Annual Reports

 
Other

  • 6-K (Mar 6, 2018)
  • 6-K (Feb 22, 2018)
  • 6-K (Feb 13, 2018)
  • 6-K (Feb 6, 2018)
  • 6-K (Feb 5, 2018)
  • 6-K (Jan 16, 2018)
BP 6-K 2008

Documents found in this filing:

  1. 6-K
  2. 6-K

SECURITIES AND EXCHANGE COMMISSION
 

      Washington, D.C. 20549
 

 

      Form 6-K
 

       Report of Foreign Issuer
 

       Pursuant to Rule 13a-16 or 15d-16 of
           the Securities Exchange Act of 1934
 


          for the period ended 28 October, 2008
 
 

           BP p.l.c.
                 (Translation of registrant's name into English)
 
 

                 1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
                    (Address of principal executive offices)
 
 

     Indicate  by check mark  whether the  registrant  files or will file annual
     reports under cover Form 20-F or Form 40-F.
 
 
Form 20-F        |X|          Form 40-F
                         ---------------               ----------------
 
 

     Indicate by check mark whether the registrant by furnishing the information
     contained in this Form is also thereby  furnishing  the  information to the
     Commission  pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
     1934.
 
 

Yes                            No        |X|
                         ---------------               ----------------

 

 

 

BP p.l.c.      

Group results
Third quarter 2008

 


London 28 October 2008

FOR IMMEDIATE RELEASE

Third 

Second 

Third 

       

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 (c)  

2008 

$ million

2008 

2007 

4,406 

9,358 

8,049 

Profit for the period(a)

24,501 

16,446 

 
     

Inventory holding (gains) losses,

     

(363)

(2,612)

1,980 

net of tax(b)

(1,495)

(1,471)

 
             

4,043 

6,746 

10,029 

Replacement cost profit(b)

23,006 

14,975 

54 

             

10.40 

18.27 

29.75 

      per ordinary share (pence)

64.69 

39.17 

 

21.27 

35.83 

53.43 

–     per ordinary share (cents)

122.27 

77.95 

57 

1.28 

2.15 

3.21 

–     per ADS (dollars)

7.34 

4.68 

 


·     

BP’s third-quarter replacement cost profit was $10,029 million, compared with $4,043 million a year ago, an increase of 148%. For the nine months, replacement cost profit was $23,006 million compared with $14,975 million a year ago, up 54%.




·     

Non-operating items and fair value accounting effects for the third quarter had a net $1,147 million favourable impact compared to a net $448 million unfavourable impact for the third quarter of 2007. For the nine months, the respective amounts were $632 million unfavourable and $561 million favourable - see further details on page 3. The largest non-operating item for the third quarter was a fair value gain on embedded derivatives which amounted to $1,098 million on a pre-tax basis. For the nine months, the fair value loss on embedded derivatives amounted to $1,673 million on a pre-tax basis.




·     

Net cash provided by operating activities for the quarter and nine months was $14.9 billion and $32.5 billion compared with $6.4 billion and $20.4 billion respectively a year ago.




·     

The effective tax rate on replacement cost profit for the third quarter was 33% and for the nine months was 35%; a year ago, the rates were 33% and 32% respectively.




·     

Net debt at the end of the quarter was $22.0 billion compared to $22.2 billion a year ago. The ratio of net debt to net debt plus equity was 17%, compared with 20% a year ago.




·     

Total capital expenditure and acquisitions was $8.9 billion for the quarter and $23.7 billion for the nine months. Capital expenditure, excluding acquisitions and asset exchanges and excluding the accounting for our transactions with Husky (see page 26) and Chesapeake (see page 17), was $5.2 billion for the quarter, $14.9 billion for the nine months and is expected to be around $21-22 billion for the year. Disposal proceeds were $365 million for the quarter and $700 million for the nine months.




·     

The quarterly dividend, to be paid in December, is 14 cents per share ($0.84 per ADS) compared with 10.825 cents per share a year ago. For the nine months, the dividend showed an increase of 30%. In sterling terms, the quarterly dividend is 8.705 pence per share, compared with 5.308 pence per share a year ago; for the nine months, the increase was 43%. During the quarter, the company repurchased 92.9 million of its own shares for cancellation at a cost of $911 million. For the nine months, share repurchases were 269.8 million at a cost of $2.9 billion.




