787 Rest of Europe 786 755
1,525 1,597 1,552 USA 1,536 1,483
598 571 576 Rest of World 601 594
----------------------- -------------
3,140 3,184 3,151 Total marketing sales 3,158 3,091
1,785 1,928 1,549 Trading/supply sales 1,751 1,720
----------------------- -------------
4,925 5,112 4,700 Total refined product sales 4,909 4,811
4,675 4,175 5,883 Crude oil 4,668 4,226
----------------------- -------------
9,600 9,287 10,583 Total oil sales 9,577 9,037
----------------------- -------------
Chemicals production+ (kte)
981 941 914 UK 2,830 2,862
1,442 1,507 1,475 Rest of Europe 4,391 4,056
2,330 2,488 2,487 USA 7,274 6,864
437 579 603 Rest of World 1,642 1,313
----------------------- --------------
5,190 5,515 5,479 Total production 16,137 15,095
======================= ==============
+ Includes BP Amoco share of associated undertakings and other interests in
production.
Exploration and Production
Replacement cost operating profit for the third quarter was $2,382 million,
after adjusting for special charges of $142 million. These special charges
comprised a $100 million write-down on Badami, Alaska and non-recurring
costs, principally relating to integration activities. The adjusted result
was over three times the amount of the equivalent quarter last year.
Average oil realizations were up by around $7.50 a barrel, while average
natural gas realizations were up 22 cents per thousand cubic feet. There
were also significant underlying improvements including cost savings, lower
exploration expense and higher production.
For the nine months, the adjusted result was up by 63% with average oil
realizations some $2 per barrel higher.
Oil and gas production were up on a year ago by 1% and 11%, respectively.
Oil production in the UK increased with a significant contribution from the
Eastern Trough Area Project in the central North Sea and from Schiehallion,
west of Shetland. This increase, combined with the higher production from
the Lower 48 states in the USA, more than offset natural declines in
production in Alaska. The higher gas production mainly reflected additional
capacity in Trinidad.
During the quarter, the Canadian oil properties were sold. Shortly after the
quarter end arrangements were made to dispose of the group's interest in the
Pedernales field in Venezuela, subject to approvals. Production from these
assets has averaged 74,000 barrels per day in 1999.
In October, it was announced that BP Amoco was purchasing all of the shares
it did not already own in ProGas, a major Canadian natural gas supply
aggregator. The deal is expected to close by the end of the year. During the
quarter, the group agreed to market the Provincial Crown Corporation's 45
million cubic feet per day of natural gas production flowing from the Sable
Offshore Energy Project located offshore Nova Scotia, Canada.
3Q 2Q 3Q Nine Months
1998 1999 1999 1999 1998
================= =============
732 1,503 2,240 Replacement cost operating profit ($m) 4,561 2,789
----------------- -------------
Results include:
216 124 141 Exploration expense ($m) 437 657
----------------- -------------
Average oil realizations* ($/bbl)
12.20 14.75 19.86 : UK 15.17 13.18
11.25 14.12 18.18 : USA 14.02 12.30
11.18 14.51 19.32 : Rest of World 14.80 11.71
11.59 14.49 19.17 : BP Amoco average 14.68 12.46
----------------- -------------
Average natural gas realizations ($/mcf)
2.51 2.24 1.96 : UK 2.19 2.83
1.72 1.97 2.37 : USA 1.97 1.81
1.58 1.42 1.59 : Rest of World 1.54 1.69
1.77 1.82 1.99 : BP Amoco average 1.87 1.93
================= =============
* Crude oil and natural gas liquids.
Refining and Marketing
Replacement cost operating profit for the third quarter was $662 million,
after adjusting for special items of $21 million, principally in respect of
integration costs. This result was down 3% on a year ago, reflecting the
deteriorating environment. Rising product prices led to squeezed marketing
margins. Although there was a short recovery in August and September, soft
refining margins at the beginning and end of the quarter led to run cuts at
a number of refineries. In both refining and marketing, operating profits
continue to benefit significantly from cost reduction programmes.
