3rd Quarter Results Pt 1of2
BP PLC
26 October 2004
BP p.l.c.
Group Results
3rd Quarter 2004
London 26 October 2004
FOR IMMEDIATE RELEASE
RECORD NINE-MONTHS RESULT
---------------------------------------------------------------------------
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 $ million 2004 2003 %
======================= ====================
Replacement cost profit
2,260 3,434 3,456 for the period (a) 11,060 8,216
498 474 481 Acquisition amortization(b) 1,502 1,755
----------------------- --------------------
2,758 3,908 3,937 Pro forma result 12,562 9,971 26
======================= ====================
7.76 9.93 9.99 - per ordinary share (pence) 31.53 27.90 13
12.50 17.85 18.17 - per ordinary share (cents) 57.38 44.92 28
0.75 1.07 1.09 - per ADS (dollars) 3.44 2.70
======================= ====================
o BP's third quarter pro forma result was $3,937 million, compared with
$2,758 million a year ago, an increase of 43%. For the nine months the
result was $12,562 million compared with $9,971 million, up 26%.
Replacement cost profit for the third quarter and nine months was
$3,456 million and $11,060 million respectively, compared with
$2,260 million and $8,216 million a year ago.
o The third quarter result includes net exceptional and non-operating
charges of $401 million compared with a net charge of $217 million in
the third quarter of 2003.
o The third quarter trading environment was generally stronger than a
year ago, with higher oil and gas realizations and higher refining and
chemicals margins.
o Net cash inflow for the quarter was $1.7 billion and net cash inflow
for the nine months was $7.0 billion, compared with an outflow of
$2.4 billion and an inflow of $3.2 billion a year ago. Net cash inflow
from operating activities for the quarter and nine months was
$6.9 billion and $21.5 billion respectively, compared with $4.9 billion
and $18.2 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 and nine months
respectively, on a pro forma basis, was 19.5% and 20.8%, compared with
15.8% and 19.2% a year ago. The cash return for the quarter was 36%
compared with 31% a year ago, and for the nine months was 34% the same
as a year ago.
o The quarterly dividend was 7.10 cents per share ($0.426 per ADS). This
compares with 6.50 cents per share a year ago. For the nine months the
dividend showed an increase of 8.8%. In sterling terms, the quarterly
dividend is 3.910 pence per share compared with 3.857 pence a year ago;
for the nine months the dividend showed a decrease of 2.2%. During the
first nine months, the company repurchased for cancellation 621 million
of its own shares, at a cost of $5.5 billion. The increase in the
dividend per share reflects the reduction in the number of shares
outstanding due to the share buyback programme which allows the
company's dividend payments to be allocated across a smaller equity
base.
BP Group Chief Executive, Lord Browne, said:
'This has been another strong performance against the backdrop of
strong global demand. We are on track against our targets of controlled
investment for growth and using additional free cash flow to fund a
significant level of share buybacks. The plans to prepare the Olefins
and Derivatives business for disposal are on track.'
The pro forma result has been derived from the group's reported UK GAAP
accounting information but is not in itself a recognized UK or US GAAP measure.
This financial performance information and measures derived therefrom, shown
above and elsewhere in the document, are provided in order to enable investors
to evaluate better BP's performance against that of its competitors.
(a) Replacement cost profit for the period includes the net profit or loss
on the sale of fixed assets and businesses or termination of
operations.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions. The results for the first
nine months of 2003 and 2004 include accelerated depreciation of the
revaluation adjustment in respect of the impairment of former ARCO
assets.
Summary Third Quarter Results
Exploration and Production's record third quarter result was up 30% on a year
ago, reflecting higher liquids and gas realizations combined with increased
volumes and the changing composition of production primarily resulting from the
TNK-BP acquisition.
The Refining and Marketing result increased 89% compared with a year ago,
reflecting stronger realized refining margins, supported by strong product
demand and the impact of industry-wide refinery maintenance.
The Petrochemicals result decreased by 10% compared with the second quarter.
This reflects higher margins and lower fixed costs more than offset by higher
non-operating and exceptional charges.
