TIDMBP.
RNS Number : 4718X
BP PLC
30 April 2019
FOR IMMEDIATE RELEASE
London 30 April 2019
BP p.l.c. Group results
First quarter 2019
==========================
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Highlights Resilient earnings and cash flow, continued strategic progress
-- Earnings and cash flow
- Underlying replacement cost profit for the first quarter of
2019 was $2.4 billion, compared to $2.6 billion a year earlier. The
result reflected the weaker price and margin environment at the
start of the quarter, partially offset by strong supply and trading
results.
- Operating cash flow, excluding Gulf of Mexico oil spill
payments, for the quarter was $5.9 billion, including a
$1.0-billion working capital build (after adjusting for inventory
holding gains). Gulf of Mexico oil spill payments in the quarter
were $0.6 billion.
- Dividend of 10.25 cents a share announced for the quarter,
2.5% higher than a year earlier.
-- New projects and marketing growth
- Reported oil and gas production for the quarter averaged 3.8
million barrels a day of oil equivalent. Upstream production, which
excludes Rosneft, was 2% higher than a year earlier. BP-operated
Upstream plant reliability was 96.2%.
- Integration of US onshore assets acquired from BHP continues,
with BP taking operational control in March.
- Three Upstream major projects - in Trinidad, Egypt and the
Gulf of Mexico - have started production in 2019 and BP has taken
final investment decisions for three more Upstream major
projects.
- Downstream continued growth in fuels marketing reflected
increased numbers of convenience partnership sites and expansion in
new markets.
-- Advancing low carbon
- Strong progress is being made towards BP's published targets
for operational greenhouse gas (GHG) emissions, with reduced
operational GHG emissions in 2018, good delivery of sustainable GHG
emissions reductions, and methane intensity remaining on
target.
- A $100-million fund to support new emissions-reducing projects
in the Upstream was announced, as well as an agreement with
Environmental Defense Fund to advance technologies and practices to
reduce oil and gas industry methane emissions.
See chart on PDF
Bob Dudley - Group chief executive:
BP's performance this quarter demonstrates the strength of our strategy.
With solid Upstream and Downstream delivery and strong trading results,
we produced resilient earnings and cash flow through a volatile period
that began with weak market conditions and included significant turnarounds.
Moving through the year, we will keep our focus on disciplined growth,
with efficient project execution and safe and reliable operations.
Financial summary First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Profit for the period attributable to BP shareholders 2,934 766 2,469
Inventory holding (gains) losses, net of tax (839) 1,951 (80)
RC profit 2,095 2,717 2,389
Net (favourable) adverse impact of non-operating items
and fair value accounting effects, net of tax 263 760 197
======
Underlying RC profit 2,358 3,477 2,586
========================================================= ====== ======= ======
RC profit (loss) per ordinary share (cents) 10.38 13.58 11.99
RC profit (loss) per ADS (dollars) 0.62 0.81 0.72
Underlying RC profit per ordinary share (cents) 11.69 17.38 12.98
Underlying RC profit per ADS (dollars) 0.70 1.04 0.78
========================================================= ====== ======= ======
RC profit (loss), underlying RC profit, operating cash flow
excluding Gulf of Mexico oil spill payments and working capital are
non-GAAP measures. These measures and Upstream plant reliability,
major projects, inventory holding gains and losses, non-operating
items and fair value accounting effects are defined in the Glossary
on page 31.
The commentary above and following should be read in conjunction with
the cautionary statement on page 35.
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Effects on key financial metrics of the adoption of IFRS 16
'Leases'
A new IFRS standard on leases came into effect on 1 January
2019. The impact on key financial metrics for the first quarter is
shown below.
Balance sheet and $0.1 billion would have been reported
As a result of the adoption of IFRS as capital expenditure without the
16, $9.6 billion of right-of-use assets adoption of IFRS 16. Impact
and $10.3 billion of lease liabilities of
have been included in the group balance IFRS
sheet as at 31 March 2019. The majority $ billion 16
of these were previously reported =============================
as operating leases and so were not Balance sheet at 31 March
previously recognized on the balance 2019
sheet. The total lease liability also Fixed assets 9.6
includes leases that were previously Lease liabilities 10.3
classified as finance leases under ============================== ==========
IAS 17, which totalled $0.7 billion Income statement for the
at 31 December 2018. Lease liabilities first quarter 2019
are now presented separately on the Operating lease expenses(a) 0.6 -
group balance sheet, do not form part Depreciation, depletion +
of finance debt and are not included and amortization 0.5
in net debt and gearing in the financial Interest charge 0.1 +
framework. Replacement cost profit* Negligible
============================== ==========
Income statement Cash flow for the first
The increase in depreciation from quarter 2019
recognizing right-of-use assets and Operating cash flow 0.5 +
interest on the lease liability is Capital expenditure 0.1 +
largely offset by the absence of operating Lease payments 0.6 -
lease expenses, resulting in no material Free cash flow* Nil
overall effect on group profit measures. ============================== ==========
Cash flow (a) Included in production and manufacturing
In prior years, operating lease payments expenses and distribution and administration
were presented as operating cash flows* expenses under IAS 17.
or capital expenditure*. Lease payments
are now split into payments of principal See pages 17-19, 22 and 24 for more
that are presented as financing cash information.
flows, and payments of interest that
are presented as operating cash flows.
There were $0.6 billion of lease payments
of principal included within financing
cash flows for the first quarter of
2019. BP estimates that $0.5 billion
of these would have been reported
as operating cash outflow
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Group headlines
Results Share buybacks
For the first quarter, underlying BP repurchased 6 million ordinary
replacement cost (RC) profit* was shares at a cost of $50 million, including
$2,358 million, compared with $2,586 fees and stamp duty, during the first
million in 2018. Underlying RC profit quarter of 2019. Our share buyback
is after adjusting RC profit* for programme is expected to be weighted
a net charge for non-operating items* to the second half of 2019 and to
of $252 million and net adverse fair fully offset the impact of scrip dilution
value accounting effects* of $11 million since the third quarter 2017 by the
(both on a post-tax basis). end of 2019.
RC profit was $2,095 million for the Operating cash flow*
first quarter, compared with $2,389 Excluding post-tax amounts related
million in 2018. to the Gulf of Mexico oil spill, operating
BP's profit for the first quarter cash flow* for the first quarter was
was $2,934 million, compared with $5.9 billion, including a $1.0-billion
$2,469 million for the same period working capital* build (after adjusting
in 2018. for inventory holding gains* and excluding
See further information on pages 4, Gulf of Mexico oil spill working capital
26 and 27. effects). For the same period in 2018
Depreciation, depletion and amortization we reported $5.4 billion (prior to
The charge for depreciation, depletion the implementation of IFRS 16).
and amortization was $4.5 billion Including amounts relating to the
in the quarter. In the same period Gulf of Mexico oil spill, operating
in 2018 it was $3.9 billion (prior cash flow for the first quarter was
to the adoption of IFRS 16). In 2019, $5.3 billion (after a $2.7-billion
we expect the full-year charge to working capital build). For the same
be around $2.5 billion higher than period in 2018 we reported $3.6 billion
2018 reflecting the depreciation of (prior to the implementation of IFRS
the right of use assets recognized 16).
under IFRS 16 (expected to be offset See page 29 for further information
in the income statement as operating on Gulf of Mexico oil spill cash flows
lease expenses will no longer appear and on working capital.
in the income statement). Capital expenditure*
Non-operating items Organic capital expenditure* for the
Non-operating items amounted to a first quarter was $3.6 billion. We
post-tax charge of $252 million for reported $3.5 billion for the same
the quarter. See further information period in 2018 (prior to the implementation
on page 26. of IFRS 16).
Effective tax rate Inorganic capital expenditure* for
The effective tax rate (ETR) on RC the first quarter was $2.0 billion,
profit or loss* for the first quarter including $1.7 billion relating to
was 42%, compared with 36% for the the BHP acquisition, compared with
same period in 2018. Adjusting for $0.4 billion for the same period in
non-operating items and fair value 2018.
accounting effects, the underlying Organic capital expenditure and inorganic
ETR* for the first quarter was 40%, capital expenditure are non-GAAP measures.
compared with 37% for the same period See page 25 for further information.
a year ago. The higher underlying Divestment and other proceeds
ETR for the first quarter reflects Divestment proceeds* were $0.6 billion
charges for adjustments in respect for the first quarter, compared with
of prior years. In the current environment $0.2 billion for the same period in
the underlying ETR in 2019 is expected 2018.
to be around 40%. ETR on RC profit Gearing*
or loss and underlying ETR are non-GAAP Net debt* at 31 March 2019 was $45.1
measures. billion, compared with $39.3 billion
Dividend a year ago. Gearing at 31 March 2019
BP today announced a quarterly dividend was 30.4%, compared with 30.0% at
of 10.25 cents per ordinary share the end of 2018 and 27.8% a year ago.
($0.615 per ADS), which is expected Net debt and gearing are non-GAAP
to be paid on 21 June 2019. The corresponding measures. See page 22 for more information.
amount in sterling will be announced
on 10 June 2019. See page 22 for further
information.
Brian Gilvary - Chief financial officer:
Our first quarter results reflect the effects of IFRS 16 for the first
time. While this impacts a number of lines across our financial statements,
our financial framework is unchanged. In particular, we have retained
a measure of gearing broadly consistent with the past, and continue to
target a range of 20-30%.
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 31.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 35.
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Analysis of underlying RC profit* before interest and tax
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Underlying RC profit before interest and tax
Upstream 2,928 3,886 3,157
Downstream 1,733 2,169 1,826
Rosneft 567 431 247
Other businesses and corporate (418) (344) (392)
Consolidation adjustment - UPII* (13) 142 (160)
Underlying RC profit before interest and tax 4,797 6,284 4,678
Finance costs and net finance expense relating to pensions
and other post-retirement benefits (754) (654) (464)
Taxation on an underlying RC basis (1,620) (2,148) (1,566)
Non-controlling interests (65) (5) (62)
====== ======
Underlying RC profit attributable to BP shareholders 2,358 3,477 2,586
============================================================= ====== ====== ======
Reconciliations of underlying RC profit or loss to the nearest
equivalent IFRS measure are provided on page 1 for the group and on
pages 6-11 for the segments.
Analysis of RC profit (loss)* before interest and tax and
reconciliation to profit for the period
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
RC profit before interest and tax
Upstream 2,884 4,168 3,174
Downstream 1,765 2,138 1,713
Rosneft 486 400 247
Other businesses and corporate (546) (1,110) (571)
Consolidation adjustment - UPII (13) 142 (160)
RC profit before interest and tax 4,576 5,738 4,403
Finance costs and net finance expense relating to pensions
and other post-retirement benefits (882) (776) (584)
Taxation on a RC basis (1,534) (2,240) (1,368)
Non-controlling interests (65) (5) (62)
RC profit attributable to BP shareholders 2,095 2,717 2,389
Inventory holding gains (losses)* 1,088 (2,574) 92
Taxation (charge) credit on inventory holding gains
and losses (249) 623 (12)
Profit for the period attributable to BP shareholders 2,934 766 2,469
============================================================= ====== ====== ======
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Strategic progress
Upstream At the end of the quarter BP announced
Upstream production, excluding Rosneft, the establishment of a new initiative
for the quarter was 2,656mboe/d, 2% under which up to $100-million will
higher than a year earlier due to be made available over the next three
acquisition of the BHP assets and years to support projects across the
growth of major projects*. Upstream Upstream to deliver new emissions
plant reliability* was 96.2%. Upstream reductions. BP has also entered into
unit production costs* were $7.39/boe. an agreement with Environmental Defense
Constellation in the Gulf of Mexico Fund to collaborate in development
was the first Upstream major project of technologies and practices to accelerate
to come onstream in 2019, followed reduction of methane emissions across
by the second stage of the West Nile the oil and gas industry.