(a)

Profit attributable to BP shareholders.

(b)

With effect from 1 January 2008, replacement cost profit excludes inventory holding gains and losses net of tax. Comparative amounts have been amended to the new basis. See page 2 for further details.

(c)

Comparative data for 2008 has been amended. See Note 2(d) on page 24 for further details.



The commentaries above and following are based on replacement cost profit and should be read in conjunction with the cautionary statement on page 11.



Top of page 2

 

Analysis of replacement cost profit and reconciliation to profit for the period

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 (d)  

2008 

$ million

2008 

2007 

6,307 

10,771 

12,709 

Exploration and Production

33,552 

19,732 

371 

539 

1,972 

Refining and Marketing

3,760 

3,917 

(511)

(314)

(16)

Other businesses and corporate

(543)

(782)

103 

(221)

838 

Consolidation adjustment(a)

(167)

47 

6,270 

10,775 

15,503 

RC profit before interest and tax(b)

36,602 

22,914 

           
     

Finance costs and net finance income

   
     

relating to pensions and other

   

(173)

(221)

(238)

post-retirement benefits

(705)

(499)

(1,982)

(3,696)

(5,099)

Taxation on a replacement cost basis(c)

(12,524)

(7,221)

(72)

(112)

(137)

Minority interest

(367)

(219)

     

Replacement cost profit attributable

   

4,043 

6,746 

10,029 

to BP shareholders(c)

23,006 

14,975 

           

539 

3,952 

(2,978)

Inventory holding gains (losses)

2,300 

2,131 

     

Taxation (charge) credit on inventory

   

(176)

(1,340)

998 

holding gains and losses

(805)

(660)

     

Profit for the period attributable to

   

4,406  

9,358 

8,049 

BP shareholders

24,501 

16,446 



(a)

The consolidation adjustment in the third quarter of 2008 was impacted by a significant fall in prices and a substantial reduction in the volumes of equity crude within the refining and marketing system.

(b)

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.

(c)

Effective 1 January 2008, replacement cost profit excludes inventory holding gains and losses and their associated tax effect. Previously, replacement cost profit excluded inventory gains and losses while the tax charge remained unadjusted and included the tax effect on inventory holding gains and losses. Comparative amounts have been amended to the new basis and the impact of the change is shown in the table below. There is no impact on profit for the period.

(d)

Comparative data for 2008 has been amended. See Note 2(d) on page 24 for further details.



 

Nine 

Third 

 

m onths 

quarter 

$ million

2007 

2007 

     

Replacement cost profit attributable to BP shareholders

   

- as previously reported

14,315 

3,867 

- tax effect on inventory holding gains and losses

660 

176 

- as amended

14,975 

4,043 



Top of page 3

 

             Non-operating items and fair value accounting effects

Non-operating items(a)

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

           

10 

(1,976)

1,118 

Exploration and Production

(1,234)

1,145 

(344)

(99)

– 

Refining and Marketing

510 

194 

(201)

(123)

(128)

Other businesses and corporate

(332)

(175)

(535)

(2,198)

990 

 

(1,056)

1,164 

174 

770 

(331)

Taxation (b)

383 

(365)

(361)

(1,428)

659 

 

(673)

799 



Fair value accounting effects(c)

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

     

Exploration and Production

   
     

Unrecognized gains (losses) brought

   

198 

366 

739 

forward from previous period

107 

155 

     

Unrecognized (gains)

   

(234)

(739)

(642)

losses carried forward

(642)

(234)

     

Favourable (unfavourable) impact

   
     

relative to management’s

   

(36)

(373)

97 

measure of performance

(535)

(79)

     

Refining and Marketing

   
     

Unrecognized gains (losses) brought

   

274 

328 

489 

forward from previous period

429 

72 

     

Unrecognized (gains)

   

(367)

(489)

147 

losses carried forward

147 

(367)

     

Favourable (unfavourable) impact

   
     

relative to management’s

   

(93)

(161)

636 

measure of performance

576 

(295)

(129)

(534)

733 

 

41 

(374)

42 

187 

(245)

Taxation (b)

– 

136 

(87)

(347)

