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 25 July 2006
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 2006
London 25 July 2006
FOR IMMEDIATE RELEASE
CONTINUED STRONG PERFORMANCE
---------------------------------------------------------------------------
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 $ million 2006 2005 %
======================= ====================
5,591 5,623 7,266 Profit for the period* 12,889 12,193
Inventory holding
(610) (358) (1,148) (gains) losses (1,506) (1,721)
----------------------- --------------------
4,981 5,265 6,118 Replacement cost profit 11,383 10,472 9
======================= ====================
12.67 14.66 16.59 - per ordinary share (pence) 31.25 26.22
23.42 25.66 30.28 - per ordinary share (cents) 55.94 49.03 14
1.40 1.54 1.82 - per ADS (dollar) 3.36 2.94
======================= ====================
o BP's second quarter replacement cost profit was $6,118 million,
compared with $4,981 million a year ago, an increase of 23%. For the
half year, replacement cost profit was $11,383 million compared with
$10,472 million, up 9%.
o The second quarter result included a net non-operating gain of $6
million compared with a net non-operating charge of $822 million in the
second quarter of 2005. For the half year, the net non-operating
charge was $11 million compared with a net non-operating charge of $280
million for the first half of 2005.
o The second quarter trading environment was generally stronger than a
year ago with higher oil and gas realizations and higher refining
margins but with lower overall marketing margins.
o Net cash provided by operating activities for the quarter and half year
was $9.1 billion and $18.1 billion compared with $6.7 billion and
$16.1 billion a year ago.
o The ratio of net debt to net debt plus equity was 15%.
o The quarterly dividend, to be paid in September, is 9.825 cents per
share ($0.5895 per ADS) compared with 8.925 cents per share a year ago.
For the half year, the dividend showed an increase of 10%. In sterling
terms, the quarterly dividend is 5.324 pence per share, compared with
5.119 pence per share a year ago; for the half year the increase was
11%. During the first half, the company repurchased 725 million of its
own shares at a cost of $8.5 billion.
BP Group Chief Executive, Lord Browne, said:
"BP's second quarter result reflected good overall operating performance
and continuing strong upstream and refining margins. The Texas City refinery is
now running at 200 mb/d and further units will be brought onstream across the
balance of 2006. Our actions to control costs are on track. Results are being
impacted by higher tax charges. Strong cash generation continues to support
shareholder distributions through dividends and buybacks."
* Profit attributable to BP shareholders.
Summary Quarterly Results
Exploration and Production's second quarter result benefited from higher liquid
realizations and marginally higher gas realizations. In addition, it included
higher costs, reflecting the impact of sector-specific inflation, increased
integrity spend, repairs and revenue investment.
The Refining and Marketing result showed an improvement over the same period
last year despite the effects of reduced throughputs at the Texas City refinery.
The second quarter's result reflects strong operating performance, higher
refining margins, supply optimization benefits and a lower net charge for
non-operating items, partially offset by lower overall marketing margins.
In Gas, Power and Renewables, the higher second quarter result benefited from a
higher net gain from non-operating items, increased contributions from the gas
trading and marketing business and better operational performance in the natural
gas liquids business. This was partly offset by a negative impact from IFRS fair
value accounting charges.
Finance costs and Other finance expense was $107 million for the quarter
compared with $163 million in the second quarter of 2005. Increases in market
interest rates were more than offset by increased capitalized interest and a
higher expected return on pension and other post-retirement benefit plan assets.
The consolidation adjustment, which removes the margin on sales between segments
in respect of inventory at the period end, was a charge of $277 million in the
second quarter.
The effective tax rate on replacement cost profit of continuing operations was
36% versus 32% a year earlier, reflecting the higher level of provision
write-backs in 2005.
Capital expenditure was $3.7 billion for the quarter; there were no significant
acquisitions. Disposal proceeds were $2 billion.
Net debt at the end of the quarter was $14.4 billion. The ratio of net debt to
net debt plus equity was 15%.
During the second quarter, the company repurchased 376 million of its own
shares, at a cost of $4.5 billion. These shares are held in treasury.
In July, BP purchased 9.6% of the shares released under Rosneft's IPO for a
consideration of $1 billion.
The commentaries above and following are based on replacement cost profit.
The financial information for 2005 has been restated to reflect the following,
all with effect from 1 January 2006: (a) the transfer of three equity-accounted
entities from Other businesses and corporate to Refining and Marketing following
the sale of Innovene; (b) the transfer of certain mid-stream assets and
activities from Refining and Marketing and Exploration and Production to Gas,
Power and Renewables; (c) the transfer of Hydrogen for Transport activities from
Gas, Power and Renewables to Refining and Marketing; and (d) the change in the
basis of accounting for over-the-counter forward sale and purchase contracts for
oil, natural gas, NGLs and power. See Note 2 for further details.
Non-operating Items
Second
Quarter
$ million 2006
=======
Exploration and Production 479
Refining and Marketing (464)
Gas, Power and Renewables 106
Other businesses and corporate 26
-------
147
Taxation (53)
-------
Continuing Operations 94
Innovene Operations (88)
Taxation - (88)
------- -------
Total for all operations 6
=======
Reconciliation of Replacement Cost Profit to Profit for the Period
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 $ million 2006 2005
============================= ================
5,901 6,823 7,826 Exploration and Production 14,649 12,385
1,273 1,612 1,856 Refining and Marketing 3,468 2,684
189 301 453 Gas, Power and Renewables 754 601
Other businesses and
(156) (217) (193) corporate (410) (327)
Consolidation adjustments
Unrealized profit in
(4) (8) (277) inventory (285) (157)
Net profit on transactions
between continuing and
159 - - Innovene operations (a) - 255
----------------------------- ----------------
RC profit before interest
7,362 8,511 9,665 and tax 18,176 15,441
----------------------------- ----------------
Finance costs and other
(163) (143) (107) finance expense (250) (365)
(2,291) (2,929) (3,441) Taxation (6,370) (4,770)
(69) (71) (77) Minority interest (148) (130)
----------------------------- ----------------
RC profit from continuing
operations attributable
4,839 5,368 6,040 to BP shareholders (b) 11,408 10,176
============================= ================
Inventory holding gains
(losses) for continuing
648 358 1,148 operations 1,506 1,609
----------------------------- ----------------
Profit for the period
from continuing operations
attributable to BP
5,487 5,726 7,188 shareholders 12,914 11,785
Profit (loss) for the
period from Innovene
104 (103) 78 operations(c) (25) 408
----------------------------- ----------------
Profit for the period
attributable to BP
5,591 5,623 7,266 shareholders 12,889 12,193
============================= ================
RC profit from continuing
operations attributable
4,839 5,368 6,040 to BP shareholders 11,408 10,176
RC profit (loss) for
142 (103) 78 Innovene operations (25) 296
----------------------------- ----------------
4,981 5,265 6,118 Replacement cost profit 11,383 10,472
============================= ================
(a) In the circumstances of discontinued operations, Accounting Standards
require that the profits earned by the discontinued operations, in this
case the Innovene operations, on sales to the continuing operations be
eliminated on consolidation from the discontinued operations, and
attributed to the continuing operations and vice versa. This
adjustment has two offsetting elements: the net margin on crude refined
by Innovene as substantially all crude for their refineries was
supplied by BP and most of the refined products manufactured were taken
by BP; and the margin on sales of feedstock from BP's US refineries to
Innovene's manufacturing plants. The profits attributable to
individual segments were not affected by this adjustment. Neither does
this representation indicate the profits earned by continuing or
Innovene operations, as if they were stand-alone entities, for past
periods or likely to be earned in future periods.
(b) Replacement cost profit reflects the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from
profit inventory holding gains and losses. BP uses this measure to
assist investors to assess BP's performance from period to period.
Replacement cost profit is not a recognized GAAP measure. Operating
cash flow is calculated from the starting point of profit before
taxation which includes inventory holding gains and losses. Operating
cash flow also reflects working capital movements including
inventories, trade and other receivables and trade and other payables.
The carrying value of these working capital items will change for
various reasons, including movements in oil, gas and products prices.
(c) See further detail in Note 3.
Per Share Amounts
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
================================ =====================
Results for the
period ($m)
5,591 5,623 7,266 Profit* 12,889 12,193
4,981 5,265 6,118 Replacement cost profit 11,383 10,472
------------------------------- --------------------
Shares in issue at
21,174,934 20,341,135 19,993,613 period end (thousand)19,993,613 21,174,934
- ADS equivalent
3,529,156 3,390,189 3,332,269 (thousand) 3,332,269 3,529,156
Average number of
shares oustanding
21,270,485 20,521,872 20,171,546 (thousand) 20,345,750 21,355,418
- ADS equivalent
3,545,081 3,420,312 3,361,924 (thousand) 3,390,958 3,559,236
Per ordinary share
(cents)
26.30 27.40 35.94 Profit for the period 63.34 57.09
RC profit
23.42 25.66 30.28 for the period 55.94 49.03
Per ADS (cents)
157.80 164.40 215.64 Profit for the period 380.04 342.54
RC profit
140.52 153.96 181.68 for the period 335.64 294.18
-------------------------------- ---------------------
* Profit attributable to BP shareholders.