Delta development, the Giza and Fayoum BP opened two dedicated electric vehicle
fields, in Egypt and the Angelin development charging stations in the quarter,
offshore Trinidad. These are the first the first in China, in partnership
of five Upstream major projects expected with 66i Fuel, and the second in the
to begin production in 2019. BP has UK.
now safely brought 22 new upstream Financial framework
major projects into production since Following the introduction of IFRS
2016, remaining on track to deliver 16, the positive impacts on Operating
900,000boe/d from new projects by cash flow* and Organic capital expenditure*
2021. are fully offset in the cash flow
Since the start of the year, BP has statement by a new line, Lease liability
taken final investment decisions on payments. Lease payments are now included
the Atlantis Phase 3 development in in the definition of free cash flow*
the Gulf of Mexico, Azeri Central as a use of cash, which means the
East in Azerbaijan and Seagull in net impact on this measure is zero
the UK North Sea. following the adoption of IFRS 16.
On 1 March, BPX Energy assumed full
control of the BHP acquired US field Operating cash flow excluding Gulf
operations. of Mexico oil spill payments* was
In March, BP confirmed a gas discovery, $5.9 billion for the first quarter
operated by Eni, in the Nour North of 2019. For the first quarter of
Sinai offshore prospect in the Egyptian 2018, we reported $5.4 billion (prior
Eastern Mediterranean. to the implementation of IFRS 16).
Downstream Organic capital expenditure for the
Increased year-on-year fuels marketing first quarter of 2019 was $3.6 billion.
earnings reflected higher premium BP expects 2019 organic capital expenditure
fuels volumes and the continued roll-out to be in the range of $15-17 billion.
of convenience partnership sites.
Expansion in new markets continued, Lease liability payments of principal
including new sites opening in Mexico, for the first quarter of 2019 were
Indonesia and China. $0.6 billion.
In the quarter BP opened its first
BP-branded retail site in Shandong Divestments and other proceeds were
Province, China. $0.6 billion for the quarter.
BP and Lotte agreed an expansion of
capacity at their joint venture acetyls Gulf of Mexico oil spill payments
petrochemicals site in South Korea, on a post-tax basis totalled $0.6
helping to meet growing regional demand. billion in the quarter. Payments for
BP also signed an agreement with Virent the full year are expected to be around
and Johnson Matthey to advance the $2 billion on a post-tax basis.
development of bio-paraxylene, a raw
material for the production of renewable Gearing* at the end of the quarter
polyester. was 30.4%. Assuming recent average
oil prices, and in line with expected
Advancing the energy transition growth in free cash flow supported
BP announced progress against its by divestment proceeds, we expect
near-term targets for operational gearing to move towards the middle
GHG emissions: 2018 operational emissions of our targeted range of 20-30% in
were 1.7 million tonnes CO(2) equivalent 2020. See page 22 for more information.
(MteCO(2) e) lower than 2017; 2.5MteCO(2) Safety
e sustainable GHG emissions reductions BP has introduced a new safety operating
have been generated throughout BP's metric including tier 2 as well as
operations since the beginning of tier 1 process safety events, giving
2016; and methane intensity was maintained a wider view of process safety within
at 0.2% in 2018. BP's operations. The increase compared
to the first quarter 2018 was mainly
due to a higher number of tier 2 events.
Operating metrics First quarter Financial metrics First quarter
2019 2019
========================== ============================
(vs. First quarter (vs. First quarter
2018) 2018)
========================== =================== ============================ ===================
Tier 1 and tier 2 Underlying RC profit*
process safety events* 28 $2.4bn
========================== ============================
(+15) (-$0.2bn)
========================== =================== ============================ ===================
Reported recordable Operating cash flow
injury frequency* excluding Gulf of
Mexico oil spill payments
0.16 (post-tax)(c) $5.9bn
========================== ============================
(-22%) (+$0.6bn)
========================== =================== ============================ ===================
Group production 3,822mboe/d Organic capital expenditure $3.6bn
========================== ============================
(+2.4%) (+$0.1bn)
========================== =================== ============================ ===================
Upstream production Gulf of Mexico oil
(excludes Rosneft spill payments (post-tax)
segment) 2,656mboe/d $0.6bn
========================== ============================
(+2.0%) (-$1.1bn)
========================== =================== ============================ ===================
Upstream unit production Divestment proceeds*
costs(a) $7.39/boe $0.6bn
========================== ============================
(-3.9%) (+$0.4bn)
========================== =================== ============================ ===================
BP-operated Upstream
plant reliability 96.2% Gearing 30.4%
=========================== ============================
(+0.3) (+2.6)
=================== ============================ ===================
BP-operated refining Dividend per ordinary
availability*(b) 94.3% share(d) 10.25 cents
========================== ============================
(-0.5) (+2.5%)
=================== ============================ ===================
(a) Broadly flat with the same period in 2018 after excluding
the impacts of IFRS 16 on production costs.
(b) From the first quarter 2019 refining availability has
changed to BP-operated refining availability to more closely align
to the BP-operated upstream plant reliability measure.
(c) 1Q19 includes estimated $0.5 billion impact due to IFRS 16.
(d) Represents dividend announced in the quarter (vs. prior year quarter).
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 35.
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Upstream
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
Profit before interest and tax 2,886 4,156 3,175
Inventory holding (gains) losses* (2) 12 (1)
======
RC profit before interest and tax 2,884 4,168 3,174
Net (favourable) adverse impact of non-operating items*
and fair value accounting effects* 44 (282) (17)
Underlying RC profit before interest and tax*(a) 2,928 3,886 3,157
========================================================== ====== ====== ======
(a) See page 7 for a reconciliation to segment RC profit before interest and tax by region.
Financial results
The replacement cost profit before interest and tax for the
first quarter was $2,884 million, compared with $3,174 million for
the same period in 2018. The first quarter included a net
non-operating charge of $4 million, compared with a net charge of
$104 million for the same period in 2018. Fair value accounting
effects in the first quarter had an adverse impact of $40 million,
compared with a favourable impact of $121 million in the same
period of 2018.
After adjusting for non-operating items and fair value
accounting effects, the underlying replacement cost profit before
interest and tax for the first quarter was $2,928 million, compared
with $3,157 million for the same period in 2018. The result for the
first quarter mainly reflected lower liquids realizations and the
impact of turnaround activities in the US Gulf of Mexico, partly
offset by strong gas marketing and trading.
Production
Production for the quarter was 2,656mboe/d, 2.0% higher than the
first quarter of 2018. Underlying production* for the quarter
decreased by 1.9%, mainly due to turnaround and maintenance
activities in the US Gulf of Mexico and severe weather impacts in
BPX Energy.
Key events
On 6 February, the Constellation development in the US Gulf of
Mexico, a tieback to the Constitution spar, commenced production
(Anadarko operator 33.33% and BP 66.67%).
On 11 February, BP confirmed it started gas production from the
second stage of Egypt's West Nile Delta development, in the Giza
and Fayoum fields (BP operator 82.75% and DEA Deutsche Erdoel AG
17.25%).
On 26 February, BP announced first gas from the Angelin project
in Trinidad.
On 1 March, BPX Energy assumed control of all Petrohawk Energy
Corporation operations from BHP.
On 13 March, BP and Environmental Defense Fund announced a
three-year strategic commitment to advance technologies and
practices to reduce methane emissions from the global oil and gas
supply chain.
On 14 March, BP confirmed a gas discovery in the Nour
exploration prospect located in the Nour North Sinai Concession,
located in the Eastern Egyptian Mediterranean (Eni operator 40%, BP
25%, Mubadala Petroleum 20% and Tharwa Petroleum 15%). The well is
currently under evaluation.
On 26 March, BP announced that it has established a fund of up
to $100-million to be made available over the next three years for
projects that will deliver new greenhouse gas (GHG) emissions
reductions in its Upstream oil and gas operations. The new Upstream
carbon fund will provide further support to BP's work in
sustainably reducing GHG emissions in its operations.
In March, a final investment decision was made on Seagull, a
development tieback to the Central UK North Sea (Neptune Energy
operator 35%, BP 50% and Japan Petroleum Exploration Co. LTD.
15%).
In April, a final investment decision was made on the Azeri
Central East (ACE) project, the next stage of the
Azeri-Chirag-Deepwater Gunashli (ACG) field.
Outlook
Looking ahead, we expect second-quarter 2019 reported production
to be broadly flat with the first quarter reflecting ramp up of
major projects* offset by ongoing seasonal turnaround and
maintenance activities in high margin regions.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 35.
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Upstream (continued)
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
Underlying RC profit before interest and tax
US 612 1,400 526
Non-US 2,316 2,486 2,631
2,928 3,886 3,157
====== ====== ======
Non-operating items
US (30) (267) (145)
Non-US 26 403 41
(4) 136 (104)
====== ====== ======
Fair value accounting effects
US (93) 127 (9)
Non-US 53 19 130
(40) 146 121
====== ====== ======
RC profit before interest and tax
US 489 1,260 372
Non-US 2,395 2,908 2,802
2,884 4,168 3,174
====== ====== ======
Exploration expense
US 25 84 309
Non-US 342 373 205
367 457 514
Of which: Exploration expenditure written off 284 351 426
================================================ ====== ====== ======
Production (net of royalties)(a)
Liquids* (mb/d)
US 455 495 448
Europe 159 154 139
Rest of World 685 673 731
1,299 1,321 1,319
====== ====== ======
Natural gas (mmcf/d)
US 2,310 2,255 1,790
Europe 145 215 217
Rest of World 5,417 5,104 5,456
7,872 7,574 7,463
====== ====== ======
Total hydrocarbons* (mboe/d)
US 853 884 757
Europe 184 191 177
Rest of World 1,619 1,553 1,672
2,656 2,627 2,605
====== ====== ======
Average realizations*(b)
Total liquids(c) ($/bbl) 56.47 61.80 61.40
Natural gas ($/mcf) 4.02 4.33 3.78
Total hydrocarbons ($/boe) 39.37 42.98 41.39
================================================ ====== ====== ======
(a) Includes BP's share of production of equity-accounted entities in the Upstream segment.
(b) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
(c) Includes condensate, natural gas liquids and bitumen.
Because of rounding, some totals may not agree exactly with the
sum of their component parts.
Top of page 8
Downstream
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
Profit (loss) before interest and tax 2,811 (332) 1,782
Inventory holding (gains) losses* (1,046) 2,470 (69)
RC profit before interest and tax 1,765 2,138 1,713
Net (favourable) adverse impact of non-operating items*
and fair value accounting effects* (32) 31 113
Underlying RC profit before interest and tax*(a) 1,733 2,169 1,826
========================================================== ====== ====== ======
(a) See page 9 for a reconciliation to segment RC profit before
interest and tax by region and by business.
Financial results
The replacement cost profit before interest and tax for the
first quarter was $1,765 million, compared with $1,713 million for
the same period in 2018.
The first quarter includes a net non-operating charge of $4
million, compared with a charge of $53 million for the same period
in 2018. Fair value accounting effects had a favourable impact of
$36 million in the first quarter, compared with an adverse impact
of $60 million for the same period in 2018.
After adjusting for non-operating items and fair value
accounting effects, the underlying replacement cost profit before
interest and tax for the first quarter was $1,733 million, compared
with $1,826 million for the same period in 2018.
Replacement cost profit before interest and tax for the fuels,
lubricants and petrochemicals businesses is set out on page 9.