The adjusted result for the nine months was 21% down on the previous year
with the severe deterioration in the environment significantly offset by
performance improvements.
In July, an agreement was signed with Primary Energy to develop, engineer
and construct a natural gas-fired co-generation facility at the Whiting
refinery in Indiana. The plant, which will generate 525 megawatts of power
and substantial steam production, is scheduled to be completed during the
second quarter of 2001. Also during the quarter, BP Amoco and Caltex
Australia created a joint venture, Australasian Lubricants Manufacturing
Company, to blend, package and warehouse lubricants. Operations began on
1 October.
3Q 2Q 3Q Nine Months
1998 1999 1999 1999 1998
================= =============
680 560 641 Replacement cost operating profit ($m) 1,547 2,058
----------------- -------------
Indicative global refining margins ($/bbl)
1.07 0.34 1.18 North West Europe 0.74 1.87
1.38 1.34 1.51 USA 1.22 2.04
0.88 0.87 1.14 Singapore 1.07 1.65
1.16 0.83 1.30 BP Amoco average 0.99 1.90
----------------- -------------
Refinery throughputs (mb/d)
271 285 245 UK 268 296
553 519 532 Rest of Europe 538 544
1,485 1,396 1,376 USA 1,345 1,542
349 383 353 Rest of World 373 360
----------------- -------------
2,658 2,583 2,506 Total throughput 2,524 2,742
================= =============
Chemicals
Chemicals' replacement cost operating profit for the third quarter was $193
million, after adjusting for special charges of $50 million, principally in
respect of integration costs. This result was down 25% from the previous
quarter, despite ongoing cost improvements across the chemicals portfolio.
The market environment continued to deteriorate for most products, driven by
a combination of rising feedstock prices and euro weakness.
The nine months' result was down 35% on a year ago, although the effect of
the poor environment was partly offset by improved operating performance.
Chemicals production was similar to the previous quarter's, with increased
capacity offset by shutdowns. Production was up 6% compared to a year ago,
reflecting additional capacity and debottleneckings.
During the quarter, BP Amoco sold its Plaskon electronic materials business,
located in the USA and Singapore, and announced an agreement to sell its
Fibers and Yarns business, located at several sites in south eastern USA.
Progress also continued on restructuring, with the decision to close the
styrene unit at Baglan Bay, and the announcement that European polybutene
production will be consolidated at the plant in Lavera, France.
3Q 2Q 3Q Nine Months
1998 1999 1999 1999 1998
================= =============
306 198 143 Replacement cost operating profit ($m) 547 975
----------------- -------------
689 405 630 Chemicals integrated margin (Dm/te) 538 865
================= =============
Other Businesses and Corporate
Other Businesses and Corporate comprises Finance, BP Solarex, the group's
coal asset, interest income and costs relating to corporate activities
worldwide. Replacement cost operating loss was $95 million, after adjusting
for special charges of $81 million, principally in respect of integration
costs. The nine months' adjusted loss was $328 million, similar to the
previous year's level. During the quarter, BP Amoco acquired APEX, a solar
electric company based in Montpellier, France.
3Q 2Q 3Q Nine Months
1998 1999 1999 1999 1998
================= =============
(127) (186) (176) Replacement cost operating loss ($m) (486) (300)
================= =============
Exceptional Items
Exceptional items include the profit on the sale of the Canadian oil
properties and loss in respect of the sale of the group's interest in the
Pedernales field, together with further restructuring, relating mainly to
severance.
3Q 2Q 3Q Nine Months
1998 1999 1999 $ million 1999 1998
================= =============
Profit (loss) on sale of fixed assets
780 162 (317) and businesses (58) 858
- (348) (184) Restructuring costs (1,687) -
(198) 23 (37) Taxation credit (charge) 184 (214)
----------------- -------------
582 (163) (538) Exceptional items after taxation (1,561) 644
================= =============
1999 Dividends
BP Amoco p.l.c. today announced a third quarterly dividend for 1999 of
5 cents per ordinary share. Holders of ordinary shares will receive
3.033 pence per share and holders of American Depositary Receipts (ADRs)
$0.30 per ADS share. The dividend is payable on 10 December 1999 to
shareholders on the register on 19 November 1999. 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 on 10 December
1999. The fourth quarter results and dividend will be announced on 15
February 2000.
