Bp PLC 6-K, filed Apr 28, 2020
Bp PLC (BP)
6-K
2020-04-28
For: 2020-04-28
View Original
Added on
April 08, 2026
About this 6-K
Bp PLC filed this 6-K on April 28, 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 28
April, 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|
---------------
--------------
|
FOR IMMEDIATE RELEASE
|
Top of
page 1
|
|
London 28 April 2020
|
|
|
BP p.l.c. Group results
|
|
|
First quarter 2020
|
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/0440L_1-2020-4-27.pdf
Performance with purpose:
protecting our people, supporting our communities, strengthening
our finances
|
Bernard Looney –
Chief executive officer:
|
|
This
extraordinary time for the world demands extraordinary responses.
And thankfully we are seeing that just about everywhere we look
around the world. Our industry has been hit by supply and demand
shocks on a scale never seen before, but that is no excuse to turn
inward. BP, like many other companies, is stepping up and extending
a helping hand to those in need. We do it not because it is
expected of us – but because we want to. That is consistent
with our purpose.
We are
focusing our efforts on protecting our people, supporting our
communities and strengthening our finances. I am incredibly proud
of the work that our people are doing in all three areas,
particularly our colleagues in operations – from rigs to
retail and everywhere in between – who are continuing to
deliver energy and provide goods in the most difficult of
circumstances.
At the
same time, we are taking decisive actions to strengthen our
finances – reinforcing liquidity, rapidly reducing spending
and costs, driving our cash balance point lower.
We are
determined to perform with purpose and remain committed to
delivering our net zero ambition.
|
First quarter 2020 results
-
Underlying
replacement cost profit for the first quarter was $0.8 billion,
compared with $2.4 billion for the same period a year earlier. The
result reflected lower prices, demand destruction in the Downstream
particularly in March, a lower estimated result from Rosneft and a
lower contribution from oil trading. It was also impacted by $0.2
billion non-cash underlying foreign exchange (FX) effects in other
businesses and corporate, including FX translation impacts of
finance debt in the BP Bunge Bioenergia joint venture.
-
Replacement cost
loss for the first quarter was $0.6 billion, compared with a profit
of $2.1 billion for the same period a year earlier, including a
$1.4 billion net adverse impact of non-operating items and fair
value accounting effects.
-
Inventory holding
losses of $3.7 billion, as a result of the dramatic drop in oil
prices at the quarter end, were the main driver of the reported
historical cost loss of $4.4 billion.
-
Operating cash flow
for the first quarter, excluding Gulf of Mexico oil spill payments,
was $1.2 billion, including a $3.7 billion working capital build
(after adjusting for net inventory holding losses) driven by higher
Downstream product balances and trading mark-to-market receivable
balances at the end of the quarter. Gulf of Mexico oil spill
payments in the quarter were $0.3 billion on a post-tax
basis.
Receipts from
divestments and other proceeds were $0.7 billion in the first
quarter.
6
Net debt at the end
of the quarter was $51.4 billion, $6.0 billion higher than a
quarter earlier. Also reflecting lower equity including FX impacts,
gearing at quarter end was 36.2%.
7
At the end of the
quarter BP had around $32 billion of liquidity
available.
8
A dividend of 10.5
cents per share was announced for the quarter.
See
chart on pdf
|
Financial summary
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Profit (loss) for the period attributable to BP
shareholders
|
|
(4,365
|
)
|
19
|
|
2,934
|
|
|
Inventory holding (gains) losses, net of tax
|
|
3,737
|
|
(23
|
)
|
(839
|
)
|
|
RC profit (loss)
|
|
(628
|
)
|
(4
|
)
|
2,095
|
|
|
Net
(favourable) adverse impact of non-operating items and fair value
accounting effects, net of tax
|
|
1,419
|
|
2,571
|
|
263
|
|
|
Underlying RC profit
|
|
791
|
|
2,567
|
|
2,358
|
|
|
RC profit (loss) per ordinary share (cents)
|
|
(3.11
|
)
|
(0.02
|
)
|
10.38
|
|
|
RC profit (loss) per ADS (dollars)
|
|
(0.19
|
)
|
0.00
|
|
0.62
|
|
|
Underlying RC profit per ordinary share (cents)
|
|
3.92
|
|
12.67
|
|
11.69
|
|
|
Underlying RC profit per ADS (dollars)
|
|
0.24
|
|
0.76
|
|
0.70
|
|
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, Upstream plant reliability and refining availability
are defined in the Glossary on page 30.
|
The commentary above and following should be read in conjunction
with the cautionary statement on page 33.
|
Top of
page 2
Outlook
1
The economic impact
of the COVID-19 pandemic coupled with pre-existing supply and
demand factors have resulted in an exceptionally challenged
commodity environment. Product demand has sharply reduced, notably
for mobility, contributing sharp falls in refining margins and
utilization. The resulting reduction in demand for crude oil has
begun to put severe pressure on storage and logistics, with a
substantial effect on prices and has promoted volatility. In April,
OPEC and its partners agreed to significant supply cuts that are
expected to help reduce the imbalance but are unlikely to prevent
material supply shut ins by oil producers in the near-term, some of
which may be difficult to reverse. Challenges in gas markets,
following significant growth in supply over recent years, have been
compounded by the pandemic, lowering LNG demand.
2
In March, Brent
crude marker prices and BP’s refining marker margin touched
levels not seen for well over a decade, while Henry Hub gas price
hit multi-year lows and prices and margins have continued to remain
depressed.
3
Looking forward,
there remains an exceptional level of uncertainty regarding the
near-term outlook for prices and product demand, particularly while
many economies remain under lockdown. There is the risk of more
sustained consequences depending on the efforts of governments and
the public and private sectors to manage the health, economic and
financial stability effects of the pandemic.
4
Upstream
second-quarter reported production is expected to be lower compared
to the first quarter. There are significant uncertainties with
regard to the implementation of OPEC+ restrictions, price impacts
on entitlement volumes, divestments, market restrictions given lack
of demand for oil and COVID-19 operational impacts.
5
In Downstream,
material impacts from COVID-19 are expected in the second quarter.
Product demand in fuels marketing is expected to be significantly
lower in BP’s key European and North America businesses. In
refining, reduced utilization is expected due to the overall
product demand declines, as well as significantly lower refining
margins. In addition, a lower level of North American heavy crude
discounts is expected.
6
During the second
quarter BP also expects to make the annual payment of around $1.2
billion relating to the Gulf of Mexico spill
settlement.
7
Gearing is expected
to remain above the 20 to 30% target range into 2021. It is
expected to trend down over time reflecting receipt of divestment
proceeds and reversal of first quarter working capital impacts, and
as BP’s financial interventions take effect.
8
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.
Taking decisive action
1
BP is taking a
series of interventions to strengthen its finances.
2
BP has strengthened
its balance sheet, with around $32 billion of liquidity at quarter
end, including a new $10 billion revolving credit facility. In
April BP has issued around $7 billion of new bonds.
3
2020 organic
capital spending is expected to be around $12 billion, a reduction
of around 25% on full-year guidance given in February. In the
Upstream, most of the interventions are being made in areas not
expected to have a significant impact on 2020 cash generation at
lower prices. These include delaying exploration and appraisal
activities and curtailing 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 underlying production by around 70mboe/d compared with
2019. In Downstream, the capital expenditure reduction contribution
is expected to be around $1 billion in 2020. Interventions are
primarily related to growth projects and are also not expected to
have a significant impact on operating cash in the short term. BP
expects to continue to invest around $500 million in low-carbon
activities in 2020.
4
BP plans to reduce
cash costs by $2.5 billion by the end of 2021 relative to 2019. The
reduction is expected to result both from cost-saving measures
across BP’s business as well as an important contribution
from actions including increased digitisation, further integration
and removing duplication, and new ways of working. Some of these
cost savings may have associated restructuring
charges.
5
The programme to
deliver $15 billion of announced transactions by mid-2021 remains
on track, although the current market environment remains
challenging. BP has delivered $10.1 billion of announced
transactions since the start of 2019. The phasing of receipt of $10
billion of divestment proceeds by the end of 2020 will be revised
as transactions complete. BP has reconfirmed its commitment to
completing the sale of its Alaska business to Hilcorp in 2020,
subject to regulatory approvals. The total consideration of $5.6
billion is unchanged but the structure of the consideration and
phasing of payments have been revised to respond to the current
environment.
6
BP will continue to
review these actions, and any further actions that may be
appropriate, in response to changes in prevailing market
conditions.
Maintaining safe operations
1
BP continues to
monitor the impact of COVID-19 on our global operations and to date
there has been no significant operational impact. This could change
through the rest of the second quarter.
2
Despite significant
challenges of the environment, BP’s operations continued to
perform safely and reliably in the quarter. BP-operated Upstream
plant reliability was 93.0% and refining availability was strong at
96.1%.
3
BP is taking
significant steps to protect and support its staff through the
pandemic. These include reducing manning levels where possible and
changing working patterns to support social distancing; introducing
testing to reduce spread of virus in offshore installations;
requesting all staff who are able to do so to work from home since
mid-March; and deploying personal protective equipment (PPE),
enhanced cleaning and social distancing measures in retail
sites.
4
BP is also
providing enhanced support and guidance on safety, health and
hygiene, homeworking and mental health to all staff. In March BP
informed staff that for three months no BP employees would lose
their jobs as a result of virus-related cost
reductions.
Supporting communities
1
BP is offering
support across the world to the communities in which it works in
their response to the pandemic.
2
These actions
include: providing free fuel and discounts to emergency services
vehicles and workers in a number of countries; donating PPE to
health services; donating access to our supercomputer in Houston to
aid researchers investigating the pandemic; donating ethanol from
our biofuels production for sanitizers; donating to MIND, the
mental health charity, and the World Health Organization’s
response fund; supporting all staff in volunteering efforts and
matching employee donations to charities.
Top of
page 3
|
Group headlines
Results
For the
first quarter, underlying RC profit was $791 million, compared with
$2,358 million in 2019. Underlying RC profit is after adjusting RC
loss for a net charge for non-operating items of $1,391 million and
net adverse fair value accounting effects of $28 million (both on a
post-tax basis).
RC loss
was $628 million for the first quarter, compared with a profit
of $2,095 million in
2019.
Loss
for the first quarter attributable to BP shareholders was $4,365
million, compared with a profit of $2,934 million for the same
period in 2019.
See
further information on pages 4, 25 and 26.
Effective tax rate
The
effective tax rate (ETR) on RC profit or loss* for the first
quarter was 280%, compared with 42% for the same period in 2019.
Adjusting for non-operating items and fair value accounting
effects, the underlying ETR* for the first quarter was 55%,
compared with 40% for the same period a year ago. The higher
underlying ETR for the first quarter reflects charges for the
reassessment of the recognition of deferred tax assets. The
underlying effective tax rate for the full year is sensitive to the
volatility in the current environment and updates will be provided
throughout the year. ETR on RC profit or loss and underlying ETR
are non-GAAP measures.
Dividend
BP
today announced a quarterly dividend of 10.5 cents per ordinary
share ($0.63 per ADS), which is expected to be paid on 19 June
2020. The corresponding amount in sterling will be announced on 8
June 2020. See page 22 for more information.
Share buybacks
BP
repurchased 120 million ordinary shares at a cost of $776 million
(including fees and stamp duty) 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 $1.2
billion for the first quarter. These amounts include a working
capital* build of $3.7 billion in the first quarter, after
adjusting for net inventory holding losses* and working capital
effects of the Gulf of Mexico oil spill. The comparable amount for
the same period in 2019 was $5.9 billion.
Operating
cash flow as reported in the group cash flow statement was $1.0
billion for the first quarter, including a working capital release
of $0.7 billion, compared with $5.3 billion for the same period in
2019.
See
page 28 and Glossary for further information on Gulf of Mexico oil
spill cash flows and on working capital.
Capital expenditure*
Organic
capital expenditure* for the first quarter was $3.5 billion,
compared with $3.6 billion for the same period in
2019.
Inorganic
capital expenditure* for the first quarter was $0.3 billion,
compared with $2.0 billion for the same period in
2019.
