SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 27 July 2004
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
--------------- ----------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
--------------- ----------------
BP p.l.c.
Group Results
2nd Quarter and Half Year 2004
London 27 July 2004
FOR IMMEDIATE RELEASE
RECORD HALF-YEAR RESULT; DIVIDEND PER SHARE UP 9%
---------------------------------------------------------------------------
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 $ million 2004 2003 %
======================= ====================
Replacement cost profit
2,536 4,170 3,434 for the period (a) 7,604 5,956
629 547 474 Acquisition amortization(b) 1,021 1,257
----------------------- --------------------
3,165 4,717 3,908 Pro forma result 8,625 7,213 20
======================= ====================
8.81 11.61 9.93 - per ordinary share (pence) 21.54 20.14 7
14.29 21.36 17.85 - per ordinary share (cents) 39.21 32.42 21
0.86 1.28 1.07 - per ADS (dollars) 2.35 1.95
======================= ====================
o BP's second quarter pro forma result was $3,908 million, compared with
$3,165 million a year ago, an increase of 23%. For the half year, the
result was $8,625 million compared with $7,213 million, up 20%.
Replacement cost profit for the second quarter and half year was
$3,434 million and $7,604 million respectively, compared with
$2,536 million and $5,956 million a year ago.
o The second quarter result includes a net exceptional and non-operating
charge of $258 million compared with a net gain of $168 million in the
second quarter of 2003.
o The second quarter trading environment was generally stronger than a
year ago, with higher oil and gas realizations and refining margins.
o Net cash inflow for the quarter was $1.5 billion and net cash inflow
for the half year was $5.3 billion, compared with an inflow of
$2.4 billion and an inflow of $5.6 billion a year ago. Net cash flow
from operating activities for the quarter and half year was
$6.9 billion and $14.6 billion respectively, compared with $7.3 billion
and $13.3 billion a year ago.
o The pro forma ratio of net debt to net debt plus equity was 23% at the
end of the quarter.
o Return on average capital employed for the quarter and half year
respectively, on a pro forma basis, was 19.8% and 21.9%, compared with
18.7% and 21.2% a year ago. The cash return for the quarter was 36%
compared with 32% a year ago, and for the half year was 34% compared
with 35% a year ago.
o The quarterly dividend increased from 6.75 cents per share to 7.10
cents per share ($0.426 per ADS). This compares with 6.50 cents per
share a year ago. For the half year the dividend showed an increase of
8.6%. In sterling terms, the quarterly dividend is 3.860 pence per
share compared with 4.039 pence a year ago; for the half year the
decrease was 4.0%. During the first half, the company repurchased for
cancellation 380 million of its own shares, at a cost of $3.25 billion.
The increase in the per share dividend growth rate reflects the
reduction in the number of shares outstanding due to the share buyback
programme. This allows the company's level of dividend payments to be
allocated across a smaller equity base.
BP Group Chief Executive, Lord Browne, said:
"This has been another strong performance against the backdrop of a
robust trading environment. We are on track against our targets of
controlled investment for growth, increasing the dividend and using
additional free cash flow to fund a significant level of share
buybacks. The reduction in the number of shares outstanding has allowed
us to accelerate the per share dividend growth rate. The plans to
prepare the Olefins and Derivatives business for disposal are on
track."
The pro forma result has been derived from the group's reported UK GAAP
accounting information but is not in itself a recognized UK or US GAAP measure.
This financial performance information and measures derived therefrom, shown
above and elsewhere in the document, are provided in order to enable investors
to evaluate better BP's performance against that of its competitors.
(a) Replacement cost profit for the period includes the net profit or loss
on the sale of fixed assets and businesses or termination of
operations.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions. The first quarter 2004 and
the first half results for 2003 and 2004 include accelerated
depreciation of the revaluation adjustment in respect of the impairment
of former ARCO assets.
Summary Second Quarter Results
Exploration and Production's second quarter result was up 18% on a year ago
reflecting higher liquids and gas realizations combined with the changing
production composition primarily arising from the greater proportion of
production from Russia, offset partly by exceptional losses and non-operating
charges in the quarter. The corresponding quarter in 2003 contained exceptional
gains and non-operating credits.
The Refining and Marketing result increased 43% compared with a year ago
reflecting stronger refining margins, supported by strong US product demand
coupled with below-normal inventories and the impact of industry-wide refinery
maintenance.
The Petrochemicals result improved from the first quarter reflecting the absence
of large exceptional losses reported in the first quarter together with improved
margins.
In Gas, Power and Renewables, the result increased compared with a year ago due
to a higher contribution from the natural gas liquids business in North America.
Interest and other finance expense for the quarter was $221 million compared
with $228 million for the prior quarter.
The pro forma effective tax rate on replacement cost profit was 35.7%.
Capital expenditure was $3.2 billion for the quarter and there were no
significant acquisitions. Disposal proceeds for the quarter were $0.66 billion.
Net debt at the end of the quarter was $18.2 billion. The pro forma ratio of net
debt to net debt plus equity was 23% at the end of the quarter compared with 22%
at the end of the first quarter.
During the third quarter, shares to the value of $1.25 billion will be issued to
Alfa Group and Access-Renova (AAR) as the first instalment of the deferred
consideration for our investment in TNK-BP.
---------
The commentaries above and following are based on the pro forma replacement cost
results.
TNK-BP operational and financial information has been estimated.
The financial information for 2003 has been restated to reflect (a) the transfer
of natural gas liquids (NGLs) operations from the Exploration and Production
segment to Gas, Power and Renewables on 1 January 2004; (b) the adoption by the
group of Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17) with
effect from 1 January 2004; and (c) the adoption by the group of Urgent Issues
Task Force Abstract No. 38 'Accounting for ESOP Trusts' with effect from 1
January 2004. For further information see Note 1.
Exceptional and Non-Operating Items
2Q 2004
------------------------------
Exceptional Non-Operating
$ million Items Items and UPIS
------------------------------
Exploration and Production (114) (247)
Refining and Marketing (18) -
Petrochemicals 6 -
Gas, Power and Renewables - -
Other businesses and corporate (1) -
------------------------------
(127) (247)
Taxation 28 88(a)
------------------------------
(99) (159)
==============================
(a) Tax on Non-Operating Items and Unrealized Profit in Stock (UPIS) is
calculated using the pro forma effective tax rate on replacement cost
profit, excluding exceptional items, of 35.5%.
Reconciliation of Reported Results to Pro Forma Results
Pro Forma Result ----- 2Q 2004 ----- Pro Forma Result
-------------------
2Q 1Q 2Q Acq. Reported First Half
2003 2004 2004 Amort+ Earnings* $ million 2004 2003
======================================= ==============
Exploration and
3,858 4,568 4,558 256 4,302 Production 9,126 8,999
Refining and
1,093 941 1,562 218 1,344 Marketing 2,503 1,926
306 (25) 208 - 208 Petrochemicals 183 443
Gas, Power
141 198 216 - 216 and Renewables 414 357
Other businesses
(153) 1,129 (164) - (164) and corporate 965 (319)
--------------------------------------- --------------
RC profit before
5,245 6,811 6,380 474 5,906 interest and tax 13,191 11,406
---------------------------------------- --------------
Interest and Other
(276) (228) (221) - (221) finance expense (449) (581)
(1,744)(1,822)(2,199) - (2,199) Taxation (4,021) (3,526)
(60) (44) (52) - (52) MSI (96) (86)
---------------------------------------- --------------
3,165 4,717 3,908 474 3,434 RC profit 8,625 7,213
---------------------------------------- --------------
462 Stock holding gains (losses)
-----
3,896 HC profit
=====
* Replacement cost profit for the period includes the net profit or loss on
the sale of fixed assets and businesses or termination of operations.
+ Acquisition amortization is depreciation and amortization relating to the
fixed asset revaluation adjustments and goodwill consequent upon the ARCO
and Burmah Castrol acquisitions. The first quarter 2004 and the first half
results for 2003 and 2004 include accelerated depreciation of the
revaluation adjustment in respect of the impairment of former ARCO assets.
