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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bp Plc | LSE:0HKP | London | Ordinary Share | BP ADR EACH REPRESENTING SIX ORD SHS |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 47.79 | 3,569 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Petroleum Refining | 211.6B | 15.24B | 0.7979 | 6.39 | 97.3B |
From May 2019 to May 2024
TIDMBP.
RNS Number : 9787D
BP PLC
06 February 2018
FOR IMMEDIATE RELEASE
London 6 February 2018
Hot Features
Premium
BP p.l.c. Group results Top of
Fourth quarter and full year 2017 page 1
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/9787D_-2018-2-5.pdf
==================================================================== ========
Full year Strong delivery and growth across BP
Highlights - Underlying profit up 139%
- Organic cash flows back in balance
- Downstream underlying profit up 24%
- Upstream production up 12%
- Reserves replacement ratio 143% for BP
group
- Share buybacks, offsetting scrip dilution,
restarted
* Underlying replacement cost profit* was $6.2 billion
for full year 2017 and $2.1 billion for the fourth
quarter, compared with $2.6 billion and $400 million
for full year and fourth quarter 2016 respectively.
* Operating cash flow for 2017, excluding Gulf of
Mexico oil spill payments*, was $24.1 billion,
compared with $17.6 billion in 2016. Gulf of Mexico
oil spill payments in 2017 were $5.2 billion,
compared with $6.9 billion in 2016.
* Downstream earnings were very strong with underlying
replacement cost profit of $7.0 billion, 24% higher
than 2016.
* Operational reliability was high, with refining
availability* and Upstream BP-operated plant
reliability* both 95%.
* Seven new major projects* delivered, boosting oil and
gas production. Upstream production, excluding BP's
share of Rosneft production, was 12% higher than
2016, the highest since 2010. Including Rosneft,
production was 3.6 million barrels of oil equivalent
a day, 10% higher than 2016. Oil and gas realizations
were 25% higher.
* Exploration delivered the most successful year for BP
since 2004, with around 1 billion boe resources
discovered.
* Dividend unchanged at 10 cents per share.
* BP began share buybacks in the fourth quarter,
spending $343 million, fully offsetting the dilution
from scrip dividends issued in the third quarter.
* Non-operating items in the fourth quarter, which are
excluded from underlying profit, included a $0.9
billion charge for US tax changes and a $1.7 billion
post-tax charge relating to a further provision for
claims associated with the oil spill.
Year on year
See chart on PDF
============= =================
Bob Dudley - Group chief executive:
"2017 was one of the strongest years in BP's recent
history. We delivered operationally and financially,
with very strong earnings in the Downstream, Upstream
production up 12%, and our finances rebalanced. And
we did all this while maintaining safe and reliable
operations.
"We enter the second year of our five-year plan with
real momentum, increasingly confident that we can continue
to deliver growth across our business, improving cash
flows and returns for shareholders out to 2021 and beyond.
"At the same time, we are embracing the energy transition,
seeking new opportunities in a changing, lower-carbon
world."
============================================================
Financial summary Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=============================== ======== ======== ======== ====== ========
Profit for the period(a) 27 1,769 497 3,389 115
Inventory holding (gains)
losses*, net of tax (610) (390) (425) (628) (1,114)
================================ ======== ======== ======== ====== ========
RC profit (loss)* (583) 1,379 72 2,761 (999)
Net (favourable) adverse
impact of non-operating
items* and fair value
accounting effects*,
net of tax 2,690 486 328 3,405 3,584
================================ ======== ======== ======== ====== ========
Underlying RC profit 2,107 1,865 400 6,166 2,585
================================ ======== ======== ======== ====== ========
RC profit (loss) per ordinary
share (cents)* (2.94) 6.98 0.38 14.02 (5.33)
RC profit (loss) per ADS
(dollars) (0.18) 0.42 0.02 0.84 (0.32)
Underlying RC profit per
ordinary share (cents)* 10.64 9.44 2.11 31.31 13.79
Underlying RC profit per
ADS (dollars) 0.64 0.57 0.13 1.88 0.83
================================ ======== ======== ======== ====== ========
(a) Profit attributable to BP shareholders.
* See definitions in the Glossary on page 30. RC profit
(loss), underlying RC profit, operating cash flow excluding
Gulf of Mexico oil spill payments and organic capital
expenditure are non-GAAP measures.
The commentary above and following should be read in
conjunction with the cautionary statement on page 34.
-------------------------------------------------------
Top of page 2
BP p.l.c. Group results
Fourth quarter and full year 2017
Group headlines
Earnings
For the full year, underlying The adjusted ETR for the
replacement cost (RC) profit full year is higher than
was $6,166 million, compared last year predominantly due
with $2,585 million in 2016. to changes in the geographical
Underlying RC profit is after mix of profits notably the
adjusting for a net charge impact of the renewal of
for non-operating items of our interest in the Abu Dhabi
$3,309 million and net adverse onshore oil concession. In
fair value accounting effects the current environment,
of $96 million (both on a and assuming no further reassessment
post-tax basis). RC profit of the recognition of deferred
was $2,761 million for the tax assets, the adjusted
full year, compared with ETR in 2018 is expected to
a loss of $999 million a be above 40%. ETR on RC profit
year ago. or loss and adjusted ETR
are non-GAAP measures.
For the fourth quarter, underlying
RC profit was $2,107 million Dividend
compared with $400 million BP today announced a quarterly
for the same period in 2016. dividend of 10.00 cents per
Underlying RC profit is after ordinary share ($0.600 per
adjusting for a net charge ADS), which is expected to
for non-operating items of be paid on 29 March 2018.
$2,515 million and net adverse The corresponding amount
fair value accounting effects in sterling will be announced
of $175 million (both on on 19 March 2018. See page
a post-tax basis). RC loss 22 for further information.
was $583 million for the
fourth quarter, compared Share buybacks
with a profit of $72 million BP recommenced a share buyback
for the same period in 2016. programme in the fourth quarter
to offset the dilution of
BP's profit for the fourth the scrip issue and repurchased
quarter and full year was 51 million ordinary shares
$27 million and $3,389 million at a cost of $343 million,
respectively, compared with including fees and stamp
$497 million and $115 million duty, during the fourth quarter
for the same periods in 2016. of 2017.
See further information on Operating cash flow*
page 4. Excluding post-tax amounts
related to the Gulf of Mexico
Depreciation, depletion and oil spill, operating cash
amortization flow* for the fourth quarter
The charge for depreciation, and full year was $6.2 billion
depletion and amortization and $24.1 billion respectively,
was $15.6 billion in 2017, compared with $4.5 billion
compared with $14.5 billion and $17.6 billion for the
in 2016. In 2018, we expect same periods in 2016. Including
the charge to be higher than amounts relating to the Gulf
2017. of Mexico oil spill, operating
cash flow for the fourth
Non-operating items quarter and full year was
Non-operating items amounted $5.9 billion and $18.9 billion
to a charge of $2,325 million respectively, compared with
pre-tax and $2,515 million $2.4 billion and $10.7 billion
post-tax for the quarter for the same periods in 2016.
and a charge of $3,622 million
pre-tax and $3,309 million Capital expenditure*
post-tax for the full year. Organic capital expenditure*
The post-tax non-operating for the fourth quarter and
charge for the fourth quarter full year was $4.6 billion
includes a charge of $1.7 and $16.5 billion respectively,
billion relating to business compared with $4.5 billion
economic loss and other claims and $16.7 billion for the
associated with the Gulf same periods in 2016. In
of Mexico oil spill (see 2018, we expect organic capital
Note 2 on page 17) and a expenditure to be in the
$0.9 billion deferred tax range of $15-16 billion.
charge following the change
in the US tax rate. See further Inorganic capital expenditure*
information on page 25. for the fourth quarter and
full year was $0.2 billion
Effective tax rate and $1.3 billion respectively,
The effective tax rate (ETR) compared with $0.4 billion,
on RC profit or loss* for and $0.8 billion for the
the fourth quarter and full same periods in 2016.
year was significantly impacted
by the effect of non-operating See page 24 for further information.
items and therefore it is
not a meaningful measure. Divestment and other proceeds
Total divestment and other
The adjusted ETR* is calculated proceeds for the year were
by eliminating the impact $4.3 billion including proceeds
of non-operating items, which of $0.8 billion received
for the fourth quarter includes in relation to the initial
a one-off deferred tax charge public offering of BP Midstream
in respect of the revaluation Partners LP's common units.
of deferred tax assets and Divestment proceeds* were
liabilities following the $2.5 billion for the fourth
reduction in the US federal quarter and $3.4 billion
corporate income tax rate for the full year, compared
from 35% to 21% enacted in with $0.5 billion and $2.6
December 2017; fair value billion for the same periods
accounting effects; and the in 2016. In 2018, divestments
impact of a reduction in are expected to be in the
the UK supplementary tax range of $2-3 billion.
charge in the third quarter
of 2016. Net debt*
Net debt at 31 December 2017
The adjusted ETR for the was $37.8 billion, compared
fourth quarter and full year with $35.5 billion a year
was 27% and 38% respectively, ago. The net debt ratio*
compared with 10% and 23% at 31 December 2017 was 27.4%,
for the same periods in 2016. compared with 26.8% a year
The adjusted ETR for the ago. We continue to target
fourth quarter 2017 reflects a net debt ratio in the range
a benefit from the reassessment of 20-30%. Net debt and the
of the recognition of deferred net debt ratio are non-GAAP
tax assets. The adjusted measures. See page 23 for
ETR for the fourth quarter more information.
2016 was impacted by a high
proportion of equity-accounted
income (which is reported
net of tax in the income
statement) within RC profit,
and reflected a benefit from
the reassessment of the recognition
of deferred tax assets and
other items, partly offset
by charges for foreign exchange
impacts.
Top of page 3
BP p.l.c. Group results
Fourth quarter and full year 2017
Reserves replacement ratio* The reserves replacement ratio on a combined basis of subsidiaries and equity-accounted entities was estimated at 143%(a) for the year. (a) Includes estimated reserves data for Rosneft. The reserves replacement ratio will be finalized and reported in BP Annual Report and Form 20-F 2017. Brian Gilvary - Chief financial officer: "We had strong delivery and growth across BP in 2017. The full-year underlying result was more than double a year earlier, our organic cash flows are back in balance and our financial frame remains resilient. Our share buyback programme in the fourth quarter offset the dilution from scrip dividends issued in September and our intent remains to offset any ongoing scrip dilution through further buybacks over time." ============================================================== The commentary above should be read in conjunction with the cautionary statement on page 34. ---------------------------------------------------
Top of page 4
BP p.l.c. Group results
Fourth quarter and full year 2017
Analysis of underlying RC profit before interest and tax
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================== ======== ======== ======== ======== ========
Underlying RC profit
before interest and tax*
Upstream 2,223 1,562 400 5,865 (542)
Downstream 1,474 2,338 877 6,967 5,634
Rosneft 321 137 135 836 567
Other businesses and
corporate (394) (398) (424) (1,598) (1,238)
Consolidation adjustment
- UPII* (149) (130) (132) (212) (196)
=============================== ======== ======== ======== ======== ========
Underlying RC profit
before interest and tax 3,475 3,509 856 11,858 4,225
Finance costs and net
finance expense relating
to pensions and other
post-retirement benefits (550) (444) (359) (1,801) (1,371)
Taxation on an underlying
RC basis (782) (1,212) (51) (3,812) (212)
Non-controlling interests (36) 12 (46) (79) (57)
=============================== ======== ======== ======== ======== ========
Underlying RC profit
attributable to BP
shareholders 2,107 1,865 400 6,166 2,585
=============================== ======== ======== ======== ======== ========
Reconciliations of underlying RC profit or loss 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
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=============================== ======== ======== ======== ======== ========
RC profit (loss) before
interest and tax*
Upstream 1,928 1,242 692 5,221 574
Downstream 1,773 2,175 899 7,221 5,162
Rosneft 321 137 158 836 590
Other businesses and
corporate(a) (2,833) (460) (1,117) (4,445) (8,157)
Consolidation adjustment
- UPII (149) (130) (132) (212) (196)
================================ ======== ======== ======== ======== ========
RC profit (loss) before
interest and tax 1,040 2,964 500 8,621 (2,027)
Finance costs and net
finance expense relating
to pensions and other
post-retirement benefits (674) (566) (484) (2,294) (1,865)
Taxation on a RC basis (913) (1,031) 102 (3,487) 2,950
Non-controlling interests (36) 12 (46) (79) (57)
================================ ======== ======== ======== ======== ========
RC profit (loss) attributable
to BP shareholders (583) 1,379 72 2,761 (999)
================================ ======== ======== ======== ======== ========
Inventory holding gains
(losses) 816 557 601 853 1,597
Taxation (charge) credit
on inventory holding
gains and losses (206) (167) (176) (225) (483)
================================ ======== ======== ======== ======== ========
Profit for the period
attributable to
BP shareholders 27 1,769 497 3,389 115
================================ ======== ======== ======== ======== ========
(a) Includes costs related to the Gulf of Mexico oil
spill. See page 11 and also Note 2 from page 17 for
further information on the accounting for the Gulf
of Mexico oil spill.