In Gas, Power and Renewables, the result increased compared with a year ago.
This reflects improved margins in the NGL and Solar businesses and higher
exceptional gains, offset partly by weaker gas marketing and trading margins.
Interest and other finance expense for the quarter was $235 million compared
with $221 million for the prior quarter. The increase relates primarily to a
rise in interest rates.
The pro forma effective tax rate on replacement cost profit was 34.6%.
Capital expenditure was $3.4 billion for the quarter and there were no
significant acquisitions. Disposal proceeds for the quarter were $0.58 billion.
Net debt at the end of the quarter was $18.6 billion. The pro forma ratio of net
debt to net debt plus equity was 22% at the end of the quarter compared with 23%
at the end of the second quarter.
During the third quarter, shares to the value of $1.25 billion were issued to
Alfa Group and Access Renova (AAR) as the first instalment of the deferred
consideration for our investment in TNK-BP. The company also repurchased for
cancellation 241.5 million of its own shares, at a cost of $2.25 billion.
---------
The commentaries above and following are based on the pro forma replacement cost
results.
TNK-BP operational and financial information has been estimated.
The financial information for 2003 has been restated to reflect (a) the transfer
of natural gas liquids (NGLs) operations from the Exploration and Production
segment to Gas, Power and Renewables on 1 January 2004; (b) the adoption by the
group of Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17) with
effect from 1 January 2004; and (c) the adoption by the group of Urgent Issues
Task Force Abstract No. 38 'Accounting for ESOP Trusts' with effect from 1
January 2004. For further information see Note 1.
Exceptional and Non-Operating Items
3Q 2004
------------------------------
Exceptional Non-Operating
$ million Items Items and UPIS(a)
------------------------------
Exploration and Production 23 (137)
Refining and Marketing (17) (206)
Petrochemicals (38) (58)
Gas, Power and Renewables 16 -
Other businesses and corporate 1 (244)
------------------------------
(15) (645)
Taxation 33 226(b)
------------------------------
18 (419)
==============================
(a) Charges for environmental and other provisions have been classified as
non-operating items and prior periods restated to conform with this
treatment.
(b) Tax on non-operating items and Unrealized Profit in Stock (UPIS) is
calculated using the pro forma effective tax rate on replacement cost
profit, excluding exceptional items, of 35%.
Reconciliation of Reported Results to Pro Forma Results
Pro Forma Result ----- 3Q 2004 ----- Pro Forma Result
-------------------
3Q 2Q 3Q Acq. Reported Nine Months
2003 2004 2004 Amort+ Earnings* $ million 2004 2003
======================================= ==============
Exploration and
3,959 4,558 5,144 261 4,883 Production 14,270 12,958
Refining and
687 1,562 1,301 220 1,081 Marketing 3,804 2,613
84 208 188 - 188 Petrochemicals 371 527
Gas, Power
127 216 130 - 130 and Renewables 544 484
Other businesses
(330) (164) (424) - (424) and corporate 541 (649)
--------------------------------------- --------------
RC profit before
4,527 6,380 6,339 481 5,858 interest and tax 19,530 15,933
---------------------------------------- --------------
Interest and Other
(298) (221) (235) - (235) finance expense (684) (879)
(1,428)(2,199)(2,109) - (2,109) Taxation (6,130) (4,954)
(43) (52) (58) - (58) MSI (154) (129)
---------------------------------------- --------------
2,758 3,908 3,937 481 3,456 RC profit 12,562 9,971
---------------------------------------- --------------
1,027 Stock holding gains (losses)
-----
4,483 HC profit
=====
* Replacement cost profit for the period includes the net profit or loss on
the sale of fixed assets and businesses or termination of operations.
+ Acquisition amortization is depreciation and amortization relating to the
fixed asset revaluation adjustments and goodwill consequent upon the ARCO
and Burmah Castrol acquisitions. The results for the first nine months of
2003 and 2004 include accelerated depreciation of the revaluation
adjustment in respect of the impairment of former ARCO assets.
