Bp PLC 6-K, filed Aug 4, 2020
Bp PLC (BP)
6-K
2020-08-04
For: 2020-08-04
View Original
Added on
April 08, 2026
About this 6-K
Bp PLC filed this 6-K on August 4, 2020.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the
period ended 4
August, 2020
BP p.l.c.
(Translation
of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file
annual
reports
under cover Form 20-F or Form 40-F.
Form
20-F |X| Form 40-F
---------------
----------------
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of
1934.
Yes No
|X|
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Top of
page 1
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London 4 August 2020
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BP p.l.c. Group results
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Second quarter and half year 2020(a)
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For a
printer friendly copy of this announcement, please click on the
link below to open a PDF version
http://www.rns-pdf.londonstockexchange.com/rns/0047V_1-2020-8-3.pdf
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Highlights
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Resetting for the future in face of difficult
conditions
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-
Underlying
replacement cost loss for the quarter was $6.7 billion, compared
with a profit of $2.8 billion for the same period a year earlier.
The result was driven primarily by non-cash Upstream exploration
write-offs – $6.5 billion after tax –
principally resulting
from a review of BP’s long-term strategic plans and revisions
to long-term price assumptions, combined with the impact of lower
oil and gas prices and very weak refining margins, reduced oil and
gas production and much lower demand for fuels and lubricants. Oil
trading delivered an exceptionally strong result.
-
Reported loss for
the quarter was $16.8 billion, compared with a profit of $1.8
billion for the same period a year earlier, including a net
post-tax charge of $10.9 billion for non-operating items. This
included $9.2 billion in post-tax non-cash impairments across the
group largely arising from the revisions to its long-term price
assumptions and $1.7 billion of post-tax non-cash exploration
write-offs treated as non-operating items.
-
Operating cash flow
for the quarter, excluding Gulf of Mexico oil spill payments, was
$4.8 billion, including a $1.5 billion working capital release
(after adjusting for net inventory holding gains). Gulf of Mexico
oil spill payments in the quarter of $1.1 billion on a post-tax
basis included the scheduled annual payment.
-
Proceeds from
divestments and other disposals received in the quarter were $1.1
billion. This included the first payment from the agreed sale of
BP’s petrochemicals business to INEOS, which delivered
BP’s plans for $15 billion of announced transactions a year
earlier than expected. The sale of the upstream portion of
BP’s Alaska business also completed at the end of the
quarter.
-
Organic capital
expenditure in the first half of 2020 was $6.6 billion, on track to
meet BP’s revised full year expectation of around $12
billion, announced in April.
-
BP’s redesign
of its organization to become leaner, faster moving and lower cost,
including the announced reduction of around 10,000 jobs, is
expected to make a significant contribution to the planned $2.5
billion reduction in annual cash costs by the end of 2021, relative
to 2019. Restructuring costs of around $1.5 billion are expected to
be recognized in 2020.
-
During the quarter
BP issued $11.9 billion in hybrid bonds – a significant step
in diversifying its capital structure, supporting its investment
grade credit rating, and strengthening its finances.
-
Net debt at the end
of the quarter was $40.9 billion, $10.5 billion lower than in the
first quarter. Gearing at the end of the quarter was 33.1% compared
with 36.2% at the end of the previous quarter. This reflected the
increase in equity associated with the issuance of hybrid
bonds and the lower net debt, partly offset by the reduction in
equity associated with the second-quarter loss.
-
A dividend of 5.25
cents per share was announced for the quarter, compared to 10.5
cents per share for the previous quarter. This dividend decision is
aligned with BP’s new distribution policy announced
separately today.
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Second quarter ($ billion)
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Underlying RC profit (loss)
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Profit (loss) for the period
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Operating
cash flow excluding Gulf of Mexico oil spill payments
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See
chart on PDF
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Helge Lund –
chairman:
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Together with our results, we are today announcing BP’s new
strategy to deliver our net zero ambition, and a new investor
proposition underpinned by a coherent financial frame. Our investor
proposition includes a new distribution policy, which is designed
to reward our investors with committed distributions, and which has
informed the board’s decision on the dividend declared today
for the second quarter of 2020.
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Financial summary
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Second
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First
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Second
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First
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First
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|||||
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quarter
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quarter
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quarter
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half
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half
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|||||
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$ million
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2020
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2020
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2019
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2020
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2019
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|||||
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Profit (loss) for the period attributable to BP
shareholders
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(16,848
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)
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(4,365
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)
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1,822
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(21,213
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)
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4,756
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Inventory holding (gains) losses, net of tax
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(809
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)
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3,737
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(47
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)
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2,928
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(886
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)
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RC profit (loss)
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(17,657
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)
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(628
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)
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1,775
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(18,285
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)
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3,870
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Net
(favourable) adverse impact of non-operating items and fair value
accounting effects, net of tax
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10,975
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1,419
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1,036
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12,394
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1,299
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Underlying RC profit (loss)
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(6,682
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)
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791
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2,811
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(5,891
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)
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5,169
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RC profit (loss) per ordinary share (cents)
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(87.32
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)
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(3.11
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)
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8.72
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(90.52
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)
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19.10
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RC profit (loss) per ADS (dollars)
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(5.24
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)
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(0.19
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)
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0.52
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(5.43
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)
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1.15
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Underlying RC profit (loss) per ordinary share (cents)
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(33.05
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)
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3.92
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13.82
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(29.17
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)
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25.51
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Underlying RC profit (loss) per ADS (dollars)
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(1.98
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)
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0.24
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0.83
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(1.75
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)
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1.53
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(a)
This results
announcement also represents BP's half-yearly financial report (see
page 12).
RC profit (loss), underlying RC profit, operating cash flow
excluding Gulf of Mexico oil spill payments, working capital,
organic capital expenditure, net debt and gearing are non-GAAP
measures. These measures and inventory holding gains and losses,
non-operating items, fair value accounting effects, underlying
production, major project, Upstream plant reliability and refining
availability are defined in the Glossary on page 35.
Top of
page 2
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Bernard Looney –
chief executive
officer:
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“These
headline results have been driven by another very challenging
quarter, but also by the deliberate steps we have taken as we
continue to reimagine energy and reinvent bp. In particular, our
reset of long-term price assumptions and the related impairment and
exploration write-off charges had a major impact. Beneath these,
however, our performance remained resilient, with good cash flow
and – most importantly – safe and reliable
operations.”
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COVID-19 Update
Outlook:
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The ongoing severe
impacts of the COVID-19 pandemic continue to create a volatile and
challenging trading environment.
-
Looking ahead, the
outlook for commodity prices and product demand remains challenging
and uncertain.
-
Global GDP is
expected to contract this year by 4-5%.
-
Global oil demand
is expected to be around 8-9 million barrels of oil per day lower
than 2019, with OECD oil stocks above their five-year range, and
gas markets are likely to remain materially oversupplied. There is
also a risk of the pandemic having an enduring impact on the global
economy, with the potential for weaker demand for energy for a
sustained period.
-
In July, refining
margins remained under pressure, with RMM at $6.3/barrel due to
lower product demand and high inventories, while BP refining
utilization improved to above 80%. Retail fuel demand recovered in
July to 10-15% lower than a year earlier, however, aviation fuel
demand continued to be over 70% lower.
-
The pandemic is not
expected to result in Upstream oil and gas outages but has impacted
development of the Mad Dog 2, Tangguh Expansion, Trinidad Cassia
Compression and Greater Tortue Ahmeyin Phase 1 major
projects.
-
BP's future
financial performance, including cash flows, net debt and gearing,
will be impacted by the extent and duration of the current market
conditions and the effectiveness of the actions that it and others
take, including its financial interventions. It is difficult to
predict when current supply and demand imbalances will be resolved
and what the ultimate impact of COVID-19 will be.
Strengthening finances:
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BP continues to
take deliberate steps to strengthen its finances and drive down its
cash balance point.
-
These steps include
issuing around $7 billion of bonds in April, issuing $12 billion in
hybrid bonds in June, agreeing the $5 billion divestment of its
petrochemicals business, and completing the sale of the upstream
Alaska business. BP also reset its long-term price
assumptions.
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BP will continue to
review these actions, and any further actions that may be
appropriate, in response to changes in prevailing market
conditions.
-
Organic capital
expenditure was limited to $6.6 billion in the first
half.
-
Net debt fell to
$40.9 billion at quarter-end. BP had around $47 billion of
liquidity, including cash and undrawn revolving credit facilities,
at quarter end.
-
Costs that are
directly attributable to COVID-19 were around $200 million for the
quarter.
Protecting our people and operations:
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BP continues to
monitor the impact of COVID-19 on global operations and to date
there has been no direct significant operational impact, although
this could change through the rest of the third
quarter.
-
In the second
quarter, Upstream production was curtailed as a result of market
demand and OPEC+ restrictions, and refinery utilization was more
than 10% below normal levels due to COVID-19 demand
impacts.
-
Despite the
significant challenges of the environment, BP’s operations
continued safely and reliably in the quarter. BP-operated Upstream
plant reliability was 95.5% and BP-operated refining availability
was strong at 95.6%.
-
BP continues to
take steps to protect and support its staff through the pandemic,
including: reduced manning levels, changing working patterns, and
deploying appropriate personal protective equipment (PPE), enhanced
cleaning and social distancing measures at plants and retail sites.
The great majority of BP staff who are able to work from home have
done so since mid-March. Decisions on repopulating offices are
taken with caution and in compliance with local and national
guidelines and regulations.
-
BP is providing
enhanced support and guidance to staff on safety, health and
hygiene, homeworking and mental health.
Supporting communities:
-
BP continues to
offer support in response to the pandemic in communities in which
it operates.
-
Recent actions
include: providing discounts to emergency service and health
workers in the UK and US; donating PPE to health services;
campaigning to promote the wearing of masks in Africa; and
supporting staff in volunteering efforts, including matching
employee donations to charities.
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The commentary above and following should be read in conjunction
with the cautionary statement on page 39.
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Top of
page 3
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Group headlines
Results
For the
half year, underlying replacement cost (RC) loss* was $5,891
million, compared with a profit of $5,169 million in 2019.
Underlying RC loss is after adjusting RC loss* for a net charge for
non-operating items* of $12,248 million and net adverse fair value
accounting effects* of $146 million (both on a post-tax
basis).
RC loss
was $18,285 million for the half year, compared with a profit of
$3,870 million in 2019.
For the
second quarter, underlying RC loss was $6,682 million, compared
with a profit of $2,811 million in 2019. Underlying RC loss is
after adjusting RC loss for a net charge for non-operating items of
$10,857 million and net adverse fair value accounting effects of
$118 million (both on a post-tax basis).
RC loss
was $17,657 million for the second quarter, compared with a profit
of $1,775
million in 2019.
Loss
for the second quarter and half year attributable to BP
shareholders was $16,848 million and $21,213 million respectively,
compared with a profit of $1,822 million and $4,756 million for the
same periods in 2019.
See
further information on pages 4, 29 and 30.
Depreciation, depletion and amortization
The
charge for depreciation, depletion and amortization was $3.9
billion in the quarter and $8.0 billion in the half year, compared
with $4.6 billion and $9.0 billion for the same periods in 2019. BP
now expects the 2020 full-year charge to be around 10% lower than
2019.
Effective tax rate
The
effective tax rate (ETR) on RC profit or loss* for the second
quarter and half year was 19% and 15% respectively, compared with
39% and 41% for the same periods in 2019. Adjusting for
non-operating items and fair value accounting effects, the
underlying ETR* for the second quarter and half year was 9% and -3%
respectively, compared with 34% and 37% for the same periods a year
ago. The lower underlying ETR for the second quarter and half year
reflects the exploration write-offs with a limited deferred tax
benefit and the reassessment of deferred tax asset recognition. The
underlying ETR in the second half of the year remains sensitive to
the volatility in the current environment. ETR on RC profit or loss
and underlying ETR are non-GAAP measures.
Dividend
BP
today announced a quarterly dividend of 5.25 cents per ordinary
share ($0.315 per ADS), which is expected to be paid on 25
September 2020. The corresponding amount in sterling will be
announced on 14 September 2020. See page 26 for more
information.
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Share buybacks
BP
repurchased 120 million ordinary shares at a cost of $776 million
(including fees and stamp duty) in the first half year of 2020, all
of which was completed in the first quarter. In January 2020, the
share dilution buyback programme had fully offset the impact of
scrip dilution since the third quarter 2017.
Operating cash flow*
Operating
cash flow excluding Gulf of Mexico oil spill payments* was $4.8
billion for the second quarter and $6.1 billion for the half year.
These amounts include a working capital* release of $1.5 billion in
the second quarter and a working capital build of $2.2 billion in
the half year, after adjusting for net inventory holding gains or
losses* and working capital effects of the Gulf of Mexico oil
spill. The comparable amount for the same periods in 2019 was $8.2
billion and $14.2 billion.
Operating
cash flow as reported in the group cash flow statement was $3.7
billion for the second quarter and $4.7 billion for the half year,
including a working capital build of $0.6 billion and a working
capital release of $0.1 billion respectively, compared with $6.8
billion and $12.1 billion for the same periods in
2019.
See
page 32 and Glossary for further information on Gulf of Mexico oil
spill cash flows and on working capital.
Capital expenditure*
Organic
capital expenditure* for the second quarter and half year was $3.0
billion and $6.6 billion respectively, compared with $3.7 billion
and $7.3 billion for the same periods in 2019.
Inorganic
capital expenditure* for the second quarter and half year was $33
million and $0.4 billion respectively, compared with $2.0 billion
and $4.0 billion for the same periods in 2019.
Organic
capital expenditure and inorganic capital expenditure are non-GAAP
measures. See page 28 for further information.
Divestment and other proceeds
Divestment
and other proceeds were $1.1 billion for the second quarter,
including the first tranche of petrochemicals disposal proceeds and
TANAP pipeline refinancing, and $1.8 billion for the half year,
compared with $0.1 billion and $0.7 billion for the same periods in
2019.
Net debt* and gearing*
Net
debt at 30 June 2020 was $40.9 billion, compared with
$46.5 billion a year ago. Gearing at 30 June 2020 was
33.1%, compared with 31.0% a year ago. Gearing including leases* at
30 June 2020 was 37.7%, compared with 35.3% a year ago.
Net debt, gearing and gearing including leases are non-GAAP
measures. See pages 27 and 31 for more information.
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* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 35.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
39.
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Top of
page 4
Analysis of underlying RC profit (loss)* before interest and
tax
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
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$ million
|
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2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
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Underlying RC profit (loss) before interest and tax
|
|
|
|
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|
|||||
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Upstream
|
|
(8,487
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)
|
1,871
|
|
3,413
|
|
|
(6,616
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)
|
6,341
|
|
|
Downstream
|
|
1,405
|
|
921
|
|
1,365
|
|
|
2,326
|
|
3,098
|
|
|
Rosneft
|
|
(61
|
)
|
(17
|
)
|
638
|
|
|
(78
|
)
|
1,205
|
|
|
Other
businesses and corporate
|
|
(260
|
)
|
(561
|
)
|
(290
|
)
|
|
(821
|
)
|
(708
|
)
|
|
Consolidation
adjustment – UPII*
|
|
(46
|
)
|
178
|
|
34
|
|
|
132
|
|
21
|
|
|
Underlying RC profit (loss) before interest and tax
|
|
(7,449
|
)
|
2,392
|
|
5,160
|
|
|
(5,057
|
)
|
9,957
|
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(677
|
)
|
(668
|
)
|
(752
|
)
|
|
(1,345
|
)
|
(1,506
|
)
|
|
Taxation on an underlying RC basis
|
|
770
|
|
(953
|
)
|
(1,515
|
)
|
|
(183
|
)
|
(3,135
|
)
|
|
Non-controlling interests
|
|
674
|
|
20
|
|
(82
|
)
|
|
694
|
|
(147
|
)
|
|
Underlying RC profit (loss) attributable to BP
shareholders
|
|
(6,682
|
)
|
791
|
|
2,811
|
|
|
(5,891
|
)
|
5,169
|
|
Reconciliations
of underlying RC profit or loss attributable to BP shareholders 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 (loss) for the period
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
(22,008
|
)
|
1,023
|
|
2,469
|
|
|
(20,985
|
)
|
5,353
|
|
|
Downstream
|
|
594
|
|
664
|
|
1,288
|
|
|
1,258
|
|
3,053
|
|
|
Rosneft
|
|
(124
|
)
|
(17
|
)
|
525
|
|
|
(141
|
)
|
1,011
|
|
|
Other
businesses and corporate
|
|
(317
|
)
|
(698
|
)
|
(381
|
)
|
|
(1,015
|
)
|
(927
|
)
|
|
Consolidation
adjustment – UPII
|
|
(46
|
)
|
178
|
|
34
|
|
|
132
|
|
21
|
|
|
RC profit (loss) before interest and tax
|
|
(21,901
|
)
|
1,150
|
|
3,935
|
|
|
(20,751
|
)
|
8,511
|
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(791
|
)
|
(790
|
)
|
(868
|
)
|
|
(1,581
|
)
|
(1,750
|
)
|
|
Taxation on a RC basis
|
|
4,361
|
|
(1,008
|
)
|
(1,210
|
)
|
|
3,353
|
|
(2,744
|
)
|
|
Non-controlling interests
|
|
674
|
|
20
|
|
(82
|
)
|
|
694
|
|
(147
|
)
|
|
RC profit (loss) attributable to BP shareholders
|
|
(17,657
|
)
|
(628
|
)
|
1,775
|
|
|
(18,285
|
)
|
3,870
|
|
|
Inventory holding gains (losses)*
|
|
1,088
|
|
(4,884
|
)
|
81
|
|
|
(3,796
|
)
|
1,169
|
|
|
Taxation (charge) credit on inventory holding gains and
losses
|
|
(279
|
)
|
1,147
|
|
(34
|
)
|
|
868
|
|
(283
|
)
|
|
Profit (loss) for the period attributable to BP
shareholders
|
|
(16,848
|
)
|
(4,365
|
)
|
1,822
|
|
|
(21,213
|
)
|
4,756
|
|
Top of
page 5
|
Operational updates
Upstream
Upstream
production, which excludes Rosneft, for the first half of the year
averaged 2,552mboe/d, 3.3% lower than a year earlier. Underlying
production*, was 1.0% higher than 2019 mainly due to ramp up of
major projects*.