Top of page 5
BP p.l.c. Group results
Fourth quarter and full year 2017
Strategic progress Financial framework
Upstream Operating cash flow, excluding
2017 oil and gas production, Gulf of Mexico payments*,
excluding Rosneft, was 12% was $24.1 billion for full
higher than in 2016, the year 2017. This compares
highest since 2010. Upstream with $17.6 billion for full
unit production costs* were year 2016.
16% lower, benefiting from
production growth and continued Organic capital expenditure*
cost discipline. for 2017 was $16.5 billion,
in the range of $15-17 billion
Zohr in Egypt completed BP's previously indicated. BP
programme of seven major expects 2018 organic capital
project* start-ups in 2017. expenditure to be in the
Together with 2016 start-ups, range of $15-16 billion.
the projects contribute more
than 500mboe/d new net production Operating cash flow excluding
capacity and are expected Gulf of Mexico payments in
to deliver operating cash 2017 exceeded organic capital
margins* around 35% greater expenditure, cash dividend
than Upstream's assets in payments to BP shareholders
2015. and share buybacks by $1.1
billion.
In the quarter BP accessed
significant new exploration Total divestment and other
acreage in the Santos basin proceeds for the year were
of Brazil and in Côte $4.3 billion including proceeds
d'Ivoire with Kosmos Energy. of $0.8 billion received
BP announced six exploration in relation to the initial
discoveries in 2017 - the public offering of BP Midstream
cumulative discovery of around Partners LP's common units.
1 billion boe of resources Divestment proceeds* were
was BP's largest since 2004. $3.4 billion for the full
year, including the proceeds
Downstream received in the fourth quarter
Fuels marketing earnings for the sale of BP's interest
increased by more than 10% in the SECCO joint venture
in 2017. Premium fuel volumes in China. In 2018, divestments
grew by 6% and BP's convenience are expected to be in the
partnership model increased range of $2-3 billion.
to 1,100 sites worldwide.
More than 120 BP retail sites Gulf of Mexico oil spill
in Mexico were operational payments were $0.3 billion
at year end. In lubricants, in the fourth quarter, bringing
BP delivered premium brand the total for 2017 to $5.2
growth and increased earnings billion. Cash outflows in
from growth markets. 2018 are expected to be approximately
$3 billion, weighted to the
In manufacturing, both refining first half of the year.
and petrochemicals grew earnings
with record levels of advantaged Gearing* was 27.4% at the
feedstock processed in refining. end of 2017. BP continues
to target a gearing range
Advancing the energy transition of 20-30%.
BP acquired a 43% interest
in Lightsource, Europe's Safety
largest solar development The 3-year average for both
company, supporting its rapid Tier 1 process safety events*
expansion worldwide. Other and reported recordable injury
progress included BP enhancing frequency* remains on an
its biofuels business in improving trend. Safety remains
Brazil through an ethanol a core value and our number
storage joint venture, forming one priority. We are committed
a partnership with Aria Energy to continuous improvement
to expand its renewable gas to drive enhanced performance.
portfolio in the US and,
in January, BP Ventures investing
in the electric vehicle fast-charging
company Freewire.
Operating metrics Year 2017 (vs. Financial metrics Year 2017 (vs.
Year 2016) Year 2016)
======================= =============== ====================== ===============
Tier 1 process 18 Underlying $6.2bn
safety events RC profit
(+2) (+$3.6bn)
======================= =============== ====================== ===============
Reported recordable 0.22 Operating cash $24.1bn
injury frequency flow excluding
Gulf of Mexico
oil spill payments
(+3%) (+$6.5bn)
======================= =============== ====================== ===============
Group production 3,595mboe/d Organic capital $16.5bn
(+10%) expenditure (-$0.2bn)
======================= =============== ====================== ===============
Upstream production 2,466mboe/d Gulf of Mexico $5.2bn
(excludes Rosneft (+12%) oil spill payments (-$1.7bn)
segment)
======================= =============== ====================== ===============
Upstream unit $7.11/boe Divestment $3.4bn
production (-16%) proceeds (+$0.8bn)
costs
======================= =============== ====================== ===============
BP-operated 80.5% Net debt ratio 27.4%
Upstream operating (gearing)
efficiency*
(+0.6)
======================= =============== ====================== ===============
BP-operated 94.7% Dividend per 10.00 cents
Upstream plant ordinary share(b)
reliability*(a)
(-0.6) (-)
======================= =============== ====================== ===============
Refining availability* 95.3% Return on average 5.8%
capital employed*(c)
(-) (+3.0)
======================= =============== ====================== ===============
(a) BP-operated Upstream plant reliability has been included
as an operating metric this quarter. It is more comparable
with the equivalent metric disclosed for the Downstream,
which is 'Refining availability'. BP-operated Upstream
plant reliability was 94.9% for the first quarter
2017, 95.2% for the six months ended 30 June 2017
and 94.5% for the nine months ended 30 September
2017.
(b) Represents dividend announced in the quarter (vs.
prior year quarter).
(c) Return on average capital employed is included as
this is a full year report.
The commentary above contains forward-looking statements
and should be read in conjunction with the cautionary
statement on page 34.
---------------------------------------------------------
Top of page 6
BP p.l.c. Group results
Fourth quarter and full year 2017
Upstream
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=========================== ======== ======== ======== ====== ========
Profit before interest
and tax 1,928 1,255 711 5,229 634
Inventory holding (gains)
losses* - (13) (19) (8) (60)
============================ ======== ======== ======== ====== ========
RC profit before interest
and tax 1,928 1,242 692 5,221 574
Net (favourable) adverse
impact of
non-operating items*
and fair value
accounting effects* 295 320 (292) 644 (1,116)
============================ ======== ======== ======== ====== ========
Underlying RC profit
(loss) before interest
and tax*(a) 2,223 1,562 400 5,865 (542)
============================ ======== ======== ======== ====== ========
(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 fourth quarter and full year was $1,928 million and $5,221 million respectively, compared with $692 million and $574 million for the same periods in 2016. The fourth quarter and full year included a net non-operating charge of $144 million and $671 million respectively, compared with a net non-operating gain of $636 million and $1,753 million for the same periods in 2016. Fair value accounting effects in the fourth quarter and full year had an adverse impact of $151 million and a favourable impact of $27 million respectively, compared with an adverse impact of $344 million and $637 million in the same periods of 2016.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $2,223 million and $5,865 million respectively, compared with a profit of $400 million and a loss of $542 million for the same periods in 2016. The result for the fourth quarter mainly reflected higher liquids realizations and higher production including the impact of the Abu Dhabi onshore concession renewal and major project* start-ups. The result for the full year reflected higher liquids realizations, and higher production including the impact of the Abu Dhabi onshore concession renewal and major project start-ups, partly offset by higher depreciation, depletion and amortization, and higher exploration write-offs.
Production
Production for the quarter was 2,581mboe/d, 18.1% higher than the fourth quarter of 2016. Fourth quarter production reflects the fifth consecutive quarter of growth as well as the highest production since first quarter 2011. Underlying production* for the quarter increased by 11.1%, due to the ramp-up of major projects. For the full year, production was 2,466mboe/d, 11.7% higher than 2016. Underlying production for the full year was 7.9% higher than 2016 due to major project start-ups. The seven major project start-ups for 2017, together with the 2016 start-ups, contribute more than 500mboe/d of new net production capacity.
Key events
On 21 November, BP agreed to sell a package of its interests in the Bruce assets in the North Sea to Serica Energy plc, subject to regulatory approvals. The Bruce assets comprise the Bruce, Keith and Rhum fields, platforms and associated subsea infrastructure.
On 18 December, BP completed the formation of Pan American Energy Group (PAEG) (BP 50%, Bridas Corporation 50%), which is a combination of Pan American Energy and Axion Energy.
On 20 December, BP confirmed that production started from the Zohr gas field, offshore Egypt (ENI operator 60%, Rosneft 30%, BP 10%), BP's seventh major project to start in 2017.
Also on 20 December, BP and Statoil signed an extension agreement for the In Amenas production-sharing contract* with Algerian state-owned energy company Sonatrach, which has been submitted to the Algerian authorities for ratification.
On 21 December, BP and Kosmos Energy (KE) were awarded five blocks offshore Côte d'Ivoire, under agreements with the government of Côte d'Ivoire and state oil company Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) (BP 45%, KE 45%, PETROCI 10%).
In December Rosneft announced an agreement to develop resources within the Kharampurskoe and Festivalnoye licence areas in Yamalo-Nenets Autonomous Okrug in northern Russia jointly with BP. Rosneft will hold a majority stake of 51% and BP will hold a 49% stake. Completion of the deal is subject to regulatory approvals.
On 31 January, BP announced the oil discovery Capercaillie (BP 100%) and the oil discovery Achmelvich (BP 52.6%, Shell 28%, and Chevron 19.4%) in the UK North Sea, both operated by BP. These two discoveries bring the total exploration discoveries in 2017 to six, and our most successful exploration campaign in the UK North Sea since 2008.
Outlook
We expect full-year 2018 underlying production to be higher than 2017 due to the ramp-up of major projects. The actual reported outcome will depend on the exact timing of project start-ups, acquisition and divestment activities, OPEC quotas and entitlement impacts in our production-sharing agreements*. We expect first-quarter 2018 reported production to be broadly flat with the fourth quarter 2017, reflecting continued growth from the 2017 major project start-ups, offset by the expiration of the Abu Dhabi offshore concession and divestment impacts.