Operating Results and Per Share Amounts
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
================================ =====================
Replacement cost
Profit before
4,029 5,906 5,858 interest and tax ($m) 18,028 14,178
-------------------------------- ---------------------
Results for the
period ($m)
2,758 3,908 3,937 Pro forma result 12,562 9,971
2,260 3,434 3,456 Replacement cost profit 11,060 8,216
2,344 3,896 4,483 Historical cost profit 13,197 8,148
-------------------------------- ---------------------
Shares in issue at
22,107,715 21,789,115 21,713,966 period end (thousand)21,713,966 22,107,715
- ADS equivalent
3,684,619 3,631,519 3,618,994 (thousand) 3,618,994 3,684,619
Average number of
shares outstanding
22,092,365 21,906,318 21,683,963 (thousand) 21,891,936 22,193,403
- ADS equivalent
3,682,061 3,651,053 3,613,994 (thousand) 3,648,656 3,698,901
Per ordinary share
(cents)
12.50 17.85 18.17 Pro forma result 57.38 44.92
RC profit
10.25 15.68 15.96 for the period 50.52 37.02
HC profit
10.62 17.80 20.67 for the period 60.28 36.71
Per ADS (cents)
75.00 107.10 109.02 Pro forma result 344.28 269.52
RC profit
61.50 94.08 95.76 for the period 303.12 222.12
HC profit
63.72 106.80 124.02 for the period 361.68 220.26
-------------------------------- ---------------------
Exploration and Production
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
================= ==============
Replacement cost profit
3,666 4,302 4,883 before interest and tax 13,427 11,818
293 256 261 Acquisition amortization 843 1,140
----------------- --------------
Pro forma replacement cost result
3,959 4,558 5,144 before interest and tax 14,270 12,958
================= ==============
Results include:
- (160) (7) Asset write-downs/impairment (290) (49)
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - (102)
- - (35) Other (35) -
15 (87) (95) Unrealized profit in stock (UPIS) (248) (4)
----------------- --------------
15 (247) (137) Total non-operating items and UPIS (573) (155)
196 (114) 23 Exceptional items 120 962
================= ==============
Total non-operating items, UPIS
211 (361) (114) and exceptional items (453) 807
================= ==============
136 108 135 Exploration expense 379 349
Of which:
75 22 34 Exploration expenditure written off 123 168
----------------- --------------
Production (Net of Royalties)
1,852 2,321 2,298 Crude oil (mb/d) 2,320 1,798
202 197 181 Natural gas liquids (mb/d) 190 211
2,054 2,518 2,479 Total liquids (mb/d)(a) 2,510 2,009
8,401 8,425 8,275 Natural gas (mmcf/d) 8,433 8,617
3,502 3,971 3,906 Total hydrocarbons (mboe/d)(b) 3,964 3,495
================= ==============
Average realizations
27.72 34.47 39.43 Crude oil ($/bbl) 34.93 28.25
19.39 23.71 28.77 Natural gas liquids ($/bbl) 25.13 18.96
26.79 33.27 38.29 Total liquids ($/bbl) 33.89 27.24
3.08 3.68 3.66 Natural gas ($/mcf) 3.71 3.46
22.58 27.66 30.08 Total hydrocarbons ($/bbl) 28.03 23.88
================= ==============
Average oil marker prices
($/bbl)
28.38 35.32 41.54 Brent 36.31 28.64
30.19 38.28 43.88 West Texas Intermediate 39.18 31.08
28.83 36.99 41.82 Alaska North Slope US West Coast 37.70 29.69
================= ==============
Average natural gas marker prices
4.97 6.00 5.75 Henry Hub gas price ($/mmbtu)(c) 5.81 5.65
UK Gas - National
15.08 20.70 23.63 Balancing Point (p/therm) 22.98 17.92
================= ==============
(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 third
quarter was $5,144 million, a record result, up 30% from the third quarter of
2003. The primary drivers for the change are the higher realizations in both
liquids and gas combined with increased volumes and the changing composition of
production primarily resulting from the TNK-BP acquisition. This quarter further
benefited from an exceptional gain of $23 million. The corresponding quarter in
2003 contained exceptional gains of $196 million.
