3rd Quarter Rslts Part 1 of 2
BP PLC
25 October 2005
BP p.l.c.
Group Results
3rd Quarter 2005
London 25 October 2005
FOR IMMEDIATE RELEASE
STRONG ENVIRONMENT, STRONG PERFORMANCE
---------------------------------------------------------------------------
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 $ million 2005 2004 %
======================= ====================
4,818 5,591 6,463 Profit for the period* 18,656 14,065
Inventory holding
(1,027) (610) (2,053) (gains) losses (3,774) (2,137)
----------------------- --------------------
3,791 4,981 4,410 Replacement cost profit 14,882 11,928 25
======================= ====================
9.61 12.67 11.86 - per ordinary share (pence) 38.08 29.93
17.49 23.42 21.04 - per ordinary share (cents) 70.07 54.48 29
1.05 1.40 1.26 - per ADS (dollar) 4.20 3.27
======================= ====================
As a result of the announced sale, Innovene operations have been treated as
discontinued operations and presented accordingly within this document.
o BP's third quarter replacement cost profit was $4,410 million compared
with $3,791 million a year ago, an increase of 16%. The result includes
the loss on re-measurement to fair value of Innovene as a result of the
recently announced divestment, and significant impacts from the effects
of hurricanes Katrina and Rita. For the nine months, replacement cost
profit was $14,882 million compared with $11,928 million, up 25%.
O The third quarter result includes a net non-operating charge of $921
millon compared with a net non-operating charge of $394 million in the
third quarter of 2004. For the nine months, the net non-operating
charge was $1,201 million compared with a net gain of $189 million for
the nine months of 2004.
O The third quarter trading environment was generally stronger than a
year ago with higher oil and gas realizations and higher refining
margins, but with lower retail marketing and olefins margins.
O Net cash provided by operating activities for the quarter and nine
months was $6.4 billion and $22.5 billion, respectively, compared with
$6.1 billion and $18.2 billion a year ago.
O The ratio of net debt to net debt plus equity was 19% compared with 20%
a year ago.
O The quarterly dividend, to be paid in December, is 8.925 cents per
share ($0.5355 per ADS) compared with 7.10 cents per share a year ago.
For the nine months, the dividend showed an increase of 26%. In
sterling terms, the quarterly dividend is 5.061 pence per share,
compared with 3.910 pence per share a year ago; for the nine months the
increase was 26%. During the nine months, the company repurchased 728
million of its own shares at a cost of $7.9 billion.
BP Group Chief Executive, Lord Browne, said:
'The recent hurricanes in the US have impacted our results. However,
underlying performance is strong, amplified by high but volatile prices
of oil, gas and products. The announced sale of Innovene for cash is a
good outcome. We continue to invest in opportunities which remain
robust to future changes in the operating environment, to pay an
increasing dividend per share over time and to return excess free cash
flow to investors'.
* Profit attributable to BP shareholders.
Summary Quarterly Results
Exploration and Production's third quarter result was up 36% on a year ago
reflecting higher realizations in both liquids and gas, partially offset by
slightly lower volumes and higher operating costs and revenue investments.
The Refining and Marketing result reflects record refining margins but
significantly lower retail marketing margins compared with a year ago.
In Gas, Power and Renewables the result increased compared with a year ago
primarily due to higher contributions from the gas marketing business.
Interest and Other finance expense was $181 million for the quarter compared
with $162 million in the previous quarter. This reflects higher interest costs
partially offset by higher capitalized interest.
The effective tax rate on replacement cost profit of continuing operations was
33.7%.
Capital expenditure was $3.3 billion for the quarter; there were no significant
acquisitions. Disposal proceeds were $0.2 billion.
Net debt at the end of the quarter was $20 billion. The ratio of net debt to net
debt plus equity was 19%.
During the third quarter, the company repurchased 332 million of its own shares,
at a cost of $3.8 billion. These shares are held in treasury.