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 34. ---------------------------------------------------------
Top of page 7
BP p.l.c. Group results
Fourth quarter and full year 2017
Upstream (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
================================== ======== ======== ======== ====== ========
Underlying RC profit
(loss) before interest
and tax
US 629 264 (147) 1,238 (1,270)
Non-US 1,594 1,298 547 4,627 728
=================================== ======== ======== ======== ====== ========
2,223 1,562 400 5,865 (542)
======== ======== ======== ====== ========
Non-operating items
US(a) (187) (97) 21 (330) 127
Non-US(b)(c) 43 (49) 615 (341) 1,626
=================================== ======== ======== ======== ====== ========
(144) (146) 636 (671) 1,753
======== ======== ======== ====== ========
Fair value accounting
effects
US 8 (100) (274) 192 (379)
Non-US (159) (74) (70) (165) (258)
=================================== ======== ======== ======== ====== ========
(151) (174) (344) 27 (637)
======== ======== ======== ====== ========
RC profit (loss) before
interest and tax
US 450 67 (400) 1,100 (1,522)
Non-US 1,478 1,175 1,092 4,121 2,096
=================================== ======== ======== ======== ====== ========
1,928 1,242 692 5,221 574
======== ======== ======== ====== ========
Exploration expense
US 27 190 511 282 693
Non-US(c)(d) 494 107 (197) 1,798 1,028
=================================== ======== ======== ======== ====== ========
521 297 314 2,080 1,721
======== ======== ======== ====== ========
Of which: Exploration
expenditure written off(c)(d) 372 217 166 1,603 1,274
=================================== ======== ======== ======== ====== ========
Production (net of royalties)(e)
Liquids* (mb/d)
US 430 408 406 426 391
Europe 117 123 122 119 120
Rest of World 796 809 650 811 698
=================================== ======== ======== ======== ====== ========
1,344 1,341 1,178 1,356 1,208
======== ======== ======== ====== ========
Natural gas (mmcf/d)
US 1,759 1,703 1,675 1,659 1,656
Europe 186 217 268 235 264
Rest of World 5,231 4,581 3,903 4,543 3,876
=================================== ======== ======== ======== ====== ========
7,176 6,502 5,846 6,436 5,796
======== ======== ======== ====== ========
Total hydrocarbons* (mboe/d)
US 734 702 694 712 676
Europe 150 161 168 160 165
Rest of World 1,698 1,599 1,323 1,594 1,366
=================================== ======== ======== ======== ====== ========
2,581 2,462 2,186 2,466 2,208
======== ======== ======== ====== ========
Average realizations*(f)
Total liquids(g) ($/bbl) 56.16 47.45 43.89 49.92 38.27
Natural gas ($/mcf) 3.23 2.89 3.08 3.19 2.84
Total hydrocarbons ($/boe) 37.48 33.23 31.40 35.38 28.24
=================================== ======== ======== ======== ====== ========
(a) Fourth quarter and full year 2017 include an impairment
charge relating to the US Lower 48 business, partially
offset by gains associated with asset divestments.
(b) Fourth quarter and full year 2017 include BP's share
of an impairment reversal recognized by the Angola
LNG equity-accounted entity, partially offset by
other items. In addition, full year 2017 includes
an impairment charge arising following the announcement
of the agreement to sell the Forties Pipeline System
business to INEOS. Fourth quarter and full year 2016
principally relate to impairment reversals in India,
Angola and the North Sea.
(c) See page 25 for more information on non-operating
items.
(d) Full year 2017 includes the write-off of exploration
well and lease costs in Angola and the write-off
of exploration wells in Egypt.
(e) Includes BP's share of production of equity-accounted
entities in the Upstream segment.
(f) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
(g) Includes condensate, natural gas liquids and bitumen.
Because of rounding, some totals may not agree exactly with the sum of their component parts.
Top of page 8
BP p.l.c. Group results
Fourth quarter and full year 2017
Downstream
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================== ======== ======== ======== ====== ========
Profit before interest
and tax 2,492 2,695 1,457 7,979 6,646
Inventory holding (gains)
losses* (719) (520) (558) (758) (1,484)
=============================== ======== ======== ======== ====== ========
RC profit before interest
and tax 1,773 2,175 899 7,221 5,162
Net (favourable) adverse
impact of
non-operating items*
and fair value
accounting effects* (299) 163 (22) (254) 472
=============================== ======== ======== ======== ====== ========
Underlying RC profit
before interest and tax*(a) 1,474 2,338 877 6,967 5,634
=============================== ======== ======== ======== ====== ========
(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 fourth quarter and full year was $1,773 million and $7,221 million respectively, compared with $899 million and $5,162 million for the same periods in 2016.
The fourth quarter and full year include a net non-operating gain of $382 million and $389 million respectively, compared with a net non-operating charge of $77 million and $24 million for the same periods in 2016. Fair value accounting effects had an adverse impact of $83 million in the fourth quarter and $135 million for the full year, compared with a favourable impact of $99 million and an adverse impact of $448 million for the same periods in 2016.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $1,474 million and $6,967 million respectively, compared with $877 million and $5,634 million for the same periods in 2016.
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 $976 million for the fourth quarter and $4,872 million for the full year, compared with $417 million and $3,727 million for the same periods in 2016. The result for the quarter and full year reflects stronger refining performance. In addition, the full-year improvement reflects growth in fuels marketing, partly offset by a weaker contribution from supply and trading.
The refining result for the quarter and full year reflects continued strong operational performance, capturing higher industry refining margins, efficiency benefits as well as increased commercial optimization including the benefits of higher levels of advantaged feedstock. The full year result was, however, impacted by a higher level of planned turnaround activity.
The fuels marketing result for the full year reflects continued profit growth supported by higher premium fuel volumes which grew by 6% and the continued rollout of our convenience partnership model to more than 220 sites, bringing the total number of convenience partnership sites to 1,100 across our retail network.
We continue to grow in Mexico, where, by the end of 2017 we had more than 120 operational sites after becoming the first international oil company to enter the deregulated fuel retail market earlier in the year.
In December, the Australian Competition and Consumer Commission announced that it intends to oppose our proposed acquisition of Woolworths' fuel and convenience sites in Australia. We are currently considering our next steps.
On 1 February 2018, we entered into joint ventures with Shandong Dongming Petrochemical Group to develop a leading branded retail fuels and convenience business in Shandong, Henan and Hebei provinces in China.
Lubricants
The lubricants business reported an underlying replacement cost profit before interest and tax of $375 million for the fourth quarter and $1,479 million for the full year, compared with $357 million and $1,523 million for the same periods in 2016. The result for the quarter and full year reflects growth in premium brands and growth markets, offset by the adverse lag impact of increasing base oil prices.
Petrochemicals
The petrochemicals business reported an underlying replacement cost profit before interest and tax of $123 million for the fourth quarter and $616 million for the full year, compared with $103 million and $384 million for the same periods in 2016. The result for the quarter and full year reflects an improved margin environment, stronger margin optimization, the benefits from our efficiency programmes and a lower level of turnaround activity. The result was, however, impacted by the divestment of our interest in the SECCO joint venture, which completed in the fourth quarter and was classified as held for sale in the group balance sheet at 30 September 2017.
Outlook
Looking to the first quarter of 2018, we expect higher discounts for North American heavy crude oil but lower industry refining margins. In addition, we expect our turnaround activity to be lower in refining but significantly higher in petrochemicals.
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 34. ---------------------------------------------------------
Top of page 9
BP p.l.c. Group results
Fourth quarter and full year 2017
Downstream (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================ ======== ======== ======== ======= =======
Underlying RC profit
before interest and tax
-
by region
US 501 640 (371) 1,978 853
Non-US 973 1,698 1,248 4,989 4,781
============================= ======== ======== ======== ======= =======
1,474 2,338 877 6,967 5,634
======== ======== ======== ======= =======
Non-operating items
US (25) (39) (122) (48) (48)
Non-US(a) 407 (16) 45 437 24
============================= ======== ======== ======== ======= =======
382 (55) (77) 389 (24)
======== ======== ======== ======= =======
Fair value accounting
effects
US 3 20 22 (29) (321)
Non-US (86) (128) 77 (106) (127)
============================= ======== ======== ======== ======= =======
(83) (108) 99 (135) (448)
======== ======== ======== ======= =======
RC profit before interest
and tax
US 479 621 (471) 1,901 484
Non-US 1,294 1,554 1,370 5,320 4,678
============================= ======== ======== ======== ======= =======
1,773 2,175 899 7,221 5,162
======== ======== ======== ======= =======
Underlying RC profit
before interest and tax
-
by business(b)(c)
Fuels 976 1,788 417 4,872 3,727
Lubricants 375 356 357 1,479 1,523
Petrochemicals 123 194 103 616 384
============================= ======== ======== ======== ======= =======
1,474 2,338 877 6,967 5,634
======== ======== ======== ======= =======
Non-operating items and
fair value
accounting effects(d)
Fuels (202) (154) 103 (193) (390)
Lubricants (14) (3) (81) (22) (84)
Petrochemicals(a) 515 (6) - 469 2
============================= ======== ======== ======== ======= =======
299 (163) 22 254 (472)
======== ======== ======== ======= =======
RC profit before interest
and tax(b)(c)
Fuels 774 1,634 520 4,679 3,337
Lubricants 361 353 276 1,457 1,439
Petrochemicals 638 188 103 1,085 386
============================= ======== ======== ======== ======= =======
1,773 2,175 899 7,221 5,162
======== ======== ======== ======= =======
BP average refining marker
margin (RMM)* ($/bbl) 14.4 16.3 11.4 14.1 11.8
============================= ======== ======== ======== ======= =======
Refinery throughputs
(mb/d)
US 714 737 604 713 646
Europe 741 768 806 773 803
Rest of World 243 240 234 216 236
============================= ======== ======== ======== ======= =======
1,698 1,745 1,644 1,702 1,685
======== ======== ======== ======= =======
Refining availability*
(%) 96.1 95.3 94.9 95.3 95.3
============================= ======== ======== ======== ======= =======
Marketing sales of refined
products (mb/d)
US 1,127 1,186 1,146 1,151 1,134
Europe 1,132 1,204 1,166 1,140 1,179
Rest of World 542 480 540 508 512
============================= ======== ======== ======== ======= =======
2,801 2,870 2,852 2,799 2,825
Trading/supply sales
of refined products 3,549 3,088 2,836 3,149 2,775
============================= ======== ======== ======== ======= =======
Total sales volumes of
refined products 6,350 5,958 5,688 5,948 5,600
============================= ======== ======== ======== ======= =======
Petrochemicals production
(kte)
US 641 617 546 2,428 2,564
Europe 1,559 1,285 930 5,462 3,729
Rest of World 1,306 2,025 2,071 7,405 7,934
============================= ======== ======== ======== ======= =======
3,506 3,927 3,547 15,295 14,227
======== ======== ======== ======= =======
(a) Fourth quarter and full year 2017 gain primarily
reflects the disposal of our shareholding in the
SECCO joint venture.
(b) Segment-level overhead expenses are included in the
fuels business result.
(c) Results from petrochemicals at our Gelsenkirchen
and Mülheim sites in Germany is reported in
the fuels business.
(d) For Downstream, fair value accounting effects arise
solely in the fuels business.
Top of page 10
BP p.l.c. Group results
Fourth quarter and full year 2017
Rosneft
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017(a) 2017 2016 2017(a) 2016
=========================== ======== ======== ======== ======== =====
Profit before interest
and tax(b) 418 161 182 923 643
Inventory holding (gains)
losses* (97) (24) (24) (87) (53)
============================ ======== ======== ======== ======== =====
RC profit before interest
and tax 321 137 158 836 590
Net charge (credit) for
non-operating items* - - (23) - (23)
============================ ======== ======== ======== ======== =====
Underlying RC profit
before interest and tax* 321 137 135 836 567
============================ ======== ======== ======== ======== =====
Financial results
Replacement cost profit before interest and tax for the fourth quarter and full year was $321 million and $836 million respectively, compared with $158 million and $590 million for the same periods in 2016.
There were no non-operating items in the fourth quarter and full year of 2017, compared with a non-operating gain of $23 million in the same periods of 2016.
After adjusting for non-operating items, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $321 million and $836 million respectively, compared with $135 million and $567 million for the same periods in 2016.
Compared with the same periods in 2016, the results primarily reflected higher oil prices. The results for the fourth quarter and the full year also benefited from a $163-million gain representing the BP share of a voluntary out-of-court settlement between Sistema, Sistema-Invest and the Rosneft subsidiary, Bashneft. These positive effects were partially offset by adverse foreign exchange effects.
In September 2017 the extraordinary general meeting adopted a resolution to pay interim dividends for the first half of 2017 of 3.83 Russian roubles per ordinary share. In October BP received a dividend of $124 million after the deduction of withholding tax.
Key events
In October Rosneft completed the acquisition of a 30% stake for $1.1 billion in a concession agreement to develop the Zohr field in Egypt from the Italian company Eni. Eni retains a 60% stake and BP holds the remaining 10%.
In December Rosneft announced an agreement to develop subsoil resources within the Kharampurskoe and Festivalnoye licence areas in Yamalo-Nenets Autonomous Okrug in northern Russia jointly with BP. Rosneft will hold a majority stake of 51% and BP will hold a 49% stake. Completion of the deal is subject to regulatory approvals.