Outlook
The Group's overall outlook for the rest of the year remains broadly
positive.
Crude oil prices may remain reasonably stable if supply discipline is
maintained.
Natural gas prices are expected to firm during the northern hemisphere
winter.
Downstream, marketing margins are likely to recover from recent lows as
markets adjust to the higher oil price, though competition will remain
intense. Refining margins, however, are expected to remain under continuing
pressure.
In Chemicals, margins in some businesses may begin to recover as oil prices
stabilize. However, surplus industry capacity and euro weakness will limit
this recovery in the near term.
BP Amoco Group Chief Executive, Sir John Browne, concluded:
'Although we expect the outlook for markets for the rest of the year to
remain broadly positive, our emphasis will continue to be on performance
improvement. This continuing performance improvement will underpin
further growth in the businesses, assuming a continuation of firm
aggregate demand. Additional potential will arise next year from the
ARCO acquisition.'
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under 'Outlook',
focuses on certain trends and general market and economic conditions
and outlook on production levels or rates, prices, margins and currency
exchange rates and, as such, are forward-looking statements that
involve risk and uncertainty that could cause actual results and
developments to differ materially from those expressed or implied by
this discussion. By their nature, trends and outlook on production,
price, margin and currency exchange rates are difficult to forecast
with any precision, and there are a number of factors, that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements including
levels of industry product supply, demand and pricing; currency
exchange rates; political stability and economic growth in relevant
areas of the world; the ability to successfully integrate after merger;
development and use of new technology and successful partnering; the
actions of competitors, natural disasters and other changes to business
conditions. Additional information, including information on factors
which may affect BP Amoco's business, is contained in BP Amoco's Annual
Report and Accounts for 1998 and in the Annual Report on Form 20-F
filed with the US Securities and Exchange Commission.
----------------------------------------------------------------------
BP Amoco p.l.c. and Subsidiaries
Summarized Group Results
Third Second Third
Quarter Quarter Quarter Nine Months
1998* 1999 1999 1999 1998*
======================= =============
$ million $ million
732 1,503 2,240 Exploration and Production 4,561 2,789
680 560 641 Refining and Marketing 1,547 2,058
306 198 143 Chemicals 547 975
(127) (186) (176) Other businesses and corporate (486) (300)
----------------------- -------------
Total replacement cost
1,591 2,075 2,848 operating profit 6,169 5,522
Profit (loss) on sale of fixed assets
780 162 (317) and businesses (Note 4) (58) 858
- (348) (184) Restructuring costs (Note 4) (1,687) -
----------------------- -------------
Replacement cost profit before
2,371 1,889 2,347 interest and tax 4,424 6,380
(92) 572 643 Stock holding gains (losses)(Note 6) 1,222 (880)
----------------------- -------------
Historical cost profit before
2,279 2,461 2,990 interest and tax 5,646 5,500
313 328 355 Interest expense (Note 7) 987 866
----------------------- -------------
1,966 2,133 2,635 Profit before taxation 4,659 4,634
371 473 738 Taxation (Note 8) 1,267 1,377
----------------------- -------------
1,595 1,660 1,897 Profit after taxation 3,392 3,257
16 25 49 Minority shareholders' interest 85 46
----------------------- -------------
1,579 1,635 1,848 Profit for the period 3,307 3,211
======================= =============
943 970 972 Distribution to shareholders 2,912 2,795
----------------------- -------------
Earnings per ordinary share - cents
8.2 8.4 9.6 Basic 17.1 16.8
8.2 8.4 9.5 Diluted 17.0 16.8
======================= =============
* Restated - for further information see Note 1.