Organic
capital expenditure and inorganic capital expenditure are non-GAAP
measures. See page 24 for further information.
Divestment and other proceeds
Divestment
proceeds* were $0.7 billion for the first quarter, compared with
$0.6 billion for the same period in 2019.
Gearing*
Net
debt* at 31 March 2020 was $51.4 billion, compared with
$45.1 billion a year ago. Gearing at 31 March 2020 was
36.2%, compared with 30.4% a year ago. Net debt and gearing are
non-GAAP measures. See page 23 for more information.
|
|
Brian Gilvary –
Chief financial officer:
|
|
“We are dealing with an exceptionally challenging environment
and the unprecedented effects of demand destruction and price
impacts that can be seen in these results are expected to continue
through the second quarter. Despite this our underlying businesses
performed well in the first quarter, although our headline results
were impacted by foreign exchange as well as price effects at the
quarter end. We have developed a clear plan and are confident in
increasing resilience in our financial framework through a set of
interventions focused on building liquidity, strengthening our
balance sheet and reducing expenditure to drive our cash balance
point below $35 per barrel in 2021.”
|
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 30.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
33.
|
Top of
page 4
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Underlying RC profit before interest and tax
|
|
|
|
|
|||
|
Upstream
|
|
1,871
|
|
2,678
|
|
2,928
|
|
|
Downstream
|
|
921
|
|
1,438
|
|
1,733
|
|
|
Rosneft
|
|
(17
|
)
|
412
|
|
567
|
|
|
Other
businesses and corporate
|
|
(561
|
)
|
(250
|
)
|
(418
|
)
|
|
Consolidation
adjustment – UPII*
|
|
178
|
|
24
|
|
(13
|
)
|
|
Underlying RC profit before interest and tax
|
|
2,392
|
|
4,302
|
|
4,797
|
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(668
|
)
|
(781
|
)
|
(754
|
)
|
|
Taxation on an underlying RC basis
|
|
(953
|
)
|
(955
|
)
|
(1,620
|
)
|
|
Non-controlling interests
|
|
20
|
|
1
|
|
(65
|
)
|
|
Underlying RC profit attributable to BP shareholders
|
|
791
|
|
2,567
|
|
2,358
|
|
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
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
RC profit before interest and tax
|
|
|
|
|
|||
|
Upstream
|
|
1,023
|
|
614
|
|
2,884
|
|
|
Downstream
|
|
664
|
|
1,433
|
|
1,765
|
|
|
Rosneft
|
|
(17
|
)
|
503
|
|
486
|
|
|
Other
businesses and corporate
|
|
(698
|
)
|
(1,432
|
)
|
(546
|
)
|
|
Consolidation
adjustment – UPII
|
|
178
|
|
24
|
|
(13
|
)
|
|
RC profit before interest and tax
|
|
1,150
|
|
1,142
|
|
4,576
|
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(790
|
)
|
(903
|
)
|
(882
|
)
|
|
Taxation on a RC basis
|
|
(1,008
|
)
|
(244
|
)
|
(1,534
|
)
|
|
Non-controlling interests
|
|
20
|
|
1
|
|
(65
|
)
|
|
RC profit (loss) attributable to BP shareholders
|
|
(628
|
)
|
(4
|
)
|
2,095
|
|
|
Inventory holding gains (losses)*
|
|
(4,884
|
)
|
10
|
|
1,088
|
|
|
Taxation (charge) credit on inventory holding gains and
losses
|
|
1,147
|
|
13
|
|
(249
|
)
|
|
Profit (loss) for the period attributable to BP
shareholders
|
|
(4,365
|
)
|
19
|
|
2,934
|
|
Top of
page 5
|
Strategic progress
Upstream
Upstream
production for the first quarter, which excludes Rosneft, was
2,579mboe/d, 2.9% lower than a year earlier. Underlying
production*, adjusted for portfolio changes and entitlement
impacts, was 0.7% higher than a year earlier, mainly due to reduced
turnaround activities.
Upstream
is making progress in the divestment programme including the
completion of the sale of the San Juan, Arkoma and Anadarko fields
in the US onshore and the recent announcement confirming that BP
expects to complete the sale of its Alaska business in
2020.
BP
continues to progress its major projects*. The COVID-19 pandemic is
slowing progress on some projects and impacts are currently being
assessed. Of the 900mboe/d major project growth targeted for 2021,
700mboe/d is currently online.
Downstream
Refining
operations in the quarter were strong with Solomon availability of
96.1%. However, reduction in utilization was seen towards
quarter-end due to reducing fuel demand.
During
the quarter BP announced plans to extend its convenience
partnership with Albert Heijn to more than 100 sites across the
Netherlands.
Advancing the energy transition
The BP
joint venture with Didi in China, BP Xiaoju, went live in the
quarter. It is now operational and active in building public
fast-charging hubs in China, the world’s largest and fastest
developing electric vehicle market.
BP
confirmed an agreement to invest in Santos’ Moomba carbon
capture and storage project in South Australia to capture and
permanently store in geological formations 1.7 million tonnes of
carbon dioxide a year.
|
BP
signed a memorandum of understanding with a number of partners to
develop Germany’s first publicly accessible hydrogen network
from Lingen to Gelsenkirchen. The planned network would link the
production of green hydrogen with industrial customers in Lower
Saxony and North Rhine-Westphalia.
In the
quarter Lightsource BP, in which BP has a 50% stake, completed
financing for a planned 260MW project in Texas. Output from the
project – expected to start commercial operation in late 2020
– will be traded through a long-term arrangement with
BP.
Financial framework
Operating cash flow excluding Gulf of Mexico oil spill
payments* was $1.2 billion for the first quarter of 2020, compared
with $5.9 billion for the same period in 2019.
Organic capital expenditure* for the first quarter of 2020
was $3.5 billion. BP now expects 2020 organic capital expenditure
to be around $12 billion.
Divestment and other proceeds were $0.7 billion for the
first quarter of 2020.
Gulf of Mexico oil spill payments on a post-tax basis was
$281 million in the first quarter of 2020. Payments for 2020 are
expected to be less than $1 billion on a post-tax
basis.
Gearing* at 31 March 2020 was 36.2%. See page 23
for more information.
|
|
Operating metrics
|
|
First quarter 2020
|
|
Financial metrics
|
|
First quarter 2020
|
|
|
(vs. First quarter 2019)
|
|
|
(vs. First quarter 2019)
|
||
|
Tier 1 and tier 2 process safety events
|
|
21
|
|
Underlying RC profit*
|
|
$0.8bn
|
|
|
(-7)
|
|
|
(-$1.6bn)
|
||
|
Reported recordable injury frequency*
|
|
0.152
|
|
Operating cash flow excluding Gulf of Mexico oil spill payments
(post-tax)
|
|
$1.2bn
|
|
|
(-4.1%)
|
|
|
(-$4.7bn)
|
||
|
Group production
|
|
3,715mboe/d
|
|
Organic capital expenditure
|
|
$3.5bn
|
|
|
(-2.8%)
|
|
|
(-$0.1bn)
|
||
|
Upstream production (excludes Rosneft segment)
|
|
2,579mboe/d
|
|
Gulf of Mexico oil spill payments (post-tax)
|
|
$0.3bn
|
|
|
(-2.9%)
|
|
|
(-$0.4bn)
|
||
|
Upstream unit production costs*
|
|
$7.07/boe
|
|
Divestment proceeds*
|
|
$0.7bn
|
|
|
(-4.4%)
|
|
|
(+$0.1bn)
|
||
|
BP-operated Upstream plant reliability*
|
|
93.0%
|
|
Gearing
|
|
36.2%
|
|
|
(-3.2)
|
|
|
(+5.8)
|
||
|
BP-operated refining availability*
|
|
96.1%
|
|
Dividend per ordinary share(a)
|
|
10.50 cents
|
|
|
(+1.8)
|
|
|
(2.4%)
|
(a)
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
33.
|
Top of
page 6
Upstream
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Profit before interest and tax
|
|
955
|
|
614
|
|
2,886
|
|
|
Inventory holding (gains) losses*
|
|
68
|
|
—
|
|
(2
|
)
|
|
RC profit before interest and tax
|
|
1,023
|
|
614
|
|
2,884
|
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
848
|
|
2,064
|
|
44
|
|
|
Underlying
RC profit before interest and tax*(a)
|
|
1,871
|
|
2,678
|
|
2,928
|
|
(a)
See page 7 for a
reconciliation to segment RC profit before interest and tax by
region.
Financial results
The
replacement cost profit before interest and tax for the first
quarter was $1,023 million, compared with $2,884 million for the
same period in 2019. The first quarter included a net non-operating
charge of $1,071 million, which principally relate to
impairments, compared with a
net charge of $4 million for the same period in 2019. Fair value
accounting effects in the first quarter had a favourable impact of
$223 million, compared with an adverse impact of $40 million in the
same period of 2019.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost profit before interest and
tax for the first quarter was $1,871 million, compared with $2,928
million for the same period in 2019. The result for the quarter
mainly reflected lower liquids and gas realizations, partly offset
by lower depreciation, depletion and amortization, lower
exploration write-offs, and very strong gas marketing and
trading.
Production
Production
for the quarter was 2,579mboe/d, 2.9% lower than the first quarter
of 2019. Underlying production* for the quarter increased 0.7%,
mainly due to reduced turnaround activities.
Key events
During
the first quarter, 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 is working with stakeholders to agree
a revised work plan. A force majeure (FM) notice was issued under
the lease and operate agreement with Golar LNG over the provision
of a floating liquified natural gas vessel, where due to the FM
event the lessee is not able to meet the connection date (BP
operator 56%, Kosmos 27%, Petrosen 10%, SMHPM 7%).
In
February, 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.
On 29
March, 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%).
In late
March, BP started to relocate personnel from the remote Tangguh
expansion project in Indonesia, as part of a COVID-19 response
plan. BP continues progressing the major project* 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 second-quarter reported production to be lower
compared to the first quarter, and will be subject to significant
uncertainties with regard to the implementation of OPEC+
restrictions, price impacts on PSA* and TSC* entitlement volumes,
divestments, market restrictions given lack of demand for oil and
COVID-19 operational impacts.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
33.
|
Top of
page 7
Upstream (continued)
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Underlying RC profit before interest and tax
|
|
|
|
|
|||
|
US
|
|
539
|
|
645
|
|
612
|
|
|
Non-US
|
|
1,332
|
|
2,033
|
|
2,316
|
|
|
|
|
1,871
|
|
2,678
|
|
2,928
|
|
|
Non-operating items(a)
|
|
|
|
|
|||
|
US
|
|
(632
|
)
|
(2,451
|
)
|
(30
|
)
|
|
Non-US
|
|
(439
|
)
|
(272
|
)
|
26
|
|
|
|
|
(1,071
|
)
|
(2,723
|
)
|
(4
|
)
|
|
Fair value accounting effects
|
|
|
|
|
|||
|
US
|
|
(2
|
)
|
120
|
|
(93
|
)
|
|
Non-US
|
|
225
|
|
539
|
|
53
|
|
|
|
|
223
|
|
659
|
|
(40
|
)
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|||
|
US
|
|
(95
|
)
|
(1,686
|
)
|
489
|
|
|
Non-US
|
|
1,118
|
|
2,300
|
|
2,395
|
|
|
|
|
1,023
|
|
614
|
|
2,884
|
|
|
Exploration expense
|
|
|
|
|
|||
|
US
|
|
20
|
|
86
|
|
25
|
|
|
Non-US
|
|
182
|
|
180
|
|
342
|
|
|
|
|
202
|
|
266
|
|
367
|
|
|
Of which: Exploration expenditure written off
|
|
98
|
|
155
|
|
284
|
|
|
Production (net of
royalties)(b)(c)
|
|
|
|
|
|||
|
Liquids* (mb/d)
|
|
|
|
|
|||
|
US
|
|
505
|
|
517
|
|
455
|
|
|
Europe
|
|
147
|
|
149
|
|
159
|
|
|
Rest of World
|
|
655
|
|
662
|
|
685
|
|
|
|
|
1,306
|
|
1,328
|
|
1,299
|
|
|
Natural gas (mmcf/d)
|
|
|
|
|
|||
|
US
|
|
2,050
|
|
2,317
|
|
2,310
|
|
|
Europe
|
|
244
|
|
275
|
|
145
|
|
|
Rest of World
|
|
5,093
|
|
5,354
|
|
5,417
|
|
|
|
|
7,387
|
|
7,945
|
|
7,872
|
|
|
Total hydrocarbons* (mboe/d)
|
|
|
|
|
|||
|
US
|
|
858
|
|
916
|
|
853
|
|
|
Europe
|
|
189
|
|
196
|
|
184
|
|
|
Rest of World
|
|
1,533
|
|
1,585
|
|
1,619
|
|
|
|
|
2,579
|
|
2,698
|
|
2,656
|
|
|
Average realizations*(d)
|
|
|
|
|
|||
|
Total
liquids(e)
($/bbl)
|
|
47.47
|
|
55.90
|
|
56.47
|
|
|
Natural gas ($/mcf)
|
|
2.83
|
|
3.12
|
|
4.02
|
|
|
Total hydrocarbons ($/boe)
|
|
31.80
|
|
36.42
|
|
39.37
|
|
(a)
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. Fourth quarter 2019 includes
impairment charges which principally related to the disposal of
heritage BPX Energy assets and our Alaska business.