488 

 

41 

(238)



Total of non-operating items and fair value accounting effects

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

           

(26)

(2,349)

1,215 

Exploration and Production

(1,769)

1,066 

(437)

(260)

636 

Refining and Marketing

1,086 

(101)

(201)

(123)

(128)

Other businesses and corporate

(332)

(175)

(664)

(2,732)

1,723 

 

(1,015)

790 

216 

957 

(576)

Taxation (b)

383 

(229)

(448)

(1,775)

1,147 

 

(632)

561 



(a)

An analysis of non-operating items by type is provided on page 20 and a geographical analysis is shown on pages 7, 9 and 10.

(b)

Tax is calculated using the quarter’s effective tax rate on replacement cost profit . Amounts for comparative periods have been amended to reflect a redefinition of the effective tax rate on replacement cost profit arising as a result of the exclusion of tax effects on inventory holding gains and losses as described on page 2.

(c)

An explanation of fair value accounting effects is provided on page 11.



Top of page 4      

 

                                                Per share amounts

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 (c)  

2008 

 

2008 

2007 

     

Results for the period ($ million)

   

4,406 

9,358 

8,049 

Profit (a)

24,501 

16,446 

4,043 

6,746 

10,029 

Replacement cost profit

23,006 

14,975 

           
     

Shares in issue at period end

   

19,019,579 

18,805,089 

18,725,073 

(thousand) (b)

18,725,073 

19,019,579 

3,169,930 

3,134,182 

3,120,846 

- ADS equivalent (thousand) (b)

3,120,846 

3,169,930 

     

Average number of shares

   

19,061,853 

18,823,515 

18,746,202 

outstanding (thousand)(b)

18,815,131 

19,209,757 

3,176,976 

3,137,253 

3,124,367 

- ADS equivalent (thousand) (b)

3,135,855 

3,201,626 

     

Shares repurchased in the

   

128,253 

85,900 

92,861 

period (thousand)

269,757 

541,975 

           
     

Per ordinary share (cents)

   

23.18 

49.70 

42.93 

Profit for the period

130.21 

85.61 

21.27 

35.83 

53.43 

RC profit for the period

122.27 

77.95 

           
     

Per ADS (cents)

   

139.08 

298.20 

257.58 

Profit for the period

781.26 

513.66 

127.62 

214.98 

320.58 

RC profit for the period

733.62 

467.70 



(a)

Profit attributable to BP shareholders.

(b)

Excludes treasury shares.

(c)

Comparative data for 2008 has been amended. See Note 2(d) on page 24 for further details.



Dividends

Dividends payable

BP today announced a dividend of 14 cents per ordinary share to be paid in December. Holders of ordinary shares will receive 8.705 pence per share and holders of American Depository Receipts (ADRs) $0.84 per ADS. The dividend is payable on 8 December to shareholders on the register on 14 November. 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 8 December.

Dividends paid

Third 

Second 

Third 

   

q uarter 

quarter 

q uarter 

 

Nine months

2007 

2008 

2008 

 

2008 

2007 

     

Dividends paid per ordinary share

   

10.825 

13.525 

14.000 

     cents

41.050 

31.475 

5.278 

6.830 

7.039 

     pence

20.682 

15.687 

64.95 

81.15 

84.00 

Dividends paid per ADS (cents)

246.30 

188.85 



Top of page 5

 

                               Net debt ratio – net debt: net debt + equity

Third 

Second 

Third 

   

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 (a)  

2008 

$ million

2008 

2007 

25,245 

30,189 

28,300 

Gross debt

28,300 

25,245 

     

Less: fair value asset (liability) of

   

640 

900 

149 

hedges related to finance debt

149 

640 

24,605 

29,289 

28,151 

 

28,151 

24,605 

2,410 

3,593 

6,142 

Cash and cash equivalents

6,142 

2,410 

22,195 

25,696 

22,009 

Net debt

22,009 

22,195 

91,494 

105,965 

106,790 

Equity

106,790 

91,494 

20% 

20% 

17%

Net debt ratio

17%

20% 



(a)

Comparative data for 2008 has been amended. See Note 2(d) on page 24 for further details.