On 7 October 2005, BP announced that it is to sell Innovene to INEOS. The $9
billion cash sale, subject to regulatory approvals, includes manufacturing
sites, markets and technologies. The sale is expected to be concluded early in
2006.
The commentaries above and following are based on replacement cost profit.
TNK-BP operational and financial information has been estimated.
The financial information for 2004 has been restated to reflect the following,
all with effect from 1 January 2005: (a) the adoption by the group of
International Financial Reporting Standards (IFRS) (see Note 1); (b) the
transfer of the aromatics and acetyls operations from the former Petrochemicals
segment to the Refining and Marketing segment; (c) the transfer of the Olefins
and Derivatives operations from the former Petrochemicals segment to Other
businesses and corporate (as noted above we have announced the sale of Innovene
and have categorized the majority of Olefins and Derivatives as discontinued
operations); (d) the transfer of the Grangemouth and Lavera refineries from the
Refining and Marketing segment into Olefins and Derivatives; (e) the transfer of
the Mardi Gras pipeline from the Exploration and Production segment to the
Refining and Marketing segment; and (f) the transfer of the Hobbs fractionator
from the Gas, Power and Renewables segment to Olefins and Derivatives. Note 2
provides further detail of the resegmentation.
Non-operating Items
Third
Quarter
$ million 2005
=======
Exploration and Production (147)
Refining and Marketing (154)
Gas, Power and Renewables 95
Other businesses and corporate (290)
-------
(496)
Taxation(a) 167
-------
Continuing operations (329)
Innovene Operations (759)
Taxation(a) 167 (592)
------- -------
Total for all operations (921)
=======
(a) Non-operating items related to Innovene operations, primarily the loss
on re-measurement to fair value, are tax effected at 22%; other non-
operating items are tax effected at 33.7%, the effective tax rate for
continuing operations.
Reconciliation of Replacement Cost Profit to Profit for the Period
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 $ million 2005 2004
============================= ================
4,822 5,903 6,535 Exploration and Production 18,924 13,327
1,318 1,286 1,858 Refining and Marketing 4,565 3,903
30 174 314 Gas, Power and Renewables 892 420
Other businesses and
(441) (156) (452) corporate (783) 400
Consolidation adjustment
Unrealized profit
(95) (4) (285) in inventory (442) (248)
Net profit on transactions
between continuing and
89 159 144 Innovene operations (a) 399 157
----------------------------- ----------------
RC profit before interest
5,723 7,362 8,114 and tax 23,555 17,959
----------------------------- ----------------
Interest and other
(183) (162) (181) finance expense (544) (528)
(1,657) (2,291) (2,674) Taxation(b) (7,444) (5,263)
(52) (69) (68) Minority interest (198) (128)
----------------------------- -----------------
RC profit for continuing
operations attributable
3,831 4,840 5,191 to BP shareholders (c) 15,369 12,040
============================= ================
Inventory holding gains
(losses) for continuing
904 648 1,938 operations 3,547 1,854
----------------------------- -----------------
Profit for the period for
continuing operations
attributable to BP
4,735 5,488 7,129 shareholders 18,916 13,894
Profit (loss) for the period
83 103 (666) from Innovene operations(d) (260) 171
----------------------------- -----------------
Profit for the period
attributable
4,818 5,591 6,463 to BP shareholders 18,656 14,065
============================= ================
RC profit for continuing
operations attributable to
3,831 4,840 5,191 BP shareholders 15,369 12,040
RC profit for Innovene
(40) 141 (781) operations (487) (112)
----------------------------- ----------------
3,791 4,981 4,410 Replacement cost profit 14,882 11,928
============================= ================
(a) In the circumstances of discontinued operations, Accounting Standards
require that the profits earned by the discontinued operations, in this
case the Innovene operations, on sales to the continuing operations and
vice versa, be eliminated on consolidation from the discontinued
operations, and attributed to the continuing operations. This net
adjustment principally represents the net margin on crude refined by
Innovene as substantially all crude for their refineries is supplied by
BP and most of the refined products manufactured are taken by BP. The
profits attributable to individual segments are not affected by this
adjustment. Neither does this representation indicate the profits
earned by continuing or Innovene operations, as if they were stand-
alone entities, for past periods or likely to be earned in future
periods.