See Note 3 for further information.
(b)
Includes BP’s
share of production of equity-accounted entities in the Upstream
segment.
(c)
Because of
rounding, some totals may not agree exactly with the sum of their
component parts.
(d)
Realizations are
based on sales by consolidated subsidiaries only – this
excludes equity-accounted entities.
(e)
Includes
condensate, natural gas liquids and bitumen.
Top of
page 8
Downstream
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Profit (loss) before interest and tax
|
|
(3,951
|
)
|
1,412
|
|
2,811
|
|
|
Inventory holding (gains) losses*
|
|
4,615
|
|
21
|
|
(1,046
|
)
|
|
RC profit before interest and tax
|
|
664
|
|
1,433
|
|
1,765
|
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
257
|
|
5
|
|
(32
|
)
|
|
Underlying
RC profit before interest and tax*(a)
|
|
921
|
|
1,438
|
|
1,733
|
|
(a)
See page 9 for a
reconciliation to segment RC profit before interest and tax by
region and by business.
Financial results
The
replacement cost profit before interest and tax for the first
quarter was $664 million, compared with $1,765 million for the same
period in 2019.
The
first quarter includes a net non-operating gain of $2 million,
compared with a charge of $4 million for the same period in 2019.
Fair value accounting effects in the first quarter had an adverse
impact of $259 million, compared with a favourable impact of $36
million in the same period in 2019.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost profit before interest and
tax for the first quarter was $921 million, compared with $1,733
million for the same period 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 $689 million for the first quarter,
compared with $1,292 million for the same period in
2019.
The
result for the quarter reflects strong refining operational
performance and a lower level of turnaround activity, more than
offset by a significantly weaker contribution from supply and
trading, and adverse COVID-19 related impacts.
The
refining result for the quarter reflects wider North American heavy
crude oil discounts and lower turnaround activity, more than offset
by lower refining margins. Operational performance across our
refining portfolio was strong, with Solomon availability* of 96.1%,
albeit with some reduction in utilization towards quarter-end due
to reducing fuel demand.
The
fuels marketing result for the quarter reflects the impact of fuels
demand destruction, initially in China, and more recently across
our US and European businesses. In recent weeks we have seen our
retail fuel volumes in North America and Europe fall by around 50%,
and demand for aviation fuel in our key markets fall by around
80%.
Despite
these fuel volume declines our store sales have remained resilient,
demonstrating the strength of our convenience retail offer which we
continue to expand, with the recently announced plans to grow our
convenience partnership with Albert Heijn in the
Netherlands.
Lubricants
The
lubricants business reported an underlying replacement cost profit
before interest and tax of $167 million for the first quarter,
compared with $272 million for the same period in 2019. The result
reflects significantly weaker demand, primarily driven by the
impact of COVID-19 which has been particularly evident in China
where we saw demand fall by more than 50% for the quarter. In
recent weeks demand has begun to recover in China but has continued
to fall in Europe, the US and India where volumes are currently
down 50-90% compared to the same period last year.
Petrochemicals
The
petrochemicals business reported an underlying replacement cost
profit before interest and tax of $65 million for the first
quarter, compared with $169 million for the same period in 2019.
The result primarily reflects a weaker margin environment across
both aromatics and acetyls.
Outlook
Looking
to the second quarter of 2020, we expect material impacts from
COVID-19. In our marketing businesses we expect product demand to
be significantly lower due to the actions taken by countries to
limit the spread of COVID-19, and in refining we expect reduced
utilization due to the lower demand, as well as significantly lower
industry refining margins. In addition we expect a lower level of
North American heavy crude oil discounts.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
33.
|
Top of
page 9
Downstream (continued)
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Underlying RC profit before interest and tax - by
region
|
|
|
|
|
|||
|
US
|
|
557
|
|
556
|
|
531
|
|
|
Non-US
|
|
364
|
|
882
|
|
1,202
|
|
|
|
|
921
|
|
1,438
|
|
1,733
|
|
|
Non-operating items
|
|
|
|
|
|||
|
US
|
|
6
|
|
(40
|
)
|
1
|
|
|
Non-US
|
|
(4
|
)
|
12
|
|
(5
|
)
|
|
|
|
2
|
|
(28
|
)
|
(4
|
)
|
|
Fair value accounting
effects(a)
|
|
|
|
|
|||
|
US
|
|
145
|
|
(37
|
)
|
61
|
|
|
Non-US
|
|
(404
|
)
|
60
|
|
(25
|
)
|
|
|
|
(259
|
)
|
23
|
|
36
|
|
|
RC profit before interest and tax
|
|
|
|
|
|||
|
US
|
|
708
|
|
479
|
|
593
|
|
|
Non-US
|
|
(44
|
)
|
954
|
|
1,172
|
|
|
|
|
664
|
|
1,433
|
|
1,765
|
|
|
Underlying RC profit before interest and tax - by
business(b)(c)
|
|
|
|
|
|||
|
Fuels
|
|
689
|
|
1,068
|
|
1,292
|
|
|
Lubricants
|
|
167
|
|
333
|
|
272
|
|
|
Petrochemicals
|
|
65
|
|
37
|
|
169
|
|
|
|
|
921
|
|
1,438
|
|
1,733
|
|
|
Non-operating items and fair value accounting
effects(a)
|
|
|
|
|
|||
|
Fuels
|
|
(257
|
)
|
(41
|
)
|
37
|
|
|
Lubricants
|
|
—
|
|
39
|
|
(4
|
)
|
|
Petrochemicals
|
|
—
|
|
(3
|
)
|
(1
|
)
|
|
|
|
(257
|
)
|
(5
|
)
|
32
|
|
|
RC profit before interest and tax(b)(c)
|
|
|
|
|
|||
|
Fuels
|
|
432
|
|
1,027
|
|
1,329
|
|
|
Lubricants
|
|
167
|
|
372
|
|
268
|
|
|
Petrochemicals
|
|
65
|
|
34
|
|
168
|
|
|
|
|
664
|
|
1,433
|
|
1,765
|
|
|
|
|
|
|
|
|||
|
BP average refining marker margin (RMM)* ($/bbl)
|
|
8.8
|
|
12.4
|
|
10.2
|
|
|
|
|
|
|
|
|||
|
Refinery throughputs (mb/d)
|
|
|
|
|
|||
|
US
|
|
748
|
|
761
|
|
735
|
|
|
Europe
|
|
835
|
|
848
|
|
767
|
|
|
Rest of World
|
|
223
|
|
238
|
|
237
|
|
|
|
|
1,806
|
|
1,847
|
|
1,739
|
|
|
BP-operated refining availability* (%)
|
|
96.1
|
|
95.7
|
|
94.3
|
|
|
|
|
|
|
|
|||
|
Marketing sales of refined products (mb/d)
|
|
|
|
|
|||
|
US
|
|
1,038
|
|
1,156
|
|
1,077
|
|
|
Europe
|
|
954
|
|
1,051
|
|
993
|
|
|
Rest of World
|
|
519
|
|
537
|
|
520
|
|
|
|
|
2,511
|
|
2,744
|
|
2,590
|
|
|
Trading/supply sales of refined products
|
|
3,377
|
|
3,519
|
|
3,296
|
|
|
Total sales volumes of refined products
|
|
5,888
|
|
6,263
|
|
5,886
|
|
|
|
|
|
|
|
|||
|
Petrochemicals production (kte)
|
|
|
|
|
|||
|
US
|
|
611
|
|
518
|
|
601
|
|
|
Europe
|
|
1,371
|
|
1,141
|
|
1,160
|
|
|
Rest of World
|
|
1,153
|
|
1,353
|
|
1,299
|
|
|
|
|
3,135
|
|
3,012
|
|
3,060
|
|
(a)
For Downstream,
fair value accounting effects arise solely in the fuels business.
See page 26 for further information.
(b)
Segment-level
overhead expenses are included in the fuels business
result.
(c)
Results from
petrochemicals at our Gelsenkirchen and Mülheim sites in
Germany are reported in the fuels business.
Top of
page 10
Rosneft
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020(a)
|
2019
|
2019
|
|||
|
Profit
(loss) before interest and tax(b)(c)
|
|
(218
|
)
|
534
|
|
526
|
|
|
Inventory holding (gains) losses*
|
|
201
|
|
(31
|
)
|
(40
|
)
|
|
RC profit (loss) before interest and tax
|
|
(17
|
)
|
503
|
|
486
|
|
|
Net charge (credit) for non-operating items*
|
|
—
|
|
(91
|
)
|
81
|
|
|
Underlying RC profit (loss) before interest and tax*
|
|
(17
|
)
|
412
|
|
567
|
|
Financial results
Replacement
cost (RC) loss before interest and tax for the first quarter was
$17 million, compared with a profit of $486 million for the same
period in 2019.
After
adjusting for non-operating items, the underlying RC loss before
interest and tax for the first quarter was $17 million, compared
with a profit of $567 million for the same period in 2019. There
were no non-operating items in the first quarter of
2020.
Compared
with the same period in 2019, the result for the first quarter
primarily reflects lower oil prices, unfavourable foreign exchange
and duty lag effects partially offset by certain one-off
items.
Key events
On 28
March 2020, Rosneft concluded an agreement with a company owned by
the Government of the Russian Federation, to sell all of its
interest and cease participation in its Venezuelan businesses. On
completion, the transaction and the sale of assets will result in
Rosneft receiving as a settlement payment a 9.6% share of
Rosneft’s equity, which will be held by a 100% subsidiary of
Rosneft and accounted for as treasury shares. Furthermore, Rosneft
has an approved programme of share buybacks under which shares have
been purchased by a Rosneft subsidiary during March and April.
These will also be accounted for as treasury shares.
BP will
retain 19.75% of the voting rights at meetings of Rosneft
shareholders and will continue to be entitled to dividends based on
its current shareholding. BP’s economic interest, however,
will increase as a result of its indirect interest in the shares
held by the subsidiary of Rosneft. BP’s share of profit or
loss of Rosneft reflects its economic interest.
On 21
April 2020, Rosneft announced that the board of directors had
recommended the annual general meeting (AGM) adopts a resolution to
pay dividends of 18.07 roubles per ordinary share, bringing the
total dividend for 2019 to 33.41 roubles per ordinary share, which
constitutes 50% of the company’s IFRS net profit. In addition
to the dividend received in November 2019 in relation to the
results for the first half of 2019, BP expects to receive later
this year a dividend of 34 billion roubles, after the deduction of
withholding tax, subject to approval at the AGM.
