TIDMBP.
RNS Number : 2362U
BP PLC
28 July 2015
press release
28 July 2015
BP second quarter 2015 results
-- Dividend of 10 cents per share approved
-- Operating cash flow of $6.3 billion in quarter
-- External environment remains challenging
-- Responding with action: capital and divestments on target;
simplification and efficiency programmes delivering benefits
-- Focus on rebalancing company for period of lower prices
BP today reported its results for the second quarter of 2015.
Underlying replacement cost profit(1) for the quarter was $1.3
billion, compared with $2.6 billion for the previous quarter and
$3.6 billion for the second quarter of 2014. The result reflected
the impact of continued low oil and gas prices, a reduced
contribution from Rosneft, and one-off charges arising from
circumstances in Libya, but also continuing strong earnings from
BP's downstream businesses and lower cash costs throughout the
Group.
Following the announcement on 2 July that BP had reached
agreements in principle to settle all outstanding federal and state
claims and claims made by more than 400 local government entities
arising from the 2010 Deepwater Horizon oil spill, an additional
non-operating pre-tax charge of $9.8 billion was included in the
result for the second quarter. As a result of this charge, together
with other non-operating items and fair value accounting effects,
BP reported a replacement cost loss for the quarter of $6.3
billion.
Bob Dudley, BP's Group Chief Executive, said: "The external
environment remains challenging, but BP moved quickly in response
and we continue to do so. Our work to increase efficiency and
reduce costs is embedding sustainable benefits throughout the Group
and we continue with capital discipline and divestments."
In the second quarter the Brent crude price averaged $62 a
barrel, compared with $54 a barrel in the first quarter and $110 a
barrel in 2Q 2014. In the third quarter to date, the price has
averaged $58 a barrel.
"In the past few weeks oil prices have fallen back in response
to continued oversupply and market weakness and the recent
agreements regarding Iran. I am confident that positioning BP for a
period of weaker prices is the right course to take, and will serve
the company well for the future," said Dudley.
BP also today announced a quarterly dividend of 10 cents per
ordinary share, expected to be paid in September.
BP's operating cash flow in the second quarter was $6.3 billion.
This compares with $7.9 billion a year earlier.
Organic capital expenditure in the quarter was $4.5 billion,
bringing the total for the first half of the year to $8.9 billion.
Full year organic capital expenditure is now expected to be below
$20 billion. BP has also now agreed $7.4 billion of divestments
towards the current $10 billion divestment programme.
BP's simplification and efficiency programmes to sustainably
reduce non-safety-critical cash costs are delivering results
throughout the Group; total cash costs in 2015 to date are
estimated to be around $1.7 billion lower than the same period last
year. In the second quarter BP took a further $270 million
non-operating restructuring charge, bringing the total over the
past three quarters to $920 million. It now expects restructuring
charges to total near to $1.5 billion by end-2015.
Brian Gilvary, BP's Chief Financial Officer, commented: "We can
see clear progress in our capital programme and from our work to
reset and reduce cash costs. Our focus remains on rebalancing the
company's sources and uses of cash in a lower price
environment."
At the end of the quarter, BP's net debt was $24.8 billion, $293
million lower than at the end of the first quarter. This is
equivalent to a gearing level of 18.8%, including the impact of the
charge taken related to the settlement, within BP's 10-20% target
band.
BP's Upstream segment reported an underlying pre-tax replacement
cost profit of $0.5 billion for the quarter, compared with $0.6
billion in the first quarter and $4.7 billion in 2Q 2014. Compared
with a year earlier, the result was mainly affected by lower oil
and gas prices. The result also included around $600 million of
exploration write-offs and other costs related to BP's activities
in Libya, primarily due to circumstances in the country.
Overall reported oil and gas production, including Russia(2) ,
was 3.1 million barrels of oil equivalent a day (mmboe/d).
Excluding Russia, reported production of 2.1 mmboe/d was
approximately the same as 2Q 2014 and underlying production(3) was
1.7% lower, mainly due to increased turnaround activity, partly
offset by the ramp-up of production from projects that started-up
in 2014.
BP reported underlying pre-tax replacement cost profit for the
Downstream segment of $1.9 billion, compared with $2.2 billion in
the first quarter and $0.7 billion in 2Q 2014. Compared to last
year, the result was driven by good refining performance and
capture of improved margins, a higher contribution from supply and
trading and stronger earnings from both the lubricants and
petrochemicals businesses.
Estimated underlying net income from Rosneft(2) was $510
million, compared with $1 billion in 2Q 2014, primarily due to the
movement in oil prices. At the Rosneft annual meeting in June Bob
Dudley and Guillermo Quintero, a BP regional president, were
elected to the Rosneft board. In July BP received its share of
Rosneft's annual dividend, $271 million after tax.
The Greater Plutonio Phase III project offshore Angola has begun
production. This is BP's second major upstream project start-up in
2015 and another two are expected before year end.
In June, BP signed agreements to purchase a 20% interest in
Rosneft's Taas subsidiary in Eastern Siberia and also agreed with
Rosneft three areas of mutual interest in Eastern and Western
Siberia for exploration. BP also announced plans to reorganise and
simplify its German refining joint venture with Rosneft.
Elsewhere in the Downstream, refining activity ceased at the
Bulwer refinery in Australia in the second quarter and BP's new
technology-advantaged purified terephthalic acid plant at Zhuhai in
China is now fully commissioned and operational.
In the quarter BP took a charge of $10.8 billion in total
related to the Gulf of Mexico oil spill - including $9.8 billion
associated with the government settlements as well as charges for
further business economic loss claims and other ongoing costs. The
total cumulative pre-tax charge for the incident is now $54.6
billion.
Following the agreements in principle announced on 2 July, BP
has now advised the District Court that it is satisfied with and
has accepted releases received from the vast majority of local
government entities. Accordingly, on 27 July, the Court ordered BP
to commence processing payments required under the releases and
that such payments be made within 30 days of the Court's order. As
part of the agreements in principle, BP agreed to pay up to $1
billion to resolve claims made by local government entities.
Further information
BP press office, London: bppress@bp.com, +44 (0)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 second quarter of 2015 is based on preliminary
operational and financial results of Rosneft for the three months
ended 30 June 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.
Full BP p.l.c. Group results for the second quarter and half
year 2015 can be seen at www.bp.com/results.
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 external
environment and future oil prices and BP plans in light thereof;
plans regarding future capital discipline and divestments; the
expected level of 2015 organic capital expenditure; the expected
total restructuring charges in 2015; plans regarding major
projects, including start-ups and exploration and development in
Siberia; and plans regarding the reorganisation of the German
refining joint venture 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 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 press release and under "Principle
risks and uncertainties" in the results announcement for the period
ended 30 June 2015 and "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.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
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