Exploration and Production
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= $ million ===============
5,904 6,816 7,827 Profit before interest and tax(a) 14,643 12,393
(3) 7 (1) Inventory holding (gains) losses 6 (8)
----------------------- ---------------
Replacement cost profit
5,901 6,823 7,826 before interest and tax 14,649 12,385
======================= ===============
Results include:
Impairment and gain (loss) on sale
(3) 9 330 of businesses and fixed assets 339 937
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss) on
(674) (395) 149 embedded derivatives (246) (834)
25 - - Other - 25
----------------------- ---------------
(652) (386) 479 Total non-operating items 93 128
======================= ===============
139 189 97 Exploration expense 286 299
Of which:
47 114 13 Exploration expenditure written off 127 131
----------------------- ---------------
Production (Net of Royalties)(b)
2,437 2,360 2,355 Crude oil (mb/d) 2,358 2,421
182 173 176 Natural gas liquids (mb/d) 174 185
2,619 2,533 2,531 Total liquids (mb/d)(c) 2,532 2,606
8,661 8,713 8,624 Natural gas (mmcf/d) 8,668 8,703
4,112 4,035 4,018 Total hydrocarbons (mboe/d)(d) 4,026 4,107
======================= ===============
Average realizations(e)
47.79 58.25 65.96 Crude oil ($/bbl) 62.08 45.60
29.86 35.47 37.80 Natural gas liquids ($/bbl) 36.66 28.99
45.95 55.88 62.86 Total liquids ($/bbl) 59.36 43.85
4.38 5.54 4.44 Natural gas ($/mcf) 4.99 4.32
36.11 44.20 44.58 Total hydrocarbons ($/boe) 44.39 34.86
======================= ===============
Average oil marker prices($/bbl)
51.63 61.79 69.59 Brent 65.71 49.64
53.08 63.29 70.46 West Texas Intermediate 66.89 51.52
50.10 60.89 68.84 Alaska North Slope US West Coast 64.89 47.64
======================= ===============
Average natural gas marker prices
6.74 9.01 6.80 Henry Hub gas price ($/mmbtu)(f) 7.90 6.51
UK Gas - National
30.15 70.00 34.55 Balancing Point (p/therm) 52.70 34.02
======================= ===============
(a) Profit from continuing operations and includes profit after interest and
tax of equity-accounted entities.
(b) Includes BP's share of production of equity-accounted entities.
(c) Crude oil and natural gas liquids.
(d) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
(e) Based on sales of consolidated subsidiaries only - this excludes equity-
accounted entities.
(f) Henry Hub First of the Month Index.
Exploration and Production
The replacement cost profit before interest and tax for the second quarter was
$7,826 million, an increase of 33% from the second quarter of 2005. This result
benefited from higher liquid realizations and marginally higher gas
realizations. In addition, it included higher costs, reflecting the impact of
sector-specific inflation, increased integrity spend, repairs and revenue
investment. Net non-operating gains for the second quarter were $479 million,
arising from net gains on sales of assets of $330 million, primarily from
interests in the North Sea and the Gulf of Mexico shelf assets in the USA, and
fair value gains of $149 million on embedded derivatives relating to North Sea
gas contracts. The corresponding quarter in 2005 contained net non-operating
losses of $652 million principally in respect of fair value losses on embedded
derivatives.
Production for the quarter at 4,018 mboe/d was broadly flat compared with the
second quarter of 2005 after adjusting for the effect of disposals. Underlying
production growth in the new profit centres and TNK-BP was offset by decline in
existing profit centres.
The replacement cost profit before interest and tax of $14,649 million for the
half year represented an increase of 18% over the same period of the previous
year. This result also benefited from higher realizations partially offset by
lower volumes and higher costs, reflecting sector-specific inflation, increased
integrity spend, repairs and revenue investment. The half year result included
net gains on sales of assets of $339 million and net fair value losses of $246
million on embedded derivatives. The first half of 2005 contained net
non-operating gains of $128 million.
Production for the half year of 4,026 mboe/d was 2% lower than the first half of
2005. After adjusting for the effect of disposals, production was broadly flat.
Underlying production growth from major projects in the new profit centres and
TNK-BP was offset by decline in existing profit centres.
Three new projects started up in the quarter. In Azerbaijan, the BTC pipeline
was successfully completed, with the first lifting from Ceyhan in Turkey in
June. In Algeria, first gas was produced from our In Amenas project in June.
In Egypt the Temsah redevelopment project started production in April, ahead of
schedule. Additionally, in June we signed a framework agreement for the
development of a new LNG plant - Damietta 2.
Offshore repair work on Thunder Horse is proceeding and we anticipate having
approval to introduce hydrocarbons to the facilities in the third quarter.
Recent work has focused on testing of the subsea equipment in readiness for
start-up. However, during a routine hydrotest we experienced two leaks in a
subsea manifold. We are taking a precautionary approach and are fully
investigating the events before starting up the platform. Subject to a
satisfactory outcome of these investigations our current plan anticipates
replacing just the damaged subsea equipment. Depending upon weather, this would
enable a start-up of production in early 2007.
We had further exploration success in Angola with the Urano oil discovery in
ultra-deepwater Block 31, bringing the number of successful discoveries that BP
has drilled in the Block to ten.
During the quarter, we completed the sale of our Gulf of Mexico Shelf assets to
Apache. Certain participants in these fields exercised their right of
pre-emption, and completion of these transactions is expected in the third
quarter of 2006. We also completed the sales of our 4.84% interest in the
Statfjord oil and gas field and of our interest in the Luva gas discovery, both
in the North Sea. In May, we announced our intention to sell our exploration
and production and gas infrastructure business in the Netherlands. In June,
TNK-BP announced that it had reached agreement to sell its Urdmurtneft assets to
Sinopec. Since the end of the quarter we have announced the sale of our 28%
interest in the Shenzi discovery in the Gulf of Mexico to Repsol for $2,145
million.
Refining and Marketing
Second First Second First Half
Quarter Quarter Quarter
2005 2006 2006 $ million 2006 2005
======================= =============
1,932 2,038 2,992 Profit before interest and tax(a) 5,030 4,285
(659) (426) (1,136) Inventory holding (gains) losses (1,562) (1,601)
----------------------- -------------
Replacement cost profit
1,273 1,612 1,856 before interest and tax 3,468 2,684
======================= =============
Results include:
Impairment and gain (loss) on sale
75 564 112 of businesses and fixed assets 676 48
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss) on
- - - embedded derivatives - -
(733) - (576) Other (576) (733)
----------------------- -------------
(658) 564 (464) Total non-operating items 100 (685)
======================= =============
Refinery throughputs (mb/d)
210 111 162 UK 137 187
671 639 671 Rest of Europe 655 659
1,350 976 1,200 USA 1,088 1,375
305 296 256 Rest of World 276 302
----------------------- -------------
2,536 2,022 2,289 Total throughput 2,156 2,523
======================= =============
93.1 79.9 86.4 Refining availability (%)(b) 83.1 94.1
======================= =============
Oil sales volumes (mb/d)
Refined products
356 345 355 UK 350 347
1,346 1,315 1,311 Rest of Europe 1,313 1,335
1,656 1,599 1,631 USA 1,615 1,652
604 567 579 Rest of World 573 612
----------------------- --------------
3,962 3,826 3,876 Total marketing sales 3,851 3,946
2,129 2,204 1,682 Trading/supply sales 1,943 2,163
----------------------- --------------
6,091 6,030 5,558 Total refined product sales 5,794 6,109
2,446 2,731 2,473 Crude oil 2,602 2,475
----------------------- --------------
8,537 8,761 8,031 Total oil sales 8,396 8,584
======================= ==============
Global Indicator Refining Margin
($/bbl)(c)
5.68 2.88 5.78 NWE 4.33 4.27
9.37 10.86 17.74 USGC 14.30 8.34
7.45 4.89 14.75 Midwest 9.82 5.65
14.53 11.22 21.27 USWC 16.25 13.71
6.30 3.54 6.83 Singapore 5.18 5.64
8.42 6.28 12.59 BP Average 9.44 7.19
======================= ==============
Chemicals production (kte)
317 303 298 UK 601 634
735 842 741 Rest of Europe 1,583 1,541
1,107 789 816 USA 1,605 2,325
1,443 1,687 1,728 Rest of World 3,415 2,551
----------------------- --------------
3,602 3,621 3,583 Total production 7,204 7,051
======================= ==============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
(b) Refining availability is defined as the ratio of units which are
available for processing, regardless of whether they are actually being
used, to total capacity. Where there is planned maintenance, such
capacity is not regarded as being available. During the first half of
2006, there was planned maintenance of a substantial part of the Texas
City refinery.
