3rd Quarter Results Pt 2of2

BP PLC 26 October 2004 BP p.l.c. and Subsidiaries Summarized Group Results Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 3,666 4,302 4,883 Exploration and Production 13,427 11,818 482 1,344 1,081 Refining and Marketing 3,145 1,998 84 208 188 Petrochemicals 371 527 127 216 130 Gas, Power and Renewables 544 484 (330) (164) (424) Other businesses and corporate 541 (649) ----------------------- -------------- Replacement cost profit before 4,029 5,906 5,858 interest and tax 18,028 14,178 84 462 1,027 Stock holding gains (losses)(Note 5) 2,137 (68) ----------------------- -------------- Historical cost profit before 4,113 6,368 6,885 interest and tax 20,165 14,110 159 145 156 Interest expense (Note 6) 453 484 139 76 79 Other finance expense (Note 7) 231 395 ----------------------- -------------- 3,815 6,147 6,650 Profit before taxation 19,481 13,231 1,428 2,199 2,109 Taxation (Note 8) 6,130 4,954 ----------------------- -------------- 2,387 3,948 4,541 Profit after taxation 13,351 8,277 43 52 58 Minority shareholders' interest 154 129 ----------------------- -------------- 2,344 3,896 4,483 Profit for the period 13,197 8,148 ----------------------- -------------- 1,438 1,536 1,530 Distribution to shareholders 4,549 4,258 ======================= ============== Earnings per ordinary share - cents 10.62 17.80 20.67 Basic 60.28 36.71 10.51 17.43 20.41 Diluted 59.18 36.51 ======================= ============== Replacement Cost Results Historical cost profit 2,344 3,896 4,483 for the period 13,197 8,148 Stock holding (gains) losses net of minority shareholders' (84) (462) (1,027) interest (2,137) 68 ----------------------- -------------- Replacement cost profit 2,260 3,434 3,456 for the period 11,060 8,216 ----------------------- -------------- Earnings per ordinary share - cents On replacement cost profit 10.25 15.68 15.96 for the period 50.52 37.02 ======================= ============= Summarized Group Balance Sheet 30 September 31 December 2004 2003 ===================== $ million Fixed assets Intangible assets 12,741 13,642 Tangible assets 91,917 91,911 Investments 18,829 17,458 --------------------- 123,487 123,011 --------------------- Current assets Stocks 15,087 11,617 Debtors 39,703 33,902 Investments 245 185 Cash at bank and in hand 1,576 1,947 --------------------- 56,611 47,651 Creditors - amounts falling due within one year Finance debt 7,665 9,456 Other creditors 48,324 41,128 --------------------- Net current assets (liabilities) 622 (2,933) --------------------- Total assets less current liabilities 124,109 120,078 Creditors - amounts falling due after more than one year Finance debt 12,780 12,869 Other creditors 4,475 6,090 Provisions for liabilities and charges Deferred taxation 14,970 14,371 Other provisions 9,270 8,815 --------------------- Net assets excluding pensions and other post-retirement benefit balances 82,614 77,933 Defined benefit pension plan surplus 1,292 1,021 Defined benefit pension plan and other post-retirement benefit plan deficits (7,682) (7,510) --------------------- Net assets 76,224 71,444 Minority shareholders' interest - equity 1,283 1,125 --------------------- BP shareholders' interest 74,941 70,319 ===================== Movement in BP shareholders' interest: $ million At 31 December 2003 75,938 Prior year adjustment - change in accounting policy (see Note 1) (5,619) ------ As restated 70,319 Profit for the period 13,197 Distribution to shareholders (4,549) Currency translation differences (net of tax) (152) Issue of ordinary share capital for employee share schemes 379 Issue of ordinary share capital for TNK-BP acquisition 1,250 Net purchase of shares by ESOP trusts (4) Repurchase of ordinary share capital (5,499) ------ At 30 September 2004 74,941 ====== Summarized Group Cash Flow Statement Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Net cash inflow from 4,891 6,917 6,919 operating activities (a) 21,510 18,198 ----------------------- --------------- 39 7 1,061 Dividends from joint ventures 1,246 80 ----------------------- --------------- Dividends from 65 97 69 associated undertakings 197 297 ----------------------- --------------- Servicing of finance and returns on investments 41 45 50 Interest received 136 124 (163) (154) (152) Interest paid (471) (816) 26 18 6 Dividends received 36 74 Dividends paid to (4) (8) (15) minority shareholders (25) (17) ----------------------- --------------- Net cash outflow from servicing of (100) (99) (111) finance and returns on investments (324) (635) ----------------------- --------------- Taxation (264) (388) (299) UK corporation tax (1,009) (856) (539) (1,231) (1,489) Overseas tax (2,978) (2,432) ----------------------- --------------- (803) (1,619) (1,788) Tax paid (3,987) (3,288) ----------------------- --------------- Capital expenditure and financial investment (3,063) (2,764) (3,251) Payments for fixed assets (8,956) (8,694) Proceeds from the sale 874 352 537 of fixed assets 3,728 4,843 ----------------------- --------------- Net cash outflow for capital expenditure and (2,189) (2,412) (2,714) financial investment (5,228) (3,851) ----------------------- -------------- Acquisitions and disposals (28) (14) - Acquisitions, net of cash acquired (14) (178) Proceeds from the sale - 305 37 of businesses 342 179 Net investment in (2,625) - 23 TNK-BP joint venture (1,250) (2,625) Net investment in - (21) (75) other joint ventures (188) (16) Investments in associated (243) (148) (171) undertakings (752) (760) ----------------------- --------------- Net cash (outflow) inflow for (2,896) 122 (186) acquisitions and disposals (1,862) (3,400) ----------------------- --------------- (1,433) (1,478) (1,536) Equity dividends paid (4,506) (4,216) ----------------------- --------------- (2,426) 1,535 1,714 Net cash inflow (outflow) 7,046 3,185 ======================= =============== (1,471) 2,155 1,617 Financing (b) 7,370 3,483 76 (153) 73 Management of liquid resources 58 182 (1,031) (467) 24 (Decrease) increase in cash (382) (480) ----------------------- --------------- (2,426) 1,535 1,714 7,046 3,185 ======================= =============== Analysis of Cash Flow Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million (a) Reconciliation of historical cost profit before interest and tax to net cash inflow from operating activities Historical cost profit before 4,113 6,368 6,885 interest and tax 20,165 14,110 2,485 2,738 2,648 Depreciation and amounts provided 8,200 7,847 Exploration expenditure 75 22 34 written off 123 168 Net operating charge for pensions and other post-retirement (525) (34) 39 benefits, less contributions (18) (723) Share of profits of joint ventures (433) (868) (1,117) and associated undertakings (2,626) (944) (72) (74) (49) Interest and other income (187) (220) (Profit) loss on sale of fixed (172) 127 15 assets and businesses (1,088) (846) 583 50 630 Charge for provisions 747 641 (187) (95) (168) Utilization of provisions (418) (512) (1,048) (1,412) (2,573) (Increase) decrease in stocks (3,738) (479) (35) (1,400) (3,395) (Increase) decrease in debtors (6,381) (3,417) 107 1,495 3,970 Increase (decrease) in creditors 6,731 2,573 ----------------------- --------------- Net cash inflow from 4,891 6,917 6,919 operating activities 21,510 18,198 ======================= =============== (b) Financing (1,433) (430) (717) Long-term borrowing (1,775) (2,656) 1,774 434 13 Repayments of long-term borrowing 1,283 2,784 (1,924) (111) (338) Short-term borrowing (605) (2,968) Repayments of short-term 143 314 479 borrowing 3,201 4,430 ----------------------- --------------- (1,440) 207 (563) 2,104 1,590 Issue of ordinary share capital (31) (96) (157) for employee share schemes (379) (112) - 44 87 Purchase of shares by ESOP trusts 146 6 Repurchase of ordinary - 2,000 2,250 share capital 5,499 1,999 ----------------------- --------------- Net cash outflow (1,471) 2,155 1,617 (inflow) from financing 7,370 3,483 ======================= =============== Adjusted Operating Cash Flow Net cash inflow from operating 4,891 6,917 6,919 activities (a) 21,510 18,198 Dividends received from 39 7 1,061 joint ventures 1,246 80 Dividends received from 65 97 69 associated undertakings 197 297 Net cash outflow from servicing of finance and returns on (100) (99) (111) investments (324) (635) ----------------------- --------------- Adjusted operating cash 4,895 6,922 7,938 flow (pre-tax) 22,629 17,940 (799) (1,647) (1,821) Tax paid on operations* (4,118) (3,081) ----------------------- --------------- Adjusted operating cash 4,096 5,275 6,117 flow (post-tax) 18,511 14,859 ----------------------- --------------- * Components of tax payments (799) (1,647) (1,821) Tax paid on operations (4,118) (3,081) Tax refunded/(paid) on (4) 28 33 exceptional items (b) 131 (207) ----------------------- --------------- (803) (1,619) (1,788) Total tax paid (3,987) (3,288) ======================= =============== (a) Includes pre-tax discretionary pension funding of $83 million in 3Q 2004 ($55 million post-tax), $249 million in nine months 2004 ($171 million post-tax), $612 million in 3Q 2003 ($386 million post-tax) and $947 million in nine months 2003 ($600 million post-tax). (b) Deemed to be the tax credit/(charge) on exceptional items in the income statement. Capital Expenditure and Acquisitions Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 181 211 191 UK 555 597 80 45 68 Rest of Europe 161 204 989 1,027 1,035 USA 2,994 2,957 6,973 1,022 1,150 Rest of World (a) 4,862 9,017 ----------------------- ------------- 8,223 2,305 2,444 8,572 12,775 ----------------------- ------------- Refining and Marketing 89 82 100 UK 259 228 169 173 159 Rest of Europe 424 337 322 330 291 USA 879 886 79 55 59 Rest of World 151 130 ----------------------- ------------- 659 640 609 1,713 1,581 ----------------------- ------------- Petrochemicals 51 22 66 UK 108 81 16 53 69 Rest of Europe 160 68 55 68 72 USA 187 161 60 38 25 Rest of World 124 166 ----------------------- ------------- 182 181 232 579 476 ----------------------- ------------- Gas, Power and Renewables 16 5 6 UK 12 48 6 3 2 Rest of Europe 7 30 18 14 14 USA 39 111 45 60 43 Rest of World 150 109 ----------------------- ------------- 85 82 65 208 298 ----------------------- ------------- Other businesses and corporate 40 13 51 UK 66 79 - - - Rest of Europe - 1 19 13 11 USA 33 191 - - - Rest of World - 1 ----------------------- ------------- 59 26 62 99 272 ----------------------- ------------- 9,208 3,234 3,412 11,171 15,402 ======================= ============= By geographical area 377 333 414 UK 1,000 1,033 271 274 298 Rest of Europe 752 640 1,403 1,452 1,423 USA 4,132 4,306 7,157 1,175 1,277 Rest of World (a) 5,287 9,423 ----------------------- ------------- 9,208 3,234 3,412 11,171 15,402 ----------------------- ------------- (a) Nine months 2004 included $1,354 million investment in TNK's interest in Slavneft within TNK-BP. Third quarter and nine months 2003 included the investment in the TNK-BP joint venture. Exchange rates US dollar/sterling average rate 1.61 1.81 1.82 for the period 1.82 1.61 1.66 1.81 1.80 US dollar/sterling period-end rate 1.80 1.66 US dollar/euro average rate 1.13 1.20 1.22 for the period 1.23 1.11 1.15 1.21 1.23 US dollar/euro period-end rate 1.23 1.15 ======================= ============= Analysis of Replacement Cost Profit Before Interest and Tax Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 672 835 745 UK 2,403 2,743 95 206 246 Rest of Europe 615 433 1,352 1,503 1,566 USA 4,563 4,384 1,547 1,758 2,326 Rest of World 5,846 4,258 ----------------------- ------------- 3,666 4,302 4,883 13,427 11,818 ----------------------- ------------- Refining and Marketing (160) (195) (152) UK (536) (320) 355 444 533 Rest of Europe 1,266 1,215 92 872 536 USA 1,817 574 195 223 164 Rest of World 598 529 ----------------------- ------------- 482 1,344 1,081 3,145 1,998 ----------------------- ------------- Petrochemicals (132) (62) (107) UK (325) (260) 93 183 130 Rest of Europe 467 442 63 3 30 USA (76) 199 60 84 135 Rest of World 305 146 ----------------------- ------------- 84 208 188 371 527 ----------------------- ------------- Gas, Power and Renewables 15 (2) (46) UK (36) 36 (12) (3) (9) Rest of Europe (23) (26) 78 114 139 USA 332 261 46 107 46 Rest of World 271 213 ----------------------- ------------- 127 216 130 544 484 ----------------------- ------------- Other businesses and corporate (108) (50) (147) UK (360) (350) 3 (1) 21 Rest of Europe 14 (7) (237) (109) (268) USA (407) (361) 12 (4) (30) Rest of World 1,294 69 ----------------------- ------------- (330) (164) (424) 541 (649) ----------------------- ------------- 4,029 5,906 5,858 18,028 14,178 ======================= ============= By geographical area 287 526 293 UK 1,146 1,849 534 829 921 Rest of Europe 2,339 2,057 1,348 2,383 2,003 USA 6,229 5,057 1,860 2,168 2,641 Rest of World 8,314 5,215 ----------------------- ------------- 4,029 5,906 5,858 18,028 14,178 ======================= ============= Included above: Share of profits of joint 303 734 942 ventures 2,161 521 128 130 165 Share of profits of associated undertakings 436 418 ----------------------- ------------- 431 864 1,107 2,597 939 ======================= ============= Pro Forma Result: Replacement Cost Profit Before Interest and Tax Adjusted for Acquisition Amortization Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 704 867 775 UK 2,500 2,842 95 206 246 Rest of Europe 615 433 1,592 1,713 1,785 USA 5,206 5,140 1,568 1,772 2,338 Rest of World 5,949 4,543 ----------------------- ------------- 3,959 4,558 5,144 14,270 12,958 ----------------------- ------------- Refining and Marketing (50) (72) (27) UK (162) 10 355 444 533 Rest of Europe 1,266 1,215 187 967 631 USA 2,102 859 195 223 164 Rest of World 598 529 ----------------------- ------------- 687 1,562 1,301 3,804 2,613 ----------------------- ------------- Petrochemicals (132) (62) (107) UK (325) (260) 93 183 130 Rest of Europe 467 442 63 3 30 USA (76) 199 60 84 135 Rest of World 305 146 ----------------------- ------------- 84 208 188 371 527 ----------------------- ------------- Gas, Power and Renewables 15 (2) (46) UK (36) 36 (12) (3) (9) Rest of Europe (23) (26) 78 114 139 USA 332 261 46 107 46 Rest of World 271 213 ----------------------- ------------- 127 216 130 544 484 ----------------------- ------------- Other businesses and corporate (108) (50) (147) UK (360) (350) 3 (1) 21 Rest of Europe 14 (7) (237) (109) (268) USA (407) (361) 12 (4) (30) Rest of World 1,294 69 ----------------------- ------------- (330) (164) (424) 541 (649) ----------------------- ------------- 4,527 6,380 6,339 19,530 15,933 ----------------------- ------------- By geographical area 429 681 448 UK 1,617 2,278 534 829 921 Rest of Europe 2,339 2,057 1,683 2,688 2,317 USA 7,157 6,098 1,881 2,182 2,653 Rest of World 8,417 5,500 ----------------------- ------------- 4,527 6,380 6,339 19,530 15,933 ======================= ============= Analysis of Exceptional Items Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 147 (2) (3) UK (6) 724 (31) - (1) Rest of Europe (1) (31) (21) 43 13 USA 37 (250) 101 (155) 14 Rest of World 90 519 ----------------------- ------------- 196 (114) 23 120 962 ----------------------- ------------- Refining and Marketing 14 (58) (16) UK (110) (32) (34) - (25) Rest of Europe (42) (62) (3) 7 16 USA 18 (29) 2 33 8 Rest of World (41) 1 ----------------------- ------------- (21) (18) (17) (175) (122) ----------------------- ------------- Petrochemicals - 3 10 UK 6 3 - 73 (56) Rest of Europe (2) (1) 12 (70) (3) USA (199) 16 1 - 11 Rest of World 9 4 ----------------------- ------------- 13 6 (38) (186) 22 ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - (5) - - USA - 4 3 - 16 Rest of World 16 - ----------------------- ------------- (2) - 16 16 4 ----------------------- ------------- Other businesses and corporate 7 1 1 UK 1 (3) - (1) 1 Rest of Europe - (1) (21) - (1) USA (1) (16) - (1) - Rest of World 1,313 - ----------------------- ------------- (14) (1) 1 1,313 (20) ----------------------- ------------- Profit (loss) on sale of fixed assets and businesses or termination 172 (127) (15) of operations 1,088 846 (4) 28 33 Taxation credit (charge) 131 (207) ----------------------- ------------- 168 (99) 18 Exceptional items after taxation 1,219 639 ======================= ============= Identified Non-operating Items and UPIS Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production - - - UK - (65) - - - Rest of Europe - - 15 (247) (77) USA (a) (390) (85) - - (60) Rest of World (183) (5) ----------------------- ------------- 15 (247) (137) (573) (155) ----------------------- ------------- Refining and Marketing - - (9) UK (9) - (72) - (20) Rest of Europe (20) (131) (369) - (159) USA (159) (369) - - (18) Rest of World (18) - ----------------------- ------------- (441) - (206) (206) (500) ----------------------- ------------- Petrochemicals (36) - (34) UK (34) (36) - - - Rest of Europe - - (20) - (24) USA (24) (15) - - - Rest of World - - ----------------------- ------------- (56) - (58) (58) (51) ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- Other businesses and corporate - - (21) UK (21) - - - - Rest of Europe - - (112) - (223) USA (223) (112) - - - Rest of World - - ----------------------- ------------- (112) - (244) (244) (112) ----------------------- ------------- (594) (247) (645) Total before taxation (1,081) (818) 209 88 226 Taxation credit (charge) 380 416 ----------------------- ------------- (385) (159) (419) Total after taxation (701) (402) ======================= ============= (a) Includes charges for Unrealized Profit in Stock (UPIS) of $95 million in 3Q 2004 and $248 million in the nine months of 2004 and a credit of $15 million in 3Q 2003 and a charge of $4 million in the nine months of 2003, which removes the upstream margin from downstream inventories. Acquisition Amortization by Business Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 32 32 30 UK 97 99 240 210 219 USA 643 756 21 14 12 Rest of World 103 285 ----------------------- ------------- 293 256 261 843 1,140 ----------------------- ------------- Refining and Marketing 110 123 125 UK 374 330 95 95 95 USA 285 285 ----------------------- ------------- 205 218 220 659 615 ----------------------- ------------- 498 474 481 Total acquisition amortization 1,502 1,755 ======================= ============= Production and Realizations Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== Production Crude oil (mb/d) (net of royalties) 312 321 281 UK 315 359 74 80 68 Rest of Europe 74 81 558 541 495 USA 533 578 908 1,379 1,454 Rest of World 1,398 780 ----------------------- ------------- 1,852 2,321 2,298 Total crude oil production 2,320 1,798 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 23 21 13 UK 18 24 5 5 3 Rest of Europe 4 5 141 140 134 USA 138 150 33 31 31 Rest of World 30 32 ----------------------- ------------- Total natural gas 202 197 181 liquids production 190 211 ======================= ============= Liquids (a)(mb/d) (net of royalties) 335 342 294 UK 333 383 79 85 71 Rest of Europe 78 86 699 681 629 USA 671 728 941 1,410 1,485 Rest of World 1,428 812 ----------------------- ------------- 2,054 2,518 2,479 Total liquids production 2,510 2,009 ======================= ============= Natural gas (b) (mmcf/d) (net of royalties) 1,267 1,213 903 UK 1,156 1,489 98 136 110 Rest of Europe 129 111 3,005 2,790 2,685 USA 2,781 3,194 4,031 4,286 4,577 Rest of World 4,367 3,823 ----------------------- ------------- 8,401 8,425 8,275 Total natural gas production 8,433 8,617 ======================= ============= Average realizations Crude oil ($/bbl) 27.68 33.99 40.33 UK 34.21 28.33 28.61 35.82 39.52 USA 35.87 29.19 26.30 32.64 38.01 Rest of World 33.83 26.69 27.72 34.47 39.43 BP Average 34.93 28.25 ======================= ============= Natural gas liquids ($/bbl) 22.62 28.30 34.29 UK 28.84 20.09 18.37 23.13 27.59 USA 24.31 18.15 21.76 22.17 30.63 Rest of World 25.81 21.65 19.39 23.71 28.77 BP Average 25.13 18.96 ======================= ============= Liquids (a) ($/bbl) 27.34 33.64 40.06 UK 33.92 27.83 26.90 33.67 37.46 USA 33.96 27.34 25.98 31.90 37.53 Rest of World 33.30 26.35 26.79 33.27 38.29 BP Average 33.89 27.24 ======================= ============= Natural gas ($/mcf) 2.69 3.59 3.60 UK 4.03 2.99 4.14 5.11 4.94 USA 4.92 4.66 2.31 2.54 2.71 Rest of World 2.64 2.51 3.08 3.68 3.66 BP Average 3.71 3.46 ======================= ============= (a) Crude oil and natural gas liquids. (b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. Reconciliation of Historical Cost Profit (Loss) to Pro Forma Result Reported Acquisition Pro forma $ million earnings amortization result ====================================== 2Q 2004 Exploration and Production 4,302 256 4,558 Refining and Marketing 1,344 218 1,562 Petrochemicals 208 - 208 Gas, Power and Renewables 216 - 216 Other businesses and corporate (164) - (164) -------------------------------------- RC profit before interest and tax 5,906 474 6,380 Interest and other finance expense (221) - (221) Taxation (2,199) - (2,199) MSI (52) - (52) -------------------------------------- RC profit 3,434 474 3,908 ================= Stock holding gains (losses) 462 ----- HC profit 3,896 ===== 3Q 2003 Exploration and Production 3,666 293 3,959 Refining and Marketing 482 205 687 Petrochemicals 84 - 84 Gas, Power and Renewables 127 - 127 Other businesses and corporate (330) - (330) -------------------------------------- RC profit before interest and tax 4,029 498 4,527 Interest and other finance expense (298) - (298) Taxation (1,428) - (1,428) MSI (43) - (43) -------------------------------------- RC profit 2,260 498 2,758 ================= Stock holding gains (losses) 84 ----- HC profit 2,344 ===== Reconciliation of Historical Cost Profit (Loss) to Pro Forma Result Reported Acquisition Pro forma $ million earnings amortization result ====================================== Nine Months 2004 Exploration and Production 13,427 843 14,270 Refining and Marketing 3,145 659 3,804 Petrochemicals 371 - 371 Gas, Power and Renewables 544 - 544 Other businesses and corporate 541 - 541 -------------------------------------- RC profit before interest and tax 18,028 1,502 19,530 Interest and other finance expense (684) - (684) Taxation (6,130) - (6,130) MSI (154) - (154) -------------------------------------- RC profit 11,060 1,502 12,562 ================= Stock holding gains (losses) 2,137 ------ HC profit 13,197 ====== Nine Months 2003 Exploration and Production 11,818 1,140 12,958 Refining and Marketing 1,998 615 2,613 Petrochemicals 527 - 527 Gas, Power and Renewables 484 - 484 Other businesses and corporate (649) - (649) -------------------------------------- RC profit before interest and tax 14,178 1,755 15,933 Interest and other finance expense (879) - (879) Taxation (4,954) - (4,954) MSI (129) - (129) -------------------------------------- RC profit 8,216 1,755 9,971 ================= Stock holding gains (losses) (68) ----- HC profit 8,148 ===== Return on Average Capital Employed Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost basis 2,260 3,434 3,456 RC profit for the period (a) 11,060 8,216 82 62 67 Interest (b) 193 259 43 52 58 Minority shareholders' interest 154 129 ----------------------- -------------- 2,385 3,548 3,581 Adjusted RC profit 11,407 8,604 ======================= ============== 86,886 93,928 95,289 Average capital employed 95,219 87,200 11.0% 15.1% 15.0% ROACE - replacement cost basis 16.0% 13.2% ----------------------- -------------- Pro forma basis 2,385 3,548 3,581 Adjusted RC profit (a) 11,407 8,604 498 474 481 Acquisition amortization 1,502 1,755 ----------------------- -------------- Adjusted RC profit - 2,883 4,022 4,062 pro forma basis 12,909 10,359 ======================= ============== 86,886 93,928 95,289 Average capital employed 95,219 87,200 Average capital employed 14,110 12,689 12,156 acquisition adjustment 12,614 15,211 ----------------------- -------------- Average capital employed 72,776 81,239 83,133 (pro forma basis) 82,605 71,989 15.8% 19.8% 19.5% ROACE - Pro forma basis 20.8% 19.2% ----------------------- ------------- Historical cost basis 2,344 3,896 4,483 Profit for the period (a) 13,197 8,148 82 62 67 Interest (b) 193 259 43 52 58 Minority shareholders' interest 154 129 ----------------------- -------------- 2,469 4,010 4,608 Adjusted historical cost profit 13,544 8,536 ======================= ============== 86,886 93,928 95,289 Average capital employed 95,219 87,200 11.4% 17.1% 19.3% ROACE - historical cost basis 19.0% 13.1% (a) 3Q 2004 includes $18 million in respect of exceptional items and $(419) million in respect of non-operating items and UPIS. Nine months 2004 includes $1,219 million in respect of exceptional items and $(701) million in respect of non-operating items and UPIS. 3Q 2003 includes $168 million in respect of exceptional items and $(385) million in respect of non-operating items and UPIS. Nine months 2003 includes $639 million in respect of exceptional items and $(402) million in respect of non-operating items and UPIS. (b) Excludes interest on joint venture and associated undertakings' debt and is on a post-tax basis using a deemed tax rate equal to the US statutory tax rate. Pre-Tax Cash Returns Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost profit before 4,029 5,906 5,858 interest and tax 18,028 14,178 (172) 127 15 Exceptional items (1,088) (846) ----------------------- -------------- 3,857 6,033 5,873 Replacement cost operating profit 16,940 13,332 498 474 481 Acquisition amortization 1,502 1,755 ----------------------- -------------- Pro forma replacement cost 4,355 6,507 6,354 operating profit 18,442 15,087 609 160 550 Non-operating items 833 814 Pro forma DD&A, adjusted for non- 1,987 2,104 2,160 cash non-operating items 6,408 6,043 ----------------------- -------------- 6,951 8,771 9,064 Cash returns numerator 25,683 21,944 ======================= ============== 88,106 93,908 96,669 Capital employed 96,669 88,106 Liabilities for current and 16,149 17,461 17,531 deferred taxation 17,531 16,149 ----------------------- -------------- 104,255 111,369 114,200 Operating capital employed 114,200 104,255 (13,751)(12,447)(11,865) Acquisition adjustment (11,865)(13,751) ----------------------- -------------- 90,504 98,922 102,335 Cash returns denominator 102,335 90,504 ======================= ============== 88,626 98,573 100,629 Average cash returns denominator 99,405 87,169 ======================= ============== 31% 36% 36% Cash return 34% 34% Net Debt Ratio - Net Debt: Net Debt + Equity Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 19,970 19,858 20,445 Gross debt 20,445 19,970 1,495 1,703 1,821 Cash and current asset investments 1,821 1,495 ----------------------- -------------- 18,475 18,155 18,624 Net debt 18,624 18,475 ======================= ============== 68,136 74,124 76,224 Equity 76,224 68,136 21% 20% 20% Net debt ratio 20% 21% ----------------------- -------------- 13,751 12,447 11,865 Acquisition adjustment 11,865 13,751 ----------------------- -------------- 25% 23% 22% Net debt ratio - pro forma basis 22% 25% ======================= ============== Notes 1. Restatement of comparative information Comparative information for 2003 has been restated to reflect the changes described below. (a) Transfer of natural gas liquids activities With effect from 1 January 2004 natural gas liquids (NGLs) activities have been transferred from the Exploration and Production segment to Gas, Power and Renewables. (b) New accounting standard for pensions and other post-retirement benefits With effect from 1 January 2004 BP has adopted Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17). FRS 17 requires that financial statements reflect at fair value the assets and liabilities arising from an employer's retirement benefit obligations and any related funding. The operating costs of providing retirement benefits are recognized in the period in which they are earned together with any related finance costs and changes in the value of related assets and liabilities. This contrasts with Statement of Standard Accounting Practice No. 24 'Accounting for Pension Costs', which requires the cost of providing pensions to be recognized on a systematic and rational basis over the period during which the employer benefits from the employee's services. The difference between the amount charged in the income statement and the amount paid as contributions into the pension fund is shown as a prepayment or provision on the balance sheet. (c) Accounting for Employee Share Ownership Plans With effect from 1 January 2004 BP has adopted Urgent Issues Task Force Abstract No. 38 'Accounting for ESOP Trusts'. This abstract requires that BP shares held by the group for the purposes of Employee Share Ownership Plans (ESOPs) are deducted from equity on the balance sheet. Such shares were previously classified as fixed asset investments. Balance sheet at 31 December 2003 Restated Reported ==================== $ million Fixed assets Intangible assets 13,642 13,642 Tangible assets 91,911 91,911 Investments 17,458 17,554 -------------------- 123,011 123,107 -------------------- Current assets 47,651 54,465 Creditors - amounts falling due within one year 50,584 50,584 ------------------- Net current assets (liabilities) (2,933) 3,881 ------------------- Total assets less current liabilities 120,078 126,988 Creditors - amounts falling due after more than one year 18,959 18,959 Provisions for liabilities and charges Deferred taxation 14,371 15,273 Other provisions 8,815 15,693 ------------------- Net assets excluding pension and other post-retirement benefit balances 77,933 77,063 Defined benefit pension plan surplus 1,021 - Defined benefit pension plan and other post-retirement benefit plan deficits (7,510) - ------------------- Net assets 71,444 77,063 Minority shareholders' interest 1,125 1,125 ------------------- BP shareholders' interest 70,319 75,938 =================== Notes Income statements Restated Reported Third Nine Third Nine Quarter Months Quarter Months 2003 2003 2003 2003 ================ ================ $ million Exploration and Production 3,666 11,818 3,716 11,961 Refining and Marketing 482 1,998 434 1,853 Petrochemicals 84 527 94 555 Gas, Power and Renewables 127 484 96 399 Other businesses and corporate (330) (649) (324) (629) ----------------------------------- Replacement cost profit before interest and tax 4,029 14,178 4,016 14,139 Stock holding gains (losses) 84 (68) 84 (68) ----------------------------------- Historical cost profit before interest and tax 4,113 14,110 4,100 14,071 Interest expense 159 484 213 624 Other finance expense 139 395 - - ----------------------------------- Profit before taxation 3,815 13,231 3,887 13,447 Taxation 1,428 4,954 1,450 5,023 ----------------------------------- Profit after taxation 2,387 8,277 2,437 8,424 Minority shareholders' interest 43 129 43 129 ----------------------------------- Profit for the period 2,344 8,148 2,394 8,295 =================================== Distribution to shareholders 1,438 4,258 1,438 4,258 ----------------------------------- Earnings per ordinary share - cents Basic 10.62 36.71 10.85 37.37 Diluted 10.51 36.51 10.74 37.18 =================================== Notes 2. Turnover Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business 7,153 8,213 8,660 Exploration and Production 25,039 23,303 38,205 45,467 45,359 Refining and Marketing 132,520 112,574 3,946 4,805 5,412 Petrochemicals 14,727 12,264 15,948 18,434 20,443 Gas, Power and Renewables 59,852 48,938 Other businesses 138 132 137 and corporate 390 378 ----------------------- --------------- 65,390 77,051 80,011 232,528 197,457 Less: sales between 7,140 7,960 9,126 businesses 24,950 22,750 ----------------------- --------------- 58,250 69,091 70,885 Group excluding JVs 207,578 174,707 Share of sales by 914 2,063 2,967 joint ventures 6,908 1,676 ----------------------- --------------- 59,164 71,154 73,852 214,486 176,383 ======================= =============== By geographical area Group excluding JVs 12,561 17,355 21,848 UK 56,499 40,854 12,476 13,332 13,876 Rest of Europe 39,249 38,294 29,119 33,541 31,435 USA 96,779 82,563 12,766 15,787 16,731 Rest of World 48,335 38,604 ----------------------- --------------- 66,922 80,015 83,890 240,862 200,315 8,672 10,924 13,005 Less: sales between areas 33,284 25,608 ----------------------- --------------- 58,250 69,091 70,885 207,578 174,707 ======================= =============== 3. Replacement cost profit Replacement cost profits reflect the current cost of supplies. The replacement cost profit for the period is arrived at by excluding from the historical cost profit stock holding gains and losses. Notes 4. Operating profits are after charging: Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration expense 11 3 4 UK 9 16 23 6 7 Rest of Europe 15 32 60 63 58 USA 218 144 42 36 66 Rest of World 137 157 ----------------------- -------------- 136 108 135 379 349 ======================= ============== Production taxes (a) 65 46 51 UK petroleum revenue tax 223 256 351 378 502 Overseas production taxes 1,279 1,046 ----------------------- -------------- 416 424 553 1,502 1,302 ======================= ============== (a) Production taxes are charged against Exploration and Production's operating profit and are not included in the charge for taxation in Note 8. 5. Stock holding gains (losses) - - 5 Exploration and Production 13 3 89 428 866 Refining and Marketing 1,823 (64) 2 40 129 Petrochemicals 290 45 (7) (6) 27 Gas, Power and Renewables 11 (52) ---------------------- -------------- 84 462 1,027 2,137 (68) ====================== ============== Notes 6. Interest expense Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 178 147 160 Group interest payable 456 528 (53) (52) (57) Capitalized (159) (130) ----------------------- -------------- 125 95 103 297 398 23 39 41 Joint ventures 121 53 11 11 12 Associated undertakings 35 33 ----------------------- -------------- 159 145 156 453 484 ======================= ============== 7. Other finance expense Interest on pension and other post-retirement benefit 460 491 502 plan liabilities 1,493 1,380 Expected return on pension and other post-retirement (375) (491) (493) benefit plan assets (1,482) (1,125) ----------------------- -------------- Interest net of expected return 85 - 9 on plan assets 11 255 Unwinding of discount 45 50 48 on provisions 146 131 Unwinding of discount on deferred consideration for acquisition of investment 9 26 22 in TNK-BP 74 9 ----------------------- -------------- 139 76 79 231 395 ======================= ============== 8. Charge for taxation 1,528 2,165 1,672 Current 5,543 4,515 (100) 34 437 Deferred 587 439 ----------------------- -------------- 1,428 2,199 2,109 6,130 4,954 ======================= ============== 245 366 601 UK 1,312 1,075 1,183 1,833 1,508 Overseas 4,818 3,879 ----------------------- -------------- 1,428 2,199 2,109 6,130 4,954 ======================= ============== Notes 9. Analysis of changes in net debt Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Opening balance 18,594 19,937 19,858 Finance debt 22,325 22,008 2,115 2,006 1,531 Less: Cash 1,947 1,520 329 328 172 Current asset investments 185 215 ----------------------- --------------- 16,150 17,603 18,155 Opening net debt 20,193 20,273 ----------------------- --------------- Closing balance 19,970 19,858 20,445 Finance debt 20,445 19,970 1,091 1,531 1,576 Less: Cash 1,576 1,091 404 172 245 Current asset investments 245 404 ----------------------- --------------- 18,475 18,155 18,624 Closing net debt 18,624 18,475 ----------------------- --------------- Decrease (increase) (2,325) (552) (469) in net debt 1,569 1,798 ======================= =============== Movement in cash/ (1,031) (467) 24 bank overdrafts (382) (480) (Decrease) increase in 76 (153) 73 current asset investments 58 182 Net cash outflow (inflow) from financing(excluding (1,440) 207 (563) share capital) 2,104 1,590 93 - - Debt transferred to TNK-BP - 93 Exchange of Exchangeable Bonds for Lukoil American - - - Depositary Shares - 420 (31) 7 10 Other movements 31 139 (12) - - Debt acquired - (12) ----------------------- -------------- Movement in net debt before (2,345) (406) (456) exchange effects 1,811 1,932 20 (146) (13) Exchange adjustments (242) (134) ----------------------- -------------- Decrease (increase) (2,325) (552) (469) in net debt 1,569 1,798 ======================= ============== Notes 10. TNK-BP Operational and Financial Information 29 Aug Second Third Nine 29 Aug 30 Sept Quarter Quarter Months 30 Sept 2003 2004 2004 2004 2003 ======================= ============== Production (Net of royalties) (BP share) 654 814 858 Crude oil (mb/d) 813 654 239 450 505 Natural gas (mmcf/d) 446 239 695 891 945 Total hydrocarbons (mboe/d)(a) 889 695 ======================= ============== $ million $ million Income statement (BP share) Replacement cost profit 158 581 807 before interest and tax 1,762 158 - - - Stock holding gains (losses) - - (13) (26) (23) Interest expense ++ (79) (13) (30) (171) (257) Taxation (543) (30) (1) (10) (6) Minority shareholders' interest (26) (1) ----------------------- -------------- 114 374 521 Net Income 1,114 114 ======================= ============== ++ Excludes unwinding of discount 9 26 22 on deferred consideration 74 9 ======================= ============== Cash Flow Additional investment in - - - TNK-BP joint venture (1,416) - Dividends related to period - - 23 prior to acquisition 166 - ----------------------- -------------- Net investment in TNK-BP - - 23 joint venture (1,250) - ======================= ============== - - 1,031 Dividends received 1,150 - ======================= ============== Third Second Third Quarter Quarter Quarter Nine Months 2003 2004 2004 2004 2003 ======================= ============== Average oil marker prices ($/bbl) 27.20 32.32 37.23 Urals (NWE - cif) 32.85 26.97 27.20 32.60 37.41 Urals (Med - cif) 33.00 27.04 16.08 19.71 23.33 Domestic Oil 20.04 9.67 ======================= ============== Balance Sheet 30 September 31 December 2004 2003 ======== ============ $ million Fixed assets - investments Gross assets 12,018 10,339 Gross liabilities (3,650) (3,290) -------- -------- 8,368 7,049 ======== ======== Deferred consideration Due within one year 1,219 1,227 Due after more than one year 1,185 2,352 -------- -------- 2,404 3,579 ======== ======== (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. BP's share of the result of the TNK-BP joint venture has been included within Exploration and Production with effect from 29 August 2003. TNK-BP operational and financial information has been estimated and includes adjustments to net income in respect of prior periods amounting to a credit of $25 million in 3Q 2004 and charges of $36 million in the nine months of 2004. Notes 11. Statutory accounts The financial information shown in this publication is unaudited and does not constitute statutory accounts. The 2003 Annual Report and Accounts have been delivered to the UK Registrar of Companies; the report of the auditors on those accounts was unqualified. Contacts London New York ------------------- ---------------- Press Office Roddy Kennedy Ian Stewart +44 (0)20 7496 4624 +1 212 451 8026 Investor Relations Fergus McLeod Rachael MacLean +44 (0)20 7496 4717 +1 212 451 8072 http://www.bp.com/investors This information is provided by RNS The company news service from the London Stock Exchange

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