Fourth Third Fourth
quarter quarter quarter Year Year
2017(a) 2017 2016 2017(a) 2016
=============================== ======== ======== ======== ======== ======
Production (net of royalties)
(BP share)
Liquids* (mb/d) 899 903 919 904 840
Natural gas (mmcf/d) 1,333 1,263 1,347 1,308 1,279
Total hydrocarbons* (mboe/d) 1,129 1,120 1,152 1,129 1,060
================================ ======== ======== ======== ======== ======
(a) The operational and financial information of the
Rosneft segment for the fourth quarter and full year
is based on preliminary operational and financial
results of Rosneft for the full year ended 31 December
2017. Actual results may differ from these amounts.
(b) The Rosneft segment result includes equity-accounted
earnings arising from BP's 19.75% shareholding in
Rosneft as adjusted for the 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 have increased the reported profit
before interest and tax for the fourth quarter and
full year 2017, as shown in the table above, compared
with the equivalent amount in Russian roubles that
we expect Rosneft to report in its own financial
statements under IFRS. BP's share of Rosneft's profit
before interest and tax for each year-to-date period
is calculated by translating the amounts reported
in Russian roubles into US dollars using the average
exchange rate for the year to date. BP's share of
Rosneft's earnings after finance costs, taxation
and non-controlling interests, as adjusted, is included
in the BP group income statement within profit before
interest and taxation.
Top of page 11
BP p.l.c. Group results
Fourth quarter and full year 2017
Other businesses and corporate
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=============================== ======== ======== ======== ======== ========
Profit (loss) before interest
and tax
Gulf of Mexico oil spill (2,221) (84) (674) (2,687) (6,640)
Other (612) (376) (443) (1,758) (1,517)
================================ ======== ======== ======== ======== ========
Profit (loss) before interest
and tax (2,833) (460) (1,117) (4,445) (8,157)
Inventory holding (gains) - - - - -
losses*
=============================== ======== ======== ======== ======== ========
RC profit (loss) before
interest and tax (2,833) (460) (1,117) (4,445) (8,157)
Net charge (credit) for
non-operating items*
Gulf of Mexico oil spill 2,221 84 674 2,687 6,640
Other 218 (22) 19 160 279
================================ ======== ======== ======== ======== ========
Net charge (credit) for
non-operating items 2,439 62 693 2,847 6,919
================================ ======== ======== ======== ======== ========
Underlying RC profit (loss)
before interest and tax* (394) (398) (424) (1,598) (1,238)
================================ ======== ======== ======== ======== ========
Underlying RC profit (loss)
before interest and tax
US (29) (145) 50 (475) (276)
Non-US (365) (253) (474) (1,123) (962)
================================ ======== ======== ======== ======== ========
(394) (398) (424) (1,598) (1,238)
======== ======== ======== ======== ========
Non-operating items
US (2,381) (92) (672) (2,861) (6,824)
Non-US (58) 30 (21) 14 (95)
================================ ======== ======== ======== ======== ========
(2,439) (62) (693) (2,847) (6,919)
======== ======== ======== ======== ========
RC profit (loss) before
interest and tax
US (2,410) (237) (622) (3,336) (7,100)
Non-US (423) (223) (495) (1,109) (1,057)
================================ ======== ======== ======== ======== ========
(2,833) (460) (1,117) (4,445) (8,157)
======== ======== ======== ======== ========
Other businesses and corporate comprises our alternative energy business, shipping, treasury, corporate activities including centralized functions, and the costs of the Gulf of Mexico oil spill.
Financial results
The replacement cost loss before interest and tax for the fourth quarter and full year was $2,833 million and $4,445 million respectively, compared with $1,117 million and $8,157 million for the same periods in 2016.
The results included a net non-operating charge of $2,439 million for the fourth quarter and $2,847 million for the full year, mainly relating to the Gulf of Mexico oil spill, compared with a net non-operating charge of $693 million and $6,919 million for the same periods in 2016. See Note 2 on page 17 for more information on the Gulf of Mexico oil spill.
After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the fourth quarter and full year was $394 million and $1,598 million respectively, compared with $424 million and $1,238 million for the same periods in 2016. The underlying charge for the full year was impacted by weaker business results, higher corporate costs and adverse foreign exchange effects which had a favourable effect in 2016.
Alternative energy
The net ethanol-equivalent production (which includes ethanol and sugar) for the fourth quarter and full year was 188 million litres and 776 million litres respectively, compared with 98 million litres and 733 million litres for the same periods in 2016.
Net wind generation capacity*(a) was 1,432MW at 31 December 2017 compared with 1,474MW at 31 December 2016. BP's net share of wind generation for the fourth quarter and full year was 1,148GWh and 4,004GWh respectively, compared with 1,154GWh and 4,389GWh for the same periods in 2016.
(a) Capacity figures for 2016 include 23MW in the Netherlands
managed by our Downstream segment.
BP formed a strategic partnership with Lightsource, Europe's largest developer of large-scale solar projects, with the aim of driving further growth of solar power development worldwide. Under the terms of the deal, which completed on 31 January 2018, BP acquired a 43% equity share in Lightsource for a total consideration of $200 million, payable over three years. The move will combine BP's global scale, technology and trading capabilities with Lightsource's expertise in solar development. The company will rebrand as Lightsource BP.
Outlook
In 2018, Other businesses and corporate average quarterly charges, excluding non-operating items, are expected to be around $350 million although this will fluctuate from quarter to quarter.
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 34. ---------------------------------------------------------
Top of page 12
BP p.l.c. Group results
Fourth quarter and full year 2017
Financial statements
Group income statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
================================= ======== ======== ======== ======== ========
Sales and other operating
revenues (Note 4) 67,816 60,018 51,007 240,208 183,008
Earnings from joint ventures
- after interest
and tax 581 231 489 1,177 966
Earnings from associates
- after interest and
tax 526 282 263 1,330 994
Interest and other income 223 185 114 657 506
Gains on sale of businesses
and fixed assets 876 92 248 1,210 1,132
================================== ======== ======== ======== ======== ========
Total revenues and other
income 70,022 60,808 52,121 244,582 186,606
Purchases(a) 51,745 44,441 37,883 179,716 132,219
Production and manufacturing
expenses(b) 7,759 5,454 6,595 24,229 29,077
Production and similar
taxes (Note 5)(a) 511 449 199 1,775 683
Depreciation, depletion
and amortization (Note
4) 4,045 3,904 3,642 15,584 14,505
Impairment and losses
on sale of businesses
and fixed assets 604 108 (305) 1,216 (1,664)
Exploration expense 521 297 314 2,080 1,721
Distribution and administration
expenses 2,981 2,634 2,692 10,508 10,495
Profit (loss) before
interest and taxation 1,856 3,521 1,101 9,474 (430)
Finance costs(b) 616 511 434 2,074 1,675
Net finance expense relating
to pensions and
other post-retirement
benefits 58 55 50 220 190
================================== ======== ======== ======== ======== ========
Profit (loss) before
taxation 1,182 2,955 617 7,180 (2,295)
Taxation(b) 1,119 1,198 74 3,712 (2,467)
================================== ======== ======== ======== ======== ========
Profit (loss) for the
period 63 1,757 543 3,468 172
================================== ======== ======== ======== ======== ========
Attributable to
BP shareholders 27 1,769 497 3,389 115
Non-controlling interests 36 (12) 46 79 57
================================== ======== ======== ======== ======== ========
63 1,757 543 3,468 172
======== ======== ======== ======== ========
Earnings per share (Note
6)
Profit (loss) for the
period attributable to
BP shareholders
Per ordinary share (cents)
Basic 0.14 8.95 2.62 17.20 0.61
Diluted 0.14 8.90 2.60 17.10 0.60
Per ADS (dollars)
Basic 0.01 0.54 0.16 1.03 0.04
Diluted 0.01 0.53 0.16 1.03 0.04
================================== ======== ======== ======== ======== ========
(a) Amounts reported in prior quarters of 2017 for Purchases
and Production and similar taxes have been amended,
with no effect on profit for the period. See Note
5 for further information.
(b) See Note 2 for information on the impact of the
Gulf of Mexico oil spill on these income statement
line items.
Top of page 13
BP p.l.c. Group results
Fourth quarter and full year 2017
Group statement of comprehensive income
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
==================================== ======== ======== ======== ======== ========
Profit (loss) for the
period 63 1,757 543 3,468 172
===================================== ======== ======== ======== ======== ========
Other comprehensive income
Items that may be reclassified
subsequently to
profit or loss
Currency translation
differences 264 611 (777) 1,986 254
Exchange (gains) losses
on translation of
foreign operations reclassified
to gain or loss
on sale of businesses
and fixed assets (138) 13 24 (120) 30
Available-for-sale investments 11 - - 14 1
Cash flow hedges marked
to market 19 49 (204) 197 (639)
Cash flow hedges reclassified
to the income
statement 23 20 86 116 196
Cash flow hedges reclassified
to the
balance sheet 8 29 32 112 81
Share of items relating
to equity-accounted
entities, net of tax 133 128 172 564 833
Income tax relating
to items that may
be reclassified (81) (59) 97 (261) 13
===================================== ======== ======== ======== ======== ========
239 791 (570) 2,608 769
======== ======== ======== ======== ========
Items that will not be
reclassified to profit
or loss
Remeasurements of the
net pension and other
post-retirement benefit
liability or asset 1,599 1,002 3,484 3,646 (2,496)
Income tax relating
to items that will not
be
reclassified (539) (351) (765) (1,238) 739
===================================== ======== ======== ======== ======== ========
1,060 651 2,719 2,408 (1,757)
======== ======== ======== ======== ========
Other comprehensive income 1,299 1,442 2,149 5,016 (988)
===================================== ======== ======== ======== ======== ========
Total comprehensive income 1,362 3,199 2,692 8,484 (816)
===================================== ======== ======== ======== ======== ========
Attributable to
BP shareholders 1,312 3,206 2,667 8,353 (846)
Non-controlling interests 50 (7) 25 131 30
===================================== ======== ======== ======== ======== ========
1,362 3,199 2,692 8,484 (816)
==================================== ======== ======== ======== ======== ========
Top of page 14
BP p.l.c. Group results
Fourth quarter and full year 2017
Group statement of changes in equity
BP
shareholders' Non-controlling Total
$ million equity interests equity
======================================== ============== ================ ========
At 1 January 2017 95,286 1,557 96,843
========================================= ============== ================ ========
Total comprehensive income 8,353 131 8,484
Dividends (6,153) (141) (6,294)
Repurchase of ordinary share
capital (343) - (343)
Share-based payments, net of
tax 687 - 687
Share of equity-accounted entities'
change in equity, net of tax 215 - 215
Transactions involving non-controlling
interests, net of tax 446 366 812
========================================= ============== ================ ========
At 31 December 2017 98,491 1,913 100,404
========================================= ============== ================ ========
BP
shareholders' Non-controlling Total
$ million equity interests equity
======================================== ============== ================ ========
At 1 January 2016 97,216 1,171 98,387
========================================= ============== ================ ========
Total comprehensive income (846) 30 (816)
Dividends (4,611) (107) (4,718)
Share-based payments, net of
tax 2,991 - 2,991
Share of equity-accounted entities'
change in equity, net of tax 106 - 106
Transactions involving non-controlling
interests, net of tax 430 463 893
========================================= ============== ================ ========
At 31 December 2016 95,286 1,557 96,843
========================================= ============== ================ ========
Top of page 15
BP p.l.c. Group results
Fourth quarter and full year 2017
Group balance sheet
31 December 31 December
$ million 2017 2016
================================================================ ============ ============
Non-current assets
Property, plant and equipment 129,471 129,757
Goodwill 11,551 11,194
Intangible assets 18,355 18,183
Investments in joint ventures 7,994 8,609
Investments in associates 16,991 14,092
Other investments 1,245 1,033
================================================================= ============ ============
Fixed assets 185,607 182,868
Loans 646 532
Trade and other receivables 1,434 1,474
Derivative financial instruments 4,110 4,359
Prepayments 1,112 945
Deferred tax assets 4,469 4,741
Defined benefit pension plan surpluses 4,169 584
================================================================= ============ ============
201,547 195,503
============ ============
Current assets
Loans 190 259
Inventories 19,011 17,655
Trade and other receivables 24,849 20,675
Derivative financial instruments 3,032 3,016
Prepayments 1,414 1,486
Current tax receivable 761 1,194
Other investments 125 44
Cash and cash equivalents 25,586 23,484
================================================================= ============ ============
74,968 67,813
Total assets 276,515 263,316