Operating Results and Per Share Amounts
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
================================ =====================
Replacement cost
Profit before
4,616 6,264 5,906 interest and tax ($m) 12,170 10,149
-------------------------------- ---------------------
Results for the
period ($m)
3,165 4,717 3,908 Pro forma result 8,625 7,213
2,536 4,170 3,434 Replacement cost profit 7,604 5,956
1,585 4,818 3,896 Historical cost profit 8,714 5,804
-------------------------------- ---------------------
Shares in issue at
22,101,622 21,996,888 21,789,115 period end (thousand)21,789,115 22,101,622
- ADS equivalent
3,683,604 3,666,148 3,631,519 (thousand) 3,631,519 3,683,604
Average number of
shares outstanding
22,164,026 22,087,796 21,906,318 (thousand) 21,997,057 22,244,797
- ADS equivalent
3,694,004 3,681,299 3,651,053 (thousand) 3,666,176 3,707,466
Per ordinary share
(cents)
14.29 21.36 17.85 Pro forma result 39.21 32.42
RC profit
11.45 18.88 15.68 for the period 34.56 26.77
HC profit
7.19 21.81 17.80 for the period 39.61 26.09
Per ADS (cents)
85.74 128.16 107.10 Pro forma result 235.26 194.52
RC profit
68.70 113.28 94.08 for the period 207.36 160.62
HC profit
43.14 130.86 106.80 for the period 237.66 156.54
-------------------------------- ---------------------
Exploration and Production
2Q 1Q 2Q First Half
2003 2004 2004 $ million 2004 2003
================= ==============
Replacement cost profit
3,434 4,242 4,302 before interest and tax 8,544 8,152
424 326 256 Acquisition amortization 582 847
----------------- --------------
Pro forma replacement cost result
3,858 4,568 4,558 before interest and tax 9,126 8,999
================= ==============
Results include:
- (123) (160) Asset write-downs/impairment (283) (49)
- - - Environmental charges - -
Restructuring, integration and
(12) - - rationalization costs - (102)
- - - Other - -
106 (66) (87) Unrealized profit in stock (UPIS) (153) (19)
----------------- --------------
94 (189) (247) Total non-operating items and UPIS (436) (170)
333 211 (114) Exceptional items 97 766
================= ==============
Total non-operating items, UPIS
427 22 (361) and exceptional items (339) 596
================= ==============
101 136 108 Exploration expense 244 213
Of which:
43 67 22 Exploration expenditure written off 89 93
----------------- --------------
Production (Net of Royalties)
1,712 2,342 2,321 Crude oil (mb/d) 2,331 1,771
199 191 197 Natural gas liquids (mb/d) 194 216
1,911 2,533 2,518 Total liquids (mb/d)(a) 2,525 1,987
8,439 8,600 8,425 Natural gas (mmcf/d) 8,512 8,727
3,366 4,015 3,971 Total hydrocarbons (mboe/d)(b) 3,993 3,492
================= ==============
Average realizations
25.73 31.30 34.47 Crude oil ($/bbl) 32.85 28.50
17.49 23.14 23.71 Natural gas liquids ($/bbl) 23.43 18.76
24.90 30.48 33.27 Total liquids ($/bbl) 31.85 27.47
3.39 3.79 3.68 Natural gas ($/mcf) 3.74 3.64
22.43 26.48 27.66 Total hydrocarbons ($/bbl) 27.06 24.49
================= ==============
Average oil marker prices
($/bbl)
26.03 32.03 35.32 Brent 33.67 28.77
29.02 35.30 38.28 West Texas Intermediate 36.80 31.53
27.04 34.22 36.99 Alaska North Slope US West Coast 35.61 30.13
================= ==============
Average natural gas marker prices
5.40 5.69 6.00 Henry Hub gas price ($/mmbtu)(c) 5.84 5.96
UK Gas - National
17.44 24.59 20.70 Balancing Point (p/therm) 22.64 19.35
================= ==============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels.
(c) Henry Hub First of the Month Index.
Exploration and Production
The pro forma replacement cost result before interest and tax for the second
quarter was $4,558 million, up 18% from the second quarter of 2003. The primary
drivers for the change are the higher realizations in both liquids and gas
combined with the changing composition of production primarily arising from the
greater proportion of production from Russia. This was partly offset by the
exceptional losses and non-operating charges in the quarter. The corresponding
quarter in 2003 contained exceptional gains and non-operating credits.
Included in the results for the quarter was a non-operating charge as a result
of impairments totalling $160 million in respect of a gas processing plant in
the USA and a field in the Gulf of Mexico Shelf.
The second quarter result also includes a charge of $87 million, reflecting an
increase in the provision for Unrealized Profit in Stock (UPIS), which removes
the upstream margin from downstream inventories. This compares with a credit of
$106 million in the equivalent quarter of last year.
Production for the quarter was up 18% from the second quarter of 2003, to 3,971
mboe/d. This reflects increased production from Russia partly offset by
divestments, lower seasonal gas takes in the North Sea, anticipated decline and
unplanned shutdowns at the Mars platform in the Gulf of Mexico and in Trinidad.
The result for the half year also benefited from higher realizations combined
with the changing composition of production primarily resulting from increased
volumes from Russia offset by the above operational items.
Projects in the New Profit Centres remain on track. In the Gulf of Mexico,
offshore installation of the Holstein and Mad Dog Spars was completed, Holstein
topsides have been installed, and the Thunder Horse platform has left the
construction yard in Korea. In Algeria, first gas sales from the In Salah gas
project have been achieved. In Azerbaijan, installation of the Central Azeri
jacket was completed. In Angola, the Kizomba A Floating Production Storage and
Offloading vessel arrived at the field location in Block 15 and hook-up to the
tension leg platform is in progress. In Trinidad the Atlas methanol plant was
brought on line. In Australia, commissioning of North West Shelf Train 4 has
commenced with first gas delivered to the plant.
Projects in Existing Profit Centres are also on track. In the UK the Clair
jacket and deck has been installed offshore. In Egypt, the first steps were
taken towards the development of a major LNG business, with agreements signed to
deliver natural gas to the Damietta plant.
In the second quarter we had a further exploration success in Angola with the
Venus discovery in offshore Block 31 and two discoveries in the Nile Delta in
Egypt, Temsah and Polaris.
During the quarter, we signed sale and purchase agreements in Indonesia for the
divestment of our interest in the Kangean Production Sharing Contract and our
participating interest in the Muriah Production Sharing Contract, in the USA for
the sale of our interest in the South Pass 60 property in the Gulf of Mexico
Shelf and Swordfish in the deepwater Gulf of Mexico. The total net exceptional
losses in respect of these transactions for the quarter were $114 million.
Customer Facing Segments
Refining and Marketing
2Q 1Q 2Q First Half
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
888 720 1,344 before interest and tax 2,064 1,516
205 221 218 Acquisition amortization 439 410
----------------------- -------------
Pro forma replacement cost result
1,093 941 1,562 before interest and tax 2,503 1,926
======================= =============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental charges - -
Restructuring, integration and
(41) - - rationalization costs - (59)
- - - Other - -
----------------------- -------------
(41) - - Total non-operating items - (59)
(49) (140) (18) Exceptional items (158) (101)
======================= =============
Total non-operating and
(90) (140) (18) exceptional items (158) (160)
======================= =============
Refinery throughputs (mb/d)
416 395 404 UK 400 397
991 884 871 Rest of Europe 878 973
1,465 1,265 1,370 USA 1,317 1,384
393 399 377 Rest of World 388 392
----------------------- -------------
3,265 2,943 3,022 Total throughput 2,983 3,146
======================= =============
96.7 95.1 95.1 Refining availability 95.1 95.4
======================= =============
Oil sales volumes (mb/d)
Refined products
279 294 318 UK 306 279
1,358 1,324 1,344 Rest of Europe 1,333 1,338
1,822 1,727 1,724 USA 1,726 1,787
607 679 665 Rest of World 672 626
----------------------- --------------
4,066 4,024 4,051 Total marketing sales 4,037 4,030
2,957 2,917 2,087 Trading/supply sales 2,502 2,884
----------------------- --------------
7,023 6,941 6,138 Total refined product sales 6,539 6,914
5,679 5,104 5,339 Crude oil 5,222 5,104
----------------------- --------------
12,702 12,045 11,477 Total oil sales 11,761 12,018
======================= ==============
Global Indicator Refining Margin(a)
($/bbl)
2.15 2.73 5.29 NWE 4.01 2.92
3.59 6.92 9.18 USGC 8.05 4.86
4.73 4.67 9.01 Midwest 6.84 4.44
6.34 8.06 15.41 USWC 11.73 6.55
0.66 3.42 2.80 Singapore 3.11 1.81
3.27 4.62 7.89 BP Average 6.25 3.89
======================= ==============
(a) The Global Indicator Refining Margin (GIM) is the average of six
regional indicator margins weighted for BP's crude refining capacity in
each region. Each regional indicator margin is based on a single
representative crude with product yields characteristic of the typical
level of upgrading complexity. The regional indicator margins may not
be representative of the margins achieved by BP in any period because
of BP's particular refinery configurations and crude and product slate.
Customer Facing Segments
Refining and Marketing
The pro forma replacement cost result before interest and tax for the second
quarter was $1,562 million. This compares with $1,093 million for the same
period last year, an increase of 43%. The result for the half year represents an
increase of $577 million (30%), at $2,503 million.
