TIDMBP.
RNS Number : 3274H
BP PLC
03 August 2021
Top of page 1
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Strong results, growing dividend, executing buybacks
Financial summary Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------- ------- ------- -------- ------- ----------
Profit (loss) for the period attributable
to bp shareholders 3,116 4,667 (16,848) 7,783 (21,213)
Inventory holding (gains) losses*, net
of tax (736) (1,342) (809) (2,078) 2,928
---------------------------------------------- ------- ------- -------- ------- --------
Replacement cost (RC) profit (loss)* 2,380 3,325 (17,657) 5,705 (18,285)
Net (favourable) adverse impact of adjusting
items*(b) , net of tax 418 (695) 10,975 (277) 12,394
---------------------------------------------- ------- ------- -------- ------- --------
Underlying RC profit (loss)* 2,798 2,630 (6,682) 5,428 (5,891)
---------------------------------------------- ------- ------- -------- -------
Operating cash flow* 5,411 6,109 3,737 11,520 4,689
----------------------------------------------
Capital expenditure* (2,514) (3,798) (3,067) (6,312) (6,928)
---------------------------------------------- ------- ------- -------- ------- --------
Divestment and other proceeds(c) 215 4,839 1,135 5,054 1,816
----------------------------------------------
Net issue (repurchase) of shares (500) - - (500) (776)
---------------------------------------------- ------- ------- -------- ------- --------
Net debt*(d) 32,706 33,313 40,920 32,706 40,920
----------------------------------------------
Announced dividend per ordinary share
(cents per share) 5.46 5.25 5.25 10.71 15.75
---------------------------------------------- ------- ------- -------- ------- --------
Underlying RC profit (loss) per ordinary
share* (cents) 13.80 12.95 (33.05) 26.75 (29.17)
---------------------------------------------- ------- ------- -------- ------- --------
Underlying RC profit (loss) per ADS*
(dollars) 0.83 0.78 (1.98) 1.61 (1.75)
---------------------------------------------- ------- ------- -------- ------- --------
-- Further
* Strong results and continued net debt reduction in an * Growth of resilient dividend within disciplined * Executing $1.4 billion buybacks from first half 2021 strategic
improving environment financial frame surplus cash flow progress
with 4
major
project
start-ups,
growth in
solar
and
convenience
We are a year into executing bp's strategy to become an integrated energy
company and are making good progress - delivering another quarter of
strong performance while investing for the future in a disciplined way.
Based on the underlying performance of our business, an improving outlook
for the environment and confidence in our balance sheet, we are increasing
our resilient dividend by 4% per ordinary share and in addition, we are
commencing a buyback of $1.4 billion from first half surplus cash flow.
On average at around $60 per barrel, we expect to be able to deliver
buybacks of around $1.0 billion per quarter and to have capacity for
an annual increase in the dividend per ordinary share of around 4%, through
2025. This shows we continue to perform while transforming bp - generating
value for our shareholders today while we transition the company for
the future.
Bernard Looney
Chief executive officer
(a) This results announcement also represents bp's half-yearly financial report (see page 16).
(b) Prior to 2021 adjusting items were reported under two
different headings - non-operating items and fair value accounting
effects*. See page 32 for more information.
(c) Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement. Other proceeds were $675
million from the sale of a 49% interest in a controlled affiliate
holding certain refined product and crude logistics assets onshore
US in the first quarter and first half 2021 and $455 million in
relation to TANAP pipeline refinancing in the second quarter and
first half 2020. There are no other proceeds in the second quarter
2021.
(d) See Note 9 for more information.
RC profit (loss), underlying RC profit (loss) and net debt are
non-GAAP measures. Inventory holding (gains) losses and adjusting
items are non-GAAP adjustments.
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 38 .
Top of page 2
Highlights
Strong results and continued net debt reduction in an improving environment
* Operating performance was resilient in the second
quarter with four major project* start-ups, strong
momentum in the customers business, including
material growth in convenience gross margin*, and
delivery of $2.5 billion of cash costs* savings on a
run-rate basis relative to 2019, around six months
earlier than targeted.
* Reported profit for the quarter was $3.1 billion,
compared with $4.7 billion for the first quarter
2021.
* Underlying replacement cost profit* was $2.8 billion,
compared with $2.6 billion for the previous quarter.
This result was driven by higher oil prices and
margins offset by a lower result in gas marketing and
trading.
* Operating cash flow* of $5.4 billion includes $1.2
billion pre-tax of Gulf of Mexico oil spill payments
within a working capital* build of $0.5 billion
(after adjusting for inventory holding gains and fair
value accounting effects).
* Net debt* fell to $32.7 billion at the end of the
second quarter.
* Following the annual review of price assumptions used
for investment appraisal and value-in-use impairment
testing, bp's Brent oil price assumption to 2030 is
increased to reflect expected supply constraints,
while longer-term assumptions are lowered as bp
expects an acceleration of the pace of transition to
a low carbon economy.
* As a result of these changed assumptions, the
reported result includes a pre-tax net impairment
reversal of $3.0 billion.
Distribution growth within disciplined financial frame
* A resilient dividend is bp's first priority within
its disciplined financial frame.
* Reflecting the underlying performance of the business,
an improving outlook for the environment, confidence
in our balance sheet and commencement of the share
buyback programme, the board has announced an
increase in the second quarter dividend of 4% to 5.46
cents per ordinary share. This increase is
accommodated within a 2021-5 average cash balance
point* of around $40 per barrel Brent, $11 per barrel
RMM and $3 per mmBtu Henry Hub (all 2020 real).
* bp generated surplus cash flow* of $0.7 billion in
the second quarter and $2.4 billion in the first half
after having reached its net debt target of $35
billion. Taking into account surplus cash flow*
generated in the first half of the year, bp intends
to execute a share buyback of $1.4 billion prior to
announcing its third quarter 2021 results. For 2021,
and subject to maintaining a strong investment grade
credit rating, the board remains committed to using
60% of surplus cash flow for share buybacks and plans
to allocate the remaining 40% to continue
strengthening the balance sheet.
* On average, based on bp's current forecasts, at
around $60 per barrel Brent and subject to the
board's discretion each quarter, bp expects to be
able to deliver buybacks of around $1.0 billion per
quarter and have capacity for an annual increase in
the dividend per ordinary share of around 4%, through
2025. Other elements of the financial frame are
unchanged.
* The board will take into account factors including
the cumulative level of and outlook for surplus cash
flow, the cash balance point and the maintenance of a
strong investment grade credit rating in setting the
dividend per ordinary share and the buyback each
quarter.
* bp expects to outline plans for the fourth-quarter
share buyback at the time of its third quarter
results.
Strong progress in our transformation to an integrated energy company
* Since outlining its new strategy a year ago, bp has
made strong progress in its transformation to an IEC.
It has delivered 8 major projects*, built a 21GW
renewable pipeline, grown convenience and
electrification, reorganized, reached over $10
billion of divestment proceeds, strengthened the
financial frame and begun share buybacks.
* Four major projects began production in the second
quarter - in India, Egypt, Angola and the Gulf of
Mexico.
* bp has continued to significantly expand its
renewables pipeline, buying a 9GW solar development
pipeline in the US. Lightsource bp also continued to
expand, growing in Portugal, Spain, Greece and
Australia. bp confirmed its intention to bid for
offshore wind leases in Scotland with EnBW and in
Norway with Statkraft and Aker.
* bp opened the UK's first fleet-dedicated EV rapid
charging hub in London, the first of a series
intended for cities across Europe. In the US, bp
agreed to take full ownership of the Thorntons
business, which is expected to complete in the third
quarter of 2021, positioning bp to be a leading
convenience operator in the Midwest US.
We have delivered another strong set of results underpinned by an improving
environment and our disciplined financial frame. We remain focused on:
maintaining a resilient dividend within a cash balance point of around
$40 per barrel; strengthening our balance sheet - with net debt reduced
for the fifth consecutive quarter; a disciplined approach to investment;
and the execution of share buybacks with upside to higher prices. Taken
together, we are building a track record of delivery, supporting our
investor proposition to grow long-term value.
Murray Auchincloss
Chief financial officer
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 44.
----------------------------------------------------------------------
Top of page 3
Financial results
At 31 December 2020, the group's reportable segments were
Upstream, Downstream and Rosneft. From the first quarter of 2021,
the group's reportable segments are gas & low carbon energy,
oil production & operations, customers & products, and
Rosneft. Comparative information for 2020 has been restated to
reflect the changes in reportable segments. For more information
see note 1 Basis of preparation - Change in segmentation.
In addition to the highlights on page 2:
- During the quarter, $500 million of share buybacks were
complete to offset the expected full-year dilution from the vesting
of awards under employee share schemes.
- Adjusting items* in the second quarter and half year were a
favourable pre-tax impact of $8 million and $704 million
respectively compared with an adverse impact of $14,566 million and
$15,930 million in the same periods of 2020. The 2020 charges were
driven by impairment charges of $11,848 million in the second
quarter. Pre-tax net impairment reversals of $2,964 million were
recorded in the second quarter of 2021 following the annual review
of price assumptions used for investment appraisal and value-in-use
impairment testing, offset by fair value accounting effects* of
$1,377 million, increases in provisions of $856 million and a
$415-million charge relating to a remeasurement of deferred tax
balances in our equity-accounted entity in Argentina.
- Capital expenditure* in the second quarter and half year was
$2.5 billion and $6.3 billion respectively, compared with $3.1
billion and $6.9 billion in the same periods of 2020.
- At the end of the second quarter, net debt* was $32.7 billion,
compared to $33.3 billion at the end of the first quarter and $40.9
billion at the end of the second quarter 2020.
- Operating cash flow* was $5.4 billion for the second quarter,
including $1.2 billion pre-tax Gulf of Mexico oil spill payments
and $0.2 billion of cash flow relating to severance costs
associated with the reinvent programme, and $11.5 billion for the
half year, compared with $3.7 billion and $4.7 billion for the same
periods of 2020.
- The effective tax rate (ETR) on RC profit* for the second
quarter and half year was 37% and 31% respectively, compared with
19% and 15% for the same periods in 2020. Excluding adjusting
items*, the underlying ETR* for the second quarter and half year
was 27% and 29% respectively, compared with 9% and -3% for the same
periods a year ago. In 2020 the underlying ETRs were lower as they
reflected the exploration write-offs with a limited deferred tax
benefit and the reassessment of deferred tax asset recognition. The
underlying ETRs for 2021 include a benefit for the reassessment of
deferred tax asset recognition. ETR on RC profit or loss and
underlying ETR are non-GAAP measures.
- A dividend of 5.46 cents per ordinary share was announced for
the quarter.
Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
-------------------------------------------------- ------- ------- -------- ------- ----------
RC profit (loss) before interest and
tax
gas & low carbon energy 927 3,430 (7,752) 4,357 (6,682)
oil production & operations 3,118 1,479 (14,314) 4,597 (14,493)
customers & products 640 934 594 1,574 1,258
Rosneft 643 363 (124) 1,006 (141)
other businesses & corporate (425) (678) (259) (1,103) (825)
Consolidation adjustment - UPII* (31) 13 (46) (18) 132
--------------------------------------------------- ------- ------- -------- ------- --------
RC profit (loss) before interest and
tax 4,872 5,541 (21,901) 10,413 (20,751)
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (687) (729) (791) (1,416) (1,581)
Taxation on a RC basis (1,567) (1,254) 4,361 (2,821) 3,353
Non-controlling interests (238) (233) 674 (471) 694
--------------------------------------------------- ------- ------- -------- ------- --------
RC profit (loss) attributable to bp shareholders* 2,380 3,325 (17,657) 5,705 (18,285)
Inventory holding gains (losses)* 953 1,730 1,088 2,683 (3,796)
Taxation (charge) credit on inventory
holding gains and losses (217) (388) (279) (605) 868
--------------------------------------------------- ------- ------- -------- ------- --------
Profit (loss) for the period attributable
to bp shareholders 3,116 4,667 (16,848) 7,783 (21,213)
--------------------------------------------------- ------- ------- -------- ------- --------
Top of page 4
Analysis of underlying RC profit (loss) before interest and
tax
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
------------------------------------------------ ------- ------- ------- ------- ---------
Underlying RC profit (loss) before interest
and tax
gas & low carbon energy 1,240 2,270 (814) 3,510 33
oil production & operations 2,242 1,565 (7,713) 3,807 (6,818)
customers & products 827 656 1,405 1,483 2,326
Rosneft 689 363 (61) 1,052 (78)
other businesses & corporate (305) (170) (220) (475) (652)
Consolidation adjustment - UPII (31) 13 (46) (18) 132
------------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit (loss) before interest
and tax 4,662 4,697 (7,449) 9,359 (5,057)
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (485) (581) (677) (1,066) (1,345)
Taxation on an underlying RC basis (1,141) (1,253) 770 (2,394) (183)
Non-controlling interests (238) (233) 674 (471) 694
------------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit (loss) attributable
to bp shareholders* 2,798 2,630 (6,682) 5,428 (5,891)
------------------------------------------------- ------- ------- ------- ------- -------
Reconciliations of underlying RC profit attributable to bp
shareholders to the nearest equivalent IFRS measure are provided on
page 1 for the group and on pages 6-15 for the segments.
Operating Metrics
Operating metrics First half vs First
2021 half 2020
------------------------------------------------ ---------- ----------
Tier 1 and tier 2 process safety events* 30 -20
Reported recordable injury frequency* 0.168 +32.5%
Group production (mboe/d)(a) 3,242 -11.3%
upstream* production (mboe/d) (excludes Rosneft
segment) 2,169 -15.0%
upstream unit production costs*(b) ($/boe) 7.33 +19.5%
bp-operated hydrocarbon plant reliability* 93.7% -0.5
bp-operated refining availability*(a) 94.1% -1.8
------------------------------------------------- ---------- ----------
.
(a) See Operational updates on pages 6, 9 and 11.
(b) Reflecting lower volumes and higher costs due to phasing and
seasonal maintenance activities.
Top of page 5
Outlook & Guidance
Macro outlook
- The oil market is expected to continue its rebalancing
process. Global stocks are expected to decline and reach historical
levels (in terms of days of forward cover) in the first half of
2022.
- Oil demand is expected to recover in 2021 on the back of a
bright macroeconomic outlook, increasing vaccination roll-out and
gradual lifting of COVID-19 restrictions around the world. The
expectation is that demand reaches pre-Covid levels sometime in the
second half of 2022.
- OPEC+ decision making on production levels is a key factor in
oil prices and market rebalancing.
- Global gas demand is expected to recover to above 2019 levels
by end 2021, and LNG demand to increase as a result of higher Asian
imports.
- Industry refining margins are expected to be broadly flat
compared to the second quarter, with recovery in demand offset by
growth in net refining capacity. In lubricants, industry base oil
and additive supply shortages are expected to continue in the
second half.
3Q21 guidance
- Looking ahead, we expect third quarter reported upstream*
production to be higher than the second quarter reflecting the
completion of seasonal maintenance activity and the ramp-up of
major projects. Within this, we expect production from oil
production & operations to be higher.
- If COVID restrictions continue to ease, we expect higher
product demand across our customer business in the third quarter.
Realized refining margins are expected to improve slightly
supported by stronger demand and wider North American heavy crude
oil differentials. In Castrol, industry base oil and additive
supply shortages are expected to continue.
2021 Guidance
In addition to the guidance on page 2:
- We continue to expect divestment and other proceeds for the
year to reach $5-6 billion during the latter stages of 2021. As a
result of the first half year divestments, our target of $25
billion of divestment and other proceeds between the second half of
2020 and 2025 is now underpinned by agreed or completed
transactions of around $14.9 billion with over $10 billion of
proceeds received.
- bp continues to expect capital expenditure*, including
inorganic capital expenditure*, of around $13 billion in 2021.
- Depreciation, depletion and amortization is expected to be at
a similar level to 2020 ($14.9 billion).
- Gulf of Mexico oil spill payments for the year are expected to
be around $1.5 billion pre-tax.
- The other businesses & corporate underlying annual charge
is expected to be in the range of $1.2-1.4 billion for 2021. The
quarterly charges may vary from quarter to quarter.
- The underlying ETR* for 2021 is now expected to be around 35%
but is sensitive to the impact that volatility in the current price
environment may have on the geographical mix of the group's profits
and losses.
- For full year 2021 we expect reported upstream production to
be lower than 2020 due to the impact of the ongoing divestment
programme. However, underlying production* should be slightly
higher than 2020 with the ramp-up of major projects, primarily in
gas regions, partly offset by the impacts of reduced capital
investment and decline in lower-margin gas assets.
COVID-19 Update
- bp's future financial performance, including cash flows and
net debt, will be impacted by the extent and duration of the
current market conditions and the effectiveness of the actions that
it and others take, including its financial interventions. It is
difficult to predict when all current supply and demand imbalances
will be resolved and what the ultimate impact of COVID-19 will
be.
- bp continues to take steps to protect and support its staff
through the pandemic. Precautions in operations and offices
together with enhanced support and guidance to staff continue with
a focus on safety, health and hygiene, homeworking and mental
health. Decisions on working practices and return to office based
working are being taken with caution and in compliance with local
and national guidelines and regulations.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 44.