(c) The Global Indicator Refining Margin (GIM) is the average of 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.
Refining and Marketing
The replacement cost profit before interest and tax for the second quarter and
half year was $1,856 million and $3,468 million respectively. This compares with
$1,273 million and $2,684 million respectively, for the equivalent periods in
2005.
The quarter's result included a net charge of $464 million for non-operating
items. Following a review during the second quarter of 2006, a further provision
of $500 million was made for fatality and personal injury compensation claims
associated with the incident at the Texas City refinery in March 2005. This is
in addition to the $700 million provided last year. The non-operating items also
include $147 million in respect of net gains on disposals, an impairment charge
of $35 million and a charge of $76 million in respect of a donation to the BP
Foundation. The total net non-operating gain for the first half of 2006
amounted to $100 million.
The result showed an improvement over the same period last year despite the
effects of reduced throughputs at the Texas City refinery. The reduction in the
result in respect of Texas City, including the impact on associated businesses,
was some $460 million compared to the second quarter of 2005 and nearly $1.1
billion compared with the first half of 2005. Both the second quarter and half
year results reflect strong operating performance, higher refining margins,
supply optimization benefits and a lower net charge for non-operating items,
partially offset by lower overall marketing margins. The result for the first
half of 2006 reflects a net non-operating gain compared with a significant net
charge a year ago. IFRS accounting effects for both the quarter and the half
year were not material when compared with the same periods last year.
Refining crude throughputs for the quarter were 2,289 mb/d compared with 2,536
mb/d for the same quarter last year. The reduction in throughputs was mainly due
to the phased start-up of production at our Texas City refinery. Recommissioning
of the site began at the end of March, with current throughput of 200 mb/d. Our
focus is to continue re-commissioning the site safely and to bring it back
onstream in a phased manner. The full financial potential of the site is not
expected to be realized until 2007. Refining availability for the quarter,
excluding the Texas City refinery, at 95.7%, was slightly ahead of the second
quarter of 2005.
Marketing volumes for the quarter were 3,876 mb/d and 3,851 mb/d for the first
half of the year, slightly lower than the comparative periods in the previous
year mainly due to divestments.
BP announced plans to invest $500 million over the next ten years to establish a
dedicated bioscience research laboratory. The BP Energy Biosciences Institute
(EBI) is planned to be the first of its kind in the world and to be attached to
a major academic centre. During the quarter, BP and DuPont announced the
creation of a partnership to develop, produce and market a next generation of
biofuels. The companies' joint strategy is to deliver advanced biofuels that
will provide improved options for expanding energy supplies and accelerate the
move to renewable transportation fuels which lower overall greenhouse gas
emissions. The first product to market is expected to be biobutanol, which will
be introduced in the United Kingdom as a gasoline bio-component.
Also during the quarter, BP announced its intention to sell its Coryton Refinery
in Essex, UK which processes 172,000 barrels of crude oil a day. BP is in
initial discussions with a number of potential buyers.
Gas, Power and Renewables
Second First Second First Half
Quarter Quarter Quarter $ million
2005 2006 2006 2006 2005
======================= =============
175 238 463 Profit before interest and tax(a) 701 601
14 63 (10) Inventory holding (gains) losses 53 -
----------------------- -------------
Replacement cost profit
189 301 453 before interest and tax 754 601
======================= =============
Results include:
Impairment and gain (loss) on sale
20 - (1) of businesses and fixed assets (1) 83
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss)
67 (55) 107 on embedded derivatives 52 109
- - - Other - -
----------------------- -------------
87 (55) 106 Total non-operating items 51 192
======================= =============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
The replacement cost profit before interest and tax for the second quarter and
half year was $453 million and $754 million respectively, compared with $189
million and $601 million a year ago. Included in the result for the quarter was
a net non-operating gain of $106 million primarily in respect of fair value
gains on embedded derivatives. The corresponding quarter of 2005 contained fair
value gains of $67 million on embedded derivatives and net gains of $20 million
on the disposal of an NGL plant in the US.
The second quarter result was up 140% on the second quarter of 2005. This
result benefited from a higher net gain from non-operating items, increased
contributions from the gas trading and marketing business and better operational
performance in the natural gas liquids business. This was partly offset by a
negative impact from IFRS fair value accounting charges. The first half result
was similarly higher than the same period in 2005 largely reflecting higher
contributions from the operating businesses partially offset by a lower gain
from non-operating items and higher IFRS fair value accounting charges.
In June, operations started at China's first liquefied natural gas (LNG) import
and re-gasification terminal at Shengzhen, Guangdong province (BP share 30%)
with an initial cargo of LNG from the North West Shelf Venture in Australia in
which BP is also a partner. As part of BP Alternative Energy's strategy, we
entered into a strategic alliance with Clipper Windpower plc and signed an
agreement with GE to jointly develop and deploy hydrogen power projects.
Other Businesses and Corporate
Second First Second First Half
Quarter Quarter Quarter $ million
2005 2006 2006 2006 2005
====================== =============
Profit (loss) before
(156) (215) (192) interest and tax(a) (407) (327)
- (2) (1) Inventory holding (gains) losses (3) -
---------------------- -------------
Replacement cost profit (loss)
(156) (217) (193) before interest and tax (410) (327)
====================== =============
Results include:
Impairment and gain (loss) on sale
34 1 21 of businesses and fixed assets 22 34
22 - - Environmental and other provisions - 22
Restructuring, integration and
(28) - - rationalization costs - (71)
Fair value gain (loss) on
(14) 8 5 embedded derivatives 13 (18)
3 - - Other - 3
---------------------- --------------
17 9 26 Total non-operating items 35 (30)
====================== ==============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The second quarter's
result includes a net gain of $26 million in respect of non-operating items,
primarily relating to disposal gains.
Dividends Payable
September June September June and September
2005 2006 2006 2006 2005
========================== =================
Dividends per ordinary share
8.925 9.375 9.825 cents 19.20 17.425
5.119 5.251 5.324 pence 10.575 9.569
53.55 56.25 58.95 Dividends per ADS (cents) 115.20 104.55
-------------------------- ----------------
BP today announced a dividend of 9.825 cents per ordinary share to be paid in
September. Holders of ordinary shares will receive 5.324 pence per share and
holders of American Depository Receipts (ADRs) $0.5895 per ADS share. The
dividend is payable on 5 September to shareholders on the register on 11 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 5 September.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
"World economic growth has been sustained. US economic growth appears to
have slowed compared to the first quarter, but Europe appears to have
grown faster; growth in other regions has been sustained. The near-term
global outlook appears resilient.
"Crude oil prices averaged $69.59 per barrel (Dated Brent) in the second
quarter of 2006, an increase of nearly $8 per barrel from the first
quarter and $18 per barrel above the same period last year. Prices rose
in face of heightened geopolitical concerns. Demand is growing strongly
in China and the Middle East, offsetting weakness in the US and Europe.
Ample inventories and increased spare OPEC production capacity have
failed to stem the increase. Oil prices are expected to remain strong.
"US natural gas prices averaged $6.80/mmbtu (Henry Hub First of Month
Index) in the second quarter, $2.21/mmbtu below the first quarter. Gas
prices traded below parity with residual fuel oil during the quarter.
Onshore gas supplies and net imports have grown; recovery of hurricane-
affected production has continued. Working gas inventories at the end of
June were 29% above the five-year average. US gas prices have fallen
further so far in the third quarter.
"UK gas prices (NBP day-ahead) fell in the second quarter to average 34.6
pence per therm, compared to 70 pence per therm in the first quarter,
but 15% higher than in the second quarter of 2005. However, European
long-term contract prices, which are indexed to oil prices, increased by
more over the same period. As a result, UK spot prices traded at a
discount to European contract prices in the second quarter 2006,
compared to a small premium during the second quarter of 2005. The Rough
storage facility has re-opened and inventories are expected to reach
normal levels by October, but concerns over winter supply have led the
NBP futures to exceed 80 pence per therm.
"Global average refining margins rose sharply to $12.59/bbl in the second
quarter of 2006 compared with $6.28/bbl in the first quarter. A heavy US
refinery maintenance programme extended into the second quarter and
coincided with the switch from MTBE to ethanol for reformulated
gasolines. Margins increased strongly to encourage sufficient product
imports from abroad. So far in July, margins have remained near the
second quarter average as the US driving season approaches its peak and
as the transition to ULSD gathers pace. Both of these developments are
likely to support the refining environment over the near term.
