BP Fourth Quarter and Full-Year 2011 Results
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|Fourth quarter||Third quarter||Fourth quarter||$ million||
|5,567||5,043||7,685||Profit (loss) for the period(b)||25,700||(3,719)|
|(953)||233||(79)||Inventory holding (gains) losses, net of tax||(1,800)||(1,195)|
|4,614||5,276||7,606||Replacement cost profit (loss)||23,900||(4,914)|
|24.55||27.85||40.10||- per ordinary share (cents)||126.41||(26.17)|
|1.47||1.67||2.41||- per ADS (dollars)||7.58||(1.57)|
- BP's fourth-quarter replacement cost profit was $7,606 million, compared with $4,614 million a year ago. For the full year, replacement cost profit was $23,900 million compared with a loss of $4,914 million a year ago. Replacement cost profit or loss for the group is a non-GAAP measure. For further information see pages 4 and 17.
- The group income statement for the fourth quarter and full year includes pre-tax credits related to the Gulf of Mexico oil spill of $4.1 billion and $3.7 billion respectively, reflecting the settlements reached in the fourth quarter with Anadarko Petroleum Company and Cameron International Corporation. The full year also reflects settlements with MOEX USA Corporation and Weatherford U.S., L.P. All amounts relating to the oil spill have been treated as non-operating items. For further information on the Gulf of Mexico oil spill and its consequences see pages 2 - 3, Note 2 on pages 21 - 26, and Legal proceedings on pages 34 - 42.
- Non-operating items (including amounts relating to the Gulf of Mexico oil spill) and fair value accounting effects for the fourth quarter, on a post-tax basis, had a net favourable impact of $2,620 million compared with a net favourable impact of $250 million in the fourth quarter of 2010. For the full year, there was a net favourable impact of $2,242 million for 2011 compared with a net unfavourable impact of $25,436 million in 2010. See pages 4, 18 and 19 for further details.
- Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $261 million for the fourth quarter, compared with $346 million for the same period last year. For the full year, the respective amounts were $983 million for 2011 and $1,123 million for 2010.
- The effective tax rates on replacement cost profit for the fourth quarter and full year were 30% and 33% respectively, compared with 34% and 32% a year ago. The reduction for the fourth quarter was due to the impact of the divestment programme and other factors. In 2012, we expect the effective tax rate to be in the range 34 - 36%.
- Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the fourth quarter and full year was $5.0 billion and $22.2 billion respectively, compared with net cash used in operating activities of $0.2 billion for the fourth quarter of 2010 and net cash provided by operating activities of $13.6 billion for the full year of 2010. The amounts for the quarter and full year of 2011 included net cash outflows of $1.2 billion and $6.8 billion respectively relating to the Gulf of Mexico oil spill.
- Net debt at the end of the quarter was $29.0 billion, compared with $25.9 billion a year ago. The ratio of net debt to net debt plus equity was 20.5%, compared with 21.2% a year ago. We intend to reduce the net debt ratio to the lower half of the 10 - 20% range over time. Net debt is a non-GAAP measure. See page 5 for further information.
- Our 2011 reported reserves replacement ratio, excluding acquisitions and disposals, was 103% (details of which will be provided in BP Annual Report and Form 20-F 2011). This reflects both subsidiaries and equity-accounted entities. Reserves additions for TNK-BP include the effect of moving from life-of-licence measurement to life-of-field measurement, reflecting TNK-BP's track record of successful licence renewal. Excluding this effect, our 2011 reserves replacement ratio excluding acquisitions and disposals would have been 83%.
- Total capital expenditure for the fourth quarter and full year was $7.6 billion and $31.5 billion respectively. Organic capital expenditure(c) in the fourth quarter and full year was $6.3 billion and $19.1 billion respectively. For 2012, we expect organic capital expenditure to be around $22 billion. Disposal proceeds, including deposits received or repaid, were $(2.0) billion for the fourth quarter and $2.7 billion for the full year. These amounts include the repayment of the deposit of $3.5 billion relating to Pan American Energy LLC in the fourth quarter, following the termination of that disposal transaction (see Note 4 on page 28). As a result of the termination, our previously announced divestment programme of $45 billion (over the period 2010 to 2013 inclusive) is reduced to $38 billion.
- Depreciation, depletion and amortization in 2012 is expected to be around $1.0 billion higher than in 2011.
- The quarterly dividend expected to be paid on 30 March 2012 is 8 cents per share ($0.48 per ADS). The corresponding amount in sterling will be announced on 19 March 2012. 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 scrip dividend programme are available at www.bp.com/scrip.
(a)Adjusted to include BP's share of Pan American Energy LLC's profit. See Note 4 on pages 28 - 30.
(b)Profit (loss) attributable to BP shareholders.
(c)Organic capital expenditure excludes acquisitions and asset exchanges and, in the fourth quarter of 2011, expenditure associated with deepening our natural gas asset base (see page 16).