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
|
|
2020(a)
|
2019
|
2019
|
|||
|
Production (net of royalties) (BP share)
|
|
|
|
|
|||
|
Liquids* (mb/d)
|
|
916
|
|
923
|
|
937
|
|
|
Natural gas (mmcf/d)
|
|
1,275
|
|
1,306
|
|
1,327
|
|
|
Total hydrocarbons* (mboe/d)
|
|
1,136
|
|
1,148
|
|
1,166
|
|
(a)
The operational and
financial information of the Rosneft segment for the first quarter
is based on preliminary operational and financial results of
Rosneft for January and February 2020, and estimated results for
March 2020. Actual results may differ from these amounts and
adjustments will be made as necessary in our second-quarter
reporting.
(b)
The Rosneft segment
result includes equity-accounted earnings arising from BP’s
19.75% economic interest in Rosneft for the first 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. These adjustments increase the segment's reported profit
before interest and tax, as shown in the table above, compared with
the amounts reported in Rosneft’s IFRS financial
statements.
(c)
BP’s adjusted
share of Rosneft’s earnings after Rosneft's own finance
costs, taxation and non-controlling interests is included in the BP
group income statement within profit before interest and taxation.
For each year-to-date period it is calculated by translating the
amounts reported in Russian roubles into US dollars using the
average exchange rate for the year to date.
Top of
page 11
Other businesses and corporate
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Profit (loss) before interest and tax
|
|
(698
|
)
|
(1,432
|
)
|
(546
|
)
|
|
Inventory holding (gains) losses*
|
|
—
|
|
—
|
|
—
|
|
|
RC profit (loss) before interest and tax
|
|
(698
|
)
|
(1,432
|
)
|
(546
|
)
|
|
Net charge (credit) for non-operating items*
|
|
137
|
|
1,182
|
|
128
|
|
|
Underlying RC profit (loss) before interest and tax*
|
|
(561
|
)
|
(250
|
)
|
(418
|
)
|
|
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|||
|
US
|
|
(124
|
)
|
(85
|
)
|
(155
|
)
|
|
Non-US
|
|
(437
|
)
|
(165
|
)
|
(263
|
)
|
|
|
|
(561
|
)
|
(250
|
)
|
(418
|
)
|
|
Non-operating items
|
|
|
|
|
|||
|
US
|
|
(48
|
)
|
(268
|
)
|
(128
|
)
|
|
Non-US
|
|
(89
|
)
|
(914
|
)
|
—
|
|
|
|
|
(137
|
)
|
(1,182
|
)
|
(128
|
)
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|||
|
US
|
|
(172
|
)
|
(353
|
)
|
(283
|
)
|
|
Non-US
|
|
(526
|
)
|
(1,079
|
)
|
(263
|
)
|
|
|
|
(698
|
)
|
(1,432
|
)
|
(546
|
)
|
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 first quarter
was $698 million, compared with $546 million for the same period in
2019.
The
result included a net non-operating charge of $137 million for the
first quarter, compared with a charge of $128 million for the same
period in 2019.
After
adjusting for non-operating items, the underlying replacement cost
loss before interest and tax for the first quarter was $561
million, compared with $418 million for the same period in 2019,
reflecting foreign exchange impacts on finance debt and other
non-US dollar balances.
Alternative Energy
BP’s
net share of ethanol-equivalent production (which includes ethanol
and sugar) for the first quarter was 9.8 million litres, compared
with 14 million litres for the 100% BP-owned business for the same
period in 2019. In order to optimize the sugar recovery curve, the
BP Bunge Bioenergia joint venture (BP 50%) had fewer harvest days
in March compared with the previous year.
Net
wind generation capacity* was 926MW at 31 March 2020,
compared with 1,001MW at 31 March 2019. BP’s net
share of wind generation for the first quarter was 777GWh, compared
with 773GWh for the same period in 2019.
Lightsource
BP had an operating portfolio of 2GW of solar projects under its
management at 31 March 2020 and remains on track to deliver 10GW of
developed assets by the end of 2023.
In
February, Lightsource BP signed a multi-year module supply
agreement with Canadian Solar Inc., one of the world’s
largest solar power companies, to deliver 1.2GW of high-efficiency
polycrystalline solar modules for projects in the US and
Australia.
In
March, Lightsource BP successfully closed on a $250 million
financing package for its Impact Solar project located in Lamar
County, Texas, USA.
Outlook
Other
businesses and corporate average quarterly charges, excluding
non-operating items 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
33.
|
Top of
page 12
Financial statements
Group income statement
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
|
|
|
|
|
|||
|
Sales and other operating revenues (Note 5)
|
|
59,650
|
|
71,109
|
|
66,321
|
|
|
Earnings from joint ventures – after interest and
tax
|
|
(22
|
)
|
163
|
|
185
|
|
|
Earnings
from associates – after interest and
tax(a)
|
|
(244
|
)
|
640
|
|
649
|
|
|
Interest and other income
|
|
140
|
|
210
|
|
163
|
|
|
Gains on sale of businesses and fixed assets
|
|
16
|
|
48
|
|
89
|
|
|
Total revenues and other income
|
|
59,540
|
|
72,170
|
|
67,407
|
|
|
Purchases
|
|
48,878
|
|
53,444
|
|
48,272
|
|
|
Production and manufacturing expenses
|
|
6,099
|
|
5,809
|
|
5,356
|
|
|
Production and similar taxes (Note 7)
|
|
203
|
|
412
|
|
424
|
|
|
Depreciation, depletion and amortization (Note 6)
|
|
4,059
|
|
4,434
|
|
4,461
|
|
|
Impairment and losses on sale of businesses and fixed assets (Note
3)
|
|
1,149
|
|
3,657
|
|
96
|
|
|
Exploration expense
|
|
202
|
|
266
|
|
367
|
|
|
Distribution and administration expenses
|
|
2,684
|
|
2,996
|
|
2,767
|
|
|
Profit (loss) before interest and taxation
|
|
(3,734
|
)
|
1,152
|
|
5,664
|
|
|
Finance costs
|
|
783
|
|
886
|
|
867
|
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
7
|
|
17
|
|
15
|
|
|
Profit (loss) before taxation
|
|
(4,524
|
)
|
249
|
|
4,782
|
|
|
Taxation
|
|
(139
|
)
|
231
|
|
1,783
|
|
|
Profit (loss) for the period
|
|
(4,385
|
)
|
18
|
|
2,999
|
|
|
Attributable to
|
|
|
|
|
|||
|
BP
shareholders
|
|
(4,365
|
)
|
19
|
|
2,934
|
|
|
Non-controlling
interests
|
|
(20
|
)
|
(1
|
)
|
65
|
|
|
|
|
(4,385
|
)
|
18
|
|
2,999
|
|
|
|
|
|
|
|
|||
|
Earnings per share (Note 8)
|
|
|
|
|
|||
|
Profit (loss) for the period attributable to BP
shareholders
|
|
|
|
|
|||
|
Per
ordinary share (cents)
|
|
|
|
|
|||
|
Basic
|
|
(21.63
|
)
|
0.09
|
|
14.54
|
|
|
Diluted
|
|
(21.63
|
)
|
0.09
|
|
14.47
|
|
|
Per
ADS (dollars)
|
|
|
|
|
|||
|
Basic
|
|
(1.30
|
)
|
0.01
|
|
0.87
|
|
|
Diluted
|
|
(1.30
|
)
|
0.01
|
|
0.87
|
|
(a)
The financial
information of the Rosneft segment for the first quarter is based
on preliminary financial results of Rosneft for January and
February 2020, and estimated results for March 2020. Actual results
may differ from these amounts and adjustments will be made as
necessary in our second-quarter reporting.
Top of
page 13
Condensed group statement of comprehensive income
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
|
|
|
|
|
|||
|
Profit (loss) for the period
|
|
(4,385
|
)
|
18
|
|
2,999
|
|
|
Other comprehensive income
|
|
|
|
|
|||
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
|||
|
Currency
translation differences(a)
|
|
(4,642
|
)
|
1,404
|
|
989
|
|
|
Exchange
(gains) losses on translation of foreign operations reclassified to
gain or loss on sale of businesses and fixed assets
|
|
1
|
|
880
|
|
—
|
|
|
Cash
flow hedges and costs of hedging
|
|
85
|
|
(76
|
)
|
19
|
|
|
Share
of items relating to equity-accounted entities, net of
tax
|
|
442
|
|
43
|
|
(50
|
)
|
|
Income
tax relating to items that may be reclassified
|
|
117
|
|
(39
|
)
|
(34
|
)
|
|
|
|
(3,997
|
)
|
2,212
|
|
924
|
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
|
|||
|
Remeasurements of
the net pension and other post-retirement benefit liability or
asset(b)
|
|
1,719
|
|
1,480
|
|
(853
|
)
|
|
Cash
flow hedges that will subsequently be transferred to the balance
sheet
|
|
(8
|
)
|
6
|
|
8
|
|
|
Income
tax relating to items that will not be reclassified
|
|
(623
|
)
|
(459
|
)
|
273
|
|
|
|
|
1,088
|
|
1,027
|
|
(572
|
)
|
|
Other comprehensive income
|
|
(2,909
|
)
|
3,239
|
|
352
|
|
|
Total comprehensive income
|
|
(7,294
|
)
|
3,257
|
|
3,351
|
|
|
Attributable to
|
|
|
|
|
|||
|
BP
shareholders
|
|
(7,217
|
)
|
3,240
|
|
3,281
|
|
|
Non-controlling
interests
|
|
(77
|
)
|
17
|
|
70
|
|
|
|
|
(7,294
|
)
|
3,257
|
|
3,351
|
|
(a)
First quarter 2020
was principally affected by the weakening of the Russian rouble
against the US Dollar.
(b)
See Note 1 for
further information.
Top of
page 14
Condensed group statement of changes in equity
|
|
|
BP shareholders’
|
Non-controlling
|
Total
|
|||
|
$ million
|
|
equity
|
interests
|
equity
|
|||
|
At 1 January 2020
|
|
98,412
|
|
2,296
|
|
100,708
|
|
|
|
|
|
|
|
|||
|
Total comprehensive income
|
|
(7,217
|
)
|
(77
|
)
|
(7,294
|
)
|
|
Dividends
|
|
(2,120
|
)
|
(31
|
)
|
(2,151
|
)
|
|
Cash flow hedges transferred to the balance sheet, net of
tax
|
|
3
|
|
—
|
|
3
|
|
|
Repurchase
of ordinary share capital
|
|
(776
|
)
|
—
|
|
(776
|
)
|
|
Share-based payments, net of tax
|
|
(15
|
)
|
—
|
|
(15
|
)
|
|
Share
of equity-accounted entities’ changes in equity, net of
tax
|
|
(5
|
)
|
—
|
|
(5
|
)
|
|
Transactions involving non-controlling interests, net of
tax
|
|
4
|
|
6
|
|
10
|
|
|
At 31 March 2020
|
|
88,286
|
|
2,194
|
|
90,480
|
|
|
|
|
|
|
|
|||
|
|
|
BP shareholders’
|
Non-controlling
|
Total
|
|||
|
$ million
|
|
equity
|
interests
|
equity
|
|||
|
At 31 December 2018
|
|
99,444
|
|
2,104
|
|
101,548
|
|
|
Adjustment
on adoption of IFRS 16, net of tax(a)
|
|
(329
|
)
|
(1
|
)
|
(330
|
)
|
|
At 1 January 2019
|
|
99,115
|
|
2,103
|
|
101,218
|
|
|
|
|
|
|
|
|||
|
Total comprehensive income
|
|
3,281
|
|
70
|
|
3,351
|
|
|
Dividends
|
|
(1,435
|
)
|
(36
|
)
|
(1,471
|
)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
5
|
|
—
|
|
5
|
|
|
Repurchase of ordinary share capital
|
|
(50
|
)
|
—
|
|
(50
|
)
|
|
Share-based payments, net of tax
|
|
280
|
|
—
|
|
280
|
|
|
Share of equity-accounted entities’ changes in equity, net of
tax
|
|
3
|
|
—
|
|
3
|
|
|
At 31 March 2019
|
|
101,199
|
|
2,137
|
|
103,336
|
|
(a)
See Note 1 in BP Annual Report and Form
20-F 2019 for further
information.
