BP Releases Third Quarter 2010 Results
Download the full version of our third quarter 2010 results using the link below. Third quarter 2010 results (SEA) (pdf, 264KB) Third quarter 2010 Third quarter Second quarter Third quarter $ million Nine months 2009 2010 2010 2010 2009 5,336 (17,150) 1,785 Profit (loss) for the period (a) (9,286) 12,283 (355) 177 62 Inventory holding (gains) losses, net of tax (242) (1,775) 4,981 (16,973) 1,847 Replacement cost profit (loss) (9,528) 10,508 26.59 (90.35) 9.83 - per ordinary share (cents) (50.73) 56.11 1.60 (5.42) 0.59 - per ADS (dollars) (3.04) 3.37
- BP's third-quarter replacement cost profit was $1,847 million, compared with $4,981 million a year ago. For the nine months, replacement cost loss was $9,528 million compared with a profit of $10,508 million a year ago.
- The group income statement for the third quarter and nine months reflects a pre-tax charge of $7.7 billion and $39.9 billion respectively related to the Gulf of Mexico oil spill. All charges relating to the incident have been treated as non-operating items. Costs incurred relating to the incident were $8.7 billion in the third quarter and $11.6 billion in total since the incident. For further information on the Gulf of Mexico oil spill and its consequences see pages 3 - 5, Note 2 on pages 24 - 29, Principal risks and uncertainties on page 34 and in our second-quarter results announcement, and Legal proceedings on pages 34 - 38. Further information on BP's third-quarter results is provided below.
- Non-operating items and fair value accounting effects for the third quarter, on a post-tax basis, had a net unfavourable impact of $3,684 million compared with a net favourable impact of $307 million in the third quarter of 2009. For the nine months, the respective amounts were $25,686 million unfavourable and $315 million favourable. See pages 6, 20 and 21 for further details.
- Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $335 million for the third quarter, compared with $311 million for the same period last year. For the nine months, the respective amounts were $777 million and $1,000 million.
- The effective tax rate on replacement cost profit or loss for the third quarter and nine months was -16% and 33% respectively, compared with 29% and 33% a year ago. The effective tax rates for 2010 were impacted by the Gulf of Mexico oil spill, resulting in a particularly unusual rate for the third quarter. Excluding these impacts, the effective tax rate for the third quarter was 25% and for the nine months was 31%. The full-year effective tax rate, excluding the impact of the Gulf of Mexico oil spill, is expected to be around 31%.
- Including the impact of the Gulf of Mexico oil spill, net cash used in operating activities for the third quarter was $0.7 billion and net cash provided by operating activities for the nine months was $13.8 billion, compared with net cash provided in the same periods of last year of $8.1 billion and $20.4 billion respectively. The amounts for 2010 included a net cash outflow of $9.1 billion and $10.6 billion for the third quarter and nine months respectively relating to the Gulf of Mexico oil spill.
- Total capital expenditure for the third quarter and nine months was $6.7 billion and $17.6 billion respectively. Organic capital expenditure(b) in the third quarter and nine months was $4.7 billion and $13.0 billion respectively. Organic capital expenditure for 2010 is expected to be around $18 billion. Given the strength of our underlying cash flows and the investment opportunities available to us, our 2011 capital expenditure is currently under review and is expected to exceed the $18 billion previously indicated. Disposal proceeds for the quarter consisted of $3.7 billion for transactions completed in the period and $5.0 billion for deposits received relating to transactions expected to complete in subsequent periods. In July, the group announced plans to deliver up to $30 billion of disposal proceeds during the following 18-month period. Disposal proceeds received since that time and further amounts to be received under agreements already concluded total $14 billion. This includes some disposal proceeds relating to transactions agreed prior to 1 July 2010.
- Net debt at the end of the quarter was $26.4 billion, compared with $26.3 billion a year ago. Net debt at the end of the quarter included $5.0 billion received as deposits for disposals completing after 30 September 2010, which is treated as short-term debt. The ratio of net debt to net debt plus equity was 23% compared with 21% a year ago. The net debt ratio at the end of the third 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 by the end of 2011.
- On 1 October 2010, Robert Dudley became group chief executive, succeeding Tony Hayward who stepped down from the post by mutual agreement with the BP board.
(b) Organic capital expenditure excludes acquisitions and asset exchanges, and the accounting for our transaction with Value Creation Inc. and for the purchase of additional interests in the Valhall and Hod fields in the North Sea (see page 18).
(c) 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 full year estimated underlying effective tax rate; expected average underlying quarterly charges for Other businesses & corporate; reduction in the net debt level within the next 18 months; expectations in relation to the future levels of cash held by the group; the anticipated timing for completion of the sale of certain group assets; organic capital expenditure for 2010; capital expenditure for 2011; fourth quarter E&P production and margins and the impact of divestments, the Gulf of Mexico oil spill and turnarounds; depreciation; fourth quarter refining margins and refinery turnaround activities; performance of Biofuels and Wind businesses; performance of the oiland gas markets, and the impact on the supply, marketing and trading businesses; and the restructuring of the Upstream segment and the group’s review of how the Upstream segment manages third-party contractors. 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 as well as our Second Quarter and Half Year Results 2010. 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/resultslibrary by selecting ‘Supplementary information’ for the appropriate reporting period. 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 www.sec.gov.