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BP PLC (BP)

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Tuesday 27 October, 2020

BP PLC

3Q20 Part 1 of 1

RNS Number : 2598D
BP PLC
27 October 2020
 

FOR IMMEDIATE RELEASE

 

London 27 October 2020

 

BP p.l.c. Group results

Third quarter and nine months 2020

 

For a printer friendly copy of this announcement, please click on the link below to open a PDF version.

http://www.rns-pdf.londonstockexchange.com/rns/2598D_1-2020-10-26.pdf

 

Highlights

Performance improving despite difficult environment

Financial results and progress

- Underlying replacement cost profit for the quarter was $0.1 billion, compared with a loss of $6.7 billion for the second quarter of 2020 and $2.3 billion profit for the third quarter of 2019. Compared to the previous quarter, the result benefitted from the absence of significant exploration write-offs and recovering oil and gas prices and demand. This was partly offset by a significantly lower oil trading result.

- Reported loss for the quarter was $0.5 billion, compared with losses of $16.8 billion for the previous quarter of 2020, reflecting absence of significant exploration write-offs and impairment charges, and $0.7 billion for the third quarter of 2019.

- Operating cash flow for the quarter, excluding Gulf of Mexico oil spill payments, was resilient at $5.3 billion, including $0.9 billion working capital release (after adjusting for net inventory holding gains). Gulf of Mexico oil spill payments in the quarter were $0.1 billion post-tax.

- Organic capital expenditure in the first three quarters of 2020 was $9.1 billion, in line with the full-year target of around $12 billion.

- BP continues to make progress towards its target of $2.5 billion in annual cash cost savings by end-2021 compared with 2019, with its new organization on schedule to be in place by start of 2021.

- Proceeds from divestments and other disposals in the quarter were $0.6 billion. BP has already completed or agreed transactions for approaching half its target of $25 billion in proceeds by 2025, including the agreed $5 billion sale of BP's petrochemicals business, expected to complete by year end.

- Net debt at quarter-end was $40.4 billion, down $0.5 billion. This includes the impact of the $1.1 billion payment for the completion of the joint venture with Reliance. Net debt is expected to fall in the fourth quarter as proceeds from divestments are received.

- A dividend of 5.25 cents per share was announced for the quarter. 

Performing while transforming

- BP has brought two new Upstream major projects into production since mid-year: Atlantis Phase 3 in the US Gulf of Mexico and, ahead of schedule, Khazzan Phase 2 (Ghazeer) in Oman.

- Operations continued to be good with refining availability of 96.2% and Upstream plant reliability of 93.0%. Upstream unit production costs for the nine months of 2020 were 10% lower than 2019, reflecting progress on cost efficiency and strategic divestments.

- While refining margins remained at historical lows, driven by the extremely weak environment, BP's marketing businesses recovered strongly in the quarter, with fuels marketing earnings growing 3% year on year and lubricants result broadly in line with a year earlier.

- BP agreed to enter the offshore wind sector through a strategic partnership with Equinor to pursue offshore wind opportunities in the US, including taking a 50% stake in two leases off the US east coast.

- BP announced plans for a network of ultra-fast chargers in Germany and BP Chargemaster won a contract to deliver over 1,000 charging points for Police Scotland.

- BP also announced a partnership with Microsoft under which the two companies will co-operate to progress their sustainability aims. As part of this, BP has agreed to supply Microsoft with renewable energy and to extend its use of Microsoft's cloud-based services.

 

See chart on pdf

 

Bernard Looney - chief executive officer :

Having set out our new strategy in detail, our priority is execution and, despite a challenging environment, we are doing just that - performing while transforming. Major projects are coming online, our consumer-facing businesses are really delivering and we remain firmly focused on cost and capital discipline. Importantly , net debt continues to fall. We are firmly committed to our updated financial frame, including the dividend - the first call on our funds.

 

Financial summary

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Profit (loss) for the period attributable to BP shareholders

 

(450)

 

(16,848)

 

(749)

 

 

(21,663)

 

4,007 

 

Inventory holding (gains) losses, net of tax

 

(194)

 

(809)

 

398 

 

 

2,734 

 

(488)

 

RC profit (loss)

 

(644)

 

(17,657)

 

(351)

 

 

(18,929)

 

3,519 

 

Net (favourable) adverse impact of non-operating items and fair value accounting effects, net of tax

 

730 

 

10,975 

 

2,605 

 

 

13,124 

 

3,904 

 

Underlying RC profit (loss)

 

86 

 

(6,682)

 

2,254 

 

 

(5,805)

 

7,423 

 

RC profit (loss) per ordinary share (cents)

 

(3.18)

 

(87.32)

 

(1.72)

 

 

(93.63)

 

17.33 

 

RC profit (loss) per ADS (dollars)

 

(0.19)

 

(5.24)

 

(0.10)

 

 

(5.62)

 

1.04 

 

Underlying RC profit (loss) per ordinary share (cents)

 

0.42 

 

(33.05)

 

11.06 

 

 

(28.72)

 

36.57 

 

Underlying RC profit (loss) per ADS (dollars)

 

0.03 

 

(1.98)

 

0.66 

 

 

(1.72)

 

2.19 

 

 

RC profit (loss), underlying RC profit, operating cash flow excluding Gulf of Mexico oil spill payments, working capital, organic capital expenditure, net debt and gearing are non-GAAP measures. These measures and inventory holding gains and losses, non-operating items, fair value accounting effects, major project, Upstream plant reliability. refining availability and cash balance point are defined in the Glossary on page 32.

 

 

Top of page 2

BP p.l.c. Group results

Third quarter and nine months 2020

 

 

Murray Auchincloss   - chief financial officer :

The underlying business performance in the quarter remained resilient a nd we made substantial progress in strengthening our balance sheet. In the quarter, net debt reduced to around $40 billion and our cash balance point was around $42 Brent, despite weak refining margins, low gas prices reduced product demand and the payment to Reliance. Funding the dividend remains our first priority and we are confident in moving towards our $35 billion net debt target, supported by value accretive divestments.

COVID-19 Update

Strengthening finances:

- BP has continued to take deliberate steps to strengthen its finances and drive down its cash balance point.

- Organic capital expenditure is on track for the revised full-year target of around $12 billion, announced in April. Total for the first nine months was $9.1 billion.

- BP has continued to progress its divestment programme towards delivery of $25 billion of proceeds by 2025. The $5 billion sale of its petrochemicals business is expected to complete by year end. In the quarter, BP also sold an interest in a portfolio of UK retail properties for $0.5 billion.

- BP's headcount has reduced by a total of around 2,800 so far during 2020, including around 300 who have already left the organization as part of the reinvent bp programme. A further 2,100 have elected to leave under the programme, which is expected to result in a total reduction of around 10,000 positions, the majority by the end of this year. BP expects to incur people-related costs associated with the reinvent programme, including redundancy payments, of around $1.4 billion over the next 1-2 years, primarily in 2020.

- Net debt was $40.4 billion at quarter-end and is expected to fall further in the fourth quarter as divestment proceeds are received. BP also continues to actively manage the profile of its debt portfolio, buying back/retiring $4.0 billion of shorter-term debt in the quarter. At quarter end BP had around $44 billion of liquidity, including cash and undrawn revolving credit facilities.

- BP will continue to review these actions, and any further actions that may be appropriate, in response to changes in prevailing market conditions.

- BP's future financial performance, including cash flows, net debt and gearing, will be impacted by the extent and duration of the current market conditions and the effectiveness of the actions that it and others take, including its financial interventions. It is difficult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of COVID-19 will be.

- Costs that are directly attributable to COVID-19 were around $0.1 billion for the quarter (second quarter 2020 $0.2 billion).

Protecting our people and operations:

- BP continues to monitor the impact of COVID-19 on global operations and to date there has been no direct significant operational impact, although this could change through the rest of the fourth quarter.

- Refinery utilization in the quarter was around 10% below 2019 levels, driven by COVID-19 impacts. Year-on-year, demand for retail fuels was lower by 7% and for aviation by around 60%. However fuels marketing earnings grew, benefitting from continued growth in convenience sales.

- Despite the significant challenges of the environment, BP's operations performed safely and reliably in the quarter. BP-operated Upstream plant reliability was 93.0% and BP-operated refining availability 96.2%.

- BP continues to take steps to protect and support its staff through the pandemic. The great majority of BP staff who are able to work from home are still doing so. Precautions in operations and offices include: reduced manning levels, changing working patterns, deploying appropriate personal protective equipment (PPE), enhanced cleaning and social distancing measures at plants and retail sites. Decisions on repopulating offices are being taken with caution and in compliance with local and national guidelines and regulations.

- BP is providing enhanced support and guidance to staff on safety, health and hygiene, homeworking and mental health.

Outlook:

- The ongoing impacts of the COVID-19 pandemic continue to create a volatile and challenging trading environment. There have been some early signs of global economic recovery as countries move to more regional or localised restrictions on movement and governments continue to offer monetary and fiscal policy stimulus. However, the shape and pace of the recovery is uncertain, as it depends on the further spread of the pandemic.

- The gradual recovery in oil demand seen since the spring looks set to continue, led by strengthening demand in Asia. The IEA estimates an increase of around six million barrels a day in 2021, as economies continue to open up. OPEC+ production cuts have played a major role in stabilising the market and there is already a reduction in crude and product inventories. Inventories are likely to reduce through 2021, although the pace at which they normalise will depend on the strength of economic recovery and the degree of continued OPEC+ compliance.

- US gas supply is expected to continue on a declining trend in 2021, largely due to a drop in associated gas production. Tightening gas balances have caused the prompt price to rise, and the futures curve for Henry Hub now averages above $3 for 2021. This would be expected to provide some support to pricing in Europe and Asia until more gas comes to market.

- The refining margin outlook remains challenging, given record high inventory levels and a levelling off in demand recovery for gasoline and jet fuel due to COVID-19.

The commentary above and following should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 3

Group headlines

Results

For the nine months, underlying replacement cost (RC) loss* was $5,805 million, compared with a profit of $7,423 million in 2019. Underlying RC loss is after adjusting RC loss* for a net charge for non-operating items* of $13,357 million and net favourable fair value accounting effects* of $233 million (both on a post-tax basis).

RC loss was $18,929 million for the nine months, compared with a profit of $3,519 million in 2019.

For the third quarter, underlying RC profit was $86 million, compared with $2,254 million in 2019. Underlying RC profit is after adjusting RC loss for a net charge for non-operating items of $1,109 million and net favourable fair value accounting effects of $379 million (both on a post-tax basis).

RC loss was $644 million for the third quarter, compared with $351 million in 2019.

Loss for the third quarter and nine months attributable to BP shareholders was $450 million and $21,663 million respectively, compared with a loss of $749 million and a profit of $4,007 million for the same periods in 2019.

See further information on pages 4, 27 and 28.

Depreciation, depletion and amortization

The charge for depreciation, depletion and amortization was $3.5 billion in the quarter and $11.5 billion in the nine months, compared with $4.3 billion and $13.3 billion for the same periods in 2019. BP now expects the 2020 full-year charge to be around 15% lower than 2019.

Effective tax rate

The effective tax rate (ETR) on RC profit or loss* for the third quarter and nine months was -504% and 13% respectively, compared with 168% and 49% for the same periods in 2019. Adjusting for non-operating items and fair value accounting effects, the underlying ETR* for the third quarter and nine months was 64% and -10% respectively, compared with 40% and 38% for the same periods a year ago. The higher underlying ETR for the third quarter reflects changes in the mix of profits and losses. The lower underlying ETR for the nine months mainly reflects the exploration write-offs with a limited deferred tax benefit and the reassessment of deferred tax asset recognition in the second quarter. ETR on RC profit or loss and underlying ETR are non-GAAP measures.

Dividend

BP today announced a quarterly dividend of 5.25 cents per ordinary share ($0.315 per ADS), which is expected to be paid on 18 December 2020. The corresponding amount in sterling will be announced on 7 December 2020. See page 24 for more information.