Top of
page 15
Group balance sheet
|
|
|
31 March
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Non-current assets
|
|
|
|
||
|
Property, plant and equipment
|
|
130,226
|
|
132,642
|
|
|
Goodwill
|
|
11,692
|
|
11,868
|
|
|
Intangible assets
|
|
15,555
|
|
15,539
|
|
|
Investments in joint ventures
|
|
9,655
|
|
9,991
|
|
|
Investments in associates
|
|
17,319
|
|
20,334
|
|
|
Other investments
|
|
1,084
|
|
1,276
|
|
|
Fixed assets
|
|
185,531
|
|
191,650
|
|
|
Loans
|
|
619
|
|
630
|
|
|
Trade and other receivables
|
|
2,074
|
|
2,147
|
|
|
Derivative financial instruments
|
|
7,836
|
|
6,314
|
|
|
Prepayments
|
|
793
|
|
781
|
|
|
Deferred tax assets
|
|
4,693
|
|
4,560
|
|
|
Defined benefit pension plan surpluses
|
|
8,014
|
|
7,053
|
|
|
|
|
209,560
|
|
213,135
|
|
|
Current assets
|
|
|
|
||
|
Loans
|
|
356
|
|
339
|
|
|
Inventories
|
|
11,641
|
|
20,880
|
|
|
Trade and other receivables
|
|
17,210
|
|
24,442
|
|
|
Derivative financial instruments
|
|
8,224
|
|
4,153
|
|
|
Prepayments
|
|
834
|
|
857
|
|
|
Current tax receivable
|
|
1,600
|
|
1,282
|
|
|
Other investments
|
|
88
|
|
169
|
|
|
Cash and cash equivalents
|
|
18,139
|
|
22,472
|
|
|
|
|
58,092
|
|
74,594
|
|
|
Assets
classified as held for sale (Note 2)
|
|
6,212
|
|
7,465
|
|
|
|
|
64,304
|
|
82,059
|
|
|
Total assets
|
|
273,864
|
|
295,194
|
|
|
Current liabilities
|
|
|
|
||
|
Trade and other payables
|
|
34,420
|
|
46,829
|
|
|
Derivative financial instruments
|
|
5,846
|
|
3,261
|
|
|
Accruals
|
|
3,854
|
|
5,066
|
|
|
Lease liabilities
|
|
2,097
|
|
2,067
|
|
|
Finance debt
|
|
12,376
|
|
10,487
|
|
|
Current tax payable
|
|
1,673
|
|
2,039
|
|
|
Provisions
|
|
2,414
|
|
2,453
|
|
|
|
|
62,680
|
|
72,202
|
|
|
Liabilities directly associated with assets classified as held for
sale (Note 2)
|
|
1,018
|
|
1,393
|
|
|
|
|
63,698
|
|
73,595
|
|
|
Non-current liabilities
|
|
|
|
||
|
Other payables
|
|
12,323
|
|
12,626
|
|
|
Derivative financial instruments
|
|
6,470
|
|
5,537
|
|
|
Accruals
|
|
954
|
|
996
|
|
|
Lease liabilities
|
|
7,276
|
|
7,655
|
|
|
Finance debt
|
|
56,741
|
|
57,237
|
|
|
Deferred tax liabilities
|
|
9,771
|
|
9,750
|
|
|
Provisions
|
|
18,057
|
|
18,498
|
|
|
Defined benefit pension plan and other post-retirement benefit plan
deficits
|
|
8,094
|
|
8,592
|
|
|
|
|
119,686
|
|
120,891
|
|
|
Total liabilities
|
|
183,384
|
|
194,486
|
|
|
Net assets
|
|
90,480
|
|
100,708
|
|
|
Equity
|
|
|
|
||
|
BP shareholders’ equity
|
|
88,286
|
|
98,412
|
|
|
Non-controlling interests
|
|
2,194
|
|
2,296
|
|
|
Total equity
|
|
90,480
|
|
100,708
|
|
Top of
page 16
Condensed group cash flow statement
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Operating activities
|
|
|
|
|
|||
|
Profit (loss) before taxation
|
|
(4,524
|
)
|
249
|
|
4,782
|
|
|
Adjustments
to reconcile profit (loss) before taxation to net cash provided by
operating activities
|
|
|
|
|
|||
|
Depreciation,
depletion and amortization and exploration expenditure written
off
|
|
4,157
|
|
4,589
|
|
4,745
|
|
|
Impairment
and (gain) loss on sale of businesses and fixed assets
|
|
1,133
|
|
3,609
|
|
7
|
|
|
Earnings
from equity-accounted entities, less dividends
received
|
|
505
|
|
(75
|
)
|
(589
|
)
|
|
Net
charge for interest and other finance expense, less net interest
paid
|
|
137
|
|
250
|
|
88
|
|
|
Share-based
payments
|
|
(6
|
)
|
167
|
|
297
|
|
|
Net
operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded
plans
|
|
(20
|
)
|
(43
|
)
|
(77
|
)
|
|
Net
charge for provisions, less payments
|
|
(59
|
)
|
270
|
|
(116
|
)
|
|
Movements
in inventories and other current and non-current assets and
liabilities
|
|
683
|
|
(306
|
)
|
(2,695
|
)
|
|
Income
taxes paid
|
|
(1,054
|
)
|
(1,107
|
)
|
(1,146
|
)
|
|
Net cash provided by operating activities
|
|
952
|
|
7,603
|
|
5,296
|
|
|
Investing activities
|
|
|
|
|
|||
|
Expenditure
on property, plant and equipment, intangible and other
assets
|
|
(3,789
|
)
|
(3,936
|
)
|
(3,695
|
)
|
|
Acquisitions, net of cash acquired
|
|
(17
|
)
|
(33
|
)
|
(1,795
|
)
|
|
Investment in joint ventures
|
|
(18
|
)
|
(57
|
)
|
—
|
|
|
Investment in associates
|
|
(37
|
)
|
(83
|
)
|
(145
|
)
|
|
Total cash capital expenditure
|
|
(3,861
|
)
|
(4,109
|
)
|
(5,635
|
)
|
|
Proceeds from disposal of fixed assets
|
|
10
|
|
24
|
|
235
|
|
|
Proceeds from disposal of businesses, net of cash
disposed
|
|
671
|
|
792
|
|
365
|
|
|
Proceeds from loan repayments
|
|
63
|
|
64
|
|
55
|
|
|
Net cash used in investing activities
|
|
(3,117
|
)
|
(3,229
|
)
|
(4,980
|
)
|
|
Financing activities
|
|
|
|
|
|||
|
Net
issue (repurchase) of shares (Note 8)
|
|
(776
|
)
|
(1,171
|
)
|
(45
|
)
|
|
Lease liability payments
|
|
(569
|
)
|
(566
|
)
|
(617
|
)
|
|
Proceeds from long-term financing
|
|
2,684
|
|
1,879
|
|
2,124
|
|
|
Repayments of long-term financing
|
|
(3,717
|
)
|
(360
|
)
|
(2,640
|
)
|
|
Net increase (decrease) in short-term debt
|
|
2,517
|
|
62
|
|
1,089
|
|
|
Net increase (decrease) in non-controlling interests
|
|
9
|
|
566
|
|
—
|
|
|
Dividends paid - BP shareholders
|
|
(2,102
|
)
|
(2,076
|
)
|
(1,435
|
)
|
|
-
non-controlling interests
|
|
(31
|
)
|
(47
|
)
|
(36
|
)
|
|
Net cash provided by (used in) financing activities
|
|
(1,985
|
)
|
(1,713
|
)
|
(1,560
|
)
|
|
Currency translation differences relating to cash and cash
equivalents
|
|
(183
|
)
|
119
|
|
32
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
(4,333
|
)
|
2,780
|
|
(1,212
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
22,472
|
|
19,692
|
|
22,468
|
|
|
Cash and cash equivalents at end of period
|
|
18,139
|
|
22,472
|
|
21,256
|
|
Top of
page 17
Notes
Note 1. Basis of preparation
The
interim financial information included in this report has been
prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The
results for the interim periods are unaudited and, in the opinion
of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2019 included in
BP Annual Report and Form 20-F
2019.
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 used in preparing BP Annual Report and Form 20-F 2019
with the exception of the adoption of amendments to IFRS 9
'Financial Instruments' relating to interest rate benchmark reform
from 1 January 2020. There are no other new or amended standards or
interpretations adopted from 1 January 2020 that have a significant
impact on the interim financial information.
Considerations in respect of COVID 19 (coronavirus) and the current
economic environment
The
impact of COVID-19 and the current economic environment on the
basis of preparation of this interim financial information has been
considered. The directors continue to consider it appropriate to
adopt the going concern basis of accounting in preparing the
interim financial information. Forecast liquidity has been assessed
under a number of stressed scenarios and a reverse stress test
performed to support this assertion.
BP's
significant accounting judgements and estimates were disclosed in
BP Annual Report and Form 20-F
2019. These were subsequently reviewed at the end of the
first 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
The
price assumptions used in value-in-use impairment testing were
reviewed as a result of the significant changes in market prices
during the first quarter of 2020. The group’s price
assumptions for 2020 and 2021 have been lowered to
management’s revised best estimates. Price assumptions for
the remainder of 2020 reflect market conditions since prices fell
in March 2020. Prices are assumed to increase from current levels
during 2021 and reach previous estimates in 2022. The group’s
long-term assumptions for Brent oil and Henry Hub gas, as disclosed
in BP Annual Report and Form 20-F
2019, remain unchanged.
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.
Impairment
charges for the first quarter of 2020 relate to the ongoing
disposal programme, changes to price assumptions and other factors.
For further information see Note 3.
Provisions assumptions
The
nominal risk-free discount rate applied to provisions was reviewed
as a result of the changes in long-dated US government bond yields
during the first quarter of 2020. The changes 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
group's existing provisions are not currently expected to change
significantly as a result of the current environment however the
detailed annual review will take place later in 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 first quarter of 2020, the group's total net
defined benefit pension plan deficit as at 31 December 2019 of $1.5
billion has moved to a total net defined benefit pension plan
deficit as at 31 March 2020 of $0.1 billion. This principally
reflects actuarial gains reported in other comprehensive income
arising from improved discount rates and lower inflation
assumptions reducing the plan obligations offset by reductions 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 31 March 2020 have not
significantly
Top of
page 18
Note 1. Basis of preparation (continued)
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.
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.
Changes in significant accounting policies
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.
The
reliefs provided by the amendments allow BP, in the event that
significant uncertainty around the reforms arise, to assume
that:
1
the interest rate
benchmark component at initial designation of fair value hedges is
separately identifiable; and
2
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.
An
exposure draft of the second phase of IFRS amendments was recently
issued by the IASB 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.
BP is also participating on external committees and taskforces
dedicated to interest rate benchmark reform.
Deferral of 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. The IASB expects an entity to be entitled to
sufficient time to determine the impact of an agenda decision and,
where applicable, to implement any resulting change in accounting
policy.
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 had
intended to implement a change in its accounting policy for these
contracts from 1 January 2020 in accordance with the conclusions
included in the agenda decision. However, the group has decided to
defer implementation after balancing the limited effect the change
would have on financial statement presentation and disclosures with
operational constraints arising from COVID-19. BP considers that
the change in policy will still be implemented within a sufficient
time period from the date of the agenda decision.
When
the group’s accounting policy is changed, which is expected
to be later in 2020:
1
Revenues and
purchases from such contracts will be 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 will be included
in other revenues.
2
It is expected
there will be no significant effect on comparative information for
‘Sales and other operating revenues’ and
‘Purchases’ as presented in the group income
statement.
3
There will be 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.
BP has,
however, chosen 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
Top of
page 19
Note 1. Basis of preparation (continued)
customers
in Note 5 and are now presented as other revenues. Comparative
information for revenue from contracts with customers has 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 31 March
2020 is $6,212 million, with associated liabilities of $1,018
million. These principally relate to one material disposal
transaction which has been classified as held for sale in the group
balance sheet.