Included in the results for the quarter was a non-operating charge totalling $42
million. This charge results from impairments associated with the write-off of
the partner operated Temsah platform in Egypt following the blow-out, revisions
to impairment estimates made in the prior quarter and a charge taken for Alaskan
tankers no longer required.
The third quarter result also included a charge of $95 million, reflecting an
increase in the provision for Unrealized Profit in Stock (UPIS), which removes
the upstream margin from downstream inventories. This compares with a credit of
$15 million in the equivalent quarter of last year.
The nine months result of $14,270 million is a record, up $1,312 million on a
year ago, reflecting the higher realizations combined with increased volumes and
the changing composition of production primarily resulting from the TNK-BP
acquisition.
Production for the quarter was up over 11% to 3,906 mboe/d compared with a year
ago. This reflects the inclusion of TNK-BP and the continuing ramp-up of
production in the New Profit Centres, partly offset by planned maintenance in
the North Sea and Alaska, the operational impact of Hurricane Ivan in the Gulf
of Mexico and the blow-out at partner operated Temsah in Egypt.
Projects in the New Profit Centres remain on track. In the quarter Kizomba A
started up in Angola, and in Australia, the North West Shelf Train 4 LNG plant
was brought on line and first liftings have taken place.
In the third quarter, we had further exploration success with the Pela Lache-1
prospect offshore Sakhalin Island in Russia.
During the quarter, we completed our divestments of various properties in the
Gulf of Mexico Shelf and of our interests in Offshore North Sinai in Egypt,
resulting in total exceptional gains in the quarter of $23 million.
Customer Facing Segments
Refining and Marketing
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
482 1,344 1,081 before interest and tax 3,145 1,998
205 218 220 Acquisition amortization 659 615
----------------------- -------------
Pro forma replacement cost result
687 1,562 1,301 before interest and tax 3,804 2,613
======================= =============
Results include:
- - - Asset write-downs/impairment - -
(369) - (206) Environmental and other provisions (206) (369)
Restructuring, integration and
(72) - - rationalization costs - (131)
- - - Other - -
----------------------- -------------
(441) - (206) Total non-operating items (206) (500)
(21) (18) (17) Exceptional items (175) (122)
======================= =============
Total non-operating and
(462) (18) (223) exceptional items (381) (622)
======================= =============
Refinery throughputs (mb/d)
405 404 410 UK 403 399
909 871 882 Rest of Europe 879 951
1,406 1,370 1,417 USA 1,350 1,391
366 377 296 Rest of World 358 383
----------------------- -------------
3,086 3,022 3,005 Total throughput 2,990 3,124
======================= =============
96.2 95.1 94.9 Refining availability 95.0 95.7
======================= =============
Oil sales volumes (mb/d)
Refined products
270 318 333 UK 315 276
1,293 1,344 1,313 Rest of Europe 1,327 1,323
1,828 1,724 1,758 USA 1,736 1,800
657 665 677 Rest of World 674 636
----------------------- --------------
4,048 4,051 4,081 Total marketing sales 4,052 4,035
2,647 2,087 2,624 Trading/supply sales 2,542 2,805
----------------------- --------------
6,695 6,138 6,705 Total refined product sales 6,594 6,840
5,316 5,339 3,572 Crude oil 4,672 5,175
----------------------- --------------
12,011 11,477 10,277 Total oil sales 11,266 12,015
======================= ==============
Global Indicator Refining Margin(a)
($/bbl)
2.47 5.29 4.37 NWE 4.15 2.77
5.61 9.18 6.99 USGC 7.72 5.11
6.39 9.01 5.01 Midwest 6.25 5.09
9.04 15.41 11.28 USWC 11.62 7.39
1.27 2.80 5.48 Singapore 3.92 1.63
4.59 7.89 6.20 BP Average 6.26 4.13
======================= ==============
(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 third
quarter was $1,301 million. This compares with $687 million for the same period
last year. The nine months result was $3,804 million, a year-on-year increase of
$1,191 million, or 46%.
The improvement in the result is due primarily to refining margins in the third
quarter being significantly higher than in the equivalent quarter a year ago.