 

 

Share buybacks

BP repurchased 120 million ordinary shares at a cost of $776 million (including fees and stamp duty) in the nine months of 2020, all of which was completed in the first quarter. In January 2020, the share dilution buyback programme had fully offset the impact of scrip dilution since the third quarter 2017.

Operating cash flow*

Operating cash flow excluding Gulf of Mexico oil spill payments* was $5.3 billion for the third quarter and $11.4 billion for the nine months. These amounts include a working capital* release of $0.9 billion in the third quarter and a working capital build of $1.3 billion in the nine months, after adjusting for net inventory holding gains or losses* and working capital effects of the Gulf of Mexico oil spill. The comparable amount for the same periods in 2019 was $6.5 billion and $20.6 billion.

Operating cash flow as reported in the group cash flow statement was $5.2 billion for the third quarter and $9.9 billion for the nine months, including a working capital release of $0.6 billion and $0.6 billion respectively, compared with $6.1 billion and $18.2 billion for the same periods in 2019.

See page 30 and Glossary for further information on Gulf of Mexico oil spill cash flows and on working capital.

Capital expenditure*

Organic capital expenditure* for the third quarter and nine months was $2.5 billion and $9.1 billion respectively, compared with $3.9 billion and $11.3 billion for the same periods in 2019.

Inorganic capital expenditure* for the third quarter and nine months was $1.1 billion and $1.5 billion respectively, compared with $0.1 billion and $4.0 billion for the same periods in 2019.

BP expects total capital expenditure for 2021 to be at the lower end of a $13-15 billion range.

Organic capital expenditure and inorganic capital expenditure are non-GAAP measures. See page 26 for further information.

Divestment and other proceeds

Divestment proceeds* were $0.1 billion for the third quarter and $1.5 billion for the nine months, compared with $0.7 billion and $1.4 billion for the same periods in 2019. In addition, $0.5 billion was received in the third quarter of 2020 in relation to the sale of an interest in BP's UK retail property portfolio.

Net debt* and gearing*

Net debt at 30 September 2020 was $40.4 billion, compared with $46.5 billion a year ago. Gearing at 30 September 2020 was 33.0%, compared with 31.7% a year ago, reflecting the reduction in equity in the period. Gearing including leases* at 30 September 2020 was 37.7%, compared with 35.9% a year ago. Net debt, gearing and gearing including leases are non-GAAP measures. See pages 25 and 29 for more information.

 

 

 

 

 

 

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 32.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 4

Analysis of underlying RC profit (loss)* before interest and tax

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Underlying RC profit (loss) before interest and tax

 

 

 

 

 

 

 

Upstream

 

878 

 

(8,487)

 

2,139 

 

 

(5,738)

 

8,480 

 

Downstream

 

636 

 

1,405 

 

1,883 

 

 

2,962 

 

4,981 

 

Rosneft

 

(177)

 

(61)

 

802 

 

 

(255)

 

2,007 

 

Other businesses and corporate

 

(130)

 

(260)

 

(322)

 

 

(951)

 

(1,030)

 

Consolidation adjustment - UPII*

 

34 

 

(46)

 

30 

 

 

166 

 

51 

 

Underlying RC profit (loss) before interest and tax

 

1,241 

 

(7,449)

 

4,532 

 

 

(3,816)

 

14,489 

 

Finance costs and net finance expense relating to pensions and other post-retirement benefits

 

(610)

 

(677)

 

(754)

 

 

(1,955)

 

(2,260)

 

Taxation on an underlying RC basis

 

(402)

 

770 

 

(1,506)

 

 

(585)

 

(4,641)

 

Non-controlling interests

 

(143)

 

674 

 

(18)

 

 

551 

 

(165)

 

Underlying RC profit (loss) attributable to BP shareholders

 

86 

 

(6,682)

 

2,254 

 

 

(5,805)

 

7,423 

 

Reconciliations of underlying RC profit or loss attributable to BP shareholders to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 6-11 for the segments.

 

Analysis of RC profit (loss)* before interest and tax and reconciliation to profit (loss) for the period

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

RC profit (loss) before interest and tax

 

 

 

 

 

 

 

Upstream

 

30 

 

(22,008)

 

(1,050)

 

 

(20,955)

 

4,303 

 

Downstream

 

915 

 

594 

 

2,016 

 

 

2,173 

 

5,069 

 

Rosneft

 

(278)

 

(124)

 

802 

 

 

(419)

 

1,813 

 

Other businesses and corporate

 

24 

 

(317)

 

(412)

 

 

(991)

 

(1,339)

 

Consolidation adjustment - UPII

 

34 

 

(46)

 

30 

 

 

166 

 

51 

 

RC profit (loss) before interest and tax

 

725 

 

(21,901)

 

1,386 

 

 

(20,026)

 

9,897 

 

Finance costs and net finance expense relating to pensions and other post-retirement benefits

 

(808)

 

(791)

 

(899)

 

 

(2,389)

 

(2,649)

 

Taxation on a RC basis

 

(418)

 

4,361 

 

(820)

 

 

2,935 

 

(3,564)

 

Non-controlling interests

 

(143)

 

674 

 

(18)

 

 

551 

 

(165)

 

RC profit (loss) attributable to BP shareholders

 

(644)

 

(17,657)

 

(351)

 

 

(18,929)

 

3,519 

 

Inventory holding gains (losses)*

 

233 

 

1,088 

 

(512)

 

 

(3,563)

 

657 

 

Taxation (charge) credit on inventory holding gains and losses

 

(39)

 

(279)

 

114 

 

 

829 

 

(169)

 

Profit (loss) for the period attributable to BP shareholders

 

(450)

 

(16,848)

 

(749)

 

 

(21,663)

 

4,007 

 

 

 

Top of page 5

Operational updates

Upstream

Upstream production, which excludes Rosneft, for the nine months of the year averaged 2,448mboe/d, 6.4% lower than a year earlier. Underlying production*, for the nine months was slightly lower than 2019 reflecting adverse weather, primarily in the US Gulf of Mexico.

For the first nine months of 2020, BP-operated Upstream plant reliability* was 93.8% and Upstream unit production costs of $6.30/boe were more than 10% lower than in 2019 reflecting ongoing progress on cost efficiency in operations, and strategic divestments.

Since mid-year, BP has started production on the Atlantis Phase 3 project in the Gulf of Mexico, followed by the Ghazeer gas project, the second phase of development on Block 61 in Oman, that began production three months ahead of schedule. These are the first of five Upstream major projects* expected to begin production in 2020. BP also brought the Galeota expansion project in Trinidad into operation during the quarter.

In September, BP confirmed a gas discovery with the Nidoco NW-1 exploratory well in the Abu Madi West development lease, offshore Egypt.

The Trans Adriatic Gas pipeline (TAP) has completed construction and is expected to soon commence gas exports from Azerbaijan to customers in Europe.

Downstream

Fuels marketing earnings for the third quarter were 3% higher than in 2019, benefiting from continued growth in store gross margin, despite COVID-driven fuel demand impacts.

BP-operated refining availability continued to be strong, at 96.2% in the quarter. However, refining margins were extremely weak and refinery utilization was around 10% below 2019 levels. 

Lubricants saw strong demand recovery in the third quarter, including year-on-year growth in key markets such as India and China.

The sale of BP's petrochemicals business to INEOS, agreed in June, remains on track to complete by the end of 2020.

Strategicprogress

In September, BP agreed to enter into a strategic partnership with Equinor to develop offshore wind projects in the US. This includes the purchase of a 50% interest in two existing wind leases and associated projects off the east coast of the US. Subject to customary regulatory and other approvals, the transaction is expected to close in early 2021.

BP continued to progress electrification in the quarter with plans announced in July to build a network of ultra-fast charging points across Germany, including more than 100 charging points at Aral retail sites over the next 12 months. BP Chargemaster was recently awarded a contract by Police Scotland, to deliver more than 1,000 charging points over the next four years.

BP announced a strategic partnership with Microsoft under which the two companies will co-operate to progress their sustainability aims. As part of this, BP has agreed to supply Microsoft with renewable energy and to extend its use of Microsoft's cloud-based services.

BP announced an agreement to partner with Aberdeen City Council to help it achieve the goals of its Net Zero Vision to reduce emissions and become a climate positive city. This follows the partnership with the City of Houston that BP announced in July.

 

Financial framework

Operating cash flow excluding Gulf of Mexico oil spill payments* was $11.4 billion for the nine months of 2020, compared with $20.6 billion for the same period in 2019.

Organic capital expenditure * for the nine months of 2020 was $9.1 billion. BP expects 2020 organic capital expenditure to be around $12 billion.

Divestment and other proceeds were $2.4 billion for the nine months of 2020.

Gulf of Mexico oil spill payments on a post-tax basis were $1.5 billion in the nine months of 2020. Payments for the full year are expected to be around $1.5 billion on a post-tax basis.

Gearing * at 30 September 2020 was 33.0%, in part reflecting the recent hybrid bond issue. See page 25 for more information.

 

 

Operating metrics

 

Nine months 2020

 

Financial metrics

 

Nine months 2020

 

(vs. Nine months 2019)

 

 

(vs. Nine months 2019)

Tier 1 and tier 2 process safety events

 

66

 

Underlying RC profit (loss)*

 

$(5.8)bn

 

(-7)

 

 

(-$13.2bn)

Reported recordable injury frequency*

 

0.127

 

Operating cash flow excluding Gulf of Mexico oil spill payments (post-tax)

 

$11.4bn

 

(-29.2%)

 

 

(-$9.2bn)

Group production

 

3,542mboe/d

 

Organic capital expenditure

 

$9.1bn

 

(-5.7%)

 

 

(-$2.2bn)

Upstream production (excludes Rosneft segment)

 

2,448mboe/d

 

Gulf of Mexico oil spill payments (post-tax)

 

$1.5bn

 

(-6.4%)

 

 

(-$1.0bn)

Upstream unit production costs (a)

 

$6.30/boe

 

Divestment proceeds*

 

$1.5bn

 

(-10.3%)

 

 

(+$0.1bn)

BP-operated Upstream plant reliability

 

93.8%

 

Gearing

 

33.0%

 

(-0.6)

 

 

(+1.3)

BP-operated refining availability*

 

96.0%

 

Dividend per ordinary share (b)

 

5.25 cents

 

(+1.4)

 

 

(-48.8%)

(a)  Reflecting lower costs and divestment impacts.

(b)  Represents dividend announced in the quarter (vs. prior year quarter).

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 6

Upstream

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Profit (loss) before interest and tax

 

38 

 

(21,951)

 

(1,050)

 

 

(20,958)

 

4,295 

 

Inventory holding (gains) losses*

 

(8)

 

(57)

 

 

 

 

 

RC profit (loss) before interest and tax

 

30 

 

(22,008)

 

(1,050)

 

 

(20,955)

 

4,303 

 

Net (favourable) adverse impact of non-operating items* and fair value accounting effects*

 

848 

 

13,521 

 

3,189 

 

 

15,217 

 

4,177 

 

Underlying RC profit (loss) before interest and tax*(a)

 

878 

 

(8,487)

 

2,139 

 

 

(5,738)

 

8,480 

 

(a)  See page 7 for a reconciliation to segment RC profit before interest and tax by region.

 

Financial results

The replacement cost result before interest and tax for the third quarter and nine months was a profit of $30 million and a loss of $20,955 million respectively, compared with a loss of $1,050 million and a profit of $4,303 million for the same periods in 2019. The third quarter and nine months included a net non-operating charge of $631 million and $15,156 million respectively, compared with a net charge of $3,454 million and $4,224 million for the same periods in 2019. The net non-operating charge for the nine months is principally related to impairments associated with revisions to long-term price assumptions. Fair value accounting effects in the third quarter and nine months had an adverse impact of $217 million and $61 million respectively, compared with a favourable impact of $265 million and $47 million in the same periods of 2019.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost result before interest and tax for the third quarter and nine months was a profit of $878 million and a loss of $5,738 million respectively, compared with a profit of $2,139 million and $8,480 million for the same periods in 2019. The result for the third quarter mainly reflects lower liquids and gas realizations, partly offset by lower depreciation, depletion and amortization. The result for the nine months mainly reflects lower liquids and gas realizations and the impact of writing down certain exploration intangible carrying values.