Net debt and net debt ratio are non-GAAP measures. We believe that these measures provide useful information to investors. Net debt enables investors to see the economic effect of gross debt, related hedges and cash and cash equivalents in total. The net debt ratio enables investors to see how significant net debt is relative to equity from shareholders. Net debt has been redefined to include the fair value of associated derivative financial instruments that are used to hedge foreign exchange and interest rate risks relating to finance debt, for which hedge accounting is claimed. The derivatives are reported on the balance sheet within the headings ‘Derivative financial instruments’. Amounts for comparative periods are presented on a consistent basis. See Note 2(c) on page 24 for further information.

Top of page 6

 

                                            Exploration and Production

Third 

Second 

Third 

   

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

6,297 

10,819 

12,545 

Profit before interest and tax (a)

33,418 

19,779 

10 

(48)

164 

Inventory holding (gains) losses

134 

(47)

     

Replacement cost profit before

   

6,307 

10,771 

12,709 

interest and tax

33,552 

19,732 

           
     

By region:

   

633 

(124)

2,488 

UK

3,287 

2,860 

227 

350 

424 

Rest of Europe

1,050 

1,136 

1,775 

3,601 

3,739 

US

10,425 

5,689 

3,672 

6,944 

6,058 

Rest of World

18,790 

10,047 

6,307 

10,771 

12,709 

 

33,552 

19,732 



(a)

Includes profit after interest and tax of equity-accounted entities.



The replacement cost profit before interest and tax for the third quarter and first nine months of 2008 was $12,709 million and $33,552 million respectively, increases of 102% and 70% over the same periods of 2007. The increases in both periods were primarily due to higher oil and gas realizations. Additionally, the results reflected a higher contribution from the gas marketing and trading business, but were impacted by higher production taxes and higher depreciation. Costs were higher, driven by sector-specific inflation, but this was substantially mitigated by reductions resulting from our focus on cost control. The results also included higher earnings from equity-accounted entities, primarily from TNK-BP. The third-quarter result benefited from gains from non-operating items (see below).

The net non-operating gain of $1,118 million in the third quarter primarily comprises fair value gains on embedded derivatives. In the first nine months, the net non-operating charge was $1,234 million with the most significant item being fair value losses on embedded derivatives partly offset by the reversal of certain provisions and of a previous impairment charge. The corresponding periods in 2007 contained net non-operating gains of $10 million and $1,145 million respectively. Additionally, in the third quarter, fair value accounting effects had a favourable impact of $97 million compared with an unfavourable impact of $36 million a year ago. For the first nine months, the unfavourable effect was $535 million compared with an unfavourable effect of $79 million a year ago.
 
Reported production for the quarter was 3,664mboe/d, slightly higher than the third quarter of 2007. After adjusting for the impact of lower entitlement in our production-sharing agreements (PSAs), production was around 5% higher than the third quarter of 2007. The continued ramp-up of production following the start-up of major projects in late 2007 and the first half of 2008 more than offset the impacts of hurricanes in the Gulf of Mexico and other operational events in the third quarter.

 

Reported production for the first nine months was 3,802mboe/d, slightly higher than the same period of the previous year. After adjusting for the effect of entitlement changes in our PSAs, production for the first nine months was around 6% higher than the same period of 2007.
 
In the Gulf of Mexico, we progressed the commissioning of Thunder Horse (BP 75% and operator) with the start-up of the second well. In Australia, the North West Shelf Venture’s fifth LNG processing train became fully operational and, shortly after the end of the quarter, its third major offshore gas production facility (Angel) began producing. BP is one of six equal participants in the North West Shelf Project.
 
Also during the quarter, Sonatrach announced exploration success in Algeria with the Tin Zaouatene-1 (TZN-1) discovery in the Bourarhet Sud Blocks 230 & 231 (BP 49% and operator). Shortly after the end of the quarter, we announced a discovery in the Freedom prospect in the deepwater Gulf of Mexico (BP 25% and operator) and, jointly with Sonangol, we announced Dione, our sixteenth discovery in ultra-deepwater Block 31, offshore Angola (BP 26.67% and operator).
 