Refining margins in the second quarter were stronger for most regions than in
both the equivalent quarter a year ago and the first quarter of 2004, supported
by strong US product demand, coupled with below-normal inventories and the
impact of industry-wide planned and unplanned refinery maintenance. Compared to
the second quarter of 2003, the increase in result was less than suggested by
movements in the Global Indicator Margin (GIM), due to operational outages at
the Texas City Refinery, scheduled refinery turnarounds and higher purchased
energy costs. Marketing margins increased relative to the previous quarter,
particularly at the end of the quarter, but were below seasonal norms due to
pressure from rising crude and product prices.
The improvement relative to the first half of 2003 was attributable to the
stronger refining margins, with overall marketing margins lower due to factors
outlined above.
Refining throughputs for the quarter were 3,022 mb/d, some 7% below the second
quarter of 2003 due to the disposal of the Bayernoil refinery and the planned
turnaround at Cherry Point refinery. The throughputs were some 3% higher than
those in the previous quarter due to lower turnaround activity. The quarter's
refining availability was 95.1%. Marketing sales were 4,051 mb/d, a similar
level to both the equivalent quarter last year and the previous quarter.
During the quarter, BP continued the successful roll-out of its new Ultimate(R)
(a) generation gasoline and diesel fuels with launches in Germany and Austria.
Also in the quarter, BP announced the closure of refining operations at the ATAS
Refinery in Mersin, south eastern Turkey. The site will continue to operate as a
fuels terminal.
The quarter's exceptional charges included an additional charge associated with
the termination of the lubricants operation at the Coryton Refinery and the
closure of a terminal elsewhere in the UK.
The disposal of BP's interests in the Singapore Refining Company Private Limited
was concluded on 30 June.
Shortly after the quarter, BP and the Singapore Petroleum Company Limited (SPC)
announced that conditional agreement had been reached for SPC to purchase BP's
Retail and LPG Business in the Singapore retail network and related assets for
$70 million; the transaction completion is expected towards the end of 2004.
(a) Ultimate(R) is a trademark of BP p.l.c.
Customer Facing Segments
Petrochemicals
2Q 1Q 2Q First Half
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
306 (25) 208 before interest and tax 183 443
- - - Acquisition amortization - -
----------------------- -------------
Pro forma replacement cost result
306 (25) 208 before interest and tax 183 443
======================= =============
Results include:
Provision against fixed
assets investments/
- - - asset write-downs/impairment - -
- - - Environmental charges - -
Restructuring, integration and
5 - - rationalization costs - 5
- - - Other - -
----------------------- -------------
5 - - Total non-operating items - 5
2 (154) 6 Exceptional items (148) 9
======================= =============
Total non-operating and
7 (154) 6 exceptional items (148) 14
======================= =============
134 125 131(b)Chemicals Indicator Margin(a)($/te) 128(b) 115
======================= =============
Petrochemicals production (kte)
714 840 856 UK 1,696 1,583
2,681 2,728 2,726 Rest of Europe 5,454 5,444
2,503 2,543 2,514 USA 5,057 5,039
872 1,132 1,075 Rest of World 2,207 1,684
----------------------- --------------
6,770 7,243 7,171 Total production 14,414 13,750
======================= ==============
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected
by Nexant in their quarterly market analyses, then weighted based on
BP's product portfolio. It does not cover our entire portfolio of
products, and consequently is only indicative of the margins achieved by
BP in any particular period.
(b) Provisional. The data for the second quarter is based on two months'
actuals and one month of provisional data.
Petrochemicals' pro forma replacement cost result before interest and tax for
the second quarter was $208 million, up from a loss of $25 million in the first
quarter. The improvement is due to the absence of large exceptional losses in
the first quarter and improved margins. The second quarter result was a decrease
of $98 million compared with the second quarter a year ago as higher product
realizations were more than offset by adverse foreign exchange impacts, higher
energy costs and increased feedstock prices. The first half result was 59% lower
than that of a year ago, reflecting exceptional losses and lower margins.
Production of 7,171 thousand tonnes in the second quarter was 72 thousand tonnes
down on the previous quarter due to seasonal turnaround activity. First half
production was 664 thousand tonnes higher than a year ago due to new Asian PTA
capacity and higher asset utilization.
During the second quarter we signed a heads of agreement with our joint venture
partner, Sinopec (BP share 50%), to build a new 500 thousand tonnes a year
acetic acid plant in China. We signed a letter of intent to examine the
viability of expanding production at the BP Zhuhai PTA plant in China (BP share
85%) to 1,200 thousand tonnes a year. We completed the sale of our Speciality
Intermediates Business.
We have progressed with plans to consolidate the Olefins and Derivatives (O&D)
business into a stand-alone entity able to operate separately from the BP Group.
The BP Group plans to sell O&D in due course, possibly commencing the sale
through an Initial Public Offering, depending on market circumstances and
necessary approvals in the second half of 2005. We intend to retain the balance
of our petrochemicals portfolio, comprising the aromatics and acetyls business.
Customer Facing Segments
Gas, Power and Renewables
2Q 1Q 2Q First Half
2003 2004 2004 $ million 2004 2003
====================== ==============
Replacement cost profit
141 198 216 before interest and tax 414 357
- - - Acquisition amortization - -
---------------------- --------------
Pro forma replacement cost result
141 198 216 before interest and tax 414 357
====================== ==============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental charges - -
Restructuring, integration and
- - - rationalization costs - -
- - - Other - -
---------------------- --------------
- - - Total non-operating items - -
6 - - Exceptional items - 6
====================== ==============
Total non-operating and
6 - - exceptional items - 6
====================== ==============
Gas sales volumes (mmcf/d)
2,581 3,027 2,495 UK 2,761 2,896
421 442 266 Rest of Europe 354 447
10,441 13,618 12,470 USA 13,044 11,084
10,839 13,902 12,070 Rest of World 12,986 11,194
---------------------- --------------
24,282 30,989 27,301 Total gas sales volumes 29,145 25,621
======================= ==============
NGL sales volumes (mb/d)
1 4 8 UK 6 3
- 1 3 Rest of Europe 2 -
289 462 334 USA 397 285
147 244 166 Rest of World 205 199
----------------------- --------------
437 711 511 Total NGL sales volumes 610 487
======================= ==============
The pro forma replacement cost result before interest and tax for the second
quarter and half year was $216 million and $414 million respectively, compared
with $141 million and $357 million a year ago. The primary reason for these
increases is a higher contribution from the natural gas liquids business in
North America.
The half year result also benefited from higher contributions from the global
LNG and Solar businesses whilst the marketing and trading result is down due to
lower margins partly offset by higher gas sales volumes.
During the quarter, the Guangdong Dapeng LNG Company Ltd. (BP share 30%) in
China signed a series of milestone agreements relating to the Guangdong LNG
terminal and trunkline project which is due on stream in 2006. In addition,
since the quarter-end, the Tangguh LNG project in Indonesia (BP share 37.16%)
signed a sale and purchase agreement for the supply of 0.55 million tonnes per
annum for a period of 20 years to Posco, who is currently building an LNG import
terminal at Gwangyang in South Korea. BP Gas Marketing Ltd. has signed an
agreement with the Egyptian Natural Gas Holding Company to purchase LNG under a
long term contract from the Damietta LNG plant which is expected to start
commercial production in 2005.
Other Businesses and Corporate
2Q 1Q 2Q First Half
2003 2004 2004 $ million 2004 2003
====================== =============
Replacement cost profit (loss)
(153) 1,129 (164) before interest and tax 965 (319)
- - - Acquisition amortization - -
---------------------- -------------
Pro forma replacement cost result
(153) 1,129 (164) before interest and tax 965 (319)
====================== =============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental charges - -
Restructuring, integration and
- - - rationalization costs - -
- - - Other - -
---------------------- --------------
- - - Total non-operating items - -
(12) 1,313 (1) Exceptional items 1,312 (6)
====================== ==============
Total non-operating
(12) 1,313 (1) and exceptional items 1,312 (6)
====================== ==============
Other businesses and corporate comprises Finance, the group's aluminium asset
and interest income and costs relating to corporate activities. In the first
quarter, BP sold its interest in PetroChina for $1.65 billion and its interest
in Sinopec for $0.7 billion. These interests were previously included in other
businesses and corporate.