Production

Production for the quarter was 2,243mboe/d, 12.7% lower than the third quarter of 2019 mainly due to divestments in BPX Energy, Alaska and Gulf of Suez oil concessions in Egypt. Underlying production* for the quarter decreased by 3.0% mainly due to decline associated with reduced capital investment levels and significant weather impacts from hurricanes in the US Gulf of Mexico.

For the nine months, production was 2,448mboe/d, 6.4% lower than the nine months of 2019. Underlying production for the nine months was slightly lower than 2019 reflecting adverse weather, primarily in the US Gulf of Mexico.

 

Key events

During the third quarter, BP was awarded eight operated and three non-operated blocks in the North Sea as part of the UK Oil & Gas Authority 32nd offshore licensing round.

On 25 August, BP confirmed it started production on Atlantis Phase 3 in the US Gulf of Mexico (BP operator 56%, BHP Billiton 44%).

On 16 September, BP confirmed a gas discovery with the Nidoco NW-1 exploratory well in the Abu Madi West development lease, offshore Egypt (Eni operator 75%, BP 25%).

On 28 September, BP Trinidad and Tobago LLC started up the Galeota expansion project in Trinidad.

On 1 October, BP confirmed force majeure was lifted on the Greater Tortue Ahmeyim (GTA) project offshore Mauritania and Senegal (BP operator 56%, Kosmos 27%, Petrosen 10%, SMHPM 7%).

On 6 October, BP confirmed the planned divestment to Premier Oil of its interests in the Andrew area and Shearwater assets, both located in the UK North Sea, will not proceed following the announcement of a proposed merger between Chrysaor and Premier Oil.

On 12 October, BP announced the start-up of production from Block 61 Phase 2 Ghazeer gas field in Oman (BP operator 60%, Makarim Gas Development Limited 30%, PC Oman Ventures Limited 10%).

 

Outlook

Looking ahead, we expect fourth-quarter 2020 reported production to be slightly lower than the third quarter due to maintenance activity.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 7

Upstream (continued)

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Underlying RC profit (loss) before interest and tax

 

 

 

 

 

 

 

US

 

125 

 

(2,960)

 

552 

 

 

(2,296)

 

2,025 

 

Non-US

 

753 

 

(5,527)

 

1,587 

 

 

(3,442)

 

6,455 

 

 

 

878 

 

(8,487)

 

2,139 

 

 

(5,738)

 

8,480 

 

Non-operating items (a)(b)

 

 

 

 

 

 

 

US

 

(114)

 

(2,122)

 

(3,338)

 

 

(2,868)

 

(3,814)

 

Non-US

 

(517)

 

(11,332)

 

(116)

 

 

(12,288)

 

(410)

 

 

 

(631)

 

(13,454)

 

(3,454)

 

 

(15,156)

 

(4,224)

 

Fair value accounting effects

 

 

 

 

 

 

 

US

 

57 

 

39 

 

19 

 

 

94 

 

(299)

 

Non-US

 

(274)

 

(106)

 

246 

 

 

(155)

 

346 

 

 

 

(217)

 

(67)

 

265 

 

 

(61)

 

47 

 

RC profit (loss) before interest and tax

 

 

 

 

 

 

 

US

 

68 

 

(5,043)

 

(2,767)

 

 

(5,070)

 

(2,088)

 

Non-US

 

(38)

 

(16,965)

 

1,717 

 

 

(15,885)

 

6,391 

 

 

 

30 

 

(22,008)

 

(1,050)

 

 

(20,955)

 

4,303 

 

Exploration expense

 

 

 

 

 

 

 

US

 

40 

 

2,560 

 

53 

 

 

2,620 

 

147 

 

Non-US

 

150 

 

7,114 

 

132 

 

 

7,446 

 

551 

 

 

 

190 

 

9,674 

 

185 

 

 

10,066 

 

698 

 

Of which: Exploration expenditure written off(b)

 

50 

 

9,618 

 

115 

 

 

9,766 

 

476 

 

Production (net of royalties)(c)(d)

 

 

 

 

 

 

 

Liquids* (mb/d)

 

 

 

 

 

 

 

US

 

363 

 

472 

 

449 

 

 

446 

 

470 

 

Europe

 

143 

 

166 

 

118 

 

 

152 

 

138 

 

Rest of World

 

623 

 

728 

 

657 

 

 

668 

 

667 

 

 

 

1,129 

 

1,366 

 

1,224 

 

 

1,266 

 

1,274 

 

Natural gas (mmcf/d)

 

 

 

 

 

 

 

US

 

1,419 

 

1,549 

 

2,396 

 

 

1,671 

 

2,372 

 

Europe

 

265 

 

298 

 

188 

 

 

269 

 

155 

 

Rest of World

 

4,774 

 

4,878 

 

5,211 

 

 

4,915 

 

5,254 

 

 

 

6,457 

 

6,725 

 

7,795 

 

 

6,855 

 

7,782 

 

Total hydrocarbons* (mboe/d)

 

 

 

 

 

 

 

US

 

608 

 

739 

 

862 

 

 

735 

 

879 

 

Europe

 

188 

 

217 

 

151 

 

 

198 

 

165 

 

Rest of World

 

1,446 

 

1,569 

 

1,555 

 

 

1,516 

 

1,573 

 

 

 

2,243 

 

2,525 

 

2,568 

 

 

2,448 

 

2,616 

 

Average realizations* (e)

 

 

 

 

 

 

 

Total liquids(f) ($/bbl)

 

38.17 

 

22.75 

 

55.68 

 

 

35.51 

 

58.38 

 

Natural gas ($/mcf)

 

2.56 

 

2.53 

 

3.11 

 

 

2.65 

 

3.49 

 

Total hydrocarbons ($/boe)

 

26.42 

 

19.06 

 

35.48 

 

 

25.68 

 

38.55 

 

(a)  Second quarter and nine months 2020 principally relate to impairments in a number of our businesses resulting from the revisions to BP's long-term price assumptions. Nine months 2020 also includes impairment charges and loss principally related to the disposal of our Alaska business, BPX Energy assets and oil price impacts in the UK North Sea. Third quarter and nine months 2019 include impairment charges related to the disposal of heritage BPX Energy assets, Alaska and GUPCO divestment. See Note 3 for further information.

(b)  Second quarter and nine months 2020 include the write-off of $1,969 million relating to value ascribed to certain licences as part of the accounting for the acquisition of upstream assets in Brazil, India and the Gulf of Mexico. This has been classified within the 'other' category of non-operating items. See Note 4 for further information.

(c)  Includes BP's share of production of equity-accounted entities in the Upstream segment.

(d)  Because of rounding, some totals may not agree exactly with the sum of their component parts.

(e)  Realizations are based on sales by consolidated subsidiaries only - this excludes equity-accounted entities.

(f)  Includes condensate, natural gas liquids and bitumen.

 

 

Top of page 8

Downstream

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Profit (loss) before interest and tax

 

1,106 

 

1,572 

 

1,583 

 

 

(1,273)

 

5,775 

 

Inventory holding (gains) losses*

 

(191)

 

(978)

 

433 

 

 

3,446 

 

(706)

 

RC profit before interest and tax

 

915 

 

594 

 

2,016 

 

 

2,173 

 

5,069 

 

Net (favourable) adverse impact of non-operating items* and fair value accounting effects*

 

(279)

 

811 

 

(133)

 

 

789 

 

(88)

 

Underlying RC profit before interest and tax*(a)

 

636 

 

1,405 

 

1,883 

 

 

2,962 

 

4,981 

 

(a)  See page 9 for a reconciliation to segment RC profit before interest and tax by region and by business.

 

Financial results

The replacement cost profit before interest and tax for the third quarter and nine months was $915 million and $2,173 million respectively, compared with $2,016 million and $5,069 million for the same periods in 2019.

The third quarter and nine months include a net non-operating charge of $146 million and $924 million respectively, compared with a charge of $14 million and $49 million for the same periods in 2019. The charge for the quarter mainly relates to restructuring, while the charge for the nine months primarily reflects impairments. Fair value accounting effects in the third quarter and nine months had a favourable impact of $425 million and $135 million respectively, compared with a favourable impact of $147 million and $137 million in the same periods in 2019.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $636 million and $2,962 million respectively, compared with $1,883 million and $4,981 million for the same periods in 2019.

Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 9.

Fuels

The fuels business reported an underlying replacement cost profit before interest and tax of $222 million for the third quarter and $2,206 million for the nine months, compared with $1,438 million and $3,691 million for the same periods in 2019.

Across fuels marketing we saw earnings growth of 3% year on year primarily driven by increased store gross margin. This growth is despite continued COVID-19 demand impacts with retail volumes in the quarter 7% lower than last year. The result for the nine months, however, remained impacted by COVID-19, with year to date retail volumes 15% lower than 2019, and aviation volumes down by 50%.

The refining result for the quarter and nine months continued to be impacted by an extremely weak environment with refining margins remaining at historical lows. Utilization of 83% for the quarter improved compared with the second quarter, albeit still around 10% lower than 2019, driven by continued COVID-19 demand impacts. These factors were partially offset by a lower level of turnaround activity and strong refining availability. 

The quarterly result also reflects a weaker contribution from supply and trading, although the contribution for the nine months remains higher year on year.

We continued to progress our advanced mobility agenda in the quarter with plans announced in July to build a network of ultra-fast charging across Germany, beginning with the roll out of more than 100 charging points at Aral retail sites over the next 12 months.  In addition, BP Chargemaster was recently awarded the UK's largest ever EV infrastructure contract by Police Scotland, to deliver more than 1,000 charging points over the next four years.

Lubricants

The lubricants business saw significant recovery in the third quarter as volumes improved to levels similar to 2019, supported by growth of more than 5% in China and India. The result for the nine months, however, continued to reflect significant COVID-19 demand destruction seen in the first half of 2020.

Underlying replacement cost profit before interest and tax was $326 million for the third quarter and $556 million for the nine months, compared with $332 million and $925 million for the same periods in 2019.

Petrochemicals

The petrochemicals business reported an underlying replacement cost profit before interest and tax of $88 million for the third quarter and $200 million for the nine months, compared with $113 million and $365 million for the same periods in 2019. The result for the quarter and nine months reflects a significantly weaker margin environment and the demand impact of COVID-19. 

As previously reported, in the second quarter we announced the sale of BP's petrochemicals business to INEOS for a total consideration of $5 billion, subject to customary adjustments. The transaction remains on track and, subject to approvals, is expected to complete by the end of the year.

Outlook

Looking to the fourth quarter of 2020, we expect continued pressure on industry refining margins and for marketing volumes to remain impacted by COVID-19 restrictions.