----------------------------------------------------------------------
Top of page 6
gas & low carbon energy
Financial results
-- The replacement cost profit before interest and tax for the
second quarter and half year was $927 million and $4,357 million
respectively, compared with a loss of $7,752 million and $6,682
million for the same periods in 2020. The second quarter and half
year included a net adjusting charge of $313 million and gain of
$847 million respectively, compared with a net adjusting charge of
$6,938 million and $6,715 million for the same periods in 2020.
-- After excluding adjusting items*, the underlying replacement
cost profit before interest and tax* for the second quarter and
half year was $1,240 million and $3,510 million respectively,
compared with a loss of $814 million and a profit of $33 million
for the same periods in 2020.
-- The underlying replacement cost profit for the second
quarter, compared with the same period in 2020, reflects
significantly lower exploration write-offs, higher realizations,
and significantly stronger gas marketing and trading performance,
offset by a higher depreciation, depletion and amortization charge
as a result of major project ramp-ups in Egypt and India. For the
half year, compared with the same period in 2020, the underlying
replacement cost profit mainly reflects the exceptionally strong
gas marketing and trading result in the first quarter, higher
realizations, and significantly lower exploration write-offs.
Operational update
-- Reported production for the quarter was 875mboe/d, slightly
higher compared to the same period in 2020 due to the partial
divestment in Oman offset by growth in underlying production.
Underlying production* was 3% higher, mainly due to major project
ramp-ups, partially offset by base decline.
-- Reported production for the half year was 892mboe/d, slightly
higher compared to the same period in 2020. Underlying production*
was flat, mainly due to major project ramp-ups, partially offset by
base decline.
-- Renewables pipeline* at the end of the quarter was 21GW (bp
net). The renewables pipeline grew by 7GW (bp net) in the quarter
and 10GW (bp net) in the half year, as a result of acquisition of a
solar pipeline in the US, Lightsource bp's (LSbp) net pipeline
growth, and our selection as preferred bidder for two major leases
in the UK Offshore Wind Round 4 with our partner EnBW in the first
quarter.
Strategic progress
gas
-- On 6 July 2021 bp announced commencement of production from
the East South flank of Shah Deniz 2.
-- On 11 June, bp agreed to establish a joint venture with the
Beijing Gas Group to supply downstream gas to northern China,
expanding its role in the Chinese gas market.
-- On 9 June, bp signed a long-term LNG sale and purchase
agreement with Pavilion Energy Trading & Supply Pte. Ltd.for
the supply of approximately 0.8 million tonnes of LNG per year to
Singapore for 10 years from 2024.
-- These events build on the progress announced in our
first-quarter results, which comprised the following: bp announced
completion of bp's sale of a 20% interest in Oman Block 61 (bp
operator 40%, OQ 30%, PTTEP 20%, Petronas 10%); bp announced gas
production from the Raven field in Egypt (bp operator 82.75%); bp
and Reliance Industries Limited (RIL) announced the start of
production from the Satellites Cluster gas field in India (bp
33.33%, RIL operator 66.67%); India Gas Solutions, a 50:50 joint
venture between bp and RIL secured gas supply from block KG D6; bp
received its first LNG cargo to directly supply gas to customers in
China.
low carbon energy
-- Solar - executing strategy and growing the pipeline
On 1 June, bp reached an agreement to purchase 9GW of solar
development projects in the US and 1GW of safe harbour equipment
from independent US solar developer 7X Energy for $220 million. The
acquisition closed on 7 July.
Lightsource bp continued its expansion in Europe in the second
quarter in Portugal, where it entered a co-development partnership
with local company INSUN for five utility scale solar projects;
entered the Greek market through award of capacity in solar and
wind auctions alongside local developer KieferTEK; added to their
Spanish pipeline through an acquisition from Grupo Jorge's energy
arm; and began commercial operations at its five-project Vendimia
cluster in Zaragoza, Spain.
-- Offshore wind - progressing strategy
On 19 July, bp and EnBW submitted a bid in the ScotWind leasing
round for offshore wind acreage in the UK North Sea that could
support projects with 2.9GW generating capacity (1.45GW bp
net).
On 14 June, bp agreed to join Statkraft and Aker Offshore Wind
in a consortium bidding to develop offshore wind energy in Norway.
The partnership - in which bp, Statkraft and Aker Offshore Wind
will each hold a 33.3% share - will pursue a bid to develop
offshore wind power in the Sørlige Nordsjø II (SN2) licence
area.
Top of page 7
gas & low carbon energy (continued)
-- These events build on the progress announced in our
first-quarter results, which included the following: bp and Equinor
completed the formation of their strategic US offshore wind
partnership to initially develop four projects in two existing
leases located offshore New York and Massachusetts; bp and partner
EnBW were announced as the preferred bidder for two highly
advantaged 60-year leases in the UK's first offshore wind leasing
round in a decade; bp announced that it is developing plans for the
UK's largest blue hydrogen production facility, targeting 1GW of
blue hydrogen production by 2030; and LSbp acquired from Iberia
Solar a 845MW solar portfolio in Spain; LSbp acquired a 1.06GW
portfolio from the global photovoltaic (PV) project developer RIC
Energy, together they will develop 14 sites in Spain; on 9 March,
LSbp announced it has agreed to provide 88 bp service stations in
New South Wales, Australia with 100% solar power, starting in
January 2023.
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------- ------- ------- ------- ----- ---------
Profit (loss) before interest and tax 931 3,452 (7,741) 4,383 (6,680)
Inventory holding (gains) losses* (4) (22) (11) (26) (2)
---------------------------------------------- ------- ------- ------- ----- -------
RC profit (loss) before interest and
tax 927 3,430 (7,752) 4,357 (6,682)
Net (favourable) adverse impact of adjusting
items 313 (1,160) 6,938 (847) 6,715
---------------------------------------------- ------- ------- ------- ----- -------
Underlying RC profit (loss) before interest
and tax 1,240 2,270 (814) 3,510 33
Taxation on an underlying RC basis (244) (535) (111) (779) (372)
---------------------------------------------- ------- ------- ------- ----- -------
Underlying RC profit (loss) before interest 996 1,735 (925) 2,731 (339)
---------------------------------------------- ------- ------- ------- ----- -------
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- ------- ----- -------
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,115 854 952 1,969 1,990
------------------------------------------------ ------- ------- ------- ----- -----
Exploration write-offs
----------------------------------------------- ------- ------- ------- ----- -------
Exploration write-offs(a) 21 6 1,631 27 1,634
------------------------------------------------ ------- ------- ------- ----- -----
Adjusted EBITDA*
----------------------------------------------- ------- ------- ------- ----- -------
Total adjusted EBITDA 2,376 3,130 1,101 5,506 2,989
------------------------------------------------ ------- ------- ------- ----- -----
Capital expenditure*
gas 705 811 1,009 1,516 2,191
low carbon energy(b) 42 1,074 10 1,116 12
------------------------------------------------ ------- ------- ------- ----- -----
Total capital expenditure 747 1,885 1,019 2,632 2,203
------------------------------------------------ ------- ------- ------- ----- -----
(a) Second quarter and first half 2020 include a write-off of
$668 million which has been classified within the 'other' category
of adjusting items.
(b) First quarter and first half 2021 include $712 million in
respect of the remaining payment to Equinor for our investment in
our strategic US offshore wind partnership and $326 million as a
lease option fee deposit paid to The Crown Estate in connection
with our participation in the UK Round 4 Offshore Wind Leasing
together with our partner EnBW.
Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
--------------------------------- ------- ------- ------- ----- -------
Production (net of royalties)(c)
Liquids* (mb/d) 109 112 99 111 97
Natural gas (mmcf/d) 4,440 4,623 4,463 4,531 4,564
Total hydrocarbons* (mboe/d) 875 909 869 892 884
---------------------------------- ------- ------- ------- ----- -----
Average realizations* (d)
Liquids ($/bbl) 61.69 55.38 22.59 58.61 34.30
Natural gas ($/mcf) 4.14 3.94 3.12 4.04 3.32
Total hydrocarbons* ($/boe) 28.97 26.84 18.63 27.89 20.99
---------------------------------- ------- ------- ------- ----- -----
(c) Includes bp's share of production of equity-accounted
entities in the gas & low carbon energy segment.
(d) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 8
gas & low carbon energy (continued)
Second First Second First First
quarter quarter quarter half half
low carbon energy 2021 2021 2020 2021 2020
Renewables (bp net, GW)
Installed renewables capacity* 1.6 1.6 1.1 1.6 1.1
--------------------------------------- ------- ------- ------- ----- -----
Developed renewables to FID* 3.7 3.3 2.8 3.7 2.8
Renewables pipeline 21.2 13.8 21.2
of which by geographical area:
-------------------------------------- ------- ------- ------- ----- -------
Renewables pipeline - Americas 15.3 7.3 15.3
Renewables pipeline - Asia Pacific 0.8 1.4 0.8
Renewables pipeline - Europe 5.1 5.1 5.1
Renewables pipeline - Other - - -
-------------------------------------- ------- ------- ------- ----- -------
of which by technology:
-------------------------------------- ------- ------- ------- ----- -------
Renewables pipeline - offshore wind 3.7 3.7 3.7
Renewables pipeline - solar 17.5 10.1 17.5
--------------------------------------- ------- ------- ------- ----- -------
Total Developed renewables to FID and
Renewables pipeline 24.9 17.1 24.9
--------------------------------------- ------- ------- ------- ----- -------
Top of page 9
oil production & operations
Financial results
-- The replacement cost profit before interest and tax for the
second quarter and half year was $3,118 million and $4,597 million
respectively, compared with a loss of $14,314 million and $14,493
million for the same periods in 2020. The second quarter and half
year included a net adjusting gain of $876 million and $790 million
respectively, compared with a net adjusting charge of $6,601
million and $7,675 million for the same periods in 2020.
-- After excluding adjusting items*, the underlying replacement
cost profit before interest and tax* for the second quarter and
half year was $2,242 million and $3,807 million respectively,
compared with a loss of $7,713 million and $6,818 million for the
same periods in 2020.
-- The underlying replacement cost profit for the second quarter
and half year, compared with the same periods in 2020 primarily
reflects significantly lower exploration write-offs and higher oil
and gas realizations.
Operational update
-- Reported production for the quarter was 1,245mboe/d, 24.8%
lower than the second quarter of 2020. This includes price impacts
on PSA* and TSC* entitlement volumes and the impact of divestments,
mainly in Alaska and BPX Energy. Underlying production* for the
quarter decreased by 9.0% mainly due to impacts from reduced
capital investment, seasonal maintenance activity and decline.
-- Reported production for the half year was 1,277mboe/d, 23.4%
lower than the same period in 2020. This includes price impacts on
PSA* and TSC* entitlement volumes and the impact of divestments in
Alaska and BPX Energy. Underlying production* for the half year
decreased by 8.5% mainly due to impacts from reduced capital
investment and seasonal maintenance activity.
Strategic progress
-- On 6 May, bp confirmed the start of production from the Zinia
Phase 2 project in Block 17, Angola (Total 38% operator, Equinor
22.16%, ExxonMobil 19%, bp 15.84%, Sonangol P&P 5%).
-- On 19 May, bp and Eni announced that they have entered into a
non-binding memorandum of understanding to progress detailed
discussions on combining their upstream portfolios in Angola,
including all their oil, gas and LNG interests in the country.
-- On 23 June, bp announced the start-up of the Manuel project
at the Na Kika platform in the deepwater Gulf of Mexico (bp 50%
operator, Shell 50%).
-- These events build on the progress announced in our
first-quarter results, which comprised the following: bp signed an
agreement to transfer its participating interests in six blocks
located in Foz do Amazonas basin off northern Brazil to Petróleo
Brasileiro S.A. (Petrobras). Subject to regulatory approval, the
transaction is expected to complete in 2021; bp announced the safe
arrival in Texas US of the Argos floating production platform, a
major milestone for the Mad Dog 2 project in the deepwater Gulf of
Mexico (bp operator 60.5%, BHP 23.9%, Union Oil Company of
California 15.6%). While in Texas, Argos will undergo final
preparatory work and regulatory inspections before moving offshore;
bp announced an oil discovery in a high-quality Miocene reservoir
at the Puma West prospect in the US deepwater Gulf of Mexico (bp
operator 50%, Chevron U.S.A. Inc. 25%, Talos Energy 25%).
Evaluation is ongoing.
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------- ------- ------- -------- ------- ----------
Profit (loss) before interest and tax 3,112 1,494 (14,268) 4,606 (14,506)
Inventory holding (gains) losses* 6 (15) (46) (9) 13
---------------------------------------------- ------- ------- -------- ------- --------
RC profit (loss) before interest and
tax 3,118 1,479 (14,314) 4,597 (14,493)
Net (favourable) adverse impact of adjusting
items (876) 86 6,601 (790) 7,675
---------------------------------------------- ------- ------- -------- ------- --------
Underlying RC profit (loss) before interest
and tax 2,242 1,565 (7,713) 3,807 (6,818)
Taxation on an underlying RC basis (939) (729) 1,095 (1,668) 592
---------------------------------------------- ------- ------- -------- ------- --------
Underlying RC profit (loss) before interest 1,303 836 (6,618) 2,139 (6,226)
---------------------------------------------- ------- ------- -------- ------- --------
Top of page 10
oil production & operations (continued)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- ------- ----- -------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- ------- ----- -------
Total depreciation, depletion and amortization 1,559 1,574 2,070 3,133 4,187
------------------------------------------------ ------- ------- ------- ----- -----
Exploration write-offs
----------------------------------------------- ------- ------- ------- ----- -------
Exploration write-offs(a) 8 56 7,987 64 8,082
------------------------------------------------ ------- ------- ------- ----- -----
Adjusted EBITDA*
----------------------------------------------- ------- ------- ------- ----- -------
Total adjusted EBITDA 3,809 3,195 1,043 7,004 4,150
------------------------------------------------ ------- ------- ------- ----- -----
Capital expenditure*
----------------------------------------------- ------- ------- ------- ----- -------
Total capital expenditure 1,148 1,319 1,619 2,467 3,579
------------------------------------------------ ------- ------- ------- ----- -----
(a) Second quarter and first half 2020 includes a write-off of
$1,301 million which has been classified within the 'other'
category of adjusting items.
Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
--------------------------------- ------- ------- ------- ----- -------
Production (net of royalties)(b)
Liquids* (mb/d) 938 997 1,266 967 1,238
Natural gas (mmcf/d) 1,786 1,810 2,262 1,798 2,492
Total hydrocarbons* (mboe/d) 1,245 1,309 1,656 1,277 1,668
---------------------------------- ------- ------- ------- ----- -----
Average realizations* (c)
Liquids ($/bbl) 60.55 52.92 22.76 56.69 34.40
Natural gas ($/mcf) 3.90 4.11 1.03 4.00 1.26
Total hydrocarbons* ($/boe) 52.47 46.81 19.32 49.61 28.01
---------------------------------- ------- ------- ------- ----- -----
(b) Includes bp's share of production of equity-accounted
entities in the oil production & operations segment.
(c) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 11
customers & products
Financial results
-- The replacement cost profit before interest and tax for the
second quarter and half year was $640 million and $1,574 million
respectively, compared with $594 million and $1,258 million for the
same periods in 2020. The second quarter and half year included a
net adjusting charge of $187 million and a net gain of $91 million
respectively, compared with a net charge of $811 million and $1,068
million for the same periods in 2020.
-- After excluding adjusting items*, the underlying replacement
cost profit before interest and tax* for the second quarter and
half year was $827 million and $1,483 million respectively,
compared with $1,405 million and $2,326 million for the same
periods in 2020.
-- The customers & products result for the second quarter
and half year reflects a stronger customers performance, more than
offset by a significantly weaker products result and absence of
earnings from our divested petrochemicals business, compared to the
same periods last year.
-- customers - convenience and mobility results for the quarter
and first half demonstrated continued strong performance, with
higher earnings than the same periods last year. This result was
supported by higher volumes in both retail fuel and aviation, as
well as a material growth in convenience gross margin*.
Castrol results for both the quarter and half year were
materially higher than last year. This was despite industry base
oil and additive shortages, and COVID impacts in key markets, such
as India, in the second quarter.
-- products - the products result was weaker for the quarter and
the half year due to a lower trading performance compared to an
exceptionally strong performance in the second quarter of 2020, and
a higher level of turnaround and maintenance activity in refining.
Refining margins in the quarter were materially higher compared to
last year, however the increasing cost of US renewable fuels
credits and relatively weaker distillate demand growth in
comparison to gasoline resulted in a smaller improvement in
realized margins.
Operational update
-- bp-operated refining availability* for the second quarter and
half year was 93.5% and 94.1% respectively, lower compared with
95.6% and 95.9% for the same periods last year, due to a higher
level of planned and unplanned maintenance. Utilization for the
quarter was around 8 percentage points higher than the same period
last year due to lower COVID related demand impacts.
Strategic progress
-- We continued to progress our strategic agenda in redefining
convenience, adding further strategic convenience sites* to our
network. We also:
announced an agreement to take full ownership of the Thorntons
business in the US, positioning bp to be a leading convenience
operator in the Midwest US. Completion of the transaction is
expected in the third quarter, subject to regulatory approvals;
expanded our convenience partnership model with Marks &
Spencer, a leading UK retailer, piloting it in our UK franchise
network;
extended our partnership with PAYBACK, Europe's largest
multi-partner loyalty programme, which has over 30 million
customers, to become the first provider in Germany to exclusively
offer PAYBACK loyalty rewards to electric vehicle drivers.