Dividends
2Q 1Q 2Q First Half
2003 2004 2004 2004 2003
====================== ==============
Dividends per ordinary share
6.50 6.75 7.10 cents 13.85 12.75
4.039 3.807 3.860 pence 7.667 7.986
39.0 40.5 42.6 Dividends per ADS (cents) 83.1 76.5
----------------------- --------------
BP today announced a second quarterly dividend for 2004 of 7.10 cents per
ordinary share. Holders of ordinary shares will receive 3.860 pence per share
and holders of American Depositary Receipts (ADRs) $0.426 per ADS share. The
dividend is payable on 7 September to shareholders on the register on 13 August.
Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in
the US Direct Access Plan will receive the dividend in the form of shares, also
on 7 September. The third quarter 2004 results and dividend will be announced on
26 October 2004.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
"The world economy slowed in the second quarter of 2004, although growth
remains above historic trend levels. The pace of economic activity seems
to be easing in the US, while specific policy actions in China have been
put in place to slow domestic demand growth. However, the momentum in
Japan has continued and signs of recovery are emerging within Europe.
Continued global economic growth is expected.
"Oil prices in the second quarter averaged $35.32 per barrel (Dated
Brent), the highest of any quarter for more than 20 years and over 10%
and $3 per barrel higher than in the first quarter. Prices have
strengthened further during July to date, averaging over $37 per barrel.
Prices have been supported by continued strong oil demand growth and
concerns about supply disruptions. OECD commercial inventories have
remained low relative to five year averages even though OPEC production
has increased following the 3 June agreement to raise the OPEC-10 output
ceiling. Oil prices should remain supported by limited spare OPEC
production capacity and further oil demand growth.
"US natural gas prices averaged $6/mmbtu (Henry Hub first of month index)
in the second quarter, up $0.31/mmbtu versus the first quarter. Since the
beginning of May spot gas prices have traded in the upper half of the
residual fuel oil and distillate parity range. The July first of month
price was $6.14/mmbtu, although daily spot prices have since eased below
$6/mmbtu as confidence has grown over gas availability through the summer
cooling period. Working gas in storage remains close to the 5 year
average. US industrial gas demand has increased. Supply is increasing as
imports grow both from Canada and in the form of LNG and as onshore
domestic production rises. Summer temperatures and oil prices will be the
keys to near term gas prices.
"Refining margins in the second quarter strengthened sharply relative to
the first quarter of 2004. Low product inventories, strong global oil
demand growth and concerns about US gasoline supply were all very
supportive. The margin gains were most pronounced in the US but Europe
also benefited. Margins in the third quarter will be increasingly
dependent on perceived demand for distillate. Marketing margins recovered
late in the second quarter but remain exposed to crude and product price
volatility.
"Petrochemical margins in the second quarter improved versus the previous
quarter as continued global economic growth supported demand. Further
growth in demand is anticipated, assuming the global economy remains on
track. Volatility of energy prices and exchange rates will continue to
influence future margins.
"Capital expenditure, excluding acquisitions, for the first half of 2004
was $6.4 billion, and will be around $14 billion for the year, slightly
above our previous forecast primarily due to the weaker US dollar.
The share buyback programme is continuing, reducing the number of
shares outstanding and increasing our ability to accelerate per share
dividend growth."
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under "Outlook",
contains forward looking statements particularly those regarding BP's
asset portfolio and changes in it, capital expenditure, costs, demand,
future performance, growth and other trend projections, maintenance,
margins, prices, production, sales, share repurchases, supply and the
timing of projects and pending transactions. Forward looking statements
by their nature involve risks and uncertainties and actual results may
differ from those expressed in such statements depending on a variety
of factors including the following: the timing of bringing new fields
on stream; industry product supply; demand and pricing; currency
exchange rates; operational problems; general economic conditions;
political stability and economic growth in relevant areas of the world;
changes in governmental regulations; exchange rate fluctuations;
development and use of new technology and successful commercial
relationships; the actions of competitors; natural disasters and other
changes in business conditions; prolonged adverse weather conditions;
wars and acts of terrorism or sabotage; and other factors discussed in
this Announcement. For more information you should refer to our Annual
Report and Accounts 2003 and our 2003 Annual Report on Form 20-F filed
with the US Securities and Exchange Commission.
----------------------------------------------------------------------
BP p.l.c. and Subsidiaries
Summarized Group Results
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
3,434 4,242 4,302 Exploration and Production 8,544 8,152
888 720 1,344 Refining and Marketing 2,064 1,516
306 (25) 208 Petrochemicals 183 443
141 198 216 Gas, Power and Renewables 414 357
(153) 1,129 (164) Other businesses and corporate 965 (319)
----------------------- --------------
Replacement cost profit before
4,616 6,264 5,906 interest and tax 12,170 10,149
(951) 648 462 Stock holding gains (losses)(Note 5) 1,110 (152)
----------------------- --------------
Historical cost profit before
3,665 6,912 6,368 interest and tax 13,280 9,997
149 152 145 Interest expense (Note 6) 297 325
127 76 76 Other finance expense (Note 7) 152 256
----------------------- --------------
3,389 6,684 6,147 Profit before taxation 12,831 9,416
1,744 1,822 2,199 Taxation (Note 8) 4,021 3,526
----------------------- --------------
1,645 4,862 3,948 Profit after taxation 8,810 5,890
60 44 52 Minority shareholders' interest 96 86
----------------------- --------------
1,585 4,818 3,896 Profit for the period 8,714 5,804
----------------------- --------------
1,434 1,483 1,536 Distribution to shareholders 3,019 2,820
----------------------- --------------
Earnings per ordinary share - cents
7.19 21.81 17.80 Basic 39.61 26.09
7.16 21.34 17.43 Diluted 38.77 26.00
======================= ==============
Replacement Cost Results
Historical cost profit
1,585 4,818 3,896 for the period 8,714 5,804
Stock holding (gains) losses
net of minority shareholders'
951 (648) (462) interest (1,110) 152
----------------------- --------------
Replacement cost profit
2,536 4,170 3,434 for the period 7,604 5,956
----------------------- --------------
Earnings per ordinary share - cents
On replacement cost profit
11.45 18.88 15.68 for the period 34.56 26.77
======================= =============
Summarized Group Balance Sheet
30 June 31 December
2004 2003
=====================
$ million
Fixed assets
Intangible assets 13,113 13,642
Tangible assets 91,275 91,911
Investments 19,034 17,458
---------------------
123,422 123,011
---------------------
Current assets
Stocks 12,470 11,617
Debtors 36,347 33,902
Investments 172 185
Cash at bank and in hand 1,531 1,947
---------------------
50,520 47,651
Creditors - amounts falling due within one year
Finance debt 7,393 9,456
Other creditors 44,859 41,128
---------------------
Net current assets (liabilities) (1,732) (2,933)
---------------------
Total assets less current liabilities 121,690 120,078
Creditors - amounts falling due
after more than one year
Finance debt 12,465 12,869
Other creditors 5,728 6,090
Provisions for liabilities and charges
Deferred taxation 14,539 14,371
