3rd Quarter Rslts Part 2 of 2

BP PLC 25 October 2005 BP p.l.c. and Subsidiaries Summarized Group Income Statement Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Sales and other operating 65,764 83,471 96,520 revenues (Note 4) 255,180 199,584 Earnings from jointly controlled 636 739 1,020 entities - after interest and tax 2,245 1,460 Earnings from associates - after 127 104 112 interest and tax 330 331 189 141 26 Interest and other revenues 379 438 ----------------------- -------------- 66,716 84,455 97,678 Total revenues 258,134 201,813 Gain on sale of businesses and 15 201 47 fixed assets 1,448 1,629 ----------------------- -------------- 66,731 84,656 97,725 Total revenues and other income 259,582 203,442 49,877 64,030 76,237 Purchases 197,581 153,424 Production and manufacturing 3,914 5,827 4,821 expenses 14,969 12,287 553 697 834 Production and similar taxes (Note 5)2,180 1,502 Depreciation, depletion and 2,056 2,232 2,041 amortization 6,420 6,099 Impairment and losses on sale of 37 75 165 businesses and fixed assets 464 811 135 139 177 Exploration expense (Note 5) 476 379 Distribution and administration 3,532 3,025 3,444 expenses 9,693 9,127 Fair value (gain) loss on embedded - 621 (46) derivatives 697 - ----------------------- -------------- Profit before interest and taxation from continuing 6,627 8,010 10,052 operations 27,102 19,813 104 128 144 Interest payable (Note 6) 444 297 79 34 37 Other finance expense (Note 7) 100 231 ----------------------- -------------- Profit before taxation 6,444 7,848 9,871 from continuing operations 26,558 19,285 1,657 2,291 2,674 Taxation 7,444 5,263 ----------------------- -------------- 4,787 5,557 7,197 Profit from continuing operations 19,114 14,022 Profit (loss) from Innovene 83 103 (666) operations (Note 3) (260) 171 ----------------------- -------------- 4,870 5,660 6,531 Profit for the period 18,854 14,193 ======================= ============== Attributable to: 4,818 5,591 6,463 BP shareholders 18,656 14,065 52 69 68 Minority interest 198 128 ----------------------- -------------- 4,870 5,660 6,531 18,854 14,193 ======================= ============== Earnings per share - cents Profit for the period attributable to BP shareholders 22.21 26.30 30.75 Basic 87.84 64.24 21.96 25.94 30.54 Diluted 86.84 63.12 ======================= ============== Profit from continuing operations Attributable to BP shareholders 21.83 25.81 33.87 Basic 89.06 63.46 21.58 25.46 33.62 Diluted 88.05 62.35 ======================= ============== Summarized Group Balance Sheet 30 September 31 December 2005 2004 ========================= $ million Non-current assets Property, plant and equipment 84,489 93,092 Goodwill 10,440 10,857 Other intangible assets 4,762 4,205 Investments in jointly controlled entities 14,110 14,556 Investments in associates 6,140 5,486 Other investments 785 467 --------------------- Fixed assets 120,726 128,663 Loans and other receivables 6,367 2,419 Defined benefit pension plan surplus 2,132 2,105 --------------------- 129,225 133,187 --------------------- Current assets Inventories 19,507 15,645 Trade and other receivables 51,921 44,282 Current tax receivable 112 157 Cash and cash equivalents 2,182 1,359 --------------------- 73,722 61,443 Innovene assets classified as held for sale 11,379 - --------------------- 85,101 61,443 --------------------- Total assets 214,326 194,630 ===================== Current liabilities Trade and other payables 58,414 48,096 Finance debt 10,480 10,184 Current tax payable 4,383 4,131 Provisions 1,020 715 --------------------- 74,297 63,126 --------------------- Non-current liabilities Other payables 7,290 4,438 Finance debt 11,679 12,907 Deferred tax liabilities 16,404 16,701 Provisions 9,579 8,884 Defined benefit pension plan and other post-retirement benefit plan deficits 9,426 10,339 --------------------- 54,378 53,269 Liabilities directly associated with the Innovene assets classified as held for sale 2,925 - --------------------- 57,303 53,269 --------------------- Total liabilities 131,600 116,395 --------------------- Net assets 82,726 78,235 ===================== Equity BP shareholders' equity 81,580 76,892 Minority interest 1,146 1,343 --------------------- 82,726 78,235 ===================== Movement in BP Shareholders' Equity Movement in BP shareholders' equity: $ million At 31 December 2004 76,892 Adoption of IAS 39 (243) ------ As restated at 1 January 2005 76,649 Profit for the period 18,656 Distribution to shareholders (5,503) Currency translation differences (net of tax) (2,152) Issue of ordinary share capital for employee share schemes 504 Issue of ordinary share capital for TNK-BP 1,250 Purchase of shares by ESOP trusts (254) Share based payment accrual (net of tax) 452 Available-for-sale investments (net of tax) 25 Cash flow hedges (net of tax) (169) Repurchase of ordinary share capital (7,878) ------ At 30 September 2005 81,580 ====== Summarized Group Cash Flow Statement Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Operating activities 6,444 7,848 9,871 Profit before taxation from continuing operations 26,558 19,285 Adjustments to reconcile profits before tax to net cash provided by operating activities 34 47 93 Exploration expenditure written off 224 123 Depreciation, depletion and 2,056 2,232 2,041 amortization 6,420 6,099 Impairment and (gain) loss on sale 22 (126) 118 of businesses and fixed assets (984) (818) Earnings