The margins continued to be supported by strong product demand and the impact of
industry-wide planned and unplanned refinery maintenance. The refining result
for the quarter was stronger than that suggested by the Global Indicator Margin
(GIM) because of upgrading capacity in our refining portfolio and the benefits
from supply optimization. Marketing margins decreased relative to the previous
quarter and the equivalent quarter a year ago because rises in crude and product
prices more than offset the increase in selling prices.
Included in the result for the quarter was a non-operating charge of $206
million in relation to new, and revisions to existing, environmental and other
provisions. The equivalent charge in the third quarter of 2003 was $369 million.
In addition, in the third quarter of 2003 there was a non-operating charge of
$72 million in relation to Veba integration costs. Also included in the result
is an exceptional charge of $17 million. The corresponding quarter in 2003
contained an exceptional charge of $21 million.
The improvement in the nine months result compared with a year ago was
attributable to the stronger refining margins, with overall marketing margins
lower due to factors outlined above.
Refining throughputs for the quarter were 3,005 mb/d, some 81 mb/d lower than in
the third quarter of 2003, due principally to the disposal of BP's interests in
the Singapore Refining Company Private Limited and the closure of refining
operations at the ATAS Refinery in Mersin, south eastern Turkey. The
throughputs were similar to those in the previous quarter with the impacts
described above being offset by relatively lower turnaround activity. The
quarter's refining availability was 94.9%. Marketing sales were 4,081 mb/d, a
similar level to both the previous quarter and the equivalent quarter a year
ago.
During the quarter BP Japan and Petrolub International announced an agreement to
merge their automotive lubricant businesses and create a new company called BP
Castrol KK.
The disposal of BP's Retail and LPG Business in the Singapore retail network and
related assets was completed on 30 September.
Customer Facing Segments
Petrochemicals
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
84 208 188 before interest and tax 371 527
- - - Acquisition amortization - -
----------------------- -------------
Pro forma replacement cost result
84 208 188 before interest and tax 371 527
======================= =============
Results include:
- - - Asset write-downs/impairment - -
(20) - (58) Environmental and other provisions (58) (20)
Restructuring, integration and
- - - rationalization costs - 5
(36) - - Other - (36)
----------------------- -------------
(56) - (58) Total non-operating items (58) (51)
13 6 (38) Exceptional items (186) 22
======================= =============
Total non-operating and
(43) 6 (96) exceptional items (244) (29)
======================= =============
109 129 139(b)Chemicals Indicator Margin(a)($/te) 131(b) 113
======================= =============
Petrochemicals production (kte)
771 856 728 UK 2,424 2,354
2,724 2,726 2,724 Rest of Europe 8,178 8,168
2,507 2,514 2,600 USA 7,657 7,399
1,038 1,075 1,097 Rest of World 3,304 2,869
----------------------- --------------
7,040 7,171 7,149 Total production 21,563 20,790
======================= ==============
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected
by Nexant in their quarterly market analyses, then weighted based on
BP's product portfolio. It does not cover our entire portfolio of
products, and consequently is only indicative of the margins achieved by
BP in any particular period.
(b) Provisional. The data for the third 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 third quarter was $188 million, an increase of $104 million compared with
the third quarter last year as higher margins more than offset higher net
non-operating and exceptional charges. The result for the nine months was 30%
lower than a year ago reflecting higher non-operating costs and exceptional
charges. The third quarter result was down from $208 million in the second
quarter, due to higher margins and lower fixed costs being more than offset by
revisions to environmental and other provisions of $58 million and an
exceptional charge of $38 million arising from the sale of our Fabrics and
Fibres business.
Production of 7,149 thousand tonnes in the third quarter was 109 thousand tonnes
higher than the third quarter last year due primarily to higher asset
utilization. Year-to-date production was 773 thousand tonnes higher than a year
ago due to new Asian PTA capacity and higher asset utilization. Production in
the third quarter was down 22 thousand tonnes compared with the second quarter
due to UK maintenance activity, which more than offset increased volumes in
other regions.