The
sale of the upstream portion of BP’s Alaska business
completed on 30 June. Hilcorp Energy and BP continue to work with
regulators and subject to approvals, expect to complete the sale of
the midstream portion, including BP’s interest in the Trans
Alaska Pipeline, during 2020. BP and Premier Oil signed sale and
purchase agreements, reflecting final agreed terms, for the
divestment of the Andrew Area and Shearwater assets in the UK North
Sea. Subject to approvals, the transaction is expected to complete
by the end of the third quarter of 2020.
Upstream
has delayed exploration and appraisal activities and curtailed
development activities in lower margin areas, as well as rephasing
or minimizing spend on projects in the early phases of development.
These interventions are expected to reduce 2020 reported production
by around 70mboe/d.
Downstream
The
second quarter saw the weakest industry refining environment in
over 15 years, and an unprecedented fall in product demand driven
by COVID-19. While refining operations in the quarter were strong,
with BP-operated refining
availability of 95.6%, demand destruction resulted in lower
utilization.
In June
BP announced the sale of its petrochemicals business to INEOS for a
total consideration of $5 billion. Subject to approvals, the
transaction is expected to complete before the end of the
year.
In July
BP and Reliance Industries completed the formation of the new fuel
and mobility joint venture that will operate across India under the
Jio-bp brand.
|
Low carbon
BP
entered into an agreement with China’s ENN to work together
to supply 300,000 tonnes a year of regasified LNG to ENN's
customers in Guangdong province. BP also agreed with Enágas in
Spain to jointly promote LNG and CNG for transport and the use of
renewable gas.
In July
BP announced plans to work with JinkoPower, a leading Chinese solar
power company, to offer integrated decarbonized energy solutions
and services to customers in China. It also announced plans to
invest $70 million in India’s Green Growth Equity Fund to
support the growing renewable energy sector in India.
Petrofac
and BP extended their partnership with a new metering contract for
four years. BP has invested in Satelytics whose technology is
expected to aid in the deployment of a suite of methane detecting
techniques across new and existing major facilities.
Financial framework
Operating cash flow excluding Gulf of Mexico oil spill
payments* was $6.1 billion for the half year of 2020, compared with
$14.2 billion for the same period in 2019.
Organic capital expenditure* for the half year of 2020 was
$6.6 billion. BP expects 2020 organic capital expenditure to be
around $12 billion.
Divestment and other proceeds were $1.8 billion for the half
year of 2020.
Gulf of Mexico oil spill payments on a post-tax basis were
$1.4 billion in the half year of 2020. BP now expects the post-tax
payments to be around $1.5 billion in 2020.
Gearing* at 30 June 2020 was 33.1%, in part
reflecting the recent hybrid bond issue. See page 27 for more
information.
|
|
Operating metrics
|
|
First half 2020
|
|
Financial metrics
|
|
First half 2020
|
|
|
(vs. First half 2019)
|
|
|
(vs. First half 2019)
|
||
|
Tier 1 and tier 2 process safety events
|
|
47
|
|
Underlying RC profit (loss)*
|
|
$(5.9)bn
|
|
|
(-2)
|
|
|
(-$11.1bn)
|
||
|
Reported recordable injury frequency*
|
|
0.131
|
|
Operating cash flow excluding Gulf of Mexico oil spill payments
(post-tax)
|
|
$6.1bn
|
|
|
(-29.8%)
|
|
|
(-$8.1bn)
|
||
|
Group production
|
|
3,655mboe/d
|
|
Organic capital expenditure
|
|
$6.6bn
|
|
|
(-3.5%)
|
|
|
(-$0.8bn)
|
||
|
Upstream production (excludes Rosneft segment)
|
|
2,552mboe/d
|
|
Gulf of Mexico oil spill payments (post-tax)
|
|
$1.4bn
|
|
|
(-3.3%)
|
|
|
(-$0.7bn)
|
||
|
Upstream unit production costs*(a)
|
|
$6.13/boe
|
|
Divestment proceeds*
|
|
$1.4bn
|
|
|
(-12.6%)
|
|
|
(+$0.7bn)
|
||
|
BP-operated Upstream plant reliability*
|
|
94.2%
|
|
Gearing
|
|
33.1%
|
|
|
(-0.7)
|
|
|
(+2.1)
|
||
|
BP-operated refining availability*
|
|
95.9%
|
|
Dividend per ordinary share(b)
|
|
5.25 cents
|
|
|
(+2.0)
|
|
|
(-48.8%)
|
(a)
Reflecting
divestment impacts and lower costs.
(b)
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
39.
|
Top of
page 6
Upstream
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Profit (loss) before interest and tax
|
|
(21,951
|
)
|
955
|
|
2,459
|
|
|
(20,996
|
)
|
5,345
|
|
|
Inventory holding (gains) losses*
|
|
(57
|
)
|
68
|
|
10
|
|
|
11
|
|
8
|
|
|
RC profit (loss) before interest and tax
|
|
(22,008
|
)
|
1,023
|
|
2,469
|
|
|
(20,985
|
)
|
5,353
|
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
13,521
|
|
848
|
|
944
|
|
|
14,369
|
|
988
|
|
|
Underlying
RC profit (loss) before interest and tax*(a)
|
|
(8,487
|
)
|
1,871
|
|
3,413
|
|
|
(6,616
|
)
|
6,341
|
|
(a)
See page 7 for a
reconciliation to segment RC profit before interest and tax by
region.
Financial results
The
replacement cost loss before interest and tax for the second
quarter and half year was $22,008 million and $20,985 million
respectively, compared with a profit of $2,469 million and $5,353
million for the same periods in 2019. The second quarter and half
year included a net non-operating charge of $13,454 million and
$14,525 million respectively, which principally relate to
impairments associated with revisions to long-term price
assumptions, compared with a net charge of $766 million and $770
million for the same periods in 2019. Fair value accounting effects
in the second quarter and half year had an adverse impact of $67
million and a favourable impact of $156 million respectively,
compared with an adverse impact of $178 million and $218 million in
the same periods of 2019.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost loss before interest and
tax for the second quarter and half year was $8,487 million and
$6,616 million respectively, compared with a profit of $3,413
million and $6,341 million for the same periods in 2019. The
results for the second quarter and half year mainly reflect the
impact of writing down certain exploration intangible carrying
values, and lower liquids and gas realizations.
Production
Production
for the quarter was 2,525mboe/d, 3.8% lower than the second quarter
of 2019. Underlying production* for the quarter increased by 0.6%
mainly due to ramp up of major projects*.
For the
half year, production was 2,552mboe/d, 3.3% lower than the first
half of 2019. Underlying production for the half year was 1.0%
higher than 2019 mainly due to ramp up of major
projects.
Key events
On 30
June, BP completed the sale of its upstream Alaska business to
Hilcorp. BP and Hilcorp continue to work with regulators to
complete the sale of midstream assets, including BP’s
interest in the Trans Alaska Pipeline System (TAPS).
On 1
July, BP confirmed the Bashrush gas discovery, located offshore
Egypt. Evaluation is ongoing (Eni operator 37.5%, BP 37.5%, Total
25%).
On 20
July, BP signed sale and purchase agreements, reflecting final
agreed terms, for the divestment of its interests in the Andrew
Area and Shearwater assets, both located in the UK North Sea, to
Premier Oil. Subject to approvals, the transaction is expected to
complete by the end of the third quarter of 2020.
These
events follow the announcements in our first-quarter results, which
comprised the following: BP executed a gas sale and purchase
agreement with partners in the Greater Tortue Ahmeyim (GTA)
project. GTA operations are severely affected by COVID-19 and the
2020 weather window for installation works can no longer be met
resulting in a delay of around one year (BP operator 56%, Kosmos
27%, Petrosen 10%, SMHPM 7%); BP confirmed notification from the
Brazilian National Petroleum Agency (ANP) of its approvals to
postpone the deadline for declaring commerciality of the Wahoo (BP
operator 35.7%, IBV Brasil Petróleo 35.7% Total 20%, Anadarko
8.6%) and Itaipu (BP operator 60%, Total 26.7%, Anadarko 13.3%)
pre-salt discoveries offshore Brazil in the Campos basin, until
June 2022; BP confirmed completion of the restructuring of
contractual arrangements for the Petrojari Foinaven floating
production, storage and offloading vessel on the Foinaven field to
the west of the Shetlands (BP operator 72%, RockRose Energy 28%);
BP relocated personnel from the remote Tangguh expansion project in
Indonesia, as part of a COVID-19 response plan and anticipates a
delay to start-up (BP operator 40.22%, MI Berau B.V. 16.30%, CNOOC
Muturi Ltd. 13.90%, Nippon Oil Exploration (Berau) Ltd. 12.23%, KG
Berau Petroleum Ltd 8.60%, Indonesia Natural Gas Resources Muturi
Inc 7.35%, KG Wiriagar Overseas Ltd 1.40%).
Outlook
Looking
ahead, we expect third-quarter 2020 reported production to be lower
than the second quarter reflecting price impacts on TSC*
entitlement volumes, divestment of the Alaska business, and
seasonal maintenance activities.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
39.
|
Top of
page 7
Upstream (continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(2,960
|
)
|
539
|
|
861
|
|
|
(2,421
|
)
|
1,473
|
|
|
Non-US
|
|
(5,527
|
)
|
1,332
|
|
2,552
|
|
|
(4,195
|
)
|
4,868
|
|
|
|
|
(8,487
|
)
|
1,871
|
|
3,413
|
|
|
(6,616
|
)
|
6,341
|
|
|
Non-operating items(a)(b)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(2,122
|
)
|
(632
|
)
|
(446
|
)
|
|
(2,754
|
)
|
(476
|
)
|
|
Non-US
|
|
(11,332
|
)
|
(439
|
)
|
(320
|
)
|
|
(11,771
|
)
|
(294
|
)
|
|
|
|
(13,454
|
)
|
(1,071
|
)
|
(766
|
)
|
|
(14,525
|
)
|
(770
|
)
|
|
Fair value accounting effects
|
|
|
|
|
|
|
|
|||||
|
US
|
|
39
|
|
(2
|
)
|
(225
|
)
|
|
37
|
|
(318
|
)
|
|
Non-US
|
|
(106
|
)
|
225
|
|
47
|
|
|
119
|
|
100
|
|
|
|
|
(67
|
)
|
223
|
|
(178
|
)
|
|
156
|
|
(218
|
)
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(5,043
|
)
|
(95
|
)
|
190
|
|
|
(5,138
|
)
|
679
|
|
|
Non-US
|
|
(16,965
|
)
|
1,118
|
|
2,279
|
|
|
(15,847
|
)
|
4,674
|
|
|
|
|
(22,008
|
)
|
1,023
|
|
2,469
|
|
|
(20,985
|
)
|
5,353
|
|
|
Exploration expense
|
|
|
|
|
|
|
|
|||||
|
US
|
|
2,560
|
|
20
|
|
69
|
|
|
2,580
|
|
94
|
|
|
Non-US
|
|
7,114
|
|
182
|
|
77
|
|
|
7,296
|
|
419
|
|
|
|
|
9,674
|
|
202
|
|
146
|
|
|
9,876
|
|
513
|
|
|
Of
which: Exploration expenditure written off(b)
|
|
9,618
|
|
98
|
|
77
|
|
|
9,716
|
|
361
|
|
|
Production (net of
royalties)(c)(d)
|
|
|
|
|
|
|
|
|||||
|
Liquids* (mb/d)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
472
|
|
505
|
|
506
|
|
|
488
|
|
480
|
|
|
Europe
|
|
166
|
|
147
|
|
137
|
|
|
156
|
|
148
|
|
|
Rest of World
|
|
728
|
|
655
|
|
658
|
|
|
691
|
|
672
|
|
|
|
|
1,366
|
|
1,306
|
|
1,301
|
|
|
1,336
|
|
1,300
|
|
|
Natural gas (mmcf/d)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
1,549
|
|
2,050
|
|
2,410
|
|
|
1,799
|
|
2,360
|
|
|
Europe
|
|
298
|
|
244
|
|
132
|
|
|
271
|
|
139
|
|
|
Rest of World
|
|
4,878
|
|
5,093
|
|
5,138
|
|
|
4,985
|
|
5,276
|
|
|
|
|
6,725
|
|
7,387
|
|
7,680
|
|
|
7,056
|
|
7,775
|
|
|
Total hydrocarbons* (mboe/d)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
739
|
|
858
|
|
921
|
|
|
799
|
|
887
|
|
|
Europe
|
|
217
|
|
189
|
|
160
|
|
|
203
|
|
172
|
|
|
Rest of World
|
|
1,569
|
|
1,533
|
|
1,544
|
|
|
1,551
|
|
1,581
|
|
|
|
|
2,525
|
|
2,579
|
|
2,625
|
|
|
2,552
|
|
2,640
|
|
|
Average realizations*(e)
|
|
|
|
|
|
|
|
|||||
|
Total
liquids(f)
($/bbl)
|
|
22.75
|
|
47.47
|
|
62.63
|
|
|
34.39
|
|
59.61
|
|
|
Natural gas ($/mcf)
|
|
2.53
|
|
2.83
|
|
3.35
|
|
|
2.69
|
|
3.68
|
|
|
Total hydrocarbons ($/boe)
|
|
19.06
|
|
31.80
|
|
40.64
|
|
|
25.36
|
|
40.02
|
|
(a)
Second quarter 2020
principally relates to impairments in a number of our businesses
resulting from the revisions to BP’s long-term price
assumptions. First quarter 2020 includes impairment charges and
loss principally related to the disposal of our Alaska business,
BPX Energy assets and oil price impacts in the UK North Sea. Second
quarter and first half 2019 include impairment charges related to
the disposal of BPX Energy assets and GUPCO divestment. See Note 3
for further information.
(b)
Second quarter 2020
includes the write-off of $1,969 million relating to value ascribed
to certain licences as part of the accounting for the acquisition
of upstream assets in Brazil, India and the Gulf of Mexico. This
has been classified within the ‘other’ category of
non-operating items. See Note 4 for further
information.
(c)
Includes BP’s
share of production of equity-accounted entities in the Upstream
segment.
(d)
Because of
rounding, some totals may not agree exactly with the sum of their
component parts.
(e)
Realizations are
based on sales by consolidated subsidiaries only – this
excludes equity-accounted entities.
(f)
Includes
condensate, natural gas liquids and bitumen.