Fuels
The fuels business reported an underlying replacement cost
profit before interest and tax of $1,292 million for the first
quarter, compared with $1,398 million for the same period in 2018.
The year-on-year movement was driven by lower refining margins,
partially offset by a strong contribution from supply and trading
and higher fuels marketing earnings.
The refining result for the quarter reflects the impact of lower
industry refining margins and narrower North American heavy crude
oil discounts.
The fuels marketing result for the quarter primarily reflects
year-on-year retail earnings growth, benefiting from higher premium
volumes, the continued roll out of our convenience partnership
model and further expansion in new markets, most notably
Mexico.
In the quarter we opened our first BP-branded retail station in
Shandong Province, through our joint venture with Dongming. This
marks the start of our plan to add 1,000 new sites over the next
five years to our existing network in China of more than 740
sites.
Lubricants
The lubricants business reported an underlying replacement cost
profit before interest and tax of $272 million for the first
quarter, compared with $331 million for the same period in 2018.
The result for the quarter reflects continued adverse foreign
exchange rate movements and one-off impacts related to the
completion of a systems implementation.
Petrochemicals
The petrochemicals business reported an underlying replacement
cost profit before interest and tax of $169 million for the first
quarter, compared with $97 million for the same period in 2018. The
result for the quarter reflects increased margin optimization and a
lower level of turnaround activity.
In the quarter we agreed an expansion of capacity at our joint
venture petrochemicals facility in South Korea which will help us
to meet the region's growing acetyls demand. We also continued to
make progress in our commitment to a low carbon future, signing an
agreement with Virent and Johnson Matthey to further advance the
development of bio-paraxylene, a key raw material for the
production of renewable polyester.
Outlook
Looking to the second quarter of 2019, we expect higher industry
refining margins, a similar level of North American heavy crude oil
discounts and a significantly higher level of turnaround
activity.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 35.
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Downstream (continued)
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Underlying RC profit before interest and tax - by region
US 531 995 589
Non-US 1,202 1,174 1,237
1,733 2,169 1,826
====== ====== ======
Non-operating items
US 1 (109) (17)
Non-US (5) (292) (36)
(4) (401) (53)
====== ====== ======
Fair value accounting effects(a)
US 61 184 (121)
Non-US (25) 186 61
36 370 (60)
====== ====== ======
RC profit before interest and tax
US 593 1,070 451
Non-US 1,172 1,068 1,262
1,765 2,138 1,713
====== ====== ======
Underlying RC profit before interest and tax - by business(b)(c)
Fuels 1,292 1,624 1,398
Lubricants 272 311 331
Petrochemicals 169 234 97
1,733 2,169 1,826
====== ====== ======
Non-operating items and fair value accounting effects(a)
Fuels 37 173 (110)
Lubricants (4) (198) (3)
Petrochemicals (1) (6) -
32 (31) (113)
====== ====== ======
RC profit before interest and tax(b)(c)
Fuels 1,329 1,797 1,288
Lubricants 268 113 328
Petrochemicals 168 228 97
======
1,765 2,138 1,713
====== ====== ======
BP average refining marker margin (RMM)* ($/bbl) 10.2 11.0 11.7
Refinery throughputs (mb/d)
US 735 691 715
Europe 767 735 797
Rest of World 237 240 249
1,739 1,666 1,761
BP-operated refining availability* (%) 94.3 95.6 94.8
=================================================================== ====== ====== ======
Marketing sales of refined products (mb/d)
US 1,077 1,138 1,096
Europe 993 1,053 1,045
Rest of World 520 526 481
2,590 2,717 2,622
Trading/supply sales of refined products 3,296 3,199 3,181
Total sales volumes of refined products 5,886 5,916 5,803
=================================================================== ====== ====== ======
Petrochemicals production (kte)
US 601 672 499
Europe 1,160 1,037 1,128
Rest of World 1,299 1,259 1,391
3,060 2,968 3,018
====== ====== ======
(a) For Downstream, fair value accounting effects arise solely
in the fuels business. See page 27 for further information.
(b) Segment-level overhead expenses are included in the fuels business result.
(c) Results from petrochemicals at our Gelsenkirchen and Mülheim
sites in Germany are reported in the fuels business.
Top of page 10
Rosneft
First Fourth First
quarter quarter quarter
$ million 2019(a) 2018 2018
======= ======= =========
Profit before interest and tax(b)(c) 526 308 269
Inventory holding (gains) losses* (40) 92 (22)
RC profit before interest and tax 486 400 247
Net charge (credit) for non-operating items* 81 31 -
Underlying RC profit before interest and tax* 567 431 247
================================================ ====== ======= ======
Financial results
Replacement cost (RC) profit before interest and tax for the
first quarter was $486 million, compared with $247 million for the
same period in 2018.
After adjusting for a non-operating item, the underlying RC
profit before interest and tax for the first quarter was $567
million. There were no non-operating items in the first quarter of
2018.
Compared with the same period in 2018, the result for the first
quarter primarily reflects favourable foreign exchange effects,
partially offset by the impact of lower oil prices.
On 16 April 2019, Rosneft announced that the board of directors
had recommended that the annual general meeting (AGM) adopts a
resolution to pay dividends of 11.33 roubles per ordinary share,
which would bring the total dividend for 2018 to 25.91 roubles per
ordinary share, which constitutes 50% of the company's IFRS net
profit. In addition to the dividend received in October 2018 in
relation to the results for the first half of 2018, BP expects to
receive later this year a dividend of 21.3 billion roubles, after
the deduction of withholding tax, subject to approval at the
AGM.
First Fourth First
quarter quarter quarter
2019(a) 2018 2018
========================================== ======= ======= =========
Production (net of royalties) (BP share)
Liquids* (mb/d) 937 946 902
Natural gas (mmcf/d) 1,327 1,312 1,307
Total hydrocarbons* (mboe/d) 1,166 1,173 1,127
=========================================== ======= ======= =======
(a) The operational and financial information of the Rosneft
segment for the first quarter is based on preliminary operational
and financial results of Rosneft for the three months ended 31
March 2019. Actual results may differ from these amounts.
(b) The Rosneft segment result includes equity-accounted
earnings arising from BP's 19.75% shareholding in Rosneft as
adjusted for the accounting required under IFRS relating to BP's
purchase of its interest in Rosneft and the amortization of the
deferred gain relating to the divestment of BP's interest in
TNK-BP. These adjustments increase the segment's reported profit
before interest and tax, as shown in the table above, compared with
the amounts reported in Rosneft's IFRS financial statements.
(c) BP's adjusted share of Rosneft's earnings after Rosneft's own finance costs, taxation and non-controlling interests is included in the BP group income statement within profit before interest and taxation. For each year-to-date period it is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date.
Top of page 11
Other businesses and corporate
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Profit (loss) before interest and tax (546) (1,110) (571)
Inventory holding (gains) losses* - - -
RC profit (loss) before interest and tax (546) (1,110) (571)
Net charge (credit) for non-operating items* 128 766 179
====== ====== ======
Underlying RC profit (loss) before interest and tax* (418) (344) (392)
======================================================= ====== ====== ======
Underlying RC profit (loss) before interest and tax
US (155) (179) (147)
Non-US (263) (165) (245)
(418) (344) (392)
====== ====== ======
Non-operating items
US (128) (654) (148)
Non-US - (112) (31)
(128) (766) (179)
====== ====== ======
RC profit (loss) before interest and tax
US (283) (833) (295)
Non-US (263) (277) (276)
(546) (1,110) (571)
====== ====== ======
Other businesses and corporate comprises our alternative energy
business, shipping, treasury, corporate activities including
centralized functions, and any residual costs of the Gulf of Mexico
oil spill.
Financial results
The replacement cost loss before interest and tax for the first
quarter was $546 million, compared with $571 million for the same
period in 2018.
The results included a net non-operating charge of $128 million
for the first quarter, primarily relating to costs of the Gulf of
Mexico oil spill, compared with a charge of $179 million for the
same period in 2018.
After adjusting for non-operating items, the underlying
replacement cost loss before interest and tax for the first quarter
was $418 million, compared with $392 million for the same period in
2018.
Alternative Energy
The net ethanol-equivalent production (which includes ethanol
and sugar) for the first quarter was 14 million litres, compared
with 7.6 million litres for the same period in 2018.
Net wind generation capacity* was 1,001MW at 31 March 2019,
compared with 1,432MW at 31 March 2018. BP's net share of wind
generation for the first quarter was 773GWh, compared with 1,217GWh
for the same period in 2018. The lower production for the quarter
is due to divestments in the fourth quarter of 2018.
Lightsource BP announced that the Green Energy Equity Fund,
managed by its Indian joint venture, EverSource Capital, is
partnering with the National Investment and Infrastructure Fund and
CDC Group plc to invest a total of $330 million in Ayana Renewable
Power. Ayana was launched to develop utility scale solar and wind
generation projects in India.
Outlook
During 2019, Other businesses and corporate average quarterly
charges, excluding non-operating items, are expected to be around
$350 million although this will fluctuate quarter to quarter.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 35.
-----------------------------------------------------------------------
Top of page 12
Financial statements
Group income statement
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Sales and other operating revenues (Note 3) 66,321 75,677 68,172
Earnings from joint ventures - after interest and tax 185 236 293
Earnings from associates - after interest and tax 649 425 414
Interest and other income 163 295 159
Gains on sale of businesses and fixed assets 89 252 105
=======
Total revenues and other income 67,407 76,885 69,143
Purchases 48,272 59,019 51,512
Production and manufacturing expenses 5,356 6,173 5,438
Production and similar taxes (Note 5) 424 186 368
Depreciation, depletion and amortization (Note 4) 4,461 3,987 3,931
Impairment and losses on sale of businesses and fixed
assets 96 244 91
Exploration expense 367 457 514
Distribution and administration expenses 2,767 3,655 2,794
=======
Profit (loss) before interest and taxation 5,664 3,164 4,495
Finance costs 867 742 553
Net finance expense relating to pensions and other
post-retirement benefits 15 34 31
Profit (loss) before taxation 4,782 2,388 3,911
Taxation 1,783 1,617 1,380
Profit (loss) for the period 2,999 771 2,531
=============================================================== ======= ======= =======
Attributable to
BP shareholders 2,934 766 2,469
Non-controlling interests 65 5 62
2,999 771 2,531
======= ======= =======
Earnings per share (Note 6)
Profit (loss) for the period attributable to BP shareholders
Per ordinary share (cents)
Basic 14.54 3.83 12.40
Diluted 14.47 3.80 12.33
Per ADS (dollars)
Basic 0.87 0.23 0.74
Diluted 0.87 0.23 0.74
=============================================================== ======= ======= =======
Top of page 13
Condensed group statement of comprehensive income
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Profit (loss) for the period 2,999 771 2,531
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss
Currency translation differences 989 (937) 531
Cash flow hedges and costs of hedging 19 (68) (82)
Share of items relating to equity-accounted entities,
net of tax (50) 200 155
Income tax relating to items that may be reclassified (34) 33 (90)
924 (772) 514
====== ====== ======
Items that will not be reclassified to profit or loss
Remeasurements of the net pension and other post-retirement
benefit liability or asset (853) (651) 865
Cash flow hedges that will subsequently be transferred
to the balance sheet 8 (8) 13
Income tax relating to items that will not be reclassified 273 223 (265)
(572) (436) 613
Other comprehensive income 352 (1,208) 1,127
====== ====== ======
Total comprehensive income 3,351 (437) 3,658
=============================================================== ====== ====== ======
Attributable to
BP shareholders 3,281 (444) 3,580
Non-controlling interests 70 7 78
3,351 (437) 3,658
====== ====== ======
Top of page 14
Condensed group statement of changes in equity
BP shareholders' Non-controlling Total
$ million equity interests equity
At 31 December 2018 99,444 2,104 101,548
Adjustment on adoption of IFRS 16, net
of tax(a) (329) (1) (330)
========================================= ============== ============= =======
At 1 January 2019 99,115 2,103 101,218
=========================================
Total comprehensive income 3,281 70 3,351
Dividends (1,435) (36) (1,471)
Cash flow hedges transferred to the
balance sheet, net of tax 5 - 5
Repurchase of ordinary share capital (50) - (50)
Share-based payments, net of tax 280 - 280
Share of equity-accounted entities'
changes in equity, net of tax 3 - 3
At 31 March 2019 101,199 2,137 103,336
========================================= ============== ============= =======
BP shareholders' Non-controlling Total
$ million equity interests equity
========================================
At 31 December 2017 98,491 1,913 100,404
Adjustment on adoption of IFRS 9, net
of tax(b) (180) - (180)
=========================================
At 1 January 2018 98,311 1,913 100,224
=========================================
Total comprehensive income 3,580 78 3,658
Dividends (1,828) (13) (1,841)
Cash flow hedges transferred to the
balance sheet, net of tax 1 - 1
Repurchase of ordinary share capital (120) - (120)
Share-based payments, net of tax 244 - 244
Transactions involving non-controlling
interests, net of tax (1) - (1)
At 31 March 2018 100,187 1,978 102,165
========================================= ============== ============= =======
(a) See Note 1 for further information.