In August, we completed the acquisition of Chesapeake Energy Corporation’s interests in approximately 90,000 net acres of leasehold and producing natural gas properties in the Arkoma Basin Woodford Shale play for $1.75 billion. In addition, in September, we acquired a 25% interest in Chesapeake’s Fayetteville Shale assets in Arkansas for $1.9 billion. As a result of this transaction, BP acquired approximately 135,000 net acres of leasehold.
 
In the fourth quarter, we expect increased production reflecting normal seasonal patterns, continuing project ramp-ups and recovery from the hurricanes in the Gulf of Mexico and other operational events in the third quarter.

Top of page 7

 

                                                 Exploration and Production

Third 

Second 

Third 

   

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

           
     

Non-operating items

   

21 

(2,082)

1,093 

UK

(1,683)

337 

 

– 

Rest of Europe

– 

538 

(15)

(8)

US

(13)

156 

(3)

114 

22 

Rest of World

462 

114 

10 

(1,976)

1,118 

 

(1,234)

1,145 

           
     

Fair value accounting effects (a)

   

(22)

(147)

11 

UK

(119)

12 

 

– 

– 

Rest of Europe

– 

 

(19)

(236)

136 

US

(242)

(96)

10 

(50)

Rest of World

(174)

5  

(36)

(373)

97 

 

(535)

(79)

           
     

Exploration expense

   

UK

105 

29 

 

– 

– 

Rest of Europe

– 

 

60 

47 

59 

US

178 

191 

182 

63 

168 

Rest of World

360 

335 

244 

118 

232 

 

643 

555 

           
     

Production (net of royalties) (b)

   
     

Liquids (mb/d) (net of royalties) (c)

   

151 

186 

146 

UK

174 

202 

52 

40 

44 

Rest of Europe

42 

52 

475 

534 

473 

US

520 

510 

1,614 

1,648 

1,620 

Rest of World

1,645 

1,632 

2,292 

2,408 

2,283 

 

2,381 

2,396 

           
     

Natural gas (mmcf/d) (net of royalties)

   

582 

723 

504 

UK

732 

739 

26 

21 

23 

Rest of Europe

23 

30 

2,186 

2,140 

2,094 

US

2,127 

2,171 

5,085 

5,364 

5,390 

Rest of World

5,358 

5,138 

7,879 

8,248 

8,011 

 

8,240 

8,078 

           
     

Total hydrocarbons (mboe/d) (d)

   

251 

311 

233 

UK

300 

329 

57 

43 

47 

Rest of Europe

46 

57 

851 

903 

834 

US

887 

885 

2,492 

2,573 

2,550 

Rest of World

2,569 

2,517 

3,651 

3,830 

3,664 

 

3,802 

3,788 

           
     

Average realizations (e)

   

71.12 

109.95 

111.47 

Total liquids ($/bbl)

103.96 

62.00 

3.93 

6.63 

6.49 

Natural gas ($/mcf)

6.32 

4.42 

46.36 

75.39 

73.49 

Total hydrocarbons ($/boe)

70.31 

44.05 



(a)

These effects represent the favourable (unfavourable) impact relative to management’s measure of performance. Further information on fair value accounting effects is provided on pages 3 and 11.

(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 sales of consolidated subsidiaries only - this excludes equity-accounted entities.

Because of rounding, some totals may not agree exactly with the sum of their component parts.



Top of page 8

 

                                               Refining and Marketing

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

931 

4,430 

(823)

Profit before interest and tax(a)

6,180 

6,009 

(560)

(3,891)

2,795 

Inventory holding (gains) losses

(2,420)

(2,092)

     

Replacement cost profit (loss)

   

371 

539 

1,972 

before interest and tax

3,760 

3,917 

     

By region :

   

19 

118 

188 

UK

413 

914 

492 

429 

1,045 

Rest of Europe

2,103 

1,374 

(522)

(401)

338 

US

91 

573 

382 

393 

401 

Rest of World

1,153 

1,056 

371 

539 

1,972 

 

3,760 

3,917 



(a)

Includes profit after interest and tax of equity-accounted entities.



The replacement cost profit before interest and tax for the third quarter and nine months was $1,972 million and $3,760 million respectively. The results in the equivalent periods of 2007 were $371 million and $3,917 million respectively. The net impact of non-operating items, which is included in the results, was nil in the quarter and was a gain of $510 million in the nine months. A year ago, the results included a net non-operating charge of $344 million for the quarter and a net non-operating gain of $194 million for the nine months. Fair value accounting effects had favourable impacts of $636 million for the current quarter and $576 million for the nine months. A year ago, the impacts were unfavourable by $93 million for the quarter and $295 million for the nine months.

