4Q05 Part 1 of 2
BP PLC
07 February 2006
BP p.l.c.
Group Results
4th Quarter and Full Year 2005
London 7 February 2006
FOR IMMEDIATE RELEASE
RECORD 2005 RESULT, CASH FLOWS AND SHAREHOLDER DISTRIBUTIONS
---------------------------------------------------------------------------
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004 %
======================= ====================
3,010 6,463 3,685 Profit for the period* 22,341 17,075
Inventory holding
494 (2,053) 747 (gains) losses (3,027) (1,643)
----------------------- --------------------
3,504 4,410 4,432 Replacement cost profit 19,314 15,432 25
======================= ====================
8.71 11.86 12.15 - per ordinary share (pence) 50.23 38.64
16.23 21.04 21.34 - per ordinary share (cents) 91.41 70.71 29
0.97 1.26 1.28 - per ADS (dollar) 5.48 4.24
======================= ====================
Innovene operations have been treated as discontinued operations and
presented accordingly within this document.
o BP's fourth quarter replacement cost profit was $4,432 million compared
with $3,504 million a year ago, an increase of 26%. For the year,
replacement cost profit was $19,314 million compared with $15,432
million, up 25%.
o The fourth quarter result includes a net non-operating charge of $553
millon compared with a net non-operating charge of $1,261 million in the
fourth quarter of 2004. In addition, the fourth quarter 2005 result for
the Refining and Marketing and Gas, Power and Renewables segments
reflects significant volatility arising under IFRS fair value
accounting. Furthermore, the Refining and Marketing result includes a
significant charge in respect of planned restructuring actions. For the
year, the net non-operating charge was $1,754 million compared with a
net charge of $1,072 million for the year 2004.
o The fourth quarter trading environment was stronger than a year ago with
higher oil and gas realizations and higher refining and retail marketing
margins but with lower olefins margins.
o Net cash provided by operating activities for the quarter and year was
$4.2 billion and $26.7 billion, respectively, compared with $5.2 billion
and $23.4 billion a year ago.
o The sale of Innovene to INEOS completed on 16 December 2005.
o The ratio of net debt to net debt plus equity was 17% compared with 22%
a year ago.
o The quarterly dividend, to be paid in March, is 9.375 cents per share
($0.5625 per ADS) compared with 8.50 cents per share a year ago. For the
year, the dividend showed an increase of 21%. In sterling terms, the
quarterly dividend is 5.288 pence per share, compared with 4.522 pence
per share a year ago; for the year the increase was 24%. During the
year, the company repurchased 1,060 million of its own shares at a cost
of $11.6 billion. Notwithstanding shares issued in respect of the TNK-BP
transaction during the year, shares in issue at end 2005 were 4% lower
than a year previously.
BP Group Chief Executive, Lord Browne, said:
'BP's fourth quarter result was particularly hit by the continued
shutdown of our Texas City refinery, during its refurbishment, and
significant non-economic effects of the application of IFRS fair value
accounting. Our 2005 result was a record; this reflects the quality of
our asset base and operations. Innovene has been sold for an attractive
price and earlier than expected. Strong operating cash flows and
proceeds from disposals have enabled record distributions to
shareholders'.
* Profit attributable to BP shareholders.
Summary Quarterly Results
Exploration and Production's fourth quarter result was a record and up 38% on a
year ago. This result benefited from higher realizations, partially offset by
the hurricane impact on volumes and associated repair costs, the cost of the
Thunder Horse stability incident, and higher operating and revenue investment
costs.
The Refining and Marketing result reflects the impact of the shutdown of the
Texas City refinery for the whole quarter, due to hurricane Rita, along with
other storm related disruptions, a significant negative impact related to IFRS
fair value accounting and a significant charge in respect of rationalization and
efficiency programmes.
In Gas, Power and Renewables, the result reflects lower contributions from the
gas trading and marketing business. It also includes a positive impact related
to IFRS fair value accounting, in addition to a significant charge related to
embedded derivatives.
Finance costs and Other finance expense was $215 million for the quarter
compared with $181 million in the previous quarter. This reflects higher
interest costs partially offset by higher capitalized interest.
The consolidation adjustment, which removes the margin on sales between segments
in respect of inventory at the period end, was a credit of $234 million in the
fourth quarter, mainly reflecting the changes in supply patterns and inventory
levels due to the shutdown of the Texas City refinery.
The effective tax rate on replacement cost profit of continuing operations was
32.4%.
Capital expenditure was $4.8 billion for the quarter; there were no significant
acquisitions. Disposal proceeds were $9.2 billion, primarily from the sale of
Innovene to INEOS.
Net debt at the end of the quarter was $16.2 billion. The ratio of net debt to
net debt plus equity was 17%.
During the fourth quarter, the company repurchased 332 million of its own
shares, at a cost of $3.7 billion. These shares are held in treasury.
The commentaries above and following are based on replacement cost profit.
The financial information for 2004 has been restated to reflect the following,
all with effect from 1 January 2005: (a) the adoption by the group of
International Financial Reporting Standards (IFRS) (see Note 1); (b) the change
in accounting policy for sales and purchases (see Note 4); (c) the Mardi Gras
pipeline system has been transferred from Exploration and Production to Refining
and Marketing; (d) the aromatics and acetyls operations and the petrochemicals
assets that are integrated with our Gelsenkirchen refinery in Germany have been
transferred from the former Petrochemicals segment to Refining and Marketing;
(e) the olefins and derivatives operations have been transferred from the former
Petrochemicals segment to the Olefins and Derivatives business. The legacy
historical results of other petrochemicals assets that had been divested during
2004 and 2003 are included within Other businesses and corporate; (f) the
Grangemouth and Lavera refineries have been transferred from Refining and
Marketing to the Olefins and Derivatives business; and (g) the Hobbs
fractionator has been transferred from Gas, Power and Renewables to the Olefins
and Derivatives business. The Olefins and Derivatives business is reported
within Other businesses and corporate. This re-organisation was a precursor to
seeking to divest the Olefins and Derivatives business. As indicated in Note 3,
during 2005 we have divested Innovene and shown these activities as discontinued
operations in these accounts. Innovene represented the majority of the Olefins
and Derivatives business.
Non-operating Items
Fourth Quarter
$ million 2005
=======
Exploration and Production (979)
Refining and Marketing 50
Gas, Power and Renewables (307)
Other businesses and corporate (64)
-------
(1,300)
Taxation(a) 421
-------
Continuing operations (879)
Innovene Operations 136
Taxation(a) 190 326
------- -------
Total for all operations (553)
=======
(a) Taxation on non-operating items related to Innovene operations
includes the actual tax effects arising on the loss on re-measurement
to fair value and the sale to INEOS; other non-operating items are tax
effected at 32.4%, the effective tax rate for continuing operations.
Reconciliation of Replacement Cost Profit to Profit for the Period
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004
============================= ================
4,750 6,535 6,567 Exploration and Production 25,491 18,077
1,337 1,858 (160) Refining and Marketing 4,405 5,240
495 314 117 Gas, Power and Renewables 1,009 915
Other businesses and
(245) (452) (403) corporate (1,186) 156
Consolidation adjustments
Unrealized profit
57 (285) 234 in inventory (208) (191)
Net profit on transactions
between continuing and
31 144 128 Innovene operations (a) 527 188
----------------------------- ----------------
RC profit before interest
6,425 8,114 6,483 and tax 30,038 24,385
----------------------------- ----------------
Finance costs and other
(264) (181) (215) finance expense (761) (780)
(1,818) (2,674) (2,029) Taxation(b) (9,473) (7,082)
(59) (68) (93) Minority interest (291) (187)
----------------------------- ----------------
RC profit for continuing
operations attributable
4,284 5,191 4,146 to BP shareholders (c) 19,513 16,336
============================= ================
Inventory holding gains
(losses) for continuing
(493) 1,938 (903) operations 2,644 1,361
----------------------------- ----------------
Profit for the period for
continuing operations
attributable to BP
3,791 7,129 3,243 shareholders 22,157 17,697
Profit (loss) for the period
(781) (666) 442 from Innovene operations(d) 184 (622)
----------------------------- ----------------
Profit for the period
attributable to
3,010 6,463 3,685 BP shareholders 22,341 17,075
============================= ================
RC profit for continuing
operations attributable to
4,284 5,191 4,146 BP shareholders 19,513 16,336
RC profit for Innovene
(780) (781) 286 operations (199) (904)
----------------------------- ----------------
3,504 4,410 4,432 Replacement cost profit 19,314 15,432
============================= ================
(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 is supplied by BP and most of the refined products
manufactured are 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 are 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) The fourth quarter effective tax rate on continuing operations of
32.4% is calculated as the tax charge ($2,029 million) divided by RC
profit for continuing operations after interest ($6,483-$215=$6,268
million).
(c) Replacement cost profit reflects the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from
profit inventory holding gains and losses. BP uses this measure to
assist investors to assess BP's performance from period to period.
Replacement cost profit is not a recognized GAAP measure. Operating
cash flow is calculated from the starting point of profit before
taxation which includes inventory holding gains and losses. Operating
cash flow also reflects working capital movements including
inventories, trade and other receivables and trade and other payables.
The carrying value of these working capital items will change for
various reasons, including movements in oil, gas and products prices.
(d) See further detail in Note 3.
Per Share Amounts
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 2005 2004
================================ =====================
Results for the
period ($m)
3,010 6,463 3,685 Profit* 22,341 17,075
3,504 4,410 4,432 Replacement cost profit 19,314 15,432
-------------------------------- --------------------
Shares in issue at
21,525,978 20,984,851 20,657,045 period end (thousand)20,657,045 21,525,978
- ADS equivalent
3,587,663 3,497,475 3,442,841 (thousand) 3,442,841 3,587,663
Average number of
shares outstanding
21,607,872 21,007,316 20,792,896 (thousand) 21,125,902 21,820,535
- ADS equivalent
3,601,312 3,501,219 3,465,483 (thousand) 3,520,984 3,636,756
-------------------------------- ---------------------
Per ordinary share
(cents)
14.00 30.75 17.90 Profit for the period 105.74 78.24
RC profit
16.23 21.04 21.34 for the period 91.41 70.71
Per ADS (cents)
84.00 184.50 107.40 Profit for the period 634.44 469.44
RC profit
97.38 126.24 128.04 for the period 548.46 424.26
-------------------------------- ---------------------
* Profit attributable to BP shareholders.
Exploration and Production
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004
======================= ==============
4,747 6,536 6,575 Profit before interest and tax(a) 25,508 18,087
3 (1) (8) Inventory holding (gains) losses (17) (10)
----------------------- --------------
Replacement cost profit
4,750 6,535 6,567 before interest and tax 25,491 18,077
======================= ==============
Results include:
Impairment and gain (loss) on sale of
(236) (106) 62 businesses and fixed assets 893 (469)
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss) on
- (53) (801) embedded derivatives (1,688) -
8 12 (240) Other (203) (27)
----------------------- --------------
(228) (147) (979) Total non-operating items (998) (496)
======================= ==============
258 177 208 Exploration expense 684 637
Of which:
151 93 81 Exploration expenditure written off 305 274
======================= ==============
Production (Net of Royalties) (b)
2,396 2,313 2,400 Crude oil (mb/d) 2,389 2,340
197 159 164 Natural gas liquids (mb/d) 173 191
2,593 2,472 2,564 Total liquids (mb/d)(c) 2,562 2,531
8,714 7,841 8,458 Natural gas (mmcf/d) 8,424 8,503
4,095 3,824 4,022 Total hydrocarbons (mboe/d)(d) 4,014 3,997
======================= ==============
Average realizations (e)
41.01 56.83 53.92 Crude oil ($/bbl) 50.27 36.45
31.20 36.70 39.29 Natural gas liquids ($/bbl) 33.23 26.75
39.88 54.80 52.44 Total liquids ($/bbl) 48.51 35.39
4.28 4.75 6.24 Natural gas ($/mcf) 4.90 3.86
32.64 41.68 44.56 Total hydrocarbons ($/boe) 38.86 29.20
======================= ==============
Average oil marker prices($/bbl)
43.85 61.63 56.87 Brent 54.48 38.27
48.29 63.18 60.01 West Texas Intermediate 56.58 41.49
42.62 60.91 57.89 Alaska North Slope US West Coast 53.55 38.96
======================= ==============
Average natural gas marker prices
7.07 8.53 13.00 Henry Hub gas price ($/mmbtu)(f) 8.65 6.13
UK Gas - National
28.51 29.26 65.30 Balancing Point (p/therm) 40.71 24.39
======================= ==============
(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 turnover 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 fourth quarter was
$6,567 million, a record result, up 38% from the fourth quarter of 2004. This
result benefited from higher realizations, partially offset by the hurricane
impact on volumes and associated repair costs, the cost of the Thunder Horse
stability incident, and higher operating and revenue investment costs.
Included in the result for the quarter were net non-operating charges of $979
million, primarily arising from fair value losses of $801 million on embedded
derivatives relating to North Sea gas contracts, and a charge of $265 million on
the cancellation of an intra-group gas supply contract (which is offset by a
gain in our Gas, Power and Renewables segment). The corresponding quarter of
2004 contained net non-operating charges of $228 million.
The replacement cost profit before interest and tax for the full year at $25,491
million was a record, up 41% on a year ago. This reflects higher realizations,
partly offset by costs associated with the hurricanes and Thunder Horse, and
higher operating and revenue investment costs. The year's result included net
non-operating charges of $998 million primarily arising from fair value losses
on embedded derivatives of $1,688 million, net gains on sales of assets of
$1,159 million, mainly from the sale of Ormen Lange in the first quarter, and
net impairment charges of $266 million. The full year results in 2004 included
net non-operating charges of $496 million.
Production for the quarter at 4,022 mboe/d was 2% lower than in the fourth
quarter of 2004, principally as a result of the lost production owing to the
hurricane damage in the Gulf of Mexico.
Total production for the year was 4,014 mboe/d, compared with 3,997 mboe/d in
2004. Increases in production in our New Profit Centres and TNK-BP were offset
by the effect of the hurricanes, higher planned maintenance shutdowns,
anticipated decline and operational issues in our Existing Profit Centres.
We estimate the opportunity losses caused by the hurricanes in the fourth
quarter and year to be in the region of $950 million for the fourth quarter and
$1,600 million for the full year.
Projects in our New Profit Centres are progressing well. During the quarter the
West Azeri project in Azerbaijan achieved first production four months ahead of
schedule, and good progress is being made on the completion of the BTC pipeline
with the first lifting at Ceyhan in Turkey expected in the second quarter of
2006. In Trinidad, Atlantic LNG Train 4 started production in mid December with
the Cannonball gas development expected to start production in the first quarter
of 2006. Repairs and construction of the Thunder Horse platform in the Gulf of
Mexico are proceeding offshore, and production is expected to start in the
second half of 2006. In Russia, TNK-BP disposed of non-core producing assets in
the Saratov region, along with the Orsk refinery. In our Existing Profit
Centres, production commenced from the Rhum and Farragon fields in the North
Sea.
BP's proved reserve replacement ratio, on a UK SORP basis, was 100% on a
combined basis of subsidiaries and equity-accounted entities, excluding
acquisitions and disposals. This is the thirteenth consecutive year that we have
at least replaced our production.
Refining and Marketing
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004
======================= =============
Profit (loss) before interest
811 3,697 (1,068) and tax(a) 6,942 6,544
526 (1,839) 908 Inventory holding (gains) losses (2,537) (1,304)
----------------------- -------------
Replacement cost profit (loss)
1,337 1,858 (160) before interest and tax 4,405 5,240
======================= =============
Results include:
Impairment and gain (loss) on sale
(333) (14) 50 of businesses and fixed assets 84 (456)
- (140) - Environmental and other provisions (140) (206)
Restructuring, integration and
(32) - - rationalization costs - (32)
Fair value gain (loss) on
- - - embedded derivatives - -
- - - Other (733) -
----------------------- -------------
(365) (154) 50 Total non-operating items (789) (694)
======================= =============
Refinery throughputs(b) (mb/d)
218 202 144 UK 180 208
601 687 664 Rest of Europe 667 684
1,436 1,328 942 USA 1,255 1,373
296 296 288 Rest of World 297 342
----------------------- -------------
2,551 2,513 2,038 Total throughput 2,399 2,607
======================= =============
96.5 92.6 90.9 Refining availability (%) 92.9 95.4
======================= =============
Oil sales volumes (mb/d)
Refined products
335 369 358 UK 355 322
1,363 1,402 1,343 Rest of Europe 1,354 1,360
1,664 1,674 1,559 USA 1,634 1,682
627 599 573 Rest of World 599 638
----------------------- --------------
3,989 4,044 3,833 Total marketing sales 3,942 4,002
2,194 2,010 1,448 Trading/supply sales 1,946 2,396
----------------------- --------------
6,183 6,054 5,281 Total refined product sales 5,888 6,398
2,569 2,803 2,710 Crude oil 2,804 2,691
----------------------- --------------
8,752 8,857 7,991 Total oil sales 8,692 9,089
======================= ==============
Global Indicator Refining Margin(c)
($/bbl)
4.72 7.78 5.51 NWE 5.47 4.28
5.52 17.12 11.64 USGC 11.40 7.15
1.65 13.40 7.91 Midwest 8.19 5.08
10.36 17.57 8.90 USWC 13.49 11.27
8.02 6.52 4.42 Singapore 5.56 4.94
5.69 12.35 7.60 BP Average 8.60 6.31
======================= ==============
Chemicals production (kte)
316 284 281 UK 1,199 1,302
779 771 811 Rest of Europe 3,123 3,189
1,122 890 676 USA 3,891 4,643
990 1,115 1,049 Rest of World 4,154 4,016
----------------------- --------------
3,207 3,060 2,817 Total production 12,367 13,150
======================= ==============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
(b) Refinery throughputs exclude the Grangemouth and Lavera refineries
which are now treated as discontinued operations within Other
businesses and corporate.
(c) 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. The GIM data shown above excludes the Grangemouth and Lavera
refineries.
Refining and Marketing
The replacement cost loss before interest and tax for the fourth quarter was
$160 million compared with a profit of $1,337 million for the same period in
2004. The replacement cost profit before interest and tax for the year was
$4,405 million compared with $5,240 million in 2004.
The reduction in the fourth quarter result compared with a year ago was driven
by three significant factors. Firstly, the impact of the shutdown, throughout
the quarter, of the Texas City refinery, along with other storm-related supply
disruptions to a number of our US-based businesses. Compared with the fourth
quarter of 2004, the reduction in replacement cost profit before interest and
tax in respect of these disruptions was some $870 million; compared with the
third quarter of 2005 the reduction was $670 million. Secondly, the fourth
quarter's result was adversely impacted by $454 million of accounting effects.
This resulted from a combination of changes in both inventory levels and the
forward trajectory of market prices across the quarter, and compares to a net
gain of $114 million in the third quarter of 2005. The third factor was a charge
of $467 million in respect of rationalization and efficiency programmes, mainly
across our marketing activities in Europe. This has not been identified as a
non-operating item.
The fourth quarter's result includes a net non-operating gain of $50 million
primarily from retail divestments. In comparison, the net charge for
non-operating items in the fourth quarter of 2004 was $365 million.
Supply disruptions in the USA and market uncertainty continued into the fourth
quarter of 2005. The average refining Global Indicator Margin (GIM) fell sharply
from the record levels of last quarter but was higher than those of the
equivalent quarter last year. Retail marketing margins recovered strongly from
the third quarter and were above those of the equivalent quarter last year,
although margins in our other marketing businesses were lower. In addition to
the impact of the three significant factors identified above, the fourth quarter
result also reflects the impact of lower refining availability compared to the
equivalent quarter last year.
Refining throughputs for the quarter were 2,038 mb/d, some 513 mb/d lower than
in the fourth quarter of 2004 due principally to the complete shut down of the
Texas City refinery late in the third quarter. Marketing volumes were 3,833 mb/
d, lower than those in the same quarter last year due primarily to
hurricane-related supply disruptions in the USA.
The full year result of $4,405 million was also impacted by the factors outlined
above: the Texas City refinery outage, adverse impacts related to fair value
accounting and costs associated with the rationalization and efficiency
programmes.
The full year average GIM was higher than that for the full year 2004, and
consistent with the increase in BP's actual realized refining margin. Retail
marketing margins, despite the recovery in the fourth quarter, were
significantly lower than those for the full year 2004, although partly offset by
increases in our other marketing businesses. Our purchased energy costs and
operating and investment costs were higher year-on-year due to refinery repair,
manufacturing integrity costs and the initial charges for the rationalization
and efficiency programmes mentioned above.
The full year result includes a charge of $789 million for non-operating items
compared with a charge of $694 million in 2004. Included in the 2005 charge is
$700 million in respect of fatality and personal injury claims associated with
the Texas City incident and charges in respect of new, and revisions to
existing, environmental and other provisions.
The total opportunity loss in respect of the Texas City refinery shutdown and
storms, at prevailing margins, is estimated at around $1,800 million for the
year.
Gas, Power and Renewables
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004
======================= =============
523 412 114 Profit before interest and tax(a) 1,104 954
(28) (98) 3 Inventory holding (gains) losses (95) (39)
----------------------- -------------
Replacement cost profit
495 314 117 before interest and tax 1,009 915
======================= =============
Results include:
Impairment and gain (loss) on sale
40 (2) (26) of businesses and fixed assets 55 56
- 6 - Environmental and other provisions 6 -
Restructuring, integration and
- - - rationalization costs - -
Fair value gain (loss)
- 91 (546) on embedded derivatives (346) -
- - 265 Other 265 -
----------------------- -------------
40 95 (307) Total non-operating items (20) 56
======================= =============
(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 fourth quarter and
full year was $117 million and $1,009 million respectively, compared with $495
million and $915 million a year ago. Non-operating items for the fourth quarter
include fair value losses on embedded derivatives of $546 million and $265
million compensation received on the cancellation of an intra-group gas supply
contract (which is offset by a loss in our Exploration and Production segment).
The fourth quarter result is lower than the same period in 2004 primarily due to
lower contributions from the gas trading and marketing business and the net
non-operating charge described above, partially offset by a $289 million
positive impact related to IFRS fair value accounting. The full year result is
higher than in 2004 reflecting higher contributions from the operating
businesses.
Other Businesses and Corporate
Fourth Third Fourth
Quarter Quarter Quarter Year
2004 2005 2005 $ million 2005 2004
======================= =============
Profit (loss) before
(237) (452) (403) interest and tax(a) (1,191) 164
(8) - - Inventory holding (gains) losses 5 (8)
----------------------- -------------
Replacement cost profit (loss)
(245) (452) (403) before interest and tax (b) (1,186) 156
======================= =============
Results include:
Impairment and gain (loss) on sale
8 4 - of businesses and fixed assets 38 1,164
- (296) (4) Environmental and other provisions (278) (283)
Restructuring, integration and
(85) (6) (57) rationalization costs (134) (102)
Fair value gain (loss) on
- 8 (3) embedded derivatives (13) -
66 - - Other 3 66
----------------------- -------------
(11) (290) (64) Total non-operating items (384) 845
======================= =============
(a) Profit from continuing operations and includes profit after interest
and tax of equity-accounted entities.
(b) Includes the portion of Olefins and Derivatives not included in the
sale of Innovene to INEOS. This includes the equity-accounted
investments in China and Malaysia that were part of Olefins and
Derivatives.
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The group's
interests in PetroChina and Sinopec were divested in early 2004. The fourth
quarter's result includes a net charge of $64 million in respect of
non-operating items.
Dividends Payable
June, September,
March December March December and March
2005 2005 2006 2005/06 2004/05
============================ ===================
Dividends per ordinary share
8.50 8.925 9.375 cents 35.725 29.45
4.522 5.061 5.288 pence 19.918 16.099
51.0 53.55 56.25 Dividends per ADS (cents) 214.35 176.70
---------------------------- -------------------
BP today announced a dividend of 9.375 cents per ordinary share to be paid in
March. Holders of ordinary shares will receive 5.288 pence per share and holders
of American Depository Receipts (ADRs) $0.5625 per ADS share. The dividend is
payable on 13 March to shareholders on the register on 24 February. 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 13 March.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
'World economic growth has continued at near trend rates. In addition to
sustained growth in the US and Asia, there has been an acceleration of activity
in Europe; the near-term global outlook appears solid.
'Crude oil prices averaged $56.87 per barrel (Dated Brent) in the fourth
quarter, a decline of nearly $5 per barrel from the third quarter average but
more than $13 per barrel above the same period last year. Prices weakened in
face of ample inventories and relatively mild weather in the early part of the
fourth quarter, and despite large production losses from hurricanes Katrina and
Rita. Prices rebounded in December with the onset of colder weather and have
been sustained above $60 in 2006. Oil prices are expected to remain strong but
remain dependent upon OPEC production levels and geopolitical concerns.
'US natural gas prices averaged $13/mmbtu (Henry Hub first of month index) in
the fourth quarter, up nearly $4.50 per mmbtu versus the third quarter. Lost
supply following hurricanes Katrina and Rita and the onset of the winter heating
season pushed prices above distillate parity for most of December. In recent
weeks prices have traded closer to parity with residual fuel oil. US gas prices
are expected to track oil prices but remain vulnerable to weather-related price
spikes in the months ahead.
'UK gas prices (National Balancing Point) more than doubled in the fourth
quarter to 65.3 pence per therm from 29.3 pence per therm in the third quarter
in face of concerns about gas availability through the winter. Prompt prices
have recently eased but remain volatile. Supplies are expected to be adequate in
the face of normal winter weather.
'Average global refining margins softened to $7.60/bbl in the fourth quarter.
The disruptions caused by last autumn's hurricanes eased during the quarter as
new sources of product supply were accessed. Oil product stocks currently appear
adequate to meet winter demand and global margins have softened further during
2006 to date. However, margin spikes are still possible during extended periods
of cold weather and a heavier than normal maintenance programme.
'During the fourth quarter, retail margins benefited from falling product prices
particularly in the first two months of the quarter. During December and so far
in 2006, a rise in wholesale gasoline and crude prices is evident. Marketing
margins are expected to remain volatile.
'Following a comprehensive refurbishment, the steam system at the Texas City
refinery was successfully recommissioned in December 2005. Initial production is
expected to commence in the first quarter, with further units restarting in a
phased programme, primarily in the second and third quarters.
'Our strategy is unchanged. We continue to execute it with discipline and focus.
Our ability to capture the benefit of current prices and margin strength
underpins continued dividend growth and continuing share buybacks subject to
market conditions and constraints. Capital expenditure excluding acquisitions
for the year was about $14 billion and is expected to be around $15 billion in
2006 with divestments in the region of $3 billion.'
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The foregoing discussion, in particular the statements under 'Outlook',
contains forward looking statements particularly those regarding first
lifting of oil from the BTC pipeline, the start-up of production from
the Cannonball gas development, the timing of production from the
Thunder Horse platform, world economic growth, oil prices, US and UK
gas prices and supplies, oil product stocks, margins, production at
Texas City, dividends and share buy-backs and capital expenditure. 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 and 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 2004 and our 2004 Annual Report on Form 20-F filed
with the US Securities and Exchange Commission.
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