On 27
August 2019, BP announced that it had agreed to sell all its Alaska
operations and interests to Hilcorp Energy. On 27 April 2020, BP
reconfirmed its commitment to completing the sale, subject to
regulatory approvals. The total consideration of $5.6 billion,
subject to customary closing adjustments, is unchanged but the
structure of the consideration and phasing of payments have been
revised to respond to the current environment. The revised
agreement adjusts the consideration to include lower completion
payments in 2020, new cash flow sharing arrangements over the
near-term, interest-bearing vendor financing and, potentially, an
increase in the proportion of the consideration subject to earnout
arrangements, up to $2.3 billion.
The
sale will include BP’s entire upstream and midstream business
in the state, including BP Exploration (Alaska) Inc., which owns
all of BP’s upstream oil and gas interests in Alaska, and BP
Pipelines (Alaska) Inc.’s 49% interest in the Trans Alaska
Pipeline System (TAPS). BP will retain its decommissioning
liability relating to TAPS, which will be partially offset by a 30%
cost reimbursement from Hilcorp. The deal, which is subject to
regulatory approvals, is expected to complete during 2020. Assets
of $6,190 million and associated liabilities of $987 million
relating to this transaction are classified as held for sale at 31
March 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 first
quarter was $1,149 million and includes a net impairment charge of
$797 million.
The
impairment charges, which are substantially all reported in the
Upstream segment, relate to the group’s ongoing divestment
programme, changes to the group’s price assumptions for 2020
and 2021, and other factors. They include $438 million relating to
the disposal of the group’s interests in its Alaska business
due to completion adjustments, changes to structure and phasing of
consideration and discounting impacts. See Note 1 and Note 2
for further information.
Net
impairment charges for the fourth quarter 2019 were $2,543 million
arising from the ongoing divestment programme, including $1,986
million relating heritage BPX Energy assets and $258 million
relating to the group's interest in its Alaska
business.
Note 4. Analysis of replacement cost profit (loss) before interest
and tax and reconciliation to profit (loss) before
taxation
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Upstream
|
|
1,023
|
|
614
|
|
2,884
|
|
|
Downstream
|
|
664
|
|
1,433
|
|
1,765
|
|
|
Rosneft
|
|
(17
|
)
|
503
|
|
486
|
|
|
Other businesses and corporate
|
|
(698
|
)
|
(1,432
|
)
|
(546
|
)
|
|
|
|
972
|
|
1,118
|
|
4,589
|
|
|
Consolidation adjustment – UPII*
|
|
178
|
|
24
|
|
(13
|
)
|
|
RC profit (loss) before interest and tax*
|
|
1,150
|
|
1,142
|
|
4,576
|
|
|
Inventory holding gains (losses)*
|
|
|
|
|
|||
|
Upstream
|
|
(68
|
)
|
—
|
|
2
|
|
|
Downstream
|
|
(4,615
|
)
|
(21
|
)
|
1,046
|
|
|
Rosneft
(net of tax)
|
|
(201
|
)
|
31
|
|
40
|
|
|
Profit (loss) before interest and tax
|
|
(3,734
|
)
|
1,152
|
|
5,664
|
|
|
Finance costs
|
|
783
|
|
886
|
|
867
|
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
7
|
|
17
|
|
15
|
|
|
Profit (loss) before taxation
|
|
(4,524
|
)
|
249
|
|
4,782
|
|
|
|
|
|
|
|
|||
|
RC profit (loss) before interest and tax*
|
|
|
|
|
|||
|
US
|
|
595
|
|
(1,603
|
)
|
771
|
|
|
Non-US
|
|
555
|
|
2,745
|
|
3,805
|
|
|
|
|
1,150
|
|
1,142
|
|
4,576
|
|
Top of
page 20
Note 5. Sales and other operating revenues
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
By segment
|
|
|
|
|
|||
|
Upstream
|
|
11,464
|
|
13,955
|
|
14,594
|
|
|
Downstream
|
|
53,964
|
|
64,251
|
|
58,416
|
|
|
Other businesses and corporate
|
|
453
|
|
538
|
|
356
|
|
|
|
|
65,881
|
|
78,744
|
|
73,366
|
|
|
|
|
|
|
|
|||
|
Less: sales and other operating revenues between
segments
|
|
|
|
|
|||
|
Upstream
|
|
6,907
|
|
6,823
|
|
6,324
|
|
|
Downstream
|
|
(782
|
)
|
384
|
|
586
|
|
|
Other businesses and corporate
|
|
106
|
|
428
|
|
135
|
|
|
|
|
6,231
|
|
7,635
|
|
7,045
|
|
|
|
|
|
|
|
|||
|
Third party sales and other operating revenues
|
|
|
|
|
|||
|
Upstream
|
|
4,557
|
|
7,132
|
|
8,270
|
|
|
Downstream
|
|
54,746
|
|
63,867
|
|
57,830
|
|
|
Other businesses and corporate
|
|
347
|
|
110
|
|
221
|
|
|
Total sales and other operating revenues
|
|
59,650
|
|
71,109
|
|
66,321
|
|
|
|
|
|
|
|
|||
|
By geographical area
|
|
|
|
|
|||
|
US
|
|
21,219
|
|
24,148
|
|
21,848
|
|
|
Non-US
|
|
43,955
|
|
54,450
|
|
49,618
|
|
|
|
|
65,174
|
|
78,598
|
|
71,466
|
|
|
Less: sales and other operating revenues between areas
|
|
5,524
|
|
7,489
|
|
5,145
|
|
|
|
|
59,650
|
|
71,109
|
|
66,321
|
|
|
|
|
|
|
|
|||
|
Revenues from contracts with
customers(a)
|
|
|
|
|
|||
|
Sales and other operating revenues include the following in
relation to revenues from contracts with customers:
|
|
|
|
|
|||
|
Crude oil
|
|
1,435
|
|
1,880
|
|
2,490
|
|
|
Oil products
|
|
20,254
|
|
25,946
|
|
22,705
|
|
|
Natural gas, LNG and NGLs
|
|
3,638
|
|
4,871
|
|
5,357
|
|
|
Non-oil products and other revenues from contracts with
customers
|
|
2,853
|
|
2,989
|
|
3,236
|
|
|
Revenue from contracts with customers
|
|
28,180
|
|
35,686
|
|
33,788
|
|
|
Other
operating revenues(b)
|
|
31,470
|
|
35,423
|
|
32,533
|
|
|
Total sales and other operating revenues
|
|
59,650
|
|
71,109
|
|
66,321
|
|
(a)
Comparative
information for revenue from contracts with customers and other
operating revenues has been represented to align with the current
period. See Note 1 for further information.
(b)
Principally relates
to physically settled derivative sales contracts.
Top of
page 21
Note 6. Depreciation, depletion and amortization
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Upstream
|
|
|
|
|
|||
|
US
|
|
1,068
|
|
1,150
|
|
1,113
|
|
|
Non-US
|
|
2,082
|
|
2,371
|
|
2,498
|
|
|
|
|
3,150
|
|
3,521
|
|
3,611
|
|
|
Downstream
|
|
|
|
|
|||
|
US
|
|
342
|
|
343
|
|
323
|
|
|
Non-US
|
|
405
|
|
417
|
|
383
|
|
|
|
|
747
|
|
760
|
|
706
|
|
|
Other businesses and corporate
|
|
|
|
|
|||
|
US
|
|
15
|
|
14
|
|
13
|
|
|
Non-US
|
|
147
|
|
139
|
|
131
|
|
|
|
|
162
|
|
153
|
|
144
|
|
|
Total group
|
|
4,059
|
|
4,434
|
|
4,461
|
|
Note 7. Production and similar taxes
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
US
|
|
13
|
|
89
|
|
81
|
|
|
Non-US
|
|
190
|
|
323
|
|
343
|
|
|
|
|
203
|
|
412
|
|
424
|
|
Note 8. Earnings per share and shares in issue
Basic
earnings per ordinary share (EpS) amounts are calculated by
dividing the profit (loss) for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares
outstanding during the period. During the quarter the company
repurchased for cancellation 120 million ordinary shares 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 22
Note 8. Earnings per share and shares in issue
(continued)
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Results for the period
|
|
|
|
|
|||
|
Profit
(loss) for the period attributable to BP shareholders
|
|
(4,365
|
)
|
19
|
|
2,934
|
|
|
Less: preference dividend
|
|
—
|
|
—
|
|
—
|
|
|
Profit
(loss) attributable to BP ordinary shareholders
|
|
(4,365
|
)
|
19
|
|
2,934
|
|
|
|
|
|
|
|
|||
|
Number of shares (thousand)(a)(b)
|
|
|
|
|
|||
|
Basic
weighted average number of shares outstanding
|
|
20,178,803
|
|
20,254,234
|
|
20,175,634
|
|
|
ADS equivalent
|
|
3,363,133
|
|
3,375,705
|
|
3,362,605
|
|
|
|
|
|
|
|
|||
|
Weighted
average number of shares outstanding used to calculate diluted
earnings per share
|
|
20,178,803
|
|
20,351,808
|
|
20,281,773
|
|
|
ADS equivalent
|
|
3,363,133
|
|
3,391,968
|
|
3,380,295
|
|
|
|
|
|
|
|
|||
|
Shares in issue at period-end
|
|
20,197,527
|
|
20,241,170
|
|
20,330,597
|
|
|
ADS equivalent
|
|
3,366,254
|
|
3,373,528
|
|
3,388,432
|
|
(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 number of potentially issuable shares that have been
excluded from the calculation for the first quarter 2020 is 74,240
thousand (ADS equivalent 12,374 thousand).
Note 9. Dividends
Dividends payable
BP
today announced an interim dividend of 10.50 cents per ordinary
share which is expected to be paid on 19 June 2020 to ordinary
shareholders on the register on 7 May 2020 and American Depositary
Share (ADS) holders on the register on 8 May 2020. The
corresponding amount in sterling is due to be announced on 8 June
2020, calculated based on the average of the market exchange rates
for the four dealing days commencing on 2 June 2020. Holders of
ADSs are expected to receive $0.630 per ADS (less applicable
fees). The board has decided not to offer a scrip dividend
alternative in respect of the first quarter 2020 dividend. Ordinary
shareholders and ADS holders (subject to certain exceptions) will
be able to participate in a dividend reinvestment programme.
Details of the first quarter dividend and timetable are available
at bp.com/dividends and
further details of the dividend reinvestment programmes are
available at bp.com/drip.
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
|
|
2020
|
2019
|
2019
|
|||
|
Dividends paid per ordinary share
|
|
|
|
|
|||
|
cents
|
|
10.500
|
|
10.250
|
|
10.250
|
|
|
pence
|
|
8.156
|
|
7.825
|
|
7.738
|
|
|
Dividends paid per ADS (cents)
|
|
63.00
|
|
61.50
|
|
61.50
|
|
|
Scrip dividends
|
|
|
|
|
|||
|
Number of shares issued (millions)
|
|
—
|
|
—
|
|
90.1
|
|
|
Value of shares issued ($ million)
|
|
—
|
|
—
|
|
629
|
|
Top of
page 23
Note 10. Net debt and net debt including leases
|
Net debt*
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Finance
debt(a)
|
|
69,117
|
|
67,724
|
|
65,990
|
|
|
Fair
value (asset) liability of hedges related to finance
debt(b)
|
|
426
|
|
190
|
|
350
|
|
|
|
|
69,543
|
|
67,914
|
|
66,340
|
|
|
Less: cash and cash equivalents
|
|
18,139
|
|
22,472
|
|
21,256
|
|
|
Net debt
|
|
51,404
|
|
45,442
|
|
45,084
|
|
|
Total equity
|
|
90,480
|
|
100,708
|
|
103,336
|
|
|
Gearing*
|
|
36.2%
|
31.1%
|
30.4%
|
|||
(a)
The fair value of
finance debt at 31 March 2020 was $67,500 million (31 March 2019
$67,003 million).
(b)
Derivative
financial instruments entered into for the purpose of managing
interest rate and foreign currency exchange risk associated with
net debt with a fair value liability position of $663 million
(fourth quarter 2019 liability of $601 million and first quarter
2019 liability of $609 million) are not included in the calculation
of net debt shown above as hedge accounting is not applied for
these instruments.