Replacement Cost Results
Third Second Third
Quarter Quarter Quarter Nine Months
1998* 1999 1999 1999 1998*
======================= =============
$ million $ million
Historical cost profit
1,579 1,635 1,848 for the period 3,307 3,211
92 (572) (643) Stock holding (gains) losses (1,222) 880
----------------------- -------------
Replacement cost profit
1,671 1,063 1,205 for the period 2,085 4,091
(582) 163 538 Exceptional items, net of tax 1,561 (644)
----------------------- -------------
Replacement cost profit before
1,089 1,226 1,743 exceptional items 3,646 3,447
======================= =============
Earnings per ordinary share - cents
On replacement cost profit before
5.7 6.3 9.0 exceptional items 18.8 18.0
======================= =============
* Restated - for further information see Note 1.
Summarized Group Balance Sheet
30 September 31 December
1999 1998*
---------------------
$ million
Fixed assets
Intangible assets 3,637 3,037
Tangible assets 52,616 54,880
Investments 10,271 9,772
---------------------
66,524 67,689
---------------------
Current assets
Stocks 4,827 3,642
Debtors 16,317 12,709
Investments 347 470
Cash at bank and in hand 536 405
---------------------
22,027 17,226
Creditors - amounts falling due within one year
Finance debt 4,160 2,837
Other creditors 15,842 15,329
---------------------
Net current assets (liabilities) 2,025 (940)
---------------------
Total assets less current liabilities 68,549 66,749
Creditors - amounts falling due
after more than one year
Finance debt 11,511 10,918
Other creditors 2,197 2,047
Provisions for liabilities and charges 10,322 10,100
---------------------
Net assets 44,519 43,684
Minority shareholders' interest 1,152 1,072
---------------------
BP Amoco shareholders' interest 43,367 42,612
=====================
Movement in BP Amoco shareholders' interest: $ million
At 31 December 1998 41,786
Prior year adjustment - change in accounting policy (Note 1) 826
------
As restated 42,612
Profit for the period 3,307
Distribution to shareholders (2,912)
Currency translation differences (175)
Share dividend plan 311
Employee share schemes 224
------
At 30 September 1999 43,367
======
* Restated - for further information see Note 1.
Summarized Group Cash Flow Statement
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= ============
$ million $ million
Net cash inflow from
2,962 2,329 2,689 operating activities (a) 5,847 7,612
----------------------- -------------
296 230 371 Dividends from joint ventures 813 497
----------------------- -------------
97 98 25 Dividends from associated undertakings 168 287
----------------------- -------------
Servicing of finance and returns
on investments
52 50 33 Interest received 115 171
(232) (316) (209) Interest paid (806) (758)
15 13 8 Dividends received 28 26
Dividends paid to
(21) (31) (49) minority shareholders (145) (61)
----------------------- -------------
Net cash outflow from servicing of
(186) (284) (217) finance and returns on investments (808) (622)
----------------------- -------------
Taxation
(60) (59) (48) UK corporation tax (179) (187)
(244) (89) (400) Overseas tax (462) (1,013)
----------------------- -------------
(304) (148) (448) Tax paid (641) (1,200)
----------------------- -------------
Capital expenditure
(2,163) (1,678) (1,473) Payments for fixed assets (4,666) (6,450)
Proceeds from the sale
120 352 419 of fixed assets 858 700
----------------------- -------------
Net cash outflow for capital
(2,043) (1,326) (1,054) expenditure (3,808) (5,750)
----------------------- -------------
Summarized Group Cash Flow Statement (continued)
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
Acquisitions and disposals
Investments in associated
(163) (51) (2) undertakings (141) (383)
(28) (45) (4) Acquisitions (49) (233)
(61) (69) (226) Net investment in joint ventures (495) (33)
703 - 196 Proceeds from the sale of businesses 288 780
----------------------- -------------
Net cash (outflow) inflow for
451 (165) (36) acquisitions and disposals (397) 131
----------------------- -------------
(589) (1,934) (967) Equity dividends paid (3,164) (1,766)
----------------------- -------------
684 (1,200) 363 Net cash inflow (outflow) (1,990) (811)
======================= =============
1,037 (1,438) 227 Financing (b) (2,040) (376)
(238) - 55 Management of liquid resources (106) (456)
(115) 238 81 Increase (decrease) in cash 156 21
----------------------- -------------
684 (1,200) 363 (1,990) (811)
======================= =============
Analysis of Cash Flow