-- In next-gen mobility:
bp pulse opened the UK's first fleet-dedicated rapid EV charging
hub in London;
Air bp expanded the rollout of sustainable aviation fuel (SAF),
adding the offer to Munich Airport. We now supply SAF at more than
20 airports worldwide.
-- In growth markets:
Castrol signed an exclusive three-year deal with Ki Mobility
solutions in India for supply of premium lubricants across their
multi-brand workshops and online service provider platform which
has around 10,000 retailers and 20,000 garage owners as
customers.
-- In refining we continue to focus on creating a more resilient
and high-performing portfolio:
bp's Cherry Point refinery in Washington state was recognized as
the "Best site in the industry" for its project planning and
execution, for a record fifth time by research and benchmarking
firm Independent Project Analysis (IPA).
-- These events build on the progress announced in our first-quarter results:
bp pulse announced the rollout of new EV-only ultra-fast
charging hubs across the UK;
bp agreed to take a stake alongside Daimler and BMW in Digital
Charging Solutions (DCS), a leading developer of digital charging
software. Completion of the transaction is subject to regulatory
approvals;
Castrol launched a range of advanced e-fluids, Castrol ON,
designed for improved electric vehicle performance, with more than
half of the world's major vehicle manufacturers(a) now using them
as part of their factory fill;
we ceased production at our Kwinana refinery in preparation to
convert it to an import terminal;
we received the final instalment of $1 billion for the sale of
our petrochemicals business to INEOS.
(a) Based on LMCA data for top 20 selling OEMs (total new car sales) in 2019.
Top of page 12
customers & products (continued)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------- ------- ------- ------- ------- ---------
Profit (loss) before interest and tax 1,527 2,539 1,572 4,066 (2,379)
Inventory holding (gains) losses* (887) (1,605) (978) (2,492) 3,637
---------------------------------------------- ------- ------- ------- ------- -------
RC profit before interest and tax 640 934 594 1,574 1,258
Net (favourable) adverse impact of adjusting
items 187 (278) 811 (91) 1,068
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest
and tax 827 656 1,405 1,483 2,326
Of which:(a)
customers - convenience & mobility 951 658 432 1,609 1,120
Castrol - included in customers 265 334 63 599 230
products - refining & trading (124) (2) 926 (126) 1,094
petrochemicals - - 47 - 112
---------------------------------------------- ------- ------- ------- ------- -------
Taxation on an underlying RC basis (123) (133) (221) (256) (586)
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest 704 523 1,184 1,227 1,740
---------------------------------------------- ------- ------- ------- ------- -------
(a) A reconciliation to RC profit before interest and tax by business is provided on page 35.
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- ------- ----- -------
Adjusted EBITDA*(b)
customers - convenience & mobility 1,280 982 715 2,262 1,690
Castrol - included in customers 304 373 106 677 311
products - refining & trading 301 419 1,345 720 1,923
petrochemicals - - 97 - 212
------------------------------------------------ ------- ------- ------- ----- -----
1,581 1,401 2,157 2,982 3,825
------- ------- ------- ----- -----
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- ------- ----- -------
Total depreciation, depletion and amortization 754 745 752 1,499 1,499
------------------------------------------------ ------- ------- ------- ----- -----
Capital expenditure*
customers - convenience & mobility 255 316 150 571 490
Castrol - included in customers 42 41 23 83 71
products - refining & trading 264 216 196 480 458
petrochemicals - - 23 - 78
------------------------------------------------ ------- ------- ------- ----- -----
Total capital expenditure 519 532 369 1,051 1,026
------------------------------------------------ ------- ------- ------- ----- -----
(b) A reconciliation to RC profit before interest and tax by business is provided on page 35.
Retail(c) Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
------------------------------------- ------- ------- ------- ------ --------
bp retail sites* - total (#) 20,300 20,300 18,900 20,300 18,900
bp retail sites in growth markets* 2,700 2,650 1,300 2,700 1,300
Strategic convenience sites* 2,000 1,950 1,650 2,000 1,650
-------------------------------------- ------- ------- ------- ------ ------
(c) Reported to the nearest 50.
Marketing sales of refined products (mb/d) Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
-------------------------------------------- ------- ------- ------- ----- -------
US 1,131 1,016 872 1,074 955
Europe 838 706 685 772 820
Rest of World 469 440 364 455 441
--------------------------------------------- ------- ------- ------- ----- -----
2,438 2,162 1,921 2,301 2,216
Trading/supply sales of refined products(d) 415 336 403 376 430
--------------------------------------------- ------- ------- ------- ----- -----
Total sales volume of refined products 2,853 2,498 2,324 2,677 2,646
--------------------------------------------- ------- ------- ------- ----- -----
(d) Comparative information for 2020 has been restated for the
changes to net presentation of revenues and purchases relating to
physically settled derivative contracts effective 1 January 2021.
For more information see Note 1 basis of preparation - Voluntary
change in accounting policy. An amendment of 22mb/d has been made
to amounts presented for the first quarter 2021.
Top of page 13
customers & products (continued)
Refining marker margin*(a) Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
---------------------------------------- ------- ------- ------- ----- -------
bp average refining marker margin (RMM)
($/bbl) 13.7 8.7 5.9 11.2 7.4
----------------------------------------- ------- ------- ------- ----- -----
(a) In 2021 the RMM has been updated to reflect changes in bp's
portfolio, and the update of crude reference for Mediterranean
region. On this basis the second quarter and half year 2020 RMM
would be $6.1/bbl and $7.5/bbl respectively.
Refinery throughputs - operated refineries
(mb/d) Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
------------------------------------------- ------- ------- ------- ----- -------
US 692 725 614 709 681
Europe 763 747 716 755 776
Rest of World 52 129 157 90 190
-------------------------------------------- ------- ------- ------- ----- -----
Total refinery throughputs 1,507 1,601 1,487 1,554 1,647
-------------------------------------------- ------- ------- ------- ----- -----
bp-operated refining availability* (%) 93.5 94.8 95.6 94.1 95.9
-------------------------------------------- ------- ------- ------- ----- -----
Top of page 14
Rosneft
Financial results
-- The replacement cost (RC) profit before interest and tax for
the second quarter and half year was $643 million and $1,006
million respectively, compared with a loss of $124 million and $141
million for the same periods in 2020. The second quarter and half
year included a net adjusting charge of $46 million, compared with
$63 million for the same periods in 2020.
-- After excluding adjusting items, the underlying RC profit
before interest and tax* for the second quarter and half year was
$689 million and $1,052 million respectively, compared with a loss
of $61 million and $78 million for the same periods in 2020.
-- Compared with the same periods in 2020, the result for the
second quarter primarily reflects higher oil prices partially
offset by adverse foreign exchange effects whilst the result for
the half year was primarily affected by higher oil prices,
favourable foreign exchange and duty lag effects.
-- bp's two nominees, Bernard Looney and Bob Dudley, were
re-elected to Rosneft's board at Rosneft's annual general meeting
(AGM) on 1 June 2021. At the AGM, shareholders also approved a
resolution to pay dividends of 6.94 roubles per ordinary share,
which constitutes 50% of the company's IFRS net profit for 2020. bp
received a payment of $176 million after a deduction of withholding
tax on 14 July.
Second First Second First First
quarter quarter quarter half half
$ million 2021(a) 2021 2020 2021 2020
--------------------------------------------- ------- ------- ------- ----- -------
Profit (loss) before interest and tax(b)(c) 711 451 (71) 1,162 (289)
Inventory holding (gains) losses* (68) (88) (53) (156) 148
---------------------------------------------- ------- ------- ------- ----- -----
RC profit (loss) before interest and
tax 643 363 (124) 1,006 (141)
Net (favourable) adverse impact of adjusting
items 46 - 63 46 63
---------------------------------------------- ------- ------- ------- ----- -----
Underlying RC profit (loss) before interest
and tax 689 363 (61) 1,052 (78)
Taxation on an underlying RC basis (68) (35) 8 (103) 11
---------------------------------------------- ------- ------- ------- ----- -----
Underlying RC profit (loss) before interest 621 328 (53) 949 (67)
---------------------------------------------- ------- ------- ------- ----- -----
Second First Second First First
quarter quarter quarter half half
2021(a) 2021 2020 2021 2020
-------------------------------------------- ------- ------- ------- ----- -------
Production: Hydrocarbons (net of royalties,
bp share)
Liquids* (mb/d) 858 827 856 842 886
Natural gas (mmcf/d) 1,374 1,294 1,248 1,335 1,261
Total hydrocarbons* (mboe/d) 1,095 1,050 1,071 1,073 1,103
--------------------------------------------- ------- ------- ------- ----- -----
(a) The operational and financial information of the Rosneft
segment for the second quarter and half year is based on
preliminary operational and financial results of Rosneft for the
three months and six months ended 30 June 2021. Actual results may
differ from these amounts. Amounts reported for the second quarter
are based on bp's 22.03% average economic interest for the quarter
(first quarter 2021 22.03% and second quarter 2020 21.2%).
(b) The Rosneft segment result includes equity-accounted
earnings arising from bp's economic interest in Rosneft as adjusted
for accounting required under IFRS relating to bp's purchase of its
interest in Rosneft, and the amortization of the deferred gain
relating to the divestment of bp's interest in TNK-BP.
(c) bp's adjusted share of Rosneft's earnings after Rosneft's own finance costs, taxation and non-controlling interests is included in the bp group income statement within profit before interest and taxation. For each year-to-date period it is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date.
Top of page 15
other businesses & corporate
Other businesses & corporate comprises our innovation &
engineering business including bp ventures and Launchpad, regions,
cities & solutions, our corporate activities & functions,
and any residual costs of the Gulf of Mexico oil spill.
Financial results
-- The replacement cost loss before interest and tax for the
second quarter and half year was $425 million and $1,103 million
respectively, compared with $259 million and $825 million for the
same periods in 2020. The second quarter and half year included a
net adjusting charge of $120 million and $628 million respectively,
including $73 million of favourable and $374 million of adverse
fair value accounting effects* respectively, compared with a net
charge of $39 million and $173 million, including $41 million of
adverse fair value accounting effects, for the same periods in
2020.
-- After excluding adjusting items*, the underlying replacement
cost loss before interest and tax* for the second quarter and half
year was $305 million and $475 million respectively, compared with
$220 million and $652 million for the same periods in 2020.
Strategic progress
-- bp and CEMEX signed a memorandum of understanding on 13 May
to explore solutions to help decarbonize the production and
distribution of CEMEX's products and develop lower carbon offers
for CEMEX and bp customers worldwide.
-- bp and the Mærsk Mc-Kinney Møller Center for Zero Carbon
Shipping signed a partnership agreement on 23 July committing to a
long-term collaboration on the development of new alternative fuels
and low carbon solutions for the shipping industry.
-- On 25 May, bp ventures invested $7 million into electric
vehicle (EV) charging firm IoTecha, which uses Internet of Things
technology to connect EV charge points with the electricity grid,
homes, and buildings. bp plans to integrate IoTecha's products into
its EV ecosystem to help accelerate mainstream adoption of EVs and
support the transition to more sustainable mobility.
-- bp ventures portfolio company Lightning eMotors became a
public listed company on the New York Stock Exchange on 7 May.
Lightning eMotors designs and manufactures electric vehicles (EVs)
for commercial fleets, including school buses and ambulances, as
well as offering charging technologies for commercial and
government vehicles. bp, which has supported the company since
2014, owns approximately 30% of the company. The listing is
expected to provide Lightning eMotors with growth capital to help
accelerate its business.
-- Open Energi became Launchpad's 6th portfolio company on 28
June. Open Energi is an advanced software technology company that
uses AI algorithms to optimize distributed commercial and
industrial power assets at scale.
-- These events build on the progress announced in our
first-quarter results, which comprised the following: bp and Qantas
signed a memorandum of understanding on 15 January to collaborate
on opportunities to reduce carbon emissions in the aviation sector
and contribute to the development of a sustainable aviation fuel
industry in Australia; bp signed a memorandum of understanding with
the Ministry of Energy of the Republic of Azerbaijan to co-operate
in assessing the potential and conditions required for large-scale
decarbonized and integrated energy and mobility systems, including
renewable energy projects in the regions and cities of Azerbaijan;
bp and Infosys signed a memorandum of understanding to explore the
development of a digitally-enabled Energy as a Service offer at
Infosys campuses in India, which could be scaled to industrial
parks and cities in the future; bp divested its holding in Palantir
for $443 million.
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) before interest and tax (425) (678) (259) (1,103) (825)
Inventory holding (gains) losses* - - - - -
--------------------------------------------- ------- ------- ------- ------- -----
RC profit (loss) before interest and
tax (425) (678) (259) (1,103) (825)
Net (favourable) adverse impact of adjusting
items 120 508 39 628 173
---------------------------------------------- ------- ------- ------- ------- -----
Underlying RC profit (loss) before interest
and tax (305) (170) (220) (475) (652)
Taxation on an underlying RC basis 101 54 (131) 155 (31)
---------------------------------------------- ------- ------- ------- ------- -----
Underlying RC profit (loss) before interest (204) (116) (351) (320) (683)
---------------------------------------------- ------- ------- ------- ------- -----
Top of page 16
This results announcement also represents BP's half-yearly
financial report for the purposes of the Disclosure Guidance and
Transparency Rules made by the UK Financial Conduct Authority. In
this context: (i) the condensed set of financial statements can be
found on pages 18-30; (ii) pages 1-15, and 31-45 comprise the
interim management report; and (iii) the directors' responsibility
statement and auditors' independent review report can be found on
pages 16-17.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the
condensed set of financial statements on pages 18-30 has been
prepared in accordance with IAS 34 'Interim Financial Reporting',
and that the interim management report on pages 1-15, and 31-45
includes a fair review of the information required by the
Disclosure Guidance and Transparency Rules.
The directors of BP p.l.c. are listed on pages 74-77 of bp
Annual Report and Form 20-F 2020, with the following
exceptions: Brendan Nelson and Professor Dame Ann Dowling retired on 12 May 2021.
By order of the board
Bernard Looney Murray Auchincloss
Chief Executive Officer Chief Financial Officer
2 August 2021 2 August 2021
Top of page 17
Independent review report to BP p.l.c.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the group income
statement, condensed group statement of comprehensive income,
condensed group statement of changes in equity, group balance
sheet, condensed group cash flow statement and related notes 1 to
11. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
International Financial Reporting Standards. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London
United Kingdom
2 August 2021
The maintenance and integrity of the BP p.l.c. website are the
responsibility of the directors; the review work carried out by the
statutory auditors does not involve consideration of these matters
and, accordingly, the statutory auditors accept no responsibility
for any changes that may have occurred to the financial information
since it was initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Top of page 18
Financial statements
Group income statement
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- -------- ------- ----------
Sales and other operating revenues (Note 5)(a) 36,467 34,544 21,262 71,011 52,235
Earnings from joint ventures - after interest
and tax (57) 160 (567) 103 (589)
Earnings from associates - after interest
and tax 856 601 (100) 1,457 (344)
Interest and other income 82 82 107 164 247
Gains on sale of businesses and fixed assets 250 1,105 74 1,355 90
------------------------------------------------ ------- ------- -------- ------- --------
Total revenues and other income 37,598 36,492 20,776 74,090 51,639
Purchases(a) 21,241 15,656 8,364 36,897 28,565
Production and manufacturing expenses 6,562 6,858 5,211 13,420 11,310
Production and similar taxes 295 253 124 548 327
Depreciation, depletion and amortization (Note
6) 3,631 3,367 3,937 6,998 7,996
Impairment and losses on sale of businesses
and fixed assets (Note 3) (2,937) 373 11,770 (2,564) 12,919
Exploration expense 107 99 9,674 206 9,876
Distribution and administration expenses 2,874 2,615 2,509 5,489 5,193
------------------------------------------------ ------- ------- -------- ------- --------
Profit (loss) before interest and taxation 5,825 7,271 (20,813) 13,096 (24,547)
Finance costs 682 723 783 1,405 1,566
Net finance expense relating to pensions and
other post-retirement benefits 5 6 8 11 15
------------------------------------------------ ------- ------- -------- ------- --------
Profit (loss) before taxation 5,138 6,542 (21,604) 11,680 (26,128)
Taxation 1,784 1,642 (4,082) 3,426 (4,221)
------------------------------------------------ ------- ------- -------- ------- --------
Profit (loss) for the period 3,354 4,900 (17,522) 8,254 (21,907)
------------------------------------------------ ------- ------- -------- ------- --------
Attributable to
BP shareholders 3,116 4,667 (16,848) 7,783 (21,213)
Non-controlling interests 238 233 (674) 471 (694)
------------------------------------------------ ------- ------- -------- ------- --------
3,354 4,900 (17,522) 8,254 (21,907)
------- ------- -------- ------- --------
Earnings per share (Note 7)
Profit (loss) for the period attributable
to BP shareholders
Per ordinary share (cents)
Basic 15.37 22.99 (83.32) 38.36 (105.02)
Diluted 15.30 22.89 (83.32) 38.16 (105.02)
Per ADS (dollars)
Basic 0.92 1.38 (5.00) 2.30 (6.30)
Diluted 0.92 1.37 (5.00) 2.29 (6.30)
------------------------------------------------ ------- ------- -------- ------- --------
(a) 2020 numbers have been restated as a result of changes to
the net presentation of revenues and purchases relating to
physically settled derivative contracts effective 1 January 2021.