"Although retail margins deteriorated in April they recovered in May and
June on the back of movements in the cost of product. This has resulted
in overall second quarter retail margins being slightly ahead of the
first quarter. So far in July, a further rise in wholesale gasoline and
crude prices is evident; marketing margins are therefore expected to
remain volatile.
"The UK Government's announced increase in the North Sea supplemental tax
rate has been enacted. This increase will have two effects; first to
create a one-time deferred tax charge and second to increase current tax
to reflect the 2006 impact of the proposed higher rate, which is
retroactive to the start of the year. The full year aggregate effective
tax rate is expected to be around 39%.
"We have 16 major projects currently under development scheduled to start
up in the 2007-9 period, and a further 11 under appraisal. Beyond 2009
we now see a further 26 major projects which would be expected to
develop around 8 billion boe. These projects support our expectation
that we will move 11 billion boe from non-proven resources to proved
reserves between now and 2010, underpinning our continued renewal beyond
this decade.
"We continue to expect full year 2006 production to be consistent with
the guidance of 4.1 to 4.2 mboe/d given in February, after adjusting for
divestments and the impact of higher prices on entitlements under
production sharing contracts. On the basis of divestments announced in
2006 to date, and assuming that oil prices remain at around $70/barrel,
these adjustments are expected to amount to around 65,000 boe/d and
45,000 boe/d respectively this year.
"Our strategy is unchanged. We continue to execute it with discipline and
focus. Capital expenditure excluding acquisitions is expected to be
between $15.5 billion and $16 billion for the year, greater than
previously estimated as a result of higher sector-specific inflation,
driven by high oil prices. Divestment proceeds are also expected to be
significantly higher than previously estimated at more than $6 billion."
----------------------------------------------------------------------------
Cautionary Statement: The foregoing discussion, in particular the statements
under "Outlook", contains forward looking statements particularly those
regarding the receipt of approvals for and start-up of production from Thunder
Horse; the timing of the completion of the sales of the remaining Gulf of Mexico
assets; recommissioning of the Texas City refinery and the timing of the
realization of its full financial potential; planned investments in biofuels
research, development and marketing; world economic growth; oil and gas prices;
UK gas inventories; refining margins; marketing margins; the effect of the
increase in the North Sea supplemental tax rate; the aggregate effective tax
rate; the timing and effect of major projects; production; divestments and
resulting adjustments to production; capital expenditure; and divestment
proceeds. By their nature, forward looking statements involve risks and
uncertainties and actual results may differ from those expressed in such
statements depending on a variety of factors including the following: the timing
of bringing new fields on stream; industry product supply; demand and pricing;
currency exchange rates; operational problems; general economic conditions
including inflationary pressures; political stability; economic growth in
relevant areas of the world; changes in governmental regulations; exchange rate
fluctuations; development and use of new technology; the actions of competitors;
natural disasters and other changes in business conditions; prolonged adverse
weather conditions; wars and acts of terrorism or sabotage; and other factors
discussed in this Announcement. For more information you should refer to our
Annual Report and Accounts 2005 and our 2005 Annual Report on Form 20-F filed
with the US Securities and Exchange Commission.
Cautionary Note to US Investors: The United States Securities and Exchange
Commission permits oil and gas companies, in their filings with the SEC, to
disclose only proved reserves that a company has demonstrated by actual
production or formation tests to be economically and legally producible under
existing economic and operating conditions. We use certain terms in this
announcement, such as "resources", that the SEC's guidelines strictly prohibit
us from including in our filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 20-F, SEC File No. 1-6262, available
from us at 1 St James's Square, London SW1Y 4PD, United Kingdom. You can also
obtain this form from the SEC by calling 1-800-SEC-0330.
--------------------------------------------------------------------------
BP p.l.c. and Subsidiaries
Summarized Group Income Statement
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Sales and other operating
58,320 65,057 72,428 revenues (Note 4) 137,485 110,666
Earnings from jointly
controlled entities - after
742 573 818 interest and tax 1,391 1,228
Earnings from associates -
101 115 114 after interest and tax 229 215
105 198 106 Interest and other revenues 304 271
---------------------- ----------------
59,268 65,943 73,466 Total revenues 139,409 112,380
Gain on sale of businesses
136 597 541 and fixed assets 1,138 1,298
---------------------- ----------------
59,404 66,540 74,007 Total revenues and other income 140,547 113,678
38,988 45,588 50,723 Purchases 96,311 73,032
Production and manufacturing
5,682 5,217 5,876 expenses 11,093 10,384
Production and similar taxes
697 932 855 (Note 5) 1,787 1,346
Depreciation, depletion and
2,232 2,184 2,308 amortization 4,492 4,379
Impairment and losses on sale
10 23 80 of businesses and fixed assets 103 196
139 189 97 Exploration expense (Note 5) 286 299
Distribution and administration
3,025 3,096 3,516 expenses 6,612 6,249
Fair value (gain) loss on
621 442 (261) embedded derivatives 181 743
---------------------- ----------------
Profit before interest and taxation
8,010 8,869 10,813 from continuing operations 19,682 17,050
128 191 153 Finance costs (Note 6) 344 300
Other finance (income) expense
35 (48) (46) (Note 7) (94) 65
---------------------- ----------------
Profit before taxation from
7,847 8,726 10,706 continuing operations 19,432 16,685
2,291 2,929 3,441 Taxation 6,370 4,770
---------------------- ----------------
Profit from continuing
5,556 5,797 7,265 operations 13,062 11,915
Profit (loss) from Innovene
104 (103) 78 operations (Note 3) (25) 408
---------------------- ----------------
5,660 5,694 7,343 Profit for the period 13,037 12,323
====================== ================
Attributable to:
5,591 5,623 7,266 BP shareholders 12,889 12,193
69 71 77 Minority interest 148 130
---------------------- ----------------
5,660 5,694 7,343 13,037 12,323
====================== ================
Earnings per share - cents
Profit for the period attributable
to BP shareholders
26.30 27.40 35.94 Basic 63.34 57.09
25.94 27.13 35.59 Diluted 62.72 56.30
Profit from continuing operations
attributable to BP shareholders
25.81 27.90 35.57 Basic 63.47 55.18
25.45 27.63 35.21 Diluted 62.84 54.42
Summarized Group Balance Sheet
30 June 31 December
2006 2005
=====================
$ million
Non-current assets
Property, plant and equipment 85,953 85,947
Goodwill 10,413 10,371
Other intangible assets 5,251 4,772
Investments in jointly controlled entities 15,711 13,556
Investments in associates 5,736 6,217
Other investments 592 967
---------------------
Fixed assets 123,656 121,830
Loans 854 821
Other receivables 842 770
Derivative financial instruments 3,789 3,652
Prepayments and accrued income 1,399 1,269
Defined benefit pension plan surplus 3,757 3,282
---------------------
134,297 131,624
---------------------
Current assets
Loans 118 132
Inventories 20,727 19,760
Trade and other receivables 38,639 40,902
Derivative financial instruments 9,103 9,726
Prepayments and accrued income 2,604 1,598
Current tax receivable 218 212
Cash and cash equivalents 4,852 2,960
---------------------
76,261 75,290
---------------------
Assets classified as held for sale 1,409 -
---------------------
Total assets 211,967 206,914
=====================
Current liabilities
Trade and other payables 43,323 42,136
Derivative financial instruments 8,538 9,083
Accruals and deferred income 6,149 5,970
Finance debt 9,648 8,932
Current tax payable 5,043 4,274
Provisions 1,282 1,102
---------------------
73,983 71,497
---------------------
Non-current liabilities
Other payables 1,783 1,935
Derivative financial instruments 3,634 3,696
Accruals and deferred income 3,957 3,164
Finance debt 9,638 10,230
Deferred tax liabilities 16,703 16,443
Provisions 10,395 9,954
Defined benefit pension plan and other
post-retirement benefit plan deficits 9,476 9,230
---------------------
55,586 54,652
---------------------