Top of
page 8
Downstream
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Profit (loss) before interest and tax
|
|
1,572
|
|
(3,951
|
)
|
1,381
|
|
|
(2,379
|
)
|
4,192
|
|
|
Inventory holding (gains) losses*
|
|
(978
|
)
|
4,615
|
|
(93
|
)
|
|
3,637
|
|
(1,139
|
)
|
|
RC profit before interest and tax
|
|
594
|
|
664
|
|
1,288
|
|
|
1,258
|
|
3,053
|
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
811
|
|
257
|
|
77
|
|
|
1,068
|
|
45
|
|
|
Underlying
RC profit before interest and tax*(a)
|
|
1,405
|
|
921
|
|
1,365
|
|
|
2,326
|
|
3,098
|
|
(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 second
quarter and half year was $594 million and $1,258 million
respectively, compared with $1,288 million and $3,053 million for
the same periods in 2019.
The
second quarter and half year include a net non-operating charge of
$780 million and $778 million respectively, mainly relating to
impairments, compared with a charge of $31 million and $35 million
for the same periods in 2019. Fair value accounting effects in the
second quarter and half year had an adverse impact of $31 million
and $290 million respectively, compared with an adverse impact of
$46 million and $10 million in the same periods in
2019.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost profit before interest and
tax for the second quarter and half year was $1,405 million and
$2,326 million respectively, compared with $1,365 million and
$3,098 million for the same periods in 2019.
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 $1,295 million for the second quarter
and $1,984 million for the half year, compared with $961 million
and $2,253 million for the same periods in 2019. The result for the
quarter was primarily driven by an exceptionally strong
contribution from supply and trading.
The
refining result for the quarter and half year reflects the weakest
industry refining environment in over 15 years. In addition,
utilization was more than 10% below normal levels at around 80%,
driven by COVID-19 demand impacts. These factors were partially
offset by lower turnaround activity and continued strong
availability.
The
fuels marketing result was significantly impacted by COVID-19
related fuels demand destruction with retail fuels volumes in the
quarter around 30% lower than last year. In addition, aviation
fuels volumes were more than 70% lower than the same period in
2019. Despite these demand impacts, store sales at our retail sites
increased year on year on a like for like basis, demonstrating the
strength and resilience of our convenience retail
offer.
In July
we announced the start of our new fuels and mobility joint venture
in India, Reliance BP Mobility Limited. Operating under the
“Jio-bp” brand, the joint venture aims to become a
leading player in India’s growing fuels and mobility markets,
expanding from its current retail network of over 1,400 retail
sites to up to 5,500 over the next five years.
Lubricants
The
lubricants business reported an underlying replacement cost profit
before interest and tax of $63 million for the second quarter and
$230 million for the half year, compared with $321 million and $593
million for the same periods in 2019. The result for the quarter
and half year reflects significant COVID-19 related demand
destruction, with lubricants volumes in Europe, North America and
India 40-50% lower in the quarter compared with the same period
last year. In China, where we experienced significant impacts in
the first quarter, we have seen strong volume recovery in the
second quarter.
Petrochemicals
The
petrochemicals business reported an underlying replacement cost
profit before interest and tax of $47 million for the second
quarter and $112 million for the half year, compared with $83
million and $252 million for the same periods in 2019. The result
for the quarter and half year reflects a weaker margin environment
and the impact of COVID-19, partly offset by lower turnaround
activity.
In the
quarter we announced the sale of BP’s petrochemicals business
to INEOS for a total consideration of $5 billion, subject to
customary adjustments. As a result, the net assets have been
classified as held for sale in the group balance sheet at 30 June
2020. Subject to approvals, the transaction is expected to complete
before the end of the year.
Outlook
Looking
to the third quarter of 2020, we expect higher product demand,
albeit still significantly below last year’s levels. We also
expect significant continued pressure on industry refining margins
into the third quarter.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
39.
|
Top of
page 9
Downstream (continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Underlying RC profit before interest and tax - by
region
|
|
|
|
|
|
|
|
|||||
|
US
|
|
719
|
|
557
|
|
566
|
|
|
1,276
|
|
1,097
|
|
|
Non-US
|
|
686
|
|
364
|
|
799
|
|
|
1,050
|
|
2,001
|
|
|
|
|
1,405
|
|
921
|
|
1,365
|
|
|
2,326
|
|
3,098
|
|
|
Non-operating items
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(69
|
)
|
6
|
|
2
|
|
|
(63
|
)
|
3
|
|
|
Non-US
|
|
(711
|
)
|
(4
|
)
|
(33
|
)
|
|
(715
|
)
|
(38
|
)
|
|
|
|
(780
|
)
|
2
|
|
(31
|
)
|
|
(778
|
)
|
(35
|
)
|
|
Fair value accounting
effects(a)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(71
|
)
|
145
|
|
8
|
|
|
74
|
|
69
|
|
|
Non-US
|
|
40
|
|
(404
|
)
|
(54
|
)
|
|
(364
|
)
|
(79
|
)
|
|
|
|
(31
|
)
|
(259
|
)
|
(46
|
)
|
|
(290
|
)
|
(10
|
)
|
|
RC profit before interest and tax
|
|
|
|
|
|
|
|
|||||
|
US
|
|
579
|
|
708
|
|
576
|
|
|
1,287
|
|
1,169
|
|
|
Non-US
|
|
15
|
|
(44
|
)
|
712
|
|
|
(29
|
)
|
1,884
|
|
|
|
|
594
|
|
664
|
|
1,288
|
|
|
1,258
|
|
3,053
|
|
|
Underlying RC profit before interest and tax - by
business(b)(c)
|
|
|
|
|
|
|
|
|||||
|
Fuels
|
|
1,295
|
|
689
|
|
961
|
|
|
1,984
|
|
2,253
|
|
|
Lubricants
|
|
63
|
|
167
|
|
321
|
|
|
230
|
|
593
|
|
|
Petrochemicals
|
|
47
|
|
65
|
|
83
|
|
|
112
|
|
252
|
|
|
|
|
1,405
|
|
921
|
|
1,365
|
|
|
2,326
|
|
3,098
|
|
|
Non-operating items and fair value accounting
effects(a)
|
|
|
|
|
|
|
|
|||||
|
Fuels
|
|
(748
|
)
|
(257
|
)
|
(99
|
)
|
|
(1,005
|
)
|
(62
|
)
|
|
Lubricants
|
|
(51
|
)
|
—
|
|
22
|
|
|
(51
|
)
|
18
|
|
|
Petrochemicals
|
|
(12
|
)
|
—
|
|
—
|
|
|
(12
|
)
|
(1
|
)
|
|
|
|
(811
|
)
|
(257
|
)
|
(77
|
)
|
|
(1,068
|
)
|
(45
|
)
|
|
RC profit before interest and tax(b)(c)
|
|
|
|
|
|
|
|
|||||
|
Fuels
|
|
547
|
|
432
|
|
862
|
|
|
979
|
|
2,191
|
|
|
Lubricants
|
|
12
|
|
167
|
|
343
|
|
|
179
|
|
611
|
|
|
Petrochemicals
|
|
35
|
|
65
|
|
83
|
|
|
100
|
|
251
|
|
|
|
|
594
|
|
664
|
|
1,288
|
|
|
1,258
|
|
3,053
|
|
|
|
|
|
|
|
|
|
|
|||||
|
BP average refining marker margin (RMM)* ($/bbl)
|
|
5.9
|
|
8.8
|
|
15.2
|
|
|
7.4
|
|
12.7
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Refinery throughputs (mb/d)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
614
|
|
748
|
|
673
|
|
|
681
|
|
703
|
|
|
Europe
|
|
716
|
|
835
|
|
715
|
|
|
776
|
|
741
|
|
|
Rest of World
|
|
157
|
|
223
|
|
209
|
|
|
190
|
|
223
|
|
|
|
|
1,487
|
|
1,806
|
|
1,597
|
|
|
1,647
|
|
1,667
|
|
|
BP-operated refining availability* (%)
|
|
95.6
|
|
96.1
|
|
93.4
|
|
|
95.9
|
|
93.9
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Marketing sales of refined products (mb/d)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
872
|
|
1,038
|
|
1,174
|
|
|
955
|
|
1,126
|
|
|
Europe
|
|
685
|
|
954
|
|
1,091
|
|
|
820
|
|
1,042
|
|
|
Rest of World
|
|
364
|
|
519
|
|
520
|
|
|
441
|
|
520
|
|
|
|
|
1,921
|
|
2,511
|
|
2,785
|
|
|
2,216
|
|
2,688
|
|
|
Trading/supply sales of refined products
|
|
3,172
|
|
3,377
|
|
3,099
|
|
|
3,274
|
|
3,197
|
|
|
Total sales volumes of refined products
|
|
5,093
|
|
5,888
|
|
5,884
|
|
|
5,490
|
|
5,885
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Petrochemicals production (kte)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
410
|
|
611
|
|
584
|
|
|
1,021
|
|
1,185
|
|
|
Europe
|
|
1,246
|
|
1,371
|
|
1,226
|
|
|
2,617
|
|
2,386
|
|
|
Rest of World
|
|
1,271
|
|
1,153
|
|
1,156
|
|
|
2,424
|
|
2,455
|
|
|
|
|
2,927
|
|
3,135
|
|
2,966
|
|
|
6,062
|
|
6,026
|
|
(a)
For Downstream,
fair value accounting effects arise solely in the fuels business.
See page 30 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
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020(a)
|
2020
|
2019
|
|
2020(a)
|
2019
|
|||||
|
Profit
(loss) before interest and tax(b)(c)
|
|
(71
|
)
|
(218
|
)
|
523
|
|
|
(289
|
)
|
1,049
|
|
|
Inventory holding (gains) losses*
|
|
(53
|
)
|
201
|
|
2
|
|
|
148
|
|
(38
|
)
|
|
RC profit (loss) before interest and tax
|
|
(124
|
)
|
(17
|
)
|
525
|
|
|
(141
|
)
|
1,011
|
|
|
Net charge (credit) for non-operating items*
|
|
63
|
|
—
|
|
113
|
|
|
63
|
|
194
|
|
|
Underlying RC profit (loss) before interest and tax*
|
|
(61
|
)
|
(17
|
)
|
638
|
|
|
(78
|
)
|
1,205
|
|
Financial results
Replacement
cost (RC) loss before interest and tax for the second quarter and
half year was $124 million and $141 million respectively, compared
with a profit of $525 million and $1,011 million for the same
periods in 2019.
After
adjusting for non-operating items, the underlying RC loss before
interest and tax for the second quarter and half year was $61
million and $78 million respectively, compared with a profit of
$638 million and $1,205 million for the same periods in
2019.
Compared
with the same periods in 2019, the result for the second quarter
primarily reflects lower oil prices partially offset by favourable
foreign exchange, whilst the result for the half year was primarily
affected by lower oil prices.
Key events
BP’s
two nominees, Bob Dudley and Bernard Looney, were elected to
Rosneft’s board at Rosneft's annual general meeting (AGM) on
2 June 2020. At the AGM, shareholders also approved a resolution to
pay a dividend of 18.07 roubles per ordinary share, which brings
the total dividend for 2019 to 33.41 roubles per ordinary share,
constituting 50% of the company’s IFRS net profit. BP
received a payment of $480 million, after the deduction of
withholding tax, on 14 July.
On 30
April 2020, Rosneft completed a transaction to transfer all of its
interest and cease participation in its Venezuelan businesses to a
company owned by the government of the Russian Federation. In
consideration, Rosneft received shares equal to a 9.6% share of its
own equity. The shares are held by a 100% subsidiary of Rosneft and
accounted for as treasury shares. Rosneft also has an approved
programme of share buybacks under which shares are being
repurchased. Those shares are also accounted for as treasury
shares.
BP
retains 19.75% of the voting rights at meetings of Rosneft
shareholders and continues to be entitled to dividends based on
that shareholding. BP’s economic interest as of 30 June,
however, has increased to 21.93% as a result of its indirect
interest in the shares held by the subsidiaries of Rosneft.
BP’s share of profit or loss of Rosneft reflects its economic
interest.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
|
|
2020(a)
|
2020
|
2019
|
|
2020(a)
|
2019
|
|||||
|
Production (net of royalties) (BP share)
|
|
|
|
|
|
|
|
|||||
|
Liquids* (mb/d)
|
|
856
|
|
916
|
|
912
|
|
|
886
|
|
924
|
|
|
Natural gas (mmcf/d)
|
|
1,248
|
|
1,275
|
|
1,250
|
|
|
1,261
|
|
1,288
|
|
|
Total hydrocarbons* (mboe/d)
|
|
1,071
|
|
1,136
|
|
1,127
|
|
|
1,103
|
|
1,146
|
|
(a)
The operational and
financial information of the Rosneft segment for the second quarter
and half year is based on preliminary operational and financial
results of Rosneft for the three months and six months ended 30
June 2020. Actual results may differ from these amounts. Amounts
reported for the second quarter are based on BP’s 21.2%
average economic interest for the quarter and include adjustments
to reflect the finalization of Rosneft’s first quarter
results. Amounts reported for the first quarter and all comparative
periods are based on BP’s 19.75% economic
interest.
(b)
The Rosneft segment
result includes equity-accounted earnings arising from BP’s
economic interest in Rosneft for the second quarter 2020 as
adjusted for 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.
(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
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Profit (loss) before interest and tax
|
|
(317
|
)
|
(698
|
)
|
(381
|
)
|
|
(1,015
|
)
|
(927
|
)
|
|
Inventory holding (gains) losses*
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
RC profit (loss) before interest and tax
|
|
(317
|
)
|
(698
|
)
|
(381
|
)
|
|
(1,015
|
)
|
(927
|
)
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
57
|
|
137
|
|
91
|
|
|
194
|
|
219
|
|
|
Underlying RC profit (loss) before interest and tax*
|
|
(260
|
)
|
(561
|
)
|
(290
|
)
|
|
(821
|
)
|
(708
|
)
|
|
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(129
|
)
|
(124
|
)
|
(224
|
)
|
|
(253
|
)
|
(379
|
)
|
|
Non-US
|
|
(131
|
)
|
(437
|
)
|
(66
|
)
|
|
(568
|
)
|
(329
|
)
|
|
|
|
(260
|
)
|
(561
|
)
|
(290
|
)
|
|
(821
|
)
|
(708
|
)
|
|
Non-operating items
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(62
|
)
|
(48
|
)
|
(78
|
)
|
|
(110
|
)
|
(206
|
)
|
|
Non-US
|
|
46
|
|
(89
|
)
|
(13
|
)
|
|
(43
|
)
|
(13
|
)
|
|
|
|
(16
|
)
|
(137
|
)
|
(91
|
)
|
|
(153
|
)
|
(219
|
)
|
|
Fair value accounting effects
|
|
|
|
|
|
|
|
|||||
|
US
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Non-US
|
|
(41
|
)
|
—
|
|
—
|
|
|
(41
|
)
|
—
|
|
|
|
|
(41
|
)
|
—
|
|
—
|
|
|
(41
|
)
|
—
|
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(191
|
)
|
(172
|
)
|
(302
|
)
|
|
(363
|
)
|
(585
|
)
|
|
Non-US
|
|
(126
|
)
|
(526
|
)
|
(79
|
)
|
|
(652
|
)
|
(342
|
)
|
|
|
|
(317
|
)
|
(698
|
)
|
(381
|
)
|
|
(1,015
|
)
|
(927
|
)
|
Other
businesses and corporate comprises our alternative energy business,
shipping, treasury, BP ventures and 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 second
quarter and half year was $317 million and $1,015 million
respectively, compared with $381 million and $927 million for the
same periods in 2019.
The
results included a net non-operating charge of $16 million for the
second quarter and $153 million for the half year, compared with a
charge of $91 million and $219 million for the same periods in
2019. Fair value accounting effects in the second quarter and half
year had an adverse impact of $41 million. See page 30 for further
information.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost loss before interest and
tax for the second quarter and half year was $260 million and $821
million respectively, compared with $290 million and $708 million
for the same periods in 2019.
Alternative Energy
BP's
net ethanol-equivalent production* for the first half of the year
averaged 14.4kb/d, compared with 9.3kb/d for the 100% BP-owned
business for the same period in 2019.
Net
wind generation capacity* was 923MW at 30 June 2020,
compared with 926MW at 30 June 2019. BP’s net share
of wind generation for the second quarter and half year was 673GWh
and 1,450GWh respectively, compared with 688GWh and 1,461GWh for
the same periods in 2019. In July, BP agreed to acquire the
remaining 50% interest in the BP-operated Fowler Ridge 1 wind asset
from its current partner, Dominion Energy. Located in central
Indiana, the asset includes 162 wind turbines with a generating
capacity of 300MW and will increase BP's net wind generation
capacity to 1,073MW.