During the quarter we have progressed with plans to consolidate the Olefins and
Derivatives (O&D) business into a stand-alone entity able to operate separately
from the BP Group. Shortly after the quarter we reached agreement to sell the
Fabrics and Fibres business, for which completion is expected during the fourth
quarter.
Customer Facing Segments
Gas, Power and Renewables
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
====================== ==============
Replacement cost profit
127 216 130 before interest and tax 544 484
- - - Acquisition amortization - -
---------------------- --------------
Pro forma replacement cost result
127 216 130 before interest and tax 544 484
====================== ==============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
- - - Other - -
---------------------- --------------
- - - Total non-operating items - -
(2) - 16 Exceptional items 16 4
====================== ==============
Total non-operating and
(2) - 16 exceptional items 16 4
====================== ==============
Gas sales volumes (mmcf/d)
2,174 2,495 1,893 UK 2,471 2,653
362 266 485 Rest of Europe 398 418
11,808 12,470 13,585 USA 13,228 11,328
11,133 12,070 13,250 Rest of World 13,078 11,173
---------------------- --------------
25,477 27,301 29,213 Total gas sales volumes 29,175 25,572
======================= ==============
NGL sales volumes (mb/d)
3 8 9 UK 7 3
- 3 7 Rest of Europe 4 -
346 334 358 USA 384 305
187 166 161 Rest of World 190 195
----------------------- --------------
536 511 535 Total NGL sales volumes 585 503
======================= ==============
The pro forma replacement cost result before interest and tax for the third
quarter and nine months was $130 million and $544 million, respectively,
compared with $127 million and $484 million a year ago. The increase in the
third quarter result reflects improved margins in the NGL and Solar businesses
and higher exceptional gains from the disposal of BP's interest in an NGL plant
in Canada, offset partly by weaker gas marketing and trading margins. The result
for the nine months is higher than a year ago due principally to higher
contributions from the NGL and Solar businesses and a higher exceptional gain
more than offsetting the weaker margins seen in gas marketing and trading.
During the quarter, the Tangguh LNG project (BP share 37.16%) signed a sale and
purchase agreement with K Power of South Korea to supply up to 0.8 million
tonnes of LNG per annum for 20 years starting in 2006. BP Shipping announced an
order for four new LNG carriers from Hyundai Heavy Industries of South Korea for
delivery in 2007 and 2008. Since the end of the third quarter, the Tangguh LNG
project has signed a sale and purchase agreement with Sempra Energy LNG to
supply up to 3.7 million tonnes of LNG per annum from Indonesia to markets in
Mexico and the US for 20 years, beginning in 2008.
Other Businesses and Corporate
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
====================== =============
Replacement cost profit (loss)
(330) (164) (424) before interest and tax 541 (649)
- - - Acquisition amortization - -
---------------------- -------------
Pro forma replacement cost result
(330) (164) (424) before interest and tax 541 (649)
====================== =============
Results include:
- - - Asset write-downs/impairment - -
(112) - (225) Environmental and other provisions (225) (112)
Restructuring, integration and
- - (19) rationalization costs (19) -
- - - Other - -
---------------------- --------------
(112) - (244) Total non-operating items (244) (112)
(14) (1) 1 Exceptional items 1,313 (20)
====================== ==============
Total non-operating
(126) (1) (243) and exceptional items 1,069 (132)
====================== ==============
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The third quarter
result includes a charge of $225 million in respect of new, and revisions to
existing, environmental and other provisions and a charge of $19 million in
respect of the separation of the Olefins and Derivatives business. In the first
quarter, BP sold its interest in PetroChina for $1.65 billion and its interest
in Sinopec for $0.7 billion. These interests were previously included in other
businesses and corporate.
Dividends
3Q 2Q 3Q Nine Months
2003 2004 2004 2004 2003
====================== ==============
Dividends per ordinary share
6.50 7.10 7.10 cents 20.95 19.25
3.857 3.860 3.910 pence 11.577 11.843
39.0 42.6 42.6 Dividends per ADS (cents) 125.7 115.5
----------------------- --------------
BP today announced a third quarterly dividend for 2004 of 7.10 cents per
ordinary share. Holders of ordinary shares will receive 3.910 pence per share
and holders of American Depositary Receipts (ADRs) $0.426 per ADS share. The
dividend is payable on 6 December to shareholders on the register on 12
November. 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 6 December. The fourth quarter 2004 results and dividend will be
announced on 8 February 2005.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
'The world economy's expansion has continued, despite patches of softer
growth in the US and Europe. Activity in the US appears to have
strengthened in the third quarter although the recovery across the major
European economies remains below trend on average and growth in parts of
Asia, including China, appears to have moderated. Continued growth is
expected across the world economy at around trend rates.
