TIDMBP.
RNS Number : 8460D
BP PLC
03 February 2015
press release
3 February 2015
BP reports fourth quarter and full year 2014 results
-- Underlying replacement cost profit $2.2 billion; significant
impairment charges in the quarter
-- Taking action to meet challenging environment
BP today reported its results for the fourth quarter and
full-year 2014. Underlying replacement cost profit(1) for the
fourth quarter was $2.2 billion compared with $2.8 billion for the
same period in 2013. Full year underlying replacement cost profit
was $12.1 billion compared with $13.4 billion reported for
2013.
BP took a $3.6 billion post-tax net charge for non-operating
items in the quarter, mainly relating to impairments of Upstream
assets reflecting the impact of the near-term lower oil price
environment, revisions to reserves and other factors. As a result,
including this charge and other effects, BP reported a replacement
cost loss of $969 million for the fourth quarter of 2014.
"We have now entered a new and challenging phase of low oil
prices through the near and medium term," said Bob Dudley, BP group
chief executive. "Our focus must now be on resetting BP: managing
and rebalancing our capital programme and cost base for the new
reality of lower prices while always maintaining safe, reliable and
efficient operations."
BP today announced a quarterly dividend of 10 cents per ordinary
share, expected to be paid in March. "Throughout the work to reset
BP, the dividend remains the first priority within our financial
framework," Dudley confirmed.
BP is now taking action to respond to the likelihood of oil
prices remaining low into the medium term and to rebalance its
sources and uses of cash accordingly.
In 2015, BP plans to reduce exploration expenditure and postpone
marginal projects in the Upstream, and not advance selected
projects in the Downstream and other areas. As a result, organic
capital expenditure in 2015 is expected to total around $20
billion, significantly lower than previous guidance of $24-26
billion. Total organic capital expenditure in 2014 was $22.9
billion, lower than initial guidance of $24-25 billion.
Since 2013 BP has agreed divestments with a cumulative value of
$4.7 billion and continues to expect this divestment total to reach
$10 billion by the end of 2015.
At the end of 2014 BP carried net debt of $22.6 billion,
equivalent to a gearing level of 16.7%. BP intends to maintain
gearing within its existing target range of 10-20%.
BP is continuing its work to streamline activity and increase
efficiency throughout the Group. Total cash costs for the Group
fell by over $1 billion in 2014 and BP is in action to deliver
further efficiencies in 2015. In December 2014 BP said that it
expects to incur restructuring charges totalling $1 billion over
the next five quarters. The 4Q 2014 results include almost $450
million in restructuring charges, taken as a non-operating
item.
BP's Upstream segment reported underlying pre-tax replacement
cost profit of $2.2 billion for the quarter compared with $3.9
billion for 4Q 2013. The result primarily reflected significantly
lower oil prices than a year earlier: the dated Brent oil marker
price averaged $77 a barrel in 4Q 2014 compared with $109 a barrel
in 4Q 2013. The price has so far averaged $48 a barrel in 2015.
Benefits from higher underlying production and lower costs were
partially offset by higher exploration write-offs.
Overall Group oil and gas production, including Russia(2) , was
3.2 million barrels of oil equivalent a day (boe/d). Excluding
Russia, underlying Upstream production(3) was 2.3% higher than a
year earlier, but reported production of 2.2 million boe/d was 2.6%
lower than 4Q 2013, primarily due to the expiry of the Abu Dhabi
concession in January 2014.
Underlying pre-tax replacement cost profit for BP's Downstream
segment was $1.2 billion for the quarter, compared with $70 million
in 4Q 2013, with improved refinery business delivery and marketing
performance.
Estimated underlying net income from Rosneft(2) was $470 million
compared with $1.1 billion in 4Q 2013. Results were affected by
lower oil prices, unfavourable duty lag effects and other items,
partly offset by foreign exchange effects.
Total Group operating cashflow in the fourth quarter was $7.2
billion. For the full year 2014, total operating cash flow was
$32.8 billion.
BP today reported a reserves replacement ratio, including
Russia(2) , for 2014 of 62%, excluding the impact of acquisitions
and divestments.
BP has gained new exploration access in the North Sea, Gulf of
Mexico and Egypt; and in December signed a production sharing
agreement with SOCAR of Azerbaijan for exploration and potential
development in the shallow water around the Absheron Peninsula in
the Caspian Sea.