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 9

Downstream (continued)

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Underlying RC profit before interest and tax - by region

 

 

 

 

 

 

 

US

 

96 

 

719 

 

537 

 

 

1,372 

 

1,634 

 

Non-US

 

540 

 

686 

 

1,346 

 

 

1,590 

 

3,347 

 

 

 

636 

 

1,405 

 

1,883 

 

 

2,962 

 

4,981 

 

Non-operating items

 

 

 

 

 

 

 

US

 

(27)

 

(69)

 

(5)

 

 

(90)

 

(2)

 

Non-US

 

(119)

 

(711)

 

(9)

 

 

(834)

 

(47)

 

 

 

(146)

 

(780)

 

(14)

 

 

(924)

 

(49)

 

Fair value accounting effects(a)

 

 

 

 

 

 

 

US

 

78 

 

(71)

 

116 

 

 

152 

 

185 

 

Non-US

 

347 

 

40 

 

31 

 

 

(17)

 

(48)

 

 

 

425 

 

(31)

 

147 

 

 

135 

 

137 

 

RC profit before interest and tax

 

 

 

 

 

 

 

US

 

147 

 

579 

 

648 

 

 

1,434 

 

1,817 

 

Non-US

 

768 

 

15 

 

1,368 

 

 

739 

 

3,252 

 

 

 

915 

 

594 

 

2,016 

 

 

2,173 

 

5,069 

 

Underlying RC profit before interest and tax - by business (b)(c)

 

 

 

 

 

 

 

Fuels

 

222 

 

1,295 

 

1,438 

 

 

2,206 

 

3,691 

 

Lubricants

 

326 

 

63 

 

332 

 

 

556 

 

925 

 

Petrochemicals

 

88 

 

47 

 

113 

 

 

200 

 

365 

 

 

 

636 

 

1,405 

 

1,883 

 

 

2,962 

 

4,981 

 

Non-operating items and fair value accounting effects (a)

 

 

 

 

 

 

 

Fuels

 

288 

 

(748)

 

135 

 

 

(717)

 

73 

 

Lubricants

 

(7)

 

(51)

 

 

 

(58)

 

18 

 

Petrochemicals

 

(2)

 

(12)

 

(2)

 

 

(14)

 

(3)

 

 

 

279 

 

(811)

 

133 

 

 

(789)

 

88 

 

RC profit before interest and tax (b)(c)

 

 

 

 

 

 

 

Fuels

 

510 

 

547 

 

1,573 

 

 

1,489 

 

3,764 

 

Lubricants

 

319 

 

12 

 

332 

 

 

498 

 

943 

 

Petrochemicals

 

86 

 

35 

 

111 

 

 

186 

 

362 

 

 

 

915 

 

594 

 

2,016 

 

 

2,173 

 

5,069 

 

 

 

 

 

 

 

 

 

BP average refining marker margin (RMM)* ($/bbl)

 

6.2 

 

5.9 

 

14.7 

 

 

7.0 

 

13.4 

 

 

 

 

 

 

 

 

 

Refinery throughputs (mb/d)

 

 

 

 

 

 

 

US

 

701 

 

614 

 

781 

 

 

687 

 

730 

 

Europe

 

699 

 

716 

 

815 

 

 

750 

 

766 

 

Rest of World

 

187 

 

157 

 

217 

 

 

189 

 

221 

 

 

 

1,587 

 

1,487 

 

1,813 

 

 

1,626 

 

1,717 

 

BP-operated refining availability* (%)

 

96.2 

 

95.6 

 

96.1 

 

 

96.0 

 

94.6 

 

 

 

 

 

 

 

 

 

Marketing sales of refined products (mb/d)

 

 

 

 

 

 

 

US

 

1,083 

 

872 

 

1,172 

 

 

997 

 

1,141 

 

Europe

 

849 

 

685 

 

1,157 

 

 

830 

 

1,081 

 

Rest of World

 

422 

 

364 

 

459 

 

 

435 

 

500 

 

 

 

2,354 

 

1,921 

 

2,788 

 

 

2,262 

 

2,722 

 

Trading/supply sales of refined products

 

2,618 

 

3,172 

 

3,157 

 

 

3,054 

 

3,183 

 

Total sales volumes of refined products

 

4,972 

 

5,093 

 

5,945 

 

 

5,316 

 

5,905 

 

 

 

 

 

 

 

 

 

Petrochemicals production (kte)

 

 

 

 

 

 

 

US

 

541 

 

410 

 

564 

 

 

1,562 

 

1,749 

 

Europe

 

1,325 

 

1,246 

 

1,187 

 

 

3,942 

 

3,573 

 

Rest of World

 

1,211 

 

1,271 

 

1,325 

 

 

3,635 

 

3,780 

 

 

 

3,077 

 

2,927 

 

3,076 

 

 

9,139 

 

9,102 

 

(a)  For Downstream, fair value accounting effects arise solely in the fuels business. See page 28 for further information.

(b)  Segment-level overhead expenses are included in the fuels business result.

(c)  Results from petrochemicals at our Gelsenkirchen and Mülheim sites in Germany are reported in the fuels business.

 

 

Top of page 10

Rosneft

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020 (a)

2020

2019

 

2020 (a)

2019

Profit (loss) before interest and tax(b)(c)

 

(244)

 

(71)

 

723 

 

 

(533)

 

1,772 

 

Inventory holding (gains) losses*

 

(34)

 

(53)

 

79 

 

 

114 

 

41 

 

RC profit (loss) before interest and tax

 

(278)

 

(124)

 

802 

 

 

(419)

 

1,813 

 

Net charge (credit) for non-operating items*

 

101 

 

63 

 

 

 

164 

 

194 

 

Underlying RC profit (loss) before interest and tax*

 

(177)

 

(61)

 

802 

 

 

(255)

 

2,007 

 

 

Financial results

Replacement cost (RC) loss before interest and tax for the third quarter and nine months was $278 million and $419 million respectively, compared with a profit of $802 million and $1,813 million for the same periods in 2019.

After adjusting for non-operating items, the underlying RC loss before interest and tax for the third quarter and nine months was $177 million and $255 million respectively, compared with a profit of $802 million and $2,007 million for the same periods in 2019.

Compared with the same periods in 2019, the results for the third quarter and nine months primarily reflects lower oil prices and adverse foreign exchange effects and lower production as a result of OPEC+ agreement.

 

 

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

 

 

2020 (a)

2020

2019

 

2020 (a)

2019

Production (net of royalties) (BP share)

 

 

 

 

 

 

 

Liquids* (mb/d)

 

858 

 

856 

 

920 

 

 

877 

 

923 

 

Natural gas (mmcf/d)

 

1,260 

 

1,248 

 

1,236 

 

 

1,261 

 

1,271 

 

Total hydrocarbons* (mboe/d)

 

1,075 

 

1,071 

 

1,133 

 

 

1,094 

 

1,142 

 

(a)  The operational and financial information of the Rosneft segment for the third quarter and nine months is based on preliminary operational and financial results of Rosneft for the three months and nine months ended 30 September 2020. Actual results may differ from these amounts. Amounts reported for the third quarter are based on BP's 21.96% average economic interest for the quarter (second quarter 2020 21.20%, first quarter 2020 and 2019 19.75%).

(b)  The Rosneft segment result includes equity-accounted earnings arising from BP's economic interest in Rosneft as adjusted for accounting required under IFRS relating to BP's purchase of its interest in Rosneft, and the amortization of the deferred gain relating to the divestment of BP's interest in TNK-BP. 

(c)  BP's adjusted share of Rosneft's earnings after Rosneft's own finance costs, taxation and non-controlling interests is included in the BP group income statement within profit before interest and taxation. For each year-to-date period it is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date.

 

 

Top of page 11

Other businesses and corporate

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Profit (loss) before interest and tax

 

24 

 

(317)

 

(412)

 

 

(991)

 

(1,339)

 

Inventory holding (gains) losses*

 

 

 

 

 

 

 

RC profit (loss) before interest and tax

 

24 

 

(317)

 

(412)

 

 

(991)

 

(1,339)

 

Net (favourable) adverse impact of non-operating items* and fair value accounting effects*

 

(154)

 

57 

 

90 

 

 

40 

 

309 

 

Underlying RC profit (loss) before interest and tax*

 

(130)

 

(260)

 

(322)

 

 

(951)

 

(1,030)

 

Underlying RC profit (loss) before interest and tax

 

 

 

 

 

 

 

US

 

(65)

 

(129)

 

(249)

 

 

(318)

 

(628)

 

Non-US

 

(65)

 

(131)

 

(73)

 

 

(633)

 

(402)

 

 

 

(130)

 

(260)

 

(322)

 

 

(951)

 

(1,030)

 

Non-operating items

 

 

 

 

 

 

 

US

 

(62)

 

(62)

 

(85)

 

 

(172)

 

(291)

 

Non-US

 

(50)

 

46 

 

(5)

 

 

(93)

 

(18)

 

 

 

(112)

 

(16)

 

(90)

 

 

(265)

 

(309)

 

Fair value accounting effects

 

 

 

 

 

 

 

US

 

 

 

 

 

 

 

Non-US

 

266 

 

(41)

 

 

 

225 

 

 

 

 

266 

 

(41)

 

 

 

225 

 

 

RC profit (loss) before interest and tax

 

 

 

 

 

 

 

US

 

(127)

 

(191)

 

(334)

 

 

(490)

 

(919)

 

Non-US

 

151 

 

(126)

 

(78)

 

 

(501)

 

(420)

 

 

 

24 

 

(317)

 

(412)

 

 

(991)

 

(1,339)

 

Other businesses and corporate comprises our alternative energy business, shipping, treasury, BP ventures and corporate activities including centralized functions, and any residual costs of the Gulf of Mexico oil spill.

Financial results

The replacement cost result before interest and tax for the third quarter and nine months was a profit of $24 million and a loss of $991 million respectively, compared with a loss of $412 million and $1,339 million for the same periods in 2019.

The results included a net non-operating charge of $112 million for the third quarter and $265 million for the nine months, compared with a charge of $90 million and $309 million for the same periods in 2019. Fair value accounting effects in the third quarter and nine months had a favourable impact of $266 million and $225 million. See page 28 for further information.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost loss before interest and tax for the third quarter and nine months was $130 million and $951 million respectively, compared with $322 million and $1,030 million for the same periods in 2019.

Alternative Energy

BP's net ethanol-equivalent production* for the third quarter and nine months of the year averaged 36.5kb/d and 22.1kb/d respectively, compared with 24.4kb/d and 14.4kb/d for the 100% BP-owned business for the same periods in 2019.

Net wind generation capacity* was 1,072MW at 30 September 2020, compared with 926MW at 30 September 2019. BP's net share of wind generation for the third quarter and nine months was 454GWh and 1,904GWh respectively, compared with 506GWh and 1,967GWh for the same periods in 2019. In September BP acquired the remaining 50% interest in the BP-operated Fowler Ridge 1 wind asset. The asset increased net wind capacity by 150MW to 1,072MW.

In September BP and Equinor announced the formation of a new strategic partnership to develop four assets in two existing offshore wind leases located offshore New York and Massachusetts. Subject to customary regulatory and other approvals, the transaction is expected to close in early 2021 and will mark BP's first entry into the offshore wind sector, one of the fastest growing energy sectors.

Lightsource BP has developed 637MW for the nine months of the year to 30 September 2020. In September Lightsource BP reached financial close and mobilized construction for the 300MW Bighorn Solar project in the US, which will deliver energy to the EVRAZ North America steel mill in Pueblo, Colorado. In October they completed construction on three solar sites in Franklin County, Pennsylvania in the US. The sites will deliver electricity to Penn State University under the 70MW Power Purchase Agreement (PPA) to provide over 100 million kilowatt-hours of electricity in year one.

BP has developed a total of 3GW net renewable energy generating capacity by 30 September 2020 across our businesses. We intend to continue building our renewable energy businesses and to have developed 20GW by 2025.