On
6 and
7 April 2020, in the ordinary course of business, the group issued
bonds totalling $6.8 billion with maturity dates ranging from 3 to
12 years. The issuance has no effect on the group's Net debt or Net
debt ratio.
|
Net debt including leases*
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Net debt
|
|
51,404
|
|
45,442
|
|
45,084
|
|
|
Lease liabilities
|
|
9,373
|
|
9,722
|
|
10,294
|
|
|
Net
partner (receivable) payable for leases entered into on behalf of
joint operations
|
|
(159
|
)
|
(158
|
)
|
(303
|
)
|
|
Net debt including leases
|
|
60,618
|
|
55,006
|
|
55,075
|
|
Note 11. Inventory valuation
A
provision of $3,596 million was held against hydrocarbon
inventories at 31 March 2020 ($290 million at
31 December 2019 and $124 million at
31 March 2019) to write them down to their net realizable
value. The net movement charged to the income statement during the
first quarter 2020 was $3,341 million as a result of significant
decreases in prices for refined products, oil and gas during March
(fourth quarter 2019 was a credit of $80 million and first quarter
2019 was a credit of $480 million).
Note 12. Statutory accounts
The
financial information shown in this publication, which was approved
by the Board of Directors on 27 April 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 24
Additional information
Capital expenditure*
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Capital expenditure on a cash basis
|
|
|
|
|
|||
|
Organic capital expenditure*
|
|
3,539
|
|
3,958
|
|
3,648
|
|
|
Inorganic
capital expenditure*(a)
|
|
322
|
|
151
|
|
1,987
|
|
|
|
|
3,861
|
|
4,109
|
|
5,635
|
|
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Organic capital expenditure by segment
|
|
|
|
|
|||
|
Upstream
|
|
|
|
|
|||
|
US
|
|
1,168
|
|
1,029
|
|
982
|
|
|
Non-US
|
|
1,662
|
|
2,029
|
|
1,888
|
|
|
|
|
2,830
|
|
3,058
|
|
2,870
|
|
|
Downstream
|
|
|
|
|
|||
|
US
|
|
121
|
|
258
|
|
187
|
|
|
Non-US
|
|
531
|
|
522
|
|
534
|
|
|
|
|
652
|
|
780
|
|
721
|
|
|
Other businesses and corporate
|
|
|
|
|
|||
|
US
|
|
32
|
|
15
|
|
9
|
|
|
Non-US
|
|
25
|
|
105
|
|
48
|
|
|
|
|
57
|
|
120
|
|
57
|
|
|
|
|
3,539
|
|
3,958
|
|
3,648
|
|
|
Organic capital expenditure by geographical area
|
|
|
|
|
|||
|
US
|
|
1,321
|
|
1,302
|
|
1,178
|
|
|
Non-US
|
|
2,218
|
|
2,656
|
|
2,470
|
|
|
|
|
3,539
|
|
3,958
|
|
3,648
|
|
(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 $1,732 million for the first quarter 2019 relating to this
transaction. First quarter 2020 and 2019 also include amounts
relating to the 25-year extension to our ACG production-sharing
agreement* in Azerbaijan.
Top of
page 25
Non-operating items*
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Upstream
|
|
|
|
|
|||
|
Gains on sale of businesses and fixed assets
|
|
7
|
|
38
|
|
58
|
|
|
Impairment
and losses on sale of businesses and fixed assets(a)
|
|
(1,131
|
)
|
(2,718
|
)
|
(69
|
)
|
|
Environmental and other provisions
|
|
(13
|
)
|
(32
|
)
|
—
|
|
|
Restructuring, integration and rationalization costs
|
|
(4
|
)
|
(13
|
)
|
(35
|
)
|
|
Other
|
|
70
|
|
2
|
|
42
|
|
|
|
|
(1,071
|
)
|
(2,723
|
)
|
(4
|
)
|
|
Downstream
|
|
|
|
|
|||
|
Gains on sale of businesses and fixed assets
|
|
7
|
|
7
|
|
32
|
|
|
Impairment and losses on sale of businesses and fixed
assets
|
|
(5
|
)
|
(23
|
)
|
(28
|
)
|
|
Environmental and other provisions
|
|
—
|
|
(77
|
)
|
—
|
|
|
Restructuring, integration and rationalization costs
|
|
—
|
|
71
|
|
(2
|
)
|
|
Other
|
|
—
|
|
(6
|
)
|
(6
|
)
|
|
|
|
2
|
|
(28
|
)
|
(4
|
)
|
|
Rosneft
|
|
|
|
|
|||
|
Other
|
|
—
|
|
91
|
|
(81
|
)
|
|
|
|
—
|
|
91
|
|
(81
|
)
|
|
Other businesses and corporate
|
|
|
|
|
|||
|
Gains on sale of businesses and fixed assets
|
|
2
|
|
3
|
|
—
|
|
|
Impairment
and losses on sale of businesses and fixed assets(b)
|
|
(2
|
)
|
(916
|
)
|
—
|
|
|
Environmental
and other provisions(c)
|
|
(23
|
)
|
(203
|
)
|
(6
|
)
|
|
Restructuring, integration and rationalization costs
|
|
(13
|
)
|
(1
|
)
|
10
|
|
|
Gulf of Mexico oil spill
|
|
(21
|
)
|
(63
|
)
|
(115
|
)
|
|
Other(d)
|
|
(80
|
)
|
(2
|
)
|
(17
|
)
|
|
|
|
(137
|
)
|
(1,182
|
)
|
(128
|
)
|
|
Total before interest and taxation
|
|
(1,206
|
)
|
(3,842
|
)
|
(217
|
)
|
|
Finance
costs(e)
|
|
(122
|
)
|
(122
|
)
|
(128
|
)
|
|
Total before taxation
|
|
(1,328
|
)
|
(3,964
|
)
|
(345
|
)
|
|
Taxation
credit (charge) on non-operating items
|
|
302
|
|
822
|
|
93
|
|
|
Taxation
– impact of foreign exchange(f)
|
|
(365
|
)
|
—
|
|
—
|
|
|
Total after taxation for period
|
|
(1,391
|
)
|
(3,142
|
)
|
(252
|
)
|
(a)
See Note 3 for
further information.
(b)
Fourth quarter 2019
includes $877 million relating to the reclassification of
accumulated foreign exchange losses from reserves to the income
statement upon the contribution of our Brazilian biofuels business
to BP Bunge Bioenergia.
(c)
Fourth quarter 2019
primarily reflects charges due to the annual update of
environmental provisions, including asbestos-related provisions for
past operations, together with updates of non-Gulf of Mexico oil
spill related legal provisions.
(d)
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 are reported within other non-operating items and
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 26
Non-GAAP information on fair value accounting effects
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Favourable (adverse) impact relative to management’s measure
of performance
|
|
|
|
|
|||
|
Upstream
|
|
223
|
|
659
|
|
(40
|
)
|
|
Downstream
|
|
(259
|
)
|
23
|
|
36
|
|
|
|
|
(36
|
)
|
682
|
|
(4
|
)
|
|
Taxation credit (charge)
|
|
8
|
|
(111
|
)
|
(7
|
)
|
|
|
|
(28
|
)
|
571
|
|
(11
|
)
|
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.
In
addition, fair value accounting effects include changes in the fair
value of the near-term portions of LNG contracts that fall within
BP’s risk management framework. LNG contracts are not
considered derivatives, because there is insufficient market
liquidity, and they are therefore accrual accounted under IFRS.
However, oil and natural gas derivative financial instruments (used
to risk manage the near-term portions of the LNG contracts) are
fair valued under IFRS. The fair value accounting effect reduces
timing differences between recognition of the derivative financial
instruments used to risk manage the LNG contracts and the
recognition of the LNG contracts themselves, which therefore gives
a better representation of performance in each period.
Top of
page 27
Readily marketable inventory* (RMI)
|
|
|
31 March
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
RMI at fair value*
|
|
2,553
|
|
6,837
|
|
|
Paid-up RMI*
|
|
1,235
|
|
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 30 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.
|
|
|
31 March
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Reconciliation of total inventory to paid-up RMI
|
|
|
|
||
|
Inventories as reported on the group balance sheet under
IFRS
|
|
11,641
|
|
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
|
|
(9,123
|
)
|
(14,280
|
)
|
|
|
|
2,518
|
|
6,600
|
|
|
Plus: difference between RMI at fair value and RMI on an IFRS
basis
|
|
35
|
|
237
|
|
|
RMI at fair value
|
|
2,553
|
|
6,837
|
|
|
Less: unpaid RMI* at fair value
|
|
(1,318
|
)
|
(3,620
|
)
|
|
Paid-up RMI
|
|
1,235
|
|
3,217
|
|
Top of
page 28
Gulf of Mexico oil spill
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Net
cash provided by operating activities as per condensed group cash
flow statement
|
|
952
|
|
7,603
|
|
5,296
|
|
|
Exclude
net cash from operating activities relating to the Gulf of Mexico
oil spill on a post-tax basis
|
|
281
|
|
(42
|
)
|
649
|
|
|
Operating cash flow, excluding Gulf of Mexico oil spill
payments*
|
|
1,233
|
|
7,561
|
|
5,945
|
|
Net
cash from operating activities relating to the Gulf of Mexico oil
spill on a pre-tax basis amounted to an outflow of $281 million in
the first quarter of 2020. For the same period in 2019, the amount
was an outflow of $654 million.
|
|
|
31 March
|
31 December
|
||
|
$ million
|
|
2020
|
2019
|
||
|
Trade and other payables
|
|
(12,374
|
)
|
(12,480
|
)
|
|
Provisions
|
|
(124
|
)
|
(189
|
)
|
|
Gulf of Mexico oil spill payables and provisions
|
|
(12,498
|
)
|
(12,669
|
)
|
|
Of
which - current
|
|
(1,622
|
)
|
(1,800
|
)
|
|
|
|
|
|
||
|
Deferred tax asset
|
|
5,549
|
|
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
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
$ million
|
|
2020
|
2019
|
2019
|
|||
|
Movements
in inventories and other current and non-current assets and
liabilities as per condensed group cash flow statement
|
|
683
|
|
(306
|
)
|
(2,695
|
)
|
|
Adjustments
to exclude movements in inventories and other current and
non-current assets and liabilities for the Gulf of Mexico oil
spill
|
|
254
|
|
91
|
|
631
|
|
|
Adjusted for Inventory holding gains (losses)* (Note
4)
|
|
|
|
|
|||
|
Upstream
|
|
(68
|
)
|
—
|
|
2
|
|
|
Downstream
|
|
(4,615
|
)
|
(21
|
)
|
1,046
|
|
|
Working capital release (build)
|
|
(3,746
|
)
|
(236
|
)
|
(1,016
|
)
|
Top of
page 29
Realizations* and marker prices
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
|
|
2020
|
2019
|
2019
|
|||
|
Average realizations(a)
|
|
|
|
|
|||
|
Liquids* ($/bbl)
|
|
|
|
|
|||
|
US
|
|
45.96
|
|
49.34
|
|
50.57
|
|
|
Europe
|
|
50.71
|
|
63.01
|
|
61.78
|
|
|
Rest of World
|
|
48.13
|
|
60.34
|
|
60.02
|
|
|
BP Average
|
|
47.47
|
|
55.90
|
|
56.47
|
|
|
Natural gas ($/mcf)
|
|
|
|
|
|||
|
US
|
|
1.28
|
|
1.65
|
|
2.57
|
|
|
Europe
|
|
3.23
|
|
4.06
|
|
5.84
|
|
|
Rest of World
|
|
3.51
|
|
3.77
|
|
4.67
|
|
|
BP Average
|
|
2.83
|
|
3.12
|
|
4.02
|
|
|
Total hydrocarbons* ($/boe)
|
|
|
|
|
|||
|
US
|
|
29.94
|
|
31.84
|
|
34.17
|
|
|
Europe
|
|
43.97
|
|
51.91
|
|
58.89
|
|
|
Rest of World
|
|
31.61
|
|
37.91
|
|
40.52
|
|
|
BP Average
|
|
31.80
|
|
36.42
|
|
39.37
|
|
|
Average oil marker prices ($/bbl)
|
|
|
|
|
|||
|
Brent
|
|
50.10
|
|
63.08
|
|
63.13
|
|
|
West Texas Intermediate
|
|
45.56
|
|
56.88
|
|
54.87
|
|
|
Western Canadian Select
|
|
28.71
|
|
37.70
|
|
44.91
|
|
|
Alaska North Slope
|
|
51.07
|
|
64.32
|
|
64.39
|
|
|
Mars
|
|
45.57
|
|
57.85
|
|
61.13
|
|
|
Urals (NWE – cif)
|
|
47.84
|
|
60.74
|
|
62.91
|
|
|
Average natural gas marker prices
|
|
|
|
|
|||
|
Henry
Hub gas price(b) ($/mmBtu)
|
|
1.95
|
|
2.50
|
|
3.15
|
|
|
UK Gas – National Balancing Point (p/therm)
|
|
24.81
|
|
31.77
|
|
48.23
|
|
(a)
Based on sales of
consolidated subsidiaries only – this excludes equity-accounted
entities.