Two new upstream major projects - Kinnoull in the UK North Sea
and Sunrise in Canada - began operations in December 2014. These
completed the series of 15 upstream project start-ups expected over
three years as part of the 10-point plan that was set out in 2011.
In 2015, four further projects are expected to come into
production: two in Angola and one each in Australia and
Algeria.
The penalty phase of the MDL2179 trial arising from the Gulf of
Mexico oil spill is underway in New Orleans. In September 2014 the
court issued a ruling on the first phase of the trial, including a
finding of gross negligence and wilful misconduct by BP Exploration
& Production Inc. BP strongly disagrees with these findings and
has appealed. Regarding the second phase, the court ruled in
January that 3.19 million barrels of oil were spilled as a result
of the incident and found no gross negligence in BP's source
control efforts.
The total cumulative pre-tax charge for Gulf of Mexico oil spill
at end of 2014 was $43.5 billion. An additional charge of $477
million was taken in the fourth quarter reflecting increased
provision for litigation costs and additional business economic
loss claims and the ongoing costs of the Gulf Coast Restoration
Organisation.
As before, this overall charge does not include any provision
for business economic loss claims that are yet to be received,
processed or paid (except where an eligibility notice has been
issued and is not subject to appeal by BP within the claims
facility).
At the end of the quarter the aggregate remaining cash balance
in the Trust and qualified settlement funds was $5.1 billion.
Further information:
-- BP press office, London: +44 (0)20 7496 4076, bppress@bp.com
Notes:
1. Underlying replacement cost profit is adjusted for
non-operating items and fair value accounting effects.
2. The operational and financial information of the Rosneft
segment for the fourth quarter 2014 is based on preliminary
operational and financial results of Rosneft for the three months
ended 31 December 2014. Actual results may differ from these
amounts.
3. Underlying oil and gas production is adjusted for the impact
of the expiry of the Abu Dhabi onshore concession in January 2014,
divestments, and production-sharing agreement effects.
Cautionary statement:
This press release contains certain forecasts, projections and
forward-looking statements - that is, statements related to future,
not past events - with respect to the financial conditions, results
of operations and businesses of BP and certain of the plans and
objectives of BP with respect to these items. These statements
generally, but not always, are identified by the use of words such
as "will", "expected to", "is intended to", "projected" or similar
expressions. In particular, among other statements, certain
statements regarding prospects for and timing of future
distributions to shareholders; expectations regarding the price
environment through the medium term; plans and expectations
regarding resetting BP; plans to reduce exploration expenditure and
postpone marginal projects in the Upstream and not advance select
projects in the Downstream; plans and expectations regarding the
level of organic capital expenditure and gearing in 2015; plans to
divest $10 billion in assets before the end of 2015; plans to
delivery further Group efficiencies in 2015; plans and expectations
regarding a total of about $1 billion in non-operating
restructuring charges by the end of 2015; plans regarding major
projects including 2015 production start-ups; and the anticipated
timing of, prospects for and BP's prospective responses to legal
and trial proceedings, court decisions, potential investigations
and civil actions by regulators, government entities and/or other
entities or parties; are all forward looking in nature. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
or may occur in the future. Actual results may differ from those
expressed in such statements, depending on a variety of factors
including the timing of bringing new fields onstream; the timing
and level of maintenance and/or turnaround activity; the nature,
timing and volume of refinery additions and outages; the timing,
quantum and nature of divestments; the receipt of relevant
third-party and/or regulatory approvals; future levels of industry
product supply; demand and pricing; OPEC quota restrictions; PSA
effects; operational problems; economic and financial market
conditions generally or in various countries and regions; political
stability and economic growth in relevant areas of the world;
changes in laws and governmental regulations; regulatory or legal
actions including court decisions, the types of enforcement action
pursued and the nature of remedies sought or imposed; the impact on
our reputation following the Gulf of Mexico oil spill; exchange
rate fluctuations; development and use of new technology; the
success or otherwise of partnering; the actions of competitors,
trading partners, creditors, rating agencies and others; natural
disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and
acts of
terrorism, cyber-attacks or sabotage; and other factors
discussed under "Principal risks and uncertainties" in BP's Form
6-K for the period ended 30 June 2014.
This press release also contains financial information that is
not presented in accordance with generally accepted accounting
principles (GAAP). A quantitative reconciliation of this
information to the most directly comparable financial measure
calculated and presented in accordance with GAAP can be found on
our website at www.bp.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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