Outlook

Other businesses and corporate average quarterly charges, excluding non-operating items, fair value accounting effects and foreign exchange volatility impact, are expected to be around $350 million although this will fluctuate quarter to quarter.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

Top of page 12

Financial statements

Group income statement

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

 

 

 

 

 

 

 

 

Sales and other operating revenues (Note 6)

 

44,251 

 

31,676 

 

68,291 

 

 

135,577 

 

207,288 

 

Earnings from joint ventures - after interest and tax

 

73 

 

(567)

 

90 

 

 

(516)

 

413 

 

Earnings from associates - after interest and tax

 

(332)

 

(100)

 

784 

 

 

(676)

 

2,041 

 

Interest and other income

 

183 

 

107 

 

126 

 

 

430 

 

559 

 

Gains on sale of businesses and fixed assets

 

27 

 

74 

 

 

 

117 

 

145 

 

Total revenues and other income

 

44,202 

 

31,190 

 

69,292 

 

 

134,932 

 

210,446 

 

Purchases

 

31,645 

 

18,778 

 

52,273 

 

 

99,301 

 

156,228 

 

Production and manufacturing expenses

 

5,073 

 

5,211 

 

5,259 

 

 

16,383 

 

16,006 

 

Production and similar taxes (Note 8)

 

140 

 

124 

 

340 

 

 

467 

 

1,135 

 

Depreciation, depletion and amortization (Note 7)

 

3,467 

 

3,937 

 

4,297 

 

 

11,463 

 

13,346 

 

Impairment and losses on sale of businesses and fixed assets (Note 3)

 

294 

 

11,770 

 

3,416 

 

 

13,213 

 

4,418 

 

Exploration expense (Note 4)

 

190 

 

9,674 

 

185 

 

 

10,066 

 

698 

 

Distribution and administration expenses

 

2,435 

 

2,509 

 

2,648 

 

 

7,628 

 

8,061 

 

Profit (loss) before interest and taxation

 

958 

 

(20,813)

 

874 

 

 

(23,589)

 

10,554 

 

Finance costs

 

800 

 

783 

 

883 

 

 

2,366 

 

2,603 

 

Net finance expense relating to pensions and other post-retirement benefits

 

 

 

16 

 

 

23 

 

46 

 

Profit (loss) before taxation

 

150 

 

(21,604)

 

(25)

 

 

(25,978)

 

7,905 

 

Taxation

 

457 

 

(4,082)

 

706 

 

 

(3,764)

 

3,733 

 

Profit (loss) for the period

 

(307)

 

(17,522)

 

(731)

 

 

(22,214)

 

4,172 

 

Attributable to

 

 

 

 

 

 

 

BP shareholders

 

(450)

 

(16,848)

 

(749)

 

 

(21,663)

 

4,007 

 

Non-controlling interests

 

143 

 

(674)

 

18 

 

 

(551)

 

165 

 

 

 

(307)

 

(17,522)

 

(731)

 

 

(22,214)

 

4,172 

 

 

 

 

 

 

 

 

 

Earnings per share (Note 9)

 

 

 

 

 

 

 

Profit (loss) for the period attributable to BP shareholders

 

 

 

 

 

 

 

Per ordinary share (cents)

 

 

 

 

 

 

 

Basic

 

(2.22)

 

(83.32)

 

(3.68)

 

 

(107.15)

 

19.74 

 

Diluted

 

(2.22)

 

(83.32)

 

(3.68)

 

 

(107.15)

 

19.63 

 

Per ADS (dollars)

 

 

 

 

 

 

 

Basic

 

(0.13)

 

(5.00)

 

(0.22)

 

 

(6.43)

 

1.18 

 

Diluted

 

(0.13)

 

(5.00)

 

(0.22)

 

 

(6.43)

 

1.18 

 

 

 

Top of page 13

Condensed group statement of comprehensive income

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

 

 

 

 

 

 

 

 

Profit (loss) for the period

 

(307)

 

(17,522)

 

(731)

 

 

(22,214)

 

4,172 

 

Other comprehensive income

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Currency translation differences(a)

 

(166)

 

1,371 

 

(986)

 

 

(3,437)

 

134 

 

Exchange (gains) losses on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets

 

 

 

 

 

 

 

Cash flow hedges and costs of hedging

 

(90)

 

68 

 

(17)

 

 

63 

 

135 

 

Share of items relating to equity-accounted entities, net of tax

 

308 

 

(333)

 

119 

 

 

417 

 

39 

 

Income tax relating to items that may be reclassified

 

(16)

 

(37)

 

12 

 

 

64 

 

(31)

 

 

 

36 

 

1,072 

 

(872)

 

 

(2,889)

 

277 

 

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

 

Remeasurements of the net pension and other post-retirement benefit liability or asset(b)

 

78 

 

(1,960)

 

(260)

 

 

(163)

 

(1,152)

 

Cash flow hedges that will subsequently be transferred to the balance sheet

 

 

(2)

 

(10)

 

 

(2)

 

(9)

 

Income tax relating to items that will not be reclassified

 

(16)

 

623 

 

27 

 

 

(16)

 

302 

 

 

 

70 

 

(1,339)

 

(243)

 

 

(181)

 

(859)

 

Other comprehensive income

 

106 

 

(267)

 

(1,115)

 

 

(3,070)

 

(582)

 

Total comprehensive income

 

(201)

 

(17,789)

 

(1,846)

 

 

(25,284)

 

3,590 

 

Attributable to

 

 

 

 

 

 

 

BP shareholders

 

(364)

 

(17,142)

 

(1,848)

 

 

(24,723)

 

3,434 

 

Non-controlling interests

 

163 

 

(647)

 

 

 

(561)

 

156 

 

 

 

(201)

 

(17,789)

 

(1,846)

 

 

(25,284)

 

3,590 

 

 

(a)  Second quarter and nine months 2020 was principally affected by movements in the Russian rouble against the US dollar.

(b)  See Note 1 for further information.

 

 

Top of page 14

Condensed group statement of changes in equity

 

 

BP shareholders'

Non-controlling interests

Total

 

equity

Hybrid bonds

Other interest

equity

At 1 January 2020

 

98,412 

 

 

2,296 

 

100,708 

 

 

 

 

 

 

 

 

(24,723)

 

133 

 

(694)

 

(25,284)

 

 

(5,305)

 

 

(163)

 

(5,468)

 

Cash flow hedges transferred to the balance sheet, net of tax

 

 

 

 

 

 

(776)

 

 

 

(776)

 

 

547 

 

 

 

547 

 

Share of equity-accounted entities' changes in equity, net of tax

 

 

 

 

 

 

(48)

 

11,909 

 

 

11,861 

 

 

 

(27)

 

 

(27)

 

 

 

 

 

 

Transactions involving non-controlling interests, net of tax

 

(160)

 

 

746 

 

586 

 

At 30 September 2020

 

67,955 

 

12,015 

 

2,185 

 

82,155 

 

 

 

 

 

 

 

 

 

BP shareholders'

Non-controlling interests

Total

$ million

 

equity

Hybrid bonds

Other interest

equity

 

99,444 

 

 

2,104 

 

101,548 

 

Adjustment on adoption of IFRS 16, net of tax(a)

 

(329)

 

 

(1)

 

(330)

 

At 1 January 2019

 

99,115 

 

 

2,103 

 

101,218 

 

 

 

 

 

 

 

 

3,434 

 

 

156 

 

3,590 

 

 

(4,857)

 

 

(166)

 

(5,023)

 

Cash flow hedges transferred to the balance sheet, net of tax

 

18 

 

 

 

18 

 

 

(340)

 

 

 

(340)

 

 

544 

 

 

 

544 

 

Share of equity-accounted entities' changes in equity, net of tax

 

 

 

 

 

At 30 September 2019

 

97,922 

 

 

2,093 

 

100,015 

 

(a)  See Note 1 in BP Annual Report and Form 20-F 2019 for further information.

 

 

Top of page 15

Group balance sheet

 

 

30 September

31 December

$ million

 

2020

2019

Non-current assets

 

 

 

Property, plant and equipment

 

116,580 

 

132,642 

 

Goodwill

 

12,457 

 

11,868 

 

Intangible assets

 

6,293 

 

15,539 

 

Investments in joint ventures

 

7,953 

 

9,991 

 

Investments in associates

 

16,929 

 

20,334 

 

Other investments

 

2,439 

 

1,276 

 

Fixed assets

 

162,651 

 

191,650 

 

Loans

 

711 

 

630 

 

Trade and other receivables

 

4,239 

 

2,147 

 

Derivative financial instruments

 

7,705 

 

6,314 

 

Prepayments

 

497 

 

781 

 

Deferred tax assets

 

6,816 

 

4,560 

 

Defined benefit pension plan surpluses

 

6,806 

 

7,053 

 

 

 

189,425 

 

213,135 

 

Current assets

 

 

 

Loans

 

555 

 

339 

 

Inventories

 

13,840 

 

20,880 

 

Trade and other receivables

 

15,954 

 

24,442 

 

Derivative financial instruments

 

3,562 

 

4,153 

 

Prepayments

 

645 

 

857 

 

Current tax receivable

 

681 

 

1,282 

 

Other investments

 

298 

 

169 

 

Cash and cash equivalents

 

30,749 

 

22,472 

 

 

 

66,284 

 

74,594 

 

Assets classified as held for sale (Note 2)

 

4,541 

 

7,465 

 

 

 

70,825 

 

82,059 

 

Total assets

 

260,250 

 

295,194 

 

Current liabilities

 

 

 

Trade and other payables

 

33,823 

 

46,829 

 

Derivative financial instruments

 

3,088 

 

3,261 

 

Accruals

 

3,822 

 

5,066 

 

Lease liabilities

 

1,907 

 

2,067 

 

Finance debt

 

11,013 

 

10,487 

 

Current tax payable

 

804 

 

2,039 

 

Provisions

 

2,563 

 

2,453 

 

 

 

57,020 

 

72,202 

 

Liabilities directly associated with assets classified as held for sale (Note 2)

 

1,057 

 

1,393 

 

 

 

58,077 

 

73,595 

 

Non-current liabilities

 

 

 

Other payables

 

11,908 

 

12,626 

 

Derivative financial instruments

 

4,761 

 

5,537 

 

Accruals

 

908 

 

996 

 

Lease liabilities

 

7,375 

 

7,655 

 

Finance debt

 

61,796 

 

57,237 

 

Deferred tax liabilities

 

6,634 

 

9,750 

 

Provisions

 

17,892 

 

18,498 

 

Defined benefit pension plan and other post-retirement benefit plan deficits 

 

8,744 

 

8,592 

 

 

 

120,018 

 

120,891 

 

Total liabilities

 

178,095 

 

194,486 

 

Net assets

 

82,155 

 

100,708 

 

Equity

 

 

 

BP shareholders' equity

 

67,955 

 

98,412 

 

Non-controlling interests

 

14,200 

 

2,296 

 

Total equity

 

82,155 

 

100,708 

 

 

 

Top of page 16

Condensed group cash flow statement

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Operating activities

 

 

 

 

 

 

 

Profit (loss) before taxation

 

150 

 

(21,604)

 

(25)

 

 

(25,978)

 

7,905 

 

Adjustments to reconcile profit (loss) before taxation to net cash provided by operating activities

 

 

 

 

 

 

 

Depreciation, depletion and amortization and exploration expenditure written off

 

3,517 

 

13,555 

 

4,412 

 

 

21,229 

 

13,822 

 

Impairment and (gain) loss on sale of businesses and fixed assets

 

267 

 

11,696 

 

3,415 

 

 

13,096 

 

4,273 

 

Earnings from equity-accounted entities, less dividends received

 

1,018 

 

860 

 

(236)

 

 

2,383 

 

(1,220)

 

Net charge for interest and other finance expense, less net interest paid

 

60 

 

17 

 

257 

 

 

214 

 

407 

 

Share-based payments

 

199 

 

351 

 

149 

 

 

544 

 

563 

 

Net operating charge for pensions and other post-retirement benefits, less contributions and benefit payments for unfunded plans

 

(46)

 

(34)

 

(50)

 

 

(100)

 

(195)

 

Net charge for provisions, less payments

 

293 

 

(365)

 

(132)

 

 

(131)

 

(446)

 

Movements in inventories and other current and non-current assets and liabilities

 

556 

 

(609)

 

141 

 

 

630 

 

(2,612)

 

Income taxes paid

 

(810)

 

(130)

 

(1,875)

 

 

(1,994)

 

(4,330)

 

Net cash provided by operating activities

 

5,204 

 

3,737 

 

6,056 

 

 

9,893 

 

18,167 

 

Investing activities

 

 

 

 

 

 

 

Expenditure on property, plant and equipment, intangible and other assets

 

(2,577)

 

(3,018)

 

(3,954)

 

 

(9,384)

 

(11,482)

 

Acquisitions, net of cash acquired

 

(10)

 

 

13 

 

 

(27)

 

(3,529)

 

Investment in joint ventures

 

(12)

 

(8)

 

(60)

 

 

(38)

 

(80)

 

Investment in associates

 