Other provisions 8,610 8,815
---------------------
Net assets excluding pensions and other
post-retirement benefit balances 80,348 77,933
Defined benefit pension plan surplus 1,258 1,021
Defined benefit pension plan and other
post-retirement benefit plan deficits (7,556) (7,510)
---------------------
Net assets 74,050 71,444
Minority shareholders' interest - equity 1,232 1,125
---------------------
BP shareholders' interest 72,818 70,319
=====================
Movement in BP shareholders' interest: $ million
At 31 December 2003 75,938
Prior year adjustment - change in accounting policy
(see Note 1) (5,619)
------
As restated 70,319
Profit for the period 8,714
Distribution to shareholders (3,019)
Currency translation differences (net of tax) (202)
Issue of ordinary share capital for employee share schemes 222
Net release of shares by ESOP trusts 33
Repurchase of ordinary share capital (3,249)
------
At 30 June 2004 72,818
======
Summarized Group Cash Flow Statement
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Net cash inflow from
7,346 7,674 6,917 operating activities (a) 14,591 13,307
----------------------- ---------------
28 178 7 Dividends from joint ventures 185 41
----------------------- ---------------
Dividends from
177 31 97 associated undertakings 128 232
----------------------- ---------------
Servicing of finance and returns
on investments
52 41 45 Interest received 86 83
(446) (165) (154) Interest paid (319) (653)
42 12 18 Dividends received 30 48
Dividends paid to
(11) (2) (8) minority shareholders (10) (13)
----------------------- ---------------
Net cash outflow from servicing of
(363) (114) (99) finance and returns on investments (213) (535)
----------------------- ---------------
Taxation
(280) (322) (388) UK corporation tax (710) (592)
(1,573) (258) (1,231) Overseas tax (1,489) (1,893)
----------------------- ---------------
(1,853) (580) (1,619) Tax paid (2,199) (2,485)
----------------------- ---------------
Capital expenditure and
financial investment
(2,760) (2,941) (2,764) Payments for fixed assets (5,705) (5,631)
Proceeds from the sale
1,652 2,839 352 of fixed assets 3,191 3,969
----------------------- ---------------
Net cash outflow for
capital expenditure and
(1,108) (102) (2,412) financial investment (2,514) (1,662)
----------------------- --------------
Acquisitions and disposals
(150) - (14) Acquisitions, net of cash acquired (14) (150)
Proceeds from the sale
19 - 305 of businesses 305 179
Net investment in
- (1,273) - TNK-BP joint venture (1,273) -
Net investment in
(2) (92) (21) other joint ventures (113) (16)
Investments in associated
(331) (433) (148) undertakings (581) (517)
----------------------- ---------------
Net cash (outflow) inflow for
(464) (1,798) 122 acquisitions and disposals (1,676) (504)
----------------------- ---------------
(1,386) (1,492) (1,478) Equity dividends paid (2,970) (2,783)
----------------------- ---------------
2,377 3,797 1,535 Net cash inflow (outflow) 5,332 5,611
======================= ===============
1,355 3,598 2,155 Financing (b) 5,753 4,954
93 138 (153) Management of liquid resources (15) 106
929 61 (467) (Decrease) increase in cash (406) 551
----------------------- ---------------
2,377 3,797 1,535 5,332 5,611
======================= ===============
Analysis of Cash Flow
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
(a) Reconciliation of historical
cost profit before interest
and tax to net cash inflow
from operating activities
Historical cost profit before
3,665 6,912 6,368 interest and tax 13,280 9,997
2,653 2,814 2,738 Depreciation and amounts provided 5,552 5,362
Exploration expenditure
43 67 22 written off 89 93
Net operating charge for pensions
and other post-retirement
45 (23) (34) benefits, less contributions (57) (198)
Share of profits of joint ventures
(207) (641) (868) and associated undertakings (1,509) (511)
(100) (64) (74) Interest and other income (138) (148)
(Profit) loss on sale of fixed
(280) (1,230) 127 assets and businesses (1,103) (674)
29 67 50 Charge for provisions 117 58
(209) (155) (95) Utilization of provisions (250) (325)
193 247 (1,412) (Increase) decrease in stocks (1,165) 569
3,263 (1,586) (1,400) (Increase) decrease in debtors (2,986) (3,382)
(1,749) 1,266 1,495 Increase (decrease) in creditors 2,761 2,466
----------------------- ---------------
Net cash inflow from
7,346 7,674 6,917 operating activities 14,591 13,307
======================= ===============
(b) Financing
(208) (628) (430) Long-term borrowing (1,058) (1,223)
607 836 434 Repayments of long-term borrowing 1,270 1,010
(418) (156) (111) Short-term borrowing (267) (1,044)
Repayments of short-term
388 2,408 314 borrowing 2,722 4,287
----------------------- ---------------
369 2,460 207 2,667 3,030
Issue of ordinary share capital
(14) (126) (96) for employee share schemes (222) (81)
- 15 44 Purchase of shares by ESOP trusts 59 6
Repurchase of ordinary
1,000 1,249 2,000 share capital 3,249 1,999
----------------------- ---------------
Net cash outflow
1,355 3,598 2,155 (inflow) from financing 5,753 4,954
======================= ===============
Adjusted Operating Cash Flow
Net cash inflow from operating
7,346 7,674 6,917 activities (a) 14,591 13,307
Dividends received from
28 178 7 joint ventures 185 41
Dividends received from
177 31 97 associated undertakings 128 232
Net cash outflow from servicing
of finance and returns on
(363) (114) (99) investments (213) (535)
----------------------- ---------------
Adjusted operating cash
7,188 7,769 6,922 flow (pre-tax) 14,691 13,045
(1,704) (650) (1,647) Tax paid on operations (2,297) (2,282)
----------------------- ---------------
Adjusted operating cash
5,484 7,119 5,275 flow (post-tax) 12,394 10,763
----------------------- ---------------
* Components of tax payments
(1,704) (650) (1,647) Tax paid on operations (2,297) (2,282)
Tax refunded/(paid) on
(149) 70 28 exceptional items (b) 98 (203)
----------------------- ---------------
(1,853) (580) (1,619) Total tax paid (2,199) (2,485)
======================= ===============
(a) Includes pre-tax discretionary pension funding of $81 million in 2Q 2004
($56 million post-tax), $166 million in first half 2004 ($116 million post-
tax), $27 million in 2Q 2003 ($17 million post-tax) and $335 million in
first half 2003 ($214 million post-tax).
(b) Approximated as the tax credit/(charge) on exceptional items in the income
statement.
Capital Expenditure and Acquisitions
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
220 153 211 UK 364 416
73 48 45 Rest of Europe 93 124
1,005 932 1,027 USA 1,959 1,968
1,136 2,690 1,022 Rest of World (a) 3,712 2,044
----------------------- -------------
2,434 3,823 2,305 6,128 4,552
----------------------- -------------
Refining and Marketing
66 77 82 UK 159 139
64 92 173 Rest of Europe 265 168
228 258 330 USA 588 564
27 37 55 Rest of World 92 51
----------------------- -------------
385 464 640 1,104 922
----------------------- -------------
Petrochemicals
30 20 22 UK 42 30
21 38 53 Rest of Europe 91 52
62 47 68 USA 115 106
85 61 38 Rest of World 99 106
----------------------- -------------
198 166 181 347 294
----------------------- -------------
Gas, Power and Renewables
24 1 5 UK 6 32
9 2 3 Rest of Europe 5 24
52 11 14 USA 25 93
41 47 60 Rest of World 107 64
----------------------- -------------
126 61 82 143 213
----------------------- -------------
Other businesses and corporate
21 2 13 UK 15 39
- - - Rest of Europe - 1
162 9 13 USA 22 172
- - - Rest of World - 1
----------------------- -------------
183 11 26 37 213
----------------------- -------------
3,326 4,525 3,234 7,759 6,194
======================= =============
By geographical area
361 253 333 UK 586 656
167 180 274 Rest of Europe 454 369
1,509 1,257 1,452 USA 2,709 2,903
1,289 2,835 1,175 Rest of World (a) 4,010 2,266
----------------------- -------------
3,326 4,525 3,234 7,759 6,194
----------------------- -------------
(a) First quarter and first half 2004 included $1,354 million investment in
TNK's interest in Slavneft within TNK-BP.