(b) See Note 1 in BP Annual Report and Form 20-F 2018 for further information.
Top of page 15
Group balance sheet
31 March 31 December
$ million 2019 2018(a)
Non-current assets
Property, plant and equipment 144,625 135,261
Goodwill 12,277 12,204
Intangible assets 16,505 17,284
Investments in joint ventures 8,701 8,647
Investments in associates 19,073 17,673
Other investments 1,269 1,341
Fixed assets 202,450 192,410
Loans 642 637
Trade and other receivables 2,111 1,834
Derivative financial instruments 5,265 5,145
Prepayments 814 1,179
Deferred tax assets 3,593 3,706
Defined benefit pension plan surpluses 5,709 5,955
220,584 210,866
======== ===========
Current assets
Loans 340 326
Inventories 21,426 17,988
Trade and other receivables 24,490 24,478
Derivative financial instruments 3,004 3,846
Prepayments 1,082 963
Current tax receivable 965 1,019
Other investments 134 222
Cash and cash equivalents 21,256 22,468
=========================================================
72,697 71,310
======== ===========
Total assets 293,281 282,176
========================================================= ======== ===========
Current liabilities
Trade and other payables 46,749 46,265
Derivative financial instruments 2,340 3,308
Accruals 3,924 4,626
Lease liabilities 2,099 44
Finance debt 11,480 9,329
Current tax payable 2,348 2,101
Provisions 2,332 2,564
71,272 68,237
======== ===========
Non-current liabilities
Other payables 13,898 13,830
Derivative financial instruments 5,294 5,625
Accruals 547 575
Lease liabilities 8,195 623
Finance debt 54,510 55,803
Deferred tax liabilities 9,770 9,812
Provisions 17,773 17,732
Defined benefit pension plan and other post-retirement
benefit plan deficits 8,686 8,391
118,673 112,391
======== ===========
Total liabilities 189,945 180,628
========================================================= ======== ===========
Net assets 103,336 101,548
========================================================= ======== ===========
Equity
BP shareholders' equity 101,199 99,444
Non-controlling interests 2,137 2,104
=========================================================
Total equity 103,336 101,548
========================================================= ======== ===========
(a) Finance debt on the comparative balance sheet has been
re-presented to align with the current period. See Note 1 for
further information.
Top of page 16
Condensed group cash flow statement
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======== =========
Operating activities
Profit (loss) before taxation 4,782 2,388 3,911
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Depreciation, depletion and amortization and exploration
expenditure written off 4,745 4,338 4,357
Impairment and (gain) loss on sale of businesses and
fixed assets 7 (8) (14)
Earnings from equity-accounted entities, less dividends
received (589) (30) (536)
Net charge for interest and other finance expense,
less net interest paid 88 222 80
Share-based payments 297 126 237
Net operating charge for pensions and other post-retirement
benefits, less contributions and benefit payments
for unfunded plans (77) (60) (202)
Net charge for provisions, less payments (116) 617 144
Movements in inventories and other current and non-current
assets and liabilities (2,695) 778 (3,398)
Income taxes paid (1,146) (1,542) (933)
Net cash provided by operating activities 5,296 6,829 3,646
============================================================== ====== ======= ======
Investing activities
Expenditure on property, plant and equipment, intangible
and other assets (3,695) (5,962) (3,586)
Acquisitions, net of cash acquired (1,795) (6,379) -
Investment in joint ventures - (290) (39)
Investment in associates (145) (265) (338)
Total cash capital expenditure (5,635) (12,896) (3,963)
Proceeds from disposal of fixed assets 235 660 85
Proceeds from disposal of businesses, net of cash disposed 365 1,758 82
Proceeds from loan repayments 55 619 9
Net cash used in investing activities (4,980) (9,859) (3,787)
============================================================== ====== ======= ======
Financing activities(a)
Net issue (repurchase) of shares (45) (16) (110)
Lease liability payments (617) (11) (10)
Proceeds from long-term financing 2,124 2,118 122
Repayments of long-term financing (2,640) (1,795) (1,147)
Net increase (decrease) in short-term debt 1,089 889 (349)
Net increase (decrease) in non-controlling interests - - (1)
Dividends paid - BP shareholders (1,435) (1,733) (1,829)
- non-controlling interests (36) (41) (13)
Net cash provided by (used in) financing activities (1,560) (589) (3,337)
============================================================== ====== ======= ======
Currency translation differences relating to cash and
cash equivalents 32 (105) 145
Increase (decrease) in cash and cash equivalents (1,212) (3,724) (3,333)
============================================================== ====== ======= ======
Cash and cash equivalents at beginning of period 22,468 26,192 25,575
Cash and cash equivalents at end of period 21,256 22,468 22,242
============================================================== ====== ======= ======
(a) Financing cash flows for the fourth and first quarters 2018
have been re-presented to align with the current period. See Note 1
for further information.
Top of page 17
Notes
Note 1. Basis of preparation
The interim financial information included in this report has
been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the
opinion of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2018 included in BP Annual
Report and Form 20-F 2018.
BP prepares its consolidated financial statements included
within BP Annual Report and Form 20-F on the basis of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), IFRS as adopted by the European
Union (EU) and in accordance with the provisions of the UK
Companies Act 2006 as applicable to companies reporting under IFRS.
IFRS as adopted by the EU differs in certain respects from IFRS as
issued by the IASB. The differences have no impact on the group's
consolidated financial statements for the periods presented.
The financial information presented herein has been prepared in
accordance with the accounting policies expected to be used in
preparing BP Annual Report and Form 20-F 2019, which are the same
as those used in preparing BP Annual Report and Form 20-F 2018 with
the exception of the adoption of IFRS 16 'Leases' from 1 January
2019.
New International Financial Reporting Standards adopted
BP adopted IFRS 16 'Leases', which replaced IAS 17 'Leases' and
IFRIC 4 'Determining whether an arrangement contains a lease', with
effect from 1 January 2019. Further information is included in BP
Annual Report and Form 20-F 2018 - Financial statements - Note 1
Significant accounting policies, judgements, estimates and
assumptions - Impact of new International Financial Reporting
Standards.
IFRS 16 provides a new model for lessee accounting in which the
majority of leases are accounted for by the recognition on the
balance sheet of a right-of-use asset and a lease liability.
Agreements that convey the right to control the use of an
identified asset for a period of time in exchange for consideration
are accounted for as leases. A lease liability is recognized at the
present value of future lease payments over the reasonably certain
lease term. Variable lease payments that do not depend on an index
or a rate are not included in the lease liability. The right-of-use
asset is recognized at a value equivalent to the initial
measurement of the lease liability adjusted for lease prepayments,
lease incentives, initial direct costs and any restoration
obligations. The subsequent amortization of the right-of-use asset
and the interest expense related to the lease liability are
recognized in the income statement over the lease term.
The group recognizes the full lease liability, rather than its
working interest share, for leases entered into on behalf of a
joint operation if the group has the primary responsibility for
making the lease payments. If the right-of-use asset is jointly
controlled by the group and the other joint operators, a receivable
is recognized for the share of the asset transferred to the other
joint operators.
BP elected to apply the modified retrospective transition
approach in which the cumulative effect of initial application is
recognized in opening retained earnings at the date of initial
application with no restatement of comparative periods' financial
information. Comparative information in the group balance sheet and
group cash flow statement has, however, been re-presented to align
with current year presentation, showing lease liabilities and lease
liability payments as separate line items. These were previously
included within the finance debt and repayments of long-term
financing line items respectively. Amounts presented in these line
items for the comparative periods relate to leases accounted for as
finance leases under IAS 17.
IFRS 16 introduces a revised definition of a lease. As permitted
by the standard, BP elected not to reassess the existing population
of leases under the new definition and will only apply the new
definition for the assessment of contracts entered into after the
transition date. On transition the standard permits, on a
lease-by-lease basis, the right-of-use asset to be measured either
at an amount equal to the lease liability (as adjusted for prepaid
or accrued lease payments), or on a historical basis as if the
standard had always applied. BP elected to use the historical asset
measurement for its more material leases and used the asset equals
liability approach for the remainder of the population. BP also
elected to adjust the carrying amounts of the right-of-use assets
as at 1 January 2019 for onerous lease provisions that had been
recognized on the group balance sheet as at 31 December 2018,
rather than performing impairment tests on transition.
Top of page 18
Note 1. Basis of preparation (continued)
The effect of the adoption of IFRS 16 on the group balance sheet
is set out below.
Adjustment
31 December 1 January on adoption
$ million 2018 2019 of IFRS 16
=========== ========= =============
Non-current assets
Property, plant and equipment 135,261 143,950 8,689
Trade and other receivables 1,834 2,159 325
Prepayments 1,179 849 (330)
Deferred tax assets 3,706 3,736 30
Current assets
Trade and other receivables 24,478 24,673 195
Prepayments 963 872 (91)
Current liabilities
Trade and other payables 46,265 46,209 (56)
Accruals 4,626 4,578 (48)
Lease liabilities 44 2,196 2,152
Finance debt 9,329 9,329 -
Provisions 2,564 2,547 (17)
Non-current liabilities
Other payables 13,830 14,013 183
Accruals 575 548 (27)
Lease liabilities 623 7,704 7,081
Finance debt 55,803 55,803 -
Deferred tax liabilities 9,812 9,767 (45)
Provisions 17,732 17,657 (75)
================================== =========== ========= ==========
Net assets 101,548 101,218 (330)
================================== =========== ========= ==========
Equity
BP shareholders' equity 99,444 99,115 (329)
Non-controlling interests 2,104 2,103 (1)
================================== =========== ========= ==========
101,548 101,218 (330)
=========== ========= ==========
The presentation and timing of recognition of charges in the
income statement has changed following the adoption of IFRS 16. The
operating lease expense previously reported under IAS 17, typically
on a straight-line basis, has been replaced by depreciation of the
right-of-use asset and interest on the lease liability. In the cash
flow statement payments are now presented as financing cash flows,
representing payments of principal, and as operating cash flows,
representing payments of interest. Variable lease payments that do
not depend on an index or rate are not included in the lease
liability and will continue to be presented as operating cash
flows. In prior years, operating lease payments were principally
presented within cash flows from operating activities.
The following table provides a reconciliation of the group's
operating lease commitments as at 31 December 2018 to the total
lease liability recognized on the group balance sheet in accordance
with IFRS 16 as at 1 January 2019.
$ million
=========
Operating lease commitments at 31 December 2018 11,979
Leases not yet commenced (1,372)
Leases below materiality threshold (86)
Short-term leases (91)
Effect of discounting (1,512)
Impact on leases in joint operations 836
Variable lease payments (58)
Redetermination of lease term (252)
Other (22)
Total additional lease liabilities recognized on adoption
of IFRS 16 9,422
============================================================ ======
Finance lease obligations at 31 December 2018 667
Adjustment for finance leases in joint operations (189)
============================================================ ======
Total lease liabilities at 1 January 2019 9,900
============================================================ ======
Top of page 19
Note 1. Basis of preparation (continued)
An explanation of each reconciling item shown in the table above
is provided in BP Annual Report and Form 20-F 2018 - Financial
statements - Note 1 Significant accounting policies, judgements,
estimates and assumptions - Impact of new International Financial
Reporting Standards.
The total adjustments to the group's lease liabilities at 1
January 2019 are reconciled as follows:
$ million
========
Total additional lease liabilities recognized on adoption
of IFRS 16 9,422
Less: adjustment for finance leases in joint operations (189)
Total adjustment to lease liabilities 9,233
============================================================ =====
Of which - current 2,152
* non-current 7,081
============================================================ =====
Note 2. Analysis of replacement cost profit (loss) before
interest and tax and reconciliation to profit (loss) before
taxation
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Upstream 2,884 4,168 3,174
Downstream 1,765 2,138 1,713
Rosneft 486 400 247
Other businesses and corporate (546) (1,110) (571)
4,589 5,596 4,563
Consolidation adjustment - UPII* (13) 142 (160)
RC profit (loss) before interest and tax* 4,576 5,738 4,403
Inventory holding gains (losses)*
Upstream 2 (12) 1
Downstream 1,046 (2,470) 69
Rosneft (net of tax) 40 (92) 22
Profit (loss) before interest and tax 5,664 3,164 4,495
Finance costs 867 742 553
Net finance expense relating to pensions and other
post-retirement benefits 15 34 31
Profit (loss) before taxation 4,782 2,388 3,911
===================================================== ====== ====== ======
RC profit (loss) before interest and tax*
US 771 1,487 359
Non-US 3,805 4,251 4,044
4,576 5,738 4,403
====== ====== ======
Top of page 20
Note 3. Sales and other operating revenues
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
=========================================================== ======= ======= =========
By segment
Upstream 14,594 15,050 13,870
Downstream 58,416 67,733 61,406
Other businesses and corporate 356 536 343
73,366 83,319 75,619
======= ====== =======
Less: sales and other operating revenues between segments
Upstream 6,324 8,669 6,733
Downstream 586 (1,232) 482
Other businesses and corporate 135 205 232
7,045 7,642 7,447
======= ====== =======
Third party sales and other operating revenues
Upstream 8,270 6,381 7,137
Downstream 57,830 68,965 60,924
Other businesses and corporate 221 331 111
Total sales and other operating revenues 66,321 75,677 68,172
============================================================ ======= ====== =======
By geographical area
US 21,848 26,890 23,613
Non-US 49,618 53,540 51,240
============================================================ ======= ====== =======
71,466 80,430 74,853
Less: sales and other operating revenues between areas 5,145 4,753 6,681
66,321 75,677 68,172
======= ====== =======
Revenues from contracts with customers
Sales and other operating revenues include the following
in relation to revenues from contracts with customers:
Crude oil 14,282 15,448 14,917
Oil products 42,583 47,847 44,130
Natural gas, LNG and NGLs 5,793 5,862 5,159
Non-oil products and other revenues from contracts
with customers 3,501 3,618 3,495
66,159 72,775 67,701
======= ====== =======
Note 4. Depreciation, depletion and amortization
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
================================ ======= ======= =========
Upstream
US 1,113 1,137 1,088
Non-US 2,498 2,242 2,272
3,611 3,379 3,360
======= ======= =======
Downstream
US 323 240 219
Non-US 383 298 302
706 538 521
======= ======= =======
Other businesses and corporate
US 13 11 16
Non-US 131 59 34
================================= ======= ======= =======
144 70 50
Total group 4,461 3,987 3,931
================================= ======= ======= =======
Top of page 21
Note 5. Production and similar taxes
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
US 81 99 90
Non-US 343 87 278
424 186 368
======= ======= =======
Note 6. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated
by dividing the profit (loss) for the period attributable to
ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period. During the quarter the
company repurchased for cancellation 6 million ordinary shares for
a total cost of $50 million, as part of the share buyback programme
as announced on 31 October 2017. The number of shares in issue is
reduced when shares are repurchased.
The calculation of EpS is performed separately for each discrete
quarterly period, and for the year-to-date period. As a result, the
sum of the discrete quarterly EpS amounts in any particular
year-to-date period may not be equal to the EpS amount for the
year-to-date period.
For the diluted EpS calculation the weighted average number of
shares outstanding during the period is adjusted for the number of
shares that are potentially issuable in connection with employee
share-based payment plans using the treasury stock method.
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
========== ========== ============
Results for the period
Profit (loss) for the period attributable to BP
shareholders 2,934 766 2,469
Less: preference dividend - - -
Profit (loss) attributable to BP ordinary shareholders 2,934 766 2,469
========================================================= ========== ========== ==========
Number of shares (thousand)(a)
Basic weighted average number of shares outstanding 20,175,634 20,007,781 19,918,700
ADS equivalent 3,362,605 3,334,630 3,319,783
========================================================= ========== ========== ==========
Weighted average number of shares outstanding
used to calculate diluted earnings per share 20,281,773 20,133,087 20,030,656
ADS equivalent 3,380,295 3,355,514 3,338,442
========================================================= ========== ========== ==========
Shares in issue at period-end 20,330,597 20,101,658 19,943,591
ADS equivalent 3,388,432 3,350,276 3,323,931
========================================================= ========== ========== ==========
(a) Excludes treasury shares and includes certain shares that
will be issued in the future under employee share-based payment
plans.
Top of page 22
Note 7. Dividends
Dividends payable
BP today announced an interim dividend of 10.25 cents per
ordinary share which is expected to be paid on 21 June 2019 to
ordinary shareholders and American Depositary Share (ADS) holders
on the register on 10 May 2019. The corresponding amount in
sterling is due to be announced on 10 June 2019, calculated based
on the average of the market exchange rates for the four dealing
days commencing on 4 June 2019. Holders of ADSs are expected to
receive $0.615 per ADS (less applicable fees). A scrip dividend
alternative is available, allowing shareholders to elect to receive
their dividend in the form of new ordinary shares and ADS holders
in the form of new ADSs. Details of the first quarter dividend and
timetable are available at bp.com/dividends and details of the
scrip dividend programme are available at bp.com/scrip.
First Fourth First
quarter quarter quarter
2019 2018 2018
======= ======= =========
Dividends paid per ordinary share
cents 10.250 10.250 10.000
pence 7.738 8.025 7.169
Dividends paid per ADS (cents) 61.50 61.50 60.00
=======
Scrip dividends
Number of shares issued (millions) 90.1 47.5 23.4
Value of shares issued ($ million) 629 322 155
===================================== ======= ======= =======
Note 8. Net debt and net debt including leases
Net debt* First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
========== ========== ============
Finance debt(a) 65,990 65,132 61,540
Fair value (asset) liability of hedges related to
finance debt(b) 350 813 46
66,340 65,945 61,586
Less: cash and cash equivalents 21,256 22,468 22,242
Net debt 45,084 43,477 39,344
==================================================== ========== ========== ==========
Equity 103,336 101,548 102,165
Gearing 30.4% 30.0% 27.8%
==================================================== ========== ========== ============
(a) The fair value of finance debt at 31 March 2019 was $67,003
million (31 December 2018 $65,259 million).
(b) Derivative financial instruments entered into for the
purpose of managing interest rate and foreign currency exchange
risk associated with net debt with a fair value liability position
of $609 million (fourth quarter 2018 liability of $827 million and
first quarter 2018 liability of $457 million) are not included in
the calculation of net debt shown above as hedge accounting is not
applied for these instruments.
As a result of the adoption of IFRS 16 'Leases', leases that
were previously classified as finance leases under IAS 17 are now
presented as 'Lease liabilities' on the group balance sheet and
therefore do not form part of finance debt. Comparative information
for finance debt (previously termed 'gross debt'), net debt and
gearing (previously termed 'net debt ratio') have been amended to
be on a consistent basis with amounts presented for 2019. The
relevant amounts for finance lease liabilities that have been
excluded from comparative information are $667 million and $649
million for the fourth and first quarters 2018. The previously
disclosed amounts for finance debt for the fourth and first
quarters 2018 were $65,799 million and $62,189 million
respectively. The previously disclosed amounts for net debt for the
fourth and first quarters 2018 were $44,144 million and $39,993
million respectively. The previously disclosed amounts for gearing
for the fourth and first quarters 2018 were 30.3% and 28.1%
respectively.
Net debt including leases* First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
===================================================== ======= ======= =========
Net debt 45,084 43,477 39,344
Lease liabilities 10,294 667 649
Net partner (receivable) payable for leases entered
into on behalf of joint operations (303) - -
Net debt including leases 55,075 44,144 39,993
====================================================== ====== ======= =======
Top of page 23
Note 9. Inventory valuation
A provision of $124 million was held against hydrocarbon
inventories at 31 March 2019 ($604 million at 31 December 2018 and
$54 million at 31 March 2018) to write them down to their net
realizable value. The net movement credited to the income statement
during the first quarter 2019 was $480 million (fourth quarter 2018
was a charge of $562 million and first quarter 2018 was a credit of
$9 million).
Note 10. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 29 April 2019, is unaudited
and does not constitute statutory financial statements. Audited
financial information will be published in BP Annual Report and
Form 20-F 2019. BP Annual Report and Form 20-F 2018 has been filed
with the Registrar of Companies in England and Wales. The report of
the auditor on those accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain a
statement under section 498(2) or section 498(3) of the UK
Companies Act 2006.
Top of page 24
Additional information
Effects on the financial statements of the adoption of IFRS 16
'Leases'
BP adopted IFRS 16 'Leases' with effect from 1 January 2019. The
principal effects of the adoption are described below. BP elected
to apply the modified retrospective transition approach in which
the cumulative effect of initial application is recognized in
opening retained earnings at the date of initial application with
no restatement of comparative periods' financial information. For
further information of the effects of adoption see Financial
statements - Note 1 and Note 8.
Balance sheet
As a result of the adoption of IFRS 16, $9.6 billion of
right-of-use assets and $10.3 billion of lease liabilities have
been included in the group balance sheet as at 31 March 2019. Lease
liabilities are now presented separately on the group balance sheet
and do not form part of finance debt. Comparative information for
finance debt in the group balance sheet has been re-presented to
align with current year presentation.
31 March 31 December
$ billion 2019 2018
====================================== ======== =============
Property, plant and equipment(a) (b) 9.6 0.5
Lease liabilities(a) 10.3 0.7
Finance debt 66.0 65.1
======================================= ======== ===========
(a) Comparative information represents finance leases accounted for under IAS 17.
(b) Net additions to right-of-use assets for the first quarter of 2019 were $0.9 billion.
Income statement
The presentation and timing of recognition of charges in the
income statement has changed following the adoption of IFRS 16. The
operating lease expense reported under the previous lease
accounting standard, IAS 17, typically on a straight-line basis,
has been replaced by depreciation of the right-of-use asset and
interest on the lease liability. Depreciation of right-of-use
assets for the first quarter of 2019 was $0.5 billion. Interest on
the group's lease liabilities for the first quarter of 2019 was
$0.1 billion. Operating lease expenses were previously principally
included within Production and manufacturing expenses and
Distribution and administration expenses in the income statement.
It is estimated that the resulting benefit to these line items is
offset, in total, by an equivalent amount in depreciation and
interest charges. Therefore, there has been no material overall
effect on group profit measures in the first quarter of 2019.
Cash flow statement
Lease payments are now presented as financing cash flows,
representing payments of principal, and as operating cash flows,
representing payments of interest. In prior years, operating lease
payments were presented as operating cash flows and capital
expenditure. Of the $0.6 billion of lease payments included within
financing activities for the first quarter of 2019, it is estimated
that $0.5 billion would have been reported as operating cash flows
and $0.1 billion would have been reported as capital expenditure
cash flows ignoring the effects of IFRS 16.
First Fourth First
quarter quarter quarter
$ billion 2019 2018 2018
============================= ======= ======= =========
Financing activities
Lease liability payments(a) (0.6) - -
============================== ====== ======= =======
(a) Comparative information represents finance leases accounted for under IAS 17.
Top of page 25
Capital expenditure*
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Capital expenditure on a cash basis
Organic capital expenditure* 3,648 4,402 3,538
Inorganic capital expenditure*(a) 1,987 8,494 425
5,635 12,896 3,963
======= ======= =======
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Organic capital expenditure by segment
Upstream
US 982 1,048 754
Non-US 1,888 2,419 2,112
2,870 3,467 2,866
======= ======= =======
Downstream
US 187 237 171
Non-US 534 562 447
721 799 618
======= ======= =======
Other businesses and corporate
US 9 34 7
Non-US 48 102 47
57 136 54
3,648 4,402 3,538
======= ======= =======
Organic capital expenditure by geographical area
US 1,178 1,319 932
Non-US 2,470 3,083 2,606
3,648 4,402 3,538
======= ======= =======
(a) On 31 October 2018, BP acquired from BHP Billiton Petroleum
(North America) Inc. 100% of the issued share capital of Petrohawk
Energy Corporation, a wholly owned subsidiary of BHP that holds a
portfolio of unconventional onshore US oil and gas assets. As at 31
March 2019, $8,520 million of the consideration had been paid,
including $6,263 million during the fourth quarter 2018 and $1,732
million during the first quarter 2019. These amounts are included,
net of cash acquired of $104 million in the fourth quarter, in
inorganic capital expenditure. Fourth quarter 2018 also includes
$1,739 million relating to the purchase of an additional 16.5%
interest in the Clair field west of Shetland in the North Sea, as
part of the agreements with ConocoPhillips in which ConocoPhillips
simultaneously purchased BP's entire 39.2% interest in the Greater
Kuparuk Area on the North Slope of Alaska. First quarter 2019 and
first quarter 2018 include amounts relating to the 25-year
extension to our ACG production-sharing agreement* in
Azerbaijan.
Top of page 26
Non-operating items*
First Fourth First
quarter quarter quarter
$ million 2019 2018(a) 2018(a)
======= ======= =========
Upstream
Impairment and gain (loss) on sale of businesses and
fixed assets(b) (11) 34 26
Environmental and other provisions - (35) -
Restructuring, integration and rationalization costs (35) (53) 1
Fair value gain (loss) on embedded derivatives - - 7
Other 42 190 (138)
(4) 136 (104)
====== ====== ======
Downstream
Impairment and gain (loss) on sale of businesses and
fixed assets 4 (20) (14)
Environmental and other provisions - (83) -
Restructuring, integration and rationalization costs (2) (279) (36)
Fair value gain (loss) on embedded derivatives - - -
Other (6) (19) (3)
(4) (401) (53)
====== ====== ======
Rosneft
Impairment and gain (loss) on sale of businesses and
fixed assets (81) (31) -
Environmental and other provisions - - -
Restructuring, integration and rationalization costs - - -
Fair value gain (loss) on embedded derivatives - - -
Other - - -
(81) (31) -
====== ====== ======
Other businesses and corporate
Impairment and gain (loss) on sale of businesses and
fixed assets - (6) 2
Environmental and other provisions(c) (6) (575) (21)
Restructuring, integration and rationalization costs 10 (112) (15)
Fair value gain (loss) on embedded derivatives - - -
Gulf of Mexico oil spill (115) (67) (86)
Other (17) (6) (59)
(128) (766) (179)
====== ====== ======
Total before interest and taxation (217) (1,062) (336)
Finance costs(d) (128) (122) (120)
Total before taxation (345) (1,184) (456)
Taxation credit (charge) on non-operating items 93 (2) 209
Total after taxation for period (252) (1,186) (247)
======================================================= ====== ====== ======
(a) Amounts reported as restructuring, integration and
rationalization costs relate to the group's restructuring
programme, originally announced in 2014, which was completed in
fourth quarter 2018.
(b) Fourth quarter 2018 includes an impairment reversal for
assets in the North Sea and Angola.
(c) Fourth quarter 2018 primarily reflects charges due to the
annual update of environmental provisions, including
asbestos-related provisions for past operations, together with
updates of non-Gulf of Mexico oil spill related legal
provisions.
(d) Relates to the unwinding of discounting effects relating to
Gulf of Mexico oil spill payables.
Top of page 27
Non-GAAP information on fair value accounting effects
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Favourable (adverse) impact relative to management's
measure of performance
Upstream (40) 146 121
Downstream 36 370 (60)
(4) 516 61
Taxation credit (charge) (7) (90) (11)
(11) 426 50
====== ====== ======
BP uses derivative instruments to manage the economic exposure
relating to inventories above normal operating requirements of
crude oil, natural gas and petroleum products. Under IFRS, these
inventories are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
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 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.
BP enters into physical commodity contracts to meet certain
business requirements, such as the purchase of crude for a refinery
or the sale of BP's gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS require that inventory held for trading is 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 other transportation,
storage capacity, oil and gas processing and liquefied natural gas
(LNG) that, under IFRS, are recorded on an accruals basis. These
contracts are risk-managed using a variety of derivative
instruments that 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
for consolidated entities by comparing the IFRS result with
management's internal measure of performance. Under management's
internal measure of performance the inventory, transportation and
capacity contracts in question are valued based on fair value using
relevant forward prices prevailing at the end of the period. The
fair values of derivative instruments used to risk manage certain
oil, gas and other contracts, are deferred to match with the
underlying exposure and the commodity contracts for business
requirements are accounted for on an accruals basis. 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.
In addition, fair value accounting effects include changes in
the fair value of the near-term portions of LNG contracts that fall
within BP's risk management framework. LNG contracts are not
considered derivatives, because there is insufficient market
liquidity, and they are therefore accrual accounted under IFRS.
However, oil and natural gas derivative financial instruments (used
to risk manage the near-term portions of the LNG contracts) are
fair valued under IFRS. The fair value accounting effect reduces
timing differences between recognition of the derivative financial
instruments used to risk manage the LNG contracts and the
recognition of the LNG contracts themselves, which therefore gives
a better representation of performance in each period.
Top of page 28
Non-GAAP information on fair value accounting effects
(continued)
The impacts of fair value accounting effects, relative to
management's internal measure of performance, are shown in the
table above. A reconciliation to GAAP information is set out
below.
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Upstream
Replacement cost profit (loss) before interest and
tax adjusted for fair value accounting effects 2,924 4,022 3,053
Impact of fair value accounting effects (40) 146 121
Replacement cost profit (loss) before interest and
tax 2,884 4,168 3,174
===================================================== ====== ======= ======
Downstream
Replacement cost profit (loss) before interest and
tax adjusted for fair value accounting effects 1,729 1,768 1,773
Impact of fair value accounting effects 36 370 (60)
Replacement cost profit (loss) before interest and
tax 1,765 2,138 1,713
===================================================== ====== ======= ======
Total group
Profit (loss) before interest and tax adjusted for
fair value accounting effects 5,668 2,648 4,434
Impact of fair value accounting effects (4) 516 61
Profit (loss) before interest and tax 5,664 3,164 4,495
===================================================== ====== ======= ======
Readily marketable inventory* (RMI)
31 March 31 December
$ million 2019 2018
======== =============
RMI at fair value* 6,293 4,202
Paid-up RMI* 2,601 1,641
===================== ======== ===========
Readily marketable inventory (RMI) is oil and oil products
inventory held and price risk-managed by BP's integrated supply and
trading function (IST) which could be sold to generate funds if
required. Paid-up RMI is RMI that BP has paid for.
We believe that disclosing the amounts of RMI and paid-up RMI is
useful to investors as it enables them to better understand and
evaluate the group's inventories and liquidity position by enabling
them to see the level of discretionary inventory held by IST and to
see builds or releases of liquid trading inventory.
See the Glossary on page 31 for a more detailed definition of
RMI. RMI, RMI at fair value, paid-up RMI and unpaid RMI are
non-GAAP measures. A reconciliation of total inventory as reported
on the group balance sheet to paid-up RMI is provided below.
31 March 31 December
$ million 2019 2018
======== =============
Reconciliation of total inventory to paid-up RMI
Inventories as reported on the group balance sheet
under IFRS 21,426 17,988
Less: (a) inventories that are not oil and oil
products and (b) oil and oil product inventories
that are not risk-managed by IST (15,420) (14,066)
6,006 3,922
Plus: difference between RMI at fair value and
RMI on an IFRS basis 287 280
RMI at fair value 6,293 4,202
Less: unpaid RMI* at fair value (3,692) (2,561)
Paid-up RMI 2,601 1,641
===================================================== ======= ==========
Top of page 29
Gulf of Mexico oil spill
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Net cash provided by operating activities as per condensed
group cash flow statement 5,296 6,829 3,646
Exclude net cash from operating activities relating
to the Gulf of Mexico oil spill on a post-tax basis 649 272 1,714
=======
Operating cash flow, excluding Gulf of Mexico oil spill
payments* 5,945 7,101 5,360
============================================================= ======= ======= =======
Net cash from operating activities relating to the Gulf of
Mexico oil spill on a pre-tax basis amounted to an outflow of $654
million in the first quarter of 2019. For the same period in 2018,
the amount was an outflow of $1,620 million. Net cash outflows
relating to the Gulf of Mexico oil spill in the first quarter of
2018 include payments made under the 2012 agreement with the US
government to resolve all federal criminal claims arising from the
incident.
31 March 31 December
$ million 2019 2018
======== =============
Trade and other payables (13,751) (14,201)
Provisions (368) (345)
Gulf of Mexico oil spill payables and provisions (14,119) (14,546)
=================================================== ======= ==========
Of which - current (2,262) (2,612)
Deferred tax asset 5,626 5,562
=================================================== ======= ==========
The provision reflects the latest estimate for the remaining
costs associated with the Gulf of Mexico oil spill. The amounts
ultimately payable may differ from the amount provided and the
timing of payments is uncertain. Further information relating to
the Gulf of Mexico oil spill, including information on the nature
and expected timing of payments relating to provisions and other
payables, is provided in BP Annual Report and Form 20-F 2018 -
Financial statements - Note 2 and pages 296 to 298 of Legal
proceedings.