(1,037)

 

(41)

 

(22)

 

 

(1,115)

 

(221)

 

Total cash capital expenditure

 

(3,636)

 

(3,067)

 

(4,023)

 

 

(10,564)

 

(15,312)

 

Proceeds from disposal of fixed assets

 

32 

 

10 

 

171 

 

 

52 

 

476 

 

Proceeds from disposal of businesses, net of cash disposed

 

84 

 

670 

 

536 

 

 

1,425 

 

909 

 

Proceeds from loan repayments

 

50 

 

543 

 

63 

 

 

656 

 

182 

 

Net cash used in investing activities

 

(3,470)

 

(1,844)

 

(3,253)

 

 

(8,431)

 

(13,745)

 

Financing activities

 

 

 

 

 

 

 

Net issue (repurchase) of shares (Note 9)

 

 

 

(215)

 

 

(776)

 

(340)

 

Lease liability payments

 

(578)

 

(664)

 

(594)

 

 

(1,811)

 

(1,806)

 

Proceeds from long-term financing

 

2,587 

 

6,846 

 

213 

 

 

12,117 

 

6,718 

 

Repayments of long-term financing

 

(4,307)

 

(964)

 

(516)

 

 

(8,988)

 

(6,758)

 

Net increase (decrease) in short-term debt

 

(2,630)

 

(215)

 

(852)

 

 

(328)

 

118 

 

Issue of perpetual hybrid bonds

 

 

11,861 

 

 

 

11,861 

 

 

Payments on perpetual hybrid bonds

 

(27)

 

 

 

 

(27)

 

 

Payments relating to transactions involving non-controlling interests (other)

 

 

(8)

 

 

 

(8)

 

 

Receipts relating to transactions involving non-controlling interests (other)

 

483 

 

 

 

 

492 

 

 

Dividends paid - BP shareholders

 

(1,060)

 

(2,119)

 

(1,656)

 

 

(5,281)

 

(4,870)

 

 - non-controlling interests

 

(58)

 

(74)

 

(47)

 

 

(163)

 

(166)

 

Net cash provided by (used in) financing activities

 

(5,590)

 

14,663 

 

(3,667)

 

 

7,088 

 

(7,104)

 

Currency translation differences relating to cash and cash equivalents

 

268 

 

(42)

 

(118)

 

 

43 

 

(94)

 

Increase (decrease) in cash and cash equivalents

 

(3,588)

 

16,514 

 

(982)

 

 

8,593 

 

(2,776)

 

Cash and cash equivalents at beginning of period

 

34,653 

 

18,139 

 

20,674 

 

 

22,472 

 

22,468 

 

Cash and cash equivalents at end of period(a)

 

31,065 

 

34,653 

 

19,692 

 

 

31,065 

 

19,692 

 

 

(a)  Third quarter and nine months 2020 include $316 million (second quarter 2020 $436 million) of cash and cash equivalents classified as assets held for sale in the group balance sheet.

 

 

Top of page 17

Notes

 

Note 1. Basis of preparation

 

The interim financial information included in this report has been prepared in accordance with IAS 34 'Interim Financial Reporting'.

The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December 2019 included in BP Annual Report and Form 20-F 2019.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial information. The impact of COVID-19 and the current economic environment has been considered as part of the going concern assessment. Forecast liquidity has been assessed under a number of stressed scenarios and a reverse stress test performed to support this assertion.

BP prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006 as applicable to companies reporting under IFRS. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group's consolidated financial statements for the periods presented.

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP Annual Report and Form 20-F 2020 which are the same as those used in preparing BP Annual Report and Form 20-F 2019 with the exception of the changes described in the 'Updates to significant accounting policies' section below. There are no other new or amended standards or interpretations adopted from 1 January 2020 onwards that have a significant impact on the interim financial information.

Considerations in respect of COVID-19 (coronavirus) and the current economic environment

BP's significant accounting judgements and estimates were disclosed in BP Annual Report and Form 20-F 2019. These have been subsequently reviewed at the end of each quarter to determine if any changes were required to those judgements and estimates as a result of current market conditions. The valuation of certain assets and liabilities is subject to a greater level of uncertainty than when reported in BP Annual Report and Form 20-F 2019, including those set out below.

Impairment testing assumptions

BP now sees the prospect of an enduring impact on the global economy as a result of the COVID-19 pandemic, with the potential for weaker demand for energy for a sustained period. BP's management also has a growing expectation that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system as countries seek to 'build back better' so that their economies will be more resilient in the future.  As a result of all the above, during the second quarter, BP revised its price assumptions for value-in-use impairment testing, lowering them and extending the period covered to 2050.  The price assumption for the remainder of 2020 for Henry Hub gas was subsequently increased during the third quarter to reflect improving observed market prices. A summary of the group's revised price assumptions, in real 2020 terms, is provided below:

 

 

4Q20

2021

2025

2030

2040

2050

Brent oil ($/bbl)

 

40

50

50

60

60

50

Henry Hub gas ($/mmBtu)

 

2.75

3.00

3.00

3.00

3.00

2.75

 

As disclosed in BP Annual Report and Form 20-F 2019 - Note 1, the majority of BP's reserves and resources that support the carrying amount of the group's oil and gas properties are expected to be produced over the next ten years. The revised assumptions for Brent oil and Henry Hub gas for the next 10 years are lower by approximately 30% and 15% respectively than the average prices used to estimate cash flows over this period as disclosed in BP Annual Report and Form 20-F 2019 - Note 1.  The revised impairment testing price assumptions are lower, on average, by approximately 27% and 31% respectively for the period from 2020 to 2050, than the prices referenced in BP Annual Report and Form 20-F 2019 - Note 1.

The group has identified oil and gas properties with carrying amounts totalling $40 billion where the headroom, based on the most recent impairment tests performed, was less than or equal to 20% of the carrying value. The significant majority of these assets have nil headroom. A change in price or other assumptions within the next financial year may result in a recoverable amount of one or more of these assets above or below the current carrying amount and therefore there is a significant risk of impairment reversals or charges in that period.

The discount rates used in value-in-use impairment testing were also reviewed. As these are set using a number of parameters that are applicable to longer-term assets, a revision of the discount rate assumption was determined not to be appropriate and therefore the rates, as disclosed in BP Annual Report and Form 20-F 2019, remain unchanged. 

Provisions

The nominal risk-free discount rate applied to provisions is reviewed on a quarterly basis. Recent changes in long-dated US government bond yields have not affected the group's overall assessment of the discount rate applied to the group's provisions and therefore the rate, as disclosed in BP Annual Report and Form 20-F 2019, remains unchanged. The timing and amount of cash flows relating to the group's existing provisions are not currently expected to change significantly as a result of the current environment. The detailed annual review will take place later in 2020.

In addition, the group has recognized provisions for restructuring costs for plans that were formalized during the third quarter.

 

 

Top of page 18

Note 1. Basis of preparation (continued)

Pensions and other post-retirement benefits

The group's defined benefit pension plans are reviewed quarterly to determine any changes to the fair value of the plan assets or present value of the defined benefit obligations. As a result of the review during the third quarter of 2020, the group's total net defined benefit pension plan deficit as at 30 September 2020 is $1.9 billion, a reduction in the deficit of $0.2 billion and an increase by $0.4 billion from 30 June 2020 and 31 December 2019 respectively.  The movement for the nine months principally reflects actuarial losses reported in other comprehensive income arising from decreasing discount rates and higher inflation assumptions increasing the plan obligations partially offset by increases in the valuation of plan assets. The current environment is likely to continue to affect the values of the plan assets and obligations resulting in potential volatility in the amount of the net defined benefit pension plan surplus/deficit recognized.

Impairment of financial assets measured at amortized cost

The estimate of the loss allowance recognized on financial assets measured at amortized cost using an expected credit loss approach was determined not to be a significant accounting estimate in preparing BP Annual Report and Form 20-F 2019.  Expected credit loss allowances are, however, reviewed and updated quarterly. Allowances are recognized on assets where there is evidence that the asset is credit-impaired and on a forward-looking expected credit loss basis for assets that are not credit-impaired. The current economic environment and future credit risk outlook have been considered in updating the estimate of loss allowances although the full economic impact of COVID-19 on the forward-looking expected credit loss is subject to significant uncertainty due to the limited forward-looking information currently available.

Whilst credit risk has increased since 31 December 2019, there has also been a significant reduction in the group's trade and other receivables balance. Therefore, the total expected credit loss allowances recognized as at 30 September 2020 have not significantly increased from the amounts disclosed in BP Annual Report and Form 20-F 2019 - Financial statements - Note 21 Valuation and qualifying accounts.

The group continues to believe that the calculation of expected credit loss allowances is not a significant accounting estimate. The group continues to apply its credit policy as disclosed in BP Annual Report and Form 20-F 2019 - Financial statements - Note 29 Financial instruments and financial risk factors - credit risk.

Income taxes

None of the group's deferred tax assets in BP Annual Report and Form 20-F 2019 were determined to be a significant accounting estimate. The carrying amounts are, however, reviewed and updated quarterly to the extent that there are changes in the probability of sufficient taxable profits being available to utilize the reported deferred tax assets. The group has recognized deferred tax assets as at 30 September 2020 of $6.8 billion, an increase of $2.3 billion from 31 December 2019. The group continues to believe that the measurement of its deferred tax assets is not a significant accounting estimate.

Other accounting judgements and estimates

All other significant accounting judgements and estimates disclosed in BP Annual Report and Form 20-F 2019 remain applicable and no new significant accounting judgements or estimates have been identified.

Updates to significant accounting policies

Hybrid bond issuance

On 17 June 2020, a group subsidiary issued perpetual subordinated hybrid bonds in EUR, GBP and USD for a US dollar equivalent amount of $11.9 billion. As the group has the unconditional right to avoid transferring cash or another financial asset in relation to these hybrid bonds, they are classified as equity instruments and reported within non-controlling interests in the condensed consolidated financial statements. The contractual terms of these instruments allow the group to defer coupon payments and the repayment of principal indefinitely, however their terms and conditions stipulate that any deferred payments must be made in the event of an announcement of an ordinary share or parity equity dividend distribution or certain share repurchases or redemptions.

Change in accounting policy - Interest Rate Benchmark Reform: Amendments to IFRS 9 'Financial instruments'

Financial authorities in the US, UK, EU and other territories are currently undertaking reviews of key interest rate benchmarks such as the London Inter-bank Offered Rate (LIBOR) with a view to replacing them with alternative benchmarks. Uncertainty around the method and timing of transition from Inter-bank Offered Rates (IBORs) to alternative risk-free rates (RfRs) may impact the assessment of whether hedge accounting can be applied to certain hedging relationships.

BP is significantly exposed to benchmark interest rate components e.g. USD LIBOR, GBP LIBOR, EURIBOR and CHF LIBOR. All of the group's existing fair value hedge relationships are directly affected by interest rate benchmark reform as they all manage interest rate risk. Further information about the group's fair value hedges is included in BP Annual Report and Form 20-F 2019 - Financial statements - Note 30 Derivative financial instruments - Fair value hedges.

BP adopted the amendments to IFRS 9 and IFRS 7 'Financial Instruments: Disclosures' relating to interest rate benchmark reform with effect from 1 January 2020. This first phase of amendments provides temporary relief from applying specific hedge accounting requirements to hedging relationships directly affected by interest rate benchmark reforms.

The reliefs provided by the amendments allow BP, in the event that significant uncertainty around the reforms arise, to assume that:

the interest rate benchmark component of fair value hedges only needs to be assessed as separately identifiable at initial designation; and

the interest rate benchmark is not altered for the purposes of assessing the economic relationship between the hedged item and the hedging instrument for fair value hedges.

In accordance with the transition provisions, the amendments have been adopted retrospectively to hedging relationships that existed at the start of the current reporting period and will be applied to new hedging relationships designated after that date.

 

 

Top of page 19

Note 1. Basis of preparation (continued)

The reliefs have meant that the uncertainty over the interest rate benchmark reforms has not resulted in discontinuation of hedge accounting for any of BP's fair value hedges.