Lightsource
BP has developed assets of 2.2GW to date and has an ambition to
reach 10GW of developed assets by the end of 2023.
In
April, Lightsource BP and Conway Corp signed a 20-year purchase
power agreement for the development of a 132MW solar energy project
in White County, Arkansas, US. In the same month Lightsource BP and
the Southeastern Pennsylvania Transportation Authority (SEPTA) in
the US signed a long-term power contract. The agreement will
provide SEPTA with 67,029MWh of electricity from two solar power
plants in Franklin county – about 20% of the transportation
agency’s annual electricity usage. Lightsource BP also
acquired the Wellington North solar project in New South Wales,
Australia in July. It will be sited adjacent to Lightsource
BP’s existing 200MW Wellington solar asset, which is
currently in construction, creating a combined total capacity of
550MW.
This
builds on the progress announced in our first-quarter results,
which comprised the following: Lightsource BP signed a multi-year
module supply agreement with Canadian Solar Inc. to deliver 1.2GW
of high-efficiency polycrystalline solar modules for projects in
the US and Australia; and Lightsource BP closed on a $250 million
financing package for its Impact Solar project located in Lamar
County, Texas, USA.
In
early July BP signed a memorandum of understanding (MOU) with
Chinese solar firm, JinkoPower Technologies, to provide integrated
decarbonized energy solutions and services to customers in
China.
Outlook
Other
businesses and corporate average quarterly charges, excluding
non-operating items, fair value accounting effects and foreign
exchange volatility impact, 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
39.
|
Top of
page 12
This
results announcement also represents BP’s half-yearly
financial report for the purposes of the Disclosure Guidance and
Transparency Rules made by the UK Financial Conduct Authority. In
this context: (i) the condensed set of financial statements can be
found on pages 14-27; (ii) pages 1-11, and 28-39 comprise the
interim management report; and (iii) the directors’
responsibility statement and auditors’ independent review
report can be found on pages 12-13.
Statement of directors’ responsibilities
The directors
confirm that, to the best of their knowledge, the condensed set of
financial statements on pages 14-27 has been prepared in accordance
with IAS 34 ‘Interim Financial Reporting’, and that the
interim management report on pages 1-11 and 28-39 includes a fair
review of the information required by the Disclosure Guidance and
Transparency Rules.
The
directors of BP p.l.c. are listed on pages 74-77 of BP Annual Report and Form 20-F 2019,
with the following exceptions: Brian Gilvary retired on 30 June
2020 and Murray Auchincloss joined the board on 1 July
2020.
By
order of the board
|
Bernard Looney
|
Murray Auchincloss
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
3 August 2020
|
3 August 2020
|
Top of
page 13
Independent review report to BP p.l.c.
We have
been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the group income
statement, condensed group statement of comprehensive income,
condensed group statement of changes in equity, group balance
sheet, condensed group cash flow statement and related notes 1 to
13. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This
report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
“Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have
formed.
Directors’ responsibilities
As
disclosed in Note 1, the annual financial statements of the group
are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34 “Interim Financial
Reporting” as adopted by the European Union.
Our responsibility
Scope of review
Conclusion
Deloitte LLP
Statutory
Auditor
London
United
Kingdom
3
August 2020
The
maintenance and integrity of the BP p.l.c. website are the
responsibility of the directors; the review work carried out by the
statutory auditors does not involve consideration of these matters
and, accordingly, the statutory auditors accept no responsibility
for any changes that may have occurred to the financial information
since it was initially presented on the website.
Legislation
in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Top of
page 14
Financial statements
Group income statement
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Sales and other operating revenues (Note 6)
|
|
31,676
|
|
59,650
|
|
72,676
|
|
|
91,326
|
|
138,997
|
|
|
Earnings from joint ventures – after interest and
tax
|
|
(567
|
)
|
(22
|
)
|
138
|
|
|
(589
|
)
|
323
|
|
|
Earnings from associates – after interest and
tax
|
|
(100
|
)
|
(244
|
)
|
608
|
|
|
(344
|
)
|
1,257
|
|
|
Interest and other income
|
|
107
|
|
140
|
|
270
|
|
|
247
|
|
433
|
|
|
Gains on sale of businesses and fixed assets
|
|
74
|
|
16
|
|
55
|
|
|
90
|
|
144
|
|
|
Total revenues and other income
|
|
31,190
|
|
59,540
|
|
73,747
|
|
|
90,730
|
|
141,154
|
|
|
Purchases
|
|
18,778
|
|
48,878
|
|
55,683
|
|
|
67,656
|
|
103,955
|
|
|
Production and manufacturing expenses
|
|
5,211
|
|
6,099
|
|
5,391
|
|
|
11,310
|
|
10,747
|
|
|
Production and similar taxes (Note 8)
|
|
124
|
|
203
|
|
371
|
|
|
327
|
|
795
|
|
|
Depreciation, depletion and amortization (Note 7)
|
|
3,937
|
|
4,059
|
|
4,588
|
|
|
7,996
|
|
9,049
|
|
|
Impairment and losses on sale of businesses and fixed assets (Note
3)
|
|
11,770
|
|
1,149
|
|
906
|
|
|
12,919
|
|
1,002
|
|
|
Exploration expense (Note 4)
|
|
9,674
|
|
202
|
|
146
|
|
|
9,876
|
|
513
|
|
|
Distribution and administration expenses
|
|
2,509
|
|
2,684
|
|
2,646
|
|
|
5,193
|
|
5,413
|
|
|
Profit (loss) before interest and taxation
|
|
(20,813
|
)
|
(3,734
|
)
|
4,016
|
|
|
(24,547
|
)
|
9,680
|
|
|
Finance costs
|
|
783
|
|
783
|
|
853
|
|
|
1,566
|
|
1,720
|
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
8
|
|
7
|
|
15
|
|
|
15
|
|
30
|
|
|
Profit (loss) before taxation
|
|
(21,604
|
)
|
(4,524
|
)
|
3,148
|
|
|
(26,128
|
)
|
7,930
|
|
|
Taxation
|
|
(4,082
|
)
|
(139
|
)
|
1,244
|
|
|
(4,221
|
)
|
3,027
|
|
|
Profit (loss) for the period
|
|
(17,522
|
)
|
(4,385
|
)
|
1,904
|
|
|
(21,907
|
)
|
4,903
|
|
|
Attributable to
|
|
|
|
|
|
|
|
|||||
|
BP
shareholders
|
|
(16,848
|
)
|
(4,365
|
)
|
1,822
|
|
|
(21,213
|
)
|
4,756
|
|
|
Non-controlling
interests
|
|
(674
|
)
|
(20
|
)
|
82
|
|
|
(694
|
)
|
147
|
|
|
|
|
(17,522
|
)
|
(4,385
|
)
|
1,904
|
|
|
(21,907
|
)
|
4,903
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Earnings per share (Note 9)
|
|
|
|
|
|
|
|
|||||
|
Profit (loss) for the period attributable to BP
shareholders
|
|
|
|
|
|
|
|
|||||
|
Per
ordinary share (cents)
|
|
|
|
|
|
|
|
|||||
|
Basic
|
|
(83.32
|
)
|
(21.63
|
)
|
8.95
|
|
|
(105.02
|
)
|
23.47
|
|
|
Diluted
|
|
(83.32
|
)
|
(21.63
|
)
|
8.92
|
|
|
(105.02
|
)
|
23.35
|
|
|
Per
ADS (dollars)
|
|
|
|
|
|
|
|
|||||
|
Basic
|
|
(5.00
|
)
|
(1.30
|
)
|
0.54
|
|
|
(6.30
|
)
|
1.41
|
|
|
Diluted
|
|
(5.00
|
)
|
(1.30
|
)
|
0.54
|
|
|
(6.30
|
)
|
1.40
|
|
Top of
page 15
Condensed group statement of comprehensive income
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Profit (loss) for the period
|
|
(17,522
|
)
|
(4,385
|
)
|
1,904
|
|
|
(21,907
|
)
|
4,903
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|||||
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
|
|
|
|||||
|
Currency
translation differences(a)
|
|
1,371
|
|
(4,642
|
)
|
131
|
|
|
(3,271
|
)
|
1,120
|
|
|
Exchange
(gains) losses on translation of foreign operations reclassified to
gain or loss on sale of businesses and fixed assets
|
|
3
|
|
1
|
|
—
|
|
|
4
|
|
—
|
|
|
Cash
flow hedges and costs of hedging
|
|
68
|
|
85
|
|
133
|
|
|
153
|
|
152
|
|
|
Share
of items relating to equity-accounted entities, net of
tax
|
|
(333
|
)
|
442
|
|
(30
|
)
|
|
109
|
|
(80
|
)
|
|
Income
tax relating to items that may be reclassified
|
|
(37
|
)
|
117
|
|
(9
|
)
|
|
80
|
|
(43
|
)
|
|
|
|
1,072
|
|
(3,997
|
)
|
225
|
|
|
(2,925
|
)
|
1,149
|
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
|
|
|
|
|||||
|
Remeasurements of
the net pension and other post-retirement benefit liability or
asset(b)
|
|
(1,960
|
)
|
1,719
|
|
(39
|
)
|
|
(241
|
)
|
(892
|
)
|
|
Cash
flow hedges that will subsequently be transferred to the balance
sheet
|
|
(2
|
)
|
(8
|
)
|
(7
|
)
|
|
(10
|
)
|
1
|
|
|
Income
tax relating to items that will not be reclassified
|
|
623
|
|
(623
|
)
|
2
|
|
|
—
|
|
275
|
|
|
|
|
(1,339
|
)
|
1,088
|
|
(44
|
)
|
|
(251
|
)
|
(616
|
)
|
|
Other comprehensive income
|
|
(267
|
)
|
(2,909
|
)
|
181
|
|
|
(3,176
|
)
|
533
|
|
|
Total comprehensive income
|
|
(17,789
|
)
|
(7,294
|
)
|
2,085
|
|
|
(25,083
|
)
|
5,436
|
|
|
Attributable to
|
|
|
|
|
|
|
|
|||||
|
BP
shareholders
|
|
(17,142
|
)
|
(7,217
|
)
|
2,001
|
|
|
(24,359
|
)
|
5,282
|
|
|
Non-controlling
interests
|
|
(647
|
)
|
(77
|
)
|
84
|
|
|
(724
|
)
|
154
|
|
|
|
|
(17,789
|
)
|
(7,294
|
)
|
2,085
|
|
|
(25,083
|
)
|
5,436
|
|
(a)
First and second
quarter 2020 was principally affected by movements in the Russian
rouble against the US dollar.
(b)
See Note 1 for
further information.
Top of
page 16
Condensed group statement of changes in equity
|
|
|
BP shareholders’
|
Non-controlling interests
|
Total
|
|||||
|
$ million
|
|
equity
|
Hybrid bonds
|
Other interest
|
equity
|
||||
|
At 1 January 2020
|
|
98,412
|
|
—
|
|
2,296
|
|
100,708
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income
|
|
(24,359
|
)
|
—
|
|
(724
|
)
|
(25,083
|
)
|
|
Dividends
|
|
(4,242
|
)
|
—
|
|
(105
|
)
|
(4,347
|
)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
6
|
|
—
|
|
—
|
|
6
|
|
|
Repurchase
of ordinary share capital
|
|
(776
|
)
|
—
|
|
—
|
|
(776
|
)
|
|
Share-based payments, net of tax
|
|
342
|
|
—
|
|
—
|
|
342
|
|
|
Share
of equity-accounted entities’ changes in equity, net of
tax
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Issue of perpetual hybrid bonds
|
|
(48
|
)
|
11,909
|
|
—
|
|
11,861
|
|
|
Transactions involving non-controlling interests, net of
tax
|
|
(471
|
)
|
—
|
|
571
|
|
100
|
|
|
At 30 June 2020
|
|
68,864
|
|
11,909
|
|
2,038
|
|
82,811
|
|
|
|
|
|
|
|
|
||||
|
|
|
BP shareholders’
|
Non-controlling interests
|
Total
|
|||||
|
$ million
|
|
equity
|
Hybrid bonds
|
Other interest
|
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
|
|
5,282
|
|
—
|
|
154
|
|
5,436
|
|
|
Dividends
|
|
(3,200
|
)
|
—
|
|
(119
|
)
|
(3,319
|
)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
12
|
|
—
|
|
—
|
|
12
|
|
|
Repurchase of ordinary share capital
|
|
(125
|
)
|
—
|
|
—
|
|
(125
|
)
|
|
Share-based payments, net of tax
|
|
398
|
|
—
|
|
—
|
|
398
|
|
|
Share
of equity-accounted entities’ changes in equity, net of
tax
|
|
3
|
|
—
|
|
—
|
|
3
|
|
|
At 30 June 2019
|
|
101,485
|
|
—
|
|
2,138
|
|
103,623
|
|
(a)
See Note 1 in BP Annual Report and Form
20-F 2019 for further
information.
