Final Results - Part 1 of 2
BP PLC
08 February 2005
BP p.l.c.
Group Results
4th Quarter and Full Year 2004
London 8 February 2005
FOR IMMEDIATE RELEASE
RECORD ANNUAL RESULT AND STRONG CASH FLOW
FOURTH QUARTERLY DIVIDEND INCREASED 26% ON A YEAR AGO
---------------------------------------------------------------------------
Fourth Third Fourth
Quarter Quarter Quarter Year
2003 2004 2004 $ million 2004 2003 %
======================= ====================
Replacement cost profit
2,250 3,456 3,028 for the period (a) 14,088 10,466
637 481 618 Acquisition amortization(b) 2,120 2,392
----------------------- --------------------
2,887 3,937 3,646 Pro forma result 16,208 12,858 26
======================= ====================
13.07 18.17 16.89 - per ordinary share (cents) 74.27 57.99 28
0.78 1.09 1.02 - per ADS (dollars) 4.46 3.48
7.68 9.99 9.05 - per ordinary share (pence) 40.58 35.58 14
======================= ====================
6.75 7.10 8.50 Dividend per share (cents) 29.45 26.00 13
0.41 0.43 0.51 Dividend per ADS (dollars) 1.77 1.56
3.674 3.910 4.522 Dividend per share (pence) 16.099 15.517 4
======================= ====================
o BP's fourth quarter pro forma result was $3,646 million, compared with
$2,887 million a year ago, an increase of 26%. For the year, the result
was $16,208 million compared with $12,858 million, up 26%. Replacement
cost profit for the fourth quarter and year was $3,028 million and
$14,088 million respectively, compared with $2,250 million and
$10,466 million a year ago.
o The fourth quarter result includes net exceptional and non-operating
charges of $1,127 million compared with a net gain of $204 million in
the fourth quarter of 2003.
o The fourth quarter trading environment was stronger than a year ago,
with higher oil and gas realizations and higher refining, marketing and
chemicals margins.
o Net cash outflow for the quarter was $1.0 billion and net cash inflow
for the year was $6.0 billion, compared with an outflow of $1.8 billion
and an inflow of $1.4 billion a year ago. Net cash inflow from
operating activities for the quarter and year was $7.0 billion and
$28.6 billion respectively, compared with $3.5 billion and
$21.7 billion a year ago. Strong annual cash flow has enabled
significant share buy-backs.
o The pro forma ratio of net debt to net debt plus equity was 24% at the
end of the quarter.
o Return on average capital employed for the quarter and year
respectively, on a pro forma basis, was 17.4% and 19.6%, compared with
15.5% and 17.8% a year ago. The cash return for the quarter was 39%
compared with 28% a year ago, and for the year was 35% compared with
31% a year ago.
o The quarterly dividend is 8.50 cents per share ($0.51 per ADS). This
compares with 6.75 cents per share a year ago. For the year the
dividend showed an increase of 13%. In sterling terms, the quarterly
dividend is 4.522 pence per share compared with 3.674 pence a year ago;
for the year the dividend showed an increase of 4%. During the year,
the company repurchased for cancellation 827 million of its own shares,
at a cost of $7.5 billion.
BP Group Chief Executive, Lord Browne, said:
'Against the backdrop of strong oil demand, we have had a very successful
year both operationally and financially. Our strong cash flow is now reflecting
the results of our significant investment programme over the past few years and
improvements in underlying performance in line with strategy. As a result of the
strong cash flow we have been able to continue to invest for the future of the
company, we have made significant share buybacks and we have consistently
increased the dividend. In addition, our confidence in the future has enabled us
to make the step change in the dividend announced today.'
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. BP will
discontinue pro forma reporting at the time it adopts International Financial
Reporting Standards with effect from the first quarter of 2005.
(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. It also includes non-operating items identified by the
group, primarily asset write-downs/impairment, environmental and other
provisions and restructuring, integration and rationalization costs.
These items do not meet the criteria to be classified as operating
exceptional items.
(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 2003 and 2004
include accelerated depreciation of the revaluation adjustment in
respect of the impairment of former ARCO assets.
Summary Fourth Quarter Results
Exploration and Production's record fourth quarter result was up 68% on a year
ago reflecting higher liquids and gas realizations and increased volumes, partly
offset by the impact of the weaker US dollar and higher costs.