For more information see Note 1 Basis of preparation - Voluntary
change in accounting policy.
Top of page 19
Condensed group statement of comprehensive income
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
---------------------------------------------- ------- ------- -------- ------ ----------
Profit (loss) for the period 3,354 4,900 (17,522) 8,254 (21,907)
----------------------------------------------- ------- ------- -------- ------ --------
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Currency translation differences(a) 902 (605) 1,371 297 (3,271)
Exchange (gains) losses on translation
of foreign operations reclassified to
gain or loss on sale of businesses and
fixed assets - - 3 - 4
Cash flow hedges and costs of hedging (207) (62) 68 (269) 153
Share of items relating to equity-accounted
entities, net of tax (68) 11 (333) (57) 109
Income tax relating to items that may
be reclassified 8 1 (37) 9 80
----------------------------------------------- ------- ------- -------- ------ --------
635 (655) 1,072 (20) (2,925)
------- ------- -------- ------ --------
Items that will not be reclassified to
profit or loss
Remeasurements of the net pension and
other post-retirement benefit liability
or asset(b) 590 2,026 (1,960) 2,616 (241)
Cash flow hedges that will subsequently
be transferred to the balance sheet 1 2 (2) 3 (10)
Income tax relating to items that will
not be reclassified (165) (588) 623 (753) -
----------------------------------------------- ------- ------- -------- ------ --------
426 1,440 (1,339) 1,866 (251)
------- ------- -------- ------ --------
Other comprehensive income 1,061 785 (267) 1,846 (3,176)
----------------------------------------------- ------- ------- -------- ------ --------
Total comprehensive income 4,415 5,685 (17,789) 10,100 (25,083)
----------------------------------------------- ------- ------- -------- ------ --------
Attributable to
BP shareholders 4,183 5,460 (17,142) 9,643 (24,359)
Non-controlling interests 232 225 (647) 457 (724)
----------------------------------------------- ------- ------- -------- ------ --------
4,415 5,685 (17,789) 10,100 (25,083)
------- ------- -------- ------ --------
(a) Second quarter and first half 2021 and 2020 principally
affected by movements in the Russian rouble against the US
dollar.
(b) See Note 1 - Basis of preparation - Pensions and other
post-retirement benefits for further information.
Top of page 20
Condensed group statement of changes in equity
bp shareholders' Non-controlling interests Total
$ million equity Hybrid bonds Other interest equity
At 1 January 2021 71,250 12,076 2,242 85,568
---------------------------------------- ---------------- ------------------ -------------- --------
Total comprehensive income 9,643 249 208 10,100
Dividends (2,134) - (158) (2,292)
Cash flow hedges transferred
to the balance sheet, net of
tax (6) - - (6)
Repurchase of ordinary share
capital (500) - - (500)
Share-based payments, net of
tax 188 - - 188
Share of equity-accounted entities'
changes in equity, net of tax (3) - - (3)
Payments on perpetual hybrid
bonds (7) (376) - (383)
Transactions involving non-controlling
interests, net of tax 366 - 194 560
---------------------------------------- ---------------- ------------------ -------------- --------
At 30 June 2021 78,797 11,949 2,486 93,232
---------------------------------------- ---------------- ------------------ -------------- --------
bp shareholders' Non-controlling interests Total
$ million equity Hybrid bonds Other interest equity
At 1 January 2020 98,412 - 2,296 100,708
---------------------------------------- ---------------- ------------------ -------------- --------
Total comprehensive income (24,359) - (724) (25,083)
Dividends (4,242) - (105) (4,347)
Cash flow hedges transferred
to the balance sheet, net of
tax 6 - - 6
Repurchase of ordinary share
capital (776) - - (776)
Share-based payments, net of
tax 342 - - 342
Issue of perpetual hybrid bonds (48) 11,909 - 11,861
Transactions involving non-controlling
interests, net of tax (471) - 571 100
---------------------------------------- ---------------- ------------------ -------------- --------
At 30 June 2020 68,864 11,909 2,038 82,811
---------------------------------------- ---------------- ------------------ -------------- --------
Top of page 21
Group balance sheet
30 June 31 December
$ million 2021 2020
------------------------------------------------------- ------- -------------
Non-current assets
Property, plant and equipment 116,177 114,836
Goodwill 12,497 12,480
Intangible assets 6,237 6,093
Investments in joint ventures 9,703 8,362
Investments in associates 20,194 18,975
Other investments 2,539 2,746
-------------------------------------------------------- ------- -----------
Fixed assets 167,347 163,492
Loans 776 840
Trade and other receivables 3,685 4,351
Derivative financial instruments 7,887 9,755
Prepayments 487 533
Deferred tax assets 6,662 7,744
Defined benefit pension plan surpluses 10,489 7,957
-------------------------------------------------------- ------- -----------
197,333 194,672
------- -----------
Current assets
Loans 366 458
Inventories 22,608 16,873
Trade and other receivables 23,540 17,948
Derivative financial instruments 4,062 2,992
Prepayments 1,298 1,269
Current tax receivable 425 672
Other investments 164 333
Cash and cash equivalents 34,256 31,111
-------------------------------------------------------- ------- -----------
86,719 71,656
Assets classified as held for sale (Note 2) 34 1,326
-------------------------------------------------------- ------- -----------
86,753 72,982
------- -----------
Total assets 284,086 267,654
-------------------------------------------------------- ------- -----------
Current liabilities
Trade and other payables 45,198 36,014
Derivative financial instruments 5,117 2,998
Accruals 4,517 4,650
Lease liabilities 1,825 1,933
Finance debt 7,622 9,359
Current tax payable 1,429 1,038
Provisions 4,831 3,761
-------------------------------------------------------- ------- -----------
70,539 59,753
Liabilities directly associated with assets classified
as held for sale (Note 2) 31 46
-------------------------------------------------------- ------- -----------
70,570 59,799
------- -----------
Non-current liabilities
Other payables 10,886 12,112
Derivative financial instruments 5,419 5,404
Accruals 889 852
Lease liabilities 7,038 7,329
Finance debt 60,625 63,305
Deferred tax liabilities 7,854 6,831
Provisions 19,069 17,200
Defined benefit pension plan and other post-retirement
benefit plan deficits 8,504 9,254
-------------------------------------------------------- ------- -----------
120,284 122,287
------- -----------
Total liabilities 190,854 182,086
-------------------------------------------------------- ------- -----------
Net assets 93,232 85,568
-------------------------------------------------------- ------- -----------
Equity
BP shareholders' equity 78,797 71,250
Non-controlling interests 14,435 14,318
-------------------------------------------------------- ------- -----------
Total equity 93,232 85,568
-------------------------------------------------------- ------- -----------
Top of page 22
Condensed group cash flow statement
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
---------------------------------------------------- ------- ------- -------- ------- ----------
Operating activities
Profit (loss) before taxation 5,138 6,542 (21,604) 11,680 (26,128)
Adjustments to reconcile profit (loss) before
taxation to net cash provided by operating
activities
Depreciation, depletion and amortization
and exploration expenditure written off 3,659 3,428 13,555 7,087 17,712
Impairment and (gain) loss on sale of businesses
and fixed assets (3,187) (732) 11,696 (3,919) 12,829
Earnings from equity-accounted entities,
less dividends received (539) (633) 860 (1,172) 1,365
Net charge for interest and other finance
expense, less net interest paid 300 29 17 329 154
Share-based payments 228 (46) 351 182 345
Net operating charge for pensions and other
post-retirement benefits, less contributions
and benefit payments for unfunded plans (371) (20) (34) (391) (54)
Net charge for provisions, less payments 1,172 902 (365) 2,074 (424)
Movements in inventories and other current
and non-current assets and liabilities 26 (2,793) (609) (2,767) 74
Income taxes paid (1,015) (568) (130) (1,583) (1,184)
----------------------------------------------------- ------- ------- -------- ------- --------
Net cash provided by operating activities 5,411 6,109 3,737 11,520 4,689
----------------------------------------------------- ------- ------- -------- ------- --------
Investing activities
Expenditure on property, plant and equipment,
intangible and other assets (2,435) (3,033) (3,018) (5,468) (6,807)
Acquisitions, net of cash acquired - (1) - (1) (17)
Investment in joint ventures (47) (742) (8) (789) (26)
Investment in associates (32) (22) (41) (54) (78)
----------------------------------------------------- ------- ------- -------- ------- --------
Total cash capital expenditure (2,514) (3,798) (3,067) (6,312) (6,928)
Proceeds from disposal of fixed assets 93 551 10 644 20
Proceeds from disposal of businesses, net
of cash disposed 122 3,613 670 3,735 1,341
Proceeds from loan repayments 67 61 543 128 606
===================================================== ======= ======= ======== ======= ========
Cash provided from investing activities 282 4,225 1,223 4,507 1,967
----------------------------------------------------- ------- ------- -------- ------- --------
Net cash used in investing activities (2,232) 427 (1,844) (1,805) (4,961)
----------------------------------------------------- ------- ------- -------- ------- --------
Financing activities
Net issue (repurchase) of shares (Note 7) (500) - - (500) (776)
Lease liability payments (514) (560) (664) (1,074) (1,233)
Proceeds from long-term financing 1,985 1,956 6,846 3,941 9,530
Repayments of long-term financing (67) (7,029) (964) (7,096) (4,681)
Net increase (decrease) in short-term debt (33) 222 (215) 189 2,302
Issue of perpetual hybrid bonds - - 11,861 - 11,861
Payments on perpetual hybrid bonds (328) (55) - (383) -
Payments relating to transactions involving
non-controlling interests (other) - - (8) - (8)
Receipts relating to transactions involving
non-controlling interests (other) 3 668 - 671 9
Dividends paid - BP shareholders (1,062) (1,064) (2,119) (2,126) (4,221)
- non-controlling interests (107) (51) (74) (158) (105)
----------------------------------------------------- ------- ------- -------- ------- --------
Net cash provided by (used in) financing
activities (623) (5,913) 14,663 (6,536) 12,678
----------------------------------------------------- ------- ------- -------- ------- --------
Currency translation differences relating
to cash and cash equivalents 24 (58) (42) (34) (225)
----------------------------------------------------- ------- ------- -------- ------- --------
Increase (decrease) in cash and cash equivalents 2,580 565 16,514 3,145 12,181
----------------------------------------------------- ------- ------- -------- ------- --------
Cash and cash equivalents at beginning of
period 31,676 31,111 18,139 31,111 22,472
Cash and cash equivalents at end of period(a) 34,256 31,676 34,653 34,256 34,653
----------------------------------------------------- ------- ------- -------- ------- --------
(a) Second quarter and first half 2020 includes $436 million of
cash and cash equivalents classified as assets held for sale in the
group balance sheet.
Top of page 23
Notes
Note 1. Basis of preparation
The interim financial information included in this report has
been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the
opinion of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2020 included in BP Annual
Report and Form 20-F 2020.
The directors consider it appropriate to adopt the going concern
basis of accounting in preparing the interim financial statements.
The ongoing impact of COVID-19 and the current economic environment
has been considered as part of the going concern assessment.
Forecast liquidity has been assessed under a number of stressed
scenarios to support this assertion. Reverse stress tests indicated
that the group will continue to operate as a going concern for at
least 12 months from the date of approval of the interim financial
statements even if the Brent price fell to zero.
bp prepares its consolidated financial statements included
within BP Annual Report and Form 20-F on the basis of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), IFRS as adopted by the European
Union (EU) and in accordance with the provisions of the UK
Companies Act 2006 as applicable to companies reporting under
international accounting standards. As a result of the UK's
withdrawal from the EU, with effect from 1 January 2021, the
consolidated financial statements are also prepared in accordance
with IFRS as adopted by the UK. IFRS as adopted by the UK does not
differ from IFRS as adopted by the EU. IFRS as adopted by the EU
and UK differ 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 2021 which are the same as
those used in preparing BP Annual Report and Form 20-F 2020 with
the exception of the changes described in the 'Updates to
significant accounting policies' section below. There are no other
new or amended standards or interpretations adopted from 1 January
2021 onwards that have a significant impact on the financial
information.
Considerations in respect of COVID-19 and the current economic
environment
bp's significant accounting judgements and estimates were
disclosed in BP Annual Report and Form 20-F 2020. These have been
subsequently considered at the end of each quarter to determine if
any changes were required to those judgements and estimates as a
result of current market conditions. The conditions also result in
the valuation of certain assets and liabilities remaining subject
to more uncertainty, including those set out below.
Impairment testing assumptions
The group's price assumption for Brent oil was revised during
the second quarter. The assumption up to 2030 was increased to
reflect near-term supply constraints whereas the long-term
assumption was decreased reaching $55 per barrel by 2040 and $45
per barrel by 2050 (in real 2020 terms) as bp's management expects
an acceleration of the pace of transition to a lower carbon
economy. The price assumption for Henry Hub gas are unchanged from
those disclosed in BP Annual Report and Form 20-F 2020. A summary
of the group's price assumptions, in real 2020 terms, is provided
below:
Second
half
2021 2025 2030 2040 2050
------------------------ ------ ---- ---- ---- ----
Brent oil ($/bbl) 60 60 60 55 45
Henry Hub gas ($/mmBtu) 3.00 3.00 3.00 3.00 2.75
-------------------------- ------ ---- ---- ---- ----
The group has identified upstream oil and gas properties with
carrying amounts totalling approximately $33 billion where the
headroom, based on the most recent impairment tests performed, was
less than or equal to 20% of the carrying value. A change in price
or other assumptions within the next financial year may result in a
recoverable amount of one or more of these assets above or below
the current carrying amount and therefore there is a significant
risk of impairment reversals or charges in that period.
Impairment reversals for the second quarter of 2021 primarily
relate to the changes to price assumptions. For further information
see Note 3.
The discount rates used in value-in-use impairment testing as
disclosed in BP Annual Report and Form 20-F 2020, are
unchanged.
Provisions
The nominal risk-free discount rate applied to provisions is
reviewed on a quarterly basis. The discount rate applied to the
group's provisions was revised in the second quarter to 2.0% (31
December 2020 2.5%) to reflect lower recent US Treasury yields. The
principal impact of this rate reduction was a $1.3 billion increase
in the decommissioning provision with a corresponding increase in
the carrying amount of property, plant and equipment of $1.0
billion.
During the second quarter, the group assessed that a
decommissioning provision should be recognized for certain assets
previously sold to a third party where the decommissioning
obligation transferred may revert to bp due to the financial
condition of the current owner. No other significant
decommissioning provisions of this nature have been identified
however bp continues to review and monitor the risk of reversion of
decommissioning obligations.
Top of page 24
Note 1. Basis of preparation (continued)
Pensions and other post-retirement benefits
The group's defined benefit pension plans are reviewed quarterly
to determine any changes to the fair value of the plan assets or
present value of the defined benefit obligations. As a result of
the review during the second quarter of 2021, the group's total net
defined benefit pension plan surplus as at 30 June 2021 is $2.0
billion, compared to a surplus of $1.0 billion and a deficit of
$1.3 billion at 31 March 2021 and 31 December 2020
respectively.
The movement for the six months principally reflects net
actuarial gains reported in other comprehensive income arising from
increases in the UK, US and Eurozone discount rates partly offset
by increases in inflation rates and negative asset performance.
Also reflected in the second quarter is a reduction in the
liability of the UK funded final salary pension plan which was
closed to future accrual on 30 June 2021. A curtailment gain of
$0.3 billion has been recognized in the income statement. For
active members of the scheme at 30 June 2021, benefits payable are
now linked to salary as at that date rather than to salary on
retirement. The current environment is likely to continue to affect
the values of the plan assets and obligations resulting in
potential volatility in the amount of the net defined benefit
pension plan surplus/deficit recognized.
Impairment of financial assets measured at amortized cost
The estimate of the loss allowance recognized on financial
assets measured at amortized cost using an expected credit loss
approach was determined not to be a significant accounting estimate
in preparing BP Annual Report and Form 20-F 2020. Expected credit
loss allowances are, however, reviewed and updated quarterly.
Allowances are recognized on assets where there is evidence that
the asset is credit-impaired and on a forward-looking expected
credit loss basis for assets that are not credit-impaired. The
current economic environment and future credit risk outlook have
been considered in updating the estimate of loss allowances with no
significant impact in the quarter.
The group continues to believe that the calculation of expected
credit loss allowances is not a significant accounting estimate.
The group continues to apply its credit policy as disclosed in BP
Annual Report and Form 20-F 2020 - Financial statements - Note 29
Financial instruments and financial risk factors - credit risk.
Other accounting judgements and estimates
All other significant accounting judgements and estimates
disclosed in BP Annual Report and Form 20-F 2020 remain applicable
and no new significant accounting judgements or estimates have been
identified specifically arising from the impact of COVID-19.