Working capital* reconciliation
First Fourth First
quarter quarter quarter
$ million 2019 2018 2018
======= ======= =========
Movements in inventories and other current and non-current
assets and liabilities as per condensed group cash
flow statement (2,695) 778 (3,398)
Adjustments to exclude movements in inventories and
other current and non-current assets and liabilities
for the Gulf of Mexico oil spill 631 238 1,588
Adjusted for Inventory holding gains (losses)* (Note
2)
Upstream 2 (12) 1
Downstream 1,046 (2,470) 69
Working capital release (build) (1,016) (1,466) (1,740)
============================================================= ====== ====== ======
Top of page 30
Realizations* and marker prices
First Fourth First
quarter quarter quarter
2019 2018 2018
============================================= ======= ======= =========
Average realizations(a)
Liquids* ($/bbl)
US 50.57 61.61 57.77
Europe 61.78 65.07 65.81
Rest of World 60.02 61.42 63.30
BP Average 56.47 61.80 61.40
============================================== ======= ======= =======
Natural gas ($/mcf)
US 2.57 3.10 2.25
Europe 5.84 8.80 7.18
Rest of World 4.67 4.77 4.22
BP Average 4.02 4.33 3.78
============================================== ======= ======= =======
Total hydrocarbons* ($/boe)
US 34.17 42.50 39.65
Europe 58.89 61.98 60.78
Rest of World 40.52 41.64 40.54
BP Average 39.37 42.98 41.39
============================================== ======= ======= =======
Average oil marker prices ($/bbl)
Brent 63.13 68.81 66.82
West Texas Intermediate 54.87 59.98 62.90
Western Canadian Select 44.91 25.31 36.84
Alaska North Slope 64.39 69.53 67.20
Mars 61.13 64.45 62.44
Urals (NWE - cif) 62.91 68.02 65.27
============================================== ======= ======= =======
Average natural gas marker prices
Henry Hub gas price(b) ($/mmBtu) 3.15 3.65 3.01
UK Gas - National Balancing Point (p/therm) 48.23 65.13 57.97
============================================== ======= ======= =======
(a) Based on sales of consolidated subsidiaries only - this
excludes equity-accounted entities.
(b) Henry Hub First of Month Index.
Exchange rates
First Fourth First
quarter quarter quarter
2019 2018 2018
======= ======= =========
$/GBP average rate for the period 1.30 1.29 1.39
$/GBP period-end rate 1.31 1.27 1.41
$/EUR average rate for the period 1.14 1.14 1.23
$/EUR period-end rate 1.12 1.14 1.24
Rouble/$ average rate for the period 66.00 66.48 56.88
Rouble/$ period-end rate 65.02 69.57 57.72
======================================= ======= ======= =======
Top of page 31
Legal proceedings
The following discussion sets out the material developments in
the group's material legal proceedings during the recent period.
For a full discussion of the group's material legal proceedings,
see pages 296-298 of BP Annual Report and Form 20-F 2018.
Other legal proceedings
Scharfstein v. BP West Coast Products, LLC A class action
lawsuit was filed against BP West Coast Products, LLC (BPWCP) in
Oregon State Court under the Oregon Unlawful Trade Practices Act on
behalf of customers who used a debit card at ARCO gasoline stations
in Oregon during the period 1 January 2011 to 30 August 2013,
alleging that ARCO sites in Oregon failed to provide sufficient
notice of the 35 cents per transaction debit card fee. In January
2014, the jury rendered a verdict against BPWCP and awarded
statutory damages of $200 per class member. On 25 August 2015, the
trial court determined the size of the class to be slightly in
excess of two million members. On 31 May 2016 the trial court
entered a judgment against BPWCP for the amount of $417.3 million.
On 31 May 2018 the Oregon Court of Appeals affirmed the trial
court's ruling. BP filed a Petition for Review to the Oregon
Supreme Court which was denied on 8 November 2018. In March 2019,
BP and the Plaintiffs agreed to a settlement of the class action
lawsuit, subject to final court approval. This has received
preliminary approval by the court and has been sent to class
members. A hearing for final approval of the settlement is
scheduled for June 2019. BP filed a petition for a writ of
certiorari to the US
Supreme Court at the end of March in order to preserve BP's
appeal rights pending final court approval of the settlement. BP's
provisions for litigation and claims includes a provision for this
lawsuit.
Glossary
Non-GAAP measures are provided for investors because they are
closely tracked by management to evaluate BP's operating
performance and to make financial, strategic and operating
decisions. Non-GAAP measures are sometimes referred to as
alternative performance measures.
Capital expenditure is total cash capital expenditure as stated
in the condensed group cash flow statement.
Consolidation adjustment - UPII is unrealized profit in
inventory arising on inter-segment transactions.
Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement.
Effective tax rate (ETR) on replacement cost (RC) profit or loss
is a non-GAAP measure. The ETR on RC profit or loss is calculated
by dividing taxation on a RC basis by RC profit or loss before tax.
Information on RC profit or loss is provided below. BP believes it
is helpful to disclose the ETR on RC profit or loss because this
measure excludes the impact of price changes on the replacement of
inventories and allows for more meaningful comparisons between
reporting periods. The nearest equivalent measure on an IFRS basis
is the ETR on profit or loss for the period.
Fair value accounting effects are non-GAAP adjustments to our
IFRS profit (loss). They reflect the difference between the way BP
manages the economic exposure and internally measures performance
of certain activities and the way those activities are measured
under IFRS. Further information on fair value accounting effects is
provided on page 27.
Free cash flow is operating cash flow less net cash used in
investing activities and lease liability payments included in
financing activities, as presented in the condensed group cash flow
statement.
Gearing and net debt are non-GAAP measures. Net debt is
calculated as finance debt, as shown in the balance sheet, plus the
fair value of associated derivative financial instruments that are
used to hedge foreign currency exchange and interest rate risks
relating to finance debt, for which hedge accounting is applied,
less cash and cash equivalents. Gearing is defined as the ratio of
net debt to the total of net debt plus shareholders' equity. All
components of equity are included in the denominator of the
calculation. BP believes these measures provide useful information
to investors. Net debt enables investors to see the economic effect
of finance debt, related hedges and cash and cash equivalents in
total. Gearing enables investors to see how significant net debt is
relative to equity from shareholders. The derivatives are reported
on the balance sheet within the headings 'Derivative financial
instruments'. The nearest equivalent GAAP measures on an IFRS basis
are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt is provided on page 22.
We are unable to present reconciliations of forward-looking
information for gearing to finance debt ratio, because without
unreasonable efforts, we are unable to forecast accurately certain
adjusting items required to present a meaningful comparable GAAP
forward-looking financial measure. These items include fair value
asset (liability) of hedges related to finance debt and cash and
cash equivalents, that are difficult to predict in advance in order
to include in a GAAP estimate.
Hydrocarbons - Liquids and natural gas. Natural gas is converted
to oil equivalent at 5.8 billion cubic feet = 1 million
barrels.
Inorganic capital expenditure is a subset of capital expenditure
and is a non-GAAP measure. Inorganic capital expenditure comprises
consideration in business combinations and certain other
significant investments made by the group. It is reported on a cash
basis. BP believes that this measure provides useful information as
it allows investors to understand how BP's management invests funds
in projects which expand the group's activities through
acquisition. Further information and a reconciliation to GAAP
information is provided on page 25.
Top of page 32
Glossary (continued)
Inventory holding gains and losses represent the difference
between the cost of sales calculated using the replacement cost of
inventory and the cost of sales calculated on the first-in
first-out (FIFO) method after adjusting for any changes in
provisions where the net realizable value of the inventory is lower
than its cost. Under the FIFO method, which we use for IFRS
reporting, the cost of inventory charged to the income statement is
based on its historical cost of purchase or manufacture, rather
than its replacement cost. In volatile energy markets, this can
have a significant distorting effect on reported income. The
amounts disclosed represent the difference between the charge to
the income statement for inventory on a FIFO basis (after adjusting
for any related movements in net realizable value provisions) and
the charge that would have arisen based on the replacement cost of
inventory. For this purpose, the replacement cost of inventory is
calculated using data from each operation's production and
manufacturing system, either on a monthly basis, or separately for
each transaction where the system allows this approach. The amounts
disclosed are not separately reflected in the financial statements
as a gain or loss. No adjustment is made in respect of the cost of
inventories held as part of a trading position and certain other
temporary inventory positions. See Replacement cost (RC) profit or
loss definition below.
Liquids - Liquids for Upstream and Rosneft comprises crude oil,
condensate and natural gas liquids. For Upstream, liquids also
includes bitumen.
Major projects have a BP net investment of at least $250
million, or are considered to be of strategic importance to BP or
of a high degree of complexity.
Net debt including leases is a non-GAAP measure. Net debt
including leases is calculated as net debt plus lease liabilities,
less the net amount of partner receivables and payables relating to
leases entered into on behalf of joint operations. BP believes this
measure provides useful information to investors as it enables
investors to understand the impact of the group's lease portfolio
on net debt. The nearest equivalent GAAP measure on an IFRS basis
is finance debt. A reconciliation of finance debt to net debt
including leases is provided on page 22.
Net wind generation 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.
Non-operating items are charges and credits included in the
financial statements that BP discloses separately because it
considers such disclosures to be meaningful and relevant to
investors. They are items that management considers not to be part
of underlying business operations and are disclosed in order to
enable investors better to understand and evaluate the group's
reported financial performance. Non-operating items within
equity-accounted earnings are reported net of incremental income
tax reported by the equity-accounted entity. An analysis of
non-operating items by region is shown on pages 7, 9 and 11, and by
segment and type is shown on page 26.
Operating cash flow is net cash provided by (used in) operating
activities as stated in the condensed group cash flow statement.
When used in the context of a segment rather than the group, the
terms refer to the segment's share thereof.
Operating cash flow excluding working capital change is a
non-GAAP measure. It is operating cash flow excluding Gulf of
Mexico oil spill payments less change in working capital adjusted
for inventory holding gains/losses (see below). BP believes
operating cash flow excluding working capital change is a useful
measure as it allows for more meaningful comparisons between
reporting periods. The nearest equivalent measure on an IFRS basis
is net cash provided by operating activities.
Operating cash flow excluding Gulf of Mexico oil spill payments
is a non-GAAP measure. It is calculated by excluding post-tax
operating cash flows relating to the Gulf of Mexico oil spill from
net cash provided by operating activities as reported in the
condensed group cash flow statement. BP believes net cash provided
by operating activities excluding amounts related to the Gulf of
Mexico oil spill is a useful measure as it allows for more
meaningful comparisons between reporting periods. The nearest
equivalent measure on an IFRS basis is net cash provided by
operating activities.
Organic capital expenditure is a subset of capital expenditure
and is a non-GAAP measure. Organic capital expenditure comprises
capital expenditure less inorganic capital expenditure. BP believes
that this measure provides useful information as it allows
investors to understand how BP's management invests funds in
developing and maintaining the group's assets. An analysis of
organic capital expenditure by segment and region, and a
reconciliation to GAAP information is provided on page 25.
We are unable to present reconciliations of forward-looking
information for organic capital expenditure to total cash capital
expenditure, because without unreasonable efforts, we are unable to
forecast accurately the adjusting item, inorganic capital
expenditure, that is difficult to predict in advance in order to
derive the nearest GAAP estimate.
Production-sharing agreement (PSA) is an arrangement through
which an oil and gas company bears the risks and costs of
exploration, development and production. In return, if exploration
is successful, the oil company receives entitlement to variable
physical volumes of hydrocarbons, representing recovery of the
costs incurred and a stipulated share of the production remaining
after such cost recovery.
Readily marketable inventory (RMI) is inventory held and price
risk-managed by our integrated supply and trading function (IST)
which could be sold to generate funds if required. It comprises oil
and oil products for which liquid markets are available and
excludes inventory which is required to meet operational
requirements and other inventory which is not price risk-managed.
RMI is reported at fair value. Inventory held by the Downstream
fuels business for the purpose of sales and marketing, and all
inventories relating to the lubricants and petrochemicals
businesses, are not included in RMI.
Paid-up RMI excludes RMI which has not yet been paid for. For
inventory that is held in storage, a first-in first-out (FIFO)
approach is used to determine whether inventory has been paid for
or not. Unpaid RMI is RMI which has not yet been paid for by BP.
RMI, RMI at fair value, Paid-up RMI and Unpaid RMI are non-GAAP
measures. Further information is provided on page 28.
Top of page 33
Glossary (continued)
Realizations are the result of dividing revenue generated from
hydrocarbon sales, excluding revenue generated from purchases made
for resale and royalty volumes, by revenue generating hydrocarbon
production volumes. Revenue generating hydrocarbon production
reflects the BP share of production as adjusted for any production
which does not generate revenue. Adjustments may include losses due
to shrinkage, amounts consumed during processing, and contractual
or regulatory host committed volumes such as royalties.
Refining availability represents Solomon Associates' operational
availability for BP-operated refineries, which is defined as the
percentage of the year that a unit is available for processing
after subtracting the annualized time lost due to turnaround
activity and all planned mechanical, process and regulatory
downtime.
The Refining marker margin (RMM) is the average of regional
indicator margins weighted for BP's crude refining capacity in each
region. Each regional marker margin is based on product yields and
a marker crude oil deemed appropriate for the region. The regional
indicator margins may not be representative of the margins achieved
by BP in any period because of BP's particular refinery
configurations and crude and product slate.
Replacement cost (RC) profit or loss reflects the replacement
cost of inventories sold in the period and is arrived at by
excluding inventory holding gains and losses from profit or loss.
RC profit or loss for the group is not a recognized GAAP measure.
BP believes this measure is useful to illustrate to investors the
fact that crude oil and product prices can vary significantly from
period to period and that the impact on our reported result under
IFRS can be significant. Inventory holding gains and losses vary
from period to period due to changes in prices as well as changes
in underlying inventory levels. In order for investors to
understand the operating performance of the group excluding the
impact of price changes on the replacement of inventories, and to
make comparisons of operating performance between reporting
periods, BP's management believes it is helpful to disclose this
measure. The nearest equivalent measure on an IFRS basis is profit
or loss attributable to BP shareholders. A reconciliation to GAAP
information is provided on page 1. RC profit or loss before
interest and tax is the measure of profit or loss that is required
to be disclosed for each operating segment under IFRS.
RC profit or loss per share is a non-GAAP measure. Earnings per
share is defined in Note 6. RC profit or loss per share is
calculated using the same denominator. The numerator used is RC
profit or loss attributable to BP shareholders rather than profit
or loss attributable to BP shareholders. BP believes it is helpful
to disclose the RC profit or loss per share because this measure
excludes the impact of price changes on the replacement of
inventories and allows for more meaningful comparisons between
reporting periods. The nearest equivalent measure on an IFRS basis
is basic earnings per share based on profit or loss for the period
attributable to BP shareholders.
Reported recordable injury frequency measures the number of
reported work-related employee and contractor incidents that result
in a fatality or injury per 200,000 hours worked. This represents
reported incidents occurring within BP's operational HSSE reporting
boundary. That boundary includes BP's own operated facilities and
certain other locations or situations.
Solomon availability - See Refining availability definition.
Tier 1 and tier 2 process safety events - Tier 1 events are
losses of primary containment from a process of greatest
consequence - causing harm to a member of the workforce, damage to
equipment from a fire or explosion, a community impact or exceeding
defined quantities. Tier 2 events are those of lesser consequence.
These represent reported incidents occurring within BP's
operational HSSE reporting boundary. That boundary includes BP's
own operated facilities and certain other locations or
situations.
Underlying effective tax rate (ETR) is a non-GAAP measure. The
underlying ETR is calculated by dividing taxation on an underlying
replacement cost (RC) basis by underlying RC profit or loss before
tax. Taxation on an underlying RC basis is taxation on a RC basis
for the period adjusted for taxation on non-operating items and
fair value accounting effects. Information on underlying RC profit
or loss is provided below. BP believes it is helpful to disclose
the underlying ETR because this measure may help investors to
understand and evaluate, in the same manner as management, the
underlying trends in BP's operational performance on a comparable
basis, period on period. The nearest equivalent measure on an IFRS
basis is the ETR on profit or loss for the period.
We are unable to present reconciliations of forward-looking
information for underlying ETR to ETR on profit or loss for the
period, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include the taxation on inventory holding gains and losses,
non-operating items and fair value accounting effects, that are
difficult to predict in advance in order to include in a GAAP
estimate.
Underlying production is production after adjusting for
acquisitions and divestments and entitlement impacts in our
production-sharing agreements.
Underlying RC profit or loss is RC profit or loss after
adjusting for non-operating items and fair value accounting
effects. Underlying RC profit or loss and adjustments for fair
value accounting effects are not recognized GAAP measures. See
pages 26 and 27 for additional information on the non-operating
items and fair value accounting effects that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the events and their financial impact. BP believes
that underlying RC profit or loss is a useful measure for investors
because it is a measure closely tracked by management to evaluate
BP's operating performance and to make financial, strategic and
operating decisions and because it may help investors to understand
and evaluate, in the same manner as management, the underlying
trends in BP's operational performance on a comparable basis,
period on period, by adjusting for the effects of these
non-operating items and fair value accounting effects. The nearest
equivalent measure on an IFRS basis for the group is profit or loss
attributable to BP shareholders. The nearest equivalent measure on
an IFRS basis for segments is RC profit or loss before interest and
taxation. A reconciliation to GAAP information is provided on page
1.
Top of page 34
Glossary (continued)
Underlying RC profit or loss per share is a non-GAAP measure.
Earnings per share is defined in Note 6. Underlying RC profit or
loss per share is calculated using the same denominator. The
numerator used is underlying RC profit or loss attributable to BP
shareholders rather than profit or loss attributable to BP
shareholders. BP believes it is helpful to disclose the underlying
RC profit or loss per share because this measure may help investors
to understand and evaluate, in the same manner as management, the
underlying trends in BP's operational performance on a comparable
basis, period on period. The nearest equivalent measure on an IFRS
basis is basic earnings per share based on profit or loss for the
period attributable to BP shareholders.
Upstream plant reliability (BP-operated) is calculated taking
100% less the ratio of total unplanned plant deferrals divided by
installed production capacity. Unplanned plant deferrals are
associated with the topside plant and where applicable the subsea
equipment (excluding wells and reservoir). Unplanned plant
deferrals include breakdowns, which does not include Gulf of Mexico
weather related downtime.
Upstream unit production cost is calculated as production cost
divided by units of production. Production cost does not include ad
valorem and severance taxes. Units of production are barrels for
liquids and thousands of cubic feet for gas. Amounts disclosed are
for BP subsidiaries only and do not include BP's share of
equity-accounted entities.
Working capital - Change in working capital is movements in
inventories and other current and non-current assets and
liabilities as reported in the condensed group cash flow statement.
Change in working capital adjusted for inventory holding
gains/losses is a non-GAAP measure. It is calculated by adjusting
for inventory holding gains/losses reported in the period and this
therefore represents what would have been reported as movements in
inventories and other current and non-current assets and
liabilities, if the starting point in determining net cash provided
by operating activities had been replacement cost profit rather
than profit for the period. The nearest equivalent measure on an
IFRS basis for this is movements in inventories and other current
and non-current assets and liabilities. In the context of
describing operating cash flow excluding Gulf of Mexico oil spill
payments, change in working capital also excludes movements in
inventories and other current and non-current assets and
liabilities relating to the Gulf of Mexico oil spill. See page 29
for further details.
BP utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Top of page 35
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, BP is
providing the following cautionary statement: The discussion in
this results announcement contains certain forecasts, projections
and forward-looking statements - that is, statements related to
future, not past events and circumstances - with respect to the
financial condition, results of operations and businesses of BP and
certain of the plans and objectives of BP with respect to these
items. These statements may generally, but not always, be
identified by the use of words such as 'will', 'expects', 'is
expected to', 'aims', 'should', 'may', 'objective', 'is likely to',
'intends', 'believes', 'anticipates', 'plans', 'we see' or similar
expressions. In particular, the following, among other statements,
are all forward looking in nature: expectations regarding the
expected quarterly dividend payment and timing of such payment;
plans and expectations regarding share buybacks, including to
offset the impact of dilution from the scrip program; expectations
regarding the underlying effective tax rate in 2019; plans and
expectations to deliver disciplined growth, efficient projects, and
safe and reliable operations; expectations regarding 2019 organic
capital expenditure and depreciation, depletion and amortization
charges; plans and expectations with respect to gearing, including
for gearing to move toward the middle of the 20-30% targeted range
in 2020; plans and expectations regarding Upstream projects
including for five Upstream major projects to begin production in
2019 and to deliver 900,000 boe/d from new major projects by 2021;
plans to make available up to $100-million over the next three
years to support projects across the Upstream and expectations that
the projects supported by the new $100-million initiative will
deliver new emissions reductions; expectations regarding Upstream
second-quarter 2019 reported production, seasonal turnaround and
maintenance activities; plans to add 1,000 new BP branded retail
station sites in China over the next five years; plans and
expectations regarding expansion of capacity at BP's joint venture
petrochemicals facility in South Korea; expectations regarding
Downstream second-quarter 2019 refining margins, discounts for
North American heavy crude oil and turnaround activity;
expectations regarding the amount of the Rosneft dividend; plans
and expectations regarding Lightsource BP, including for the Green
Energy Equity Fund to invest a total of $330 million in Ayana
Renewable Power; plans and expectations regarding the Other
businesses and corporate 2019 average quarterly charges; and
expectations with respect to the amount of future payments relating
to the Gulf of Mexico oil spill. 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 and are outside the control of BP. Actual results may differ
materially from those expressed in such statements, depending on a
variety of factors, including: the specific factors identified in
the discussions accompanying such forward-looking statements; the
receipt of relevant third party and/or regulatory approvals; the
timing and level of maintenance and/or turnaround activity; the
timing and volume of refinery additions and outages; the timing of
bringing new fields onstream; the timing, quantum and nature of
certain acquisitions and divestments; future levels of industry
product supply, demand and pricing, including supply growth in
North America; OPEC quota restrictions; PSA effects; operational
and safety problems; potential lapses in product quality; 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 the types of enforcement
action pursued and the nature of remedies sought or imposed; the
actions of prosecutors, regulatory authorities and courts; delays
in the processes for resolving claims; amounts ultimately payable
and timing of payments relating to the Gulf of Mexico oil spill;
exchange rate fluctuations; development and use of new technology;
recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading
partners, contractors, subcontractors, creditors, rating agencies
and others; our access to future credit resources; business
disruption and crisis management; the impact on our reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; decisions by Rosneft's
management and board of directors; 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 elsewhere in
this report, under ""Risk factors" in BP Annual Report and Form
20-F 2018 as filed with the US Securities and Exchange
Commission.
Contacts
London Houston
Press Office David Nicholas Brett Clanton
+44 (0)20 7496 4708 +1 281 366 8346
Investor Relations Craig Marshall Brian Sullivan
bp.com/investors +44 (0)20 7496 4962 +1 281 892 3421
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
QRFZMGZDRLDGLZM
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April 30, 2019 02:00 ET (06:00 GMT)
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