The Refining and Marketing result was a record $1,799 million, an increase of
$1,268 million compared with a year ago. This was driven primarily by
significantly higher refining margins, higher marketing margins and an
exceptional gain, offset partly by charges related primarily to a review of
carrying values of fixed and current marketing assets.
The Petrochemicals result reflects exceptional and non-operating charges, higher
fixed costs and adverse foreign exchange impacts, offset partially by higher
margins and volumes.
In Gas, Power and Renewables, the improved result reflects a higher marketing
and trading result, a higher contribution from the natural gas liquids and solar
businesses and an exceptional gain.
Interest and other finance expense for the quarter was $315 million compared
with $235 million for the prior quarter. The increase relates primarily to an
increase in debt, higher interest rates and a revaluation of environmental and
other provisions at a lower discount rate.
The pro forma effective tax rate on replacement cost profit was 36.6%.
Capital expenditure, excluding acquisitions, was $4.6 billion for the quarter.
Total capital expenditure and acquisitions was $6.1 billion including the
acquisition of Solvay's interests in BP Solvay Polyethylene Europe and BP Solvay
Polyethylene North America. Disposal proceeds for the quarter were $1 billion.
Net debt at the end of the quarter was $21.6 billion. The pro forma ratio of net
debt to net debt plus equity was 24% at the end of the year compared with 22% at
the end of the third quarter.
During the fourth quarter, the company repurchased for cancellation 206 million
of its own shares, at a cost of $2 billion.
---------
The commentaries above and following are based on the pro forma replacement cost
results.
TNK-BP operational and financial information has been estimated.
BP Solvay ventures were consolidated with effect from 2 November 2004.
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
4Q 2004
------------------------------
Exceptional Non-Operating
$ million Items Items and UPIS(a)
------------------------------
Exploration and Production 32 (52)
Refining and Marketing 58 -
Petrochemicals (377) (1,149)
Gas, Power and Renewables 40 -
Other businesses and corporate (26) (29)
------------------------------
(273) (1,230)
Taxation 130 246(b)(c)
------------------------------
(143) (984)
==============================
(a) Charges for environmental and other provisions have been classified as
non-operating items in 2004 and prior periods restated to conform with
this treatment.
(b) The Petrochemicals non-operating items, primarily impairment charges,
attract tax relief at a lower rate than described in note (c) below
(c) Tax on other 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 34.3%.
Reconciliation of Reported Results to Pro Forma Results
Pro Forma Result ----- 4Q 2004 ----- Pro Forma Result
-------------------
4Q 3Q 4Q Acq. Reported Year
2003 2004 2004 Amort+ Earnings* $ million 2004 2003
======================================= ==============
Exploration and
3,274 5,144 5,489 396 5,093 Production 19,759 16,232
Refining and
531 1,301 1,799 222 1,577 Marketing 5,603 3,144
41 188 (1,271) - (1,271) Petrochemicals (900) 568
Gas, Power
86 130 399 - 399 and Renewables 943 570
Other businesses
465 (424) (227) - (227) and corporate 314 (184)
--------------------------------------- --------------
RC profit before
4,397 6,339 6,189 618 5,571 interest and tax 25,719 20,330
---------------------------------------- --------------
Interest and Other
(312) (235) (315) - (315) finance expense (999) (1,191)
(1,157)(2,109)(2,152) - (2,152) Taxation (8,282) (6,111)
(41) (58) (76) - (76) MSI (230) (170)
---------------------------------------- --------------
2,887 3,937 3,646 618 3,028 RC profit 16,208 12,858
---------------------------------------- --------------
(494) Stock holding gains (losses)
-----
2,534 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. It
also includes non-operating items identified by the group, primarily asset
write-downs/impairment, environmental and other provisions and
restructuring, integration and rationalization costs. These items do not
meet the criteria to be classified as operating exceptional items.