The second phase of IFRS amendments were issued by the IASB in August 2020 to address the financial reporting impacts of transitioning from IBORs to RfRs. These amendments will be effective for BP from 1 January 2021.The amendments are not yet endorsed by the EU or the UK. BP has set up an internal working group to monitor and manage the transition to alternative benchmark rates and are currently assessing the impact on contracts and arrangements that are linked to existing interest rate benchmarks, for example, borrowings, leases and derivative contracts. BP is also participating on external committees and task forces dedicated to interest rate benchmark reform.

Change in accounting policy - physically settled derivative contracts

In March 2019, the IFRS Interpretations Committee ("IFRIC") issued an agenda decision on the application of IFRS 9 to the physical settlement of contracts to buy or sell a non-financial item, such as commodities, that are not accounted for as 'own-use' contracts. IFRIC concluded that such contracts are settled by the delivery or receipt of a non-financial item in exchange for both cash and the settlement of the derivative asset or liability.

BP regularly enters into forward sale and purchase contracts. As described in the group's accounting policy for revenue in BP Annual Report and Form 20-F 2019, revenue recognized at the time such contracts were physically settled was measured at the contractual transaction price and was presented together with revenue from contracts with customers in those financial statements.

BP changed its accounting policy for these contracts, in accordance with the conclusions included in the agenda decision, with effect from 1 April 2020, as follows:

Revenues and purchases from such contracts are measured at the contractual transaction price plus the carrying amount of the related derivative at the date of settlement. Realized derivative gains and losses on physically settled derivative contracts are included in other revenues.

There is no significant effect on current period or comparative information for 'Sales and other operating revenues' and 'Purchases' as presented in the group income statement, therefore no comparative information has been re-stated.

There is no significant effect on net assets or on comparative information for 'Profit before taxation' or 'Profit after taxation' as presented in the group income statement.

In addition, BP chose to change its presentation of revenues from physically settled derivative sales contracts from first quarter 2020. Revenues from physically settled derivative sales contracts are no longer presented together with revenue from contracts with customers. They are now presented as other revenues. Comparative information in Note 6 for revenue from contracts with customers and other revenues have been re-presented to align with the current period.

 

 

Note 2. Non-current assets held for sale  

The carrying amount of assets classified as held for sale at 30 September 2020 is $4,541 million, with associated liabilities of $1,057 million. These principally relate to two transactions.

Downstream segment

On 29 June 2020 BP announced that it had agreed to sell its global petrochemicals business to INEOS for a total consideration of $5 billion, subject to customary closing adjustments. Under the terms of the agreement, INEOS paid BP a deposit of $400 million and will pay a further $3.6 billion on completion. An additional $1 billion will be deferred and paid in three separate instalments of $100 million in March, April and May 2021 with the remaining $700 million payable by the end of June 2021. The business has interests in manufacturing plants in Asia, Europe and the US, including interests held in equity-accounted entities. Subject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.  Assets of $3,963 million and associated liabilities of $745 million have been classified as held for sale in the group balance sheet at 30 September 2020. Accumulated foreign exchange differences will be reclassified from the foreign currency translation reserve to the income statement when the sale transaction completes.  At 30 September 2020 these foreign exchange differences amounted to a gain of approximately $375 million.

Upstream segment

On 27 August 2019, BP announced that it had agreed to sell all of its Alaska operations and interests to Hilcorp Energy ('Hilcorp'), including its ownership interests in BP Exploration (Alaska) Inc, which owned all of BP's upstream oil and gas interests in Alaska, and the assets of BP Pipelines (Alaska) Inc., including a 49% interest in the Trans Alaska Pipeline System (TAPS), for up to $5.6 billion, subject to customary closing adjustments. Assets of $6,518 million and associated liabilities of $969 million relating to this transaction were classified as held for sale at 31 December 2019. Deposit payments totalling $500 million in cash were received in 2019.

On 30 June 2020, BP completed the sale of BP Exploration (Alaska) Inc. On completion, BP received $209 million in cash and recognized a loan note with a principal amount of $2,100 million receivable from Hilcorp.  The group also recognized other assets totalling $1,689 million, including amounts in relation to the 'earn-out' provisions of the agreement.

The sale of BP Pipelines (Alaska) Inc.'s 49% interest in the Trans Alaska Pipeline System (TAPS) and other midstream assets, which is subject to regulatory approvals, is expected to complete during the fourth quarter of 2020. On completion of the sale, BP will retain its decommissioning liability relating to TAPS, which will be partially offset by a 30% cost reimbursement from Harvest Alaska LLC, an affiliate of Hilcorp. Assets of $499 million and associated liabilities of $279 million relating to this transaction continue to be classified as held for sale at 30 September 2020.

 

 

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Note 3. Impairment and losses on sale of businesses and fixed assets

Impairment and losses on sale of businesses and fixed assets for the third quarter and nine months were $294 million and $13,213 million and include net impairment charges of $277 million and $12,923 million respectively. Impairment charges also arose in certain equity-accounted entities in the nine months. The BP shares of these charges, amounting to $978 million for the nine months, are reported in the line items 'Earnings from joint ventures' and 'Earnings from associates' in the group income statement.

Upstream segment

Net impairment charges in the Upstream segment were $272 million and $12,157 million for the third quarter and nine months respectively.

Impairment charges for the nine months mainly relate to producing assets and principally arose as a result of changes to the group's oil and gas price assumptions. They include amounts in Azerbaijan, BPX Energy, Canada, Egypt, India, Mauritania & Senegal, the North Sea, and Trinidad. The recoverable amounts of the cash generating units within these businesses were based on value-in-use calculations.

Impairment charges for the nine months also include amounts relating to the disposal of the group's interests in its Alaska business. See Note 2 for further information.

The BP share of impairment charges arising in equity-accounted entities reported in the Upstream segment in the nine months was $742 million.

Downstream segment

Impairment charges in the Downstream segment were $736 million for the nine months, principally relating to anticipated portfolio changes in the fuels business. Materially all of the impairment charges arose in the second quarter.

 

 

Note 4. Exploration expense

Exploration expense in the third quarter and nine months was $190 million and $10,066 million and includes exploration expenditure write-offs of $50 million and $9,766 million respectively. All exploration expenditure is recorded within the Upstream segment.

The exploration write-offs principally arose following management's re-assessment of expectations to extract value from certain exploration prospects as a result of a review of the group's long-term strategic plan and changes in the group's price assumptions. The exploration write-offs for the nine months principally arose in Angola, Brazil, Canada, Egypt, India and the Gulf of Mexico.

 

 

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Note 5. Analysis of replacement cost profit (loss) before interest and tax and reconciliation to profit (loss) before taxation

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Upstream

 

30 

 

(22,008)

 

(1,050)

 

 

(20,955)

 

4,303 

 

Downstream

 

915 

 

594 

 

2,016 

 

 

2,173 

 

5,069 

 

Rosneft

 

(278)

 

(124)

 

802 

 

 

(419)

 

1,813 

 

Other businesses and corporate

 

24 

 

(317)

 

(412)

 

 

(991)

 

(1,339)

 

 

 

691 

 

(21,855)

 

1,356 

 

 

(20,192)

 

9,846 

 

Consolidation adjustment - UPII*

 

34 

 

(46)

 

30 

 

 

166 

 

51 

 

RC profit (loss) before interest and tax*

 

725 

 

(21,901)

 

1,386 

 

 

(20,026)

 

9,897 

 

Inventory holding gains (losses)*

 

 

 

 

 

 

 

Upstream

 

 

57 

 

 

 

(3)

 

(8)

 

Downstream

 

191 

 

978 

 

(433)

 

 

(3,446)

 

706 

 

Rosneft (net of tax)

 

34 

 

53 

 

(79)

 

 

(114)

 

(41)

 

Profit (loss) before interest and tax

 

958 

 

(20,813)

 

874 

 

 

(23,589)

 

10,554 

 

Finance costs

 

800 

 

783 

 

883 

 

 

2,366 

 

2,603 

 

Net finance expense relating to pensions and other post-retirement benefits

 

 

 

16 

 

 

23 

 

46 

 

Profit (loss) before taxation

 

150 

 

(21,604)

 

(25)

 

 

(25,978)

 

7,905 

 

 

 

 

 

 

 

 

 

RC profit (loss) before interest and tax*

 

 

 

 

 

 

 

US

 

105 

 

(4,695)

 

(2,425)

 

 

(3,995)

 

(1,156)

 

Non-US

 

620 

 

(17,206)

 

3,811 

 

 

(16,031)

 

11,053 

 

 

 

725 

 

(21,901)

 

1,386 

 

 

(20,026)

 

9,897 

 

 

 

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Note 6. Sales and other operating revenues

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

By segment

 

 

 

 

 

 

 

Upstream

 

7,797 

 

7,194 

 

12,396 

 

 

26,455 

 

40,546 

 

Downstream

 

40,256 

 

27,241 

 

61,834 

 

 

121,461 

 

186,646 

 

Other businesses and corporate

 

391 

 

450 

 

461 

 

 

1,294 

 

1,250 

 

 

 

48,444 

 

34,885 

 

74,691 

 

 

149,210 

 

228,442 

 

 

 

 

 

 

 

 

 

Less: sales and other operating revenues between segments

 

 

 

 

 

 

 

Upstream

 

3,647 

 

2,613 

 

6,406 

 

 

13,167 

 

20,211 

 

Downstream

 

124 

 

330 

 

(59)

 

 

(328)

 

589 

 

Other businesses and corporate

 

422 

 

266 

 

53 

 

 

794 

 

354 

 

 

 

4,193 

 

3,209 

 

6,400 

 

 

13,633 

 

21,154 

 

 

 

 

 

 

 

 

 

Third party sales and other operating revenues

 

 

 

 

 

 

 

Upstream

 

4,150 

 

4,581 

 

5,990 

 

 

13,288 

 

20,335 

 

Downstream

 

40,132 

 

26,911 

 

61,893 

 

 

121,789 

 

186,057 

 

Other businesses and corporate

 

(31)

 

184 

 

408 

 

 

500 

 

896 

 

Total sales and other operating revenues

 

44,251 

 

31,676 

 

68,291 

 

 

135,577 

 

207,288 

 

 

 

 

 

 

 

 

 

By geographical area

 

 

 

 

 

 

 

US

 

16,513 

 

10,117 

 

23,413 

 

 

47,849 

 

71,347 

 

Non-US

 

32,328 

 

24,776 

 

51,030 

 

 

101,059 

 

153,581 

 

 

 

48,841 

 

34,893 

 

74,443 

 

 

148,908 

 

224,928 

 

Less: sales and other operating revenues between areas

 

4,590 

 

3,217 

 

6,152 

 

 

13,331 

 

17,640 

 

 

 

44,251 

 

31,676 

 

68,291 

 

 

135,577 

 

207,288 

 

 

 

 

 

 

 

 

 

Revenues from contracts with customers(a)

 

 

 

 

 

 

 

Sales and other operating revenues include the following in relation to revenues from contracts with customers:

 

 

 

 

 

 

 

Crude oil

 

1,366 

 

1,062 

 

2,194 

 

 

3,863 

 

7,261 

 

Oil products

 

16,301 

 

10,452 

 

26,547 

 

 

47,007 

 

76,462 

 

Natural gas, LNG and NGLs

 

2,844 

 

2,992 

 

4,387 

 

 

9,474 

 

14,038 

 

Non-oil products and other revenues from contracts with customers

 

2,965 

 

2,118 

 

2,970 

 

 

7,573 

 

9,291 

 

Revenue from contracts with customers

 

23,476 

 

16,624 

 

36,098 

 

 

67,917 

 

107,052 

 

Other operating revenues(b)

 

20,775 

 

15,052 

 

32,193 

 

 

67,660 

 

100,236 

 

Total sales and other operating revenues

 

44,251 

 

31,676 

 

68,291 

 

 

135,577 

 

207,288 

 

(a)  Amounts shown for revenue from contracts with customers and other operating revenues for third quarter and nine months 2019 have been represented to align with the current period. See Note 1 for further information.