from jointly controlled (763) (843) (1,132) entities and associates (2,575) (1,791) Dividends received from jointly 1,130 741 893 controlled entities and associates 1,989 1,443 (3,186) (2,692) (5,718) Working capital and other movements (9,297) (6,074) ----------------------- --------------- Net cash provided by operating activities of continuing 5,737 7,207 6,166 operations 22,335 18,267 Net cash provided by (used in) operating activities of 318 (470) 205 Innovene operations 147 (46) ----------------------- --------------- Net cash provided by 6,055 6,737 6,371 operating activities 22,482 18,221 ----------------------- --------------- Investing activities (3,083) (2,911) (3,069) Capital expenditure (8,805) (8,481) - - - Acquisitions, net of cash acquired - (14) Net investment in jointly controlled (88) (36) (2) entities (53) (1,514) (171) (186) (82) Net investment in associates (367) (752) Proceeds from disposal of businesses 574 425 226 and fixed assets 1,978 4,067 - 48 11 Proceeds from loan repayments 91 3 ----------------------- --------------- Net cash used in investing (2,768) (2,660) (2,916) activities (7,156) (6,691) ----------------------- --------------- Financing activities (2,180) (2,034) (3,661) Net repurchase of shares (7,628) (5,266) 717 482 497 Proceeds from long-term financing 1,790 1,775 (13) (1,011) (420) Repayments of long-term financing (3,623) (1,283) Net increase (decrease) in short- (130) 149 2,983 term debt 966 (2,553) (1,536) (1,809) (1,871) Dividends paid - BP shareholders (5,503) (4,506) (15) (15) (87) - Minority interest (422) (25) ----------------------- --------------- Net cash used in financing (3,157) (4,238) (2,559) activities (14,420)(11,858) ----------------------- --------------- Currency translation differences relating to cash and cash 21 - (74) equivalents (83) 13 ----------------------- --------------- Increase (decrease) in cash and 151 (161) 822 cash equivalents 823 (315) Cash and cash equivalents at 1,590 1,521 1,360 beginning of period 1,359 2,056 ----------------------- --------------- Cash and cash equivalents at 1,741 1,360 2,182 end of period 2,182 1,741 ======================= =============== Summarized Group Cash Flow Statement Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Working capital and other movements (46) (102) (86) Interest receivable (251) (155) 56 78 81 Interest received 193 138 104 128 144 Interest payable 444 297 (152) (119) (384) Interest paid (835) (471) 79 34 37 Other finance expense 100 231 41 79 66 Share-based payments 222 156 Net operating charge for pensions and other post-retirement benefits, 39 (6) (21) less contributions (37) (18) Net charge for provisions, 416 507 440 less payments 884 416 (2,305) (1,786) (3,737) (Increase) decrease in inventories (6,320) (3,309) (Increase) decrease in trade and (3,413) (4,608)(10,116) other receivables (16,041) (6,065) Increase (decrease) in trade and 3,787 5,536 10,425 other payables 18,328 6,698 (1,792) (2,433) (2,567) Income taxes paid (5,984) (3,992) ----------------------- --------------- (3,186) (2,692) (5,718) (9,297) (6,074) ======================= =============== Capital Expenditure and Acquisitions Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 191 213 221 UK 610 555 68 37 50 Rest of Europe 118 161 983 942 930 USA 2,869 2,853 1,152 1,289 1,292 Rest of World (a) 3,678 4,841 ----------------------- ------------- 2,394 2,481 2,493 7,275 8,410 ----------------------- ------------- Refining and Marketing 82 97 65 UK 205 225 148 111 99 Rest of Europe 277 351 298 219 282 USA 691 829 104 88 115 Rest of World 234 194 ----------------------- ------------- 632 515 561 1,407 1,599 ----------------------- ------------- Gas, Power and Renewables 6 16 3 UK 20 12 2 6 4 Rest of Europe 11 7 14 19 22 USA 54 38 40 10 10 Rest of World 26 142 ----------------------- ------------- 62 51 39 111 199 ----------------------- ------------- Other businesses and corporate 113 82 92 UK 249 159 73 58 40 Rest of Europe 118 144 60 53 29 USA 146 171 15 34 3 Rest of World 53 101 ----------------------- ------------- 261 227 164 566 575 ----------------------- ------------- 3,349 3,274 3,257 9,359 10,783 ======================= ============= By geographical area 392 408 381 UK 1,084 951 291 212 193 Rest of Europe 524 663 1,355 1,233 1,263 USA 3,760 3,891 1,311 1,421 1,420 Rest of World (a) 3,991 5,278 ----------------------- ------------- 3,349 3,274 3,257 9,359 10,783 ======================= ============= Included above: - 66 - Acquisitions and asset exchanges 151 14 184 125 103 Innovene operations 357 376 ======================= ============= (a) Nine months 2004 included $1,354 million investment in TNK's interest in Slavneft within TNK-BP. Exchange rates US dollar/sterling average rate 1.82 1.86 1.78 for the period 1.84 1.82 1.80 1.80 1.76 US dollar/sterling period-end rate 1.76 1.80 US dollar/euro average rate 1.22 1.26 1.22 for the period 1.26 1.23 1.23 1.21 1.20 US dollar/euro period-end rate 1.20 1.23 ======================= ============= Analysis of Profit Before Interest and Tax Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 763 574 939 UK 2,424 2,455 246 294 301 Rest of Europe 1,923 615 1,804 2,441 2,071 USA 6,520 5,210 2,014 2,597 3,225 Rest of World 8,066 5,060 ----------------------- ------------- 4,827 5,906 6,536 18,933 13,340 ----------------------- ------------- Refining and Marketing (18) (73) 316 UK (6) (232) 866 982 1,122 Rest of Europe 2,939 1,947 1,018 691 1,701 USA 3,821 2,997 324 350 558 Rest of World 1,256 1,021 ----------------------- ------------- 2,190 1,950 3,697 8,010 5,733 ----------------------- ------------- Gas, Power and Renewables (90) 124 (17) UK 223 (74) (11) (8) 4 Rest of Europe 2 (28) 144 39 403 USA 614 316 14 5 22 Rest of World 151 217 ----------------------- ------------- 57 160 412 990 431 ----------------------- ------------- Other businesses and corporate (170) (209) (144) UK (532) (424) 4 30 11 Rest of Europe 45 (3) (265) (13) (361) USA (383) (585) (10) 31 42 Rest of World 82 1,412 ----------------------- ------------- (441) (161) (452) (788) 400 ----------------------- ------------- 6,633 7,855 10,193 27,145 19,904 (95) (4) (285) Unrealized profit in inventory (442) (248) Net profit on transactions between 89 159 144 continuing and Innovene operations 399 157 ----------------------- ------------- 6,627 8,010 10,052 Total for continuing operations 27,102 19,813 ----------------------- ------------- Innovene operations (9) 164 (289) UK (67) (99) 226 129 (88) Rest of Europe 407 483 11 (16) (220) USA (124) 52 3 16 (28) Rest of World (16) 11 ----------------------- ------------- 231 293 (625) 200 447 Net profit on transactions between (89) (159) (144) continuing and Innovene operations (399) (157) ----------------------- ------------- 142 134 (769) Total for Innovene operations (199) 290 ----------------------- ------------- 6,769 8,144 9,283 Total for period 26,903 20,103 ======================= ============== By geographical area 513 463 1,138 UK 2,206 1,793 1,166 1,406 1,523 Rest of Europe 5,175 2,620 2,606 3,158 3,543 USA 10,165 7,690 2,342 2,983 3,848 Rest of World 9,556 7,710 ----------------------- ------------- 6,627 8,010 10,052 Total for continuing operations 27,102 19,813 ======================= ============= Analysis of Replacement Cost Profit Before Interest and Tax Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 763 574 939 UK 2,424 2,455 246 294 301 Rest of Europe 1,923 615 1,799 2,438 2,070 USA 6,511 5,197 2,014 2,597 3,225 Rest of World 8,066 5,060 ----------------------- -------------- 4,822 5,903 6,535 18,924 13,327 ----------------------- -------------- Refining and Marketing (69) (59) 268 UK (61) (315) 534 658 657 Rest of Europe 1,738 1,403 611 373 563 USA 1,939 2,027 242 314 370 Rest of World 949 788 ----------------------- -------------- 1,318 1,286 1,858 4,565 3,903 ----------------------- -------------- Gas, Power and Renewables (90) 124 (17) UK 223 (74) (12) (1) (4) Rest of Europe 1 (29) 138 43 378 USA 584 330 (6) 8 (43) Rest of World 84 193 ----------------------- -------------- 30 174 314 892 420 ----------------------- -------------- Other businesses and corporate (170) (209) (144) UK (532) (424) 4 30 10 Rest of Europe 45 (3) (265) (13) (366) USA (383) (585) (10) 36 48 Rest of World 87 1,412 ----------------------- -------------- (441) (156) (452) (783) 400 ----------------------- -------------- 5,729 7,207 8,255 23,598 18,050 (95) (4) (285) Unrealized profit in inventory (442) (248) Net profit on transactions between continuing and 89 159 144 Innovene operations 399 157 ----------------------- -------------- 5,723 7,362 8,114 Total for continuing operations 23,555 17,959 ----------------------- -------------- Innovene operations (49) 152 (276) UK (137) (173) 174 120 (169) Rest of Europe 256 370 (14) 42 (258) USA (126) (36) (3) 17 (37) Rest of World (20) 3 ----------------------- -------------- 108 331 (740) (27) 164 Net profit on transactions between continuing and (89) (159) (144) Innovene operations (399) (157) ----------------------- -------------- 19 172 (884) Total for Innovene operations (426) 7 ----------------------- -------------- 5,742 7,534 7,230 Total for period 23,129 17,966 ======================= ============== By geographical area 462 477 1,089 UK 2,151 1,710 833 1,089 1,049 Rest of Europe 3,972 2,075 2,188 2,841 2,376 USA 8,245 6,721 2,240 2,955 3,600 Rest of World 9,187 17,453 ----------------------- -------------- 5,723 7,362 8,114 Total for continuing operations 23,555 17,959 ======================= ============== Analysis of Non-operating Items Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production (3) (678) (53) UK (1,021) (6) (1) 3 - Rest of Europe 1,030 (1) 31 (3) (106) USA (110) (105) (46) 26 12 Rest of World 82 (156) ----------------------- ------------- (19) (652) (147) (19) (268) ----------------------- ------------- Refining and Marketing (25) (23) (3) UK (18) (119) (46) (12) (53) Rest of Europe (64) (10) (143) (634) (96) USA (725) (141) (10) 11 (2) Rest of World (32) (59) ----------------------- ------------- (224) (658) (154) (839) (329) ----------------------- ------------- Gas, Power and Renewables - 66 90 UK 261 - - - - Rest of Europe - - - 21 5 USA 26 - 16 - - Rest of World - 16 ----------------------- ------------- 16 87 95 287 16 ----------------------- ------------- Other businesses and corporate (44) (6) (6) UK (54) (43) (54) 12 - Rest of Europe 11 (54) (251) 11 (284) USA (277) (447) 11 - - Rest of World - 1,400 ----------------------- ------------- (338) 17 (290) (320) 856 ----------------------- ------------- Total before taxation (565) (1,206) (496) for continuing operations (891) 275 171 384 167 Taxation credit (charge) 296 (83) ----------------------- ------------- Total after taxation for (394) (822) (329) continuing