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
(a) Reconciliation of historical
cost profit before interest
and tax to net cash inflow
from operating activities
Historical cost profit before
2,279 2,461 2,990 interest and tax 5,646 5,500
1,122 1,152 1,197 Depreciation and amounts provided 3,593 3,796
Exploration expenditure
97 51 135 written off 270 277
Share of (profits) losses of
joint ventures and
(443) (383) (568) associated undertakings+ (1,307) (914)
(72) (61) (53) Interest and other income (166) (207)
(Profit) loss on sale of fixed
(670) (148) 308 assets and businesses 102 (748)
75 30 144 Charge for provisions 623 222
(16) (115) (61) Utilization of provisions (271) (180)
141 (603) (586) Decrease (increase) in stocks (1,190) 659
265 (774) (350) Decrease (increase) in debtors (2,138) 1,430
184 719 (467) Increase (decrease) in creditors 685 (2,223)
----------------------- --------------
Net cash inflow from
2,962 2,329 2,689 operating activities 5,847 7,612
======================= ==============
+Includes the following amounts
of depreciation of the BP/Mobil
76 72 77 European JV 227 224
----------------------- --------------
(b) Financing
(217) (1,616) (303) Long-term borrowing (1,969) (1,778)
235 558 603 Repayments of long-term borrowing 1,954 1,115
921 (463) (164) Short-term borrowing (2,819) (615)
Repayments of short-term
116 148 143 borrowing 1,012 412
------------------------ --------------
1,055 (1,373) 279 (1,822) (866)
(41) (65) (52) Issue of ordinary share capital (218) (94)
Repurchase of ordinary
23 - - share capital - 584
------------------------ --------------
Net cash outflow (inflow)
1,037 (1,438) 227 from financing (2,040) (376)
======================== ==============
Capital Expenditure and Acquisitions
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
By business
Exploration and Production
447 203 135 UK 582 1,323
44 5 44 Rest of Europe 57 135
592 403 318 USA 1,083 1,622
535 491 278 Rest of World 1,089 1,688
----------------------- --------------
1,618 1,102 775 2,811 4,768
----------------------- --------------
Refining and Marketing
25 41 47 UK 122 84
148 96 134 Rest of Europe 310 333
228 130 151 USA 435 617
90 62 67 Rest of World 177 226
----------------------- --------------
491 329 399 1,044 1,260
----------------------- --------------
Chemicals
71 103 133 UK 296 190
56 71 51 Rest of Europe 183 378
123 84 65 USA 212 327
53 52 70 Rest of World 147 166
----------------------- --------------
303 310 319 838 1,061
----------------------- --------------
55 83 118 Other businesses and corporate 226 443
----------------------- --------------
2,467 1,824 1,611 4,919 7,532
======================= =============
By geographical area
552 376 355 UK 1,075 1,869
252 172 234 Rest of Europe 557 889
986 671 606 USA 1,872 2,693
677 605 416 Rest of World 1,415 2,081
----------------------- --------------
2,467 1,824 1,611 4,919 7,532
======================= =============
Includes the following
amounts for the BP/Mobil
161 127 175 European joint venture 409 399
----------------------- --------------
US dollar/Sterling exchange rates
1.65 1.61 1.60 Average rates for the period 1.61 1.65
1.70 1.58 1.65 Period-end rates 1.65 1.70
======================= =============
Analysis of Replacement Cost Operating Profit
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
By business
Exploration and Production
338 461 677 UK 1,461 1,328
69 103 207 Rest of Europe 437 303
178 427 600 USA 1,223 1,007
147 512 756 Rest of World 1,440 151
----------------------- -------------
732 1,503 2,240 4,561 2,789
----------------------- -------------
Refining and Marketing
103 67 102 UK 147 248
188 58 91 Rest of Europe 249 464
317 332 305 USA 750 958
72 103 143 Rest of World 401 388
----------------------- -------------
680 560 641 1,547 2,058
----------------------- -------------
Chemicals
- (26) (1) UK 15 147
118 21 8 Rest of Europe 90 260
158 155 124 USA 386 545
30 48 12 Rest of World 56 23
----------------------- -------------
306 198 143 547 975
----------------------- -------------
(127) (186) (176) Other businesses and corporate (486) (300)
----------------------- -------------
1,591 2,075 2,848 6,169 5,522
======================= =============
By geographical area
379 397 668 UK 1,412 1,602
386 191 350 Rest of Europe 823 1,031
559 823 930 USA 2,041 2,257
267 664 900 Rest of World 1,893 632
----------------------- -------------
1,591 2,075 2,848 6,169 5,522
======================= =============
Includes the following amounts
for joint ventures and
