1st Quarter Results Pt 1 of 2
BP PLC
27 April 2004
BP p.l.c.
Group Results
First Quarter 2004
London 27 April 2004
FOR IMMEDIATE RELEASE
---------------------------------------------------------------------------
RESULT UP 17% - STRONG CASH FLOW
===========================================================================
1Q
2004
1Q 4Q 1Q vs.1Q
$ million 2004 2003 2003 2003
==========================
Replacement cost profit for the period(a) 4,170 2,250 3,420
Acquisition amortization(b) 547 637 628
--------------------------
Pro forma result 4,717 2,887 4,048 17%
==========================
- per ordinary share (pence) 11.61 7.68 11.33
- per ordinary share (cents) 21.36 13.07 18.13 18%
- per ADS (dollars) 1.28 0.78 1.09
==========================
o BP's first quarter pro forma result was $4,717 million compared with
$4,048 million a year ago, an increase of 17%. Replacement cost profit
for the quarter was $4,170 million compared with $3,420 million a year
ago.
o The first quarter result includes a net exceptional and non-operating
credit of $1,177 million compared with $285 million in the first
quarter of 2003. This includes the exceptional gains from the sale of
our investments in PetroChina and Sinopec.
o The first quarter trading environment was generally stronger than a
year ago, with higher oil realizations, refining margins and
petrochemicals margins, slightly reduced gas realizations and lower NGL
and marketing margins.
o Net cash inflow for the quarter was $3.8 billion compared with an
inflow of $3.2 billion a year ago, reflecting higher cash flow from
operating activities partly offset by higher acquisition spending. Net
cash flow from operating activities was $7.7 billion compared with $6.0
billion a year ago.
o The pro forma ratio of net debt to net debt plus equity was 22% at the
end of the quarter.
o Return on average capital employed for the quarter, on a pro forma
basis, was 24%, the same as a year ago. The cash return for the quarter
was 32% compared with 37% a year ago.
o The quarterly dividend is 6.75 cents per share ($0.405 per ADS)
compared with 6.25 cents per share a year ago, an increase of 8%.
In sterling terms, the quarterly dividend is 3.807 pence per share
compared with 3.947 pence per share a year ago, a decrease of 3.5%. The
company repurchased for cancellation 155 million of its own shares
during the quarter, at a cost of $1,249 million.
BP Group Chief Executive, Lord Browne, said:
'This has been another strong performance against the backdrop of a
robust trading environment. We are on track against our targets of
investing for growth, growing the dividend and utilizing surplus
cash to fund a significant level of share buybacks. We are continuing
our portfolio management actions in Petrochemicals and today announced
that we intend to dispose of our Olefins and Derivatives business.'
The pro forma result has been derived from the group's reported UK GAAP
accounting information but is not in itself a recognized UK or US GAAP measure.
This financial performance information and measures derived therefrom, shown
above and elsewhere in the document, are provided in order to enable investors
to evaluate better BP's performance against that of its competitors.
(a) Replacement cost profit for the period includes the net profit or loss
on the sale of fixed assets and businesses or termination of
operations.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions. The first quarter 2004 and
both comparative periods include accelerated depreciation of the
revaluation adjustment in respect of the impairment of former ARCO
assets.
Summary Quarterly Results
Exploration and Production's first quarter result decreased 11% compared with a
year ago, reflecting lower exceptional gains, higher depreciation, the impact of
the changing composition of production resulting from the TNK-BP acquisition and
the divestments made in 2003, higher costs due to foreign exchange movements and
slightly lower US gas realizations, partly offset by higher production and
slightly higher liquids realizations.
The Refining and Marketing result increased 13% compared with a year ago,
reflecting improved refining margins, particularly in the US, partly offset by
lower marketing margins due to pressure from higher crude prices.
The Petrochemicals result decreased compared with the prior quarter, as overall
improvement in margins was more than offset by exceptional losses associated
with the sale of the Specialty Intermediates business and the exit of the Baglan
Bay site in the UK.
In Gas, Power and Renewables, the result was down slightly compared with a year
ago and reflects a lower result from marketing and trading, improved results in
global LNG and the solar and renewables business and a similar contribution from
the natural gas liquids business.
Interest and Other finance expense was $228 million for the quarter compared
with $312 million in the previous quarter. The decrease relates primarily to a
reduction in net pension finance costs.
The pro forma effective tax rate on replacement cost profit was 28%.
Capital expenditure, excluding acquisitions, was $3.2 billion for the quarter.
Total capital expenditure and acquisitions was $4.5 billion, including $1.35
billion for including TNK's interest in Slavneft within TNK-BP. Disposal
proceeds were $2.8 billion.
Net debt at the end of the quarter was $17.6 billion. The pro forma ratio of net
debt to net debt plus equity was 22%, compared with 26% at the end of 2003.
----------
The commentaries above and following are based on the pro forma replacement cost
results.
The financial information for 2003 has been restated to reflect (a) the transfer
of natural gas liquids (NGLs) operations from the Exploration and Production
segment to Gas, Power and Renewables on 1 January 2004; (b) the adoption by the
group of Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17) with
effect from 1 January 2004; and (c) the adoption by the group of Urgent Issues
Task Force Abstract No. 38 'Accounting for ESOP Trusts' with effect from 1
January 2004. For further information see Note 1.
Exceptional and Non-Operating Items
1Q 2004
------------------------------
Exceptional Non-Operating
$ million Items Items and UPIS
------------------------------
Exploration and Production 211 (189)
Refining and Marketing (140) -
Petrochemicals (154) -
Gas, Power and Renewables - -
Other businesses and corporate 1,313 -
------------------------------
1,230 (189)
Taxation 70 66
------------------------------
1,300 (123)
==============================
Reconciliation of Reported Results to Pro Forma Results
------ 1Q 2004------ Pro forma Result
---------------------
Reported Acq. 1Q 4Q 1Q
$ million Earnings(a) Amort.(b) 2004 2003 2003
------------------------------------------
Exploration and Production 4,242 326 4,568 3,274 5,141
Refining and Marketing 720 221 941 531 833
Petrochemicals (25) - (25) 41 137
Gas, Power and Renewables 198 - 198 86 216
Other businesses and corporate 1,129 - 1,129 465 (166)
------------------------------------------
RC profit before interest and tax 6,264 547 6,811 4,397 6,161
------------------------------------------
Interest and Other finance expense (228) - (228) (312) (305)
Taxation (1,822) - (1,822) (1,157) (1,782)
MSI (44) - (44) (41) (26)
------------------------------------------
RC profit 4,170 547 4,717 2,887 4,048
==========================================
Stock holding gains (losses) 648
-----
HC profit 4,818
=====
(a) Replacement cost profit for the period includes the net profit or loss
on the sale of fixed assets and businesses or termination of operations.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon the
ARCO and Burmah Castrol acquisitions. The first quarter 2004 and both
comparative periods include accelerated depreciation of the revaluation
adjustment in respect of the impairment of former ARCO assets.
Operating Results and Per Share Amounts
First Fourth First
Quarter Quarter Quarter
2004 2003 2003
================================
Replacement cost profit
before interest and tax ($m) 6,264 3,760 5,533
--------------------------------
Results for the period ($m)
Pro forma result 4,717 2,887 4,048
Replacement cost profit 4,170 2,250 3,420
Historical cost profit 4,818 2,334 4,219
--------------------------------
Shares in issue at period end (thousand) 21,996,888 22,122,610 22,241,895
- ADS equivalent (thousand) 3,666,148 3,687,102 3,706,983
Average number of shares
outstanding (thousand) 22,087,796 22,103,542 22,326,486
- ADS equivalent (thousand) 3,681,299 3,683,924 3,721,081
Per ordinary share (cents)
Pro forma result 21.36 13.07 18.13
RC profit for the period 18.88 10.18 15.32
HC profit for the period 21.81 10.56 18.90
Per ADS (cents)
Pro forma result 128.16 78.42 108.78
RC profit for the period 113.28 61.08 91.92
HC profit for the period 130.86 63.36 113.40
================================
Exploration and Production
1Q 4Q 1Q
$ million 2004 2003 2003
=====================
Replacement cost profit before interest and tax 4,242 2,848 4,718
Acquisition amortization 326 426 423
---------------------
Pro forma replacement cost result
before interest and tax 4,568 3,274 5,141
=====================
Results include:
Asset write-downs/impairment (123) (308) (49)
Environmental charges - - -
Restructuring, integration and rationalization costs - (15) (90)
Other - - -
Unrealized profit in stock (UPIS) (66) (57) (125)
---------------------
Total non-operating items and UPIS (189) (380) (264)
Exceptional items 211 (49) 433
---------------------
Total non-operating items, UPIS and exceptional items 22 (429) 169
=====================
Exploration expense 136 193 112
Of which:
Exploration expenditure written off 67 129 50
=====================
Production(Net of Royalties)
Crude oil (mb/d) 2,342 2,248 1,830
Natural gas liquids (mb/d) 191 206 233
Total liquids (mb/d)(a) 2,533 2,454 2,063
Natural gas (mmcf/d) 8,600 8,600 9,017
Total hydrocarbons (mboe/d)(b) 4,015 3,936 3,618
=======================
Average realizations
Crude oil ($/bbl) 31.30 28.18 31.07
Natural gas liquids ($/bbl) 23.14 20.15 19.82
Total liquids ($/bbl) 30.48 27.30 29.82
Natural gas ($/mcf) 3.79 3.18 3.87
Total hydrocarbons ($/bbl) 26.48 23.15 26.39
=======================
Average oil marker prices ($/bbl)
Brent 32.03 29.43 31.47
West Texas Intermediate 35.30 31.15 34.00
Alaska North Slope US West Coast 34.22 29.43 33.16
=====================
Average natural gas marker prices
Henry Hub gas price(c) ($/mmbtu) 5.69 4.58 6.53
UK Gas - National Balancing Point (p/therm) 24.59 27.30 21.28
=======================
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels.
(c) Henry Hub First of the Month Index.
Exploration and Production
The pro forma replacement cost result before interest and tax for the first
quarter was $4,568 million, down 11% from the first quarter of 2003. The primary
drivers for the change are lower exceptional gains, higher depreciation, the
impact of the changing composition of production resulting from the TNK-BP
acquisition and the divestments made in 2003, higher costs due to foreign
exchange movements and slightly lower US gas realizations, partly offset by
higher production and slightly higher liquids realizations.
In Venezuela, the sales agreement for our interest in Desarrollo Zuli Occidental
(DZO) and Boqueron has lapsed and we will now retain these fields. We had
previously reported an exceptional loss on disposal of $217 million in respect
of these assets which has now been reversed. As a result of the lapse of the
agreement, an impairment charge of $186 million has been recognized in the
quarter, comprising a $123 million non-operating charge and accelerated
acquisition amortization of $63 million.
The first quarter result also includes a charge of $66 million, reflecting an
increase in the provision for Unrealized Profit in Stock (UPIS), which removes
the upstream margin from downstream inventories. This compares with a charge of
$125 million in the equivalent quarter of last year.
Production for the quarter was up from 3,618 mboe/d in the first quarter of 2003
to 4,015 mboe/d. This reflects the impact of the inclusion of TNK-BP from 29
August 2003 and the first quarter of Slavneft, growth in Trinidad, the start up
of NaKika in Deepwater Gulf of Mexico and Xikomba in Angola, partly offset by
decline in existing profit centers in North America and Europe and divestments
made during 2003.
Progress continues in our new profit centres as indicated in our strategy
presentation on 29 March 2004. During the first quarter, construction of the
Holstein and Mad Dog Spars was completed and installation offshore has
commenced. In Algeria, commissioning of the In Salah gas facilities is underway.
In Azerbaijan, construction on the Azeri project and the BTC pipeline remains on
track. In Angola, the Kizomba A Floating Production Storage and Offloading
vessel sailed away from the construction yard in Korea enroute to the field
location in Block 15.
The first quarter saw exploration successes in Egypt with the Raven 1 and Taurt
wells in the Nile Delta along with three further discoveries in Angola: Cesio 1
and Chumbo 1 in offshore Block 18 and Bavuca in Block 15.
In January we sold 45% of our interest in Kings Peak in Deepwater Gulf of Mexico
to Marubeni Oil & Gas (USA) Inc. Additionally, on 9 February 2004 we signed a
sale and purchase agreement with Fairborne Energy Ltd to sell a package of
non-core assets in Alberta, Canada for $88 million.
Customer Facing Segments
Refining and Marketing
1Q 4Q 1Q
$ million 2004 2003 2003
=====================
Replacement cost profit before interest and tax 720 320 628
Acquisition amortization 221 211 205
---------------------
Pro forma replacement cost result
before interest and tax 941 531 833
=====================
Results include:
Asset write-downs/impairment - - -
Environmental charges - - -
Restructuring, integration and rationalization costs - (156) (18)
Other - 10 -
---------------------
Total non-operating items - (146) (18)
Exceptional items (140) (91) (52)
---------------------
Total non-operating and exceptional items (140) (237) (70)
=====================
Refinery throughputs (mb/d)
UK 395 389 377
Rest of Europe 884 873 954
USA 1,265 1,374 1,302
Rest of World 399 378 391
---------------------
Total throughput 2,943 3,014 3,024
=====================
Refinery availability 95.1 94.9 94.2
=====================
Oil sales volumes (mb/d)
Refined products
UK 294 257 279
Rest of Europe 1,324 1,295 1,318
USA 1,727 1,788 1,751
Rest of World 679 681 645
-----------------------
Total marketing sales 4,024 4,021 3,993
Trading/supply sales 2,917 2,350 2,811
-----------------------
Total refined product sales 6,941 6,371 6,804
Crude oil 5,104 4,504 4,529
-----------------------
Total oil sales 12,045 10,875 11,333
=======================
Global Indicator Refining Margin(a)($/bbl)
NWE 2.73 2.21 3.70
USGC 6.92 3.53 6.14
Midwest 4.67 2.89 4.14
USWC 8.06 6.09 6.77
Singapore 3.42 2.20 2.98
BP Average 4.62 3.14 4.52
=====================
(a) The Global Indicator Refining Margin (GIM) is the average of six
regional indicator margins weighted for BP's crude refining capacity
in each region. Each regional indicator margin is based on a single
representative crude with product yields characteristic of the
typical level of upgrading complexity. The regional indicator margins
may not be representative of the margins achieved by BP in any period
because of BP's particular refinery configurations and crude and
product slate.
Customer Facing Segments
Refining and Marketing
The pro forma replacement cost result before interest and tax for the first
quarter was $941 million. This compares with $833 million for the same period
last year, an increase of 13%.
The result reflects improved refining margins, particularly in the US, due to
strong demand, cold weather and concerns over US gasoline supplies. Marketing
margins were lower than those in both the first quarter and the fourth quarter
of 2003 due to pressure from higher crude and product prices.
Refining throughputs for the quarter were 3% below those in the first quarter of
2003; the decrease was attributable to the disposal of the Bayernoil refinery in
Germany in the second quarter of 2003. The quarter's refining availability was
95.1%, enabling strong margin capture. Marketing sales were slightly higher than
in the first quarter of 2003.
During the quarter BP launched its new product line of gasoline and diesel
fuels, BP Ultimate, in Portugal. We also launched a new advertising and
communications campaign - Fluid Motion - for the Castrol brand in Europe, along
with a new product, Castrol GTX High Mileage, in the UK.
During the quarter, BP and the Singapore Petroleum Company Limited (SPC)
announced that conditional agreement had been reached for SPC to purchase BP's
interests and one-third stake in Singapore Refining Company Private Limited
(SRC) for $140 million. Subsequent to this announcement we have been notified
that the remaining shareholders would like to exercise their pre-emption rights.
This would result in BP's one third share being divided equally between the two
remaining shareholders in SRC, namely Caltex Singapore Private Ltd and Singapore
Petroleum Company Limited. As a result these two companies would also acquire
BP's one-sixth equity interest in Tanker Mooring Services Company Pte Ltd (TMS).
In the first quarter, BP and Lembaga Tabung Angkatan Tentera (LTAT) announced
that agreement had been reached for LTAT to purchase BP's 70% shareholding in
the BP Malaysia Sdn Bhd fuels business. Subject to receiving the necessary
regulatory consents, this transaction is also expected to be concluded by 30
June 2004.
The quarter's result includes net exceptional losses of $140 million before tax,
which principally relate to the disposal of the SRC and the closure of the
lubricants operation of the Coryton Refinery, in the UK.
Customer Facing Segments
Petrochemicals
1Q 4Q 1Q
$ million 2004 2003 2003
=====================
Replacement cost profit before interest and tax (25) 41 137
Acquisition amortization - - -
---------------------
Pro forma replacement cost result
before interest and tax (25) 41 137
=====================
Results include:
Provision against fixed asset investments/
asset write-downs/impairment - - -
Environmental charges - - -
Restructuring, integration and rationalization costs - - -
Other - - -
---------------------
Total non-operating items - - -
Exceptional items (154) 16 7
---------------------
Total non-operating and exceptional items (154) 16 7
=====================
Chemicals Indicator Margin(a)($/te) 122(b) 109 96
=====================
Petrochemicals production (kte)
UK 840 832 869
Rest of Europe 2,728 2,790 2,763
USA 2,543 2,466 2,536
Rest of World 1,132 1,065 812
-----------------------
Total production 7,243 7,153 6,980
=======================
(a) The Chemicals Indicator Margin (CIM) is a weighted average of externally
based product margins. It is based on market data collected by Nexant in
their quarterly market analyses, then weighted based on BP's product
portfolio. While it does not cover our entire portfolio, it includes a
broad range of products. Among the products and businesses covered in
the CIM are the olefins and derivatives, the aromatics and derivatives,
linear alpha-olefins (LAOs), acetic acid, vinyl acetate monomers and
nitriles. Not included are fabrics and fibres, plastic fabrications,
poly alpha-olefins (PAOs), anhydrides, speciality intermediates, and the
remaining parts of the solvents and acetyls businesses.
(b) Provisional. The data for the first quarter is based on two months'
actuals and one month of provisional data.
Petrochemicals' pro forma replacement cost result before interest and tax for
the first quarter was a loss of $25 million, down from $41 million in the fourth
quarter of 2003. The result was affected by exceptional losses largely
associated with the sale of our Specialty Intermediates Business and the exit of
the Baglan Bay site in the UK more than offsetting overall margin improvement.
The first quarter result was a decrease of $162 million compared with the same
quarter last year, due to the exceptional losses and adverse foreign exchange
impacts. The margin structures of our European operations continue to be
affected by the strength of the Euro and Sterling, as we are unable to achieve
offsetting price increases due to dollar-based competition.
Petrochemicals production of 7,243 thousand tonnes in the first quarter was up
90 thousand tonnes compared with the previous quarter due to improved
reliability and asset utilization.
During the first quarter, our portfolio management actions continued. We
announced the closure and exit from the Baglan Bay site in the UK. We signed a
sale and purchase agreement for our Specialty Intermediates Business
(trimellitic anhydride, purified isophthalic acid (PIA) and maleic anhydride)
based in Joliet, Illinois in the USA, plus the economic interest in our European
PIA business. We also announced the intention to sell our Global Fabrics and
Fibres business as well as our speciality business manufacturing and marketing
linear and poly alpha olefins based in Feluy, Belgium; Pasadena, USA and Joffre,
Canada.
Customer Facing Segments
Gas, Power and Renewables
1Q 4Q 1Q
$ million 2004 2003 2003
=====================
Replacement cost profit before interest and tax 198 86 216
Acquisition amortization - - -
---------------------
Pro forma replacement cost result
before interest and tax 198 86 216
=====================
Results include:
Asset write-downs/impairment - - -
Environmental charges - - -
Restructuring, integration and rationalization costs - - -
Other - - -
---------------------
Total non-operating items - - -
Exceptional items - (10) -
---------------------
Total non-operating and exceptional items - (10) -
---------------------
Gas sales volumes (mmcf/d)
UK 3,027 2,565 3,215
Rest of Europe 442 511 473
USA 13,618 12,121 11,734
Rest of World 13,902 13,138 11,553
-----------------------
Total gas sales volumes 30,989 28,335 26,975
=======================
NGL sales volumes (mb/d)
UK 4 2 5
Rest of Europe 1 - -
USA 462 400 282
Rest of World 244 234 251
-----------------------
Total NGL sales volumes 711 636 538
=======================
The pro forma replacement cost result before interest and tax for the first
quarter was $198 million compared with $216 million a year ago. The result
reflects a lower result in marketing and trading, improved results in global LNG
and Solar and a similar contribution from the natural gas liquids business.
The marketing and trading result in North America is down compared with the
first quarter of 2003, when the business benefited from high margins as a result
of the prolonged cold weather in north east and midwest markets. The global LNG
business had a strong quarter due to higher margins and continued growth in LNG
sales volumes. Group gas sales volumes are up 15% above the same period last
year.
The first quarter NGL result was flat, with volume increases of 32% offset by
lower margins.
First quarter results for the solar business were improved over a year ago
primarily as a result of the benefits of the 2003 restructuring programme.
Other Businesses and Corporate
1Q 4Q 1Q
$ million 2004 2003 2003
=====================
Replacement cost profit (loss)
before interest and tax 1,129 465 (166)
Acquisition amortization - - -
---------------------
Pro forma replacement cost result
before interest and tax 1,129 465 (166)
=====================
Results include:
Asset write-downs/impairment - - -
Environmental charges - - -
Restructuring, integration and rationalization costs - - -
Other(a) - 574 -
---------------------
Total non-operating items - 574 -
Exceptional items 1,313 119 6
---------------------
Total non-operating and exceptional items 1,313 693 6
=====================
(a) For 4Q 2003, Other businesses and corporate other items includes a
vacant space provision of $74 million and a credit of $648 million
relating to US post-retirement benefit schemes.
Other businesses and corporate comprises Finance, the group's aluminium asset,
its investments in PetroChina and Sinopec, interest income and costs relating to
corporate activities. During the quarter, BP sold its interest in PetroChina for
$1.65 billion and its interest in Sinopec for $0.7 billion; these transactions
resulted in exceptional gains of $1.3 billion.
Dividends
1Q 4Q 1Q
2004 2003 2003
=====================
Dividends per ordinary share
cents 6.75 6.75 6.25
pence 3.807 3.674 3.947
Dividends per ADS (cents) 40.5 40.5 37.5
-----------------------
BP today announced a first quarterly dividend for 2004 of 6.75 cents per
ordinary share. Holders of ordinary shares will receive 3.807 pence per share
and holders of American Depository Receipts (ADRs) $0.405 per ADS share. The
dividend is payable on 7 June to shareholders on the register on 14 May.
Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in
the US Direct Access Plan will receive the dividend in the form of shares, also
on 7 June. The second quarter 2004 results and dividend will be announced on 27
July 2004.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
'The world economy appears to have grown at or above trend in the first
quarter of 2004. Growth was especially robust in the US and in Asian
economies, particularly in China, but Europe, with the exception of the
UK, continues to lag. The US and Asia are expected to continue growing at
or above trend in 2004 but mainland European growth is expected to remain
below trend.
'At just over $32 per barrel (dated Brent), crude oil prices during the
first quarter were the highest since the fourth quarter of 1990
(immediately prior to the first Gulf War) and $2.60 per barrel higher
than in the fourth quarter of 2003. Prices have averaged around
$32.91 so far in April (through close 23 April 2004). Strong oil demand
growth, low inventories, a tight US gasoline market and concern about
possible supply disruptions have kept crude prices supported,
notwithstanding the continuing high levels of OPEC production. The same
forces should underpin crude prices during the second quarter but a
rebuilding of inventories closer to seasonal norms looks likely if OPEC
does not make production cuts that more closely match the seasonal drop
in oil product demand.
'US natural gas prices traded in a relatively narrow range for most of
the first quarter, averaging $5.69/mmbtu (Henry Hub first of the month
index). This represented an increase of around $1.10/mmbtu versus the
fourth quarter of 2003, due to seasonal weather effects, lingering supply
concerns and the strength in oil prices. Spot gas prices traded between
residual fuel oil and distillate parity throughout the whole period.
Working gas in storage currently stands well above last year's levels and
close to the five-year average. With storage at adequate levels and with
growth in supply and demand looking more balanced than in recent years,
we expect that gas prices will remain strongly influenced by movements in
oil prices for the remainder of 2004.
'Refining margins in the first quarter strengthened relative to the
fourth quarter 2003 in the face of declining product inventories, strong
global oil demand growth and cold US weather. Margin gains were most
pronounced in the US, where low gasoline inventories and specification
changes raised concerns about supply during the coming driving season.
Margins have begun the second quarter strongly, with low gasoline
inventories and demand strength. Marketing margins are expected to
reflect seasonal improvements although they continue to be impacted by
high crude oil and product prices.
'Petrochemical margins in the first quarter improved versus the prior
period. We continue to remain cautious about the overall market although
we expect demand to improve gradually during 2004 provided the global
economic recovery is sustained.
'Capital expenditure, excluding acquisitions, for the quarter was $3.2
billion, and is projected to be approximately $13.5 billion for the year,
subject to developments in the US dollar exchange rate. The share buyback
programme is continuing.'
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under 'Outlook',
contains forward looking statements particularly those regarding BP's
asset portfolio and changes in it, capital expenditure, economic
growth, growth in oil demand, impact of foreign exchange exposure,
inventory levels, the US gasoline market and supply concerns, margins,
prices, petrochemicals demand and share buybacks. Forward looking
statements by their nature involve risks and uncertainties and actual
results may differ from those expressed in such statements depending on
a variety of factors including the following: the timing of bringing
new fields on stream; industry product supply, demand and pricing;
operational problems; general economic conditions; political stability
and economic growth in relevant areas of the world; changes in
governmental regulations; exchange rate fluctuations; development and
use of new technology and successful commercial relationships; the
actions of competitors; natural disasters and other changes in business
conditions; prolonged adverse weather conditions; and wars and acts of
terrorism or sabotage. For more information you should refer to our
Annual Report and Accounts 2003 and our Annual Report on Form 20-F
filed with the US Securities and Exchange Commission..
----------------------------------------------------------------------
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