(b) The third quarter effective tax rate on continuing operations of 33.7%
is calculated as the tax charge ($2,674 million) divided by RC profit
for continuing operations after interest ($8,114-$181=$7,933 million).
(c) Replacement cost profit reflects the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from
profit inventory holding gains and losses. BP uses this measure to
assist investors to assess BP's performance from period to period.
Replacement cost profit is not a recognized GAAP measure. Operating
cash flow is calculated from the starting point of profit before
taxation which includes inventory holding gains and losses. Operating
cash flow also reflects working capital movements including
inventories, trade and other receivables and trade and other payables.
The carrying value of these working capital items will change for
various reasons, including movements in oil, gas and products prices.
(d) See further detail in Note 3.
Per Share Amounts
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
================================ =====================
Results for the
period ($m)
4,818 5,591 6,463 Profit* 18,656 14,065
3,791 4,981 4,410 Replacement cost profit 14,882 11,928
-------------------------------- --------------------
Shares in issue at
21,713,966 21,174,934 20,984,851 period end (thousand)20,984,851 21,713,966
- ADS equivalent
3,618,994 3,529,156 3,497,475 (thousand) 3,497,475 3,618,994
Average number of
shares outstanding
21,683,963 21,270,485 21,007,316 (thousand) 21,238,117 21,891,936
- ADS equivalent
3,613,994 3,545,081 3,501,219 (thousand) 3,539,686 3,648,656
-------------------------------- ---------------------
Per ordinary share
(cents)
22.21 26.30 30.75 Profit for the period 87.84 64.24
RC profit
17.49 23.42 21.04 for the period 70.07 54.48
Per ADS (cents)
133.26 157.80 184.50 Profit for the period 527.04 385.44
RC profit
104.94 140.52 126.24 for the period 420.42 326.88
-------------------------------- ---------------------
* Profit attributable to BP shareholders.
Exploration and Production
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 $ million 2005 2004
======================= ==============
4,827 5,906 6,536 Profit before interest and tax(a) 18,933 13,340
(5) (3) (1) Inventory holding (gains) losses (9) (13)
----------------------- --------------
Replacement cost profit
4,822 5,903 6,535 before interest and tax 18,924 13,327
======================= ==============
Results include:
Impairment and gain (loss) on sale of
16 (3) (106) businesses and fixed assets 831 (233)
- - - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss) on
- (674) (53) embedded derviatives (887) -
(35) 25 12 Other 37 (35)
----------------------- --------------
(19) (652) (147) Total non-operating items (19) (268)
======================= ==============
135 139 177 Exploration expense 476 379
of which:
34 47 93 Exploration expenditure written off 224 123
======================= ==============
Production (Net of Royalties) (b)
2,298 2,437 2,313 Crude oil (mb/d) 2,385 2,320
181 182 159 Natural gas liquids (mb/d) 176 190
2,479 2,619 2,472 Total liquids (mb/d)(c) 2,561 2,510
8,275 8,661 7,841 Natural gas (mmcf/d) 8,412 8,433
3,906 4,112 3,824 Total hydrocarbons (mboe/d)(d) 4,011 3,964
======================= ==============
Average realizations (e)
39.43 47.79 56.83 Crude oil ($/bbl) 49.07 34.93
28.77 29.86 36.70 Natural gas liquids ($/bbl) 31.30 25.13
38.29 45.95 54.80 Total liquids ($/bbl) 47.22 33.89
3.66 4.38 4.75 Natural gas ($/mcf) 4.45 3.71
30.08 36.11 41.68 Total hydrocarbons ($/boe) 36.97 28.03
======================= ==============
Average oil marker prices($/bbl)
41.54 51.63 61.63 Brent 53.68 36.31
43.88 53.08 63.18 West Texas Intermediate 55.43 39.18
41.82 50.10 60.91 Alaska North Slope US West Coast 52.08 37.70
======================= ==============
Average natural gas marker prices
5.75 6.74 8.53 Henry Hub gas price ($/mmbtu)(f) 7.19 5.81
UK Gas - National
23.63 30.15 29.26 Balancing Point (p/therm) 32.42 22.98
======================= ==============
(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 turnover of consolidated subsidiaries only - this excludes
equity-accounted entities.