================================================================= ============ ============
Current liabilities
Trade and other payables 44,209 37,915
Derivative financial instruments 2,808 2,991
Accruals 4,960 5,136
Finance debt 7,739 6,634
Current tax payable 1,686 1,666
Provisions 3,324 4,012
================================================================= ============ ============
64,726 58,354
Non-current liabilities
Other payables 13,889 13,946
Derivative financial instruments 3,761 5,513
Accruals 505 469
Finance debt 55,491 51,666
Deferred tax liabilities 7,982 7,238
Provisions 20,620 20,412
Defined benefit pension plan and other post-retirement benefit
plan deficits 9,137 8,875
================================================================= ============ ============
111,385 108,119
============ ============
Total liabilities 176,111 166,473
================================================================= ============ ============
Net assets 100,404 96,843
================================================================= ============ ============ Equity BP shareholders' equity 98,491 95,286 Non-controlling interests 1,913 1,557 ================================================================= ============ ============ Total equity 100,404 96,843 ================================================================= ============ ============
Top of page 16
BP p.l.c. Group results
Fourth quarter and full year 2017
Condensed group cash flow statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
==================================== ======== ======== ======== ========= =========
Operating activities
Profit (loss) before
taxation 1,182 2,955 617 7,180 (2,295)
Adjustments to reconcile
profit (loss) before
taxation
taxation to net cash
provided by operating
activities
Depreciation, depletion
and amortization and
exploration expenditure
written off 4,417 4,121 3,808 17,187 15,779
Impairment and (gain)
loss on sale of
businesses and fixed
assets (272) 16 (553) 6 (2,796)
Earnings from equity-accounted
entities,
less dividends received (820) (111) (605) (1,254) (855)
Net charge for interest
and other finance
expense, less net interest
paid 294 163 310 793 795
Share-based payments 166 177 150 661 779
Net operating charge
for pensions and other
post-retirement benefits,
less contributions
and benefit payments
for unfunded plans (215) (160) (347) (394) (467)
Net charge for provisions,
less payments 2,244 (144) (629) 2,106 4,487
Movements in inventories
and other current
and non-current assets
and liabilities (60) 305 393 (3,352) (3,198)
Income taxes paid (1,033) (1,298) (716) (4,002) (1,538)
==================================== ======== ======== ======== ========= =========
Net cash provided by
operating activities 5,903 6,024 2,428 18,931 10,691
==================================== ======== ======== ======== ========= =========
Investing activities
Expenditure on property,
plant and equipment,
intangible and other
assets (4,422) (4,136) (4,658) (16,562) (16,701)
Acquisitions, net of
cash acquired (16) (146) (1) (327) (1)
Investment in joint ventures (15) (5) (37) (50) (50)
Investment in associates (368) (176) (226) (901) (700)
==================================== ======== ======== ======== ========= =========
Total cash capital expenditure (4,821) (4,463) (4,922) (17,840) (17,452)
Proceeds from disposal
of fixed assets 2,287 149 391 2,936 1,372
Proceeds from disposal
of businesses, net of
cash disposed 173 92 78 478 1,259
Proceeds from loan repayments 8 308 7 349 68
==================================== ======== ======== ======== ========= =========
Net cash used in investing
activities (2,353) (3,914) (4,446) (14,077) (14,753)
==================================== ======== ======== ======== ========= =========
Financing activities
Net issue (repurchase)
of shares (343) - - (343) -
Proceeds from long-term
financing 201 3,078 3,069 8,712 12,442
Repayments of long-term
financing (2,657) (1,239) (1,733) (6,276) (6,685)
Net increase (decrease)
in short-term debt (297) 123 375 (158) 51
Net increase (decrease)
in non-controlling interests 982 - 126 1,063 887
Dividends
paid - BP shareholders (1,627) (1,676) (1,182) (6,153) (4,611)
- non-controlling
interests (32) (32) (24) (141) (107)
====================== ======== ======== ======== ========= =========
Net cash provided by
(used in) financing activities (3,773) 254 631 (3,296) 1,977
==================================== ======== ======== ======== ========= =========
Currency translation
differences relating
to
cash and cash equivalents 29 146 (649) 544 (820)
==================================== ======== ======== ======== ========= =========
Increase (decrease) in
cash and cash equivalents (194) 2,510 (2,036) 2,102 (2,905)
==================================== ======== ======== ======== ========= =========
Cash and cash equivalents
at beginning of period 25,780 23,270 25,520 23,484 26,389
Cash and cash equivalents
at end of period 25,586 25,780 23,484 25,586 23,484
==================================== ======== ======== ======== ========= =========
Top of page 17
BP p.l.c. Group results
Fourth quarter and full year 2017
Notes
Note 1. Basis of preparation
The results for the interim periods and for the year ended 31 December 2017 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 2016 included in BP Annual Report and Form 20-F 2016.
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. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group's consolidated financial statements for the periods presented.
The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP Annual Report and Form 20-F 2017, which do not differ significantly from those used in BP Annual Report and Form 20-F 2016.
Note 2. Gulf of Mexico oil spill
(a) Overview
The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2016 - Financial statements - Note 2 and Legal proceedings on page 261.
The group income statement includes a post-tax charge for the fourth quarter of $1,693 million due to an increase in the provision relating to business economic loss (BEL) and other claims associated with the Deepwater Horizon Court Supervised Settlement Program (DHCSSP). The increase in the provision is primarily a result of significantly higher average claims determinations issued by the DHCSSP in the fourth quarter and the continuing effect of the Fifth Circuit's May 2017 opinion on the matching of revenues with expenses when evaluating BEL claims.
The group income statement for the fourth quarter also includes finance costs relating to the unwinding of discounting effects and a tax charge of $3,012 million in respect of the revaluation of US deferred tax assets related to the Gulf of Mexico oil spill following the reduction in the US federal corporate income tax rate from 35% to 21% enacted in December 2017.
The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items in those statements as set out below.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================== ======== ======== ======== ======== ========
Income statement
Production and manufacturing
expenses 2,221 84 674 2,687 6,640
=============================== ======== ======== ======== ======== ========
Profit (loss) before
interest and taxation (2,221) (84) (674) (2,687) (6,640)
Finance costs 124 122 125 493 494
=============================== ======== ======== ======== ======== ========
Profit (loss) before
taxation (2,345) (206) (799) (3,180) (7,134)
Taxation (2,495) 71 268 (2,222) 3,105
=============================== ======== ======== ======== ======== ========
Profit (loss) for the
period (4,840) (135) (531) (5,402) (4,029)
=============================== ======== ======== ======== ======== ========
The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $65,765 million.
Top of page 18
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 2. Gulf of Mexico oil spill (continued)
31 December 31 December
$ million 2017 2016
====================================== ============ ============
Balance sheet
Current assets
Trade and other receivables 252 194
Current liabilities
Trade and other payables (2,089) (3,056)
Provisions (1,439) (2,330)
======================================= ============ ============
Net current assets (liabilities) (3,276) (5,192)
======================================= ============ ============
Non-current assets
Deferred tax assets 2,067 2,973
Non-current liabilities
Other payables (12,253) (13,522)
Provisions (1,141) (112)
Deferred tax liabilities 3,634 5,119
======================================= ============ ============
Net non-current assets (liabilities) (7,693) (5,542)
======================================= ============ ============
Net assets (liabilities) (10,969) (10,734)
======================================= ============ ============
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================= ======== ======== ======== ======== ========
Cash flow statement -
Operating activities
Profit (loss) before
taxation (2,345) (206) (799) (3,180) (7,134)
Adjustments to reconcile
profit (loss) before
taxation to net cash
provided by
operating activities
Net charge for interest
and other finance
expense, less net interest
paid 124 122 125 493 494
Net charge for provisions,
less payments 2,181 68 (376) 2,542 4,353
Movements in inventories
and other current
and non-current assets
and liabilities (413) (548) (993) (5,191) (4,818)
============================== ======== ======== ======== ======== ========
Pre-tax cash flows (453) (564) (2,043) (5,336) (7,105)
============================== ======== ======== ======== ======== ========
Cash outflows in 2016 and 2017 include payments made under the 2012 agreement with the US government to resolve all federal criminal claims arising from the incident and the 2016 consent decree and settlement agreement with the United States and the five Gulf coast states. Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $284 million and $5,167 million in the fourth quarter and full year of 2017 respectively. For the same periods in 2016, the amount was an outflow of $2,043 million and $6,892 million respectively.
Top of page 19
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 2. Gulf of Mexico oil spill (continued)
(b) Provisions and other payables
Provisions
Movements in the remaining provision, which relates to litigation and claims, are shown in the table below.
$ million ================================ ====== At 1 October 2017 726 Increase in provision 2,210 Reclassified to other payables (50) Utilization (306) ================================= ====== At 31 December 2017 2,580 ================================= ======
Movements in the remaining provision for the full year are shown in the table below.
$ million ================================ ======== At 1 January 2017 2,442 Increase in provision 2,647 Reclassified to other payables (759) Utilization (1,750) ================================= ======== At 31 December 2017 2,580 ================================= ========
The provision includes amounts for the future cost of resolving claims by individuals and businesses for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of natural resources.
PSC settlement
The provision for the cost associated with the 2012 Plaintiffs' Steering Committee (PSC) settlement reflects the latest estimate for claims, including business economic loss claims and associated administration costs. However, the amounts ultimately payable may differ from the amount provided and the timing of payments is uncertain.
The increase in the provision in the quarter is primarily a result of significantly higher average claims determinations issued by the Deepwater Horizon Court Supervised Settlement Program (settlement programme) during the fourth quarter and the continuing effect of the May 2017 Fifth Circuit opinion on the policy addressing the matching of revenue with expenses in relation to business economic loss claims. See Legal proceedings on page 29 for further details on the May 2017 Fifth Circuit opinion and related appeals.
The settlement programme's determination of business economic loss claims was substantially completed by the end of 2017. Nevertheless, a significant number of business economic loss claims determined by the settlement programme have been and continue to be appealed by BP and/or the claimants, with the total value of claims under appeal or eligible for appeal approximately doubling during the fourth quarter. The provision at the end of the year reflects the latest estimate of the amounts that are expected ultimately to be paid to resolve these claims. Depending upon the resolution of these claims (including how such resolution may be impacted by the May 2017 Fifth Circuit opinion), the amounts payable may differ from those currently provided.
The settlement programme is expected to issue determinations with respect to the remaining business economic loss claims in the first half of 2018. Whilst BP has a better understanding of the total population of remaining claims, there is uncertainty around how these claims will ultimately be determined, including in relation to the impact of the May 2017 Fifth Circuit opinion on the determination of the business economic claims.
Payments to resolve outstanding claims under the PSC settlement are now expected to be made over a number of years. The timing of payments, however, is uncertain, and, in particular, will be impacted by how long it takes to resolve claims that have been appealed and may be appealed in the future.
Other payables
Other payables include amounts payable under the 2012 agreement with the US government to resolve all federal criminal claims arising from the incident, amounts payable under the consent decree and settlement agreement with the United States and the five Gulf coast states for natural resource damages, state claims and Clean Water Act penalties, BP's remaining commitment to fund the Gulf of Mexico Research Initiative, and amounts payable for certain economic loss and property damage claims.
Further information on provisions, other payables, and contingent liabilities is provided in BP Annual Report and Form
20-F 2016 - Financial statements - Note 2.
Top of page 20
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 3. Analysis of replacement cost profit (loss) before interest and tax and
reconciliation to profit (loss) before taxation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================== ======== ======== ======== ======== ========
Upstream 1,928 1,242 692 5,221 574
Downstream 1,773 2,175 899 7,221 5,162
Rosneft 321 137 158 836 590
Other businesses and
corporate(a) (2,833) (460) (1,117) (4,445) (8,157)
=============================== ======== ======== ======== ======== ========
1,189 3,094 632 8,833 (1,831)
Consolidation adjustment
- UPII* (149) (130) (132) (212) (196)
=============================== ======== ======== ======== ======== ========
RC profit (loss) before
interest and tax* 1,040 2,964 500 8,621 (2,027)
Inventory holding gains
(losses)*
Upstream - 13 19 8 60
Downstream 719 520 558 758 1,484
Rosneft (net of tax) 97 24 24 87 53
=============================== ======== ======== ======== ======== ========
Profit (loss) before
interest and tax 1,856 3,521 1,101 9,474 (430)
Finance costs 616 511 434 2,074 1,675
Net finance expense relating
to pensions and
other post-retirement
benefits 58 55 50 220 190
=============================== ======== ======== ======== ======== ========
Profit (loss) before
taxation 1,182 2,955 617 7,180 (2,295)
=============================== ======== ======== ======== ======== ========
RC profit (loss) before
interest and tax*
US (1,509) 428 (1,646) (266) (8,311)
Non-US 2,549 2,536 2,146 8,887 6,284
=============================== ======== ======== ======== ======== ========
1,040 2,964 500 8,621 (2,027)
======== ======== ======== ======== ========
(a) Includes costs related to the Gulf of Mexico oil
spill. See Note 2 for further information.
Top of page 21
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 4. Segmental analysis
Sales and other operating Fourth Third Fourth
revenues
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=========================== ======== ======== ======== ======== ========
By segment
Upstream 12,651 10,969 9,129 45,440 33,188
Downstream 62,697 54,881 46,834 219,853 167,683
Other businesses and
corporate 480 378 424 1,469 1,667
============================ ======== ======== ======== ======== ========
75,828 66,228 56,387 266,762 202,538
======== ======== ======== ======== ========
Less: sales and other
operating revenues
between segments
Upstream 6,929 5,312 4,695 24,179 17,581
Downstream 913 765 523 1,800 1,291
Other businesses and
corporate 170 133 162 575 658
============================ ======== ======== ======== ======== ========
8,012 6,210 5,380 26,554 19,530
======== ======== ======== ======== ========
Third party sales and
other operating revenues
Upstream 5,722 5,657 4,434 21,261 15,607
Downstream 61,784 54,116 46,311 218,053 166,392
Other businesses and
corporate 310 245 262 894 1,009
============================ ======== ======== ======== ======== ========
Total sales and other
operating revenues 67,816 60,018 51,007 240,208 183,008
============================ ======== ======== ======== ======== ========
By geographical area
US 24,127 21,853 18,642 88,709 68,772
Non-US 50,778 44,212 37,381 176,113 128,771
============================ ======== ======== ======== ======== ========
74,905 66,065 56,023 264,822 197,543
Less: sales and other
operating revenues
between areas 7,089 6,047 5,016 24,614 14,535
============================ ======== ======== ======== ======== ========
67,816 60,018 51,007 240,208 183,008
======== ======== ======== ======== ========
Depreciation, depletion Fourth Third Fourth
and amortization
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
========================= ======== ======== ======== ======= =======
Upstream
US 1,107 1,154 1,216 4,631 4,396
Non-US 2,339 2,154 1,859 8,637 7,835
==========================
3,446 3,308 3,075 13,268 12,231
======== ======== ======== ======= =======
Downstream
US 218 222 219 875 856
Non-US 301 287 273 1,141 1,094
==========================
519 509 492 2,016 1,950
======== ======== ======== ======= =======
Other businesses and
corporate
US 16 17 20 65 71
Non-US 64 70 55 235 253
========================== ======== ======== ======== ======= =======
80 87 75 300 324
======== ======== ======== ======= =======
Total group 4,045 3,904 3,642 15,584 14,505
========================== ======== ======== ======== ======= =======
Note 5. Production and similar taxes
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=========== ======== ======== ======== ====== =====
US 44 (69) 38 52 155
Non-US(a) 467 518 161 1,723 528
============ ======== ======== ======== ====== =====
511 449 199 1,775 683
======== ======== ======== ====== =====
(a) Amounts reported in prior quarters of 2017 have been
amended as certain charges are better presented as
Production and similar taxes rather than the previous
presentation which showed the amounts as royalties
within the Purchases line; there is no impact upon
2016. Amended total Production and similar taxes
are $468 million for the first quarter, $347 million
for the second quarter and $449 million for the third
quarter. The previously reported amounts were $306
million, $189 million and $278 million respectively.
Amended non-US Production and similar taxes are $432
million for the first quarter, $306 million for the
second quarter and $518 million for the third quarter.
The previously reported amounts were $270 million,
$148 million and $347 million respectively. Purchases
have been amended by the same amounts and there is,
therefore, no impact on reported profit.
Top of page 22
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 6. 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 51 million ordinary shares for a total consideration of $343 million, including transaction costs of $2 million, as part of the share buyback programme as 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.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
================================ =========== =========== =========== =========== ===========
Results for the period
Profit (loss) for the
period attributable
to
BP shareholders 27 1,769 497 3,389 115
Less: preference dividend - - - 1 1
================================= =========== =========== =========== =========== ===========
Profit (loss) attributable
to BP ordinary
shareholders 27 1,769 497 3,388 114
================================= =========== =========== =========== =========== ===========
Number of shares (thousand)(a)
Basic weighted average
number of
shares outstanding 19,804,932 19,756,117 18,995,725 19,692,613 18,744,800
ADS equivalent 3,300,822 3,292,686 3,165,954 3,282,102 3,124,133
================================= =========== =========== =========== =========== ===========
Weighted average number
of shares
outstanding used to
calculate
diluted earnings per
share 19,929,655 19,866,745 19,107,599 19,816,442 18,855,319
ADS equivalent 3,321,609 3,311,124 3,184,599 3,302,740 3,142,553
================================= =========== =========== =========== =========== ===========
Shares in issue at period-end 19,817,325 19,797,657 19,438,990 19,817,325 19,438,990
ADS equivalent 3,302,887 3,299,609 3,239,831 3,302,887 3,239,831
================================= =========== =========== =========== =========== ===========
(a) Excludes treasury shares and includes certain shares
that will be issued in the future under employee
share-based payment plans.
Note 7. Dividends
Dividends payable
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 29 March 2018 to shareholders and American Depositary Share (ADS) holders on the register on 16 February 2018. The corresponding amount in sterling is due to be announced on 19 March 2018, calculated based on the average of the market exchange rates for the four dealing days commencing on 13 March 2018. Holders of ADSs are expected to receive $0.600 per ADS (less applicable fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the fourth quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
Fourth Third Fourth
quarter quarter quarter Year Year
2017 2017 2016 2017 2016
============================= ======== ======== ======== ======= =======
Dividends paid per ordinary
share
cents 10.000 10.000 10.000 40.000 40.000
pence 7.443 7.621 7.931 30.979 29.418
Dividends paid per ADS
(cents) 60.00 60.00 60.00 240.00 240.00
============================== ======== ======== ======== ======= =======
Scrip dividends
Number of shares issued
(millions) 53.3 51.3 129.2 289.8 548.0
Value of shares issued
($ million) 354 298 710 1,714 2,858
============================== ======== ======== ======== ======= =======
Top of page 23
BP p.l.c. Group results
Fourth quarter and full year 2017
Note 8. Net Debt*
Net debt ratio * Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
================================= ======== ======== ======== ======== =======
Gross debt 63,230 65,784 58,300 63,230 58,300
Fair value (asset) liability
of hedges related
to finance debt(a) 175 (227) 697 175 697
================================== ======== ======== ======== ======== =======
63,405 65,557 58,997 63,405 58,997
Less: cash and cash equivalents 25,586 25,780 23,484 25,586 23,484
================================== ======== ======== ======== ======== =======
Net debt 37,819 39,777 35,513 37,819 35,513
================================== ======== ======== ======== ======== =======
Equity 100,404 100,138 96,843 100,404 96,843
Net debt ratio 27.4% 28.4% 26.8% 27.4% 26.8%
================================== ======== ======== ======== ======== =======
Analysis of changes in Fourth Third Fourth
net debt
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
================================= ======== ======== ======== ======== ========
Opening balance
Finance debt 65,784 63,004 58,997 58,300 53,168
Fair value (asset) liability
of hedges related
to finance debt(a) (227) 60 (1,113) 697 379
Less: cash and cash equivalents 25,780 23,270 25,520 23,484 26,389
================================== ======== ======== ======== ======== ========
Opening net debt 39,777 39,794 32,364 35,513 27,158
================================== ======== ======== ======== ======== ========
Closing balance
Finance debt 63,230 65,784 58,300 63,230 58,300
Fair value (asset) liability
of hedges related
to finance debt(a) 175 (227) 697 175 697
Less: cash and cash equivalents 25,586 25,780 23,484 25,586 23,484
================================== ======== ======== ======== ======== ========
Closing net debt 37,819 39,777 35,513 37,819 35,513
================================== ======== ======== ======== ======== ========
Decrease (increase) in
net debt 1,958 17 (3,149) (2,306) (8,355)
================================== ======== ======== ======== ======== ========
Movement in cash and
cash equivalents
(excluding exchange
adjustments) (223) 2,364 (1,387) 1,558 (2,085)
Net cash outflow (inflow)
from financing(b) 2,753 (1,962) (1,711) (2,278) (5,808)
Other movements (299) (186) (146) (564) 278
================================== ======== ======== ======== ======== ========
Movement in net debt
before exchange effects 2,231 216 (3,244) (1,284) (7,615)
Exchange adjustments (273) (199) 95 (1,022) (740)
================================== ======== ======== ======== ======== ========
Decrease (increase) in
net debt 1,958 17 (3,149) (2,306) (8,355)
================================== ======== ======== ======== ======== ========
(a) 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 $634 million (third
quarter 2017 liability of $883 million and fourth
quarter 2016 liability of $1,962 million) are not
included in the calculation of net debt shown above
as hedge accounting is not applied for these instruments.
(b) Comprises proceeds and repayments of long-term financing
and net (increase) decrease in short-term debt.
Note 9. Inventory valuation
A provision of $474 million was held at 31 December 2017 ($501 million at 30 September 2017 and $501 million at 31 December 2016) to write inventories down to their net realizable value. The net movement credited to the income statement during the fourth quarter 2017 was $24 million (third quarter 2017 was a credit of $131 million and fourth quarter 2016 was a charge of $13 million).
Note 10. Statutory accounts
The financial information shown in this publication, which was approved by the Board of Directors on 5 February 2018, is unaudited and does not constitute statutory financial statements. Audited financial information will be published in BP Annual Report and Form 20-F 2017. BP Annual Report and Form 20-F 2016 has been filed with the Registrar of Companies in England and Wales. The report of the auditor on those accounts was unqualified and did not contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.
Top of page 24
BP p.l.c. Group results
Fourth quarter and full year 2017
Additional information
Capital expenditure*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
=================================== ======== ======== ======== ======= =======
Capital expenditure on
a cash basis
Organic capital expenditure* 4,622 3,993 4,473 16,501 16,675
Inorganic capital expenditure*(a) 199 470 449 1,339 777
==================================== ======== ======== ======== ======= =======
4,821 4,463 4,922 17,840 17,452
======== ======== ======== ======= =======
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================= ======== ======== ======== ======= =======
Organic capital expenditure
by segment
Upstream
US 726 827 602 2,999 3,415
Non-US 2,819 2,601 2,918 10,764 10,929
============================== ======== ======== ======== ======= =======
3,545 3,428 3,520 13,763 14,344
======== ======== ======== ======= =======
Downstream
US 349 159 303 809 774
Non-US 598 356 530 1,590 1,328
============================== ======== ======== ======== ======= =======
947 515 833 2,399 2,102
======== ======== ======== ======= =======
Other businesses and
corporate
US 30 10 25 64 32
Non-US 100 40 95 275 197
============================== ======== ======== ======== ======= =======
130 50 120 339 229
======== ======== ======== ======= =======
4,622 3,993 4,473 16,501 16,675
======== ======== ======== ======= =======
Organic capital expenditure
by geographical area
US 1,105 996 930 3,872 4,221
Non-US 3,517 2,997 3,543 12,629 12,454
============================== ======== ======== ======== ======= =======
4,622 3,993 4,473 16,501 16,675
======== ======== ======== ======= =======
(a) Third quarter and full year 2017 include amounts
paid to acquire interests in Mauritania and Senegal
and other items. Full year 2017 also includes amounts
paid to purchase an interest in the Zohr gas field
in Egypt and in exploration blocks in Senegal.