369 246 359 associated undertakings 865 1,033
----------------------- -------------
Notes
1. New accounting standard: provisions
The group has adopted Financial Reporting Standard No. 12 'Provisions,
Contingent Liabilities and Contingent Assets' (FRS12) with effect from
1 January 1999. This standard changes the criteria for recognizing
provisions for such costs as decommissioning, environmental liabilities
and restructuring charges. It also requires provisions for liabilities
which may not be settled for a number of years to be discounted to
their net present value. The adoption of this standard has been treated
as a change in accounting policy. Comparative figures have been
restated to reflect this change in accounting policy.
The principal effects of the adoption of FRS12 are as follows:
(a) Provisions for environmental liabilities are determined on a
discounted basis as the effect of the time value of money is
material. Previously these liabilities were on an undiscounted
basis.
(b) Provisions for decommissioning are recognized in full, on a
discounted basis, at the commencement of oil and natural gas
production. The group's prior practice was to accrue the expected
cost of decommissioning oil and natural gas production facilities
on a unit-of-production basis over the life of the field. FRS12
also requires the group to capitalize an amount equivalent to the
provision as a tangible fixed asset and to amortize this amount
over the life of the field on a unit-of-production basis.
(c) The unwinding of the discount, which represents a period-by-period
cost, is included within interest expense.
The adjustments to total replacement cost operating profit for
businesses and interest expense are as follows:
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
21 24 24 Exploration and Production 69 62
---------------------- -------------
Total replacement cost
21 24 24 operating profit 69 62
(30) (33) (33) Interest expense (96) (90)
---------------------- ------------
(9) (9) (9) Loss for the period (27) (28)
======================= ============
The adjustments to tangible assets and provisions for liabilities and
charges at 31 December 1998 are as follows:
$ million
Tangible assets 415
Other creditors 62
Other provisions 349
----
BP Amoco shareholders' interest 826
====
Notes
2. Turnover
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= ==============
$ million $ million
By business
4,086 4,852 6,301 Exploration and Production 15,177 13,163
12,673 13,988 16,697 Refining and Marketing 40,852 37,354
2,348 2,248 2,297 Chemicals 6,668 7,466
Other businesses
44 45 39 and corporate 114 150
------------------------ --------------
19,151 21,133 25,334 62,811 58,133
Less: Sales between
1,805 2,117 3,376 businesses 7,195 5,662
------------------------ --------------
17,346 19,016 21,958 Group excluding JVs 55,616 52,471
4,305 3,923 4,707 Sales of joint ventures 11,972 11,665
------------------------ --------------
21,651 22,939 26,665 67,588 64,136
======================== ==============
By geographical area
Group excluding JVs
5,812 6,397 8,139 UK 19,331 17,276
1,452 1,468 1,561 Rest of Europe 4,219 4,516
8,357 9,043 10,255 USA 25,928 25,491
3,394 4,248 5,235 Rest of World 12,937 10,747
------------------------ --------------
19,015 21,156 25,190 62,415 58,030
Less: Sales between
1,669 2,140 3,232 areas 6,799 5,559
------------------------ --------------
17,346 19,016 21,958 55,616 52,471
------------------------ --------------
Sales of joint ventures
861 836 1,155 UK 2,738 2,645
3,974 3,528 4,428 Rest of Europe 10,945 10,722
8 27 36 USA 87 33
65 193 143 Rest of World 429 204
------------------------ --------------
4,908 4,584 5,762 14,199 13,604
Less: Sales between
603 661 1,055 areas 2,227 1,939
------------------------ --------------
4,305 3,923 4,707 11,972 11,665
======================== ==============
Notes
3. Operating profits are after charging:
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
Exploration expense
35 7 16 UK 36 86
35 11 - Rest of Europe 35 75
56 30 65 USA 115 165
90 76 60 Rest of World 251 331
----------------------- -------------
216 124 141 437 657
======================= =============
Production taxes (i)
10 49 72 UK petroleum revenue tax 154 43
160 166 220 Overseas production taxes 495 466
----------------------- -------------
170 215 292 649 509
======================= =============
(i) Production taxes are charged against Exploration and Production's
operating profit and are not included in the charge for taxation in
Note 8.