(f) Henry Hub First of the Month Index.
Exploration and Production
The replacement cost profit before interest and tax for the third quarter was
$6,535 million, an increase of 36% over the third quarter of 2004. This result
benefited from higher realizations in both liquids and gas, partially offset by
slightly lower volumes and higher operating costs and revenue investments. The
results of the third quarter were significantly affected by hurricanes Katrina
and Rita and their aftermath. The effects include profits foregone owing to lost
oil and gas production from the US Gulf of Mexico and additional costs incurred
because of damage to facilities.
Net non-operating charges for the third quarter total $147 million, primarily
arising from fair value losses of $53 million on embedded derivatives relating
to North Sea gas contracts and a charge for impairment of $100 million in
respect of a field in the Gulf of Mexico Shelf following the hurricane damage,
which continues to be assessed. The corresponding quarter in 2004 contained
non-operating charges for impairments and other items of $42 million and gains
on sales of assets of $23 million.
Production for the quarter at 3,824 mboe/d was 2% lower than the third quarter
of 2004. This primarily reflected the loss in production owing to the hurricanes
in the Gulf of Mexico and higher planned maintenance shutdowns in the North Sea,
partly offset by production growth from major projects in the New Profit Centres
and TNK-BP.
The replacement cost profit before interest and tax of $18,924 million for the
nine months represented an increase of some 42% over the same period of the
previous year. This result benefited from higher realizations and higher volumes
partly offset by higher operating costs and revenue investments. The nine months
result included net gains on sales of assets of $1,061 million, fair value
losses of $887 million on embedded derivatives and charges for impairments of
$230 million.
In the Gulf of Mexico, repairs to the Thunder Horse are proceeding offshore,
with production expected to start in the second half of 2006. The costs incurred
to secure and repair the facility were $107 million for the quarter.
Elsewhere, projects remain on track. In Azerbaijan, line-fill of the
Baku-Tbilisi-Ceyhan (BTC) oil export pipeline continues and the inauguration of
the Georgian section of the pipeline was held in early October. In Angola,
Kizomba B started producing in early July. In Trinidad, both the Cannonball
project and the Atlantic LNG Train 4 remain on course for start-up of production
in the fourth quarter. In October, we announced the planned investment of $2.2
billion in the Wamsutter natural gas field in Wyoming, USA.
We have had continued exploration success in Angola with the 'Juno-1' '
Astraea-1' and 'Hebe-1'oil discoveries in ultra-deepwater Block 31. These bring
the number of successful discoveries that BP has drilled in Block 31 to nine.
Also, we have made a second discovery offshore Sakhalin Island with the
Udachnaya well.
