Stmt re Future Output, etc
BP Amoco PLC
9 May 2000
BP AMOCO OUTPUT SET TO RISE 17 PER CENT BY END-2001
BP Amoco said today that it expected this year's capital spending,
excluding acquisitions, to rise to some $10-11 billion for the newly-
enlarged group and envisaged significant volume growth from its three main
businesses for the next several years.
The announcement came as the company unveiled record first-quarter UK GAAP
earnings of $2.7 billion, up 256 per cent on the corresponding quarter of
last year and 28 per cent higher than the last quarter.
It also unveiled US GAAP profits of $583 million for the quarter for ARCO,
inclusive of ARCO's Alaskan business which has been sold to Phillips under
the terms of the consent decree from the Federal Trade Commission.
In comments following the results, BP Amoco chief executive Sir John Browne
said the combined company planned to spend the $10-11 billion on organic
investment during 2000 and had earmarked a further $8 billion for other
acquisitions already announced, including Burmah Castrol.
Browne said that, while liquids production for the enlarged group would
remain stable at some two million barrels a day, gas output would jump to
eight billion cubic feet a day by the end of this year and nine billion
cubic feet by end-2001 - an increase of 50 per cent on the 1999 daily
average of six billion cubic feet.
In oil-equivalent terms, this meant a rise in the group's annual oil and
gas output from 1999 levels of some seven per cent to 3.1 million barrels a
day by the end of this year, and an increase of 17 per cent to
approximately 3.6 million barrels by the end of 2001.
Browne continued: 'In our downstream business, compared with the 1999
average, we expect marketing volumes to be up by 15 per cent this year and
30 per cent next year. And in our chemicals business, we anticipate annual
growth rates of around six per cent over the next two years, well ahead of
the growth in world GDP.'
Commenting on cost-savings, he said $2.1 billion of synergies had already
been delivered from the merger with Amoco, leaving around a further $3
billion to come from existing plans and from ARCO and Burmah Castrol.
He said return on capital employed for the quarter was over 20 per cent,
the highest in the sector. 'This is partly the result of cost-savings and
higher volumes. But it is also a direct consequence of the rigour and
discipline which this company has applied, and will continue to apply, to
business performance.'
Browne said that, including sales already announced, BP Amoco expected
disposals for the year to total $11-12 billion. He added that, following
approval from shareholders at its annual general meeting last month, the
company would begin buying back its shares at the appropriate time, through
an on-market rolling programme with brokers in the UK and US.
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