We continue to make good progress with the turnaround of the segment, delivering underlying year-on-year performance improvement in both Fuels Value Chains (FVCs) and International Businesses, against a weaker external business environment. Compared with 2007, the third-quarter result benefited from stronger commercial refining,
supply and trading performance in the FVCs and improved marketing performance, partially offset by a negative foreign exchange effect caused by the strengthening of the US dollar. For the nine months, in addition to these factors, improved refinery operations have in part mitigated the impact of a considerably lower refining margin environment. The International Businesses continued to deliver a strong performance in the third quarter. Progress on our efficiency improvements has helped to offset the effects of inflation and higher energy costs.

Refining throughputs for the quarter and nine months were 2,185mb/d and 2,197mb/d respectively, compared with 2,148mb/d and 2,169mb/d for the same periods last year, the increases being primarily driven by the recoveries at the Texas City and Whiting refineries, partially offset by the net loss of throughput from previous disposals and acquisitions. Solomon availability was 4.3 percentage points higher than a year ago. Relative to the second quarter of 2008, it was slightly lower, as a result of the disruption at the Texas City refinery in September caused by Hurricane Ike. Most of the refinery units were restarted within two weeks after the hurricane shutdown. In addition, we successfully started up the second residue hydrotreater train on 1 October and have completed mechanical work on ultraformer number 3. This unit is expected to start production during the fourth quarter, completing the restoration of the economic capability of Texas City refinery.

On 29 August 2008, BP announced an agreement with Enbridge Inc. to develop a new delivery system to transport Canadian heavy crude oil from Flanagan, Illinois, to Houston and Texas City, Texas. The system is expected to be in service by late 2012 with an initial capacity of 250,000 barrels per day. The joint investment of the phased capacity additions is expected to be in the range of $1-2 billion.
 
Refinery turnaround activities are expected to be higher in the fourth quarter than in the third. The slowing of global economies, exacerbated by the current instability in global financial markets, remains a key risk to our marketing and supply businesses.

Top of page 9

 

                                             Refining and Marketing

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

           
     

Non-operating items

   

(4)

(10)

UK

(50)

677 

(16)

(32)

(10)

Rest of Europe

(127)

(72)

(316)

(16)

13 

US

771 

(204)

(8)

(41)

(12)

Rest of World

(84)

(207)

(344)

(99)

 

 

510 

194 

           
     

Fair value accounting effects (a)

   

45 

(177)

270 

UK

89 

(53)

(59)

122 

Rest of Europe

99 

(115)

(142)

53 

174 

US

322 

(133)

22 

70 

Rest of World

66 

(93)

(161)

636 

 

576 

(295)

           
     

Refinery throughputs (mb/d)

   

 

 

 

UK

 

90 

735 

753 

730 

Rest of Europe

753 

691 

1,109 

1,189 

1,158 

US

1,141 

1,086 

304 

297 

297 

Rest of World

303 

302 

2,148 

2,239 

2,185 

Total throughput

2,197 

2,169 

83.4 

88.3 

87.7 

Refining availability (%) (b)

88.0 

82.6 

           
     

Oil sales volumes (mb/d)

   
     

Refined products

   

350 

315 

303 

UK

313 

343 

1,329 

1,236 

1,281 

Rest of Europe

1,254 

1,282 

1,535 

1,498 

1,453 

US

1,468 

1,559 

641 

716 

662 

Rest of World

690 

627 

3,855 

3,765 

3,699 

Total marketing sales

3,725 

3,811 

1,687 

2,017 

2,107 

Trading/supply sales

2,057 

1,860 

5,542 

5,782 

5,806 

Total refined product sales

5,782 

5,671 

1,709 

1,848 

1,511 

Crude oil

1,739 

1,964 

7,251 

7,630 

7,317 

Total oil sales

7,521 

7,635 

           
     

Global Indicator Refining Margin ($/bbl) (c)

   