+ 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 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
Fourth Third Fourth
Quarter Quarter Quarter Year
2003 2004 2004 2004 2003
================================ =====================
Replacement cost
Profit before
3,760 5,858 5,571 interest and tax ($m) 23,599 17,938
-------------------------------- ---------------------
Results for the
period ($m)
2,887 3,937 3,646 Pro forma result 16,208 12,858
2,250 3,456 3,028 Replacement cost profit 14,088 10,466
2,334 4,483 2,534 Historical cost profit 15,731 10,482
-------------------------------- ---------------------
Shares in issue at
22,122,610 21,713,966 21,525,978 period end (thousand)21,525,978 22,122,610
- ADS equivalent
3,687,102 3,618,994 3,587,663 (thousand) 3,587,663 3,687,102
Average number of
shares outstanding
22,103,542 21,683,963 21,607,872 (thousand) 21,820,535 22,170,741
- ADS equivalent
3,683,924 3,613,994 3,601,312 (thousand) 3,636,756 3,695,124
Per ordinary share
(cents)
13.07 18.17 16.89 Pro forma result 74.27 57.99
RC profit
10.18 15.96 14.03 for the period 64.55 47.20
HC profit
10.56 20.67 11.80 for the period 72.08 47.27
Per ADS (cents)
78.42 109.02 101.34 Pro forma result 445.62 347.94
RC profit
61.08 95.76 84.18 for the period 387.30 283.20
HC profit
63.36 124.02 70.80 for the period 432.48 283.62
-------------------------------- ---------------------
Exploration and Production
4Q 3Q 4Q Year
2003 2004 2004 $ million 2004 2003
================= ==============
Replacement cost profit
2,848 4,883 5,093 before interest and tax 18,520 14,666
426 261 396 Acquisition amortization 1,239 1,566
----------------- --------------
Pro forma replacement cost result
3,274 5,144 5,489 before interest and tax 19,759 16,232
================= ==============
Results include:
(308) (7) (117) Asset write-downs/impairment (407) (357)
- - - Environmental and other provisions - -
Restructuring, integration and
(15) - - rationalization costs - (117)
- (35) 8 Other (27) -
(57) (95) 57 Unrealized profit in stock (UPIS) (191) (61)
----------------- --------------
(380) (137) (52) Total non-operating items and UPIS (625) (535)
(49) 23 32 Exceptional items 152 913
================= ==============
Total non-operating items, UPIS
(429) (114) (20) and exceptional items (473) 378
================= ==============
193 135 258 Exploration expense 637 542
Of which:
129 34 151 Exploration expenditure written off 274 297
----------------- --------------
Production (Net of Royalties)
2,248 2,298 2,396 Crude oil (mb/d) 2,340 1,911
206 181 197 Natural gas liquids (mb/d) 191 210
2,454 2,479 2,593 Total liquids (mb/d)(a) 2,531 2,121
8,600 8,275 8,714 Natural gas (mmcf/d) 8,503 8,613
3,936 3,906 4,095 Total hydrocarbons (mboe/d)(b) 3,997 3,606
================= ==============
Average realizations
28.18 39.43 41.01 Crude oil ($/bbl) 36.45 28.23
20.15 28.77 31.20 Natural gas liquids ($/bbl) 26.75 19.26
27.30 38.29 39.88 Total liquids ($/bbl) 35.39 27.25
3.18 3.66 4.28 Natural gas ($/mcf) 3.86 3.39
23.15 30.08 32.64 Total hydrocarbons ($/bbl) 29.20 23.69
================= ==============
Average oil marker prices
($/bbl)
29.43 41.54 43.85 Brent 38.27 28.83
31.15 43.88 48.29 West Texas Intermediate 41.49 31.06
29.43 41.82 42.62 Alaska North Slope US West Coast 38.96 29.59
================= ==============
Average natural gas marker prices
4.58 5.75 7.07 Henry Hub gas price ($/mmbtu)(c) 6.13 5.37
UK Gas - National
27.30 23.63 28.51 Balancing Point (p/therm) 24.39 20.28
================= ==============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
(c) Henry Hub First of the Month Index.
Exploration and Production
The pro forma replacement cost result before interest and tax for the fourth
quarter was $5,489 million, a record result, up 68% from the fourth quarter of
2003. The primary drivers for the change are the higher realizations in both
liquids and gas and increased volumes partly offset by the impact of the weaker
US dollar and higher costs. This quarter benefited from an exceptional gain of
$32 million. The corresponding quarter in 2003 contained exceptional losses of
$49 million.
Included in the results for the quarter was a net non-operating charge totalling
$109 million. This charge primarily results from impairments of fields in the
deepwater Gulf of Mexico and US Onshore.