operations (595) 192 ----------------------- ------------- Innovene operations - - (301) UK (325) (5) - - (224) Rest of Europe (224) - - - (208) USA (208) - - - (26) Rest of World (26) - ----------------------- ------------- Total before taxation for - - (759)(a) Innovene operations (783)(a) (5) - - 167 Taxation credit (charge) 177 2 ----------------------- ------------- Total after taxation for - - (592) Innovene operations (606) (3) ----------------------- ------------- (394) (822) (921) Total after taxation for period (1,201) 189 ======================= ============= (a) Includes the loss on re-measurement to fair value of $724 million in the third quarter and impairment charges of $24 million and $35 million in the first and third quarters of 2005, respectively. Depreciation of Fixed Asset Revaluation Adjustment Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Exploration and Production 6 12 6 UK 25 25 98 70 64 USA 211 281 4 3 5 Rest of World 12 16 ----------------------- ------------- 108 85 75 248 322 ----------------------- ------------- Refining and Marketing 31 31 31 USA 93 93 ----------------------- ------------- 31 31 31 93 93 ----------------------- ------------- Total depreciation of revaluation 139 116 106 adjustment (a)(b) 341 415 ======================= ============= (a) Relates to the revaluation adjustment consequent upon the ARCO acquisition. (b) Excludes impairment of the revaluation adjustment which is included in non-operating items. Net Debt Ratio - Net Debt: Net Debt + Equity Third Second Third Quarter Quarter Quarter 30 September 2004 2005 2005 2005 2004 ======================= ============== $ million $ million 20,445 19,302 22,159 Gross debt 22,159 20,445 1,741 1,360 2,182 Cash and cash equivalents 2,182 1,741 ----------------------- -------------- 18,704 17,942 19,977 Net debt 19,977 18,704 ======================= ============== 75,114 80,097 82,726 Equity 82,726 75,114 20% 18% 19% Net debt ratio 19% 20% ======================= ============== Production and Realizations Third Second Third Quarter Quarter Quarter Nine months 2004 2005 2005 2005 2004 ======================= ============== Production (a) Crude oil (mb/d) (net of royalties) 281 290 224 UK 267 315 68 73 64 Rest of Europe 71 74 495 546 427 USA 511 533 1,454 1,528 1,598 Rest of World 1,536 1,398 ----------------------- ------------- 2,298 2,437 2,313 Total crude oil production 2,385 2,320 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 13 20 12 UK 16 18 3 4 4 Rest of Europe 4 4 134 127 113 USA 125 138 31 31 30 Rest of World 31 30 ----------------------- ------------- Total natural gas 181 182 159 liquids production 176 190 ======================= ============= Liquids (b)(mb/d) (net of royalties) 294 310 236 UK 283 333 71 77 68 Rest of Europe 75 78 629 673 540 USA 636 671 1,485 1,559 1,628 Rest of World 1,567 1,428 ----------------------- ------------- 2,479 2,619 2,472 Total liquids production 2,561 2,510 ======================= ============= Natural gas (mmcf/d) (net of royalties) 903 1,136 831 UK 1,068 1,156 110 106 99 Rest of Europe 109 129 2,685 2,727 2,456 USA 2,610 2,781 4,577 4,692 4,455 Rest of World 4,625 4,367 ----------------------- ------------- 8,275 8,661 7,841 Total natural gas production 8,412 8,433 ======================= ============= Average realizations (c) Crude oil ($/bbl) 40.33 48.76 57.77 UK 50.15 34.21 39.52 49.27 56.64 USA 49.15 35.87 38.01 44.57 55.89 Rest of World 47.68 33.83 39.43 47.79 56.83 BP Average 49.07 34.93 ======================= ============= Natural gas liquids ($/bbl) 34.29 34.34 47.49 UK 36.03 28.84 27.59 28.04 36.39 USA 30.15 24.31 30.63 33.77 32.97 Rest of World 32.63 25.81 28.77 29.86 36.70 BP Average 31.30 25.13 ======================= ============= Liquids (a) ($/bbl) 40.06 47.83 57.26 UK 49.35 33.92 37.46 45.92 53.17 USA 46.05 33.96 37.53 43.94 54.63 Rest of World 46.79 33.30 38.29 45.95 54.80 BP Average 47.22 33.89 ======================= ============= Natural gas ($/mcf) 3.60 4.82 4.45 UK 5.01 4.03 4.94 5.83 6.77 USA 5.95 4.92 2.71 3.20 3.43 Rest of World 3.24 2.64 3.66 4.38 4.75 BP Average 4.45 3.71 ======================= ============= (a) Includes BP's share of production of equity-accounted entities. (b) Crude oil and natural gas liquids. (c) Based on turnover of consolidated subsidiaries only - this excludes equity-accounted entities. Notes 1. Transition to International Financial Reporting Standards For all periods up to and including the year ended 31 December 2004, BP prepared its financial statements in accordance with UK generally accepted accounting practice (UK GAAP). From 1 January 2005 BP is required to prepare consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Commission ('EC'). Consequently, financial information for interim quarters of 2005 must be prepared on the basis of IFRS. The general principle that should be applied on first-time adoption of IFRS is that standards in force at the first reporting date (that is, for BP, 31 December 2005) should be applied retrospectively. However, IFRS 1 'First-time Adoption of International Financial Reporting Standards' contains a number of exemptions which companies are permitted to apply. BP has elected: - not to present comparative information in accordance with IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'. - not to restate its financial information for acquisitions occurring before 1 January 2003. - to