3.82 

7.46 

7.13 

NWE

6.46 

5.03 

12.58 

8.59 

9.87 

USGC

8.22 

15.74 

14.31 

6.53 

10.47 

Midwest

6.04 

16.02 

6.90 

9.94 

7.07 

USWC

7.64 

17.22 

4.52 

9.41 

5.90 

Singapore

6.69 

5.12 

8.05 

8.19 

8.03 

Average

6.93 

11.38 

           
     

Chemicals production (kte)

   

237 

164 

144 

UK

569 

739 

587 

657 

711 

Rest of Europe

2,076 

1,990 

1,117 

1,022 

850 

US

2,908 

3,240 

1,569 

1,598 

1,358 

Rest of World

4,487 

4,586 

3,510 

3,441 

3,063 

Total production

10,040 

10,555 



(a)

These effects represent the favourable (unfavourable) impact relative to management’s measure of performance. Further information on fair value accounting effects is provided on pages 3 and 11.

(b)

Solomon refining availability is defined as the ratio of units which are available for processing, regardless of whether they are actually being used, to total capacity. Where there is planned maintenance, such capacity is not regarded as being available.

(c)

The Global Indicator Refining Margin (GIM) is the average of 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 actual margins achieved by BP in any period because of BP’s particular refinery configurations and crude and product slate.



Top of page 10

 

                                    Other businesses and corporate

Third 

Second 

Third 

     

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 

2008 

$ million

2008 

2007 

(522)

(301)

(35)

Profit (loss) before interest and tax(a)

(529)

(790)

11 

(13)

19 

Inventory holding (gains) losses

(14)

     

Replacement cost profit (loss) before

   

(511)

(314)

(16)

interest and tax

(543)

(782)

           
     

By region:

   

112 

(119)

385 

UK

147 

57 

(120)

(29)

(78)

Rest of Europe

(107)

(108)

(363)

(185)

(288)

US

(625)

(624)

(140)

19 

(35)

Rest of World

42 

(107)

(511)

(314)

(16)

 

(543)

(782)

     

Results include:

   
     

Non-operating items

   

(41)

(20)

UK

(67)

(14)

(11)

(47)

(2)

Rest of Europe

(62)

17 

(195)

(33)

(105)

US

(187)

(182)

(2)

(1)

Rest of World

(16)

(201)

(123)

(128)

 

(332)

(175)



(a)

Includes profit after interest and tax of equity-accounted entities.



Other businesses and corporate comprises the Alternative Energy business, Shipping, the group's aluminium asset, Treasury (which includes interest income on the group's cash and cash equivalents) and corporate activities worldwide.

The replacement cost profit before interest and tax for the third quarter was a loss of $16 million, compared with a loss of $511 million a year ago. This result reflects a higher contribution from the operating businesses and lower corporate costs. For the nine months, the replacement cost loss before interest and tax was $543 million in 2008 compared with a loss of $782 million a year ago.

The net non-operating charge was $128 million for the third quarter and $332 million for the nine months. The third-quarter result included a $30 million restructuring charge, a $76 million net charge in relation to new, and revisions to existing, environmental and other provisions and a net charge of $22 million for impairment and other provisions. The prior year included a net non-operating charge of $201 million in the third quarter and $175 million for the nine months.

On 15 September, Alternative Energy announced BP’s first bioethanol production from its Brazilian biofuels joint venture, Tropical BioEnergia, a significant milestone in the implementation of BP’s biofuels strategy. Tropical BioEnergia farms sugar cane and refines it into fuel in a new 435 million litres per year (115 million US gallons per year) refinery. BP’s investment in Tropical BioEnergia is the largest made by any international oil company into Brazil's ethanol market.
In August, BP and Verenium Corporation announced the creation of a strategic partnership to accelerate the development and commercialization of cellulosic ethanol. Under the initial phase of the strategic alliance, Verenium is to receive $90 million in funding from BP over 18 months in exchange for rights to current and future technology held within the partnership.

Also in August, BP started commercial operations at its Silver Star wind farm in Texas, a 60MW gross capacity installation in partnership with Clipper Windpower, Inc. and at Edom Hills, California, a 20MW wholly-owned wind farm. On 20 October, BP started commercial operations of phase 1 of the Sherbino wind farm in Texas. The first 150MW of the project, which has a potential capacity of 750MW, has been built through a 50:50 joint venture with Padoma Wind Power LLC, a wholly owned subsidiary of NRG Energy, Inc.