(b)
Henry Hub First of
Month Index.
Exchange rates
|
|
|
First
|
Fourth
|
First
|
|||
|
|
|
quarter
|
quarter
|
quarter
|
|||
|
|
|
2020
|
2019
|
2019
|
|||
|
$/£ average rate for the period
|
|
1.28
|
|
1.29
|
|
1.30
|
|
|
$/£ period-end rate
|
|
1.24
|
|
1.31
|
|
1.31
|
|
|
|
|
|
|
|
|||
|
$/€ average rate for the period
|
|
1.10
|
|
1.11
|
|
1.14
|
|
|
$/€ period-end rate
|
|
1.10
|
|
1.12
|
|
1.12
|
|
|
|
|
|
|
|
|||
|
Rouble/$ average rate for the period
|
|
66.75
|
|
63.74
|
|
66.00
|
|
|
Rouble/$ period-end rate
|
|
78.14
|
|
61.98
|
|
65.02
|
|
Top of
page 30
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.
Glossary
Non-GAAP
measures are provided for investors because they are closely
tracked by management to evaluate BP’s operating performance
and to make financial, strategic and operating decisions. Non-GAAP
measures are sometimes referred to as alternative performance
measures.
Capital expenditure is total cash capital expenditure as
stated in the condensed group cash flow statement.
Consolidation adjustment – UPII is unrealized profit
in inventory arising on inter-segment transactions.
Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement.
Effective tax rate (ETR) on replacement cost (RC) profit or
loss is a non-GAAP measure. The ETR on RC profit or loss is
calculated by dividing taxation on a RC basis by RC profit or loss
before tax. Information on RC profit or loss is provided below. BP
believes it is helpful to disclose the ETR on RC profit or loss
because this measure excludes the impact of price changes on the
replacement of inventories and allows for more meaningful
comparisons between reporting periods. The nearest equivalent
measure on an IFRS basis is the ETR on profit or loss for the
period.
Fair value accounting effects are non-GAAP adjustments to
our IFRS profit (loss). They reflect the difference between the way
BP manages the economic exposure and internally measures
performance of certain activities and the way those activities are
measured under IFRS. Further information on fair value accounting
effects is provided on page 26.
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 23.
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.
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
24.
Inventory holding gains and losses represent the difference
between the cost of sales calculated using the replacement cost of
inventory and the cost of sales calculated on the first-in
first-out (FIFO) method after adjusting for any changes in
provisions where the net realizable value of the inventory is lower
than its cost. Under the FIFO method, which we use for IFRS
reporting, the cost of inventory charged to the income statement is
based on its historical cost of purchase or manufacture, rather
than its replacement cost. In volatile energy markets, this can
have a significant distorting effect on reported income. The
amounts disclosed represent the difference between the charge to
the income statement for inventory on a FIFO basis (after adjusting
for any related movements in net realizable value provisions) and
the charge that would have arisen based on the replacement cost of
inventory. For this purpose, the replacement cost of inventory is
calculated using data from each operation’s production and
manufacturing system, either on a monthly basis, or separately for
each transaction where the system allows this approach. The amounts
disclosed are not separately reflected in the financial statements
as a gain or loss. No adjustment is made in respect of the cost of
inventories held as part of a trading position and certain other
temporary inventory positions. See Replacement cost (RC) profit or
loss definition below.
Liquids – Liquids for Upstream and Rosneft comprises
crude oil, condensate and natural gas liquids. For Upstream,
liquids also includes bitumen.
Major projects have a BP net investment of at least $250
million, or are considered to be of strategic importance to BP or
of a high degree of complexity.
Net debt including leases is a non-GAAP
measure. Net debt including leases is calculated as net debt plus
lease liabilities, less the net amount of partner receivables and
payables relating to leases entered into on behalf of joint
operations. BP believes this measure provides useful information to
investors as it enables investors to understand the impact of the
group’s lease portfolio on net debt. The nearest equivalent
GAAP measure on an IFRS basis is finance debt. A reconciliation of
finance debt to net debt including leases is provided on page
23.
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.
Top of
page 31
Glossary (continued)
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 25.
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
24.
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 27.
Realizations are the result of dividing revenue generated
from hydrocarbon sales, excluding revenue generated from purchases
made for resale and royalty volumes, by revenue generating
hydrocarbon production volumes. Revenue generating hydrocarbon
production reflects the BP share of production as adjusted for any
production which does not generate revenue. Adjustments may include
losses due to shrinkage, amounts consumed during processing, and
contractual or regulatory host committed volumes such as
royalties.
Refining availability represents Solomon
Associates’ operational availability for BP-operated
refineries, which is defined as the percentage of the year that a
unit is available for processing after subtracting the annualized
time lost due to turnaround activity and all planned mechanical,
process and regulatory downtime.
The
Refining marker
margin (RMM) is the average of regional indicator margins
weighted for BP’s crude refining capacity in each region.
Each regional marker margin is based on product yields and a marker
crude oil deemed appropriate for the region. The regional indicator
margins may not be representative of the margins achieved by BP in
any period because of BP’s particular refinery configurations
and crude and product slate.
Replacement cost (RC) profit or loss reflects the
replacement cost of inventories sold in the period and is arrived
at by excluding inventory holding gains and losses from profit or
loss. RC profit or loss for the group is not a recognized GAAP
measure. BP believes this measure is useful to illustrate to
investors the fact that crude oil and product prices can vary
significantly from period to period and that the impact on our
reported result under IFRS can be significant. Inventory holding
gains and losses vary from period to period due to changes in
prices as well as changes in underlying inventory levels. In order
for investors to understand the operating performance of the group
excluding the impact of price changes on the replacement of
inventories, and to make comparisons of operating performance
between reporting periods, BP’s management believes it is
helpful to disclose this measure. The nearest equivalent measure on
an IFRS basis is profit or loss attributable to BP shareholders. A
reconciliation to GAAP information is provided on page 1. RC profit
or loss before interest and tax is the measure of profit or loss
that is required to be disclosed for each operating segment under
IFRS.
RC profit or loss per share is a non-GAAP measure. Earnings
per share is defined in Note 8. 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.
Top of
page 32
Glossary (continued)
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, and curtailment and entitlement
impacts in our production-sharing agreements.
Underlying RC profit or loss is RC profit or loss after
adjusting for non-operating items and fair value accounting
effects. Underlying RC profit or loss and adjustments for fair
value accounting effects are not recognized GAAP measures. See
pages 25 and 26 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 8. Underlying RC
profit or loss per share is calculated using the same denominator.
The numerator used is underlying RC profit or loss attributable to
BP shareholders rather than profit or loss attributable to BP
shareholders. BP believes it is helpful to disclose the underlying
RC profit or loss per share because this measure may help investors
to understand and evaluate, in the same manner as management, the
underlying trends in BP’s operational performance on a
comparable basis, period on period. The nearest equivalent measure
on an IFRS basis is basic earnings per share based on profit or
loss for the period attributable to BP shareholders.
Upstream plant reliability (BP-operated) is calculated
taking 100% less the ratio of total unplanned plant deferrals
divided by installed production capacity. Unplanned plant deferrals
are associated with the topside plant and where applicable the
subsea equipment (excluding wells and reservoir). Unplanned plant
deferrals include breakdowns, which does not include Gulf of Mexico
weather related downtime.
Upstream unit production cost is calculated as production
cost divided by units of production. Production cost does not
include ad valorem and severance taxes. Units of production are
barrels for liquids and thousands of cubic feet for gas. Amounts
disclosed are for BP subsidiaries only and do not include
BP’s share of equity-accounted entities.
Working capital - Change in working capital is movements in
inventories and other current and non-current assets and
liabilities as reported in the condensed group cash flow statement.
Change in working capital adjusted for inventory holding
gains/losses is a non-GAAP measure. It is calculated by adjusting
for inventory holding gains/losses reported in the period and this
therefore represents what would have been reported as movements in
inventories and other current and non-current assets and
liabilities, if the starting point in determining net cash provided
by operating activities had been replacement cost profit rather
than profit for the period. The nearest equivalent measure on an
IFRS basis for this is movements in inventories and other current
and non-current assets and liabilities. In the context of
describing operating cash flow excluding Gulf of Mexico oil spill
payments, change in working capital also excludes movements in
inventories and other current and non-current assets and
liabilities relating to the Gulf of Mexico oil spill. See page 28
for further details.
BP
utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Top of
page 33
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
COVID-19 pandemic including its risks, impacts, consequences and
challenges and BP’s response; plans and expectations relating
to BP’s net zero ambition; plans and expectations relating to
the financial framework and the investor proposition, focus on
safety, the operational impact of COVID-19, commitment regarding
employee job security, the divestment programme including
expectations with respect to completion of transactions and the
timing and amount of proceeds of agreed disposals (including the
announced sale of our Alaskan business to Hilcorp), reductions in
organic capital expenditure and reductions in production due to
capital expenditure interventions and cash cost savings;
expectations regarding quarterly dividends; expectations regarding
demand for BP’s products in the Upstream and Downstream;
expectations regarding the Downstream refining margins, utilization
and light-heavy crude spreads; plans to invest around $500 million
in low-carbon activities in 2020; expectations regarding BP’s
future financial performance and cash flows; plans and expectations
with respect to the implementation and impact of cost-saving
measures, including to achieve $2.5 billion in cost savings by the
end of 2021 relative to 2019 and associated restructuring charges;
expectations regarding the underlying effective tax rate in 2020;
plans and expectations to build liquidity, strengthen the balance
sheet drive the cash balance point below $35 per barrel in
2021;expectations for net debt and for gearing to remain above the
20-30% range into 2021 and for gearing to trend down over time;
plans to deliver 900mboe/d from new major projects by 2021; plans
and expectations to extend the convenience partnership with Albert
Heijn; plans and expectations with respect to the planned hydrogen
network in Germany, the investment in Santos’ Moomba project
in South Australia and the Lightsource BP project in Texas;
expectations regarding the Rosneft results; plans and expectations
regarding Upstream projects, including the timing of the GTA
project and the Tangguh expansion project; expectations regarding
Upstream full year and second-quarter 2020 reported and underlying
production; expectations regarding the timing of implementation of
new accounting policies; 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; PSA and 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.
|
|
Contacts
|
|
London
|
Houston
|
|
|
|
|
|
Press Office
|
David Nicholas
|
Brett Clanton
|
|
|
+44 (0)20 7496 4708
|
+1 281 366 8346
|
|
|
|
|
|
Investor Relations
|
Craig Marshall
|
Brian Sullivan
|
|
bp.com/investors
|
+44 (0)20 7496 4962
|
+1 281 892 3421
|
BP
p.l.c.’s LEI Code 213800LH1BZH3D16G760
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.
|
|
BP
p.l.c.
|
|
|
(Registrant)
|
|
|
|
|
Dated: 28
April 2020
|
|
|
|
/s/ Ben
J. S. Mathews
|
|
|
------------------------
|
|
|
Ben J.
S. Mathews
|
|
|
Company
Secretary
|