Liabilities directly associated with the assets
classified as held for sale 42 -
---------------------
Total liabilities 129,611 126,149
---------------------
Net assets 82,356 80,765
=====================
Equity
BP shareholders' equity 81,586 79,976
Minority interest 770 789
---------------------
82,356 80,765
=====================
Group Statement of Recognized Income and Expense
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
(1,646) 153 309 Currency translation differences 462 (2,398)
Available-for-sale investments
20 197 (44) marked to market 153 22
Available-for-sale investments -
- (346) (79) recycled to the income statement (425) (43)
(89) 57 230 Cash flow hedges marked to market 287 (149)
Cash flow hedges - recycled to
(4) 57 19 the income statement 76 (11)
(3) 61 (15) Taxation 46 53
---------------------- ----------------
Net income (expense) recognized
(1,722) 179 420 directly in equity 599 (2,526)
5,660 5,694 7,343 Profit for the period 13,037 12,323
---------------------- ----------------
Total recognized income and
3,938 5,873 7,763 expense relating to the period 13,636 9,797
====================== ================
Attributable to:
3,869 5,802 7,686 BP shareholders 13,488 9,667
69 71 77 Minority interest 148 130
---------------------- ----------------
3,938 5,873 7,763 13,636 9,797
====================== ================
Change in accounting policy -
adoption of IAS 32 and 39 on
1 January 2005 (wholly attributable
- - - to BP shareholders) - (243)
====================== ================
Movement in BP Shareholders' Equity
Movement in BP shareholders' equity $ million
At 31 December 2005 79,976
Profit for the period 12,889
Distribution to shareholders (3,816)
Currency translation differences (net of tax) 494
Repurchase of ordinary share capital (8,499)
Issue of ordinary share capital for employee share schemes 426
Purchase of shares by ESOP trusts (199)
Share-based payments (net of tax) 241
Available-for-sale investments (net of tax) (205)
Cash flow hedges (net of tax) 279
------
At 30 June 2006 81,586
======
Summarized Group Cash Flow Statement
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
Operating activities
Profit before taxation from
7,847 8,726 10,706 continuing operations 19,432 16,685
Adjustments to reconcile profits
before tax to net cash provided
by operating activities
47 114 13 Exploration expenditure written off 127 131
Depreciation, depletion and
2,232 2,184 2,308 amortization 4,492 4,379
Impairment and (gain) loss on sale
(126) (574) (461) of businesses and fixed assets (1,035) (1,102)
Earnings from jointly controlled
(843) (688) (932) entities and associates (1,620) (1,443)
Dividends received from jointly
controlled entities and
741 1,011 268 associates 1,279 1,096
Working capital and other
(2,691) (1,850) (2,753) movements (4,603) (3,577)
---------------------- ----------------
Net cash provided by operating
activities of continuing
7,207 8,923 9,149 operations 18,072 16,169
Net cash used in operating
activities of Innovene
(470) - - operations - (58)
---------------------- ----------------
Net cash provided by operating
6,737 8,923 9,149 activities 18,072 16,111
---------------------- ----------------
Investing activities
(2,911) (3,295) (3,412) Capital expenditure (6,707) (5,736)
Investment in jointly controlled
(36) - (26) entities (26) (51)
(186) (157) (151) Investment in associates (308) (285)
Proceeds from disposal of
425 484 1,899 fixed assets 2,383 1,752
Proceeds from disposal of
- 166 90 businesses 256 -
48 72 58 Proceeds from loan repayments 130 80
---------------------- ----------------
Net cash used in
(2,660) (2,730) (1,542) investing activities (4,272) (4,240)
---------------------- ----------------
Financing activities
(2,034) (3,861) (4,411) Net repurchase of shares (8,272) (3,967)
482 396 514 Proceeds from long-term financing 910 1,293
(1,011) (65) (720) Repayments of long-term financing (785) (3,203)
Net increase (decrease) in
149 (710) 941 short-term debt 231 (2,017)
(1,809) (1,922) (1,894) Dividends paid - BP shareholders (3,816) (3,632)
(15) (66) (88) - Minority interest (154) (335)
---------------------- ----------------
Net cash used in financing
(4,238) (6,228) (5,658) activities (11,886) (11,861)
---------------------- ----------------
Currency translation differences
relating to cash and cash
- 14 (36) equivalents (22) (9)
---------------------- ----------------
Increase (decrease) in cash
(161) (21) 1,913 and cash equivalents 1,892 1
Cash and cash equivalents at
1,521 2,960 2,939 beginning of period 2,960 1,359
---------------------- ----------------
Cash and cash equivalents at
1,360 2,939 4,852 end of period 4,852 1,360
====================== ================
Summarized Group Cash Flow Statement
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
Working capital and other movements
(102) (130) (122) Interest receivable (252) (165)
78 146 145 Interest received 291 112
128 191 153 Finance costs 344 300
(119) (310) (351) Interest paid (661) (451)
35 (48) (46) Other finance (income) expense (94) 65
79 83 122 Share-based payments 205 156
Net operating charge for pensions
and other post-retirement benefits,
(6) (50) (47) less contributions (97) (16)
Net charge for provisions,
507 (207) 216 less payments 9 444
(Increase) decrease in
(1,786) 1,008 (2,351) inventories (1,343) (2,583)
(Increase) decrease in other
(4,608) 335 2,008 current and non-current assets 2,343 (5,925)
Increase (decrease) in other
current and non-current
5,536 (107) 135 liabilities 28 7,903
(2,433) (2,761) (2,615) Income taxes paid (5,376) (3,417)
---------------------- ----------------
(2,691) (1,850) (2,753) (4,603) (3,577)
====================== ================
Capital Expenditure and Acquisitions
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
By business
Exploration and Production
213 182 244 UK 426 389
37 69 74 Rest of Europe 143 68
942 1,021 1,190 USA 2,211 1,939
1,289 1,428 1,476 Rest of World 2,904 2,386
---------------------- ----------------
2,481 2,700 2,984 5,684 4,782
---------------------- ----------------
Refining and Marketing
97 61 83 UK 144 140
111 65 101 Rest of Europe 166 178
219 258 252 USA 510 409
118 107 109 Rest of World 216 164
---------------------- ----------------
545 491 545 1,036 891
---------------------- ----------------
Gas,Power and Renewables
16 1 6 UK 7 17
6 5 7 Rest of Europe 12 7
19 20 32 USA 52 32
10 14 19 Rest of World 33 16
---------------------- ----------------
51 40 64 104 72
---------------------- ----------------
Other businesses and corporate
82 19 39 UK 58 157
58 - - Rest of Europe - 78
53 8 80 USA 88 117
4 - - Rest of World - 5
---------------------- ----------------
197 27 119 146 357
---------------------- ----------------
3,274 3,258 3,712 6,970 6,102
====================== ================
By geographical area
408 263 372 UK 635 703
212 139 182 Rest of Europe 321 331
1,233 1,307 1,554 USA 2,861 2,497
1,421 1,549 1,604 Rest of World 3,153 2,571
---------------------- ----------------
3,274 3,258 3,712 6,970 6,102
====================== ================
Included above:
66 10 - Acquisitions and asset exchanges 10 151
125 - - Innovene operations - 254
====================== ================
Exchange rates
US dollar/sterling average rate
1.86 1.75 1.83 for the period 1.79 1.87
1.80 1.75 1.81 US dollar/sterling period-end rate 1.81 1.80
US dollar/euro average rate for
1.26 1.20 1.26 the period 1.23 1.28
1.21 1.21 1.25 US dollar/euro period-end rate 1.25 1.21
---------------------- ----------------
Analysis of Profit Before Interest and Tax
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
By business
Exploration and Production
574 1,165 1,834 UK 2,999 1,485
294 303 393 Rest of Europe 696 1,622
2,441 2,304 2,255 USA 4,559 4,449
2,595 3,044 3,345 Rest of World 6,389 4,837
---------------------- ----------------
5,904 6,816 7,827 14,643 12,393
---------------------- ----------------
Refining and Marketing
(74) (155) 166 UK 11 (325)
982 686 785 Rest of Europe 1,471 1,817
679 828 1,526 USA 2,354 2,104
345 679 515 Rest of World 1,194 689
---------------------- ----------------
1,932 2,038 2,992 5,030 4,285
---------------------- ----------------
Gas, Power and Renewables
125 (72) 188 UK 116 243
(8) 7 (2) Rest of Europe 5 (2)
51 168 257 USA 425 227
7 135 20 Rest of World 155 133
---------------------- ----------------
175 238 463 701 601
---------------------- ----------------
Other businesses and corporate
(209) (141) (80) UK (221) (388)
30 (1) (45) Rest of Europe (46) 34
(13) (104) (37) USA (141) (22)
36 31 (30) Rest of World 1 49
---------------------- ----------------
(156) (215) (192) (407) (327)
---------------------- ----------------
7,855 8,877 11,090 19,967 16,952
(4) (8) (277) Unrealized profit in inventory (285) (157)
Net profit on transactions between
159 - - continuing and Innovene operations - 255