 

Third 

Second 

Third 

 

quarter 

quarter 

quarter 

 

2008 

2008 

2007 

       

Wind – net rated capacity as at period end (megawatts) (a)

243 

172 

32 

Solar – cell production capacity as at period end (megawatts)(b)

277 

255 

201 



(a)

Net wind capacity is the sum of the rated capacities of the assets/turbines that have entered into commercial operation, including BP’s share of equity-accounted entities. The equivalent capacities on a gross-JV basis (which includes 100% of the capacity of equity-accounted entities where BP has partial ownership) are 453MW as at the third quarter of 2008, 373MW as at the second quarter of 2008 and 32MW as at the third quarter last year.

(b)

Solar capacity is the theoretical cell production capacity per annum of in-house manufacturing facilities.



Top of page 11

Information on fair value accounting effects

BP uses derivative instruments to manage the economic exposure relating to inventories above normal operating requirements of crude oil, natural gas and petroleum products as well as certain contracts to supply physical volumes at future dates. Under IFRS, these inventories and contracts are recorded at historic cost and on an accruals basis, respectively. The related derivative instruments, however, are required to be recorded at fair value with gains and losses recognized in income because hedge accounting is either not permitted or not followed, principally due to the impracticality of effectiveness testing requirements. Therefore, measurement differences in relation to recognition of gains and losses occur. Gains and losses on these inventories and contracts are not recognized until the commodity is sold in a subsequent accounting period. Gains and losses on the related derivative commodity contracts are recognized in the income statement from the time the derivative commodity contract is entered into on a fair value basis using forward prices consistent with the contract maturity.
 
IFRS requires that inventory held for trading be recorded at its fair value using period end spot prices whereas any related derivative commodity instruments are required to be recorded at values based on forward prices consistent with the contract maturity. Depending on market conditions, these forward prices can be either higher or lower than spot prices resulting in measurement differences.
 
BP enters into contracts for pipelines and storage capacity which, under IFRS, are recorded on an accruals basis. These contracts are risk managed using a variety of derivative instruments which are fair valued under IFRS. This results in measurement differences in relation to recognition of gains and losses.
 
The way that BP manages the economic exposures described above, and measures performance internally, differs from the way these activities are measured under IFRS. BP calculates this difference by comparing the IFRS result with management’s internal measure of performance, under which the inventory and the supply and capacity contracts in question are valued based on fair value using relevant forward prices prevailing at the end of the period. We believe that disclosing management’s estimate of this difference provides useful information for investors because it enables investors to see the economic effect of these activities as a whole. The impacts of fair value accounting effects, relative to management’s internal measure of performance, are shown in the table on page 3. Information for all quarters of 2006 and 2007 can be found at
www.bp.com/FVAE .
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cautionary Statement: The foregoing discussion contains forward-looking statements particularly those regarding capital expenditure, increased production, expected refinery turnaround activities and the continuing risk of slowing global economies, exacerbated by the global credit freeze, to our marketing and supply businesses. By their nature, forward-looking statements involve risk and uncertainty 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 onstream; industry product supply; demand and pricing; operational problems; general economic conditions (including inflation); political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations and quotas; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors; natural disasters and adverse weather conditions; changes in public expectations and other changes to business 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 2007 and our 2007 Annual Report on Form 20-F filed with the US Securities and Exchange Commission.

Top of page 12

 

                                           Group income statement

Third 

Second 

Third 

   

quarter 

quarter 

quarter 

 

Nine months

2007 

2008 (a)  

2008 

 

2008 

2007 

$ million

 

$ million

71,334 

108,747 

103,174 

Sales and other operating revenues

299,666 

204,513 

     

Earnings from jointly controlled entities -

   

900 

1,752 

1,172 

after interest and tax

3,899 

2,143 

     

Earnings from associates - after interest

   

204 

251 

155 

and tax

631 

540 

172 

153 

135 

Interest and other revenues

566 

533 

72,610 

110,903 

104,636 

Total revenues (Note 4)

304,762 

207,729 

     

Gains on sale of businesses and