deem cumulative translation differences to be zero at 1 January 2003. - to recognize all actuarial gains and losses on pensions and other post-retirement benefits directly in shareholders' equity at 1 January 2003. This is consistent with the group's adoption of FRS 17 'Retirement Benefits' in 2004. - to apply IFRS 2 'Share-based Payment' retrospectively to all share- based payments. As a result of the above exemptions certain changes apply from 1 January 2003 (BP's Date of Transition) followed by further changes (due to IAS 32 and IAS 39) to apply from 1 January 2005. The quarterly information for 2005 and the restatement of financial information for the year ended 31 December 2004 and the interim quarters of 2004 have been prepared on the basis of all International Financial Reporting Standards (IFRSs) (with the exception of IAS 32 and IAS 39 (as amended) for the 2004 information) and Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) expected to be in effect for the year ending 31 December 2005. It is possible that there will be changes to these standards and interpretations before the end of 2005, which might require further adjustments to this information before it is included in the 2005 Annual Report and Accounts. In addition, BP has decided to early adopt IFRS 6 'Exploration for and Evaluation of Mineral Resources', the amendment to IAS 19 'Amendment to international accounting standard IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures', the amendment to IAS 39 'Financial Instruments: Recognition and Measurement - Cash Flow Hedge Accounting of Forecast Intra-group Transactions' and IFRIC 4 'Determining whether an Arrangement contains a Lease'. In the restatement information for the year ended 31 December 2004 and the interim quarters of 2004 financial assets and financial liabilities are accounted for on the basis of UK GAAP. Under UK GAAP, all derivatives used for trading purposes are recognized on the balance sheet at fair value. However, derivative financial instruments used for hedging purposes are recognized by applying either the accrual method or the deferral method. Under the accrual method, amounts payable or receivable in respect of derivatives are recognized rateably in earnings over the period of the contracts. Changes in the derivative's fair value are not recognized. On the deferral method, gains and losses from derivatives are deferred and recognized in earnings or as adjustments to carrying amounts as the underlying hedged transaction matures or occurs. From 1 January 2005 for IFRS all financial assets and financial liabilities have to be recognized initially at fair value. In subsequent periods the measurement of these financial instruments depends on their classification into one of the following measurement categories: i) financial assets or financial liabilities at-fair-value- through-profit-and-loss (such as those used for trading purposes, and all derivatives which do not qualify for hedge accounting); ii) loans and receivables; iii) available-for-sale financial assets (including certain investments held for the long term) and iv) other liabilities. The effect of adopting IAS 39 at 1 January 2005 is shown as a movement in BP shareholders' equity for 2005. Notes 1. Transition to International Financial Reporting Standards (continued) The principal differences for the group between reporting on the basis of UK GAAP and IFRS are as follows: - ceasing to amortize goodwill. - setting up deferred taxation on: - acquisitions; - inventory valuation differences; - unremitted earnings of subsidiaries, associates and jointly controlled entities. - expensing a greater proportion of major maintenance costs. - no longer recognizing dividends proposed but not declared as a liability at the balance sheet date. - recognizing an expense for the fair value of employee share option schemes rather than the intrinsic value. - recording asset swaps on the basis of fair value. - embedded derivatives measured at fair value. BP has produced an explanatory note setting out its accounting policies under IFRS, the major differences between UK GAAP and IFRS for BP, and reconciliations of UK GAAP to IFRS for its 2003 and 2004 Income and Cash Flow Statements, its Balance Sheets at 1 January 2003, 31 December 2003, 31 December 2004 and 1 January 2005. This information can be found at the Investor Centre www.bp.com. In addition, the reconciliations for 2004 interim periods included in this report are shown below. Third Nine Quarter Months 2004 2004 ===================== $ million Profit for the period under UK GAAP 4,541 13,351 Adjustments Goodwill amortization 361 1,077 Major maintenance expenditure (35) (123) Share-based payments (74) (109) Asset swaps 1 3 Recycling foreign exchange on disposal - 78 Deferred tax 104 (50) Other (28) (34) --------------------- Profit for the period under IFRS 4,870 14,193 ===================== 30 September 2004 ======= $ million BP shareholders' equity under UK GAAP 74,941 Adjustments Goodwill amortization 2,499 Major maintenance expenditure (667) Share-based payments (299) Asset swaps (139) Deferred tax (3,971) Dividend accrual 1,536 Other (69) ------- BP shareholders' equity under IFRS 73,831 ======= Notes 2. Resegmentation With effect from 1 January 2005 there have been the following changes to the business segments reported by the group. (a) Our petrochemicals operations were