4. Analysis of exceptional items
272 8 (419) Exploration and Production (420) 351
422 59 12 Refining and Marketing 115 417
90 102 89 Chemicals 253 90
(4) (7) 1 Other businesses and corporate (6) -
----------------------- -------------
Profit (loss) on sale of fixed
780 162 (317) assets and businesses (58) 858
- (348) (184) Restructuring costs (1,687) -
----------------------- -------------
Exceptional items
780 (186) (501) before taxation+ (1,745) 858
(198) 23 (37) Taxation credit (charge) 184 (214)
----------------------- -------------
Exceptional items
582 (163) (538) after taxation (1,561) 644
======================= =============
+Includes the following amounts
for joint ventures and
110 8 (11) associated undertakings 36 110
----------------------- -------------
5. Replacement cost profit
Replacement cost profits reflect the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from
the historical cost profit stock holding gains and losses.
Notes
6. Stock holding gains (losses)
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
6 1 (3) Exploration and Production (13) (10)
(31) 531 582 Refining and Marketing 1,158 (763)
(67) 40 64 Chemicals 77 (107)
---------------------- --------------
(92) 572 643 1,222 (880)
====================== ==============
Includes the following amounts
for joint ventures and
(36) 129 220 associated undertakings 406 (229)
----------------------- --------------
7. Interest expense
259 263 285 Group interest payable 784 763
(20) (11) (7) Capitalized (33) (104)
----------------------- --------------
239 252 278 751 659
7 15 13 Joint ventures 44 40
37 28 31 Associated undertakings 96 77
Unwinding of discount on
30 33 33 provisions (Note 1) 96 90
----------------------- --------------
313 328 355 987 866
======================= ==============
8. Charge for taxation
128 100 165 UK 353 417
243 373 573 Overseas 914 960
----------------------- -------------
371 473 738 1,267 1,377
======================= =============
Includes the following amounts
for joint ventures and
58 26 25 associated undertakings 75 129
----------------------- -------------
Notes
9. Analysis of changes in net debt
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= ==============
$ million $ million
Opening balance
14,779 14,510 15,850 Finance debt 13,755 12,877
472 270 467 Less: Cash 405 355
847 305 304 Current asset investments 470 1,067
----------------------- --------------
13,460 13,935 15,079 Opening net debt 12,880 11,455
----------------------- --------------
Closing balance
13,759 15,850 15,671 Finance debt 15,671 13,759
375 467 536 Less: Cash 536 375
612 304 347 Current asset investments 347 612
----------------------- --------------
12,772 15,079 14,788 Closing net debt 14,788 12,772
----------------------- --------------
(Increase) decrease
688 (1,144) 291 in net debt (1,908) (1,317)
======================= ==============
Movement in cash/
(115) 238 81 bank overdrafts 156 21
Increase(decrease) in
(238) - 55 current asset investments (106) (456)
Net cash (inflow) outflow
from financing(excluding
1,055 (1,373) 279 share capital) (1,822) (866)
(8) (7) (108) Other movements (115) (17)
----------------------- --------------
Movement in net debt before
694 (1,142) 307 exchange effects (1,887) (1,318)
(6) (2) (16) Exchange adjustments (21) 1
----------------------- --------------
(Increase) decrease
688 (1,144) 291 in net debt (1,908) (1,317)
======================= ==============
Notes
10. Consolidated statement of cash flows presented on a US GAAP format
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
Operating activities