The fourth quarter result also includes a credit of $57 million, reflecting a
decrease in the provision for Unrealized Profit in Stock (UPIS), which removes
the upstream margin from downstream inventories. This compares with a charge of
$57 million in the equivalent quarter of last year.
The full year result of $19,759 million is a record, up $3,527 million on a year
ago, reflecting the higher realizations combined with increased volumes.
Production for the quarter was up over 4% to 4,095 mboe/d compared with a year
ago. This reflects the continuing ramp-up of production in the New Profit
Centres and increased volumes from TNK-BP. This is partly offset by decline in
our Existing Profit Centres. Total production for the year was 3,997 mboe/d, an
increase of more than 10% over the prior year. Our expectation for 2005, based
on our $20/bbl planning basis, is that production will be between 4.1 and 4.2
million barrels of oil equivalent per day before any acquisitions or
divestments.
Projects in the New Profit Centres remain on track. In the Gulf of Mexico, the
Holstein and Mad Dog projects achieved first production in December 2004 and
January 2005 respectively. In Indonesia, we approved our share of the investment
in the Tangguh gas project and in Angola we approved the Rosa project. In
Azerbaijan, construction of the Azeri project and the BTC pipeline is on track.
In the UK, construction of the Clair platform has been completed and the project
is on track to commence production in the first quarter of 2005.
In the fourth quarter we had further exploration success in Trinidad with the
Chachalaca well.
BP's proved reserve replacement ratio, on a UK GAAP/SORP basis, was 106% in
respect of subsidiaries, 118% for equity-accounted entities and 110% on a
combined basis. The proved reserve replacement has exceeded production for the
twelfth consecutive year.
BP has also calculated its reserve replacement ratio on a US GAAP/SEC basis
which requires the use of year-end prices. On this basis, the proved reserve
replacement ratio for subsidiaries was 78%, for equity-accounted entities was
114% and was 89% on a combined basis. The lower US GAAP/SEC replacement ratio
for subsidiaries was primarily a result of the impact of higher 2004 year-end
prices versus our planning prices on reserves in production sharing contracts
(PSCs). In fields subject to PSCs our reserves entitlement is based on volumes
required to recover agreed costs and an agreed percentage of the remaining
volumes. Applying higher year end prices to reserves in PSCs has the effect of
decreasing the volume required to recover the agreed costs. These effects
considerably outweigh any increases in tax and royalty regimes arising from
fields having a longer economic life.
All our proved reserve replacement ratios represent bookings through
discoveries, extensions, revisions and improved recovery and exclude the impact
of acquisitions and divestments.
During the quarter we completed our divestments of certain properties in the
Gulf of Mexico and the North Sea and in Australia we sold 5.3% of our reserves
in the North West Shelf to the China National Offshore Oil Company, resulting in
total exceptional gains in the quarter of $32 million.
Customer Facing Segments
Refining and Marketing
4Q 3Q 4Q Year
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
320 1,081 1,577 before interest and tax 4,722 2,318
211 220 222 Acquisition amortization 881 826
----------------------- -------------
Pro forma replacement cost result
531 1,301 1,799 before interest and tax 5,603 3,144
======================= =============
Results include:
- - - Asset write-downs/impairment - -
- (206) - Environmental and other provisions (206) (369)
Restructuring, integration and
(156) - - rationalization costs - (287)
10 - - Other - 10
----------------------- -------------
(146) (206) - Total non-operating items (206) (646)
(91) (17) 58 Exceptional items (117) (213)
======================= =============
Total non-operating and
(237) (223) 58 exceptional items (323) (859)
======================= =============
Refinery throughputs (mb/d)
389 410 420 UK 407 397
873 882 781 Rest of Europe 854 932
1,374 1,417 1,436 USA 1,373 1,386
378 296 296 Rest of World 342 382
----------------------- -------------
3,014 3,005 2,933 Total throughput 2,976 3,097
======================= =============
94.9 94.9 96.6 Refining availability 95.4 95.5
======================= =============
Oil sales volumes (kb/d)
Refined products
257 334 335 UK 322 271
1,290 1,406 1,363 Rest of Europe 1,360 1,311
1,761 1,696 1,664 USA 1,682 1,767
658 621 627 Rest of World 638 620
----------------------- --------------
3,966 4,057 3,989 Total marketing sales 4,002 3,969
2,609 2,627 2,194 Trading/supply sales 2,396 2,719
----------------------- --------------
6,575 6,684 6,183 Total refined product sales 6,398 6,688
3,985 3,679 3,731 Crude oil 3,808 3,837
----------------------- --------------
10,560 10,363 9,914 Total oil sales 10,206 10,525
======================= ==============
Global Indicator Refining Margin(a)
($/bbl)
2.21 4.37 4.72 NWE 4.28 2.62
3.53 6.99 5.52 USGC 7.15 4.71
2.89 5.01 1.65 Midwest 5.08 4.54
6.09 11.28 10.36 USWC 11.27 7.06
2.20 5.48 8.02 Singapore 4.94 1.77
3.14 6.20 5.60 BP Average 6.08 3.88
======================= ==============
(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 results before interest and tax for the fourth
quarter and the year were records of $1,799 million and $5,603 million
respectively, compared with $531 million and $3,144 million respectively for the
equivalent periods in 2003.