Top of
page 17
Group balance sheet
|
|
|
30 June
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Non-current assets
|
|
|
|
||
|
Property, plant and equipment
|
|
117,208
|
|
132,642
|
|
|
Goodwill
|
|
12,352
|
|
11,868
|
|
|
Intangible assets
|
|
5,987
|
|
15,539
|
|
|
Investments in joint ventures
|
|
8,015
|
|
9,991
|
|
|
Investments in associates
|
|
16,982
|
|
20,334
|
|
|
Other investments
|
|
2,559
|
|
1,276
|
|
|
Fixed assets
|
|
163,103
|
|
191,650
|
|
|
Loans
|
|
724
|
|
630
|
|
|
Trade and other receivables
|
|
4,270
|
|
2,147
|
|
|
Derivative financial instruments
|
|
7,381
|
|
6,314
|
|
|
Prepayments
|
|
495
|
|
781
|
|
|
Deferred tax assets
|
|
6,891
|
|
4,560
|
|
|
Defined benefit pension plan surpluses
|
|
6,346
|
|
7,053
|
|
|
|
|
189,210
|
|
213,135
|
|
|
Current assets
|
|
|
|
||
|
Loans
|
|
370
|
|
339
|
|
|
Inventories
|
|
12,504
|
|
20,880
|
|
|
Trade and other receivables
|
|
16,522
|
|
24,442
|
|
|
Derivative financial instruments
|
|
4,751
|
|
4,153
|
|
|
Prepayments
|
|
679
|
|
857
|
|
|
Current tax receivable
|
|
637
|
|
1,282
|
|
|
Other investments
|
|
122
|
|
169
|
|
|
Cash and cash equivalents
|
|
34,217
|
|
22,472
|
|
|
|
|
69,802
|
|
74,594
|
|
|
Assets
classified as held for sale (Note 2)
|
|
4,169
|
|
7,465
|
|
|
|
|
73,971
|
|
82,059
|
|
|
Total assets
|
|
263,181
|
|
295,194
|
|
|
Current liabilities
|
|
|
|
||
|
Trade and other payables
|
|
32,134
|
|
46,829
|
|
|
Derivative financial instruments
|
|
3,678
|
|
3,261
|
|
|
Accruals
|
|
3,670
|
|
5,066
|
|
|
Lease liabilities
|
|
1,958
|
|
2,067
|
|
|
Finance debt
|
|
11,452
|
|
10,487
|
|
|
Current tax payable
|
|
1,159
|
|
2,039
|
|
|
Provisions
|
|
2,074
|
|
2,453
|
|
|
|
|
56,125
|
|
72,202
|
|
|
Liabilities directly associated with assets classified as held for
sale (Note 2)
|
|
948
|
|
1,393
|
|
|
|
|
57,073
|
|
73,595
|
|
|
Non-current liabilities
|
|
|
|
||
|
Other payables
|
|
11,777
|
|
12,626
|
|
|
Derivative financial instruments
|
|
5,652
|
|
5,537
|
|
|
Accruals
|
|
936
|
|
996
|
|
|
Lease liabilities
|
|
7,373
|
|
7,655
|
|
|
Finance debt
|
|
64,527
|
|
57,237
|
|
|
Deferred tax liabilities
|
|
6,585
|
|
9,750
|
|
|
Provisions
|
|
17,986
|
|
18,498
|
|
|
Defined benefit pension plan and other post-retirement benefit plan
deficits
|
|
8,461
|
|
8,592
|
|
|
|
|
123,297
|
|
120,891
|
|
|
Total liabilities
|
|
180,370
|
|
194,486
|
|
|
Net assets
|
|
82,811
|
|
100,708
|
|
|
Equity
|
|
|
|
||
|
BP shareholders’ equity
|
|
68,864
|
|
98,412
|
|
|
Non-controlling interests
|
|
13,947
|
|
2,296
|
|
|
Total equity
|
|
82,811
|
|
100,708
|
|
Top of
page 18
Condensed group cash flow statement
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Operating activities
|
|
|
|
|
|
|
|
|||||
|
Profit (loss) before taxation
|
|
(21,604
|
)
|
(4,524
|
)
|
3,148
|
|
|
(26,128
|
)
|
7,930
|
|
|
Adjustments
to reconcile profit (loss) before taxation to net cash provided by
operating activities
|
|
|
|
|
|
|
|
|||||
|
Depreciation,
depletion and amortization and exploration expenditure written
off
|
|
13,555
|
|
4,157
|
|
4,665
|
|
|
17,712
|
|
9,410
|
|
|
Impairment
and (gain) loss on sale of businesses and fixed assets
|
|
11,696
|
|
1,133
|
|
851
|
|
|
12,829
|
|
858
|
|
|
Earnings
from equity-accounted entities, less dividends
received
|
|
860
|
|
505
|
|
(395
|
)
|
|
1,365
|
|
(984
|
)
|
|
Net
charge for interest and other finance expense, less net interest
paid
|
|
17
|
|
137
|
|
62
|
|
|
154
|
|
150
|
|
|
Share-based
payments
|
|
351
|
|
(6
|
)
|
117
|
|
|
345
|
|
414
|
|
|
Net
operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded
plans
|
|
(34
|
)
|
(20
|
)
|
(68
|
)
|
|
(54
|
)
|
(145
|
)
|
|
Net
charge for provisions, less payments
|
|
(365
|
)
|
(59
|
)
|
(198
|
)
|
|
(424
|
)
|
(314
|
)
|
|
Movements
in inventories and other current and non-current assets and
liabilities
|
|
(609
|
)
|
683
|
|
(58
|
)
|
|
74
|
|
(2,753
|
)
|
|
Income
taxes paid
|
|
(130
|
)
|
(1,054
|
)
|
(1,309
|
)
|
|
(1,184
|
)
|
(2,455
|
)
|
|
Net cash provided by operating activities
|
|
3,737
|
|
952
|
|
6,815
|
|
|
4,689
|
|
12,111
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|||||
|
Expenditure
on property, plant and equipment, intangible and other
assets
|
|
(3,018
|
)
|
(3,789
|
)
|
(3,833
|
)
|
|
(6,807
|
)
|
(7,528
|
)
|
|
Acquisitions, net of cash acquired
|
|
—
|
|
(17
|
)
|
(1,747
|
)
|
|
(17
|
)
|
(3,542
|
)
|
|
Investment in joint ventures
|
|
(8
|
)
|
(18
|
)
|
(20
|
)
|
|
(26
|
)
|
(20
|
)
|
|
Investment in associates
|
|
(41
|
)
|
(37
|
)
|
(54
|
)
|
|
(78
|
)
|
(199
|
)
|
|
Total cash capital expenditure
|
|
(3,067
|
)
|
(3,861
|
)
|
(5,654
|
)
|
|
(6,928
|
)
|
(11,289
|
)
|
|
Proceeds from disposal of fixed assets
|
|
10
|
|
10
|
|
70
|
|
|
20
|
|
305
|
|
|
Proceeds from disposal of businesses, net of cash
disposed
|
|
670
|
|
671
|
|
8
|
|
|
1,341
|
|
373
|
|
|
Proceeds from loan repayments
|
|
543
|
|
63
|
|
64
|
|
|
606
|
|
119
|
|
|
Net cash used in investing activities
|
|
(1,844
|
)
|
(3,117
|
)
|
(5,512
|
)
|
|
(4,961
|
)
|
(10,492
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|||||
|
Net
issue (repurchase) of shares (Note 9)
|
|
—
|
|
(776
|
)
|
(80
|
)
|
|
(776
|
)
|
(125
|
)
|
|
Lease liability payments
|
|
(664
|
)
|
(569
|
)
|
(595
|
)
|
|
(1,233
|
)
|
(1,212
|
)
|
|
Proceeds from long-term financing
|
|
6,846
|
|
2,684
|
|
4,381
|
|
|
9,530
|
|
6,505
|
|
|
Repayments of long-term financing
|
|
(964
|
)
|
(3,717
|
)
|
(3,602
|
)
|
|
(4,681
|
)
|
(6,242
|
)
|
|
Net increase (decrease) in short-term debt
|
|
(215
|
)
|
2,517
|
|
(119
|
)
|
|
2,302
|
|
970
|
|
|
Issue of perpetual hybrid bonds
|
|
11,861
|
|
—
|
|
—
|
|
|
11,861
|
|
—
|
|
|
Payments relating to transactions involving non-controlling
interests (other)
|
|
(8
|
)
|
—
|
|
—
|
|
|
(8
|
)
|
—
|
|
|
Receipts relating to transactions involving non-controlling
interests (other)
|
|
—
|
|
9
|
|
—
|
|
|
9
|
|
—
|
|
|
Dividends paid - BP shareholders
|
|
(2,119
|
)
|
(2,102
|
)
|
(1,779
|
)
|
|
(4,221
|
)
|
(3,214
|
)
|
|
-
non-controlling interests
|
|
(74
|
)
|
(31
|
)
|
(83
|
)
|
|
(105
|
)
|
(119
|
)
|
|
Net cash provided by (used in) financing activities
|
|
14,663
|
|
(1,985
|
)
|
(1,877
|
)
|
|
12,678
|
|
(3,437
|
)
|
|
Currency translation differences relating to cash and cash
equivalents
|
|
(42
|
)
|
(183
|
)
|
(8
|
)
|
|
(225
|
)
|
24
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
16,514
|
|
(4,333
|
)
|
(582
|
)
|
|
12,181
|
|
(1,794
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
18,139
|
|
22,472
|
|
21,256
|
|
|
22,472
|
|
22,468
|
|
|
Cash
and cash equivalents at end of period(a)
|
|
34,653
|
|
18,139
|
|
20,674
|
|
|
34,653
|
|
20,674
|
|
(a)
Second quarter and
first half 2020 includes $436 million of cash and cash equivalents
classified as assets held for sale in the group balance
sheet.
Top of
page 19
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 2019 included in
BP Annual Report and Form 20-F
2019.
The
directors consider it appropriate to adopt the going concern basis
of accounting in preparing the interim financial information. The
impact of COVID-19 and the current economic environment has been
considered as part of the going concern assessment. Forecast
liquidity has been assessed under a number of stressed scenarios
and a reverse stress test performed to support this
assertion.
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 2020 which are the same as those used in preparing
BP Annual Report and Form 20-F
2019 with the exception of the changes described in the
'Updates to significant accounting policies' section below. There
are no other new or amended standards or interpretations adopted
from 1 January 2020 onwards that have a significant impact on the
interim financial information.
Considerations in respect of COVID 19 (coronavirus) and the current
economic environment
BP's
significant accounting judgements and estimates were disclosed in
BP Annual Report and Form 20-F
2019. These have been subsequently reviewed at the end of
each quarter to determine if any changes were required to those
judgements and estimates as a result of current market conditions.
The valuation of certain assets and liabilities is subject to a
greater level of uncertainty than when reported in BP Annual Report and Form 20-F 2019,
including those set out below.
Impairment testing assumptions
With
the COVID-19 pandemic having continued during the second
quarter of 2020, BP now sees the prospect of an enduring
impact on the global economy, with the potential for weaker demand
for energy for a sustained period. BP’s management also has a
growing expectation that the aftermath of the pandemic will
accelerate the pace of transition to a lower carbon economy
and energy system, as countries seek to ‘build back
better’ so that their economies will be more resilient in
the future. As a result of all the above, BP has revised
its price assumptions used in value-in-use impairment testing,
lowering them and extending the period covered to 2050. A
summary of the group’s revised price assumptions, in real
2020 terms, is provided below:
|
|
|
Second half 2020
|
2021
|
2025
|
2030
|
2040
|
2050
|
|
Brent oil ($/bbl)
|
|
40
|
50
|
50
|
60
|
60
|
50
|
|
Henry Hub gas ($/mmBtu)
|
|
2.00
|
3.00
|
3.00
|
3.00
|
3.00
|
2.75
|
As
disclosed in BP Annual Report and
Form 20-F 2019 - Note 1, the majority of BP’s reserves
and resources that support the carrying amount of the group’s
oil and gas properties are expected to be produced over the next
ten years. The revised assumptions for Brent oil and Henry Hub gas
for the next 10 years are lower by approximately 30% and
16% respectively than the average prices used to estimate cash
flows over this period as disclosed in BP Annual Report and Form 20-F 2019 -
Note 1. The revised impairment testing price assumptions are
lower, on average, by approximately 27% and 31% respectively
for the period from 2020 to 2050, than the prices referenced
in BP Annual Report and Form 20-F
2019 - Note 1.
The
group identified oil and gas properties with carrying amounts
totalling $43 billion where the headroom, after the impairment
tests performed in the second quarter, was less than or equal to
20% of the carrying value. A change in price or other assumptions
within the next financial year may result in a recoverable amount
of one or more of these assets above or below the current carrying
amount.
Impairment
charges for the second quarter of 2020 relate to the changes to
price assumptions, the group’s ongoing disposal programme and
other factors. For further information see Note 3.
The
discount rates used in value-in-use impairment testing were also
reviewed. As these are set using a number of parameters that are
applicable to longer-term assets, a revision of the discount rate
assumption was determined not to be appropriate and therefore the
rates, as disclosed in BP Annual Report and Form 20-F 2019,
remain unchanged.
Exploration and appraisal intangible assets
As a
result of the revised price assumptions and a review of the
long-term strategic plan, management reviewed BP's exploration
prospects and the carrying value of the associated intangible
assets. The outcome of the review has resulted in revised
judgements over the expectations to extract value from certain
prospects, thereby leading to write-offs of the associated
exploration and appraisal intangible assets in the second quarter
of 2020. For further information see Note 4.
Top of
page 20
Note 1. Basis of preparation (continued)
Provisions
The
nominal risk-free discount rate applied to provisions is reviewed
on a quarterly basis. Recent changes in long-dated US government
bond yields have not affected the group's overall assessment of the
discount rate applied to the group's provisions and therefore the
rate, as disclosed in BP Annual Report and Form 20-F 2019,
remains unchanged. The timing and amount of cash flows relating to
the group's existing provisions are not currently expected to
change significantly as a result of the current environment. The
detailed annual review will take place later in 2020.
In
addition, the group expects to recognize provisions for
restructuring costs as plans are formalized from the second half of
2020.
Pensions and other post-retirement benefits
The
group's defined benefit pension plans are reviewed quarterly to
determine any changes to the fair value of the plan assets or
present value of the defined benefit obligations. As a result of
the review during the second quarter of 2020, the group's total net
defined benefit pension plan deficit as at 30 June 2020 is $2.1
billion, an increase in the deficit by $2.0 billion and $0.6
billion from 31 March 2020 and 31 December 2019 respectively. This
principally reflects actuarial losses reported in other
comprehensive income arising from decreasing discount rates and
higher inflation assumptions increasing the plan obligations
partially offset by increases in the valuation of plan assets. The
current environment is likely to continue to affect the values of
the plan assets and obligations resulting in potential volatility
in the amount of the net defined benefit pension plan
surplus/deficit recognized.
Impairment of financial assets measured at amortized
cost
The
estimate of the loss allowance recognised on financial assets
measured at amortized cost using an expected credit loss approach
was determined not to be a significant accounting estimate in
preparing BP Annual Report and
Form 20-F 2019. Expected credit loss allowances are,
however, reviewed and updated quarterly. Allowances are recognized
on assets where there is evidence that the asset is credit-impaired
and on a forward-looking expected credit loss basis for assets that
are not credit-impaired. The current economic environment and
future credit risk outlook have been considered in updating the
estimate of loss allowances although the full economic impact of
COVID-19 on the forward-looking expected credit loss is subject to
significant uncertainty due to the limited forward-looking
information currently available.
Whilst
credit risk has increased since 31 December 2019, there has also
been a significant reduction in the group's trade and other
receivables balance. Therefore, the total expected credit loss
allowances recognized as at 30 June 2020 have not significantly
increased from the amounts disclosed in BP Annual Report and Form 20-F 2019 -
Financial statements - Note 21 Valuation and qualifying
accounts.
The
group continues to believe that the calculation of expected credit
loss allowances is not a significant accounting estimate. The group
continues to apply its credit policy as disclosed in BP Annual Report and Form 20-F 2019 -
Financial statements - Note 29 Financial instruments and financial
risk factors - credit risk.
Income taxes
None of
the group's deferred tax assets in BP Annual Report and Form 20-F 2019
were determined to be a significant accounting estimate. The
carrying amounts are, however, reviewed and updated quarterly to
the extent that there are changes in the probability
of sufficient taxable profits being available to utilize
the reported deferred tax assets. The group has recognized deferred
tax assets as at 30 June 2020 of $6.9 billion, an increase of $2.3
billion from 31 December 2019. The group continues to believe that
the measurement of its deferred tax assets is not a significant
accounting estimate.
Other accounting judgements and estimates
All
other significant accounting judgements and estimates disclosed in
BP Annual Report and Form 20-F
2019 remain applicable and no new significant accounting
judgements or estimates have been identified.
Updates to significant accounting policies
Hybrid bond issuance
On 17
June 2020, a group subsidiary issued perpetual subordinated hybrid
bonds in EUR, GBP and USD for a USD equivalent amount of $11.9
billion. As the group has the unconditional right to avoid
transferring cash or another financial asset in relation to these
hybrid bonds, they are classified as equity instruments and
reported within non-controlling interests in the condensed
consolidated financial statements. The contractual terms of
these instruments allow the group to defer coupon payments and the
repayment of principal indefinitely, however their terms and
conditions stipulate that any deferred payments must be made in the
event of an announcement of an ordinary share or parity equity
dividend distribution or certain share repurchases or
redemptions.
Change in accounting policy - Interest Rate Benchmark Reform:
Amendments to IFRS 9 'Financial instruments'
Financial
authorities in the US, UK, EU and other territories are currently
undertaking reviews of key interest rate benchmarks such as the
London Inter-bank Offered Rate (LIBOR) with a view to replacing
them with alternative benchmarks. Uncertainty around the method and
timing of transition from Inter-bank Offered Rates (IBORs) to
alternative risk-free rates (RfRs) may impact the assessment of
whether hedge accounting can be applied to certain hedging
relationships.
BP is
significantly exposed to benchmark interest rate components e.g.
USD LIBOR, GBP LIBOR, EURIBOR and CHF LIBOR. All of the group's
existing fair value hedge relationships are directly affected by
interest rate benchmark reform as they all manage interest rate
risk. Further information about the group’s fair value hedges
is included in BP Annual Report
and Form 20-F 2019 - Financial statements - Note 30
Derivative financial instruments - Fair value hedges.
BP
adopted the amendments to IFRS 9 and IFRS 7 ‘Financial
Instruments: Disclosures’ relating to interest rate benchmark
reform with effect from 1 January 2020. This first phase of
amendments provides temporary relief from applying specific hedge
accounting requirements to hedging relationships directly affected
by interest rate benchmark reforms.
Top of
page 21
Note 1. Basis of preparation (continued)
The
reliefs provided by the amendments allow BP, in the event that
significant uncertainty around the reforms arise, to assume
that:
-
the interest rate
benchmark component of fair value hedges only needs to be assessed
as separately identifiable at initial designation; and
-
the interest rate
benchmark is not altered for the purposes of assessing the economic
relationship between the hedged item and the hedging instrument for
fair value hedges.
In
accordance with the transition provisions, the amendments have been
adopted retrospectively to hedging relationships that existed at
the start of the current reporting period and will be applied to
new hedging relationships designated after that date.
The
reliefs have meant that the uncertainty over the interest rate
benchmark reforms has not resulted in discontinuation of hedge
accounting for any of BP’s fair value hedges.
The
second phase of IFRS amendments is expected to be issued by the
IASB later in 2020 to address the financial reporting impacts of
transitioning from IBORs to RfRs. BP has set up an internal working
group to monitor and manage the transition to alternative benchmark
rates and are currently assessing the population of contracts and
arrangements that are linked to existing interest rate benchmarks,
for example, leases and derivative contracts. BP is also
participating on external committees and task forces dedicated to
interest rate benchmark reform.