'Oil prices averaged $41.54 per barrel (Dated Brent) in the third quarter
- over $6 per barrel higher than second quarter prices. Loss of US
production following Hurricane Ivan, along with low inventories and
limited spare capacity, propelled prices to record nominal highs in
October, averaging almost $50 per barrel to date. Price spreads between
light, sweet and heavier, sourer crudes also touched record highs
recently. The outlook for the rest of 2004 will depend upon the rate of
US production recovery after Hurricane Ivan and the strength of oil
demand growth. Medium term oil price prospects will principally depend on
the future strength of supply, demand growth, OPEC politics and
perceptions of risks to political stability in certain of those nations.
Oil prices are considered to have an approximate support level of $30 per
barrel for at least the medium term, with chances of spiking above this
level.
'US natural gas prices averaged $5.75/mmbtu (Henry Hub first of month
index) in the third quarter, despite the oil price surge, down around
$0.25/mmbtu versus the second quarter. Following a cool summer, working
gas inventories are at record highs going into the winter heating season.
However, the 12-month futures strip (NYMEX Henry Hub) is trading
currently at almost $8/mmbtu, reflecting oil price strength.
'Refining margins in the third quarter slipped from the second quarter's
record levels but remained high by historical standards. Strong demand
growth, record refinery throughputs and low aggregate OECD product
inventories continued to underpin the refining environment. Margins
began the fourth quarter strongly amid concerns over winter heating oil
supplies in Europe and lost refinery production due to Hurricane Ivan.
The premium for light crude over heavy crude has been driven to
exceptional levels, favouring upgraded refineries over less complex
sites. The refining system should adjust, but this will take time.
Marketing margins compressed in the third quarter due to increasing crude
prices, product cost volatility and competitive pressure.
'Petrochemical margins held during the third quarter as product prices
continued to strengthen, enabling the businesses to offset rapidly rising
feedstock and energy costs. Current margins appear sustainable, although
energy price volatility and foreign exchange rates are expected to
influence future margins. Demand remained robust during the quarter, with
sales volumes stable compared with the previous quarter.
'Capital expenditure, excluding acquisitions, for the nine months was
$9.8 billion, and is expected to be slightly above $14 billion for the
year. 2005 capital spending is expected to be around $14 billion, above
our previous forecast primarily due to the weak US dollar and the
assumption that recent sector specific inflationary pressure in the
market price of capital goods is sustained through 2005. The share
buyback programme is continuing, reducing the number of shares
outstanding thus increasing our ability to accelerate per share dividend
growth.'
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under 'Outlook',
contains forward looking statements particularly those regarding BP's
asset portfolio and changes in it, capital expenditure, costs, demand,
divestments, future performance, growth and other trend projections,
impact of foreign exchange rates, maintenance, margins, prices,
production, share repurchases and the timing of projects and pending
transactions. Forward looking statements by their nature involve risks
and uncertainties and actual results may differ from those expressed in
such statements depending on a variety of factors including the
following: the timing of bringing new fields on stream; industry
product supply; demand and pricing; currency exchange rates;
operational problems; general economic conditions including
inflationary pressures; political stability and economic growth in
relevant areas of the world; changes in governmental regulations;
exchange rate fluctuations; development and use of new technology and
successful commercial relationships; the actions of competitors;
natural disasters and other changes in business conditions; prolonged
adverse weather conditions; wars and acts of terrorism or sabotage; and
other factors discussed in this Announcement. For more information you
should refer to our Annual Report and Accounts 2003 and our 2003
Annual Report on Form 20-F filed with the US Securities and Exchange
Commission.
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