TIDMBP.
RNS Number : 4933L
BP PLC
28 April 2015
press release
28 April 2015
BP first quarter 2015 results
-- Underlying replacement cost profit 20% down on year earlier,
15% higher than previous quarter
-- Focus on rebalancing BP - resetting capital expenditure,
managing cost, delivering divestments
BP today reported its results for first quarter of 2015.
Underlying replacement cost profit(1) for the quarter was $2.6
billion compared with $3.2 billion for the same period in 2014 and
$2.2 billion for the fourth quarter of 2014.
"We are resetting and rebalancing BP to meet the challenges of a
possible period of sustained lower prices. Our results today
reflect both this weaker environment and the actions we are taking
in response," said Bob Dudley, BP group chief executive. "We are
continuing to progress our planned divestment programme, we are
resetting our level of capital spending, and we are addressing
costs through focusing on simplification and efficiency throughout
BP."
Oil and gas prices in the quarter were sharply lower than a year
earlier. Brent crude averaged $54 per barrel compared with $108 in
1Q 2014. This was the lowest quarterly average Brent price since 1Q
2009. The Henry Hub gas marker price averaged $2.99 per million
British Thermal Units, 40% lower than a year earlier.
BP remains on track to divest a further $10 billion of assets by
the end of 2015. This total has now reached $7.1 billion, including
the agreement to sell BP's interest in the CATS business in the UK
North Sea, announced last week.
Organic capital expenditure in the first quarter was $4.4
billion and Dudley confirmed BP's reset expectation of $20 billion
total organic capital expenditure for 2015. "We will also look to
take advantage of any opportunities presented by the lower price
environment to further reduce capital expenditure or costs," he
added.
Operating cash flow for the quarter was $1.9 billion compared
with $8.2 billion a year earlier. The quarter's operating cash flow
included a working capital build of $2.5 billion. At the end of the
quarter BP's net debt was $25.1 billion, equivalent to a gearing
level of 18.4%.
BP today announced a stable quarterly dividend of 10 cents per
ordinary share, expected to be paid in June. Dudley said: "The
dividend is the first priority within our financial framework and
the board is committed to maintaining it, as we have today. We can
sustain this by successfully resetting our capital and cost base
and rebalancing our sources and uses of cash in the prevailing oil
price environment. We will continue to review progress on this as
we move through the year."
BP's Upstream segment reported underlying pre-tax replacement
cost profit of $0.6 billion for the first quarter of 2015 compared
with $4.4 billion for 1Q 2014. The result included a $545 million
loss for BP's US Upstream business.
As expected, the Upstream result was significantly affected by
lower oil and gas prices as well as weaker gas marketing and
trading and $375 million costs associated with the cancellation of
contracts for two deepwater rigs in the Gulf of Mexico no longer
required for BP's reset drilling programme. This was partly offset
by the positive impacts of higher oil and gas production, lower
exploration write-offs, and also cost benefits from simplification
and efficiency work throughout the segment.
Overall Group oil and gas production, including Russia(2) , was
3.3 million barrels of oil equivalent a day (mmboe/d). Excluding
Russia, reported Upstream production of 2.3 mmboe/d was 8.3% higher
than a year earlier and underlying production(3) 3.7% higher.
Production increases were primarily due to the ramp up of
production from new projects in key regions.
Underlying pre-tax replacement cost profit for BP's Downstream
segment was $2.2 billion for the quarter, compared with $1.0
billion in 1Q 2014. The result reflects the stronger overall
refining environment, increased refining optimisation and
production, and improved marketing performance. There was also a
stronger contribution from supply and trading than a year earlier.
Simplification and efficiency programmes also contributed to lower
costs in the Downstream.
Estimated underlying net income from Rosneft(2) was $183 million
compared with $270 million in 1Q 2014.
BP's first quarter result included a one-off, non-cash, deferred
tax credit as a result of the reduction in the rate of the UK North
Sea supplementary charge, announced in March; the opposite effect
was reported in 2011 when the supplementary charge was
increased.
The quarter's result also included a further $215 million
non-operating restructuring charge; bringing total restructuring
charges to $648 million compared with an estimated total of $1.0
billion BP expects to take before the end of 2015.
In the first quarter BP announced the Atoll gas discovery and
also signed final agreements for the major $12 billion West Nile
Delta gas project, both offshore Egypt. The new advanced technology
purified terephthalic acid (PTA) plant in Zhuhai, China - which
will add over one million tonnes a year of PTA capacity with an
advantaged cost position - started up in March.
At the end of the quarter the total cumulative pre-tax charge
for the Gulf of Mexico oil spill was $43.8 billion. An additional
charge of $332 million was taken in the quarter due mainly to
additional business economic loss claims. This overall charge does
not include any provision for business economic loss claims that
are yet to be received, processed or paid (except where an
eligibility notice has been issued and is not subject to appeal by
BP within the claims facility).
At the end of the quarter the aggregate remaining cash balance
in the Trust and qualified settlement funds was $4.3 billion.
Further information:
BP press office, London: bppress@bp.com, +44 20 496 4076
Notes:
1. Underlying replacement cost profit is adjusted for
non-operating items and fair value accounting effects.
2. The operational and financial information of the Rosneft
segment for the first quarter of 2015 is based on preliminary
operational and financial results of Rosneft for the three months
ended 31 March 2015. Actual results may differ from these
amounts.
3. Underlying oil and gas production is adjusted for divestments and entitlement impacts in production-sharing agreements.
Cautionary statement:
This press release contains certain forecasts, projections and
forward-looking statements - that is, statements related to future,
not past events - with respect to the financial conditions, results
of operations and businesses of BP and certain of the plans and
objectives of BP with respect to these items. These statements
generally, but not always, are identified by the use of words such
as "will", "expected to", "is intended to", "projected" or similar
expressions. In particular, among other statements, certain
statements regarding prospects for and timing of future
distributions to shareholders; expectations regarding the future
price environment; plans to reset BP's level of capital spending
and focus on simplification and efficiency; plans to divest $10
billion in assets before the end of 2015; the expected level of
2015 capital expenditure; plans to take advantage of the lower
price environment and reduce capital expenditure and costs; plans
and expectations regarding a total of about $1 billion in
non-operating restructuring charges by the end of 2015; plans
regarding major projects including the new PTA plant in China and
expectations regarding the sale of the CATS business are all
forward looking in nature. 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; the impact on our reputation
following the Gulf of Mexico oil spill; the timing and amount of
future payments relating to the Gulf of Mexico oil spill; exchange
rate fluctuations; development and use of new technology;
recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading
partners, contractors, subcontractors, creditors, rating agencies
and others; our access to future credit resources; business
disruption and crisis management; the impact on our reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; decisions by Rosneft's
management and board of directors; the actions of contractors;
natural disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and
acts of terrorism; cyber-attacks or sabotage; and other factors
discussed elsewhere in this report and under "Risk factors" in BP
Annual Report and Form 20-F 2014 as filed with the US Securities
and Exchange Commission.
This press release also contains financial information that is
not presented in accordance with generally accepted accounting
principles (GAAP). A quantitative reconciliation of this
information to the most directly comparable financial measure
calculated and presented in accordance with GAAP can be found on
our website at www.bp.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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