---------------------- ----------------
8,010 8,869 10,813 Total for continuing operations 19,682 17,050
---------------------- ----------------
Innovene operations
164 (55) (90) UK (145) 222
129 (21) (40) Rest of Europe (61) 495
(16) 7 (6) USA 1 96
16 (27) 48 Rest of World 21 12
---------------------- ----------------
293 (96) (88) (184) 825
Net profit on transactions between
(159) - - continuing and Innovene operations - (255)
---------------------- ----------------
134 (96) (88) Total for Innovene operations (184) 570
---------------------- ----------------
8,144 8,773 10,725 Total for period 19,498 17,620
====================== ================
By geographical area
463 772 2,148 UK 2,920 1,068
1,406 995 1,059 Rest of Europe 2,054 3,652
3,158 3,245 3,717 USA 6,962 6,622
2,983 3,857 3,889 Rest of World 7,746 5,708
---------------------- ----------------
8,010 8,869 10,813 Total for continuing operations 19,682 17,050
====================== ================
Analysis of Replacement Cost Profit
Before Interest and Tax
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
By business
Exploration and Production
574 1,165 1,834 UK 2,999 1,485
294 303 393 Rest of Europe 696 1,622
2,438 2,311 2,254 USA 4,565 4,441
2,595 3,044 3,345 Rest of World 6,389 4,837
---------------------- ----------------
5,901 6,823 7,826 14,649 12,385
---------------------- ----------------
Refining and Marketing
(60) (148) 171 UK 23 (332)
658 564 584 Rest of Europe 1,148 1,081
361 637 749 USA 1,386 1,360
314 559 352 Rest of World 911 575
---------------------- ----------------
1,273 1,612 1,856 3,468 2,684
---------------------- ----------------
Gas, Power and Renewables
125 (72) 188 UK 116 243
(1) 1 (4) Rest of Europe (3) 5
55 178 250 USA 428 222
10 194 19 Rest of World 213 131
---------------------- ----------------
189 301 453 754 601
---------------------- ----------------
Other businesses and corporate
(209) (141) (80) UK (221) (388)
30 (3) (46) Rest of Europe (49) 34
(13) (104) (37) USA (141) (22)
36 31 (30) Rest of World 1 49
---------------------- ----------------
(156) (217) (193) (410) (327)
---------------------- ----------------
7,207 8,519 9,942 18,461 15,343
(4) (8) (277) Unrealized profit in inventory (285) (157)
Net profit on transactions between
159 - - continuing and Innovene operations - 255
---------------------- ----------------
7,362 8,511 9,665 Total for continuing operations 18,176 15,441
---------------------- ----------------
Innovene operations
152 (55) (90) UK (145) 139
120 (21) (40) Rest of Europe (61) 425
42 7 (6) USA 1 132
17 (27) 48 Rest of World 21 17
---------------------- ----------------
331 (96) (88) (184) 713
Net profit on transactions between
(159) - - continuing and Innovene operations - (255)
---------------------- ----------------
172 (96) (88) Total for Innovene operations (184) 458
---------------------- ----------------
7,534 8,415 9,577 Total for period 17,992 15,899
====================== ================
By geographical area
477 779 2,153 UK 2,932 1,062
1,089 865 855 Rest of Europe 1,720 2,923
2,841 3,071 2,932 USA 6,003 5,869
2,955 3,796 3,725 Rest of World 7,521 5,587
---------------------- ----------------
7,362 8,511 9,665 Total for continuing operations 18,176 15,441
====================== ================
Analysis of Non-operating Items
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
By business
Exploration and Production
(678) (394) 386 UK (8) (968)
3 - 83 Rest of Europe 83 1,030
(3) 2 9 USA 11 (4)
26 6 1 Rest of World 7 70
---------------------- ----------------
(652) (386) 479 93 128
---------------------- ----------------
Refining and Marketing
(23) 20 (1) UK 19 (15)
(12) 229 (29) Rest of Europe 200 (11)
(634) 96 (446) USA (350) (629)
11 219 12 Rest of World 231 (30)
---------------------- ----------------
(658) 564 (464) 100 (685)
---------------------- ----------------
Gas, Power and Renewables
66 (55) 107 UK 52 171
- - - Rest of Europe - -
21 - (1) USA (1) 21
- - - Rest of World - -
---------------------- ----------------
87 (55) 106 51 192
---------------------- ----------------
Other businesses and corporate
(6) - - UK - (48)
12 - (1) Rest of Europe (1) 11
11 9 10 USA 19 7
- - 17 Rest of World 17 -
---------------------- ----------------
17 9 26 35 (30)
---------------------- ----------------
Total before taxation for continuing
(1,206) 132 147 operations 279 (395)
384 (46) (53) Taxation credit (charge) (99) 129
---------------------- ----------------
Total after taxation for continuing
(822) 86 94 operations 180 (266)
---------------------- ----------------
Innovene operations
- (55) (90) UK (145) (24)
- (21) (40) Rest of Europe (61) -
- 7 (6) USA 1 -
- (27) 48 Rest of World 21 -
---------------------- ----------------
Total before taxation for Innovene
- (96) (88) operations (a) (184) (24)
- (7) - Taxation credit (charge) (7) 10
---------------------- ----------------
Total after taxation for Innovene
- (103) (88) operations (191) (14)
---------------------- ----------------
(822) (17) 6 Total after taxation for period (11) (280)
====================== ================
(a) Includes the loss on re-measurement to fair value of $88 million in
the second quarter of 2006 and $96 million in the first quarter of
2006 and impairment charges of $24 million in the first quarter of
2005.
Depreciation of Fixed Asset Revaluation Adjustment
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
Exploration and Production
12 8 7 UK 15 20
70 55 48 USA 103 146
3 5 4 Rest of World 9 8
---------------------- ----------------
85 68 59 127 174
---------------------- ----------------
Refining and Marketing
26 25 25 USA 50 51
---------------------- ----------------
26 25 25 50 51
---------------------- ----------------
Gas, Power and Renewables
5 6 5 USA 11 11
---------------------- ----------------
5 6 5 11 11
---------------------- ----------------
Total depreciation of revaluation
116 99 89 adjustment (a)(b) 188 236
====================== ================
(a) Relates to the revaluation adjustment consequent upon the ARCO
acquisition.
(b) Excludes impairment of the revaluation adjustment which is included in
non-operating items.
Net Debt Ratio - Net Debt: Net Debt + Equity
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
$ million $ million
19,302 18,679 19,286 Gross debt 19,286 19,302
1,360 2,939 4,852 Cash and cash equivalents 4,852 1,360
---------------------- ----------------
17,942 15,740 14,434 Net debt 14,434 17,942
====================== ================
80,097 80,881 82,356 Equity 82,356 80,097
18% 16% 15% Net debt ratio 15% 18%
====================== ================
Production and Realizations
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= =============
Production (a)(d)
Crude oil (mb/d) (net of royalties)
290 268 264 UK 266 289
73 64 60 Rest of Europe 62 74
546 444 444 USA 444 553
1,528 1,584 1,587 Rest of World 1,586 1,505
---------------------- ----------------
2,437 2,360 2,355 Total crude oil production 2,358 2,421
====================== ================
Natural gas liquids (mb/d)
(net of royalties)
20 13 16 UK 14 18
4 4 3 Rest of Europe 4 5
127 122 121 USA 122 131
31 34 35 Rest of World 35 31
---------------------- ----------------
182 173 176 Total natural gas liquids production 174 185
====================== ================
Liquids (b) (mb/d) (net of royalties)
310 281 280 UK 280 307
77 68 64 Rest of Europe 65 79
673 566 565 USA 566 684
1,559 1,618 1,622 Rest of World 1,620 1,536
---------------------- ----------------
2,619 2,533 2,531 Total liquids production 2,532 2,606
====================== ================
Natural gas (mmcf/d) (net of royalties)
1,136 1,196 911 UK 1,053 1,189
106 94 83 Rest of Europe 88 114
2,727 2,485 2,493 USA 2,489 2,688
4,692 4,938 5,138 Rest of World 5,038 4,712
---------------------- ----------------
8,661 8,713 8,624 Total natural gas production 8,668 8,703
====================== ================
Average realizations(c)
Crude oil ($/bbl)
48.76 60.57 67.82 UK 64.19 47.16
49.27 58.27 65.37 USA 61.84 46.21
44.57 56.18 64.90 Rest of World 60.46 43.08
47.79 58.25 65.96 BP Average 62.08 45.60
====================== ================
Natural gas liquids ($/bbl)
34.34 48.19 46.33 UK 47.16 32.30
28.04 33.25 37.32 USA 35.33 27.50
33.77 37.05 35.18 Rest of World 36.10 32.47
29.86 35.47 37.80 BP Average 36.66 28.99
====================== ================
Liquids ($/bbl)(b)
47.83 60.00 66.61 UK 63.32 46.27
45.92 53.79 60.21 USA 57.03 43.21
43.94 55.02 63.00 Rest of World 58.95 42.43
45.95 55.88 62.86 BP Average 59.36 43.85
====================== ================
Natural gas ($/mcf)
4.82 7.87 5.67 UK 6.92 5.21
5.83 6.91 5.44 USA 6.17 5.57
3.20 3.94 3.54 Rest of World 3.73 3.15
4.38 5.54 4.44 BP Average 4.99 4.32
====================== ================
(a) Includes BP's share of production of equity-accounted entities.
(b) Crude oil and natural gas liquids.
(c) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
(d) Because of rounding, some totals may not agree exactly with the sum of
their component parts.
Notes
1. Basis of preparation
BP prepares its Annual Report and Accounts on the basis of
International Financial Reporting Standards (IFRS) as adopted for use
by the European Union (EU). The financial information presented herein
has been prepared in accordance with the accounting policies expected
to be used in preparing Annual Report and Accounts 2006, which do not
differ significantly from those used for Annual Report and Accounts
2005.
2. Resegmentation and other changes to comparatives
With effect from 1 January 2006 the following changes to the business
segment boundaries have been implemented:
(a) Following the sale of Innovene to INEOS in December 2005, the
transfer of three equity-accounted entities (Shanghai SECCO
Petrochemical Company Limited in China and Polyethylene Malaysia
Sdn Bhd (PEMSB) and Ethylene Malaysia Sdn Bhd (EMSB), both in
Malaysia), previously reported in Other businesses and corporate,
to Refining and Marketing.
(b) The formation of BP Alternative Energy in November 2005 has
resulted in the transfer of certain mid-stream assets and
activities to Gas, Power and Renewables:
- South Houston Green Power (SHGP) co-generation facility (in
Texas City refinery) from Refining and Marketing.
- Watson Cogeneration (in Carson City refinery) from Refining and
Marketing.
- Phu My Phase 3 CCGT plant in Vietnam from Exploration and
Production.
(c) The transfer of Hydrogen for Transport activities from Gas, Power
and Renewables to Refining and Marketing.
Comparative financial data is shown after these changes.
Restated Reported
-----------------------------------------
Second First Second First
Quarter Half Quarter Half
2005 2005 2005 2005
-----------------------------------------
$ million
Profit before interest
and tax
Exploration and
Production 5,904 12,393 5,906 12,397
Refining and Marketing 1,932 4,285 1,950 4,313
Gas, Power and Renewables 175 601 160 578
Other businesses and
corporate (156) (327) (161) (336)
-----------------------------------------
Profit before interest
and tax 7,855 16,952 7,855 16,952
Unrealized profit in
inventory (4) (157) (4) (157)
Net profit on transactions
between continuing and
Innovene operations 159 255 159 255
-----------------------------------------
8,010 17,050 8,010 17,050
=========================================
In 2005 the basis of accounting for over-the-counter forward sale and
purchase contracts for oil, natural gas, NGLs and power was changed.
These transactions are now reported on a net basis in sales and other
operating revenues, whereas previously they had been reported gross in
sales and purchases. This change, while reducing sales and other
operating revenues and purchases, had no impact on reported profit,
profit per ordinary share, cash flow or the balance sheet.
During 2006, as part of a continuous process to review how individual
contracts are accounted for, certain other minor adjustments have been
identified that should have been reflected in the restatement from
gross to net presentation. Though these adjustments are not
significant to the group income statement, the amendment has been made
to bring the comparatives onto a consistent basis. The comparative
figures have been amended to reflect these items as set out below.
Notes
2. Resegmentation and other changes to comparatives (concluded)
Amended Reported
--------------------------------------------------
First Second First First Second First
Quarter Quarter Half Quarter Quarter Half
2006 2005 2005 2006 2005 2005
--------------------------------------------------
$ million
Sales and other
operating revenues
Exploration and
Production 13,918 10,934 21,120 13,918 10,934 21,120
Refining and Marketing 55,880 53,164 99,173 56,605 55,115 102,877
Gas, Power and Renewables 6,979 5,817 12,278 8,279 6,250 13,355
Other businesses and
corporate 206 174 346 206 174 346
--------------------------------------------------
Sales by continuing
operations 76,983 70,089 132,917 79,008 72,473 137,698
Less: sales between
businesses 11,926 7,843 16,212 11,926 7,843 16,212
sales to continuing
operations - 3,926 6,039 - 3,926 6,039
--------------------------------------------------
Third party sales of
continuing operations 65,057 58,320 110,666 67,082 60,704 115,447
==================================================
Purchases 45,588 38,988 73,032 47,613 41,372 77,813
==================================================
Notes
3. Sale of Olefins and Derivatives business
The sale of Innovene, BP's olefins, derivatives and refining group, to
INEOS, was completed on 16 December 2005.
The Innovene operations represented a separate major line of business
for BP. As a result of the sale, these operations were treated as
discontinued operations for the year ended 31 December 2005. A single
amount was shown on the face of the income statement comprising the
post-tax result of discontinued operations and the post-tax loss
recognized on the remeasurement to fair value less costs to sell of the
discontinued operation. That is, the income and expenses of Innovene
were reported separately from the continuing operations of the BP
group. The table below provides further detail of the amount shown on
the income statement.
In the cash flow statement the cash provided by the operating
activities of Innovene in 2005 has been separated from that of the rest
of the group and reported as a single line item.
Second quarter 2006 includes a loss before tax of $88 million related
to post-closing adjustments. There was a similar adjustment of $96
million in the first quarter of 2006. We anticipate further
adjustments during the second half of 2006.
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Profit before tax from
293 - - Innovene operations - 825
Net profit on transactions
between continuing and
(159) - - Innovene operations - (255)
----------------------- --------------
Profit before interest and
134 - - taxation - 570
1 - - Other finance income (expense) - 2
(Loss) gain recognized on the
- (96) (88) remeasurement to fair value (184) -
----------------------- --------------
135 (96) (88) (184) 572
Taxation
(31) - 166 Related to profit before tax 166 (164)
Related to remeasurement to
- (7) - fair value (7) -
----------------------- --------------
Profit (loss) from Innovene
104 (103) 78 operations (25) 408
======================= ==============
Earnings (loss) per share from
Innovene operations - cents
0.49 (0.50) 0.37 Basic (0.13) 1.91
0.49 (0.50) 0.38 Diluted (0.12) 1.88
======================= ==============
The net cash flows of Innovene
operations are presented below
Net cash used in operating
(470) - - activities - (58)
Net cash used in investing
(105) - - activities - (264)
----------------------- --------------
Net cash provided by
575 - - financing activities - 322
======================= ==============
Notes
4. Sales and other operating revenues
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
By business
10,934 13,918 13,495 Exploration and Production 27,413 21,120
53,164 55,880 64,025 Refining and Marketing 119,905 99,173
5,817 6,979 5,735 Gas, Power and Renewables 12,714 12,278
174 206 252 Other businesses and corporate 458 346
----------------------- ---------------
Sales by continuing
70,089 76,983 83,507 operations 160,490 132,917
7,843 11,926 11,079 Less: sales between businesses 23,005 16,212
sales to Innovene
3,926 - - operations - 6,039
----------------------- ---------------
Third party sales of
58,320 65,057 72,428 continuing operations 137,485 110,666
5,951 - - Innovene sales - 11,294
Less: sales to continuing
2,605 - - operations - 4,139
----------------------- ---------------
Third party sales of
3,346 - - Innovene operations - 7,155
----------------------- ---------------
61,666 65,057 72,428 Total third party sales 137,485 117,821
======================= ===============
By geographical area
24,340 27,865 26,288 UK 54,153 43,148
16,916 18,374 19,406 Rest of Europe 37,780 32,740
24,403 23,703 27,962 USA 51,665 46,414
14,247 18,375 18,467 Rest of World 36,842 26,972
----------------------- ---------------
Sales by continuing
79,906 88,317 92,123 operations 180,440 149,274
17,660 23,260 19,695 Less: sales between areas 42,955 32,569
sales to Innovene
3,926 - - operations - 6,039
----------------------- ---------------
58,320 65,057 72,428 137,485 110,666
======================= ===============
5. Profit before interest and taxation is after charging:
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Exploration expense
13 7 - UK 7 18
- - - Rest of Europe - 1
85 66 55 USA 121 188
41 116 42 Rest of World 158 92
----------------------- ---------------
139 189 97 286 299
======================= ===============
Production and similar taxes
153 235 72 UK 307 267
544 697 783 Overseas 1,480 1,079
----------------------- ---------------
697 932 855 1,787 1,346
======================= ===============
Notes
6. Finance costs
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
204 293 285 Interest payable 578 395
(76) (102) (132) Capitalized (234) (152)
----------------------- ---------------
128 191 153 344 243
Early redemption of finance
- - - leases - 57
----------------------- ---------------
128 191 153 344 300
======================= ===============
7. Other finance (income) expense
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Interest on pension and other
post-retirement benefit plan
509 471 484 liabilities 955 1,023
Expected return on pension and
other post-retirement benefit
(542) (582) (599) plan assets (1,181) (1,089)
----------------------- ---------------
Interest net of expected return
(33) (111) (115) on plan assets (226) (66)
Unwinding of discount on
50 54 61 provisions 115 95
Unwinding of discount on deferred
consideration for acquisition
17 9 8 of investment in TNK-BP 17 34
----------------------- ---------------
34 (48) (46) (94) 63
1 - - Innovene operations - 2
----------------------- ---------------
35 (48) (46) Continuing operations (94) 65
======================= ===============
8. Dividends paid
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Dividends per ordinary share
8.50 9.375 9.375 Cents 18.75 17.0
4.450 5.288 5.251 Pence 10.539 8.972
51.0 56.25 56.25 Dividends per ADS (cents) 112.50 102.0
======================= ===============
Notes
9. Analysis of changes in net debt
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
$ million $ million
Opening balance
19,564 19,162 18,679 Finance debt 19,162 23,091
1,521 2,960 2,939 Less: Cash and cash equivalents 2,960 1,359
----------------------- ---------------
18,043 16,202 15,740 Opening net debt 16,202 21,732
----------------------- ---------------
Closing balance
19,302 18,679 19,286 Finance debt 19,286 19,302
1,360 2,939 4,852 Less: Cash and cash equivalents 4,852 1,360
----------------------- ---------------
17,942 15,740 14,434 Closing net debt 14,434 17,942
----------------------- ---------------
101 462 1,306 Decrease (increase) in net debt 1,768 3,790
======================= ===============
Movement in cash and cash
equivalents (excluding
(161) (35) 1,949 exchange adjustments) 1,914 10
Net cash outflow (inflow)
from financing (excluding
380 379 (734) share capital) (355) 3,927
- - - Adoption of IAS 39 - (147)
17 82 60 Fair value hedge adjustment 142 115
53 32 26 Other movements 58 102
----------------------- ---------------
Movement in net debt before
289 458 1,301 exchange effects 1,759 4,007
(188) 4 5 Exchange adjustments 9 (217)
----------------------- ---------------
101 462 1,306 Decrease (increase) in net debt 1,768 3,790
======================= ===============
Notes
10. TNK-BP Operational and Financial Information
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
Production (Net of royalties)
(BP share)
903 896 907 Crude oil (mb/d) 901 889
429 567 538 Natural gas (mmcf/d) 552 477
977 994 999 Total hydrocarbons (mboe/d)(a) 997 971
======================= ==============
$ million $ million
Income statement (BP share)
920 852 1,084 Profit before interest and tax 1,936 1,535
(32) (43) (45) Interest expense * (88) (61)
(227) (350) (348) Taxation (698) (394)
(20) (41) (46) Minority interest (87) (28)
----------------------- ---------------
641 418 645 Net Income 1,063 1,052
======================= ==============
* Excludes unwinding of
discount on deferred
17 9 8 consideration 17 34
======================= ==============
Cash Flow
425 771 - Dividends received 771 675
======================= ==============
Second First Second
Quarter Quarter Quarter First Half
2005 2006 2006 2006 2005
======================= ==============
Average oil marker prices ($/bbl)
48.08 58.15 64.73 Urals (NWE - cif) 61.42 45.31
48.49 58.26 64.84 Urals (Med - cif) 61.52 45.85
27.39 35.27 36.18 Domestic Oil 35.73 23.27
======================= ==============
Balance sheet 30 June 31 December
2006 2005
=======================
Investments in jointly controlled entities 9,151 8,089
=======================
Deferred consideration
Due within one year 1,244 1,227
Due after more than one year - -
-----------------------
1,244 1,227
=======================
(a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels.
As reported in previous quarters, various TNK-BP companies have received tax
notifications. Upon entering into the joint venture arrangement, each party
received indemnities from its co-venturers in respect of historical tax
liabilities related to assets contributed to the joint venture. BP believes its
provisions are adequate for its share of any liabilities arising from tax claims
not covered by these indemnities.
Notes
11. Equity-accounted entities
The group's profit for the period includes the following in respect of
equity-accounted entities.
RC profit Profit
(loss) Inventory (loss)
before holding before
interest gains interest
and tax (losses) and tax
---------------------------------------
$ million
Second Quarter 2006
Exploration and Production 1,369 - 1,369
Refining and Marketing 106 3 109
Gas, Power and Renewables 55 - 55
Other businesses and corporate 1 - 1
---------------------------------------
Continuing operations 1,531 3 1,534
Innovene operations - - -
---------------------------------------
1,531 3 1,534
=======================================
First Quarter 2006
Exploration and Production 1,149 - 1,149
Refining and Marketing 95 6 101
Gas, Power and Renewables 29 - 29
Other businesses and corporate (2) - (2)
---------------------------------------
Continuing operations 1,271 6 1,277
Innovene operations - - -
---------------------------------------
1,271 6 1,277
=======================================
Second Quarter 2005
Exploration and Production 1,161 - 1,161
Refining and Marketing 67 (15) 52
Gas, Power and Renewables 18 - 18
Other businesses and corporate - - -
---------------------------------------
Continuing operations 1,246 (15) 1,231
Innovene operations 3 - 3
---------------------------------------
1,249 (15) 1,234
=======================================
Half Year 2006
Exploration and Production 2,518 - 2,518
Refining and Marketing 201 9 210
Gas, Power and Renewables 84 - 84
Other businesses and corporate (1) - (1)
---------------------------------------
Continuing operations 2,802 9 2,811
Innovene operations - - -
---------------------------------------
2,802 9 2,811
=======================================
Half Year 2005
Exploration and Production 2,000 - 2,000
Refining and Marketing 142 (19) 123
Gas, Power and Renewables 25 - 25
Other businesses and corporate - - -
---------------------------------------
Continuing operations 2,167 (19) 2,148
Innovene operations 3 - 3
---------------------------------------
2,170 (19) 2,151
=======================================
Notes
11. Equity-accounted entities (continued)
Profit
(loss)
Minority for the
Interest Tax interest period
----------------------------------------
$ million
Second Quarter 2006
Exploration and Production (78) (436) (46) 809
Refining and Marketing (19) (13) - 77
Gas, Power and Renewables (6) (4) - 45
Other businesses and corporate - - - 1
---------------------------------------
Continuing operations (103) (453) (46) 932
Innovene operations - - - -
---------------------------------------
(103) (453) (46) 932
=======================================
First Quarter 2006
Exploration and Production (72) (439) (41) 597
Refining and Marketing (19) (10) - 72
Gas, Power and Renewables (4) (4) - 21
Other businesses and corporate - - - (2)
---------------------------------------
Continuing operations (95) (453) (41) 688
Innovene operations - - - -
---------------------------------------
(95) (453) (41) 688
=======================================
Second Quarter 2005
Exploration and Production (56) (289) (20) 796
Refining and Marketing (6) (13) - 33
Gas, Power and Renewables (3) (1) - 14
Other businesses and corporate - - - -
---------------------------------------
Continuing operations (65) (303) (20) 843
Innovene operations - - - 3
---------------------------------------
(65) (303) (20) 846
=======================================
Half Year 2006
Exploration and Production (150) (875) (87) 1,406
Refining and Marketing (38) (23) - 149
Gas, Power and Renewables (10) (8) - 66
Other businesses and corporate - - - (1)
---------------------------------------
Continuing operations (198) (906) (87) 1,620
Innovene operations - - - -
---------------------------------------
(198) (906) (87) 1,620
=======================================
Half Year 2005
Exploration and Production (108) (516) (28) 1,348
Refining and Marketing (14) (31) - 78
Gas, Power and Renewables (5) (3) - 17
Other businesses and corporate - - - -
---------------------------------------
Continuing operations (127) (550) (28) 1,443
Innovene operations - - - 3
---------------------------------------
(127) (550) (28) 1,446
=======================================
Notes
12. Third quarter results
BP's third quarter results will be announced on 24 October 2006.
13. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 2005 Annual Report and
Accounts have been delivered to the UK Registrar of Companies; the
report of the auditors on those accounts (in accordance with section
235 of the Companies Act 2005) was unqualified.
Contacts
London United States
Press Office Roddy Kennedy Ronnie Chappell
+44 (0)20 7496 4624 +1 281 366 5174
Investor Relations Fergus MacLeod Rachael MacLean
+44 (0)20 7496 4717 +1 212 451 8072
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: 25 July 2006 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary