2Q06 Part 1 of 2
BP PLC
25 July 2006
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.
--------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 hours ago Alphawave IP Group
- 3 hours ago WH Smith
- 3 hours ago Staffline Group
- 3 hours ago Manchester & London Investment Trust
- 4 hours ago Associated British Foods