Trading Statement

BP Amoco PLC
11 July 2000


BP AMOCO AIMS FOR DOUBLE-DIGIT EARNINGS GROWTH

BP Amoco said that it expects to increase gross capital spending to an average
of $13.5 billion a year for the next three years and aims to grow underlying
earnings for the group by at least ten per cent a year over the same period.

The additional spend - up from a comparable annual average of some $12 billion
for the three years to 1999 for BP Amoco, ARCO and Burmah Castrol combined -
will be used to accelerate high-return projects from the group's enlarged
portfolio, in particular gas production from Trinidad and oil production from
the deep water Gulf of Mexico.

Speaking to financial analysts in London, chief executive Sir John Browne said
he and his management team are determined that the extra spend, which excludes
acquisitions, will be accompanied by a continuing focus on unit costs and
enhanced productivity from existing assets.

'We anticipate disposals of some $1.5 billion a year over the next three
years, as we continue to high-grade our portfolio,' Browne said. 'This means
total net investment will average around $12 billion per annum, so capital
employed should grow by around four to six per cent a year. Add to that
improved productivity of between four and eight per cent a year, which we
believe we can achieve across the group, and we can see bottom-line growth of
ten per cent a year and possibly more.

'Let me be clear, there is no question of us taking a pause in earnings growth
while we go through an investment phase. We will work our existing assets, as
well as the new ones, so that the new level of performance can be achieved
without any such pause.'

Browne said the newly-enlarged BP Amoco group now had a superlative asset base
from which to grow, with oil reserves of 7.5 billion barrels and 43 trillion
cubic feet of gas, a global retail network of 28,000 sites and a world-class
petrochemicals business.

'We also have a stronger financial base, a much wider set of opportunities and
a superb array of people skills from across the world. We are now ready to
move from a phase of retrenchment to a phase of expansion.'

Browne said that over the next three years he expected BP Amoco's oil
production to rise by five to eight per cent a year and gas by eight to ten
per cent. By 2003, gas would account for over 40 per cent of overall output.

Sales of gas were scheduled to rise by between nine and 11 per cent and
petroleum products by up to four per cent. Petrochemical volumes were set to
rise by eight to ten per cent and convenience market sales by up to 15 per
cent.

Gross capital spending on exploration and production would rise to an average
of $8 billion a year, on refining and marketing to $2.8 billion and on
petrochemicals to $2 billion. The new gas and power business would spend some
$400 million and annual investment in renewables, including solar, would
double to around $500 million.

Browne said the group would continue to plan on the basis of a prudent
financial framework, with dividends based on 50 per cent of pro forma income.
Against the background of current world crude prices, which he expected to
remain strong for at least the next year, the group's mid-cycle oil price
assumption would rise from $14 to $16 dollars a barrel, although upstream
projects would still be tested to return the cost of capital at a price of $11
a barrel.

Gearing would remain capped at 30 per cent, with an average target of 25 per
cent but a new floor of 20 per cent at above mid-cycle conditions to allow
either increased investment in top-quality projects or share buybacks in
excess of the current programme. The average tax rate over the three-year
period was expected to rise from around 25 per cent to 30 per cent.

Highlighting progress on existing group targets, Browne said the group
expected to deliver cost-savings of $4.7 billion by year-end - 80 per cent of
the projected total of $5.8 billion, well ahead of schedule. 'This means we
can be confident of delivering the target we set out last year - a five to six
percentage point underlying improvement in return on capital employed by
around the end of this year.'

Exploration chief executive Dick Olver told analysts that the company was
strongly encouraged by the results of appraisal wells currently drilling in
its Crazy Horse and Atlantis fields in the deep water Gulf of Mexico.

He said: 'In Crazy Horse we have two active wells showing exciting multiple
zones, some not seen in the original discovery well. In Atlantis, our first
appraisal well has encountered 280 feet of net oil pay in a horizon again not
encountered in the discovery well, with additional zones yet to be drilled.
Drilling is continuing in both fields, so we will have to wait for more news.'

Olver said BP Amoco had large stakes in nine of the ten big deep water fields
so far found in the Gulf of Mexico, with a net share of discoveries totalling
3.5 billion barrels of oil equivalent, 500 million barrels of which were added
in the past year. With the acquisition of Vastar, BP Amoco would be the
biggest lease-holder in the Gulf, with 20 per cent of the acreage so far
licensed, Olver said.

Doug Ford, chief executive of refining and marketing, told analysts that the
company was planning to sell further refinery capacity, including its interest
in the Singapore Refining Company (SRC). 'With the Alliance refinery in
Louisiana, which is close to sale, we expect to divest over 500,000 barrels of
capacity, around 15 per cent of our portfolio,' he said.

'We expect to dispose of this excess capacity in the first half of next year,
so that our refining coverage for the combined group is reduced to less than
70 per cent by the end of 2001. We will emerge with a capacity of some 2.8
million barrels a day - a material, high-graded portfolio from which we will
deliver further efficiencies and integration opportunities.'

Ford also disclosed that the company would shortly launch a new brand, under
the name 'BP' and a new logo radically different from the BP shield and Amoco
torch, which would be gradually introduced at the group's retail sites, except
for the US West Coast where the company intended to retain the ARCO brand.

'A single, global brand will help unite our employees around a common vision
of the future,' Ford said. 'We have spent around $7 million on researching the
new brand, including legal and copyright work and design for its different
applications.

'We plan to spend some $25 million a quarter on its launch and ongoing
support, which is little more than was spent on the separate brands that now
make up the new BP.' Amoco Ultimate gasoline would retain its distinctive
brand in the US, and the Castrol lubricants would remain unaffected.

Ford said that the company also planned to update its global retail network in
a phased programme spanning four years. Revamped sites would incorporate new
convenience store design, thin-film solar canopies and be fully digitised for
e-commerce transactions.

Concluding his remarks to analysts, Sir John Browne said: 'BP Amoco is now a
truly global company, with substantial operations in more than 100 countries
worldwide. We have become a major producer of natural gas, for which demand
has grown 30 per cent faster than for oil over the past decade. We are
participants in nearly all the significant, accessible oil and gas provinces
around the world, and we're one of the leading refiners and marketers.

'All that is supported by an organisation with strategic leadership from the
centre but delivery delegated to 150 business units, each with clear
accountability for performance, and the whole connected by the very best
modern technology so that we can spread knowledge and learning. We have a
disciplined and prudent financial framework.

'The result, I believe, is that we can look forward with confidence to
underlying growth in earnings of at least 10 per cent a year - on constant
assumptions which don't rely on exceptional prices or margin.'