Change in accounting policy - physically settled derivative
contracts
In
March 2019, the IFRS Interpretations Committee
(“IFRIC”) issued an agenda decision on the application
of IFRS 9 to the physical settlement of contracts to buy or sell a
non-financial item, such as commodities, that are not accounted for
as 'own-use' contracts. IFRIC concluded that such contracts are
settled by the delivery or receipt of a non-financial item in
exchange for both cash and the settlement of the derivative asset
or liability.
BP
regularly enters into forward sale and purchase contracts. As
described in the group's accounting policy for revenue in BP Annual
Report and Form 20-F 2019, revenue recognized at the time such
contracts were physically settled was measured at the contractual
transaction price and was presented together with revenue from
contracts with customers in those financial
statements.
BP has
changed its accounting policy for these contracts, in accordance
with the conclusions included in the agenda decision, with effect
from 1 April 2020, as follows:
-
Revenues and
purchases from such contracts are measured at the contractual
transaction price plus the carrying amount of the related
derivative at the date of settlement. Realized derivative gains and
losses on physically settled derivative contracts are included in
other revenues.
-
There is no
significant effect on current period or comparative information,
including the first quarter 2020, for ‘Sales and other
operating revenues’ and ‘Purchases’ as presented
in the group income statement, therefore no comparative information
has been re-stated.
-
There is no
significant effect on net assets or on comparative information for
‘Profit before taxation’ or ‘Profit after
taxation’ as presented in the group income
statement.
In
addition, BP chose to change its presentation of revenues from
physically settled derivative sales contracts from first quarter
2020. Revenues from physically settled derivative sales contracts
are no longer presented together with revenue from contracts with
customers. They are now presented as other revenues. Comparative
information in Note 6 for revenue from contracts with customers and
other revenues have been re-presented to align with the current
period.
Note 2. Non-current assets held for sale
The
carrying amount of assets classified as held for sale at 30 June
2020 is $4,169 million, with associated liabilities of $948
million. These principally relate to two transactions.
Downstream segment
On 29
June 2020 BP announced that it had agreed to sell its global
petrochemicals business to INEOS for a total consideration of $5
billion, subject to customary closing adjustments. Under the
terms of the agreement, INEOS paid BP a deposit of $400 million
and will pay a further $3.6 billion on completion. An
additional $1 billion will be deferred and paid in three
separate instalments of $100 million in March, April and May
2021 with the remaining $700 million payable by the end of June
2021. The business has interests in manufacturing plants in
Asia, Europe and the US, including interests held in
equity-accounted entities. Subject to regulatory and other
approvals, the transaction is expected to complete before the
end of 2020. Assets of $3,647 million and associated liabilities of
$637 million have been classified as held for sale in the group
balance sheet at 30 June 2020. Accumulated foreign exchange
differences will be reclassified from the foreign currency
translation reserve to the income statement when the sale
transaction completes. At 30 June 2020 these foreign exchange
differences amounted to a gain of approximately $300
million.
Upstream segment
On 27
August 2019, BP announced that it had agreed to sell all of its
Alaska operations and interests to Hilcorp Energy
(‘Hilcorp’), including its ownership interests in BP
Exploration (Alaska) Inc, which owned all of BP’s upstream
oil and gas interests in Alaska, and the assets of BP Pipelines
(Alaska) Inc., including a 49% interest in the Trans Alaska
Pipeline System (TAPS), for up to $5.6 billion, subject to
customary closing adjustments. Assets of $6,518 million and
associated liabilities of $969 million relating to this transaction
were classified as held for sale at 31 December 2019. Deposit
payments totalling $500 million in cash were received in
2019.
On 30
June 2020, BP completed the sale of BP Exploration (Alaska) Inc. On
completion, BP received $209 million in cash and recognized a loan
note with a principal amount of $2,100 million receivable from
Hilcorp. The group also recognized other assets totalling
$1,689 million, including amounts in relation to the
‘earn-out’ provisions of the agreement.
Top of
page 22
Note 2. Non-current assets held for sale (continued)
The
sale of BP Pipelines (Alaska) Inc.’s 49% interest in the
Trans Alaska Pipeline System (TAPS) and other midstream assets,
which is subject to regulatory approvals, is expected to complete
during 2020. On completion of the sale, BP will retain its
decommissioning liability relating to TAPS, which will be partially
offset by a 30% cost reimbursement from Harvest Alaska LLC, an
affiliate of Hilcorp. Assets of $499 million and associated
liabilities of $279 million relating to this transaction continue
to be classified as held for sale at 30 June 2020.
Note 3. Impairment and losses on sale of businesses and fixed
assets
Impairment
and losses on sale of businesses and fixed assets for the second
quarter and half year were $11,770 million and $12,919 million and
include net impairment charges of $11,848 million ($8,540 million
after tax) and $12,646 million ($9,111 million after tax)
respectively. Impairment charges also arose in certain
equity-accounted entities in the second quarter. The BP shares of
these charges, amounting to $648 million for the second quarter
($635 million after tax), are reported in the line items 'Earnings
from joint ventures' and 'Earnings from associates' in the group
income statement.
Upstream segment
Impairment
charges in the Upstream segment were $11,100 million and $11,885
million for the second quarter and half year
respectively.
Impairment
charges for the second quarter mainly relate to producing assets
and principally arose as a result of changes to the group’s
oil and gas price assumptions. They include amounts in Azerbaijan,
BPX Energy, Canada, Egypt, India, Mauritania & Senegal, the
North Sea, and Trinidad. The recoverable amounts of the cash
generating units within these businesses were based on value-in-use
calculations.
Impairment
charges for the second quarter and half year also include amounts
relating to the disposal of the group’s interests in its
Alaska business. For the second quarter these principally relate to
revisions to the fair value of the consideration recognized
following changes to oil and gas price assumptions. For the
first half they additionally relate to completion adjustments,
changes to structure and phasing of consideration and discounting
impacts. The recoverable amount of the Alaska business was
based on its fair value less costs of disposal. See Note 2 for
further information.
The BP
share of impairment charges arising in equity-accounted entities
reported in the Upstream segment in the second quarter was $585
million.
Downstream segment
Impairment
charges in the Downstream segment were $729 million for the second
quarter, principally relating to anticipated portfolio changes in
the fuels business. There were no other significant impairment
charges in the Downstream segment for the half year.
Note 4. Exploration expense
Exploration
expense in the second quarter and half year was $9,674 million and
$9,876 million and includes exploration expenditure write-offs of
$9,618 million ($8,128 million after tax) and $9,716 million
($8,202 million after tax) respectively. All exploration
expenditure is recorded within the Upstream segment.
The
exploration write-offs principally arose following management's
re-assessment of expectations to extract value from certain
exploration prospects as a result of a review of the group's
long-term strategic plan and changes in the group's long-term price
assumptions. The exploration write-offs for the second quarter
principally arose in Angola, Brazil, Canada, Egypt, India and the
Gulf of Mexico.
Top of
page 23
Note 5. Analysis of replacement cost profit (loss) before interest
and tax and reconciliation to profit (loss) before
taxation
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Upstream
|
|
(22,008
|
)
|
1,023
|
|
2,469
|
|
|
(20,985
|
)
|
5,353
|
|
|
Downstream
|
|
594
|
|
664
|
|
1,288
|
|
|
1,258
|
|
3,053
|
|
|
Rosneft
|
|
(124
|
)
|
(17
|
)
|
525
|
|
|
(141
|
)
|
1,011
|
|
|
Other businesses and corporate
|
|
(317
|
)
|
(698
|
)
|
(381
|
)
|
|
(1,015
|
)
|
(927
|
)
|
|
|
|
(21,855
|
)
|
972
|
|
3,901
|
|
|
(20,883
|
)
|
8,490
|
|
|
Consolidation adjustment – UPII*
|
|
(46
|
)
|
178
|
|
34
|
|
|
132
|
|
21
|
|
|
RC profit (loss) before interest and tax*
|
|
(21,901
|
)
|
1,150
|
|
3,935
|
|
|
(20,751
|
)
|
8,511
|
|
|
Inventory holding gains (losses)*
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
57
|
|
(68
|
)
|
(10
|
)
|
|
(11
|
)
|
(8
|
)
|
|
Downstream
|
|
978
|
|
(4,615
|
)
|
93
|
|
|
(3,637
|
)
|
1,139
|
|
|
Rosneft
(net of tax)
|
|
53
|
|
(201
|
)
|
(2
|
)
|
|
(148
|
)
|
38
|
|
|
Profit (loss) before interest and tax
|
|
(20,813
|
)
|
(3,734
|
)
|
4,016
|
|
|
(24,547
|
)
|
9,680
|
|
|
Finance costs
|
|
783
|
|
783
|
|
853
|
|
|
1,566
|
|
1,720
|
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
8
|
|
7
|
|
15
|
|
|
15
|
|
30
|
|
|
Profit (loss) before taxation
|
|
(21,604
|
)
|
(4,524
|
)
|
3,148
|
|
|
(26,128
|
)
|
7,930
|
|
|
|
|
|
|
|
|
|
|
|||||
|
RC profit (loss) before interest and tax*
|
|
|
|
|
|
|
|
|||||
|
US
|
|
(4,695
|
)
|
595
|
|
498
|
|
|
(4,100
|
)
|
1,269
|
|
|
Non-US
|
|
(17,206
|
)
|
555
|
|
3,437
|
|
|
(16,651
|
)
|
7,242
|
|
|
|
|
(21,901
|
)
|
1,150
|
|
3,935
|
|
|
(20,751
|
)
|
8,511
|
|
Top of
page 24
Note 6. Sales and other operating revenues
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
By segment
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
7,194
|
|
11,464
|
|
13,556
|
|
|
18,658
|
|
28,150
|
|
|
Downstream
|
|
27,241
|
|
53,964
|
|
66,396
|
|
|
81,205
|
|
124,812
|
|
|
Other businesses and corporate
|
|
450
|
|
453
|
|
433
|
|
|
903
|
|
789
|
|
|
|
|
34,885
|
|
65,881
|
|
80,385
|
|
|
100,766
|
|
153,751
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Less: sales and other operating revenues between
segments
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
2,613
|
|
6,907
|
|
7,481
|
|
|
9,520
|
|
13,805
|
|
|
Downstream
|
|
330
|
|
(782
|
)
|
62
|
|
|
(452
|
)
|
648
|
|
|
Other businesses and corporate
|
|
266
|
|
106
|
|
166
|
|
|
372
|
|
301
|
|
|
|
|
3,209
|
|
6,231
|
|
7,709
|
|
|
9,440
|
|
14,754
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Third party sales and other operating revenues
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
4,581
|
|
4,557
|
|
6,075
|
|
|
9,138
|
|
14,345
|
|
|
Downstream
|
|
26,911
|
|
54,746
|
|
66,334
|
|
|
81,657
|
|
124,164
|
|
|
Other businesses and corporate
|
|
184
|
|
347
|
|
267
|
|
|
531
|
|
488
|
|
|
Total sales and other operating revenues
|
|
31,676
|
|
59,650
|
|
72,676
|
|
|
91,326
|
|
138,997
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By geographical area
|
|
|
|
|
|
|
|
|||||
|
US
|
|
10,117
|
|
21,219
|
|
26,086
|
|
|
31,336
|
|
47,934
|
|
|
Non-US
|
|
24,776
|
|
43,955
|
|
52,933
|
|
|
68,731
|
|
102,551
|
|
|
|
|
34,893
|
|
65,174
|
|
79,019
|
|
|
100,067
|
|
150,485
|
|
|
Less: sales and other operating revenues between areas
|
|
3,217
|
|
5,524
|
|
6,343
|
|
|
8,741
|
|
11,488
|
|
|
|
|
31,676
|
|
59,650
|
|
72,676
|
|
|
91,326
|
|
138,997
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Revenues from contracts with
customers(a)
|
|
|
|
|
|
|
|
|||||
|
Sales and other operating revenues include the following in
relation to revenues from contracts with customers:
|
|
|
|
|
|
|
|
|||||
|
Crude oil
|
|
1,062
|
|
1,435
|
|
2,577
|
|
|
2,497
|
|
5,067
|
|
|
Oil products
|
|
10,452
|
|
20,254
|
|
27,211
|
|
|
30,706
|
|
49,915
|
|
|
Natural gas, LNG and NGLs
|
|
2,992
|
|
3,638
|
|
4,294
|
|
|
6,630
|
|
9,651
|
|
|
Non-oil
products and other revenues from contracts with
customers(b)
|
|
2,118
|
|
2,490
|
|
3,258
|
|
|
4,608
|
|
6,321
|
|
|
Revenue from contracts with customers
|
|
16,624
|
|
27,817
|
|
37,340
|
|
|
44,441
|
|
70,954
|
|
|
Other
operating revenues(b)(c)
|
|
15,052
|
|
31,833
|
|
35,336
|
|
|
46,885
|
|
68,043
|
|
|
Total sales and other operating revenues
|
|
31,676
|
|
59,650
|
|
72,676
|
|
|
91,326
|
|
138,997
|
|
(a)
Amounts shown for
revenue from contracts with customers and other operating revenues
for second quarter and first half 2019 have been represented to
align with the current period. See Note 1 for further
information.
(b)
Comparative
information for the first quarter 2020 for non-oil products and
other revenues from contracts with customers and other operating
revenues have been amended from those previously presented with no
overall effect on total sales and other operating revenues. The
previously disclosed amount for non-oil products and other revenues
from contracts was $2,853 million. The previously disclosed amount
for other operating revenues was $31,470 million.
(c)
Principally relates
to physically settled derivative sales contracts.
Top of
page 25
Note 7. Depreciation, depletion and amortization
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Upstream
|
|
|
|
|
|
|
|
|||||
|
US
|
|
1,044
|
|
1,068
|
|
1,288
|
|
|
2,112
|
|
2,401
|
|
|
Non-US
|
|
1,973
|
|
2,082
|
|
2,396
|
|
|
4,055
|
|
4,894
|
|
|
|
|
3,017
|
|
3,150
|
|
3,684
|
|
|
6,167
|
|
7,295
|
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
|
US
|
|
344
|
|
342
|
|
333
|
|
|
686
|
|
656
|
|
|
Non-US
|
|
408
|
|
405
|
|
392
|
|
|
813
|
|
775
|
|
|
|
|
752
|
|
747
|
|
725
|
|
|
1,499
|
|
1,431
|
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
|
US
|
|
16
|
|
15
|
|
14
|
|
|
31
|
|
27
|
|
|
Non-US
|
|
152
|
|
147
|
|
165
|
|
|
299
|
|
296
|
|
|
|
|
168
|
|
162
|
|
179
|
|
|
330
|
|
323
|
|
|
Total group
|
|
3,937
|
|
4,059
|
|
4,588
|
|
|
7,996
|
|
9,049
|
|
Note 8. Production and similar taxes
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
US
|
|
13
|
|
13
|
|
79
|
|
|
26
|
|
160
|
|
|
Non-US
|
|
111
|
|
190
|
|
292
|
|
|
301
|
|
635
|
|
|
|
|
124
|
|
203
|
|
371
|
|
|
327
|
|
795
|
|
Note 9. 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. No share buybacks were carried out
during the quarter. This brings the total number of ordinary shares
repurchased for cancellation in the year to 120 million for a total
cost of $776 million, including transaction costs of $4 million, as
part of the share buyback programme 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.
Top of
page 26
Note 9. Earnings per share and shares in issue
(continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Results for the period
|
|
|
|
|
|
|
|
|||||
|
Profit
(loss) for the period attributable to BP shareholders
|
|
(16,848
|
)
|
(4,365
|
)
|
1,822
|
|
|
(21,213
|
)
|
4,756
|
|
|
Less: preference dividend
|
|
1
|
|
—
|
|
1
|
|
|
1
|
|
1
|
|
|
Profit
(loss) attributable to BP ordinary shareholders
|
|
(16,849
|
)
|
(4,365
|
)
|
1,821
|
|
|
(21,214
|
)
|
4,755
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Number of shares (thousand)(a)(b)
|
|
|
|
|
|
|
|
|||||
|
Basic
weighted average number of shares outstanding
|
|
20,222,575
|
|
20,178,803
|
|
20,336,347
|
|
|
20,200,694
|
|
20,256,254
|
|
|
ADS equivalent
|
|
3,370,429
|
|
3,363,133
|
|
3,389,391
|
|
|
3,366,782
|
|
3,376,042
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Weighted
average number of shares outstanding used to calculate diluted
earnings per share
|
|
20,222,575
|
|
20,178,803
|
|
20,421,184
|
|
|
20,200,694
|
|
20,368,125
|
|
|
ADS equivalent
|
|
3,370,429
|
|
3,363,133
|
|
3,403,530
|
|
|
3,366,782
|
|
3,394,687
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Shares in issue at period-end
|
|
20,249,046
|
|
20,197,527
|
|
20,373,332
|
|
|
20,249,046
|
|
20,373,332
|
|
|
ADS equivalent
|
|
3,374,841
|
|
3,366,254
|
|
3,395,555
|
|
|
3,374,841
|
|
3,395,555
|
|
(a)
Excludes treasury
shares and includes certain shares that will be issued in the
future under employee share-based payment plans.
