BP (BP)

Trend information

        Over the next three or four years we expect to see additional cash flows coming from three main sources:

—

First, having contributed $2.5 billion in 2003 to address deficits in our funded pension plans, we now expect to return to a funding programme of $400-600 million per year. We have the capacity to adjust this funding should circumstances warrant.



—

Secondly, organic capital expenditure, that is capital expenditure excluding acquisitions, is expected to level off as we pass the peak of the recent investment cycle.

100

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Lastly, and most importantly, that we expect operations to be our main source of additional cash. This includes the benefits from capital coming into service in our new Exploration and Production profit centres and greater margin contributions from our Customer Facing Businesses.

        We expect capital expenditure, excluding acquisitions, to be around $14 billion in 2005; the exact level will depend on the level of the dollar and is subject to our ability to continue to offset normal underlying inflation of around 2% per annum. Refer to Item 4 for further information.

        Further out, for the medium term, a level of around $14 billion is a reasonable expectation.

        Total production for 2005 is estimated at an average of between 2.85 and 2.9 mmboe/d for subsidiaries and between 1.25 and 1.3 mmboe/d for equity accounted entities; these estimates are before any divestments and are based on our $20/bbl planning basis. The exact level will depend on oil prices, divestments and many other factors.

        The anticipated decline in production volumes from subsidiaries in our existing profit centres is partly mitigated by the development of new projects and the investment in incremental reserves in and around existing fields. We expect that this overall decline in production from subsidiaries in our existing profit centres will be more than compensated for by strong increases in production from subsidiaries in our new profit centres over the next few years. Production in our equity-accounted joint venture, TNK-BP, is also expected to grow over the next few years.

        The most important determinants of cash flows in relation to our oil and natural gas production are the prices of these commodities. In a stable price environment, cash flows from currently developed proved reserves are expected to decline in a manner consistent with anticipated production decline rates. Development activities associated with recent discoveries, as well as continued investment in these producing fields, are expected to more than offset this decline, resulting in increased operating cash flows over the next few years. Cash flows from equity-accounted entities are expected to be in the form of dividend payments.

Trend information

        Over the next three or four years we expect to see additional cash flows coming from three main sources:

—

First, having contributed $2.5 billion in 2003 to address deficits in our funded pension plans, we now expect to return to a funding programme of $400-600 million per year. We have the capacity to adjust this funding should circumstances warrant.



—

Secondly, organic capital expenditure, that is capital expenditure excluding acquisitions, is expected to level off as we pass the peak of the recent investment cycle.

93

—

Lastly, and most importantly, that we expect operations to be our main source of additional cash. This includes the benefits from capital coming into service in our new Exploration and Production profit centres and greater margin contributions from our Customer Facing Businesses.

        We expect capital expenditure, excluding acquisitions, to be around $14 billion in 2005; the exact level will depend on the level of the dollar and is subject to our ability to continue to offset normal underlying inflation of around 2% per annum. Refer to Item 4 for further information.

        Further out, for the medium term, a level of around $14 billion is a reasonable expectation.

        Total production for 2005 is estimated at an average of between 2.85 and 2.9 mmboe/d for subsidiaries and between 1.25 and 1.3 mmboe/d for equity accounted entities; these estimates are before any divestments and are based on our $20/bbl planning basis. The exact level will depend on oil prices, divestments and many other factors.

        The anticipated decline in production volumes from subsidiaries in our existing profit centres is partly mitigated by the development of new projects and the investment in incremental reserves in and around existing fields. We expect that this overall decline in production from subsidiaries in our existing profit centres will be more than compensated for by strong increases in production from subsidiaries in our new profit centres over the next few years. Production in our equity-accounted joint venture, TNK-BP, is also expected to grow over the next few years.

        The most important determinants of cash flows in relation to our oil and natural gas production are the prices of these commodities. In a stable price environment, cash flows from currently developed proved reserves are expected to decline in a manner consistent with anticipated production decline rates. Development activities associated with recent discoveries, as well as continued investment in these producing fields, are expected to more than offset this decline, resulting in increased operating cash flows over the next few years. Cash flows from equity-accounted entities are expected to be in the form of dividend payments.