The improvement in the fourth quarter compared with a year ago was driven
primarily by significantly higher refining margins, higher marketing margins and
an exceptional gain in the quarter compared with net non-operating and
exceptional charges in the equivalent quarter of 2003. The improvement was
offset partly by charges of $310 million, related primarily to a review of
carrying values of fixed and current marketing assets (this is not classified as
a non-operating item). The year-on-year increase in BP's realized refining
margins in the quarter was higher than that suggested by the increase in the
Global Indicator Margin due to the combination of wider light/heavy spreads,
higher clean fuels premia, locational advantages and greater supply optimization
benefits. Marketing margins were stronger than in the equivalent period in 2003
assisted by the fall in crude and product prices late in the quarter. The
exceptional gain related primarily to the Cushing to Chicago Pipeline disposal
in the US.
The improvement in the result for the year compared with a year ago was
attributable to stronger refining margins due to the factors outlined above and
lower net non-operating and exceptional charges of $323 million compared with
$859 million a year ago. The improvement was offset by significantly lower
marketing margins, despite the improvement in the fourth quarter, the impact of
the weaker US dollar and the charges in 2004 related primarily to a review of
carrying values of fixed and current marketing assets.
Refining throughputs for the quarter were 2,933 mb/d, some 81 mb/d lower than in
the fourth 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 earlier in 2004.
The quarter's refining availability was 96.6%. Marketing sales in the fourth
quarter were 3,989 kb/d, a similar level to the equivalent quarter a year ago.
During the quarter BP China and Sinopec announced the establishment of the
BP-Sinopec (Zhejiang) Petroleum Co., Ltd, a retail joint venture between BP and
Sinopec, to build, operate and manage a network of 500 service stations in
Hangzhou, Ningbo and Shaoxing. Also during the quarter BP China and PetroChina
announced the establishment of BP-PetroChina Petroleum Company Limited, to
acquire, build, operate and manage 500 service stations in the province. BP
continued its strategic progress in the development of premium offers. This
included the opening of 101 new format Connect stores by the end of the quarter,
bringing the total worldwide to 576. The group also continued its roll-out of
new generation Ultimate gasoline and diesel fuels, now available in the UK,
Germany, Austria, Spain, Portugal, Greece, France, Poland, Australia and the US.
From 1 January 2005, the Aromatics and Acetyls business will be included in the
segment and the Lavera and Grangemouth refineries will be included in the
Olefins and Derivatives business, which will be reported as part of Other
businesses and corporate.
Customer Facing Segments
Petrochemicals
4Q 3Q 4Q Year
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
41 188 (1,271) before interest and tax (900) 568
- - - Acquisition amortization - -
----------------------- -------------
Pro forma replacement cost result
41 188 (1,271) before interest and tax (900) 568
======================= =============
Results include:
- - (1,110) Asset write-downs/impairment (1,110) -
- (58) - Environmental and other provisions (58) (20)
Restructuring, integration and
- - (39) rationalization costs (39) 5
- - - Other - (36)
----------------------- -------------
- (58) (1,149) Total non-operating items (1,207) (51)
16 (38) (377) Exceptional items (563) 38
======================= =============
Total non-operating and
16 (96) (1,526) exceptional items (1,770) (13)
======================= =============
109 138 166(b)Chemicals Indicator Margin(a)($/te) 140(b) 112
======================= =============
Petrochemicals production (kte)
832 728 904 UK 3,328 3,186
2,790 2,724 2,812 Rest of Europe 10,990 10,958
2,398 2,600 2,547 USA 10,204 9,797
1,133 1,097 1,101 Rest of World 4,405 4,002
----------------------- --------------
7,153 7,149 7,364 Total production 28,927 27,943
======================= ==============
(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 fourth quarter is based on two months'
actuals and one month of provisional data.