Forward Looking Statements - Cautionary Statement: This presentation, including the video presentation regarding Project 20K, and the associated slides and discussion contain forward-looking statements, particularly those regarding: expectations regarding financial momentum in 2013 and 2014; BP’s outlook on global energy trends to 2030; expected increases in investment in exploration and upstream drilling and production; anticipated improvements and increases, and the sources and timing thereof, in pre-tax returns, operating cash flow and margins, including generating around 50% more annually in operating cash flow by 2014 versus 2011 at US$100/bbl; divestment plans, including the anticipated timing for completion of and final proceeds from the disposition of certain BP assets; the expected level of planned turnarounds and related production outages expectations and plans for increased investment, increased distributions to shareholders; the restoration of high value production; the expected level of planned turnarounds; expectations regarding our new operating model; expectations of a challenging marketing environment in 2012 for fuels, lubricants and petrochemicals; the quarterly dividend payment; the strength of the balance sheet; the expected increase in exploration activity; expectations for drilling and rig activity generally and specifically in the Gulf of Mexico; the level of performance improvement in Refining and Marketing; expected full-year 2012 organic capital expenditure and increased capital spend for the future; the timing and composition of major projects including expected start up, completion, level of production and margins;
the expected timing and level of final investment decisions the expected timing and level of appraisal activity; the timing for completion of the Whiting refinery upgrade, other refining upgrades and logistics optimization; the expected level of production in the first quarter of 2012 and in full-year 2012 the magnitude and timing of remaining remediation costs related to the Deepwater Horizon oil spill; the factors that could affect the magnitude of BP’s ultimate exposure and the cost to BP in relation to the spill and any potential mitigation resulting from BP’s partners or others involved in the spill; the potential liabilities resulting from pending and future legal proceedings and potential investigations and civil or criminal actions that US state and/or local governments could seek to take against BP as a result of the spill; the timing of claims and litigation outcomes and of payment of legal costs; timing and quantum of contributions to and payments from the $20 billion Trust Fund; expectations regarding the reduction of net debt and the net debt ratio; the expected levels of underlying and reported production in 2012, and the impact of disposals thereon; the expected level of depreciation, depletion and amortization in 2012;
expectations for the level and volatility of quarterly losses in Other businesses and corporate; the expected full-year effective tax rate for 2012; plans to continue to seek opportunities and prospects in BP’s areas of strength, such as deepwater, gas value chains and giant fields; plans to strengthen BP’s position in unconventionals; the expected production potential of certain existing unconventional oil assets; the timing of the deployment of BP’s new single work management system; the sources and timing of volume growth and earnings momentum in Lubricants and Petrochemicals; expected future levels of resource recovery in giant fields; expectations about the future significance of deepwater drilling for BP; BP’s intentions to invest in and develop certain deepwater technology and systems in connection with Project 20K, and the expected level of investment in connection therewith; the expected level of investments by TNK-BP; TNK-BP’s expected organic production growth; TNK-BP’s plans to manage production decline in certain fields; the timing and composition of major projects of TNK-BP; TNK-BP’s expansion plans; BP’s plans to report TNK-BP as a separate segment in BP’s financial accounts; the expected future level of investment in Alternative Energy; and the expected profitability and level of future cash flow of certain Alternative Energy assets.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors including the timing of bringing new fields onstream; the timing of certain disposals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; changes in taxation or regulation; regulatory or legal actions including the types of enforcement action pursued and the nature of remedies sought; the actions of prosecutors, regulatory authorities, the Gulf Coast Claims Facility and the courts; the actions of all parties to the Deepwater Horizon oil spill-related litigation at various phases of the litigation; the impact on our reputation following the Deepwater Horizon oil spill; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the successful completion of certain disposals; the actions of competitors, trading partners, creditors, rating agencies and others; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism or sabotage; and other factors discussed under “Risk factors” in our Annual Report and Form 20-F 2010 as filed with the US Securities and Exchange Commission (SEC).
Reconciliations to GAAP: This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at www.bp.com.
Statement of Assumptions: The operating cash flow projection for 2014 stated on slides 8, 10, 11, 33, 38, 58, 61, 62 and 63 reflects our expectation that all required payments into the $20 billion US Trust Fund will have been completed prior to 2014. The projection does not reflect any cash flows relating to other liabilities, contingent liabilities, settlements or contingent assets arising from the Deepwater Horizon oil spill which may or may not arise at that time. As disclosed in the Stock Exchange Announcement, we are not today able to reliably estimate the amount or timing of a number of contingent liabilities.
Cautionary note to US investors: We use certain terms in this presentation, such as “resources”, “non-proved resources” and references to projections in relation to such that the SEC’s rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov. Tables and projections in this presentation are BP projections unless otherwise stated.