Top of page 25
BP p.l.c. Group results
Fourth quarter and full year 2017
Non-operating items*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================= ======== ======== ======== ======== ========
Upstream
Impairment and gain (loss)
on sale of
businesses and fixed
assets(a)(b) (181) 18 479 (563) 2,391
Environmental and other
provisions 1 - - 1 (8)
Restructuring, integration
and rationalization costs (4) (3) (71) (24) (373)
Fair value gain (loss)
on embedded derivatives 2 1 (17) 33 32
Other(b)(c) 38 (162) 245 (118) (289)
============================== ======== ======== ======== ======== ========
(144) (146) 636 (671) 1,753
======== ======== ======== ======== ========
Downstream
Impairment and gain (loss)
on sale of businesses
and fixed assets(d) 469 (35) 72 579 405
Environmental and other
provisions (19) - 2 (19) (73)
Restructuring, integration
and rationalization costs (69) (19) (103) (171) (300)
Fair value gain (loss) - - - - -
on embedded derivatives
Other 1 (1) (48) - (56)
============================== ======== ======== ======== ======== ========
382 (55) (77) 389 (24)
======== ======== ======== ======== ========
Rosneft
Impairment and gain (loss)
on sale of businesses
and fixed assets - - 62 - 62
Environmental and other - - - - -
provisions
Restructuring, integration - - - - -
and rationalization costs
Fair value gain (loss) - - - - -
on embedded derivatives
Other - - (39) - (39)
============================== ======== ======== ======== ======== ========
- - 23 - 23
======== ======== ======== ======== ========
Other businesses and
corporate
Impairment and gain (loss)
on sale of businesses
and fixed assets (16) 1 2 (22) -
Environmental and other
provisions (153) - - (156) (134)
Restructuring, integration
and rationalization costs (35) (6) (21) (72) (90)
Fair value gain (loss) - - - - -
on embedded derivatives
Gulf of Mexico oil spill(e) (2,221) (84) (674) (2,687) (6,640)
Other (14) 27 - 90 (55)
============================== ======== ======== ======== ======== ========
(2,439) (62) (693) (2,847) (6,919)
======== ======== ======== ======== ========
Total before interest
and taxation (2,201) (263) (111) (3,129) (5,167)
Finance costs(e) (124) (122) (125) (493) (494)
============================== ======== ======== ======== ======== ========
Total before taxation (2,325) (385) (236) (3,622) (5,661)
Taxation credit (charge)
on non-operating items(f) 669 111 56 1,172 2,833
Taxation - impact of
US tax reform(g) (859) - - (859) -
============================== ======== ======== ======== ======== ========
Total after taxation
for period (2,515) (274) (180) (3,309) (2,828)
============================== ======== ======== ======== ======== ========
(a) Fourth quarter and full year 2017 include an impairment
charge relating to the US Lower 48 business, partially
offset by gains associated with asset divestments.
In addition, full year 2017 includes an impairment
charge arising following the announcement of the
agreement to sell the Forties Pipeline System business
to INEOS. Fourth quarter and full year 2016 principally
relate to impairment reversals.
(b) Fourth quarter and full year 2016 include a $319-million
exploration write-back relating to Block KG D6 in
India. In addition, an impairment reversal of $234
million was also recorded in relation to this block.
(c) Fourth quarter and full year 2017 include BP's share
of an impairment reversal recognized by the Angola
LNG equity-accounted entity, partially offset by
other items. Third quarter and full year 2017 include
the write-off of $145 million in relation to the
value ascribed to certain licences in the deepwater
Gulf of Mexico as part of the accounting for the
acquisition of upstream assets from Devon Energy
in 2011. Full year 2016 includes the write-off of
$334 million in relation to the value ascribed to
the licence in Brazil as part of the accounting
for the acquisition of upstream assets from Devon
Energy in 2011.
(d) Fourth quarter and full year 2017 gain primarily
reflects the disposal of our shareholding in the
SECCO joint venture.
(e) See Note 2 for further details regarding costs relating
to the Gulf of Mexico oil spill.
(f) Fourth quarter and full year 2017 include the tax
effect of the increase in the provision in the fourth
quarter for business economic loss and other claims
associated with the Deepwater Horizon Court Supervised
Settlement Program (DHCSSP) at the new US tax rate.
(g) Fourth quarter and full year 2017 include the impact
of US tax reform, which reduced the US federal corporate
income tax rate from 35% to 21% effective from 1
January 2018. The impact disclosed has been calculated
as the change in deferred tax balances at 31 December
2017, excluding the increase in the provision in
the fourth quarter for business economic loss and
other claims associated with the DHCSSP, which arises
following the reduction in the tax rate. The impact
of the US tax reform has been treated as a non-operating
item because it is not considered to be part of
underlying business operations, has a material impact
upon the reported result and is substantially impacted
by Gulf of Mexico oil spill charges, which are also
treated as non-operating items. Separate disclosure
is considered meaningful and relevant to investors.
Top of page 26
BP p.l.c. Group results
Fourth quarter and full year 2017
Non-GAAP information on fair value accounting effects
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
========================== ======== ======== ======== ====== ========
Favourable (adverse)
impact relative to
management's measure
of performance
Upstream (151) (174) (344) 27 (637)
Downstream (83) (108) 99 (135) (448)
=========================== ======== ======== ======== ====== ========
(234) (282) (245) (108) (1,085)
Taxation credit (charge) 59 70 97 12 329
=========================== ======== ======== ======== ====== ========
(175) (212) (148) (96) (756)
======== ======== ======== ====== ========
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 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. In addition, derivative instruments are used to manage the price risk associated with certain future natural gas sales. 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 storage capacity, oil and gas processing and liquefied natural gas (LNG) 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 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 certain derivative instruments used to risk manage certain LNG and oil and gas contracts and gas sales 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. The impacts of fair value accounting effects, relative to management's internal measure of performance, are shown in the table above. A reconciliation to GAAP information is set out below.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2017 2017 2016 2017 2016
============================ ======== ======== ======== ====== ========
Upstream
Replacement cost profit
before interest and
tax adjusted for fair
value accounting effects 2,079 1,416 1,036 5,194 1,211
Impact of fair value
accounting effects (151) (174) (344) 27 (637)
============================= ======== ======== ======== ====== ========
Replacement cost profit
before
interest and tax 1,928 1,242 692 5,221 574
============================= ======== ======== ======== ====== ========
Downstream
Replacement cost profit
before interest and
tax adjusted for fair
value accounting effects 1,856 2,283 800 7,356 5,610
Impact of fair value
accounting effects (83) (108) 99 (135) (448)
============================= ======== ======== ======== ====== ========
Replacement cost profit
before interest and tax 1,773 2,175 899 7,221 5,162
============================= ======== ======== ======== ====== ========
Total group
Profit (loss) before
interest and tax adjusted
for
fair value accounting
effects 2,090 3,803 1,346 9,582 655
Impact of fair value
accounting effects (234) (282) (245) (108) (1,085)
============================= ======== ======== ======== ====== ========
Profit (loss) before
interest and tax 1,856 3,521 1,101 9,474 (430)
============================= ======== ======== ======== ====== ========
Top of page 27
BP p.l.c. Group results
Fourth quarter and full year 2017
Readily marketable inventory* (RMI)
31 December 31 December
$ million 2017 2016
==================== ============ ============
RMI at fair value* 5,661 5,952
Paid-up RMI* 2,688 2,705
===================== ============ ============
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, 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 December 31 December
$ million 2017 2016
================================================= ============ ============
Reconciliation of total inventory to
paid-up RMI
Inventories as reported on the group
balance sheet 19,011 17,655
Less: (a) inventories which are not
oil and oil products and (b) oil and
oil
product inventories which are not risk-managed
by IST (13,929) (12,131)
RMI on an IFRS basis 5,082 5,524
Plus: difference between RMI at fair
value and RMI on an IFRS basis 579 428
================================================== ============ ============
RMI at fair value 5,661 5,952
Less: unpaid RMI* at fair value (2,973) (3,247)
================================================== ============ ============
Paid-up RMI 2,688 2,705
================================================== ============ ============
Top of page 28
BP p.l.c. Group results
Fourth and full year 2017
Realizations* and marker prices
Fourth Third Fourth
quarter quarter quarter Year Year
2017 2017 2016 2017 2016
============================= ======== ======== ======== ====== ======
Average realizations(a)
Liquids* ($/bbl)
US 51.50 43.58 41.93 46.55 36.25
Europe 57.92 50.02 45.66 52.13 40.53
Rest of World(b) 59.09 49.54 45.27 51.83 39.29
BP Average(b) 56.16 47.45 43.89 49.92 38.27
============================== ======== ======== ======== ====== ======
Natural gas ($/mcf)
US 2.28 2.34 2.29 2.36 1.90
Europe 5.56 5.10 4.81 5.09 4.40
Rest of World 3.51 3.03 3.35 3.45 3.19
BP Average 3.23 2.89 3.08 3.19 2.84
============================== ======== ======== ======== ====== ======
Total hydrocarbons* ($/boe)
US 35.75 31.30 30.32 33.47 25.76
Europe 52.17 45.26 40.48 46.09 36.31
Rest of World(b) 37.27 33.13 30.98 35.44 28.62
BP Average(b) 37.48 33.23 31.40 35.38 28.24
============================== ======== ======== ======== ====== ======
Average oil marker prices
($/bbl)
Brent 61.26 52.08 49.33 54.19 43.73
West Texas Intermediate 55.23 48.18 49.23 50.79 43.34
Western Canadian Select 38.74 38.16 35.44 38.55 30.78
Alaska North Slope 61.31 52.04 50.06 54.43 43.67
Mars 57.70 48.46 46.23 50.65 40.14
Urals (NWE - cif) 60.17 50.73 47.73 52.84 41.68
============================== ======== ======== ======== ====== ======
Average natural gas marker
prices
Henry Hub gas price(c)
($/mmBtu) 2.93 2.99 2.98 3.11 2.46
UK Gas - National Balancing
Point (p/therm) 51.94 41.59 45.76 44.95 34.63
============================== ======== ======== ======== ====== ======
(a) Based on sales of consolidated subsidiaries only
- this excludes equity-accounted entities.
(b) Production volume recognition methodology for our
Technical Service Contract arrangement in Iraq has
been simplified to exclude the impact of oil price
movements on lifting imbalances. A minor adjustment
has been made to fourth quarter and full year 2016.
There is no impact on the financial results.
(c) Henry Hub First of Month Index.
Exchange rates
Fourth Third Fourth
quarter quarter quarter Year Year
2017 2017 2016 2017 2016
========================== ======== ======== ======== ====== ======
$/GBP average rate for
the period 1.33 1.31 1.24 1.29 1.35
$/GBP period-end rate 1.34 1.34 1.22 1.34 1.22
$/EUR average rate for
the period 1.18 1.17 1.08 1.13 1.11
$/EUR period-end rate 1.19 1.18 1.05 1.19 1.05
Rouble/$ average rate
for the period 58.46 58.99 63.12 58.36 67.06
Rouble/$ period-end rate 57.60 57.94 60.63 57.60 60.63
=========================== ======== ======== ======== ====== ======
Top of page 29
BP p.l.c. Group results
Fourth quarter and full year 2017
Legal proceedings
The following discussion sets out the material developments in the group's material legal proceedings during the fourth quarter. For a full discussion of the group's material legal proceedings, see pages 261-265 of BP Annual Report and Form 20-F 2016, and page 35 of BP p.l.c. Group results second quarter and half year 2017.