Updates to significant accounting policies
Change in accounting policy - Interest Rate Benchmark Reform -
Phase II
Financial authorities have announced the timing of interest rate
benchmark transitions with market discussions continuing around
benchmark application. The replacement of key interest rate
benchmarks such as the London Inter-bank Offered Rate (LIBOR) with
alternative benchmarks in the US, UK, EU and other territories is
expected at the end of 2021 for most benchmarks, with remaining USD
tenors expected to cease in 2023. bp is primarily exposed to USD
LIBORs that will be available until June 2023.
Amendments to IFRS 9 'Financial instruments', IFRS 16 'Leases'
and other IFRSs were issued by the IASB in August 2020 to provide
practical expedients and reliefs when changes are made to
contractual cash flows or hedging relationships because of the
transition from Inter-bank Offered Rates to alternative risk-free
rates. bp adopted these amendments from 1 January 2021 and they
will be applied prospectively.
bp has set up an internal working group on interest rate
benchmark reform to monitor market developments and manage the
transition to alternative benchmark rates. The impacts on contracts
and arrangements that are linked to existing interest rate
benchmarks, for example, borrowings, leases and derivative
contracts have been assessed and transition plans are being
developed. bp is also participating on external committees and task
forces dedicated to interest rate benchmark reform.
Change in segmentation
During the first quarter of 2021, the group's reportable
segments were changed consistent with a change in the way that
resources are allocated and performance is assessed by the chief
operating decision maker, who for bp is the group chief executive,
from that date. From the first quarter of 2021, the group's
reportable segments are gas & low carbon energy, oil production
& operations, customers & products, and Rosneft. At 31
December 2020, the group's reportable segments were Upstream,
Downstream and Rosneft.
Gas & low carbon energy comprises regions with upstream
businesses that predominantly produce natural gas, gas marketing
and trading activities and the group's renewables businesses,
including biofuels, solar and wind. Gas producing regions were
previously in the Upstream segment. The group's renewables
businesses were previously part of 'Other businesses and
corporate'.
Oil production & operations comprises regions with upstream
activities that predominantly produce crude oil. These activities
were previously in the Upstream segment.
Customers & products comprises the group's customer-focused
businesses, spanning convenience and mobility, which includes fuels
retail and next-gen offers such as electrification, as well as
aviation, midstream, and Castrol lubricants. It also includes our
oil products businesses, refining & trading. The petrochemicals
business will also be reported in restated comparative information
as part of the customers and products segment up to its sale in
December 2020. The customers & products segment is, therefore,
substantially unchanged from the former Downstream segment with the
exception of the Petrochemicals disposal.
The Rosneft segment is unchanged and continues to include
equity-accounted earnings from the group's investment in
Rosneft.
The segment measure of profit or loss continues to be
replacement cost profit or loss before interest and tax, which
reflects the replacement cost of supplies by excluding from profit
or loss before interest and tax inventory holding gains and losses.
See Note 4 for further information.
Comparative information for 2020 has been restated in Notes 4, 5
and 6 to reflect the changes in reportable segments.
Top of page 25
Note 1. Basis of preparation (continued)
Voluntary change in accounting policy - Net presentation of
revenues and purchases relating to physically settled derivative
contracts
bp routinely enters into transactions for the sale and purchase
of commodities that are physically settled and meet the definition
of a derivative financial instrument. These contracts are within
the scope of IFRS 9 and as such, prior to settlement, changes in
the fair value of these derivative contracts are presented as gains
and losses within other operating revenues. The group previously
presented revenues and purchases for such contracts on a gross
basis in the income statement upon physical settlement.
These transactions have historically represented a substantial
portion of the revenues and purchases reported in the group's
consolidated financial statements.
The change in strategic direction of the group supported by
organisational changes to implement the strategy from 1 January
2021, resulted in the group determining that the revenue and
corresponding purchases relating to such transactions should be
presented net, as gains or losses within other operating revenues,
from that date.
Additionally the group's trading activity has continued to
evolve over time from one of capturing third-party physical trades
to provide flow assurance to one with increasing levels of
optimisation, taking advantage of price volatility and fluctuations
in demand and supply, which will continue under the new strategy,
further supporting the change in presentation. The new presentation
provides reliable and more relevant information for users of the
accounts as the group's revenue recognition is more closely aligned
with its assessment of 'Scope 3' emissions from its products, its
'Net Zero' ambition and how management monitors and manages
performance of such contracts. Comparative information for sales
and other operating revenues and purchases for 2020 has been
restated as shown in the table below. There is no significant
impact on comparative information for profit before income and tax
or earnings per share.
In addition, as disclosed in the group's 2020 financial
statements, in 2020 revenues from physically settled derivative
contracts were reclassified as other operating revenues and were no
longer presented together with revenues from contracts with
customers. In these financial statements certain other similar
contracts have been reclassified as other operating revenues and
then been subject to net presentation as described above.
Comparative information for natural gas, LNG and NGLs, and non-oil
products and other revenue from contracts with customers in Note 5
has been amended to align with current period presentation as shown
in the table below.
Top of page 26
Note 1. Basis of preparation (continued)
Second Second First First
quarter quarter half half
2020 2020 Impact 2020 2020 Impact
of net of net
$ million Restated presentation(a) Restated presentation(a)
------------------------------- ------- -------- --------------- ------- -------- -----------------
Sales and other operating revenues (Note
5)
gas & low carbon energy 4,183 3,227 (956) 10,235 8,752 (1,483)
oil production & operations 3,304 3,304 - 9,135 9,135 -
customers & products 27,241 17,783 (9,458) 81,205 43,597 (37,608)
other businesses & corporate 442 442 - 879 879 -
-------------------------------- ------- -------- --------------- ------- -------- ---------------
35,170 24,756 (10,414) 101,454 62,363 (39,091)
------- -------- --------------- ------- -------- ---------------
Less: sales and other revenues
between segments
gas & low carbon energy 27 27 - 1,838 1,838 -
oil production & operations 2,870 2,870 - 8,371 8,371 -
customers & products 330 330 - (452) (452) -
other businesses & corporate 267 267 - 371 371 -
-------------------------------- ------- -------- --------------- ------- -------- ---------------
3,494 3,494 - 10,128 10,128 -
------- -------- --------------- ------- -------- ---------------
External sales and other
operating revenues
gas & low carbon energy 4,156 3,200 (956) 8,397 6,914 (1,483)
oil production & operations 435 435 - 765 765 -
customers & products 26,911 17,453 (9,458) 81,657 44,049 (37,608)
other businesses & corporate 174 174 - 507 507 -
-------------------------------- ------- -------- --------------- ------- -------- ---------------
Total sales and other operating
revenues 31,676 21,262 (10,414) 91,326 52,235 (39,091)
Sales and other operating
revenues include the following
in relation to revenues from
contracts with customers:
Crude oil 1,062 1,062 - 2,497 2,497 -
Oil products 10,452 10,452 - 30,706 30,706 -
Natural gas, LNG and NGLs 2,992 2,072 (920) 6,630 5,250 (1,379)
Non-oil products and other
revenues from contracts
with
customers 2,118 2,092 (26) 4,608 4,569 (39)
-------------------------------- ------- -------- --------------- ------- -------- ---------------
Revenues from contracts with
customers 16,624 15,678 (946) 44,441 43,022 (1,419)
-------------------------------- ------- -------- --------------- ------- -------- ---------------
Other operating revenues 15,052 5,584 (9,468) 46,885 9,213 (37,672)
-------------------------------- ------- -------- --------------- ------- -------- ---------------
Total sales and other operating
revenues 31,676 21,262 (10,414) 91,326 52,235 (39,091)
-------------------------------- ------- -------- --------------- ------- -------- ---------------
(a) Total purchases for the second quarter and first half 2020
have been re-stated by the equal and opposite amount as total sales
and other operating revenues.
Note 2. Non-current assets held for sale
The carrying amount of assets classified as held for sale at 30
June 2021 is $34 million, with associated liabilities of $31
million.
At 31 December 2020 the balance consists primarily of a 20%
participating interest from BP's 60% participating interest in
Block 61 in Oman, which is reported in the gas & low carbon
energy segment. As announced on 1 February 2021, BP agreed to sell
this interest to PTT Exploration and Production Public Company
Limited (PTTEP) of Thailand for a total consideration of up to $2.6
billion, subject to final adjustments. On 28 March, a royal decree
was published approving the sale and $2.4 billion was received in
March 2021.
Top of page 27
Note 3. Impairment and losses on sale of businesses and fixed
assets(a)
Impairment reversals net of losses on sale of businesses and
fixed assets for the second quarter and first half 2021 were $2,937
million and $2,564 million respectively (charges of $11,770 million
and $12,919 million for the comparative periods in 2020) and
include net impairment reversals for the second quarter and first
half 2021 of $2,964 million and $2,744 million respectively
(charges of $11,848 million and $12,646 million for the comparative
periods in 2020). Impairment charges included within the 2021
numbers are immaterial.
gas & low carbon energy segment
Net impairment reversals in the gas & low carbon energy
segment were $1,270 million and $1,148 million for the second
quarter and first half 2021 respectively (charges of $6,111 million
and $6,112 million for the comparative periods in 2020).
Impairment reversals for the second quarter and first half 2021
mainly relate to producing assets and principally arose as a result
of changes to the group's oil and gas price assumptions. They
include amounts in Azerbaijan, India and Trinidad. The recoverable
amounts of the cash generating units within these businesses were
based on value-in-use calculations.
oil production & operations segment
Net impairment reversals in the oil production & operations
segment were $1,756 million and $1,657 million for the second
quarter and first half 2021 (charges of $5,008 million and $5,792
million for the comparative periods in 2020).
Impairment reversals for the second quarter and first half 2021
mainly relate to producing assets and principally arose as a result
of changes to the group's oil and gas price assumptions. They
include amounts in BPX Energy and the North Sea. The recoverable
amounts of the cash generating units within these businesses were
based on value-in-use calculations.
(a) All disclosures are pre-tax.
Note 4. Analysis of replacement cost profit (loss) before
interest and tax and reconciliation to profit (loss) before
taxation(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------- ------- ------- -------- ------- ----------
gas & low carbon energy 927 3,430 (7,752) 4,357 (6,682)
oil production & operations 3,118 1,479 (14,314) 4,597 (14,493)
customers & products 640 934 594 1,574 1,258
Rosneft 643 363 (124) 1,006 (141)
other businesses & corporate (425) (678) (259) (1,103) (825)
------------------------------------------ ------- ------- -------- ------- --------
4,903 5,528 (21,855) 10,431 (20,883)
Consolidation adjustment - UPII* (31) 13 (46) (18) 132
------------------------------------------ ------- ------- -------- ------- --------
RC profit (loss) before interest and
tax* 4,872 5,541 (21,901) 10,413 (20,751)
Inventory holding gains (losses)*
gas & low carbon energy 4 22 11 26 2
oil production & operations (6) 15 46 9 (13)
customers & products 887 1,605 978 2,492 (3,637)
Rosneft (net of tax) 68 88 53 156 (148)
------------------------------------------ ------- ------- -------- ------- --------
Profit (loss) before interest and tax 5,825 7,271 (20,813) 13,096 (24,547)
Finance costs 682 723 783 1,405 1,566
Net finance expense relating to pensions
and other post-retirement benefits 5 6 8 11 15
------------------------------------------ ------- ------- -------- ------- --------
Profit (loss) before taxation 5,138 6,542 (21,604) 11,680 (26,128)
------------------------------------------ ------- ------- -------- ------- --------
RC profit (loss) before interest and
tax*
US 955 1,907 (4,695) 2,862 (4,100)
Non-US 3,917 3,634 (17,206) 7,551 (16,651)
------------------------------------------ ------- ------- -------- ------- --------
4,872 5,541 (21,901) 10,413 (20,751)
------- ------- -------- ------- --------
(a) Comparative information for 2020 has been restated to
reflect the changes in reportable segments. For more information
see Note 1 basis of preparation - Change in segmentation.
Top of page 28
Note 5. Sales and other operating revenues(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------------------- ------- ------- ------- ------ --------
By segment
gas & low carbon energy 5,739 8,002 3,227 13,741 8,752
oil production & operations 5,597 5,155 3,304 10,752 9,135
customers & products 31,160 27,107 17,783 58,267 43,597
other businesses & corporate 381 436 442 817 879
---------------------------------------------------- ------- ------- ------- ------ ------
42,877 40,700 24,756 83,577 62,363
------- ------- ------- ------ ------
Less: sales and other operating revenues between
segments
gas & low carbon energy 1,063 1,032 27 2,095 1,838
oil production & operations 4,928 4,855 2,870 9,783 8,371
customers & products 112 110 330 222 (452)
other businesses & corporate 307 159 267 466 371
---------------------------------------------------- ------- ------- ------- ------ ------
6,410 6,156 3,494 12,566 10,128
------- ------- ------- ------ ------
External sales and other operating revenues
gas & low carbon energy 4,676 6,970 3,200 11,646 6,914
oil production & operations 669 300 435 969 765
customers & products 31,048 26,997 17,453 58,045 44,049
other businesses & corporate 74 277 174 351 507
---------------------------------------------------- ------- ------- ------- ------ ------
Total sales and other operating revenues 36,467 34,544 21,262 71,011 52,235
---------------------------------------------------- ------- ------- ------- ------ ------
By geographical area
US 15,305 14,491 7,532 29,796 17,197
Non-US 29,700 26,883 16,946 56,583 43,778
---------------------------------------------------- ------- ------- ------- ------ ------
45,005 41,374 24,478 86,379 60,975
Less: sales and other operating revenues between
areas 8,538 6,830 3,216 15,368 8,740
---------------------------------------------------- ------- ------- ------- ------ ------
36,467 34,544 21,262 71,011 52,235
------- ------- ------- ------ ------
Revenues from contracts with customers
Sales and other operating revenues include
the following in relation to revenues from
contracts with customers:
Crude oil 1,291 1,334 1,062 2,625 2,497
Oil products 24,651 19,278 10,452 43,929 30,706
Natural gas, LNG and NGLs(b) 4,273 4,181 2,072 8,454 5,250
Non-oil products and other revenues from contracts
with customers(b) 1,603 1,398 2,092 3,001 4,569
---------------------------------------------------- ------- ------- ------- ------ ------
Revenue from contracts with customers 31,818 26,191 15,678 58,009 43,022
---------------------------------------------------- ------- ------- ------- ------ ------
Other operating revenues(c) 4,649 8,353 5,584 13,002 9,213
---------------------------------------------------- ------- ------- ------- ------ ------
Total sales and other operating revenues 36,467 34,544 21,262 71,011 52,235
---------------------------------------------------- ------- ------- ------- ------ ------
(a) Comparative information for 2020 has been restated for the
changes in reportable segments and also changes to net presentation
of revenues and purchases relating to physically settled derivative
contracts effective 1 January 2021. For more information see Note 1
Basis of preparation - Voluntary change in accounting policy and
Change in segmentation.
(b) Comparative information has been amended for certain
contracts that have been reclassified to other operating revenues
and then been subject to the net presentation described in Note 1
Basis of preparation - Voluntary change in accounting policy.
(c) Principally relates to commodity derivative transactions.
Top of page 29
Note 6. Depreciation, depletion and amortization(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- ------- ----- -------
Total depreciation, depletion and amortization
by segment
gas & low carbon energy 1,115 854 952 1,969 1,990
oil production & operations 1,559 1,574 2,070 3,133 4,187
customers & products 754 745 752 1,499 1,499
other businesses & corporate 203 194 163 397 320
------------------------------------------------ ------- ------- ------- ----- -----
3,631 3,367 3,937 6,998 7,996
------- ------- ------- ----- -----
Total depreciation, depletion and amortization
by geographical area
US 1,160 1,121 1,404 2,281 2,829
Non-US 2,471 2,246 2,533 4,717 5,167
------------------------------------------------ ------- ------- ------- ----- -----
3,631 3,367 3,937 6,998 7,996
------- ------- ------- ----- -----
(a) Comparative information for 2020 has been restated to
reflect the changes in reportable segments. For more information
see Note 1 basis of preparation - Change in segmentation.
Note 7. 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 second quarter
2021 115 million of ordinary shares were repurchased for
cancellation for a total cost of $500 million, including
transaction costs of $3 million, as part of the share buyback
programme announced on 27 April 2021. 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.
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
------------------------------------------ ---------- ---------- ---------- ---------- ------------
Results for the period
Profit (loss) for the period attributable
to bp shareholders 3,116 4,667 (16,848) 7,783 (21,213)
Less: preference dividend - 1 1 1 1
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Profit (loss) attributable to
bp ordinary shareholders 3,116 4,666 (16,849) 7,782 (21,214)
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Number of shares (thousand) (a)(b)
Basic weighted average number
of shares outstanding 20,272,111 20,297,585 20,222,575 20,285,083 20,200,694
ADS equivalent(c) 3,378,685 3,382,930 3,370,429 3,380,847 3,366,782
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Weighted average number of shares
outstanding used to calculate
diluted earnings per share 20,366,731 20,388,628 20,222,575 20,394,877 20,200,694
ADS equivalent(c) 3,394,455 3,398,104 3,370,429 3,399,146 3,366,782
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Shares in issue at period-end 20,224,314 20,331,023 20,249,046 20,224,314 20,249,046
ADS equivalent(c) 3,370,719 3,388,503 3,374,841 3,370,719 3,374,841
------------------------------------------- ---------- ---------- ---------- ---------- ----------
(a) Excludes treasury shares and includes certain shares that
will be issued in the future under employee share-based payment
plans.
(b) If the inclusion of potentially issuable shares would
decrease loss per share, the potentially issuable shares are
excluded from the weighted average number of shares outstanding
used to calculate diluted earnings per share. The numbers of
potentially issuable shares that have been excluded from the
calculation for the second quarter 2020 and first half 2020 are
63,119 thousand (ADS equivalent 10,520 thousand) and 85,469
thousand (ADS equivalent 14,245 thousand) respectively.
(c) One ADS is equivalent to six ordinary shares.
Top of page 30
Note 8. Dividends
Dividends payable
BP today announced an interim dividend of 5.46 cents per
ordinary share which is expected to be paid on 24 September 2021 to
ordinary shareholders and American Depositary Share (ADS) holders
on the register on 13 August 2021. The ex-dividend date will be 12
August 2021. The corresponding amount in sterling is due to be
announced on 14 September 2021, calculated based on the average of
the market exchange rates over three dealing days between 8
September 2021 and 10 September 2021. Holders of ADSs are expected
to receive $0.3276 per ADS (less applicable fees). The board has
decided not to offer a scrip dividend alternative in respect of the
second quarter 2021 dividend. Ordinary shareholders and ADS holders
(subject to certain exceptions) will be able to participate in a
dividend reinvestment programme. Details of the second quarter
dividend and timetable are available at bp.com/dividends and
further details of the dividend reinvestment programmes are
available at bp.com/drip.
Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
---------------------------------- ------- ------- ------- ------ --------
Dividends paid per ordinary share
cents 5.250 5.250 10.500 10.500 21.000
pence 3.712 3.768 8.342 7.480 16.498
Dividends paid per ADS (cents) 31.50 31.50 63.00 63.00 126.00
----------------------------------- ------- ------- ------- ------ ------
Note 9. Net debt
Net debt* Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
--------------------------------------- -------- -------- -------- -------- ----------
Finance debt(a) 68,247 66,123 76,003 68,247 76,003
Fair value (asset) liability of hedges
related to finance debt(b) (1,285) (1,134) (430) (1,285) (430)
---------------------------------------- -------- -------- -------- -------- --------
66,962 64,989 75,573 66,962 75,573
Less: cash and cash equivalents 34,256 31,676 34,653 34,256 34,653
---------------------------------------- -------- -------- -------- -------- --------
Net debt(c) 32,706 33,313 40,920 32,706 40,920
---------------------------------------- -------- -------- -------- -------- --------
Total equity 93,232 90,586 82,811 93,232 82,811
Gearing* 26.0% 26.9% 33.1% 26.0% 33.1%
---------------------------------------- -------- -------- -------- -------- ----------
(a) The fair value of finance debt at 30 June 2021 was $70,589
million (30 June 2020 $77,990 million).
(b) Derivative financial instruments entered into for the
purpose of managing interest rate and foreign currency exchange
risk associated with net debt with a fair value liability position
of $308 million (first quarter 2021 liability of $346 million and
second quarter 2020 liability of $554 million) are not included in
the calculation of net debt shown above as hedge accounting is not
applied for these instruments.
(c) Net debt does not include accrued interest, which is
reported within other receivables and other payables on the balance
sheet and for which the associated cash flows are presented as
operating cash flows in the group cash flow statement.
As part of actively managing its debt portfolio, on 9 June 2021
bp exercised its option to redeem finance debt with an outstanding
aggregate principal amount of $2.4 billion on 13 July 2021. In the
first quarter, the group bought back $3.9 billion equivalent of US
dollar, euro and sterling bonds and terminated derivatives
associated with the non-USD debt bought back. These transactions
have no significant impact on net debt or gearing.
Note 10. Inventory valuation
A provision of $17 million was held against hydrocarbon
inventories at 30 June 2021 ($80 million at 31 March 2021 and $289
million at 30 June 2020) to write them down to their net realizable
value. As a result of the changes in strategic direction of the
group and the evolution of the trading strategy set out in Note 1,
from 1 January, certain inventory, totalling $11.0 billion as at 30
June 2021 ($10.2 billion as at 31 March 2021), is now treated as
trading inventory and is valued at fair value whereas the
equivalent inventory was previously valued at the lower of cost or
net realisable value in prior periods.
Note 11. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 2 August 2021, is unaudited
and does not constitute statutory financial statements. Audited
financial information will be published in BP Annual Report and
Form 20-F 2021. BP Annual Report and Form 20-F 2020 has been filed
with the Registrar of Companies in England and Wales. The report of
the auditor on those accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain a
statement under section 498(2) or section 498(3) of the UK
Companies Act 2006.
Top of page 31
Additional information
Capital expenditure*(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
---------------------------------- ------- ------- ------- ----- -------
Capital expenditure
Organic capital expenditure* 2,511 2,906 3,034 5,417 6,573
Inorganic capital expenditure*(b) 3 892 33 895 355
----------------------------------- ------- ------- ------- ----- -----
2,514 3,798 3,067 6,312 6,928
------- ------- ------- ----- -----
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------- ------- ------- ------- ----- -------
Capital expenditure by segment
gas & low carbon energy(b) 747 1,885 1,019 2,632 2,203
oil production & operations 1,148 1,319 1,619 2,467 3,579
customers & products 519 532 369 1,051 1,026
other businesses & corporate 100 62 60 162 120
------------------------------------------ ------- ------- ------- ----- -----
2,514 3,798 3,067 6,312 6,928
------- ------- ------- ----- -----
Capital expenditure by geographical area
US 890 1,487 1,113 2,377 2,436
Non-US 1,624 2,311 1,954 3,935 4,492
------------------------------------------ ------- ------- ------- ----- -----
2,514 3,798 3,067 6,312 6,928
------- ------- ------- ----- -----
(a) Comparative information for 2020 has been restated to
reflect the changes in reportable segments. For more information
see Note 1 Basis of preparation - Change in segmentation.
(b) First quarter and first half 2021 include the final payment
of $712 million in respect of the strategic partnership with
Equinor.
Top of page 32
Adjusting items*(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- -------- ------- ----------
gas & low carbon energy
Gains on sale of businesses and fixed
assets(b) - 1,034 - 1,034 -
Impairment and losses on sale of businesses
and fixed assets(c) 1,270 (123) (6,111) 1,147 (6,114)
Environmental and other provisions - - - - -
Restructuring, integration and rationalization
costs(d) (21) (8) (6) (29) (4)
Fair value accounting effects(e) (1,311) 247 (67) (1,064) 156
Other(f) (251) 10 (754) (241) (753)
------------------------------------------------ ------- ------- -------- ------- --------
(313) 1,160 (6,938) 847 (6,715)
------- ------- -------- ------- --------
oil production & operations
Gains on sale of businesses and fixed
assets 216 168 87 384 94
Impairment and losses on sale of businesses
and fixed assets(c) 1,751 (209) (4,861) 1,542 (5,991)
Environmental and other provisions(g) (776) (65) - (841) (13)
Restructuring, integration and rationalization
costs(d) (90) (4) (18) (94) (24)
Fair value accounting effects - - - - -
Other(f)(h) (225) 24 (1,809) (201) (1,741)
------------------------------------------------ ------- ------- -------- ------- --------
876 (86) (6,601) 790 (7,675)
------- ------- -------- ------- --------
customers & products
Gains on sale of businesses and fixed
assets 8 (97) (13) (89) (6)
Impairment and losses on sale of businesses
and fixed assets (35) (43) (798) (78) (803)
Environmental and other provisions (8) - - (8) -
Restructuring, integration and rationalization
costs(d) (10) (41) 31 (51) 31
Fair value accounting effects(e) (139) 459 (31) 320 (290)
Other (3) - - (3) -
------------------------------------------------ ------- ------- -------- ------- --------
(187) 278 (811) 91 (1,068)
------- ------- -------- ------- --------
Rosneft
Other (46) - (63) (46) (63)
------------------------------------------------ ------- ------- -------- ------- --------
(46) - (63) (46) (63)
------- ------- -------- ------- --------
other businesses & corporate
Gains on sale of businesses and fixed
assets - - - - 2
Impairment and losses on sale of businesses
and fixed assets (50) (1) - (51) -
Environmental and other provisions (72) - - (72) (23)
Restructuring, integration and rationalization
costs(d) (74) (25) (33) (99) (46)
Gulf of Mexico oil spill (18) (11) (31) (29) (52)
Fair value accounting effects(e) 73 (447) (41) (374) (41)
Other 21 (24) 66 (3) (13)
------------------------------------------------ ------- ------- -------- ------- --------
(120) (508) (39) (628) (173)
Total before interest and taxation 210 844 (14,452) 1,054 (15,694)
Finance costs(i)(j) (202) (148) (114) (350) (236)
------------------------------------------------ ------- ------- -------- ------- --------
Total before taxation 8 696 (14,566) 704 (15,930)
Taxation credit (charge) on adjusting
items (396) 12 3,477 (384) 3,787
Taxation - impact of foreign exchange(k) (30) (13) 114 (43) (251)
------------------------------------------------ ------- ------- -------- ------- --------
Total taxation on adjusting items (426) (1) 3,591 (427) 3,536
------------------------------------------------ ------- ------- -------- ------- --------
Total after taxation for period (418) 695 (10,975) 277 (12,394)
------------------------------------------------ ------- ------- -------- ------- --------
(a) Prior to 2021 adjusting items were reported under two
different headings - non-operating items and fair value accounting
effects. Comparative information for 2020 has been restated to
reflect the changes in reportable segments. For more information
see Note 1 Basis of preparation - Change in segmentation.
(b) First quarter and first half 2021 relate to a gain from the
divestment of a 20% stake in Oman Block 61.
(c) See Note 3 for further information.
(d) All periods in 2021 include recognized provisions for
restructuring costs associated with the reinvent programme that was
formalized in 2020.
(e) For further information, including the nature of fair value
accounting effects reported in each segment, see page 39.
(f) Second quarter and first half 2020 include the exploration
write-off of $668 million in gas and lower carbon energy relating
to fair value ascribed to certain licences as part of the
accounting at the time of acquisition of gas & low carbon
assets in India and the impairment of certain intangible assets in
Mauritania and Senegal and $1,301 million in oil production &
operations relating to fair value ascribed to certain licences as
part of the accounting at the time of acquisition of oil production
& operations assets in Brazil and the Gulf of Mexico.
(g) Second quarter and first half 2021 Includes adjustments
relating to the change in discount rate on retained decommissioning
provisions and the recognition of a decommissioning provision in
relation to certain assets previously sold to a third party where
the decommissioning obligation transferred may revert to bp due to
the financial condition of the current owner.
(h) Second quarter and first half 2021 includes a $415 million
charge relating to a remeasurement of deferred tax balances in our
equity-accounted entity in Argentina following income tax rate
changes partially offset by impairment reversals in
equity-accounted entities.
Top of page 33
(i) All periods presented include the unwinding of discounting
effects relating to Gulf of Mexico oil spill payables. Second
quarter, first quarter and first half 2021 also include the income
statement impact associated with the buyback of finance debt. See
Note 9 for further information.
(j) From first quarter 2021 bp is presenting temporary valuation
differences associated with the group's interest rate and foreign
currency exchange risk management of finance debt as an adjusting
item within finance costs. In 2020 these amounts were presented
within production and manufacturing expenses and as an 'other'
adjusting item in the other business & corporate segment.
Relevant amounts in the comparative periods presented were not
material.
(k) bp is presenting certain foreign exchange effects on tax as
adjusting items. These amounts represent the impact of: (i) foreign
exchange on deferred tax balances arising from the conversion of
local currency tax base amounts into functional currency, and (ii)
taxable gains and losses from the retranslation of US
dollar-denominated intra-group loans to local currency.
Net debt including leases
Net debt including leases* Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
---------------------------------------- -------- -------- -------- -------- ----------
Net debt 32,706 33,313 40,920 32,706 40,920
Lease liabilities 8,863 9,030 9,331 8,863 9,331
Net partner (receivable) payable for
leases entered into on behalf of joint
operations 109 37 (90) 109 (90)
Net debt including leases 41,678 42,380 50,161 41,678 50,161
----------------------------------------- -------- -------- -------- -------- --------
Total equity 93,232 90,586 82,811 93,232 82,811
Gearing including leases* 30.9% 31.9% 37.7% 30.9% 37.7%
----------------------------------------- -------- -------- -------- -------- ----------
Gulf of Mexico oil spill
30 June 31 December
$ million 2021 2020
Gulf of Mexico oil spill payables and provisions (10,258) (11,436)
-------------------------------------------------- -------- -----------
Of which - current (1,270) (1,444)
Deferred tax asset 4,326 5,471
-------------------------------------------------- -------- -----------
During the second quarter pre-tax payments of $1,199 million
were made relating to the 2016 consent decree and settlement
agreement with the United States and the five Gulf coast states.
Payables and provisions presented in the table above reflect the
latest estimate for the remaining costs associated with the Gulf of
Mexico oil spill. Where amounts have been provided on an estimated
basis, the amounts ultimately payable may differ from the amounts
provided and the timing of payments is uncertain. Further
information relating to the Gulf of Mexico oil spill, including
information on the nature and expected timing of payments relating
to provisions and other payables, is provided in BP Annual Report
and Form 20-F 2020 - Financial statements - Notes 7, 9, 20, 22, 23,
29, and 33.
Top of page 34
Working capital* reconciliation(a)
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------------- ------- ------- ------- ------- ---------
Movements in inventories and other current
and non-current assets and liabilities
as per condensed group cash flow statement(b) 26 (2,793) (609) (2,767) 74
Adjusted for inventory holding gains
(losses)* (Note 4 excluding Rosneft) 885 1,642 1,035 2,527 (3,648)
Adjusted for fair value accounting effects (1,377) 259 (139) (1,118) (175)
------------------------------------------------ ------- ------- ------- ------- -------
Working capital release (build) after
adjusting for net inventory gains (losses)
and fair value accounting effects (466) (892) 287 (1,358) (3,749)
------------------------------------------------ ------- ------- ------- ------- -------
(a) Commencing with second quarter 2021 results fair value
accounting effects have been included in the working capital
reconciliation. For further information see Glossary page 43.
(b) The movement in working capital includes outflows relating
to the Gulf of Mexico oil spill on a pre-tax basis of $1,204
million and $1,339 million in the second quarter and first half of
2021 respectively. For the same periods in 2020 the amount was an
outflow of $1,120 million and $1,374 million respectively.
Surplus cash flow* reconciliation
Second First
quarter half
$ million 2021 2021
------------------------------------------------------------ ------- ----------
Sources:
Net cash provided by operating activities 5,411 11,520
Cash provided from investing activities 282 4,507
Receipts relating to transactions involving non-controlling
interests (other) 3 671
------------------------------------------------------------- ------- --------
Cash inflow 5,696 16,698
------------------------------------------------------------- ------- --------
Uses:
Lease liability payments (514) (1,074)
Payments on perpetual hybrid bonds (328) (383)
Dividends paid - BP shareholders (1,062) (2,126)
- non-controlling interests (107) (158)
Total capital expenditure* (2,514) (6,312)
Net repurchase of shares relating to employee
share schemes (500) (500)
Currency translation differences relating to
cash and cash equivalents 24 (34)
------------------------------------------------------------- ------- --------
Cash outflow (5,001) (10,587)
------------------------------------------------------------- ------- --------
Surplus (deficit) cash and cash equivalent 695 6,111
------------------------------------------------------------- ------- --------
Net debt
Opening balance at 1 January 2021 38,941
Fair value and other movements on debt (212)
Net debt target 35,000
------------------------------------------------------------- --------
Cash used to meet net debt target 3,729
------------------------------------------------------------- --------
Surplus cash flow 2,382
------------------------------------------------------------- --------
Top of page 35
Reconciliation of customers & products RC profit before
interest and tax* to underlying RC profit before interest and tax
to adjusted EBITDA* by business
Second First Second First First
quarter quarter quarter half half
$ million 2021 2021 2020 2021 2020
----------------------------------------- ------- ------- ------- ----- ---------
RC profit before interest and tax for
customers & products 640 934 594 1,574 1,258
Less: Adjusting items gains (charges) (187) 278 (811) 91 (1,068)
Underlying RC profit before interest
and tax for customers & products 827 656 1,405 1,483 2,326
By business:
customers - convenience & mobility 951 658 432 1,609 1,120
Castrol - included in customers 265 334 63 599 230
products - refining & trading (124) (2) 926 (126) 1,094
petrochemicals - - 47 - 112
Add back: Depreciation, depletion and
amortization 754 745 752 1,499 1,499
By business:
customers - convenience & mobility 329 324 283 653 570
Castrol - included in customers 39 39 43 78 81
products - refining & trading 425 421 419 846 829
petrochemicals - - 50 - 100
Adjusted EBITDA for customers & products 1,581 1,401 2,157 2,982 3,825
By business:
customers - convenience & mobility 1,280 982 715 2,262 1,690
Castrol - included in customers 304 373 106 677 311
products - refining & trading 301 419 1,345 720 1,923
petrochemicals - - 97 - 212
------------------------------------------ ------- ------- ------- ----- -------
Top of page 36
Realizations* and marker prices
Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
-------------------------------------------- ------- ------- ------- ----- -------
Average realizations (a)
Liquids* ($/bbl)
US 53.64 45.21 21.63 49.36 33.80
Europe 69.19 61.72 28.91 64.83 40.30
Rest of World 64.44 57.48 22.58 61.04 33.79
BP Average 60.69 53.20 22.75 56.91 34.39
--------------------------------------------- ------- ------- ------- ----- -----
Natural gas ($/mcf)
US 3.03 3.45 0.97 3.24 1.15
Europe 8.94 6.89 1.38 7.78 2.17
Rest of World 4.13 3.94 3.12 4.03 3.32
BP Average 4.08 3.98 2.53 4.03 2.69
--------------------------------------------- ------- ------- ------- ----- -----
Total hydrocarbons* ($/boe)
US 41.14 36.91 16.05 39.02 23.37
Europe 63.85 55.34 23.00 58.93 33.46
Rest of World 40.27 36.06 20.21 38.16 25.63
BP Average 41.84 37.75 19.06 39.77 25.36
--------------------------------------------- ------- ------- ------- ----- -----
Average oil marker prices ($/bbl)
Brent 68.97 61.12 29.56 64.98 40.07
West Texas Intermediate 66.19 58.13 27.96 62.22 36.69
Western Canadian Select 53.10 46.12 22.19 49.57 25.48
Alaska North Slope 68.58 61.07 30.28 64.89 40.59
Mars 66.01 58.65 30.02 62.39 37.73
Urals (NWE - cif) 66.69 59.36 31.36 62.96 39.80
--------------------------------------------- ------- ------- ------- ----- -----
Average natural gas marker prices
Henry Hub gas price(b) ($/mmBtu) 2.83 2.71 1.71 2.77 1.83
UK Gas - National Balancing Point (p/therm) 64.79 49.82 12.88 57.19 18.98
--------------------------------------------- ------- ------- ------- ----- -----
(a) Based on sales of consolidated subsidiaries only - this excludes equity-accounted entities.
