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Second Quarter 2010 Results BP


Download the full version of our second quarter 2010 results using the link below. link_arrow.gif Second quarter 2010 results  (pdf, 480KB) Second quarter and half year 2010(a) Second quarter First quarter Second quarter $ million First half 2009 2010 2010 2010 2009

4,385 6,079 (17,150) Profit (loss) for the period (b) (11,071) 6,947 (1,245) (481) 177 Inventory holding (gains) losses, net of tax (304) (1,420)

3,140 5,598 (16,973) Replacement cost profit (loss) (11,375) 5,527

16.76 29.82 (90.35) - per ordinary share (cents) (60.58) 29.51 1.01 1.79 (5.42) - per ADS (dollars) (3.63) 1.77

  • Following the explosion and subsequent sinking of the Transocean Holdings LLC operated Deepwater Horizon drilling rig in the Gulf of Mexico in April 2010, BP and US Government authorities have been conducting unprecedented oil spill response activities. These ongoing efforts have sought to halt the flow of hydrocarbons from the well, capture and contain oil that has been leaking, protect the shores and clean up oil that has reached the shores. BP's own investigation, as well as several independent investigations, into the cause of the accident are ongoing.
  • BP's second quarter replacement cost loss was $16,973 million, compared with a profit of $3,140 million a year ago. For the half year, replacement cost loss was $11,375 million compared with a profit of $5,527 million a year ago.
  • The group income statement for the second quarter reflects a pre-tax charge of $32.2 billion related to the Gulf of Mexico oil spill. This includes $2.9 billion which has been charged for costs incurred to 30 June 2010. All charges relating to the incident have been treated as non-operating items. For further information on the Gulf of Mexico oil spill and its consequences see pages 2 - 5, Note 2 on pages 25 - 28, Principal risks and uncertainties on pages 33 39 and Legal proceedings on pages 40 - 43. Further information on BP's second quarter results is provided below.
  • Non-operating items and fair value accounting effects for the second quarter, on a post-tax basis, had a net unfavourable impact of $21,953 million compared with a net favourable impact of $202 million in the second quarter of 2009. For the half year, the respective amounts were $22,002 million unfavourable and $8 million favourable. See pages 6, 21 and 22 for further details.
  • Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $214 million for the second quarter, compared with $321 million for the same period last year. For the half year, the respective amounts were $442 million and $689 million.
  • The effective tax rate on replacement cost profit or loss for the second quarter and half year was 30% and 27% respectively, compared with 35% and 36% a year ago. Excluding the impact of the Gulf of Mexico oil spill, the effective tax rate for the second quarter was 35% and for the half year was 34%.
  • Net cash provided by operating activities for the quarter and half year was $6.8 billion and $14.4 billion, including a $2.1-billion cash outflow relating to the Gulf of Mexico oil spill response, compared with $6.8 billion and $12.3 billion respectively a year ago.
  • Total capital expenditure for the second quarter and half year was $6.2 billion and $10.9 billion respectively. Organic capital expenditure(c) in the second quarter and half year was $4.4 billion and $8.2 billion respectively. Organic capital expenditure for 2010 and 2011 is expected to be around $18 billion a year. Disposal proceeds were $0.7 billion for the quarter and $0.8 billion for the half year. The group plans to dispose of assets with a value of up to $30 billion over the next 18 months, including $7 billion from the recently announced disposals to Apache Corporation.
  • Net debt at the end of the quarter was $23.2 billion, compared with $27.1 billion a year ago. The ratio of net debt to net debt plus equity was 21% compared with 22% a year ago. The net debt ratio at the end of the second quarter 2010 was impacted by the reduction in equity arising from the liabilities we have recognized in relation to the Gulf of Mexico oil spill. The group intends to reduce net debt to $10-15 billion within the next 18 months.
  • Cash costs(d) for the second quarter and half year were slightly lower than a year ago. Cash costs do not include amounts relating to the Gulf of Mexico oil spill.
(a)This results announcement also represents BP's half-yearly financial report for the purposes of the Disclosure and Transparency Rules made by the UK Financial Services Authority. In this context: (i) the condensed set of financial statements can be found on pages 15-20 and 24-32; (ii) pages 1-13, 21-23 and 33-43 comprise the interim management report; and (iii) the directors' responsibility statement and auditors' independent review report can be found on pages 13-14. (b) Profit (loss) attributable to BP shareholders. (c) Organic capital expenditure excludes acquisitions and asset exchanges and the accounting for our transaction with Value Creation Inc. (see page 19). (d) Cash costs are a subset of production and manufacturing expenses plus distribution and administration expenses. They represent the substantial majority of the expenses in these line items but exclude associated non-operating items, and certain costs that are variable, primarily with volumes (such as freight costs). They are the principal operating and overhead costs that management considers to be most directly under their control although they include certain foreign exchange and commodity price effects.

Forward Looking Statements - Cautionary Statement:
This presentation and the associated slides and discussion contain forward-looking statements, particularly those regarding production and income; third quarter E&P turn-around activities and the effect on volumes, costs and margins; our refining and petrochemical margins; capital expenditure; divestment proceeds and timing and their impact on production and income in 2010, and planned disposals over 18 months; dividend payments; expected underlying quarterly charges for Other business & corporate; expected changes in foreign exchange effects; reduction in the net debt level within the next 18 months; R&M pre-tax performance opportunity; completion of OMS roll out; relief well operations; future costs arising from the Gulf of Mexico oil spill; partner recovery; financial compensation and environmental restoration; and the adjudication of claims arising out of the spill. By their nature, forward-looking statements involve risks and uncertainties 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 on stream; 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; regulatory or legal actions; exchange rate fluctuations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; natural disasters and adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed elsewhere in this presentation. For more information you should refer to our Annual Report and Accounts 2009 and our 2009 Annual Report on Form 20-F filed with the US Securities and Exchange Commission.

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.

Cautionary Note to US Investors:

We use certain terms in this presentation, such as "resources" and "non-proved reserves", 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 http:www.sec.gov.
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