Customer Facing Segments
Refining and Marketing
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 $ million 2005 2004
======================= =============
2,190 1,950 3,697 Profit before interest and tax(a) 8,010 5,733
(872) (664) (1,839) Inventory holding (gains) losses (3,445) (1,830)
----------------------- -------------
Replacement cost profit
1,318 1,286 1,858 before interest and tax 4,565 3,903
======================= =============
Results include:
Impairment and gain (loss) on sale
(18) 75 (14) of businesses and fixed assets 34 (123)
(206) - (140) Environmental and other provisions (140) (206)
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss) on
- - - embedded derivatives - -
- (733) - Other (733) -
----------------------- -------------
(224) (658) (154) Total non-operating items (839) (329)
======================= =============
Refinery throughputs(b) (mb/d)
211 210 202 UK 192 205
696 671 687 Rest of Europe 668 712
1,417 1,350 1,328 USA 1,360 1,351
296 305 296 Rest of World 300 357
----------------------- -------------
2,620 2,536 2,513 Total throughput 2,520 2,625
======================= =============
95.1 93.1 92.6 Refining availability (%) 93.6 95.0
======================= =============
Oil sales volumes (mb/d)
Refined products
334 356 369 UK 354 318
1,406 1,346 1,402 Rest of Europe 1,357 1,359
1,696 1,656 1,674 USA 1,660 1,689
621 604 599 Rest of World 608 641
----------------------- --------------
4,057 3,962 4,044 Total marketing sales 3,979 4,007
2,627 2,129 2,010 Trading/supply sales 2,112 2,463
----------------------- --------------
6,684 6,091 6,054 Total refined product sales 6,091 6,470
3,679 4,123 3,888 Crude oil 3,882 3,833
----------------------- --------------
10,363 10,214 9,942 Total oil sales 9,973 10,303
======================= ==============
Global Indicator Refining Margin(c)
($/bbl)
4.37 5.68 7.78 NWE 5.46 4.13
6.99 9.37 17.12 USGC 11.31 7.70
5.01 7.45 13.40 Midwest 8.28 6.23
11.28 14.53 17.57 USWC 15.02 11.58
5.48 6.30 6.52 Singapore 5.94 3.90
6.39 8.42 12.35 BP Average 8.93 6.52
======================= ==============
Chemicals production (kte)
357 317 284 UK 918 986
799 735 771 Rest of Europe 2,312 2,410
1,194 1,107 890 USA 3,215 3,521
1,004 981 1,115 Rest of World 3,105 3,026
----------------------- --------------
3,354 3,140 3,060 Total production 9,550 9,943
======================= ==============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
(b) Refinery throughputs exclude the Grangemouth and Lavera refineries
which are now treated as discontinued operations within Other
businesses and corporate.
(c) The Global Indicator Refining Margin (GIM) is the average of six
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.
The GIM data shown above excludes the Grangemouth and Lavera
refineries.
Customer Facing Segments
Refining and Marketing
The replacement cost profit before interest and tax for the third quarter was a
record $1,858 million. This is compared to $1,318 million for the same period
last year. The nine months' result was $4,565 million, an increase of $662
million, or 17%, year-on-year.
The quarter's result includes a charge of $154 million for non-operating items.
This is primarily in respect of new, and revisions to existing, environmental
and other provisions. The non-operating charge for the corresponding quarter in
2004 was $224 million.
This quarter's result reflects record refining margins and significantly lower
retail marketing margins. The impact of hurricanes Katrina and Rita on the
third quarter's result was significant. The effects include margin foregone due
to refinery and other production shutdowns and supply disruptions to marketing
operations. BP's increase in the third quarter refining margin was lower than
the increase reflected in the Global Indicator Margin (GIM) as a result of the
actual yield differing from the yields assumed in the GIM.
Refinery throughputs for the quarter and nine months were 2,513 mb/d and 2,520
mb/d respectively, lower than in the corresponding periods of 2004 due to the
effects of the Texas City incident in March 2005 and the complete shut down of
the refinery late in the quarter in advance of hurricane Rita. The Texas City
refinery is expected to resume production late in the fourth quarter, with
initial gasoline production expected during December.