divided between the Refining and Marketing segment and Other businesses and corporate. The Aromatics and Acetyls businesses and the petrochemicals assets that are integrated with our Gelsenkirchen refinery in Germany became part of Refining and Marketing. The Olefins and Derivatives business was reported within Other businesses and corporate. This segment was also restated to include the legacy historical results of other petrochemicals assets that had been divested during 2004. In addition we also combined our Grangemouth and Lavera refineries into the Olefins and Derivatives business to maintain current operating synergies. As indicated below we have agreed to sell our Olefins and Derivatives business and have categorized the majority of this business as discontinued operations. (b) A small US operation, the Hobbs fractionator, which supplies petrochemicals feedstock, has been transferred from Gas, Power and Renewables to Olefins and Derivatives. (c) The Mardi Gras pipeline system in the Gulf of Mexico has been transferred from Exploration and Production to Refining and Marketing. Comparative financial and operating information is shown after resegmentation and the adoption of International Financial Reporting Standards. Further information regarding these adjustments can be found at the BP investor centre www.bp.com. 3. Sale of Olefins and Derivatives business BP announced on 7 October 2005, its intention to sell Innovene, its olefins, derivatives and refining group to UK-based INEOS for $9 billion in cash. The transaction, which is subject to regulatory approvals, includes all Innovene's manufacturing sites, markets and technologies. The equity-accounted investments in China and Malaysia which were part of the Olefins and Derivatives business will remain with BP and are included within Other businesses and corporate. The proposed sale was sufficiently well advanced at the end of September for the Innovene operations to be classified as a 'disposal group' and for the assets and related liabilities to be shown as held for sale at 30 September. In these circumstances the Innovene operations should be carried on the group's balance sheet at the lower of cost and fair value less costs to sell. The re-measurement to fair value resulted in a loss of $724 million before tax. The Innovene operations represent a separate major line of business for BP. As a result of the proposed sale, these operations have been treated as discontinued operations at 30 September 2005. A single amount is shown on the face of the income statement comprising the post-tax result of discontinued operations and the post-tax loss recognized on the re- measurement to fair value less costs to sell of the discontinued operation. That is, the income and expenses of Innovene are reported separately from the continuing operations of the BP group. The table below provides further detail of the amount shown on the income statement. The income statements for prior periods have been restated to conform this style of presentation. In the cash flow statement the cash provided by the operating activities of Innovene has been separated from that of the rest of the group and reported as a single line item. Notes 3. Sale of Olefins and Derivatives business (continued) Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Profit before tax from 231 293 99 Innovene operations 924 447 Net profit on transactions between continuing and (89) (159) (144) Innovene operations (399) (157) ----------------------- --------------- 142 134 (45) Profit before taxation 525 290 Loss recognized on the re-measurement to - - (724) fair value (724) - ----------------------- --------------- 142 134 (769) (199) 290 Taxation Related to profit (59) (31) (56) before tax (220) (119) Related to re-measurement - - 159 to fair value 159 - ----------------------- --------------- Profit (loss) from 83 103 (666) Innovene operations (260) 171 ======================= =============== Notes 4. Sales and other operating revenues Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business 8,601 10,934 11,321 Exploration and Production 32,441 24,870 46,639 61,022 68,790 Refining and Marketing 181,458 141,795 20,443 23,110 28,917 Gas, Power and Renewables 75,694 59,852 Other businesses 137 174 161 and corporate 507 390 ----------------------- --------------- Sales by continuing 75,820 95,240 109,189 operations 290,100 226,907 Less: sales between 7,873 7,843 8,511 businesses 24,723 21,367 sales to Innovene 2,183 3,926 4,158 operations 10,197 5,956 ----------------------- --------------- Third party sales of 65,764 83,471 96,520 continuing operations 255,180 199,584 ======================= =============== By geographical area 20,355 29,998 37,406 UK 92,233 52,075 11,499 16,916 16,904 Rest of Europe 49,644 32,309 30,476 38,115 45,759 USA 116,818 94,037 16,552 20,028 19,595 Rest of World 58,237 47,806 ----------------------- --------------- Sales by continuing 78,882 105,057 119,664 operations 316,932 226,227 10,935 17,660 18,986 Less: sales between areas 51,555 20,687 sales to Innovene 2,183 3,926 4,158 operations 10,197 5,956 ----------------------- --------------- 65,764 83,471 96,520 255,180 199,584 ======================= =============== Notes 5. Operating profits are after charging: Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Exploration expense 4 13 3 UK 21 9 7 - 1 Rest of Europe 2 15 58 85 120 USA 308 218 66 41 53 Rest of World 145 137 ----------------------- -------------- 135 139 177 476 379 ======================= ============== Production and similar taxes (a) 51 153 95 UK 362 223 502 544 739 Overseas 1,818 1,279 ----------------------- -------------- 553 697 834 2,180 1,502 ======================= ============== (a) Production taxes are charged against Exploration and Production's operating profit. 