Petrochemicals' pro forma replacement cost results before interest and tax for
the fourth quarter and year were a loss of $1,271 million and $900 million
respectively, down by $1,312 million and $1,468 million respectively compared
with the equivalent periods a year ago. The decreases were due to exceptional
charges reflecting business exits and the closure of facilities, and
non-operating charges in respect of asset impairments, together with higher
fixed costs and adverse foreign exchange impacts. Partially offseting these
impacts were higher margins and volumes. The fourth quarter result was $1,459
million lower than the third quarter due to higher exceptional and non-operating
charges, higher fixed costs, including a number of non-routine charges, and
adverse foreign exchange impacts, offset partially by higher margins and
volumes.
Production for the fourth quarter and the year was a record, at 7,364 thousand
tonnes and 28,927 thousand tonnes respectively, an increase of 3% and 4%
respectively. Improved production was due to higher asset utilization and
increased Asian PTA capacity during the year, with additional High Density
Polyethylene capacity in the fourth quarter from the acquisition of the BP
Solvay ventures.
During the quarter we have continued to implement plans to consolidate the
Olefins and Derivatives business into a separate entity to operate as a
stand-alone business within the BP Group and have announced that Grangemouth and
Lavera refineries will be included in that entity. We have completed the
acquisition of Solvay's interests in the BP Solvay High Density Polyethylene
ventures and have reached agreement in principle with Nova Chemicals Corporation
to combine our respective European Styrene Polymer interests within a joint
venture. As part of restructuring efforts we also announced the closure of
plants at Pasadena in Texas, and at Grangemouth and Hull in the UK.
Customer Facing Segments
Gas, Power and Renewables
4Q 3Q 4Q Year
2003 2004 2004 $ million 2004 2003
====================== ==============
Replacement cost profit
86 130 399 before interest and tax 943 570
- - - Acquisition amortization - -
---------------------- --------------
Pro forma replacement cost result
86 130 399 before interest and tax 943 570
====================== ==============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
- - - Other - -
---------------------- --------------
- - - Total non-operating items - -
(10) 16 40 Exceptional items 56 (6)
====================== ==============
Total non-operating and
(10) 16 40 exceptional items 56 (6)
====================== ==============
Gas sales volumes (mmcf/d)
5,956 4,463 3,456 UK 4,679 6,801
511 485 449 Rest of Europe 411 441
12,121 13,585 13,852 USA 13,384 11,528
13,138 13,250 13,659 Rest of World 13,216 11,669
---------------------- --------------
31,726 31,783 31,416 Total gas sales volumes 31,690 30,439
======================= ==============
NGL sales volumes (mb/d)
2 9 11 UK 8 3
- 7 12 Rest of Europe 6 -
400 358 421 USA 393 329
234 161 240 Rest of World 203 205
----------------------- --------------
636 535 684 Total NGL sales volumes 610 537
======================= ==============
The pro forma replacement cost result before interest and tax for the fourth
quarter was $399 million compared with $86 million a year ago. The improved
result is due to a higher marketing and trading result, a higher contribution
from the natural gas liquids and solar businesses and an exceptional gain from
the disposal of BP's interest in an NGL plant in Canada.
The result for the year was $943 million compared with $570 million a year ago.
The improvement is due principally to a higher contribution from the natural gas
liquids and solar businesses and exceptional gains from the disposals of BP's
interests in two NGL plants in Canada.