1,595 1,660 1,897 Profit after taxation 3,392 3,257
Adjustments to reconcile
profits after tax to net
cash provided by
operating activities
Depreciation and
1,122 1,152 1,197 amounts provided 3,593 3,796
97 51 135 Exploration expense 270 277
Share of (profit) loss of
joint ventures and associates
(50) (55) (172) less dividends received (326) (130)
(Profit) loss on sale of
(670) (148) 308 businesses and fixed assets 102 (748)
Working capital movement
173 (547) (1,261) (see analysis below) (2,683) (361)
370 42 464 Other 941 415
----------------------- -------------
Net cash provided by
2,637 2,155 2,568 operating activities 5,289 6,506
----------------------- -------------
Investing activities
(1,918) (1,582) (1,566) Capital expenditures (4,432) (6,316)
Acquisitions, net of
(28) (45) (4) cash acquired (49) (233)
Investment in
(163) (51) (2) associated undertakings (141) (383)
Net investment in
(61) (69) (226) joint ventures (495) (33)
Proceeds from
823 352 615 disposal of assets 1,146 1,480
----------------------- --------------
Net cash used
(1,347) (1,395) (1,183) in investing activities (3,971) (5,485)
----------------------- --------------
Notes
10. Consolidated statement of cash flows presented on a US GAAP format
(continued)
Third Second Third
Quarter Quarter Quarter Nine Months
1998 1999 1999 1999 1998
======================= =============
$ million $ million
Financing activities
Proceeds from shares
18 65 52 issued (repurchased) 218 (490)
Proceeds from
217 1,616 303 long-term financing 1,969 1,778
Repayments of
(235) (558) (603) long-term financing (1,954) (1,115)
Net increase (decrease)
(1,037) 315 21 in short-term debt 1,807 203
Dividends paid
(589) (1,934) (967) - BP Amoco shareholders (3,164) (1,766)
(21) (31) (49) - Minority shareholders (145) (61)
----------------------- --------------
Net cash used in
(1,647) (527) (1,243) financing activities (1,269) (1,451)
----------------------- --------------
Currency translation
differences relating to
21 (40) (27) cash and cash equivalents (42) 2
----------------------- --------------
(Decrease) increase in cash
(336) 193 115 and cash equivalents 7 (428)
----------------------- --------------
Cash and cash equivalents
1,246 493 686 at beginning of period 794 1,338
----------------------- --------------
Cash and cash equivalents
910 686 801 at end of period 801 910
----------------------- --------------
Analysis of working
capital movement
141 (603) (586) Decrease (increase)in stocks (1,190) 659
Decrease (increase)
285 (837) (549) in debtors (2,069) 1,561
Increase (decrease)
(253) 893 (126) in creditors 576 (2,581)
----------------------- --------------
Total working
173 (547) (1,261) capital movement (2,683) (361)
======================= ==============
Notes
11. Ordinary shares
Shares in issue at 30 September 1999 = 9,737.1 million (19,474 million
after share split on 4 October).
Average number of shares in issue during January-September 1999 =
19,376.0 million after share split (excluding shares held by the
Employee Share Ownership Plans). Each BP Amoco ADS represents six BP
Amoco Ordinary Shares.
12. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 1998 statutory accounts
have been delivered to the UK Registrar of Companies; the report of the
auditors on those accounts was unqualified.
Contacts
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(+44) 0171 496 4624 (+1) 212 451 8008 (+1) 312 856 5566
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(+44) 0171 496 4717 (+1) 212 451 8034
http://www.bpamoco.com/investors
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