6. Interest payable 161 204 237 Group interest payable 632 456 (57) (76) (93) Capitalized (245) (159) ----------------------- -------------- 104 128 144 387 297 Early redemption of finance - - - leases 57 - ----------------------- -------------- 104 128 144 444 297 ======================= ============== 7. Other finance expense Interest on pension and other post-retirement benefit 502 509 502 plan liabilities 1,525 1,493 Expected return on pension and other post-retirement (493) (542) (528) benefit plan assets (1,617) (1,482) ----------------------- -------------- Interest net of expected return 9 (33) (26) on plan assets (92) 11 Unwinding of discount 48 50 49 on provisions 144 146 Unwinding of discount on deferred consideration for acquisition of investment 22 17 14 in TNK-BP 48 74 ----------------------- -------------- 79 34 37 100 231 ======================= ============== Notes 8. Dividends paid Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== Dividends per ordinary share 7.10 8.50 8.925 cents 25.925 20.6 3.860 4.450 5.119 pence 14.091 11.341 42.6 51.0 53.55 Dividends per ADS (cents) 155.55 123.6 ======================= ============== 9. Analysis of changes in net debt Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Opening balance 19,858 19,564 19,302 Finance debt 23,091 22,325 Less: Cash and cash 1,590 1,521 1,360 equivalents 1,359 2,056 ----------------------- --------------- 18,268 18,043 17,942 Opening net debt 21,732 20,269 ----------------------- --------------- Closing balance 20,445 19,302 22,159 Finance debt 22,159 20,445 Less: Cash and cash 1,741 1,360 2,182 equivalents 2,182 1,741 ----------------------- --------------- 18,704 17,942 19,977 Closing net debt 19,977 18,704 ----------------------- --------------- Decrease (increase) (436) 101 (2,035) in net debt 1,755 1,565 ======================= =============== Movement in cash and cash equivalents (excluding 130 (161) 896 exchange adjustments) 906 (328) Net cash outflow (inflow) from financing(excluding (563) 380 (3,060) share capital) 867 2,104 - - - Adoption of IAS 39 (147) - - 17 8 Fair value hedge adjustment 123 - 10 53 33 Other movements 135 31 ----------------------- -------------- Movement in net debt before (423) 289 (2,123) exchange effects 1,884 1,807 (13) (188) 88 Exchange adjustments (129) (242) ----------------------- -------------- Decrease (increase) (436) 101 (2,035) in net debt 1,755 1,565 ======================= ============== Notes 10. TNK-BP Operational and Financial Information Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== Production (Net of royalties) (BP share) 858 903 930 Crude oil (mb/d) 903 813 505 429 449 Natural gas (mmcf/d) 468 446 945 977 1,007 Total hydrocarbons (mboe/d)(a) 983 889 ======================= ============== $ million $ million Income statement (BP share) 807 920 1,253 Profit before interest and tax 2,788 1,762 (23) (32) (37) Interest expense * (98) (79) (222) (227) (347) Taxation (741) (491) (6) (20) (46) Minority interest (74) (26) ----------------------- -------------- 556 641 823 Net Income 1,875 1,166 ======================= ============== * Excludes unwinding of discount 22 17 14 on deferred consideration 48 74 ======================= ============== 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) ======================= ============== 1,031 425 750 Dividends received (b) 1,425 1,150 ======================= ============== Third Second Third Quarter Quarter Quarter Nine Months 2004 2005 2005 2005 2004 ======================= ============== Average oil marker prices ($/bbl) 37.23 48.08 57.13 Urals (NWE - cif) 49.30 32.85 37.41 48.49 57.39 Urals (Med - cif) 49.75 33.00 23.33 27.39 36.60 Domestic Oil 27.77 20.04 ======================= ============== Balance Sheet 30 September 31 December 2005 2004 ========================== Investments in jointly controlled entities 8,744 8,294 ========================== Deferred consideration Due within one year 1,219 1,227 Due after more than one year - 1,194 -------------------------- 1,219 2,421 ========================== (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. (b) Dividends received since the inception of the TNK-BP joint venture are $3,649 million (including $464 million relating to the period prior to completion of the acquisition). TNK-BP operational and financial information has been estimated and includes adjustments to net income in respect of prior periods amounting to a charge of $8 million in 3Q 2005 and a charge of $14 million in nine months 2005. As reported at previous quarters, various TNK-BP group companies had received tax notifications totalling approximately $1 billion in respect of 2001. Significant progress was made during this quarter towards resolving these matters. Claims totalling approximately $870 million have been settled by TNK-BP for approximately $250 million, with the lower courts also finding in favour of TNK-BP in early October in respect of a claim totalling $143 million. BP's share of these settlements is covered by indemnities that BP had received from its co-venturers on entering into the joint venture arrangement. Audits of tax years 2002 and 2003 are currently ongoing, and no tax notifications in respect of these periods have as yet been issued. Notes 11. Equity-accounted entities The group's profit for the period includes the following in respect of equity-accounted entities. RC profit Profit (loss) Inventory (loss) before holding before interest gains interest and tax (losses) and tax --------------------------------------- $ million Third Quarter 2005 Exploration and Production 1,523 - 1,523 Refining and Marketing 126 4 130 Gas, Power and Renewables (2) - (2) Other businesses and corporate 62 - 62 --------------------------------------- Continuing operations 1,709 4 1,713 Innovene operations - - - --------------------------------------- 1,709 4 1,713 ======================================= Second Quarter 2005 Exploration and Production 1,163 - 1,163 Refining and Marketing 72 (10) 62 Gas, Power and Renewables 9 - 9 Other businesses and corporate 2 (5) (3) --------------------------------------- Continuing operations 1,246 (15) 1,231 Innovene operations 3 - 3 --------------------------------------- 1,249 (15) 1,234 ======================================= Third Quarter 2004 Exploration and Production 980 - 980 Refining and Marketing 123 (7) 116 Gas, Power and Renewables 6 - 6 Other businesses and corporate 21 (6) 15 --------------------------------------- Continuing operations 1,130 (13) 1,117 Innovene operations 6 2 8 --------------------------------------- 1,136 (11) 1,125 ======================================= Notes 11. Equity-accounted entities (continued) Profit (loss) Minority for the Interest Tax interest period ---------------------------------------- $ million Third Quarter 2005 Exploration and Production (63) (421) (46) 993 Refining and Marketing (6) (23) - 101 Gas, Power and Renewables (1) (4) - (7) Other businesses and corporate (17) - - 45 --------------------------------------- Continuing operations (87) (448) (46) 1,132 Innovene operations - - - - --------------------------------------- (87) (448) (46) 1,132 ======================================= Second Quarter 2005 Exploration and Production (56) (289) (20) 798 Refining and Marketing (5) (13) - 44 Gas, Power and Renewables (3) (1) - 5 Other businesses and corporate (1) - - (4) --------------------------------------- Continuing operations (65) (303) (20) 843 Innovene operations - - - 3 --------------------------------------- (65) (303) (20) 846 ======================================= Third Quarter 2004 Exploration and Production (45) (273) (6) 656 Refining and Marketing (4) (22) - 90 Gas, Power and Renewables (2) (1) - 3 Other businesses and corporate (1) - - 14 --------------------------------------- Continuing operations (52) (296) (6) 763 Innovene operations (3) - - 5 --------------------------------------- (55) (296) (6) 768 ======================================= 11. Equity-accounted entities (continued) RC profit Profit (loss) Inventory (loss) before holding before interest gains interest and tax (losses) and tax --------------------------------------- $ million Nine Months 2005 Exploration and Production 3,527 - 3,527 Refining and Marketing 274 (10) 264 Gas, Power and Renewables 12 - 12 Other businesses and corporate 63 (5) 58 --------------------------------------- Continuing operations 3,876 (15) 3,861 Innovene operations 3 - 3 --------------------------------------- 3,879 (15) 3,864 ======================================= Nine Months 2004 Exploration and Production 2,357 - 2,357 Refining and Marketing 293 (14) 279 Gas, Power and Renewables 8 - 8 Other businesses and corporate 69 (23) 46 --------------------------------------- Continuing operations 2,727 (37) 2,690 Innovene operations (16) 8 (8) --------------------------------------- 2,711 (29) 2,682 ======================================= Profit (loss) Minority for the Interest Tax interest period ---------------------------------------- $ million Nine Months 2005 Exploration and Production (171) (937) (74) 2,345 Refining and Marketing (16) (54) - 194 Gas, Power and Renewables (6) (7) - (1) Other businesses and corporate (21) - - 37 --------------------------------------- Continuing operations (214) (998) (74) 2,575 Innovene operations - - - 3 --------------------------------------- (214) (998) (74) 2,578 ======================================= Nine Months 2004 Exploration and Production (141) (653) (26) 1,537 Refining and Marketing (12) (58) - 209 Gas, Power and Renewables (5) (1) - 2 Other businesses and corporate (3) - - 43 --------------------------------------- Continuing operations (161) (712) (26) 1,791 Innovene operations (3) - - (11) --------------------------------------- (164) (712) (26) 1,780 ======================================= Notes 12. Fourth quarter results BP's fourth quarter results will be announced on 7 February 2006. 13. Statutory accounts The financial information shown in this publication is unaudited and does not constitute statutory accounts. The 2004 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 United States -------------- -------------- Press Office Roddy Kennedy Ronnie Chappell +44 (0)20 7496 4624 +1 281 366 5174 Investor Relations Fergus MacLeod 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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