(b) Henry Hub First of Month Index.
Exchange rates
Second First Second First First
quarter quarter quarter half half
2021 2021 2020 2021 2020
------------------------------------- ------- ------- ------- ----- -------
$/GBP average rate for the period 1.40 1.38 1.24 1.39 1.26
$/GBP period-end rate 1.38 1.37 1.23 1.38 1.23
$/EUR average rate for the period 1.21 1.21 1.10 1.21 1.10
$/EUR period-end rate 1.19 1.17 1.12 1.19 1.12
$/AUD average rate for the period 0.77 0.77 0.66 0.77 0.66
$/AUD period-end rate 0.75 0.76 0.69 0.75 0.69
Rouble/$ average rate for the period 74.20 74.41 72.40 74.31 69.64
Rouble/$ period-end rate 72.70 76.09 71.25 72.70 71.25
-------------------------------------- ------- ------- ------- ----- -----
Top of page 37
Principal risks and uncertainties
The principal risks and uncertainties affecting bp are described
in the Risk factors section of bp Annual Report and Form 20-F 2020
(pages 67-70) and are summarized below. There are no material
changes in those principal risks and uncertainties for the
remaining six months of the financial year.
The risks and uncertainties summarized below, separately or in
combination, could have a material adverse effect on the
implementation of our strategy, our business, financial
performance, results of operations, cash flows, liquidity,
prospects, shareholder value and returns and reputation.
Strategic and commercial risks
-- Prices and markets - our financial performance is impacted by
fluctuating prices of oil, gas and refined products, technological
change, exchange rate fluctuations, and the general macroeconomic
outlook.
-- Access, renewal and reserves progression - inability to
access, renew and progress upstream resources in a timely manner
could adversely affect our long-term replacement of reserves.
-- Major project* delivery - failure to invest in the best
opportunities or deliver major projects successfully could
adversely affect our financial performance.
-- Geopolitical - exposure to a range of political developments
and consequent changes to the operating and regulatory environment
could cause business disruption.
-- Liquidity, financial capacity and financial, including
credit, exposure - failure to work within our financial framework
could impact our ability to operate and result in financial
loss.
-- Joint arrangements and contractors - varying levels of
control over the standards, operations and compliance of our
partners, contractors and sub-contractors could result in legal
liability and reputational damage.
-- Digital infrastructure and cyber security - breach or failure
of our or third parties' digital infrastructure or cyber security,
including loss or misuse of sensitive information could damage our
operations, increase costs and damage our reputation.
-- Climate change and the transition to a lower carbon economy -
developments in policy, law, regulation, technology and markets,
including societal and investor sentiment, related to the issue of
climate change could increase costs, constrain our operations and
affect our business plans and financial performance.
-- Competition - inability to remain efficient, maintain a
high-quality portfolio of assets, innovate and retain an
appropriately skilled workforce could negatively impact delivery of
our strategy in a highly competitive market.
-- Crisis management and business continuity - failure to
address an incident effectively could potentially disrupt our
business.
-- Insurance - our insurance strategy could expose the group to material uninsured losses.
Safety and operational risks
-- Process safety, personal safety, and environmental risks -
exposure to a wide range of health, safety, security and
environmental risks could cause harm to people, the environment and
our assets and result in regulatory action, legal liability,
business interruption, increased costs, damage to our reputation
and potentially denial of our licence to operate.
-- Drilling and production - challenging operational
environments and other uncertainties could impact drilling and
production activities.
-- Security - hostile acts against our staff and activities
could cause harm to people and disrupt our operations.
-- Product quality - supplying customers with off-specification
products could damage our reputation, lead to regulatory action and
legal liability, and impact our financial performance.
Compliance and control risks
-- Ethical misconduct and non-compliance - ethical misconduct or
breaches of applicable laws by our businesses or our employees
could be damaging to our reputation, and could result in
litigation, regulatory action and penalties.
-- Regulation - changes in the law and regulation could increase
costs, constrain our operations and affect our business plans and
financial performance.
-- Treasury and trading activities - ineffective oversight of
treasury and trading activities could lead to business disruption,
financial loss, regulatory intervention or damage to our
reputation.
-- Reporting - failure to accurately report our data could lead
to regulatory action, legal liability and reputational damage.
Top of page 38
Legal proceedings
For a full discussion of the group's material legal proceedings,
see pages 226-227 of bp Annual Report and Form 20-F 2020.
Glossary
Non-GAAP measures are provided for investors because they are
closely tracked by management to evaluate bp's operating
performance and to make financial, strategic and operating
decisions. Non-GAAP measures are sometimes referred to as
alternative performance measures.
New metrics have been introduced in 2021 to provide transparency
against key strategic value drivers.
Adjusted EBITDA is a non-GAAP measure presented for bp's
operating segments and is defined as replacement cost (RC) profit
before interest and tax, excluding net adjusting items*, adding
back depreciation, depletion and amortization and exploration
write-offs (net of adjusting items). Adjusted EBITDA by business is
a further analysis of adjusted EBITDA for the customers &
products businesses. bp believes it is helpful to disclose adjusted
EBITDA by operating segment and by business because it reflects how
the segments measure underlying business delivery. The nearest
equivalent measure on an IFRS basis for the segment is RC profit or
loss before interest and tax, which is bp's measure of profit or
loss that is required to be disclosed for each operating segment
under IFRS.
Adjusting items are items that bp discloses separately because
it considers such disclosures to be meaningful and relevant to
investors. They are items that management considers to be important
to period-on-period analysis of the group's results and are
disclosed in order to enable investors to better understand and
evaluate the group's reported financial performance. Adjusting
items include gains and losses on the sale of businesses and fixed
assets, impairments, environmental and other provisions,
restructuring, integration and rationalization costs, fair value
accounting effects, costs relating to the Gulf of Mexico oil spill
and other items. Adjusting items within equity-accounted earnings
are reported net of incremental income tax reported by the
equity-accounted entity. Adjusting items are used as a reconciling
adjustment to derive underlying RC profit or loss and related
underlying measures which are non-GAAP measures. An analysis of
adjusting items by segment and type is shown on page 32. Prior to
2021 adjusting items were reported under two different headings -
non-operating items and fair value accounting effects.
Bioenergy production is average thousands of barrels of biofuel
production per day during the period covered, net to bp. This
includes equivalent ethanol production, bp Bunge biopower for grid
export, biogas and refining co-processing and standalone
hydrogenated vegetable oil (HVO).
Capital expenditure is total cash capital expenditure as stated
in the condensed group cash flow statement. Capital expenditure for
the operating segments and customers & products businesses is
presented on the same basis.
Cash balance point is defined as the implied Brent oil price for
the quarter that would cause the sum of operating cash flow
excluding Gulf of Mexico oil spill payments (assuming actual
refining marker margins and Henry Hub gas prices for the quarter)
and proceeds from loan repayments to equate to the sum of total
cash capital expenditure, lease liability payments, dividend paid,
and payments on perpetual hybrid bonds.
Cash costs is a non-GAAP measure and is defined as production
and manufacturing expenses plus distribution and administration
expenses and excludes costs that are classified as adjusting items
and costs that are variable, primarily with volumes (such as
freight costs). Management believes that cash costs is a
performance measure that provides investors with useful information
regarding the company's financial performance because it considers
these expenses to be the principal operating and overhead expenses
that are most directly under their control although they also
include certain foreign exchange and commodity price effects.
Consolidation adjustment - UPII is unrealized profit in
inventory arising on inter-segment transactions.
Convenience gross margin is a non-GAAP measure. Convenience
gross margin is calculated as RC profit before interest and tax for
the customers & products segment, excluding RC profit before
interest and tax for the refining & trading and petrochemicals
businesses, and adjusting items* (as defined above) for the
convenience & mobility business to derive underlying RC profit
before interest and tax for the convenience & mobility
business; subtracting underlying RC profit before interest and tax
for the Castrol business; adding back depreciation, depletion and
amortization, production and manufacturing, distribution and
administration expenses for convenience & mobility (excluding
Castrol); subtracting earnings from equity-accounted entities in
the convenience & mobility business (excluding Castrol) and
gross margin for the retail fuels, next-gen, aviation, B2B and
midstream businesses.
Convenience gross margin growth at constant foreign exchange is
a non-GAAP measure. This metric requires a calculation of the
comparative convenience gross margin ($ million) at current period
foreign exchange rates (constant foreign exchange) and compares the
current period value with the restated comparative period value,
which results in the growth % at constant foreign exchange rates.
bp believes the convenience gross margin and growth at constant
foreign exchange are useful measures because these measures may
help investors to understand and evaluate, in the same way as
management, our progress against our strategic objectives of
redefining convenience. The nearest GAAP measure to convenience
gross margin is RC profit before interest and tax for the customer
& products segment.
Developed renewables to final investment decision (FID) - Total
generating capacity for assets developed to FID by all entities
where bp has an equity share (proportionate to equity share). If
asset is subsequently sold bp will continue to record capacity as
developed to FID. If bp equity share increases developed capacity
to FID will increase proportionately to share increase for any
assets where bp held equity at the point of FID.
Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement.
Top of page 39
Glossary (continued)
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.
Taxation on a RC basis for the group is calculated as taxation as
stated on the group income statement adjusted for taxation on
inventory holding gains and losses. 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. Taxation on
a RC basis and ETR on RC profit or loss are non-GAAP measures. The
nearest equivalent measure on an IFRS basis is the ETR on profit or
loss for the period.
Electric vehicle charge points are defined as charge points
operated by either bp or a bp joint venture.
Fair value accounting effects are non-GAAP adjustments to our
IFRS profit (loss). They reflect the difference between the way bp
manages the economic exposure and internally measures performance
of certain activities and the way those activities are measured
under IFRS. Fair value accounting effects are included within
adjusting items. They relate to certain of the group's commodity,
interest rate and currency risk exposures as detailed below. Other
than as noted below, the fair value accounting effects described
are reported in both the gas & low carbon energy and customer
& products segments.
bp uses derivative instruments to manage the economic exposure
relating to inventories above normal operating requirements of
crude oil, natural gas and petroleum products. Under IFRS, these
inventories are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories, other than net realizable value provisions, are not
recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value
basis using forward prices consistent with the contract
maturity.
bp enters into physical commodity contracts to meet certain
business requirements, such as the purchase of crude for a refinery
or the sale of bp's gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS require that inventory held for trading is recorded at its
fair value using period-end spot prices, whereas any related
derivative commodity instruments are required to be recorded at
values based on forward prices consistent with the contract
maturity. Depending on market conditions, these forward prices can
be either higher or lower than spot prices, resulting in
measurement differences.
bp enters into contracts for pipelines and other transportation,
storage capacity, oil and gas processing, liquefied natural gas
(LNG) and certain gas and power contracts that, under IFRS, are
recorded on an accruals basis. These contracts are risk-managed
using a variety of derivative instruments that are fair valued
under IFRS. This results in measurement differences in relation to
recognition of gains and losses.
The way that bp manages the economic exposures described above,
and measures performance internally, differs from the way these
activities are measured under IFRS. bp calculates this difference
for consolidated entities by comparing the IFRS result with
management's internal measure of performance. Under management's
internal measure of performance the inventory, transportation and
capacity contracts in question are valued based on fair value using
relevant forward prices prevailing at the end of the period. The
fair values of derivative instruments used to risk manage certain
oil, gas, power and other contracts, are deferred to match with the
underlying exposure and the commodity contracts for business
requirements are accounted for on an accruals basis. We believe
that disclosing management's estimate of this difference provides
useful information for investors because it enables investors to
see the economic effect of these activities as a whole.
Fair value accounting effects also include changes in the fair
value of the near-term portions of LNG contracts that fall within
bp's risk management framework. LNG contracts are not considered
derivatives, because there is insufficient market liquidity, and
they are therefore accrual accounted under IFRS. However, oil and
natural gas derivative financial instruments (used to risk manage
the near-term portions of the LNG contracts) are fair valued under
IFRS. The fair value accounting effect, which is reported in the
gas and low carbon energy segment, reduces the measurement
differences between that of the derivative financial instruments
used to risk manage the LNG contracts and the measurement of the
LNG contracts themselves, which therefore gives a better
representation of performance in each period.
In addition, from the second quarter 2020 fair value accounting
effects include changes in the fair value of derivatives entered
into by the group to manage currency exposure and interest rate
risks relating to hybrid bonds to their respective first call
periods. The hybrid bonds which were issued on 17 June 2020 are
classified as equity instruments and were recorded in the balance
sheet at that date at their USD equivalent issued value. Under IFRS
these equity instruments are not remeasured from period to period,
and do not qualify for application of hedge accounting. The
derivative instruments relating to the hybrid bonds, however, are
required to be recorded at fair value with mark to market gains and
losses recognized in the income statement. Therefore, measurement
differences in relation to the recognition of gains and losses
occur. The fair value accounting effect, which is reported in the
other businesses & corporate segment, eliminates the fair value
gains and losses of these derivative financial instruments that are
recognized in the income statement. We believe that this gives a
better representation of performance, by more appropriately
reflecting the economic effect of these risk management activities,
in each period.
Top of page 40
Glossary (continued)
Gearing and net debt are non-GAAP measures. Net debt is
calculated as finance debt, as shown in the balance sheet, plus the
fair value of associated derivative financial instruments that are
used to hedge foreign currency exchange and interest rate risks
relating to finance debt, for which hedge accounting is applied,
less cash and cash equivalents. Net debt does not include accrued
interest, which is reported within other receivables and other
payables on the balance sheet and for which the associated cash
flows are presented as operating cash flows in the group cash flow
statement. Gearing is defined as the ratio of net debt to the total
of net debt plus total equity. bp believes these measures provide
useful information to investors. Net debt enables investors to see
the economic effect of finance debt, related hedges and cash and
cash equivalents in total. Gearing enables investors to see how
significant net debt is relative to total equity. The derivatives
are reported on the balance sheet within the headings 'Derivative
financial instruments'. The nearest equivalent GAAP measures on an
IFRS basis are finance debt and finance debt ratio. A
reconciliation of finance debt to net debt is provided on page
30.
We are unable to present reconciliations of forward-looking
information for net debt or gearing to finance debt and total
equity, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include fair value asset (liability) of hedges related to
finance debt and cash and cash equivalents, that are difficult to
predict in advance in order to include in a GAAP estimate.
Gearing including leases and net debt including leases are
non-GAAP measures. Net debt including leases is calculated as net
debt plus lease liabilities, less the net amount of partner
receivables and payables relating to leases entered into on behalf
of joint operations. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. bp believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group's lease portfolio on net debt
and gearing. The nearest equivalent GAAP measures on an IFRS basis
are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt including leases is provided on page
33.
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 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. The nearest
equivalent measure on an IFRS basis is capital expenditure on a
cash basis. Further information and a reconciliation to GAAP
information is provided on page 31.
Installed renewables capacity is bp's share of capacity for
operating assets owned by entities where bp has an equity
share.
Inventory holding gains and losses are non-GAAP adjustments to
our IFRS profit (loss) and represent:
a. 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 of inventories other than for trading
inventories, 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 as inventory holding gains and losses 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; and
b. an adjustment relating to certain trading inventories that
are not price risk managed which relate to a minimum inventory
volume that is required to be held to maintain underlying business
activities. This adjustment represents the movement in fair value
of the inventories due to prices, on a grade by grade basis, during
the period. This is calculated from each operation's inventory
management system on a monthly basis using the discrete monthly
movement in market prices for these inventories.
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 that are
price risk-managed. See Replacement cost (RC) profit or loss
definition below.
Liquids - Liquids for oil production & operations, gas &
low carbon energy and Rosneft comprises crude oil, condensate and
natural gas liquids. For oil production & operations and gas
& low carbon energy, liquids also includes bitumen.
Major projects have a bp net investment of at least $250
million, or are considered to be of strategic importance to bp or
of a high degree of complexity.
Operating cash flow is net cash provided by (used in) operating
activities as stated in the condensed group cash flow
statement.
Top of page 41
Glossary (continued)
Organic capital expenditure is a non-GAAP measure. Organic
capital expenditure comprises capital expenditure on a cash basis
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. The nearest equivalent measure on an IFRS basis is
capital expenditure on a cash basis and a reconciliation to GAAP
information is provided on page 31.
We are unable to present reconciliations of forward-looking
information for organic capital expenditure to total cash capital
expenditure, because without unreasonable efforts, we are unable to
forecast accurately the adjusting item, inorganic capital
expenditure, that is difficult to predict in advance in order to
derive the nearest GAAP estimate.
Production-sharing agreement/contract (PSA/PSC) is an
arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return, if
exploration is successful, the oil company receives entitlement to
variable physical volumes of hydrocarbons, representing recovery of
the costs incurred and a stipulated share of the production
remaining after such cost recovery.
Realizations are the result of dividing revenue generated from
hydrocarbon sales, excluding revenue generated from purchases made
for resale and royalty volumes, by revenue generating hydrocarbon
production volumes. Revenue generating hydrocarbon production
reflects the bp share of production as adjusted for any production
which does not generate revenue. Adjustments may include losses due
to shrinkage, amounts consumed during processing, and contractual
or regulatory host committed volumes such as royalties.
Refining availability represents Solomon Associates' operational
availability for bp-operated refineries, which is defined as the
percentage of the year that a unit is available for processing
after subtracting the annualized time lost due to turnaround
activity and all planned mechanical, process and regulatory
downtime.
The Refining marker margin (RMM) is the average of regional
indicator margins weighted for bp's crude refining capacity in each
region. Each regional marker margin is based on product yields and
a marker crude oil deemed appropriate for the region. The regional
indicator margins may not be representative of the margins achieved
by bp in any period because of bp's particular refinery
configurations and crude and product slate.
Renewables pipeline - Renewable projects satisfying criteria to
the point they can be considered developed to final investment
decision (FID): Site based projects have obtained land exclusivity
rights, or for PPA based projects an offer has been made to the
counterparty, or for auction projects pre-qualification criteria
has been met, or for acquisition projects post a binding offer
being accepted.
Replacement cost (RC) profit or loss / RC profit or loss
attributable to bp shareholders reflects the replacement cost of
inventories sold in the period and is calculated as profit or loss
attributable to bp shareholders, adjusting for inventory holding
gains and losses (net of tax). RC profit or loss for the group is
not a recognized GAAP measure. bp believes this measure is useful
to illustrate to investors the fact that crude oil and product
prices can vary significantly from period to period and that the
impact on our reported result under IFRS can be significant.
Inventory holding gains and losses vary from period to period due
to changes in prices as well as changes in underlying inventory
levels. In order for investors to understand the operating
performance of the group excluding the impact of price changes on
the replacement of inventories, and to make comparisons of
operating performance between reporting periods, bp's management
believes it is helpful to disclose this measure. The nearest
equivalent measure on an IFRS basis is profit or loss attributable
to bp shareholders. A reconciliation to GAAP information is
provided on page 1. RC profit or loss before interest and tax is
bp's measure of profit or loss that is required to be disclosed for
each operating segment under IFRS.
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. Reported incidents are
investigated throughout the year and as a result there may be
changes in previously reported incidents. Therefore comparative
movements are calculated against internal data reflecting the final
outcomes of such investigations, rather than the previously
reported comparative period, as this this represents a more up to
date reflection of the safety environment.
Retail sites include sites operated by dealers, jobbers,
franchisees or brand licensees or joint venture (JV) partners,
under the bp brand. These may move to and from the bp brand as
their fuel supply agreement or brand licence agreement expires and
are renegotiated in the normal course of business. Retail sites are
primarily branded bp, ARCO, Amoco, Aral and Thorntons, and also
includes sites in India through our Jio-bp JV.
Retail sites in growth markets are retail sites that are either
bp branded or co-branded with our partners in China, Mexico and
Indonesia and also include sites in India through our Jio-bp
JV.
Solomon availability - See Refining availability definition.
Strategic convenience sites are retail sites, within the bp
portfolio, which both sell bp branded fuel and carry one of the
strategic convenience brands (e.g. M&S, Rewe to Go). To be
considered a strategic convenience brand the convenience offer
should be a strategic differentiator in the market in which it
operates. Strategic convenience site count includes sites under a
pilot phase.
Top of page 42
Glossary (continued)
Surplus cash flow is a non-GAAP measure and refers to the net
surplus of sources of cash over uses of cash, after reaching the
$35 billion net debt target. Sources of cash include net cash
provided by operating activities, cash provided from investing
activities and cash receipts relating to transactions involving
non-controlling interests (other). Uses of cash include lease
liability payments, payments on perpetual hybrid bond, dividends
paid, cash capital expenditure, the cash cost of share buybacks to
offset the dilution from vesting of awards under employee share
schemes and currency translation differences relating to cash and
cash equivalents as presented on the condensed group cash flow
statement. See page 34 for the components of our sources of cash
and uses of cash.
Technical service contract (TSC) - Technical service contract is
an arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return,
the oil and gas company receives entitlement to variable physical
volumes of hydrocarbons, representing recovery of the costs
incurred and a profit margin which reflects incremental production
added to the oilfield.
Tier 1 and tier 2 process safety events - Tier 1 events are
losses of primary containment from a process of greatest
consequence - causing harm to a member of the workforce, damage to
equipment from a fire or explosion, a community impact or exceeding
defined quantities. Tier 2 events are those of lesser consequence.
These represent reported incidents occurring within bp's
operational HSSE reporting boundary. That boundary includes bp's
own operated facilities and certain other locations or situations.
Reported process safety events are investigated throughout the year
and as a result there may be changes in previously reported events.
Therefore comparative movements are calculated against internal
data reflecting the final outcomes of such investigations, rather
than the previously reported comparative period, as this this
represents a more up to date reflection of the safety
environment.
Underlying effective tax rate (ETR) is a non-GAAP measure. The
underlying ETR is calculated by dividing taxation on an underlying
replacement cost (RC) basis by underlying RC profit or loss before
tax. Taxation on an underlying RC basis for the group is calculated
as taxation as stated on the group income statement adjusted for
taxation on inventory holding gains and losses and total taxation
on adjusting items. Information on underlying RC profit or loss is
provided below. Taxation on an underlying RC basis presented for
the operating segments is calculated through an allocation of
taxation on an underlying RC basis to each segment. bp believes it
is helpful to disclose the underlying ETR because this measure may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period. Taxation on an underlying
RC basis and underlying ETR are non-GAAP measures. The nearest
equivalent measure on an IFRS basis is the ETR on profit or loss
for the period.
We are unable to present reconciliations of forward-looking
information for underlying ETR to ETR on profit or loss for the
period, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include the taxation on inventory holding gains and losses
and adjusting items, that are difficult to predict in advance in
order to include in a GAAP estimate.
Underlying production - 2021 underlying production, when
compared with 2020, is production after adjusting for acquisitions
and divestments, curtailments, and entitlement impacts in our
production-sharing agreements/contracts and technical service
contract.
Underlying RC profit or loss / underlying RC profit or loss
attributable to bp shareholders is a non-GAAP measure and is RC
profit or loss* (as defined on page 41) after excluding net
adjusting items and related taxation. See page 32 for additional
information on the adjusting items that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the items and their financial impact. Underlying
RC profit or loss before interest and tax for the operating
segments or customers & products businesses is calculated as RC
profit or loss (as defined above) including profit or loss
attributable to non-controlling interests before interest and tax
for the operating segments and excluding net adjusting items for
the respective operating segment or business.
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 adjusting items. 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 and businesses is RC profit or loss before interest and
taxation. A reconciliation to GAAP information is provided on page
1 for the group and pages 6-15 for the segments.
Top of page 43
Glossary (continued)
Underlying RC profit or loss per share is a non-GAAP measure.
Earnings per share is defined in Note 7. Underlying RC profit or
loss per ordinary share is calculated using the same denominator as
earnings per share as defined in the consolidated financial
statements. The numerator used is underlying RC profit or loss
attributable to bp shareholders rather than profit or loss
attributable to bp shareholders. Underlying RC profit or loss per
ADS is calculated as outlined above for underlying RC profit or
loss per share except the denominator is adjusted to reflect one
ADS equivalent to six ordinary shares. bp believes it is helpful to
disclose the underlying RC profit or loss per ordinary share and
per ADS because these measures 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 includes oil and natural gas field development and
production within the gas & low carbon energy and oil
production & operations segments. References to upstream
exclude Rosneft.
upstream/hydrocarbon plant reliability (bp-operated) is
calculated taking 100% less the ratio of total unplanned plant
deferrals divided by installed production capacity. Unplanned plant
deferrals are associated with the topside plant and where
applicable the subsea equipment (excluding wells and reservoir).
Unplanned plant deferrals include breakdowns, which does not
include Gulf of Mexico weather related downtime.
upstream unit production cost is calculated as production cost
divided by units of production. Production cost does not include ad
valorem and severance taxes. Units of production are barrels for
liquids and thousands of cubic feet for gas. Amounts disclosed are
for bp subsidiaries only and do not include bp's share of
equity-accounted entities.
Working capital is movements in inventories and other current
and non-current assets and liabilities as reported in the condensed
group cash flow statement.
Change in working capital adjusted for inventory holding
gains/losses and fair value accounting effects is a non-GAAP
measure. It is calculated by adjusting for inventory holding
gains/losses reported in the period and from the second quarter
onwards, it is also adjusted for fair value accounting effects
reported within adjusting items for the period. This represents
what would have been reported as movements in inventories and other
current and non-current assets and liabilities, if the starting
point in determining net cash provided by operating activities had
been underlying replacement cost profit rather than profit for the
period. The nearest equivalent measure on an IFRS basis for this is
movements in inventories and other current and non-current assets
and liabilities.
bp utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Trade marks
Trade marks of the bp group appear throughout this announcement.
They include:
bp , Amoco, Aral, Castrol ON and Thorntons
Top of page 44
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, bp is
providing the following cautionary statement:
The discussion in this results announcement contains certain
forecasts, projections and forward-looking statements - that is,
statements related to future, not past events and circumstances -
with respect to the financial condition, results of operations and
businesses of bp and certain of the plans and objectives of bp with
respect to these items. These statements may generally, but not
always, be identified by the use of words such as 'will',
'expects', 'is expected to', 'aims', 'should', 'may', 'objective',
'is likely to', 'intends', 'believes', 'anticipates', 'plans', 'we
see' or similar expressions.
In particular, the following, among other statements, are all
forward looking in nature: expectations regarding the COVID-19
pandemic, including its risks, impacts, consequences, duration,
continued restrictions, challenges, bp's response, the impact on
bp's financial performance (including cash flows and net debt),
operations and credit losses, and the impact on the trading
environment, oil and gas prices, and global GDP; expectations
regarding the shape of the COVID-19 recovery and the pace of
transition to a lower-carbon economy and energy system; plans,
expectations and assumptions regarding oil and gas demand, supply
or prices, the timing of production of reserves, or decision making
by OPEC+; expectations regarding refining margins, refinery
utilization rates and product demand; expectations regarding bp's
future financial performance and cash flows; expectations regarding
future upstream production and project ramp-up; expectations
regarding supply shortages; expectations with respect to completion
of transactions and the timing and amount of proceeds of agreed
disposals; expectations with regards to bp's transformation to an
IEC; plans and expectations regarding bp's financial framework;
expectations regarding quarterly dividends and share buybacks,
including bp's plan to increase the second quarter dividend by 4%
per ordinary share, bp's expectation based on its current
forecasts, at an oil price of around $60 per barrel Brent and
subject to the Board's approval each quarter of being able to
deliver a buyback of around $1.0 billion per quarter on average and
have capacity for an annual increase in the dividend per ordinary
share of around 4% through 2025, and plan to commence a buyback
from first half surplus cash flow; expectations of executing a
share buyback of $1.4 billion prior to announcement of third
quarter 2021 results; expectations of outlining plans for the
fourth-quarter share buyback at the time of bp's third quarter
results; plans and expectations of using 60% of surplus cash flow
for share buybacks and plans to allocate the remaining 40% to
strengthen bp's balance sheet for 2021; expectations regarding
demand for bp's products; plans and expectations with respect to
the total capital expenditure, depreciation, depletion and
amortization, expected tax rate and business and corporate
underlying annual charge for 2021; plans and expectations regarding
net debt; plans and expectations regarding the
divestment programme, including the amount and timing of
proceeds in 2021, and plans and expectations in respect of reaching
$25 billion of proceeds by 2025 and expectations that divestment
and other proceeds for 2021 will be in the $5-6 billion range;
plans and expectations regarding bp's renewable energy and
alternative energy businesses; expectations regarding reported and
underlying production and related major project ramp-up, capital
investments, divestment and maintenance activity; expectations
regarding price assumptions used in accounting estimates;
expectations regarding the underlying effective tax rate for 2021;
expectations regarding the timing and amount of future payments
relating to the Gulf of Mexico oil spill; plans and expectations
that capital expenditure, including inorganic capital expenditure,
will reach around $13 billion in 2021; plans and expectations
regarding new joint ventures and other agreements, including
partnerships and other collaborations with EnBW, Statkraft, Aker
Offshore Wind, Equinor, Eni, Marks & Spencer, PAYBACK, Ki
Mobility, Daimler, BMW, Qantas, Azerbaijan, Infosys, CEMEX and the
Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping as well as
plans and expectations regarding LSbp's acquisitions from Iberia
Solar and RIC Energy and its activities in Australia, bp's blue
hydrogen production facility, bp's Mad Dog 2 development in the
Gulf of Mexico, the transfer by bp of its participating interests
in six blocks located in Foz do Amazonas basin off northern Brazil,
bp's exploration at the Puma West prospect, bp's announced
agreement to take full ownership of the Thorntons business in the
US with completion in the third quarter of 2021 and Air bp's
rollout of sustainable aviation fuel; plans and expectations
regarding bp's intention to bid with EnBW to develop offshore wind
in the UK North Sea; plans and expectations regarding bp's plans to
join Statkraft and Aker to develop offshore wind power in Norway
and pursue a bid in the Sørlige Nordsjø II (SN2) licence area;
plans and expectations for bp's work on EV charging, including the
development of EV charging networks in the UK and Europe and bp's
investment into IoTecha; plans and expectations regarding the
listing of Lightning eMotors; plans and expectations regarding
Launchpad portfolio companies; and expectations regarding
operational and financial results or acquisitions or divestments by
Rosneft, and expectations with respect to Rosneft dividends.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will or may occur in the future and are outside
the control of bp.
Actual results may differ materially from those expressed in
such statements, depending on a variety of factors, including: the
extent and duration of the impact of current market conditions
including the volatility of oil prices, the impact of COVID-19,
overall global economic and business conditions impacting our
business and demand for our products as well as the specific
factors identified in the discussions accompanying such
forward-looking statements; changes in consumer preferences and
societal expectations; the pace of development and adoption of
alternative energy solutions; developments in policy, law,
regulation, technology and markets, including societal and investor
sentiment related to the issue of climate change; the receipt of
relevant third party and/or regulatory approvals; the timing and
level of maintenance and/or turnaround activity; the timing and
volume of refinery additions and outages; the timing of bringing
new fields onstream; the timing, quantum and nature of certain
acquisitions and divestments; future levels of industry product
supply, demand and pricing, including supply growth in North
America and continued base oil and additive supply shortages; OPEC+
quota restrictions; PSA and TSC effects; operational and safety
problems; potential lapses in product quality; economic and
financial market conditions generally or in various countries and
regions; political stability and economic growth in relevant areas
of the world; changes in laws and governmental regulations;
regulatory or legal actions including the types of enforcement
action pursued and the nature of remedies sought or imposed; the
actions of prosecutors, regulatory authorities and courts; delays
in the processes for resolving claims; amounts ultimately payable
and timing of payments relating to the Gulf of Mexico oil spill;
exchange rate fluctuations; development and use of new technology;
recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading
partners, contractors, subcontractors, creditors, rating agencies
and others; our access to future credit resources; business
disruption and crisis management; the impact on our reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; decisions by Rosneft's
management and board of directors; the actions of contractors;
natural disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and
acts of terrorism; cyber-attacks or sabotage; and other factors
discussed elsewhere in this report, as well those factors discussed
under "Risk factors" in bp Annual Report and Form 20-F 2020 as
filed with the US Securities and Exchange Commission.
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of BP p.l.c. is Ben Mathews, Company Secretary.
Contacts
London Houston
Press Office David Nicholas Brett Clanton
+44 (0)20 7496 4708 +1 281 366 8346
Investor Relations Craig Marshall Geoff Carr
bp.com/investors +44 (0)20 7496 4962 +1 281 892 3065
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