Marketing sales were 4,044 mb/d for the third quarter and 3,979 mb/d for the
first nine months of the year, compared with 4,057 mb/d and 4,007 mb/d for the
corresponding periods in the previous year. The third quarter result reflects
depressed retail marketing margins caused by a quarter of rapidly rising
wholesale product prices not fully recovered in the market place. The marketing
result was also affected by supply disruptions caused by the hurricanes in the
USA, which led to plant shutdowns within the Aromatics and Acetyls business.
During the quarter, we announced plans for a second PTA plant at the BP Zhuhai
Chemical Company Limited site in Guangdong Province, China, subject to approval
from the Government. The new plant will have operating capacity of 900,000
tonnes a year and will be the first plant to use BP's latest generation PTA
technology. Also, the transaction announced in 2004 for the sale of BP's 70%
shareholding in BP Malaysia Sdn Bhd to Lembaga Tabung Angkatan Tentera (LTAT)
was successfully concluded.
During early October, BP has agreed terms for the disposal to Osterreichische
Mineralol Verwaltung Aktiengesellschaft (OMV) of BP's network of 70 Retail sites
in the Czech Republic and signed a letter of intent with Hindustan Petroleum
Corporation Limited to form a 50/50 strategic joint venture covering the
refining and marketing sector in India.
Customer Facing Segments
Gas, Power and Renewables
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 $ million 2005 2004
======================= =============
57 160 412 Profit before interest and tax(a) 990 431
(27) 14 (98) Inventory holding (gains) losses (98) (11)
----------------------- -------------
Replacement cost profit
30 174 314 before interest and tax 892 420
======================= =============
Results include:
Impairment and gain (loss) on sale
16 20 (2) of businesses and fixed assets 81 16
- - 6 Environmental and other provisions 6 -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss)
- 67 91 on embedded derivatives 200 -
- - - Other - -
----------------------- -------------
16 87 95 Total non-operating items 287 16
======================= =============
Gas sales volumes (mmcf/d)
4,463 4,699 3,858 UK 4,651 5,091
485 382 300 Rest of Europe 356 398
13,585 14,501 15,552 USA 14,752 13,228
13,250 14,933 15,031 Rest of World 15,195 13,078
---------------------- --------------
31,783 34,515 34,741 Total gas sales volumes 34,954 31,795
======================= ==============
NGL sales volumes (mb/d)
9 4 7 UK 7 7
7 12 7 Rest of Europe 11 4
358 317 384 USA 358 385
161 162 178 Rest of World 197 190
----------------------- --------------
535 495 576 Total NGL sales volumes 573 586
======================= ==============
(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 third quarter and
nine months was $314 million and $892 million respectively, compared with $30
million and $420 million a year ago.
The third quarter result is higher than the same period in 2004 primarily due to
higher contributions from the gas marketing business. The nine months result is
higher than the same period in 2004 reflecting higher gains from non-operating
items as well as higher contribution from the operating businesses. Results
reflect changes to fair value accounting following the introduction of IFRS in
2005 which have created increased volatility in the Gas, Power and Renewables
results.
Other Businesses and Corporate
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 $ million 2005 2004
======================= =============
Profit (loss) before
(441) (161) (452) interest and tax(a) (788) 400
- 5 - Inventory holding (gains) losses 5 -
----------------------- -------------
Replacement cost profit
(441) (156) (452) before interest and tax (b) (783) 400
======================= =============
Results include:
Impairment and gain (loss) on sale
(36) 34 4 of businesses and fixed assets 38 1,158
(283) 22 (296) Environmental and other provisions (274) (283)
Restructuring, integration and
(19) (28) (6) rationalization costs (77) (19)
Fair value gain (loss) on
- (14) 8 embedded derivatives (10) -
- 3 - Other 3 -
----------------------- -------------
(338) 17 (290) Total non-operating items (320) 856
======================= =============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
(b) Includes the portion of Olefins and Derivatives not included in the
sale of Innovene to INEOS. This includes the equity-accounted
investments in China and Malaysia that were part of Olefins and
Derivatives.
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The group's
interests in PetroChina and Sinopec were divested in early 2004. The third
quarter's result includes a net charge of $290 million in respect of
non-operating items. This includes a charge of $296 million relating to new, and
revisions to existing, environmental and other provisions.
Dividends Payable
June, September
December September December and December
2004 2005 2005 2005 2004
============================ ===============
Dividends per ordinary share
7.10 8.925 8.925 cents 26.35 20.95
3.910 5.119 5.061 pence 14.630 11.577
42.60 53.55 53.55 Dividends per ADS (cents) 158.10 125.70
---------------------------- ---------------
BP today announced a dividend of 8.925 cents per ordinary share to be paid in
December. Holders of ordinary shares will receive 5.061 pence per share and
holders of American Depository Receipts (ADRs) $0.5355 per ADS share. The
dividend is payable on 5 December to shareholders on the register on 11
November. 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 5 December.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
'World economic growth appears to have been sustained at close to trend rates,
despite the disruptions and uncertainties following hurricanes Katrina and Rita.
'Crude oil prices averaged $61.63 per barrel (Dated Brent) in the third quarter,
an increase of $10 per barrel from the second quarter average, and more than $20
per barrel above the same period last year. Hurricanes Katrina and Rita resulted
in the loss of as much as 1.5 mmb/d of production in the US Gulf of Mexico.
However, in recent weeks, the temporary loss of Gulf Coast refining capacity and
signs of weaker consumption have caused crude prices to drift downward.
Nonetheless, prices are expected to be well supported into the winter.
'US natural gas prices averaged $8.53/mmbtu (Henry Hub first of month index) in
the third quarter, up nearly $2 per mmbtu versus the second quarter. Hurricanes
Katrina and Rita shut in about 20% of US domestic output and raised prices to
around imputed distillate parity. We expect US gas prices to continue to trade
close to distillate parity.
'Average global refining margins reached a record $12.35/bbl in the third
quarter. Hurricanes Katrina and Rita caused extensive damage to refining
facilities in the US Gulf, shutting-in 5mmb/d of refining capacity, of which 1.5
mmb/d is yet to return to operation. Oil product stocks and anticipated
recoveries in refining capacity generally are adequate to meet current demand
but the situation remains finely balanced and vunerable to further disruptions
or a colder than normal winter. Therefore, refining margins are likely to remain
high during the fourth quarter.
'During the third quarter, retail margins have been impacted negatively by high
and rising product prices. As the fourth quarter opens, some easing in wholesale
gasoline prices is evident. However, significant uncertainty exists about the
strength of the consequent margin recovery and the outlook for marketing margins
remains highly volatile.
'We anticipate production from the deepwater Gulf of Mexico to be back to
normal, with the exception of the Shell-operated Mars project, by the end of the
year. Thunder Horse is expected to start production in the second half of 2006.
The Texas City refinery is expected to resume production late in the fourth
quarter, with initial gasoline production expected during December.
'Our strategy is unchanged. We continue to execute it with discipline and focus.
Our ability to capture the benefit of current prices and margin strength
underpins continued dividend growth and continuing share buybacks subject to
market conditions and constraints. Capital expenditure is now expected to be
approximately $14 billion for the year and around $15 billion in 2006.'
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The foregoing discussion, in particular the statements under 'Outlook',
contains forward looking statements particularly those regarding
capital expenditure, costs, demand, dividends, future performance,
growth and other trend projections, margins, prices, production, share
buybacks, supply and the timing of projects. By their nature, forward
looking statements involve risks and uncertainties 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; currency
exchange rates; operational problems; general economic conditions
including inflationary pressures; political stability and economic
growth in relevant areas of the world; changes in governmental
regulations; exchange rate fluctuations; development and use of new
technology; the actions of competitors; natural disasters and other
changes in business conditions; prolonged adverse weather 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 2004 and our 2004 Annual Report on Form 20-F filed
with the US Securities and Exchange Commission.
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