Other Businesses and Corporate
4Q 3Q 4Q Year
2003 2004 2004 $ million 2004 2003
====================== =============
Replacement cost profit (loss)
465 (424) (227) before interest and tax 314 (184)
- - - Acquisition amortization - -
---------------------- -------------
Pro forma replacement cost result
465 (424) (227) before interest and tax 314 (184)
====================== =============
Results include:
- - (12) Asset write-downs/impairment (12) -
(81) (225) - Environmental and other provisions (225) (193)
Restructuring, integration and
- (19) (83) rationalization costs (102) -
585 - 66 Other 66 585
---------------------- --------------
504 (244) (29) Total non-operating items (273) 392
119 1 (26) Exceptional items 1,287 99
====================== ==============
Total non-operating
623 (243) (55) and exceptional items 1,014 491
====================== ==============
Other businesses and corporate comprises Finance, the group's coal asset
(divested in October 2003), the group's aluminium asset, its investments in
PetroChina and Sinopec (divested in January 2004), interest income and costs
relating to corporate activities. The fourth quarter result includes a net
charge of $55 million for non-operating charges and exceptional losses. This
primarily comprises a charge in respect of the separation of the Olefins and
Derivatives business partially offset by a credit primarily resulting from the
reversal of vacant space provisions in the UK and the US. 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
4Q 3Q 4Q Year
2003 2004 2004 2004 2003
====================== ==============
Dividends per ordinary share
6.75 7.10 8.50 cents 29.45 26.00
3.674 3.910 4.522 pence 16.099 15.517
40.5 42.6 51.0 Dividends per ADS (cents) 176.70 156.0
----------------------- --------------
BP today announced a fourth quarterly dividend for 2004 of 8.50 cents per
ordinary share. Holders of ordinary shares will receive 4.522 pence per share
and holders of American Depositary Receipts (ADRs) $0.51 per ADS share. The
dividend is payable on 14 March to shareholders on the register on 18 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 14 March. The first quarter 2005 results and dividend will be announced on 26
April 2005.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
'World economic growth was sustained into the fourth quarter of 2004,
completing a year of strong growth. The current outlook is for a
moderation of global growth towards trend rates through 2005.
'Oil prices averaged a record high $43.85 per barrel (Dated Brent) in the
fourth quarter, more than $2 per barrel higher than in the third quarter.
The price peaked at over $52 per barrel in the second half of October in
face of the production disruptions caused by Hurricane Ivan. The Dated
Brent price has averaged over $44 per barrel during 2005 to date.
However, despite a counter seasonal rise in inventories, prices are
expected to remain supported at historically high levels by ongoing
supply concerns and OPEC's decision to reduce above quota production from
the start of January.
'US natural gas prices averaged a record $7.07/mmbtu (Henry Hub first of
month index) in the fourth quarter, up by over $1/mmbtu versus the third
quarter. Working gas inventories remain above year-earlier and 5-year
average levels but the futures market continues to signal a supply-
constrained market. The 12-month futures strip (NYMEX Henry Hub) is
trading currently (4 February 2005) at just above $6.50/mmbtu, above
imputed fuel oil parity.
'Refining margins slipped 60c/bbl versus the third quarter to $5.60/bbl
but were still the highest fourth quarter margins for at least 15 years.
Margins moderated further in early 2005, particularly for sweet crude
refiners, but global average margins remain healthy by historic
standards. Retail margins began the fourth quarter under pressure but
improved as crude prices retreated. However, with oil prices rising
again, retail margins have weakened early in the new year. Robust product
demand, however, is likely to underpin both refining and retail margins
in the near term. In Petrochemicals, industry utilization rates rose
during the quarter, reflecting an improvement in overall market
conditions. As a consequence, both sales volumes and margins strengthened
for most products but notably for the paraxylene and olefins businesses.
We expect a continuation of this effect in the near term.
'Our strategy is unchanged and our operations are on track with the plans
laid out last year. We continue to focus on positioning the company for
the future and on post tax cash flow, and shareholder distributions in
the form of dividends and share buybacks. Capital expenditure, excluding
acquisitions, for the year was $14.4 billion. 2005 capital expenditure is
expected to be around $14 billion, in line with the guidance given with
our third quarter results.
'We aim to continue with our distribution policy of a growing dividend
and using excess cash flow to fund share buybacks. Total distributions in
2004 were $13.7 billion, and the number of shares outstanding was reduced
by 3%. BP's financial condition is very healthy with gearing at 24%, at
the bottom of the target range. I believe all of this gives us a strong
base for a sustainable future.'
----------------------------------------------------------------------
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, dividends, future performance, growth and other trend
projections, impact of foreign exchange rates, maintenance, margins,
petrochemicals sales volumes, prices, production, share buybacks,
supply and the timing of projects and pending transactions. 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 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.
----------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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