Exchange rates
US dollar/sterling average rate
1.62 1.84 1.81 for the period 1.82 1.61
1.65 1.83 1.81 US dollar/sterling period-end rate 1.81 1.65
US dollar/euro average rate
1.14 1.25 1.20 for the period 1.23 1.10
1.14 1.22 1.21 US dollar/euro period-end rate 1.21 1.14
======================= =============
Analysis of Replacement Cost Profit
Before Interest and Tax
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
993 823 835 UK 1,658 2,071
143 163 206 Rest of Europe 369 338
1,374 1,494 1,503 USA 2,997 3,032
924 1,762 1,758 Rest of World 3,520 2,711
----------------------- -------------
3,434 4,242 4,302 8,544 8,152
----------------------- -------------
Refining and Marketing
(117) (189) (195) UK (384) (160)
499 289 444 Rest of Europe 733 860
337 409 872 USA 1,281 482
169 211 223 Rest of World 434 334
----------------------- -------------
888 720 1,344 2,064 1,516
----------------------- -------------
Petrochemicals
(38) (156) (62) UK (218) (128)
232 154 183 Rest of Europe 337 349
82 (109) 3 USA (106) 136
30 86 84 Rest of World 170 86
----------------------- -------------
306 (25) 208 183 443
----------------------- -------------
Gas, Power and Renewables
17 12 (2) UK 10 21
(5) (11) (3) Rest of Europe (14) (14)
126 79 114 USA 193 183
3 118 107 Rest of World 225 167
----------------------- -------------
141 198 216 414 357
----------------------- -------------
Other businesses and corporate
(149) (163) (50) UK (213) (242)
(2) (6) (1) Rest of Europe (7) (10)
(43) (30) (109) USA (139) (124)
41 1,328 (4) Rest of World 1,324 57
----------------------- -------------
(153) 1,129 (164) 965 (319)
----------------------- -------------
4,616 6,264 5,906 12,170 10,149
======================= =============
By geographical area
706 327 526 UK 853 1,562
867 589 829 Rest of Europe 1,418 1,523
1,876 1,843 2,383 USA 4,226 3,709
1,167 3,505 2,168 Rest of World 5,673 3,355
----------------------- -------------
4,616 6,264 5,906 12,170 10,149
======================= =============
Included above:
Share of profits of joint
101 485 734 ventures 1,219 218
110 141 130 Share of profits of associated
undertakings 271 290
----------------------- -------------
211 626 864 1,490 508
======================= =============
Pro Forma Result: Replacement Cost Profit Before
Interest and Tax Adjusted for Acquisition Amortization
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
1,027 858 867 UK 1,725 2,138
143 163 206 Rest of Europe 369 338
1,631 1,708 1,713 USA 3,421 3,548
1,057 1,839 1,772 Rest of World 3,611 2,975
----------------------- -------------
3,858 4,568 4,558 9,126 8,999
----------------------- -------------
Refining and Marketing
(7) (63) (72) UK (135) 60
499 289 444 Rest of Europe 733 860
432 504 967 USA 1,471 672
169 211 223 Rest of World 434 334
----------------------- -------------
1,093 941 1,562 2,503 1,926
----------------------- -------------
Petrochemicals
(38) (156) (62) UK (218) (128)
232 154 183 Rest of Europe 337 349
82 (109) 3 USA (106) 136
30 86 84 Rest of World 170 86
----------------------- -------------
306 (25) 208 183 443
----------------------- -------------
Gas, Power and Renewables
17 12 (2) UK 10 21
(5) (11) (3) Rest of Europe (14) (14)
126 79 114 USA 193 183
3 118 107 Rest of World 225 167
----------------------- -------------
141 198 216 414 357
----------------------- -------------
Other businesses and corporate
(149) (163) (50) UK (213) (242)
(2) (6) (1) Rest of Europe (7) (10)
(43) (30) (109) USA (139) (124)
41 1,328 (4) Rest of World 1,324 57
----------------------- -------------
(153) 1,129 (164) 965 (319)
----------------------- -------------
5,245 6,811 6,380 13,191 11,406
----------------------- -------------
By geographical area
850 488 681 UK 1,169 1,849
867 589 829 Rest of Europe 1,418 1,523
2,228 2,152 2,688 USA 4,840 4,415
1,300 3,582 2,182 Rest of World 5,764 3,619
----------------------- -------------
5,245 6,811 6,380 13,191 11,406
======================= =============
Analysis of Exceptional Items
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
576 (1) (2) UK (3) 577
- - - Rest of Europe - -
(69) (19) 43 USA 24 (229)
(174) 231 (155) Rest of World 76 418
----------------------- -------------
333 211 (114) 97 766
----------------------- -------------
Refining and Marketing
(31) (36) (58) UK (94) (46)
12 (17) - Rest of Europe (17) (28)
(30) (5) 7 USA 2 (26)
- (82) 33 Rest of World (49) (1)
----------------------- -------------
(49) (140) (18) (158) (101)
----------------------- -------------
Petrochemicals
- (7) 3 UK (4) 3
- (19) 73 Rest of Europe 54 (1)
- (126) (70) USA (196) 4
2 (2) - Rest of World (2) 3
----------------------- -------------
2 (154) 6 (148) 9
----------------------- -------------
Gas, Power and Renewables
- - - UK - -
- - - Rest of Europe - -
9 - - USA - 9
(3) - - Rest of World - (3)
----------------------- -------------
6 - - - 6
----------------------- -------------
Other businesses and corporate
(10) (1) 1 UK - (10)
- - (1) Rest of Europe (1) (1)
(2) - - USA - 5
- 1,314 (1) Rest of World 1,313 -
----------------------- -------------
(12) 1,313 (1) 1,312 (6)
----------------------- -------------
Profit (loss) on sale of fixed assets
and businesses or termination
280 1,230 (127) of operations 1,103 674
(149) 70 28 Taxation credit (charge) 98 (203)
----------------------- -------------
131 1,300 (99) Exceptional items after taxation 1,201 471
======================= =============
Identified Non-operating Items and UPIS
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
(12) - - UK - (65)
- - - Rest of Europe - -
106 (66) (247) USA (a) (313) (100)
- (123) - Rest of World (123) (5)
----------------------- -------------
94 (189) (247) (436) (170)
----------------------- -------------
Refining and Marketing
- - - UK - -
(41) - - Rest of Europe - (59)
- - - USA - -
- - - Rest of World - -
----------------------- -------------
(41) - - - (59)
----------------------- -------------
Petrochemicals
- - - UK - -
- - - Rest of Europe - -
5 - - USA - 5
- - - Rest of World - -
----------------------- -------------
5 - - - 5
----------------------- -------------
Gas, Power and Renewables
- - - UK - -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- - - - -
----------------------- -------------
Other businesses and corporate
- - - UK - -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- - - - -
----------------------- -------------
58 (189) (247) Total before taxation (436) (224)
(21) 66 88 Taxation credit (charge) 154 206
----------------------- -------------
37 (123) (159) Total after taxation (282) (18)
======================= =============
(a) Includes charges for Unrealized Profit in Stock (UPIS) of $87 million
in 2Q 2004 and $153 million in the first half 2004 and a credit of $106
million in 2Q 2003 and a charge of $19 million in the first half of
2003, which removes the upstream margin from downstream inventories.
Acquisition Amortization by Business
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
34 35 32 UK 67 67
257 214 210 USA 424 516
133 77 14 Rest of World 91 264
----------------------- -------------
424 326 256 582 847
----------------------- -------------
Refining and Marketing
110 126 123 UK 249 220
95 95 95 USA 190 190
----------------------- -------------
205 221 218 439 410
----------------------- -------------
629 547 474 Total acquisition amortization 1,021 1,257
======================= =============
Production and Realizations
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Production
Crude oil (mb/d) (net of royalties)
325 344 321 UK 333 383
80 73 80 Rest of Europe 76 85
569 564 541 USA 552 588
738 1,361 1,379 Rest of World 1,370 715
----------------------- -------------
1,712 2,342 2,321 Total crude oil production 2,331 1,771
======================= =============
Natural gas liquids (mb/d) (net of royalties)
18 20 21 UK 20 24
5 5 5 Rest of Europe 5 5
144 137 140 USA 139 155
32 29 31 Rest of World 30 32
----------------------- -------------
Total natural gas
199 191 197 liquids production 194 216
======================= =============
Liquids (a)(mb/d) (net of royalties)
343 364 342 UK 353 407
85 78 85 Rest of Europe 81 90
713 701 681 USA 691 743
770 1,390 1,410 Rest of World 1,400 747
----------------------- -------------
1,911 2,533 2,518 Total liquids production 2,525 1,987
======================= =============
Natural gas (b) (mmcf/d) (net of royalties)
1,407 1,355 1,213 UK 1,284 1,602
103 142 136 Rest of Europe 139 117
3,145 2,869 2,790 USA 2,829 3,290
3,784 4,234 4,286 Rest of World 4,260 3,718
----------------------- -------------
8,439 8,600 8,425 Total natural gas production 8,512 8,727
======================= =============
Average realizations
Crude oil ($/bbl)
25.16 29.36 33.99 UK 31.60 28.60
27.09 32.69 35.82 USA 34.22 29.48
24.16 30.80 32.64 Rest of World 31.69 26.90
25.73 31.30 34.47 BP Average 32.85 28.50
======================= =============
Natural gas liquids ($/bbl)
11.97 25.70 28.30 UK 27.04 18.86
17.80 22.25 23.13 USA 22.71 18.05