Matters relating to the Deepwater Horizon accident and oil spill (the Incident)
Plaintiffs' Steering Committee (PSC) settlements - Economic and Property Damages Settlement Agreement The Economic and Property Damages Settlement established a court-supervised settlement programme (CSSP) to resolve certain economic and property damage claims arising from the Incident.
Following numerous court decisions, on 31 March 2015, the United States district court in New Orleans denied the PSC motion seeking to alter or amend a revised policy relating to business economic loss claims. Such policy required the matching of revenue with the expenses incurred by claimants to generate that revenue, even where the revenue and expenses were recorded at different times. The PSC appealed the district court decision and, on 22 May 2017, the Fifth Circuit issued an opinion upholding the policy in part and reversing the policy in part. The Fifth Circuit ordered that the portion of the policy upheld, which covers the substantial majority of the remaining business economic loss claims, be applied as the governing methodology for all applicable business economic loss claims. BP filed a petition for a rehearing which was denied on 21 June 2017. In May to July 2017, the district court issued a series of orders instructing the CSSP on how to implement the Fifth Circuit's opinion. On 10 August 2017, the district court denied BP's motion to clarify or reconsider these orders. BP appealed all of these orders and decisions on 8 September 2017; the appeals have been consolidated with four appeals filed by claimants in early to mid-September 2017 challenging the same set of orders and decisions, albeit raising different issues than are raised by BP's appeal. These appeals are currently pending before the Fifth Circuit.
As a result of significantly higher average claims determinations issued by the CSSP in the period and the continuing effect of the May 2017 Fifth Circuit opinion, the provision for the costs associated with the 2012 PSC settlement was increased in the fourth quarter of 2017. The amounts ultimately payable may differ from the amount provided and the timing of payments is uncertain. See Note 2 on page 17 for further details.
Other civil complaints Following numerous court decisions, on 11 January 2018, the United States district court in New Orleans issued an order requiring all remaining private plaintiffs with economic loss or property damage claims outside of the CSSP to file by 11 April 2018 a verified sworn statement regarding the actual damages each such plaintiff seeks in its pending litigation and an explanation of how those alleged damages were causally related to the Incident.
Non-US government lawsuits On 3 December 2015 and 29 March 2016, Acciones Colectivas de Sinaloa filed two class actions (which have since been consolidated) in a Mexican Federal District Court on behalf of several Mexican states against BP Exploration & Production Inc., BP America Production Company (BPAPC), and other purported BP subsidiaries. In these class actions, plaintiffs seek an order requiring the BP defendants to repair the damage to the Gulf of Mexico, to pay penalties, and to compensate plaintiffs for damage to property, to health and for economic loss. BP was formally served with the action on 8 December 2017.
Other legal proceedings
California False Claims Act matters On 4 November 2014, the California Attorney General filed a notice in California state court that it was intervening in a previously-sealed California False Claims Act (CFCA) lawsuit filed by relator Christopher Schroen against BP, BP Energy Company, BP Corporation North America Inc., BP Products and BPAPC. On 7 January 2015, the California Attorney General filed a complaint in intervention alleging that BP violated the CFCA and the California Unfair Competition Law by falsely and fraudulently overcharging California state entities for natural gas and making similar allegations in addition to individual claims. In January 2018 the parties reached a settlement pursuant to which BP, while denying liability, agreed to pay $102 million to the state of California.
Top of page 30
BP p.l.c. Group results
Fourth quarter and full year 2017
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.
Adjusted effective tax rate (ETR) is a non-GAAP measure. The adjusted ETR is calculated by dividing taxation on an underlying 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. For the 2016 calculation, taxation on an underlying RC basis also reflects an adjustment to eliminate a $434-million credit that arises from the reduction in the rate of the North Sea supplementary charge in the third quarter of 2016. Information on underlying RC profit or loss is provided below. BP believes it is helpful to disclose the adjusted 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.
BP-operated Upstream plant reliability 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 weather related downtime.
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) relating to certain physical inventories, pipelines and storage capacity. Management uses a fair-value basis to value these items which, under IFRS, are accounted for on an accruals basis with the exception of trading inventories, which are valued using spot prices. The adjustments have the effect of aligning the valuation basis of the physical positions with that of any associated derivative instruments, which are required to be fair valued under IFRS, in order to provide a more representative view of the ultimate economic value. Further information is provided on page 26.
Gearing - See Net debt and net debt ratio definition.
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.
Top of page 31
BP p.l.c. Group results
Fourth quarter and full year 2017
Glossary (continued)
Major projects have a BP net investment of at least $250 million, or are considered to be of strategic importance to BP or of a high degree of complexity.
Net debt and net debt ratio are non-GAAP measures. Net debt is calculated as gross 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. The net debt ratio is defined as the ratio of net debt to the total of net debt plus shareholders' equity. All components of equity are included in the denominator of the calculation. BP believes these measures provide useful information to investors. Net debt enables investors to see the economic effect of gross debt, related hedges and cash and cash equivalents in total. The net debt ratio enables investors to see how significant net debt is relative to equity from shareholders. The derivatives are reported on the balance sheet within the headings 'Derivative financial instruments'. The nearest equivalent GAAP measures on an IFRS basis are gross debt and gross debt ratio. A reconciliation of gross debt to net debt 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. The gross data is the equivalent capacity on a gross-JV basis, which includes 100% of the capacity of equity-accounted entities where BP has partial ownership.
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 amounts related to the Gulf of Mexico oil spill / Gulf of Mexico oil spill payments or Underlying operating cash flow is a non-GAAP measure calculated by excluding post-tax operating cash flows relating to the Gulf of Mexico oil spill as reported in Note 2 from Net cash provided by operating activities as reported in the condensed group cash flow statement. BP believes it is helpful to disclose net cash provided by operating activities excluding amounts related to the Gulf of Mexico oil spill because this measure allows for more meaningful comparisons between reporting periods. The nearest equivalent measure on an IFRS basis is Net cash provided by operating activities.
Operating cash margin is operating cash flow divided by the applicable number of barrels of oil equivalent produced, at $52/bbl flat oil prices. Expected operating cash margins are calculated over the period 2016-2025.
Organic balance and organic cash balance are non-GAAP terms that refer to the point BP's organic sources of cash equal organic uses of cash. Organic sources of cash and organic uses of cash are referred to as organic cash flows which is also a non-GAAP measure. Organic sources of cash is the sum of operating cash flow, excluding amounts related to the Gulf of Mexico oil spill, and proceeds of loan repayments. Organic uses of cash is organic capital expenditure plus dividends. BP believes that the organic balance point is useful for investors because it is closely tracked by management to evaluate BP's financial 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 nearest equivalent measure on an IFRS basis for organic sources of cash is net cash provided by operating activities and the nearest equivalent measures on an IFRS basis for organic uses of cash are total cash capital expenditure and dividends paid - BP shareholders.
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.
Production-sharing agreement (PSA) / Production-sharing contract is an arrangement through which an oil 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.
Top of page 32
BP p.l.c. Group results
Fourth quarter and full year 2017
Glossary (continued)
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, 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, 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 is the measure of profit or loss that is required to be disclosed for each operating segment under IFRS. 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.
RC profit or loss per share is a non-GAAP measure. Earnings per share is defined in Note 6. RC profit or loss per share is calculated using the same denominator. The numerator used is RC profit or loss attributable to BP shareholders rather than profit or loss attributable to BP shareholders. BP believes it is helpful to disclose the RC profit or loss per share because this measure excludes the impact of price changes on the replacement of inventories and allows for more meaningful comparisons between reporting periods. The nearest equivalent measure on an IFRS basis is basic earnings per share based on profit or loss for the period attributable to BP shareholders.
Reported recordable injury frequency measures the number of reported work-related employee and contractor incidents that result in a fatality or injury per 200,000 hours worked. This represents reported incidents occurring within BP's operational HSSE reporting boundary. That boundary includes BP's own operated facilities and certain other locations or situations.
Reserves replacement ratio is the extent to which production is replaced by proved reserves additions. This ratio is expressed in oil equivalent terms and includes changes resulting from revisions to previous estimates, improved recovery, and extensions and discoveries.
Return on average capital employed (ROACE) is a non-GAAP measure and is underlying replacement cost profit, after adding back non-controlling interest and interest expense net of notional tax at an assumed 35%, divided by average capital employed, excluding cash and cash equivalents and goodwill. Interest expense is finance cost excluding the unwinding of the discount on provisions and other payables, and for full year 2017 interest expense was $1,421 million before tax. BP believes it is helpful to disclose the ROACE because this measure gives an indication of the company's capital efficiency. The nearest GAAP measures of the numerator and denominator are profit or loss for the period attributable to BP shareholders and average capital employed respectively.
Tier 1 process safety events are losses of primary containment from a process of greatest consequence - causing harm to a member of the workforce, costly damage to equipment or exceeding defined quantities. 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.
Top of page 33
BP p.l.c. Group results
Fourth quarter and full year 2017
Glossary (continued)
Underlying production is production after adjusting for divestments and entitlement impacts in our production-sharing agreements. 2017 underlying production does not include the Abu Dhabi onshore concession renewal.
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. Underlying profit in the headline on page 1 refers to full year underlying RC profit for the group.
Underlying RC profit or loss per share is a non-GAAP measure. Earnings per share is defined in Note 6. 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 operating efficiency is calculated as production for BP-operated sites, excluding US Lower 48 and adjusted for certain items including entitlement impacts in our production-sharing agreements divided by installed production capacity for BP-operated sites, excluding US Lower 48. Installed production capacity is the agreed rate achievable (measured at the export end of the system) when the installed production system (reservoir, wells, plant and export) is fully optimized and operated at full rate with no planned or unplanned deferrals.
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.
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BP p.l.c. Group results
Fourth quarter and full year 2017
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 (the 'PSLRA'), 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 - 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: expectations regarding the expected quarterly dividend payment and timing of such payment; plans and expectations regarding cash flows and returns to 2021 and beyond; expectations regarding 2018 organic capital expenditure and depreciation, depletion and amortization charges; plans and expectations with respect to gearing including to target gearing within a 20-30% band; plans and expectations to target a net debt ratio of 20-30%; expectations regarding divestment transactions and the amount and timing of divestment proceeds; expectations regarding the adjusted effective tax rate in 2018; plans and expectations regarding the continuation of the share buyback programme; expectations regarding Upstream 2018 underlying production and first-quarter 2018 reported production; expectations regarding Downstream first-quarter 2018 refining margins, turnaround activity and discounts for North American heavy crude oil; expectations regarding Other businesses and corporate 2018 average quarterly charges; expectations with respect to cash margins of 2016 and 2017 Upstream project start-ups; plans and expectations regarding the joint development agreement with Rosneft with respect to subsoil resources within the Kharampurskoe and Festivalnoye licence areas; plans and expectations regarding the joint ventures with Shandong Dongming Petrochemical Group; plans and expectations regarding the strategic partnership with Lightsource; expectations regarding the determination of business economic loss claims in respect of the 2012 PSC settlement; and expectations with respect to the timing and amount of future payments relating to the Gulf of Mexico oil spill including 2012 PSC settlement payments. 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 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 divestments; future levels of industry product supply, demand and pricing, including supply growth in North America; OPEC quota restrictions; PSA 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, under "Principal risks and uncertainties" in our Form 6-K for the period ended 30 June 2017 and under "Risk factors" in BP Annual Report and Form 20-F 2016 as filed with the US Securities and Exchange Commission.
This document contains references to non-proved resources and production outlooks based on non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov.
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 5183 +1 281 892 3421
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
This information is provided by RNS
The company news service from the London Stock Exchange
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