(b)  Principally relates to physically settled derivative sales contracts.

 

 

Top of page 23

Note 7. Depreciation, depletion and amortization

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Upstream

 

 

 

 

 

 

 

US

 

842 

 

1,044 

 

1,121 

 

 

2,954 

 

3,522 

 

Non-US

 

1,713 

 

1,973 

 

2,295 

 

 

5,768 

 

7,189 

 

 

 

2,555 

 

3,017 

 

3,416 

 

 

8,722 

 

10,711 

 

Downstream

 

 

 

 

 

 

 

US

 

336 

 

344 

 

336 

 

 

1,022 

 

992 

 

Non-US

 

407 

 

408 

 

394 

 

 

1,220 

 

1,169 

 

 

 

743 

 

752 

 

730 

 

 

2,242 

 

2,161 

 

Other businesses and corporate

 

 

 

 

 

 

 

US

 

13 

 

16 

 

14 

 

 

44 

 

41 

 

Non-US

 

156 

 

152 

 

137 

 

 

455 

 

433 

 

 

 

169 

 

168 

 

151 

 

 

499 

 

474 

 

Total group

 

3,467 

 

3,937 

 

4,297 

 

 

11,463 

 

13,346 

 

 

 

Note 8. Production and similar taxes

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

US

 

14 

 

13 

 

66 

 

 

40 

 

226 

 

Non-US

 

126 

 

111 

 

274 

 

 

427 

 

909 

 

 

 

140 

 

124 

 

340 

 

 

467 

 

1,135 

 

 

 

Note 9. Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit (loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. No share buybacks were carried out during the quarter. A total of 120 million ordinary shares were repurchased for cancellation in the nine months, as part of the share buyback programme announced on 31 October 2017. The shares had a total cost of $776 million, including transaction costs of $4 million. The number of shares in issue is reduced when shares are repurchased.

The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.

For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.

 

 

Top of page 24

Note 9. Earnings per share and shares in issue (continued)

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Results for the period

 

 

 

 

 

 

 

Profit (loss) for the period attributable to BP shareholders

 

(450)

 

(16,848)

 

(749)

 

 

(21,663)

 

4,007 

 

Less: preference dividend

 

 

 

 

 

 

 

Profit (loss) attributable to BP ordinary shareholders

 

(450)

 

(16,849)

 

(749)

 

 

(21,664)

 

4,006 

 

 

 

 

 

 

 

 

 

Number of shares (thousand) (a)(b)

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding

 

20,251,199 

 

20,222,575 

 

20,371,728 

 

 

20,217,559 

 

20,295,078 

 

ADS equivalent

 

3,375,199 

 

3,370,429 

 

3,395,288 

 

 

3,369,593 

 

3,382,513 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding used to calculate diluted earnings per share

 

20,251,199 

 

20,222,575 

 

20,371,728 

 

 

20,217,559 

 

20,411,739 

 

ADS equivalent

 

3,375,199 

 

3,370,429 

 

3,395,288 

 

 

3,369,593 

 

3,401,957 

 

 

 

 

 

 

 

 

 

Shares in issue at period-end

 

20,254,417 

 

20,249,046 

 

20,417,220 

 

 

20,254,417 

 

20,417,220 

 

ADS equivalent

 

3,375,736 

 

3,374,841 

 

3,402,870 

 

 

3,375,736 

 

3,402,870 

 

(a)  Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.

(b)  If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share. The numbers of potentially issuable shares that have been excluded from the calculation for the second quarter 2020, third quarter 2020 and nine months 2020 are 63,119 thousand (ADS equivalent 10,520 thousand), 81,097 thousand (ADS equivalent 13,516 thousand) and 94,302 thousand (ADS equivalent 15,717 thousand) respectively.

 

 

Note 10. Dividends

Dividends payable

BP today announced an interim dividend of 5.25 cents per ordinary share which is expected to be paid on 18 December 2020 to ordinary shareholders and American Depositary Share (ADS) holders on the register on 6 November 2020. The corresponding amount in sterling is due to be announced on 7 December 2020, calculated based on the average of the market exchange rates for the four dealing days commencing on 1 December 2020. Holders of ADSs are expected to receive $0.315 per ADS (less applicable fees). The board has decided not to offer a scrip dividend alternative in respect of the third quarter 2020 dividend. Ordinary shareholders and ADS holders (subject to certain exceptions) will be able to participate in a dividend reinvestment programme. Details of the third quarter dividend and timetable are available at bp.com/dividends and further details of the dividend reinvestment programmes are available at bp.com/drip.

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

 

 

2020

2020

2019

 

2020

2019

Dividends paid per ordinary share

 

 

 

 

 

 

 

cents

 

5.250 

 

10.500 

 

10.250 

 

 

26.250 

 

30.750 

 

pence

 

4.043 

 

8.342 

 

8.348 

 

 

20.541 

 

24.152 

 

Dividends paid per ADS (cents)

 

31.50 

 

63.00 

 

61.50 

 

 

157.50 

 

184.50 

 

Scrip dividends

 

 

 

 

 

 

 

Number of shares issued (millions)

 

 

 

72.5 

 

 

 

208.9 

 

Value of shares issued ($ million)

 

 

 

440 

 

 

 

1,387 

 

 

 

Top of page 25

Note 11. Net debt

Net debt*

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Finance debt(a)(b)

 

72,828 

 

76,003 

 

65,867 

 

 

72,828 

 

65,867 

 

Fair value (asset) liability of hedges related to finance debt(c)

 

(1,384)

 

(430)

 

319 

 

 

(1,384)

 

319 

 

 

 

71,444 

 

75,573 

 

66,186 

 

 

71,444 

 

66,186 

 

Less: cash and cash equivalents(b)

 

31,065 

 

34,653 

 

19,692 

 

 

31,065 

 

19,692 

 

Net debt

 

40,379 

 

40,920 

 

46,494 

 

 

40,379 

 

46,494 

 

Total equity

 

82,155 

 

82,811 

 

100,015 

 

 

82,155 

 

100,015 

 

Gearing*

 

33.0%

33.1%

31.7%

 

33.0%

31.7%

(a)  The fair value of finance debt at 30 September 2020 was $75,338 million (30 September 2019 $66,879 million).

(b)  Third quarter and nine months 2020 include $316 million of cash and $19 million of finance debt included in assets and liabilities held for sale in the group balance sheet.

(c)  Derivative financial instruments entered into for the purpose of managing interest rate and foreign currency exchange risk associated with net debt with a fair value liability position of $372 million (second quarter 2020 liability of $554 million and third quarter 2019 liability of $682 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.

 

In the third quarter, the group bought back $4.0 billion equivalent of euro and sterling bonds as part of actively managing its debt portfolio. Derivatives associated with the debt bought back were also terminated.  There was no significant impact on net debt as a result of these transactions.

On 17 June 2020 the group issued perpetual hybrid bonds with a US dollar equivalent value of $11.9 billion. See Note 1 for further information.

 

 

Note 12. Inventory valuation

A provision of $544 million was held against hydrocarbon inventories at 30 September 2020 ($289 million at 30 June 2020 and $290 million at 31 December 2019) to write them down to their net realizable value.

 

 

Note 13. Statutory accounts

The financial information shown in this publication, which was approved by the Board of Directors on 26 October 2020, is unaudited and does not constitute statutory financial statements. Audited financial information will be published in BP Annual Report and Form 20-F 2020. BP Annual Report and Form 20-F 2019 has been filed with the Registrar of Companies in England and Wales. The report of the auditor on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.

 

 

Top of page 26

Additional information

 

 

Capital expenditure*

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Capital expenditure on a cash basis

 

 

 

 

 

 

 

Organic capital expenditure*

 

2,512 

 

3,034 

 

3,946 

 

 

9,085 

 

11,280 

 

Inorganic capital expenditure*(a)(b)

 

1,124 

 

33 

 

77 

 

 

1,479 

 

4,032 

 

 

 

3,636 

 

3,067 

 

4,023 

 

 

10,564 

 

15,312 

 

 

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Organic capital expenditure by segment

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

US

 

589 

 

1,018 

 

1,036 

 

 

2,775 

 

2,990 

 

Non-US

 

1,367 

 

1,517 

 

2,110 

 

 

4,546 

 

5,856 

 

 

 

1,956 

 

2,535 

 

3,146 

 

 

7,321 

 

8,846 

 

Downstream

 

 

 

 

 

 

 

US

 

139 

 

135 

 

197 

 

 

395 

 

655 

 

Non-US

 

345 

 

295 

 

558 

 

 

1,171 

 

1,562 

 

 

 

484 

 

430 

 

755 

 

 

1,566 

 

2,217 

 

Other businesses and corporate

 

 

 

 

 

 

 

US

 

13 

 

21 

 

 

 

66 

 

32 

 

Non-US

 

59 

 

48 

 

37 

 

 

132 

 

185 

 

 

 

72 

 

69 

 

45 

 

 

198 

 

217 

 

 

 

2,512 

 

3,034 

 

3,946 

 

 

9,085 

 

11,280 

 

Organic capital expenditure by geographical area

 

 

 

 

 

 

 

US

 

741 

 

1,174 

 

1,241 

 

 

3,236 

 

3,677 

 

Non-US

 

1,771 

 

1,860 

 

2,705 

 

 

5,849 

 

7,603 

 

 

 

2,512 

 

3,034 

 

3,946 

 

 

9,085 

 

11,280 

 

(a)  On 31 October 2018, BP acquired from BHP Billiton Petroleum (North America) Inc. 100% of the issued share capital of Petrohawk Energy Corporation, a wholly owned subsidiary of BHP that holds a portfolio of unconventional onshore US oil and gas assets. The entire consideration payable of $10,268 million, after customary closing adjustments, was paid in instalments between July 2018 and April 2019. The amounts presented as inorganic capital expenditure include $3,480 million for the nine months 2019 relating to this transaction.

(b)  Third quarter and nine months 2020 include $1 billion relating to an investment in a 49% interest in the group's Indian fuels and mobility venture with Reliance industries. Nine months 2020 and 2019 also include amounts relating to the 25-year extension to our ACG production-sharing agreement* in Azerbaijan.

 

 

Top of page 27

Non-operating items*

 

 

Third

Second

Third

 

Nine

Nine

 

 

quarter

quarter

quarter

 

months

months

$ million

 

2020

2020

2019

 

2020

2019

Upstream

 

 

 

 

 

 

 

Gains on sale of businesses and fixed assets

 

10 

 

87 

 

 

 

104 

 

105 

 

Impairment and losses on sale of businesses and fixed assets(a)

 

(274)

 

(10,953)

 

(3,406)

 

 

(12,358)

 

(4,318)

 

Environmental and other provisions

 

(9)

 

 

 

 

(22)

 

 

Restructuring, integration and rationalization costs(b)

 

(164)

 

(24)

 

(24)

 

 

(192)

 

(76)

 

Other(c)(d)

 

(194)

 

(2,564)

 

(24)

 

 

(2,688)

 

65 

 

 

 

(631)

 

(13,454)

 

(3,454)

 

 

(15,156)

 

(4,224)

 

Downstream

 

 

 

 

 

 

 

Gains on sale of businesses and fixed assets

 

16 

 

(13)

 

 

 

10 

 

44 

 

Impairment and losses on sale of businesses and fixed assets(a)

 

(20)

 

(798)

 

(11)

 

 

(823)

 

(100)

 

Environmental and other provisions

 

 

 

(1)

 

 

 

(1)

 

Restructuring, integration and rationalization costs(b)

 

(142)

 

31 

 

(4)

 

 

(111)

 

14 

 

Other

 

 

 

 

 

 

(6)

 

 

 

(146)

 

(780)

 

(14)

 

 

(924)

 

(49)

 

Rosneft

 

 

 

 

 

 

 

Other

 

(101)

 

(63)

 

 

 

(164)

 

(194)

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