20.16 24.61 22.17 Rest of World 23.36 21.63
17.49 23.14 23.71 BP Average 23.43 18.76
======================= =============
Liquids (a) ($/bbl)
24.45 29.16 33.64 UK 31.33 28.04
25.61 31.08 33.67 USA 32.36 27.55
23.93 30.42 31.90 Rest of World 31.14 26.58
24.90 30.48 33.27 BP Average 31.85 27.47
======================= =============
Natural gas ($/mcf)
2.84 4.70 3.59 UK 4.18 3.11
4.52 4.72 5.11 USA 4.91 4.91
2.53 2.67 2.54 Rest of World 2.60 2.63
3.39 3.79 3.68 BP Average 3.74 3.64
======================= =============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
Reconciliation of Historical Cost
Profit (Loss) to Pro Forma Result
Reported Acquisition Pro forma
$ million earnings amortization result
======================================
1Q 2004
Exploration and Production 4,242 326 4,568
Refining and Marketing 720 221 941
Petrochemicals (25) - (25)
Gas, Power and Renewables 198 - 198
Other businesses and corporate 1,129 - 1,129
--------------------------------------
RC profit before interest and tax 6,264 547 6,811
Interest and other finance expense (228) - (228)
Taxation (1,822) - (1,822)
MSI (44) - (44)
--------------------------------------
RC profit 4,170 547 4,717
=================
Stock holding gains (losses) 648
-----
HC profit 4,818
=====
2Q 2003
Exploration and Production 3,434 424 3,858
Refining and Marketing 888 205 1,093
Petrochemicals 306 - 306
Gas, Power and Renewables 141 - 141
Other businesses and corporate (153) - (153)
--------------------------------------
RC profit before interest and tax 4,616 629 5,245
Interest and other finance expense (276) - (276)
Taxation (1,744) - (1,744)
MSI (60) - (60)
--------------------------------------
RC profit 2,536 629 3,165
=================
Stock holding gains (losses) (951)
-----
HC profit 1,585
=====
Reconciliation of Historical Cost
Profit (Loss) to Pro Forma Result
Reported Acquisition Pro forma
$ million earnings amortization result
======================================
1H 2004
Exploration and Production 8,544 582 9,126
Refining and Marketing 2,064 439 2,503
Petrochemicals 183 - 183
Gas, Power and Renewables 414 - 414
Other businesses and corporate 965 - 965
--------------------------------------
RC profit before interest and tax 12,170 1,021 13,191
Interest and other finance expense 449 - 449
Taxation 4,021 - 4,021
MSI 96 - 96
--------------------------------------
RC profit 7,604 1,021 8,625
=================
Stock holding gains (losses) 1,110
-----
HC profit 8,714
=====
1H 2003
Exploration and Production 8,152 847 8,999
Refining and Marketing 1,516 410 1,926
Petrochemicals 443 - 443
Gas, Power and Renewables 357 - 357
Other businesses and corporate (319) - (319)
--------------------------------------
RC profit before interest and tax 10,149 1,257 11,406
Interest and other finance expense (581) - (581)
Taxation (3,526) - (3,526)
MSI (86) - (86)
--------------------------------------
RC profit 5,956 1,257 7,213
=================
Stock holding gains (losses) (152)
-----
HC profit 5,804
=====
Return on Average Capital Employed
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Replacement cost basis
2,536 4,170 3,434 RC profit for the period (a) 7,604 5,956
78 64 62 Interest (b) 126 177
60 44 52 Minority shareholders' interest 96 86
----------------------- --------------
2,674 4,278 3,548 Adjusted RC profit 7,826 6,219
======================= ==============
85,472 93,858 93,965 Average capital employed 93,876 85,980
12.5% 18.2% 15.1% ROACE - replacement cost basis 16.7% 14.5%
----------------------- --------------
Pro forma basis
2,674 4,278 3,548 Adjusted RC profit (a) 7,826 6,219
629 547 474 Acquisition amortization 1,021 1,257
----------------------- --------------
Adjusted RC profit -
3,303 4,825 4,022 pro forma basis 8,847 7,476
======================= ==============
85,472 93,858 93,965 Average capital employed 93,876 85,980
Average capital employed
14,839 13,146 12,689 acquisition adjustment 12,905 15,571
----------------------- --------------
Average capital employed
70,633 80,712 81,276 (pro forma basis) 80,971 70,409
18.7% 23.9% 19.8% ROACE - Pro forma basis 21.9% 21.2%
----------------------- -------------
Historical cost basis
1,585 4,818 3,896 Profit for the period (a) 8,714 5,804
78 64 62 Interest (b) 126 177
60 44 52 Minority shareholders' interest 96 86
----------------------- --------------
1,723 4,926 4,010 Adjusted historical cost profit 8,936 6,067
======================= ==============
85,472 93,858 93,965 Average capital employed 93,876 85,980
8.1% 21.0% 17.1% ROACE - historical cost basis 19.0% 14.1%
(a) 2Q 2004 includes ($99) million in respect of exceptional items and
($159) million in respect of non-operating items and UPIS. First half
2004 includes $1,201 million in respect of exceptional items and ($282)
million in respect of non-operating items and UPIS. 2Q 2003 includes
$131 million in respect of exceptional items and $37 million in respect
of non-operating items and UPIS. First half 2003 includes $471 million
in respect of exceptional items and ($18) million in respect of non-
operating items and UPIS.
(b) Excludes interest on joint venture and associated undertakings' debt
and is on a post-tax basis using a deemed tax rate equal to the US
statutory tax rate.
Pre-Tax Cash Returns
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Replacement cost profit before
4,616 6,264 5,906 interest and tax 12,170 10,149
(280) (1,230) 127 Exceptional items (1,103) (674)
----------------------- --------------
4,336 5,034 6,033 Replacement cost operating profit 11,067 9,475
629 547 474 Acquisition amortization 1,021 1,257
----------------------- --------------
Pro forma replacement cost
4,965 5,581 6,507 operating profit 12,088 10,732
- 123 160 Non-cash non-operating items 283 49
Pro forma DD&A, adjusted for non-
2,024 2,144 2,104 cash non-operating items 4,248 4,056
----------------------- --------------
6,989 7,848 8,771 Cash returns numerator 16,619 14,837
======================= ==============
85,666 93,947 93,982 Capital employed 93,982 85,666
Liabilities for current and
15,550 17,207 17,461 deferred taxation 17,461 15,550
----------------------- --------------
101,216 111,154 111,443 Operating capital employed 111,443 101,216
(14,469)(12,930)(12,447) Acquisition adjustment (12,447)(14,469)
----------------------- --------------
86,747 98,224 98,996 Cash returns denominator 98,996 86,747
======================= ==============
86,066 97,350 98,610 Average cash returns denominator 97,736 85,291
======================= ==============
32% 32% 36% Cash return 34% 35%
Net Debt Ratio - Net Debt: Net Debt + Equity
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
18,594 19,937 19,858 Gross debt 19,858 18,594
2,444 2,334 1,703 Cash and current asset investments 1,703 2,444
----------------------- --------------
16,150 17,603 18,155 Net debt 18,155 16,150
======================= ==============
67,072 74,010 74,124 Equity 74,124 67,072
19% 19% 20% Net debt ratio 20% 19%
----------------------- --------------
14,469 12,930 12,447 Acquisition adjustment 12,447 14,469
----------------------- --------------
23% 22% 23% Net debt ratio - pro forma basis 23% 23%
======================= ==============
Notes
1. Restatement of comparative information
Comparative information for 2003 has been restated to reflect the
changes described below.
(a) Transfer of natural gas liquids activities
With effect from 1 January 2004 natural gas liquids (NGLs)
activities have been transferred from the Exploration and
Production segment to Gas, Power and Renewables.
(b) New accounting standard for pensions and other post-retirement
benefits
With effect from 1 January 2004 BP has adopted Financial Reporting
Standard No. 17 'Retirement Benefits' (FRS 17). FRS 17 requires
that financial statements reflect at fair value the assets and
liabilities arising from an employer's retirement benefit
obligations and any related funding. The operating costs of
providing retirement benefits are recognized in the period in which
they are earned together with any related finance costs and changes
in the value of related assets and liabilities. This contrasts
with Statement of Standard Accounting Practice No. 24 'Accounting
for Pension Costs', which requires the cost of providing pensions
to be recognized on a systematic and rational basis over the period
during which the employer benefits from the employee's services.
The difference between the amount charged in the income statement
and the amount paid as contributions into the pension fund is shown
as a prepayment or provision on the balance sheet.
(c) Accounting for Employee Share Ownership Plans
With effect from 1 January 2004 BP has adopted Urgent Issues Task
Force Abstract No. 38 'Accounting for ESOP Trusts'. This abstract
requires that BP shares held by the group for the purposes of
Employee Share Ownership Plans (ESOPs) are deducted from equity on
the balance sheet. Such shares were previously classified as fixed
asset investments.
