BP (BP)

Financing the group’s activities

Net debt at 30 June 2007 was $21.1 billion compared with $21.4 billion at 31 December 2006. The ratio of net debt to net debt plus equity was 19% at 30 June 2007 compared with 20% at 31 December 2006. This ratio shows the proportion of debt and equity used to finance our operations, and can also be used to measure borrowing capacity. In addition to reported debt, BP uses conventional off balance sheet sources of finance such as operating leases and joint venture and associate borrowings.

The group has access to other sources of liquidity in the form of committed facilities and other funding through the capital markets. BP believes that, taking into account the substantial amounts of undrawn borrowing facilities available, the group has sufficient working capital for foreseeable requirements.

In the normal course of business the group has entered into certain long-term purchase commitments principally relating to take or pay contracts for the purchase of natural gas, crude oil and chemicals feedstocks and throughput arrangements for pipelines. The group expects to fulfil its obligations under these arrangements with no adverse consequences to the group’s results of operations or financial condition.

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