(b)
If the inclusion of
potentially issuable shares would decrease loss per share, the
potentially issuable shares are excluded from the weighted average
number of shares outstanding used to calculate diluted earnings per
share. The numbers of potentially issuable shares that have been
excluded from the calculation for the first quarter 2020, second
quarter 2020 and first half 2020 are 74,240 thousand (ADS
equivalent 12,374 thousand), 63,119 thousand (ADS equivalent 10,520
thousand) and 85,469 thousand (ADS equivalent 14,245 thousand)
respectively.
Note 10. Dividends
Dividends payable
BP
today announced an interim dividend of 5.25 cents per ordinary
share which is expected to be paid on 25 September 2020 to ordinary
shareholders and American Depositary Share (ADS) holders on the
register on 14 August 2020. The corresponding amount in sterling is
due to be announced on 14 September 2020, calculated based on the
average of the market exchange rates for the four dealing days
commencing on 8 September 2020. Holders of ADSs are expected to
receive $0.315 per ADS (less applicable fees). The board has
decided not to offer a scrip dividend alternative in respect of the
second quarter 2020 dividend. Ordinary shareholders and ADS holders
(subject to certain exceptions) will be able to participate in a
dividend reinvestment programme. Details of the second quarter
dividend and timetable are available at bp.com/dividends and further details of
the dividend reinvestment programmes are available at bp.com/drip.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Dividends paid per ordinary share
|
|
|
|
|
|
|
|
|||||
|
cents
|
|
10.500
|
|
10.500
|
|
10.250
|
|
|
21.000
|
|
20.500
|
|
|
pence
|
|
8.342
|
|
8.156
|
|
8.066
|
|
|
16.498
|
|
15.804
|
|
|
Dividends paid per ADS (cents)
|
|
63.00
|
|
63.00
|
|
61.50
|
|
|
126.00
|
|
123.00
|
|
|
Scrip dividends
|
|
|
|
|
|
|
|
|||||
|
Number of shares issued (millions)
|
|
—
|
|
—
|
|
46.3
|
|
|
—
|
|
136.4
|
|
|
Value of shares issued ($ million)
|
|
—
|
|
—
|
|
318
|
|
|
—
|
|
947
|
|
Top of
page 27
Note 11. Net debt
|
Net debt*
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Finance
debt(a)(b)
|
|
76,003
|
|
69,117
|
|
67,553
|
|
|
76,003
|
|
67,553
|
|
|
Fair
value (asset) liability of hedges related to finance
debt(c)
|
|
(430
|
)
|
426
|
|
(378
|
)
|
|
(430
|
)
|
(378
|
)
|
|
|
|
75,573
|
|
69,543
|
|
67,175
|
|
|
75,573
|
|
67,175
|
|
|
Less:
cash and cash equivalents(b)
|
|
34,653
|
|
18,139
|
|
20,674
|
|
|
34,653
|
|
20,674
|
|
|
Net debt
|
|
40,920
|
|
51,404
|
|
46,501
|
|
|
40,920
|
|
46,501
|
|
|
Total
equity(d)
|
|
82,811
|
|
90,480
|
|
103,623
|
|
|
82,811
|
|
103,623
|
|
|
Gearing*
|
|
33.1%
|
36.2%
|
31.0%
|
|
33.1%
|
31.0%
|
|||||
(a)
The fair value of
finance debt at 30 June 2020 was $77,990 million (30 June 2019
$68,857 million).
(b)
Second quarter and
first half 2020 includes $436 million of cash and $24 million of
finance debt included in assets and liabilities held for sale in
the group balance sheet.
(c)
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 $554 million
(first quarter 2020 liability of $663 million and second quarter
2019 liability of $563 million) are not included in the calculation
of net debt shown above as hedge accounting is not applied for
these instruments.
(d)
Total equity in the
second quarter and first half 2020 includes $11.9 billion related
to perpetual hybrid bonds issued on 17 June 2020. See Note 1 for
further information.
Note 12. Inventory valuation
A
provision of $289 million was held against hydrocarbon inventories
at 30 June 2020 ($3,596 million at
31 March 2020 and $290 million at
31 December 2019) to write them down to their net
realizable value.
Note 13. Statutory accounts
The
financial information shown in this publication, which was approved
by the Board of Directors on 3 August 2020, is unaudited and does
not constitute statutory financial statements. Audited financial
information will be published in BP Annual Report and Form 20-F 2020. BP Annual
Report and Form 20-F 2019 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 28
Additional information
Capital expenditure*
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Capital expenditure on a cash basis
|
|
|
|
|
|
|
|
|||||
|
Organic capital expenditure*
|
|
3,034
|
|
3,539
|
|
3,686
|
|
|
6,573
|
|
7,334
|
|
|
Inorganic
capital expenditure*(a)
|
|
33
|
|
322
|
|
1,968
|
|
|
355
|
|
3,955
|
|
|
|
|
3,067
|
|
3,861
|
|
5,654
|
|
|
6,928
|
|
11,289
|
|
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Organic capital expenditure by segment
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
|
|
|
|
|
|
|||||
|
US
|
|
1,018
|
|
1,168
|
|
972
|
|
|
2,186
|
|
1,954
|
|
|
Non-US
|
|
1,517
|
|
1,662
|
|
1,858
|
|
|
3,179
|
|
3,746
|
|
|
|
|
2,535
|
|
2,830
|
|
2,830
|
|
|
5,365
|
|
5,700
|
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
|
US
|
|
135
|
|
121
|
|
271
|
|
|
256
|
|
458
|
|
|
Non-US
|
|
295
|
|
531
|
|
470
|
|
|
826
|
|
1,004
|
|
|
|
|
430
|
|
652
|
|
741
|
|
|
1,082
|
|
1,462
|
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
|
US
|
|
21
|
|
32
|
|
15
|
|
|
53
|
|
24
|
|
|
Non-US
|
|
48
|
|
25
|
|
100
|
|
|
73
|
|
148
|
|
|
|
|
69
|
|
57
|
|
115
|
|
|
126
|
|
172
|
|
|
|
|
3,034
|
|
3,539
|
|
3,686
|
|
|
6,573
|
|
7,334
|
|
|
Organic capital expenditure by geographical area
|
|
|
|
|
|
|
|
|||||
|
US
|
|
1,174
|
|
1,321
|
|
1,258
|
|
|
2,495
|
|
2,436
|
|
|
Non-US
|
|
1,860
|
|
2,218
|
|
2,428
|
|
|
4,078
|
|
4,898
|
|
|
|
|
3,034
|
|
3,539
|
|
3,686
|
|
|
6,573
|
|
7,334
|
|
(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. The entire
consideration payable of $10,268 million, after customary closing
adjustments, was paid in instalments between July 2018 and April
2019. The amounts presented as inorganic capital expenditure
include $1,748 million for the second quarter 2019 and $3,480
million for the first half 2019 relating to this transaction. First
half 2020 and 2019 also include amounts relating to the 25-year
extension to our ACG production-sharing agreement* in
Azerbaijan.
Top of
page 29
Non-operating items*
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Upstream
|
|
|
|
|
|
|
|
|||||
|
Gains on sale of businesses and fixed assets
|
|
87
|
|
7
|
|
47
|
|
|
94
|
|
105
|
|
|
Impairment
and losses on sale of businesses and fixed assets(a)
|
|
(10,953
|
)
|
(1,131
|
)
|
(843
|
)
|
|
(12,084
|
)
|
(912
|
)
|
|
Environmental and other provisions
|
|
—
|
|
(13
|
)
|
—
|
|
|
(13
|
)
|
—
|
|
|
Restructuring, integration and rationalization costs
|
|
(24
|
)
|
(4
|
)
|
(17
|
)
|
|
(28
|
)
|
(52
|
)
|
|
Other(b)(c)
|
|
(2,564
|
)
|
70
|
|
47
|
|
|
(2,494
|
)
|
89
|
|
|
|
|
(13,454
|
)
|
(1,071
|
)
|
(766
|
)
|
|
(14,525
|
)
|
(770
|
)
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
|
Gains on sale of businesses and fixed assets
|
|
(13
|
)
|
7
|
|
10
|
|
|
(6
|
)
|
42
|
|
|
Impairment
and losses on sale of businesses and fixed assets(a)
|
|
(798
|
)
|
(5
|
)
|
(61
|
)
|
|
(803
|
)
|
(89
|
)
|
|
Environmental and other provisions
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Restructuring, integration and rationalization costs
|
|
31
|
|
—
|
|
20
|
|
|
31
|
|
18
|
|
|
Other
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(6
|
)
|
|
|
|
(780
|
)
|
2
|
|
(31
|
)
|
|
(778
|
)
|
(35
|
)
|
|
Rosneft
|
|
|
|
|
|
|
|
|||||
|
Other(c)
|
|
(63
|
)
|
—
|
|
(113
|
)
|
|
(63
|
)
|
(194
|
)
|
|
|
|
(63
|
)
|
—
|
|
(113
|
)
|
|
(63
|
)
|
(194
|
)
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
|
Gains on sale of businesses and fixed assets
|
|
—
|
|
2
|
|
(4
|
)
|
|
2
|
|
(4
|
)
|
|
Impairment and losses on sale of businesses and fixed
assets
|
|
(19
|
)
|
(2
|
)
|
—
|
|
|
(21
|
)
|
—
|
|
|
Environmental and other provisions
|
|
—
|
|
(23
|
)
|
(22
|
)
|
|
(23
|
)
|
(28
|
)
|
|
Restructuring, integration and rationalization costs
|
|
(33
|
)
|
(13
|
)
|
(3
|
)
|
|
(46
|
)
|
7
|
|
|
Gulf of Mexico oil spill
|
|
(31
|
)
|
(21
|
)
|
(57
|
)
|
|
(52
|
)
|
(172
|
)
|
|
Other(d)
|
|
67
|
|
(80
|
)
|
(5
|
)
|
|
(13
|
)
|
(22
|
)
|
|
|
|
(16
|
)
|
(137
|
)
|
(91
|
)
|
|
(153
|
)
|
(219
|
)
|
|
Total before interest and taxation
|
|
(14,313
|
)
|
(1,206
|
)
|
(1,001
|
)
|
|
(15,519
|
)
|
(1,218
|
)
|
|
Finance
costs(e)
|
|
(114
|
)
|
(122
|
)
|
(116
|
)
|
|
(236
|
)
|
(244
|
)
|
|
Total before taxation
|
|
(14,427
|
)
|
(1,328
|
)
|
(1,117
|
)
|
|
(15,755
|
)
|
(1,462
|
)
|
|
Taxation
credit (charge) on non-operating items
|
|
3,456
|
|
302
|
|
256
|
|
|
3,758
|
|
349
|
|
|
Taxation
– impact of foreign exchange(f)
|
|
114
|
|
(365
|
)
|
—
|
|
|
(251
|
)
|
—
|
|
|
Total after taxation for period
|
|
(10,857
|
)
|
(1,391
|
)
|
(861
|
)
|
|
(12,248
|
)
|
(1,113
|
)
|
(a)
See Note 3 for
further information.
(b)
Second quarter and
first half 2020 include the exploration write-off of $1,969 million
($1,670 million after tax) relating to fair value ascribed to
certain licences as part of the accounting at the time of
acquisition of upstream assets in Brazil, India and the Gulf of
Mexico and the impairment of certain intangible assets in
Mauritania and Senegal.
(c)
Second quarter and
first half 2020 include $585 million and $63 million of impairments
reported by equity-accounted entities in the Upstream and Rosneft
segments respectively.
(d)
From first quarter
2020, BP is presenting temporary valuation differences associated
with the group’s interest rate and foreign currency exchange
risk management of finance debt as non-operating items. These
amounts represent: (i) the impact of ineffectiveness and the
amortisation of cross currency basis resulting from the application
of fair value hedge accounting; and (ii) the net impact of foreign
currency exchange movements on finance debt and associated
derivatives where hedge accounting is not applied. Relevant amounts
in the comparative periods presented were not
material.
(e)
Relates to the
unwinding of discounting effects relating to Gulf of Mexico oil
spill payables.
(f)
From first quarter
2020, BP is presenting certain foreign exchange effects on tax as
non-operating items. These amounts represent the impact of: (i)
foreign exchange on deferred tax balances arising from the
conversion of local currency tax base amounts into functional
currency, and (ii) taxable gains and losses from the retranslation
of US dollar-denominated intra-group loans to local currency.
Relevant amounts in the comparative periods presented were not
material.
Top of
page 30
Non-GAAP information on fair value accounting effects
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Favourable (adverse) impact relative to management’s measure
of performance
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
(67
|
)
|
223
|
|
(178
|
)
|
|
156
|
|
(218
|
)
|
|
Downstream
|
|
(31
|
)
|
(259
|
)
|
(46
|
)
|
|
(290
|
)
|
(10
|
)
|
|
Other businesses and corporate
|
|
(41
|
)
|
—
|
|
—
|
|
|
(41
|
)
|
—
|
|
|
|
|
(139
|
)
|
(36
|
)
|
(224
|
)
|
|
(175
|
)
|
(228
|
)
|
|
Taxation credit (charge)
|
|
21
|
|
8
|
|
49
|
|
|
29
|
|
42
|
|
|
|
|
(118
|
)
|
(28
|
)
|
(175
|
)
|
|
(146
|
)
|
(186
|
)
|
Fair
value accounting effects reflect differences in the way that BP
manages the economic exposure and measures performance relating to
certain activities and the way these activities are measured under
IFRS. They relate to certain of the groups commodity,
interest rate and currency risk exposures as detailed
below.
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, other than net realizable value provisions, 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, liquefied natural gas
(LNG) and certain gas and power contracts 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, power
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.
Fair
value accounting effects also 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.
In
addition, from the second quarter 2020 fair value accounting
effects include changes in the fair value of derivatives entered
into by the group to manage currency exposure and interest rate
risks relating to hybrid bonds to their respective first call
periods. The hybrid bonds which were issued on 17 June 2020
are classified as equity instruments and were recorded in the
balance sheet at that date at their USD equivalent issued value.
Under IFRS these equity instruments are not remeasured from period
to period, and do not qualify for application of hedge accounting.
The derivative instruments relating to the hybrid bonds, however,
are required to be recorded at fair value with mark to market gains
and losses recognized in the income statement. Therefore,
measurement differences in relation to the recognition of gains and
losses occur. The fair value accounting effect, which is reported
in the Other businesses and corporate segment in the table above,
eliminates the fair value gains and losses of these derivative
financial instruments that are recognized in the income
statement. We believe that this gives a better representation
of performance, by more appropriately reflecting the economic
effect of these risk management activities, in each
period.
Top of
page 31
Net debt including leases
|
Net debt including leases*
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Net debt
|
|
40,920
|
|
51,404
|
|
46,501
|
|
|
40,920
|
|
46,501
|
|
|
Lease liabilities
|
|
9,331
|
|
9,373
|
|
10,379
|
|
|
9,331
|
|
10,379
|
|
|
Net
partner (receivable) payable for leases entered into on behalf of
joint operations
|
|
(90
|
)
|
(159
|
)
|
(230
|
)
|
|
(90
|
)
|
(230
|
)
|
|
Net debt including leases
|
|
50,161
|
|
60,618
|
|
56,650
|
|
|
50,161
|
|
56,650
|
|
|
Total
equity(a)
|
|
82,811
|
|
90,480
|
|
103,623
|
|
|
82,811
|
|
103,623
|
|
|
Gearing including leases*
|
|
37.7%
|
40.1%
|
35.3%
|
|
37.7%
|
35.3%
|
|||||
(a)
Total equity in the
second quarter and first half 2020 includes $11.9 billion related
to perpetual hybrid bonds issued on 17 June 2020. See Note 1 for
further information.