Balance sheet at 31 December 2003 Restated Reported
====================
$ million
Fixed assets
Intangible assets 13,642 13,642
Tangible assets 91,911 91,911
Investments 17,458 17,554
--------------------
123,011 123,107
--------------------
Current assets 47,651 54,465
Creditors - amounts falling due within one year 50,584 50,584
-------------------
Net current assets (liabilities) (2,933) 3,881
-------------------
Total assets less current liabilities 120,078 126,988
Creditors - amounts falling due after
more than one year 18,959 18,959
Provisions for liabilities and charges
Deferred taxation 14,371 15,273
Other provisions 8,815 15,693
-------------------
Net assets excluding pension and other
post-retirement benefit balances 77,933 77,063
Defined benefit pension plan surplus 1,021 -
Defined benefit pension plan and other
post-retirement benefit plan deficits (7,510) -
-------------------
Net assets 71,444 77,063
Minority shareholders' interest 1,125 1,125
-------------------
BP shareholders' interest 70,319 75,938
===================
Notes
Income statements Restated Reported
Second First Second First
Quarter Half Quarter Half
2003 2003 2003 2003
================ ================
$ million
Exploration and Production 3,434 8,152 3,486 8,245
Refining and Marketing 888 1,516 840 1,419
Petrochemicals 306 443 315 461
Gas, Power and Renewables 141 357 109 303
Other businesses and corporate (153) (319) (146) (305)
-----------------------------------
Replacement cost profit before
interest and tax 4,616 10,149 4,604 10,123
Stock holding gains (losses) (951) (152) (951) (152)
-----------------------------------
Historical cost profit before
interest and tax 3,665 9,997 3,653 9,971
Interest expense 149 325 191 411
Other finance expense 127 256 - -
-----------------------------------
Profit before taxation 3,389 9,416 3,462 9,560
Taxation 1,744 3,526 1,768 3,573
-----------------------------------
Profit after taxation 1,645 5,890 1,694 5,987
Minority shareholders' interest 60 86 60 86
-----------------------------------
Profit for the period 1,585 5,804 1,634 5,901
===================================
Distribution to shareholders 1,434 2,820 1,434 2,820
-----------------------------------
Earnings per ordinary share - cents
Basic 7.19 26.09 7.41 26.52
Diluted 7.16 26.00 7.39 26.44
===================================
Notes
2. Turnover
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
7,272 8,166 8,213 Exploration and Production 16,379 16,150
34,874 41,694 45,467 Refining and Marketing 87,161 74,369
4,197 4,510 4,805 Petrochemicals 9,315 8,318
14,910 20,975 18,434 Gas, Power and Renewables 39,409 32,990
Other businesses
129 121 132 and corporate 253 240
----------------------- ---------------
61,382 75,466 77,051 152,517 132,067
Less: sales between
6,956 7,864 7,960 businesses 15,824 15,610
----------------------- ---------------
54,426 67,602 69,091 Group excluding JVs 136,693 116,457
Share of sales by
364 1,878 2,063 joint ventures 3,941 762
----------------------- ---------------
54,790 69,480 71,154 140,634 117,219
======================= ===============
By geographical area
Group excluding JVs
13,161 17,296 17,355 UK 34,651 28,293
12,501 12,041 13,332 Rest of Europe 25,373 25,818
24,103 31,803 33,541 USA 65,344 53,444
12,102 15,817 15,787 Rest of World 31,604 25,838
----------------------- ---------------
61,867 76,957 80,015 156,972 133,393
7,441 9,355 10,924 Less: sales between areas 20,279 16,936
----------------------- ---------------
54,426 67,602 69,091 136,693 116,457
======================= ===============
3. Replacement cost profit
Replacement cost profits reflect the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from the
historical cost profit stock holding gains and losses.
Notes
4. Operating profits are after charging:
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration expense
2 2 3 UK 5 5
5 2 6 Rest of Europe 8 9
47 97 63 USA 160 84
47 35 36 Rest of World 71 115
----------------------- --------------
101 136 108 244 213
======================= ==============
Production taxes (a)
58 126 46 UK petroleum revenue tax 172 191
324 399 378 Overseas production taxes 777 695
----------------------- --------------
382 525 424 949 886
======================= ==============
(a) Production taxes are charged against Exploration and Production's
operating profit and are not included in the charge for taxation in
Note 8.
5. Stock holding gains (losses)
(3) 8 - Exploration and Production 8 3
(773) 529 428 Refining and Marketing 957 (153)
(103) 121 40 Petrochemicals 161 43
(72) (10) (6) Gas, Power and Renewables (16) (45)
---------------------- --------------
(951) 648 462 1,110 (152)
====================== ==============
Notes
6. Interest expense
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
163 149 147 Group interest payable 296 350
(43) (50) (52) Capitalized (102) (77)
----------------------- --------------
120 99 95 194 273
17 41 39 Joint ventures 80 30
12 12 11 Associated undertakings 23 22
----------------------- --------------
149 152 145 297 325
======================= ==============
7. Other finance expense
Interest on pension and other
post-retirement benefit
460 500 491 plan liabilities 991 920
Expected return on pension
and other post-retirement
(375) (498) (491) benefit plan assets (989) (750)
----------------------- --------------
Interest net of expected return
85 2 - on plan assets 2 170
Unwinding of discount
42 48 50 on provisions 98 86
Unwinding of discount on
deferred consideration for
acquisition of investment
- 26 26 in TNK-BP 52 -
----------------------- --------------
127 76 76 152 256
======================= ==============
8. Charge for taxation
1,406 1,706 2,165 Current 3,871 2,987
338 116 34 Deferred 150 539
----------------------- --------------
1,744 1,822 2,199 4,021 3,526
======================= ==============
379 345 366 UK 711 830
1,365 1,477 1,833 Overseas 3,310 2,696
----------------------- --------------
1,744 1,822 2,199 4,021 3,526
======================= ==============
Notes
9. Analysis of changes in net debt
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Opening balance
19,042 22,325 19,937 Finance debt 22,325 22,008
1,151 1,947 2,006 Less: Cash 1,947 1,520
228 185 328 Current asset investments 185 215
----------------------- ---------------
17,663 20,193 17,603 Opening net debt 20,193 20,273
----------------------- ---------------
Closing balance
18,594 19,937 19,858 Finance debt 19,858 18,594
2,115 2,006 1,531 Less: Cash 1,531 2,115
329 328 172 Current asset investments 172 329
----------------------- ---------------
16,150 17,603 18,155 Closing net debt 18,155 16,150
----------------------- ---------------
Decrease (increase)
1,513 2,590 (552) in net debt 2,038 4,123
======================= ===============
Movement in cash/
929 61 (467) bank overdrafts (406) 551
(Decrease) increase in
93 138 (153) current asset investments (15) 106
Net cash outflow (inflow)
from financing(excluding
369 2,460 207 share capital) 2,667 3,030
Exchange of Exchangeable Bonds
for Lukoil American
- - - Depositary Shares - 420
106 14 7 Other movements 21 170
----------------------- --------------
Movement in net debt before
1,497 2,673 (406) exchange effects 2,267 4,277
16 (83) (146) Exchange adjustments (229) (154)
----------------------- --------------
Decrease (increase)
1,513 2,590 (552) in net debt 2,038 4,123
======================= ==============
Notes
10. TNK-BP Operational and Financial Information
Second First Second
Quarter Quarter Quarter First Half
2003 2004 2004 2004 2003
======================= ==============
Production (Net of royalties)
(BP share)
- 766 814 Crude oil (mb/d) 790 -
- 382 450 Natural gas (mmcf/d) 416 -
- 832 891 Total hydrocarbons (mboe/d)(a) 862 -
======================= ==============
Average oil marker prices ($/bbl)
24.10 29.01 32.32 Urals (NWE - cif) 30.67 26.85
24.18 28.98 32.60 Urals (Med - cif) 30.79 26.97
7.44 17.08 19.71 Domestic Oil 18.40 6.47
======================= ==============
$ million $ million
Income statement (BP share)
Replacement cost profit
- 374 581 before interest and tax 955 -
- - - Stock holding gains (losses) - -
- (30) (26) Interest expense ... (56) -
- (115) (171) Taxation (286) -
- (10) (10) Minority shareholders' interest (20) -
----------------------- --------------
- 219 374 Net Income 593 -
======================= ==============
... Excludes unwinding of discount
- 26 26 on deferred consideration 52 -
======================= ==============
Cash Flow
Additional investment in
- (1,416) - TNK-BP joint venture (1,416) -
Dividends related to period
- 143 - prior to acquisition 143 -
----------------------- --------------
Net investment in TNK-BP
- (1,273) - joint venture (1,273) -
======================= ==============
- 119 - Dividends received 119 -
======================= ==============
Balance Sheet 30 June 31 December
2004 2003
======== ============
$ million
Fixed assets - investments
Gross assets 12,239 10,339
Gross liabilities (3,361) (3,290)
-------- --------
8,878 7,049
======== ========
Deferred consideration
Due within one year 1,244 1,227
Due after more than one year 2,387 2,352
-------- --------
3,631 3,579
======== ========
(a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
million barrels.
BP's share of the result of the TNK-BP joint venture has been included
within Exploration and Production with effect from 29 August 2003. TNK-BP
operational and financial information has been estimated and includes
adjustments to net income in respect of prior periods amounting to charges
of $7 million in 2Q 2004 and $36 million in first half 2004.
Notes
11. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 2003 Annual Report and
Accounts have been delivered to the UK Registrar of Companies; the
report of the auditors on those accounts was unqualified.
Contacts
London New York
------------------- ----------------
Press Office Roddy Kennedy Ian Stewart
+44 (0)20 7496 4624 +1 212 451 8026
Investor Relations Fergus McLeod Terry LaMore
+44 (0)20 7496 4717 +1 212 451 8034
http://www.bp.com/investors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: 27 July 2004 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary