1st Quarter Results-Part 1

BP Amoco PLC 9 May 2000 Part 1 BP Amoco p.l.c. Group Results 1st Quarter 2000 =========================================================================== BP AMOCO ANNOUNCES ANOTHER RECORD QUARTER. --------------------------------------------------------------------------- o First quarter 2000 replacement cost profit, before exceptional items, was a record $2,707 million, after adjusting for special charges of $30 million. This is an increase of 256% on a year ago and 28% on the previous quarter, which was itself a record. o The result reflects stronger oil and gas prices and improved refining margins along with continued performance improvements in all our businesses. o Lower cash costs contributed $280 million pre-tax to the result versus a year ago. In addition, there were other performance improvements arising from an improved mix of sales, and tax benefits. o Quarterly dividend 5 cents per share ($0.30 per ADS). BP Amoco p.l.c. today reported its first quarter 2000 results. BP Amoco Group Chief Executive, Sir John Browne, commented: 'This record result reflects not only the better environment but also the sustained improvement in the cost base over the past year. 'With the completion of the ARCO acquisition in April we are well placed to deliver substantial benefits from further cost reductions and margin improvement from new business while maintaining the competitiveness of our existing portfolio.' Operating Results First Fourth First Quarter Quarter Quarter 2000 1999 1999 ======================= Replacement cost operating profit ($m) 3,961 2,725 1,246 ----------------------- Replacement cost profit before exceptional items ($m) 2,677 1,684 677 ----------------------- Profit (loss) after exceptional items ($m) Replacement cost 2,553 1,195 (183) Historical cost 3,085 1,701 (176) ----------------------- Earnings per ordinary share+ (cents) RC profit before exceptional items 13.78 8.67 3.50 HC profit after exceptional items 15.88 8.76 (0.91) Earnings per ADS+ (cents) RC profit before exceptional items 82.68 52.02 21.00 ----------------------- Dividends per ordinary share+ cents 5.00 5.00 5.00 pence 3.220 3.125 3.069 Dividends per ADS+ (cents) 30.0 30.0 30.0 ======================= + Amounts for first quarter 1999 have been restated for the 2 for 1 share split on 4 October 1999. Income Adjusted for Special Items Adjusted ---------- 1Q 2000 --------- Results Reported Special Adjusted 4Q 1Q $ million Earnings Items* Results 1999 1999 -------------------------------------------- Exploration and Production 3,203 24 3,227 2,628 836 Gas and Power 52 - 52 48 68 Refining and Marketing 674 - 674 464 363 Chemicals 259 - 259 266 217 Other businesses and corporate (227) 16 (211) (100) (124) -------------------------------------------- RC operating profit 3,961 40 4,001 3,306 1,360 ============================================ Interest expense (296) - (296) (305) (304) Taxation (920) (10) (930) (825) (284) MSI (68) - (68) (53) (11) -------------------------------------------- RC profit before exceptional items 2,677 30 2,707 2,123 761 ============================================ Exceptional items before tax (157) Taxation on exceptional items 33 -------- RC profit after exceptional items 2,553 Stock holding gains (losses) 532 -------- HC profit 3,085 ======== * The special items refer to non-recurring charges and credits reported in the quarter. Operating Results Replacement cost profit, before exceptional items, was $2,707 million, after adjusting for special charges of $30 million. This is an increase of 256% on a year ago and 28% on the previous quarter. Exploration and Production replacement cost operating profit was again at a record level with oil and gas prices up significantly on the first quarter and also higher than in the fourth quarter of 1999. The result also reflected cost improvements over both quarters. Gas and Power replacement cost operating profit was at a similar level to the previous quarter and slightly down on a year ago. Refining and Marketing replacement cost operating profit was significantly higher than for the previous quarter and the first quarter last year, reflecting a strongly improved refining environment towards the end of the quarter and significant cost reductions over the past year. Chemicals' replacement cost operating profit was at a similar level to the previous quarter and up on a year ago. In each case, the deterioration in the environment was offset by cost reductions and, versus a year ago, by improved volumes. Interest expense was $296 million compared with $329 million in the previous quarter, which included a special charge of $24 million, and $304 million a year ago. The effective tax rate on replacement cost profit, before exceptional items, was 25% compared with 28% in the previous quarter, mainly reflecting increased utilization of Section 29 tax credits in the USA. Capital expenditure for the quarter was $2.5 billion, including $869 million for the purchase of some 19.5% of Burmah Castrol's issued ordinary share capital. Net debt at the end of the quarter was $13.6 billion. The ratio of net debt to net debt plus equity was 22.9%. Net cash outflow for the quarter was $766 million, compared with $1,153 million a year ago. This reflects improved operating cash flow, largely offset by higher payments for capital expenditure and acquisitions and higher tax and dividend payments. Operating Statistics First Fourth First Quarter Quarter Quarter 2000 1999 1999 ======================= Crude oil and natural gas liquids production (mb/d) (Net of Royalties) UK 581 605 586 Rest of Europe 91 96 107 USA 794 818 814 Rest of World 515 531 592 ----------------------- Total crude oil and liquids production 1,981 2,050 2,099 ----------------------- Natural gas production (mmcf/d) UK 1,746 1,546 1,490 Rest of Europe 184 157 243 USA 2,256 2,303 2,433 Rest of World 2,123 2,333 1,906 ----------------------- Total natural gas production 6,309 6,339 6,072 ----------------------- Oil sales volumes (mb/d) Refined products UK 224 233 240 Rest of Europe 766 820 785 USA 1,472 1,562 1,458 Rest of World 650 656 658 ----------------------- Total marketing sales 3,112 3,271 3,141 Trading/supply sales 1,621 2,010 1,776 ----------------------- Total refined product sales 4,733 5,281 4,917 Crude oil 6,496 5,933 3,947 ----------------------- Total oil sales 11,229 11,214 8,864 ----------------------- Chemicals production+ (kte) UK 867 907 975 Rest of Europe 1,640 1,602 1,409 USA 2,619 2,643 2,299 Rest of World 577 564 460 ----------------------- Total production 5,703 5,716 5,143 ======================= + Includes BP Amoco share of associated undertakings and other interests in production. Exploration and Production Replacement cost operating profit for the first quarter was a record $3,227 million, after adjusting for a special charge of $24 million. Average oil realizations were up on a year ago by around $14 a barrel and natural gas realizations by 32 cents/mcf. There were also benefits from cost savings and lower exploration expense. Lower liquids volumes reflected the effect of divestments and the decline in mature fields in Alaska. Gas volumes were up 4% with additional production from Trinidad. The adjusted result was up 23% over the fourth quarter of 1999. The stronger oil price was again a significant factor with realizations up around $2 a barrel. Gas realizations were at a similar level while cash costs were lower. These factors more than offset the effect of slightly lower liquids and lower gas volumes primarily in Trinidad, where domestic supply was affected by a plant shut-in. In February, BP Amoco and the Algerian state company, Sonatrach, announced the go ahead for the development of a $2.5 billion complex of seven gas fields in central Algeria, which are expected to have a supply capacity of some 320 billion cubic feet of gas a year (BP Amoco 65%). First deliveries from the seven In Salah fields are expected in 2003. In March, BP Amoco (64%) and Shell Exploration & Production Company announced the sale of their interests in Altura Energy, a US onshore oil- producing joint venture. The transaction, with a total value for BP Amoco and Shell together, amounted to $3.6 billion and closed in April. During the quarter, BP Amoco (25.5% and operator) announced a further successful gas condensate well in the Shah Deniz field, offshore Azerbaijan. The well was drilled six kilometres to the south of the discovery SDX-1, which was announced last year. A discovery was also made offshore Angola at the Jasmim-1 well in Block 17 (BP Amoco 16.7%). In addition, on the Australian North West Shelf, there were discoveries at the Urania-1 well and the Maenad-1A well (both BP Amoco 12.5%). 1Q 4Q 1Q 2000 1999 1999 ===================== Replacement cost operating profit ($m) 3,203 2,585 750 --------------------- Results include: Exploration expense ($m) 131 111 172 --------------------- BP Amoco average oil realizations ($/bbl)* 24.75 22.70 10.45 --------------------- BP Amoco average natural gas realizations ($/mcf) 2.12 2.08 1.80 ===================== * Crude oil and natural gas liquids. Gas and Power Plans were announced in September 1999 to draw together BP Amoco's existing activity in the areas of gas and power marketing and trading. This created a Gas and Power business stream which is reported separately from 1 January 2000. The new stream is responsible for BP Amoco's world-wide gas marketing activities and all business development opportunities in natural gas, including gas-fired power generation. Replacement cost operating profit for the first quarter was $52 million compared with $68 million a year ago, and was up slightly on the previous quarter's result. The reduction compared to the equivalent quarter last year was largely attributable to new business development expenditure and exchange rate movements with respect to Ruhrgas income. In February, progress on the development of the future market for Trinidad & Tobago LNG was made when BP Amoco was selected by the government of Brazil to participate in a priority power generation programme, to meet Brazil's growing electricity needs. Also in February, plans for gas sales in Turkey were accelerated with the announcement of the discovery in Azerbaijan. In addition, the go-ahead for the development of gas fields in Algeria will underpin plans for sales into Southern Europe. In March, BP Amoco issued tenders for the construction and purchase of two LNG ships with options for further vessels. Progress in gas marketing was made in Spain, China and North America. BP Amoco became the first non-Spanish company to be awarded marketer status and, in March, was the first to agree sales to business customers in the recently deregulated Spanish market. In China plans were announced to form a gas marketing joint venture with PetroChina. In North America BP Amoco announced an investment in Altra, a leading e-commerce energy exchange, as part of the company's strategy to increase its web trading presence. 1Q 4Q 1Q 2000 1999 1999 ===================== Replacement cost operating profit ($m) 52 48 68 --------------------- Euro/US$ 1.01 0.96 0.89 ===================== Refining and Marketing Replacement cost operating profit for the first quarter was $674 million, an increase of 86% on a year ago, on an adjusted basis. The higher operating profit reflects the improved refining margins experienced during the latter part of the quarter, mainly in the USA. Improved operating performance, lower costs and yield management contributed to improvements in operating profits in both refining and marketing. The result was up 45% over the fourth quarter of 1999 with stronger refining margins again a significant factor. In refining, although overall the environment was improved, weaker margin conditions at the start of the quarter led to slightly lower throughputs overall. In marketing, rising crude and product prices led to tighter margins, in both the retail and commercial sectors. On 14 March, it was announced that BP Amoco had agreed to buy Burmah Castrol for £3 billion through a recommended cash offer of £16.75 per share. Following the acquisition, Castrol will become BP Amoco's leading lubricants brand, with its products made available both through BP Amoco's 28,000 retail sites and to our automotive, industrial and marine customers around the world. The offer is conditional on Burmah Castrol shareholder approval and regulatory clearance from the European Commission, the US Federal Trade Commission, and other regulatory authorities. On 7 April the US Federal Trade Commission cleared the purchase. To date, BP Amoco has purchased some 19.5% of Burmah Castrol's issued ordinary share capital at a cost of $869 million. During the quarter, plans were announced to form a retail joint venture with PetroChina in China. In addition, there was further progress on our clean fuels initiatives, including the announcement of the offering of low sulphur gasoline nationally across the UK and in the Detroit metropolitan area in the United States. In addition the Ford Motor Company also announced that BP Amoco's cleaner fuels would be used as a factory fill for new premium- gasoline-fuelled Ford Motor Company vehicles from assembly lines in markets where the low-sulphur fuel is available. 1Q 4Q 1Q 2000 1999 1999 ===================== Replacement cost operating profit ($m) 674 293 346 --------------------- BP Amoco average indicative global refining margins ($/bbl) 2.45 0.68 0.82 --------------------- Refinery throughputs (mb/d) UK 281 279 273 Rest of Europe 518 542 563 USA 1,290 1,322 1,276 Rest of World 349 365 382 --------------------- Total throughput 2,438 2,508 2,494 ===================== Chemicals Chemicals' replacement cost operating profit for the first quarter was $259 million, in line with the fourth quarter 1999 adjusted profit of $266 million; the benefit of cost control efforts offset environmental deterioration caused by the continued weakness of the euro and feedstock increases early in the quarter. Compared with a year ago, the result benefited from cost reductions and volume improvements. Chemicals production was 5,703 ktes in the first quarter, a similar level to the record production achieved in the fourth quarter of 1999. Versus the corresponding period of last year, this was an 11% increase, reflecting higher reliability and utilization across the business, and new plant capacity added in 1999 at the Feluy linear alpha-olefins, Chocolate Bayou polypropylene, Geel PTA and Yaraco acetic acid operations. During the quarter, BP Amoco signed letters of intent with key suppliers for our joint venture development with SINOPEC of a $2.5 billion ethylene complex in Shanghai, China. Also, BP Amoco purchased an equity interest in ChemConnect, an internet on-line exchange for trading chemicals and plastics. 1Q 4Q 1Q 2000 1999 1999 ===================== Replacement cost operating profit ($m) 259 139 206 --------------------- Chemicals Indicator Margin ($/te)* 119 128 122 ===================== * The Chemicals Indicator Margin (CIM) is a weighted average of externally- based product margins. It is based on market data collected by Chem Systems in their quarterly market analyses, then weighted based on BP Amoco's product portfolio. While it does not cover our entire portfolio, it includes a broader range of products than our previous indicator. Among the products and businesses covered in the CIM are the olefins and derivatives, the aromatics and derivatives, linea alpha-olefins, acetic acid, vinyl acetate monomer and nitriles. Not included are Fabrics and Fibres, plastic fabrications, poly alpha-olefins, anhydrides, Engineering Polymers and Carbon Fibres, speciality intermediates, and remaining parts of solvents and acetyls. Other Businesses and Corporate Other Businesses and Corporate comprises Finance, BP Solarex, the group's coal asset, interest income and costs relating to corporate activities worldwide. Replacement cost operating loss for the first quarter was $211 million, after adjusting for a special charge of $16 million. 1Q 4Q 1Q 2000 1999 1999 ===================== Replacement cost operating loss ($m) (227) (340) (124) ===================== Exceptional Items Exceptional items for the first quarter include the subvention of Singapore Aromatics Company bank loans. 1Q 4Q 1Q 2000 1999 1999 ===================== Profit (loss) on sale of fixed assets and businesses and termination of operations (157) (279) 97 Restructuring costs - (256) (1,155) Taxation credit 33 46 198 --------------------- Exceptional items after taxation (124) (489) (860) ===================== 2000 Dividends BP Amoco p.l.c. today announced a first quarterly dividend for 2000 of 5 cents per ordinary share. Holders of ordinary shares will receive 3.220 pence per share and holders of American Depositary Receipts (ADRs) $0.30 per ADS share. The dividend is payable on 12 June 2000 to shareholders on the register on 19 May 2000. 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 on 12 June 2000. The second quarter 2000 results and dividend will be announced on 8 August. Outlook Crude oil prices have responded to increased OPEC production; they are expected to remain broadly in the current trading range though volatile. Natural gas prices are expected to remain strong over the year and remain above the historical trading range. Downstream, marketing margins are expected to stabilise after the recent increase and subsequent fall in oil prices. Refining margins are expected to be similar to the first quarter's but show considerable volatility. In Chemicals, margins in some businesses - particularly the commodity products - should strengthen as oil prices stabilize, assuming continuation of firm demand. However, continuing weakness of the euro, together with increasing industry capacity, may somewhat limit the extent of any recovery. BP Amoco Group Chief Executive, Sir John Browne, concluded: 'There is a broadly positive environment. Continuing cost and capital discipline should add to productivity gains. These, combined with the increased capital expenditure in 2000, will underpin our future growth.' ---------------------------------------------------------------------- The foregoing discussion, in particular the statements under 'Outlook', focuses on certain trends and general market and economic conditions and outlook on production levels or rates, prices, margins and currency exchange rates and, as such, are forward-looking statements that involve risk and uncertainty that could cause actual results and developments to differ materially from those expressed or implied by this discussion. By their nature, trends and outlook on production, price, margin and currency exchange rates are difficult to forecast with any precision, and there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing; currency exchange rates; political stability and economic growth in relevant areas of the world; the ability to successfully integrate after merger; development and use of new technology and successful partnering; the actions of competitors, natural disasters and other changes to business conditions. Additional information, including information on factors which may affect BP Amoco's business, is contained in BP Amoco's Annual Report and Accounts for 1999 and in the Annual Report on Form 20-F filed with the US Securities and Exchange Commission. ---------------------------------------------------------------------- MORE TO FOLLOW QRFUUUPAAUPUGUB

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