Readily marketable inventory* (RMI)
|
|
|
30 June
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
RMI at fair value*
|
|
4,111
|
|
6,837
|
|
|
Paid-up RMI*
|
|
1,971
|
|
3,217
|
|
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 35 for a more detailed definition of 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.
|
|
|
30 June
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Reconciliation of total inventory to paid-up RMI
|
|
|
|
||
|
Inventories as reported on the group balance sheet under
IFRS
|
|
12,504
|
|
20,880
|
|
|
Less:
(a) inventories that are not oil and oil products and (b) oil and
oil product inventories that are not risk-managed by
IST
|
|
(8,793
|
)
|
(14,280
|
)
|
|
|
|
3,711
|
|
6,600
|
|
|
Plus: difference between RMI at fair value and RMI on an IFRS
basis
|
|
400
|
|
237
|
|
|
RMI at fair value
|
|
4,111
|
|
6,837
|
|
|
Less: unpaid RMI* at fair value
|
|
(2,140
|
)
|
(3,620
|
)
|
|
Paid-up RMI
|
|
1,971
|
|
3,217
|
|
Top of
page 32
Gulf of Mexico oil spill
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Net
cash provided by operating activities as per condensed group cash
flow statement
|
|
3,737
|
|
952
|
|
6,815
|
|
|
4,689
|
|
12,111
|
|
|
Exclude
net cash from operating activities relating to the Gulf of Mexico
oil spill on a post-tax basis
|
|
1,097
|
|
281
|
|
1,413
|
|
|
1,378
|
|
2,062
|
|
|
Operating cash flow, excluding Gulf of Mexico oil spill
payments*
|
|
4,834
|
|
1,233
|
|
8,228
|
|
|
6,067
|
|
14,173
|
|
Net
cash from operating activities relating to the Gulf of Mexico oil
spill on a pre-tax basis amounted to an outflow of $1,209 million
and $1,490 million in the second quarter and first half of 2020
respectively. For the same periods in 2019, the amount was an
outflow of $1,472 million and $2,126 million respectively. Net cash
outflows relating to the Gulf of Mexico oil spill in 2020 and 2019
include payments made under the 2016 consent decree and settlement
agreement with the United States and the five Gulf coast states.
Included in the current quarter are payments of $1,199 million on a
pre-tax basis relating to the 2016 consent decree and settlement
agreement.
|
|
|
30 June
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Trade and other payables
|
|
(11,294
|
)
|
(12,480
|
)
|
|
Provisions
|
|
(29
|
)
|
(189
|
)
|
|
Gulf of Mexico oil spill payables and provisions
|
|
(11,323
|
)
|
(12,669
|
)
|
|
Of
which - current
|
|
(1,511
|
)
|
(1,800
|
)
|
|
|
|
|
|
||
|
Deferred tax asset
|
|
5,456
|
|
5,526
|
|
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 2019 - Financial statements -
Notes 7, 9, 20, 22, 23, 29, 33 and pages 319 to 320 of Legal
proceedings.
Working capital* reconciliation
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Movements
in inventories and other current and non-current assets and
liabilities as per condensed group cash flow statement
|
|
(609
|
)
|
683
|
|
(58
|
)
|
|
74
|
|
(2,753
|
)
|
|
Adjustments
to exclude movements in inventories and other current and
non-current assets and liabilities for the Gulf of Mexico oil
spill
|
|
1,120
|
|
254
|
|
1,451
|
|
|
1,374
|
|
2,082
|
|
|
Adjusted for Inventory holding gains (losses)* (Note
5)
|
|
|
|
|
|
|
|
|||||
|
Upstream
|
|
57
|
|
(68
|
)
|
(10
|
)
|
|
(11
|
)
|
(8
|
)
|
|
Downstream
|
|
978
|
|
(4,615
|
)
|
93
|
|
|
(3,637
|
)
|
1,139
|
|
|
Working capital release (build)
|
|
1,546
|
|
(3,746
|
)
|
1,476
|
|
|
(2,200
|
)
|
460
|
|
Top of
page 33
Realizations* and marker prices
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
Average realizations(a)
|
|
|
|
|
|
|
|
|||||
|
Liquids* ($/bbl)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
21.63
|
|
45.96
|
|
56.98
|
|
|
33.80
|
|
53.91
|
|
|
Europe
|
|
28.91
|
|
50.71
|
|
68.73
|
|
|
40.30
|
|
65.04
|
|
|
Rest of World
|
|
22.58
|
|
48.13
|
|
66.24
|
|
|
33.79
|
|
63.18
|
|
|
BP Average
|
|
22.75
|
|
47.47
|
|
62.63
|
|
|
34.39
|
|
59.61
|
|
|
Natural gas ($/mcf)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
0.97
|
|
1.28
|
|
1.80
|
|
|
1.15
|
|
2.18
|
|
|
Europe
|
|
1.38
|
|
3.23
|
|
3.63
|
|
|
2.17
|
|
4.75
|
|
|
Rest of World
|
|
3.12
|
|
3.51
|
|
4.12
|
|
|
3.32
|
|
4.40
|
|
|
BP Average
|
|
2.53
|
|
2.83
|
|
3.35
|
|
|
2.69
|
|
3.68
|
|
|
Total hydrocarbons* ($/boe)
|
|
|
|
|
|
|
|
|||||
|
US
|
|
16.05
|
|
29.94
|
|
35.94
|
|
|
23.37
|
|
35.08
|
|
|
Europe
|
|
23.00
|
|
43.97
|
|
63.40
|
|
|
33.46
|
|
61.02
|
|
|
Rest of World
|
|
20.21
|
|
31.61
|
|
41.60
|
|
|
25.63
|
|
41.06
|
|
|
BP Average
|
|
19.06
|
|
31.80
|
|
40.64
|
|
|
25.36
|
|
40.02
|
|
|
Average oil marker prices ($/bbl)
|
|
|
|
|
|
|
|
|||||
|
Brent
|
|
29.56
|
|
50.10
|
|
68.86
|
|
|
40.07
|
|
65.95
|
|
|
West Texas Intermediate
|
|
27.96
|
|
45.56
|
|
59.90
|
|
|
36.69
|
|
57.42
|
|
|
Western Canadian Select
|
|
22.19
|
|
28.71
|
|
47.37
|
|
|
25.48
|
|
46.14
|
|
|
Alaska North Slope
|
|
30.28
|
|
51.07
|
|
68.29
|
|
|
40.59
|
|
66.37
|
|
|
Mars
|
|
30.02
|
|
45.57
|
|
65.20
|
|
|
37.73
|
|
63.20
|
|
|
Urals (NWE – cif)
|
|
31.36
|
|
47.84
|
|
67.62
|
|
|
39.80
|
|
65.23
|
|
|
Average natural gas marker prices
|
|
|
|
|
|
|
|
|||||
|
Henry
Hub gas price(b) ($/mmBtu)
|
|
1.71
|
|
1.95
|
|
2.64
|
|
|
1.83
|
|
2.90
|
|
|
UK Gas – National Balancing Point (p/therm)
|
|
12.88
|
|
24.81
|
|
31.53
|
|
|
18.98
|
|
40.01
|
|
(a)
Based on sales of
consolidated subsidiaries only – this excludes equity-accounted
entities.
(b)
Henry Hub First of
Month Index.
Exchange rates
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|||||
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|||||
|
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
$/£ average rate for the period
|
|
1.24
|
|
1.28
|
|
1.29
|
|
|
1.26
|
|
1.29
|
|
|
$/£ period-end rate
|
|
1.23
|
|
1.24
|
|
1.27
|
|
|
1.23
|
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|||||
|
$/€ average rate for the period
|
|
1.10
|
|
1.10
|
|
1.12
|
|
|
1.10
|
|
1.13
|
|
|
$/€ period-end rate
|
|
1.12
|
|
1.10
|
|
1.14
|
|
|
1.12
|
|
1.14
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Rouble/$ average rate for the period
|
|
72.40
|
|
66.75
|
|
64.58
|
|
|
69.64
|
|
65.29
|
|
|
Rouble/$ period-end rate
|
|
71.25
|
|
78.14
|
|
63.09
|
|
|
71.25
|
|
63.09
|
|
Top of
page 34
Principal risks and uncertainties
The
principal risks and uncertainties affecting BP are described in the
Risk factors section of BP Annual
Report and Form 20-F 2019 (pages 70-71) and are summarized
below. There are no material changes in those principal risks and
uncertainties for the remaining six months of the financial year.
See page 2 for an update in relation to COVID-19.
The
risks and uncertainties summarized below, separately or in
combination, could have a material adverse effect on the
implementation of our strategy, our business, financial
performance, results of operations, cash flows, liquidity,
prospects, shareholder value and returns and
reputation.
Strategic and commercial risks
●
Prices and markets – our financial
performance is impacted by fluctuating prices of oil, gas and
refined products, technological change, exchange rate fluctuations,
and the general macroeconomic outlook.
●
Access, renewal and reserves progression
– inability to access, renew and progress upstream resources
in a timely manner could adversely affect our long-term replacement
of reserves.
●
Major project* delivery – failure
to invest in the best opportunities or deliver major projects
successfully could adversely affect our financial
performance.
●
Geopolitical – exposure to a range
of political developments and consequent changes to the operating
and regulatory environment could cause business
disruption.
●
Liquidity, financial capacity and financial,
including credit, exposure – failure to work within
our financial framework could impact our ability to operate and
result in financial loss.
●
Joint arrangements and contractors
– varying levels of control over the standards, operations
and compliance of our partners, contractors and sub-contractors
could result in legal liability and reputational
damage.
●
Digital infrastructure and cyber
security – breach or failure of our or third
parties’ digital infrastructure or cyber security, including
loss or misuse of sensitive information could damage our
operations, increase costs and damage our reputation.
●
Climate change and the transition to a lower
carbon economy – policy, legal, regulatory, technology
and market developments related to the issue of climate change
could increase costs, reduce demand for our products, reduce
revenue and limit certain growth opportunities.
●
Competition – inability to remain
efficient, maintain a high-quality portfolio of assets, innovate
and retain an appropriately skilled workforce could negatively
impact delivery of our strategy in a highly competitive
market.
●
Crisis management and business
continuity – failure to address an incident
effectively could potentially disrupt our business.
●
Insurance – our insurance strategy
could expose the group to material uninsured losses.
Safety and operational risks
●
Process safety, personal safety, and
environmental risks – exposure to a wide range of
health, safety, security and environmental risks could cause harm
to people, the environment and our assets and result in regulatory
action, legal liability, business interruption, increased costs,
damage to our reputation and potentially denial of our licence to
operate.
●
Drilling and production –
challenging operational environments and other uncertainties could
impact drilling and production activities.
●
Security – hostile acts against
our staff and activities could cause harm to people and disrupt our
operations.
●
Product quality – supplying
customers with off-specification products could damage our
reputation, lead to regulatory action and legal liability, and
impact our financial performance.
Compliance and control risks
●
Ethical misconduct and non-compliance
– ethical misconduct or breaches of applicable laws by our
businesses or our employees could be damaging to our reputation,
and could result in litigation, regulatory action and
penalties.
●
Regulation – changes in the
regulatory and legislative environment could increase the cost of
compliance, affect our provisions and limit our access to new
growth opportunities.
●
Treasury and trading activities –
ineffective oversight of treasury and trading activities could lead
to business disruption, financial loss, regulatory intervention or
damage to our reputation.
●
Reporting – failure to accurately
report our data could lead to regulatory action, legal liability
and reputational damage.
Legal proceedings
For a
full discussion of the group’s material legal proceedings,
see pages 319-320 of BP Annual
Report and Form 20-F 2019.
Top of
page 35
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.
Ethanol-equivalent production (which includes ethanol and sugar) is
converted to thousands of barrels a day at 6.289 million litres = 1
thousand barrels divided by the total number of days in the period
reported.
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 30.
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 total equity. 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
total equity. 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 27.
We are
unable to present reconciliations of forward-looking information
for gearing to finance debt and total equity, 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.
Gearing including leases and net debt including leases are
non-GAAP measures. 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. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. BP believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group’s lease portfolio on net
debt and gearing. The nearest equivalent GAAP measures on an IFRS
basis are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt including leases is provided on page
31.
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
28.
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.
Top of
page 36
Glossary (continued)
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 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 29.
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 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
28.
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/contract (PSA/PSC) 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 at
fair value, Paid-up RMI and Unpaid RMI are non-GAAP measures.
Further information is provided on page 31.
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.
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Glossary (continued)
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 9. 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.
Technical service contract (TSC) – Technical service
contract is an arrangement through which an oil and gas company
bears the risks and costs of exploration, development and
production. In return, the oil and gas company receives entitlement
to variable physical volumes of hydrocarbons, representing recovery
of the costs incurred and a profit margin which reflects
incremental production added to the oilfield.
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 – 2020 underlying production,
when compared with 2019, is production after adjusting for
acquisitions and divestments, curtailments, and entitlement impacts
in our production-sharing agreements/contracts and technical
service contract.
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 29 and 30 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.
Underlying RC profit or loss per share is a non-GAAP
measure. Earnings per share is defined in Note 9. 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.
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Glossary (continued)
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 32
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
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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: the expectations regarding the COVID-19
pandemic including its risks, impacts, consequences and challenges
and BP’s response, including the impact on the trading
environment, commodity prices, global GDP; plans and expectations
regarding the divestment programme including expectations with
respect to completion of transactions and the timing and amount of
proceeds of agreed disposals (including the expected completion of
the sales of the midstream portion of BP’s Alaskan business
to Hilcorp, BP’s petrochemicals business to INEOS and
BP’s Andrew Area and Shearwater assets to Premier Oil);
expectations for the total amount of organic capital expenditure in
2020; plans and expectations regarding new joint ventures and other
agreements, including partnerships with Reliance Industries,
China’s ENN, Enágas in Spain, JinkoPower, and Petrofac;
plans to invest in India’s Green Growth Equity Fund and
Satelytics; expectations regarding quarterly dividends;
expectations regarding demand for BP’s products in the
Upstream and Downstream; expectations regarding the Downstream
refining margins; expectations regarding BP’s future
financial performance and cash flows; plans and expectations with
respect to the implementation and impact of BP’s redesign of
its organization, including the announced reduction of around
10,000 jobs, and plans for BP to achieve $2.5 billion in cost
savings by the end of 2021 relative to 2019, and the amount and
timing of associated restructuring charges; expectations regarding
the full-year charge for depreciation, depletion and amortization;
expectations regarding the underlying effective tax rate in the
second half of 2020; plans and expectations with respect the
Lightsource BP project with SEPTA in the US and Lightsource
BP’s ambition to reach 10GW of developed assets by the end of
2023; expectations regarding the Rosneft results; plans and
expectations regarding Upstream projects, including the timing of
the Mad Dog 2, Tanguuh Expansion, Trinidad Cassia Compression and
Greater Tortue Ahmeyin Phase 1 major projects; expectations
regarding Upstream full year and third-quarter 2020 reported
production, including the expectation that interventions will
reduce 2020 reported production; expectations regarding price
assumptions used in accounting estimates; expectations regarding
the Other businesses and corporate average quarterly charges; and
expectations with respect to the timing and 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 extent and duration of the impact of current market
conditions including the significant drop in the oil price, the
impact of COVID-19, overall global economic and business conditions
impacting our business and demand for our products as well as 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; TSC 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; the actions of contractors;
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, and under “Risk
factors” in BP Annual Report and Form 20-F 2019 as filed with
the US Securities and Exchange Commission.
This announcement includes inside information as defined in Article
7 of the Market Abuse Regulation No. 596/2014. The person
responsible for arranging the release of this announcement on
behalf of BP p.l.c. is Ben Mathews, Company Secretary.
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Contacts
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London
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Houston
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Press Office
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David Nicholas
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Brett Clanton
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+44 (0)20 7496 4708
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+1 281 366 8346
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Investor Relations
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Craig Marshall
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Brian Sullivan
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bp.com/investors
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+44 (0)20 7496 4962
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+1 281 892 3421
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BP
p.l.c.’s LEI Code 213800LH1BZH3D16G760
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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BP
p.l.c.
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(Registrant)
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Dated: 4
August 2020
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/s/ Ben
J. S. Mathews
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Ben J.
S. Mathews
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Company
Secretary
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