BP : Second Quarter 2014 Results (Stock Exchange Announcement)

• Stock exchange announcement(pdf, 371.0KB)null

• BP's second-quarter replacement cost (RC) profit was $3,182 million, compared with $2,400 million a year ago. After adjusting for a net charge for non-operating items of $481 million and net favourable fair value accounting effects of $28 million (both on a post-tax basis), underlying RC profit for the second quarter 2014 was $3,635 million, compared with $2,712 million for the same period in 2013. For the half year, RC profit was $6,657 million, compared with $18,996 million a year ago which included a $12.5-billion gain relating to the disposal of our interest in TNK-BP. After adjusting for a net charge for non-operating items of $257 million and net favourable fair value accounting effects of $54 million (both on a post-tax basis), underlying RC profit for the half year was $6,860 million, compared with $6,927 million for the same period last year. RC profit or loss for the group, underlying RC profit or loss and fair value accounting effects are non-GAAP measures and further information is provided on pages 3 and 31.
• All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $260 million for the quarter and $299 million for the half year. For further information on the Gulf of Mexico oil spill and its consequences, including information on utilization of the Deepwater Horizon Oil Spill Trust fund, see page 10 and Note 2 on page 18. See also Principal risks and uncertainties on page 35 and Legal proceedings on page 42.
• Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the quarter and half year was $7.9 billion and $16.1 billion respectively, compared with $5.4 billion and $9.4 billion for the same periods in 2013. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the second quarter and half year was $7.6 billion and $16.5 billion respectively, compared with $5.2 billion and $9.5 billion respectively for the same periods in 2013.
• Net debt at 30 June 2014 was $24.4 billion, compared with $18.2 billion a year ago. The ratio of net debt to net debt plus equity at 30 June 2014 was 15.5%, compared with 12.3% a year ago. Net debt and the ratio of net debt to net debt plus equity are non-GAAP measures. See page 27 for more information.
• Total capital expenditure on an accruals basis for the second quarter was $5.6 billion, almost all of which was organic. For the half year, total capital expenditure on an accruals basis was $11.7 billion, of which organic capital expenditure was $11.0 billion.
• In October 2013, BP announced plans to divest a further $10 billion of assets before the end of 2015, having completed its earlier divestment programme of $38 billion in 2012. BP has agreed around $3.4 billion of such further divestments to date. Disposal proceeds received in cash were $0.8 billion for the quarter and $1.8 billion for the half year.
• BP today announced a quarterly dividend of 9.75 cents per ordinary share ($0.585 per ADS), which is expected to be paid on 19 September 2014. The corresponding amount in sterling will be announced on 9 September 2014. See page 27 for further information.

• The effective tax rate (ETR) on RC profit for the second quarter and half year was 34% and 32% respectively, compared with 46% and 20% for the same periods in 2013. Adjusting for non-operating items and fair value accounting effects, the underlying ETR in the second quarter and half year was 33% for both periods, compared with 45% and 41% for the same periods in 2013. The underlying ETR was higher in 2013 due to foreign exchange impacts on deferred tax and a lower level of equity-accounted earnings (which are reported net of tax), compared with the corresponding periods in 2014.
• Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $356 million for the second quarter, compared with $369 million for the same period in 2013. For the half year, the respective amounts were $723 million and $773 million.
• BP repurchased 53 million ordinary shares at a cost of $0.5 billion, including fees and stamp duty, during the second quarter of 2014. For the half year, BP repurchased 298 million ordinary shares at a cost of $2.4 billion, including fees and stamp duty. As at 30 June 2014, BP had bought back 1,051 million shares for a total amount of $7.9 billion, including fees and stamp duty, since the announcement on 22 March 2013 of a share repurchase programme with a total value of up to $8 billion. The $8-billion share repurchase programme was completed in July 2014.

(a) This results announcement also represents BP's half-yearly financial report (see page 11).
(b) Profit attributable to BP shareholders.

The commentaries above and in the above download are based on RC profit and should be read in conjunction with the cautionary statement below. The page references above refer to pages in the download.

Cautionary statement regarding forward-looking statements: The discussion in this results announcement contains certain forecasts, projections and forward-looking statements - that is, statements related to future, not past events - with respect to the financial condition, results of operation 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, among other statements, plans regarding future divestment of $10 billion in assets by 2015; the expected quarterly dividend payment and timing of the payment; expectations regarding BP's plans to separate its US lower 48 oil and gas businesses; the expected level of reported production in the third quarter of 2014 and the expected impact of turnaround and seasonal maintenance activities thereon; the expected timing of the halt in refinery operations at the Bulwer refinery; the expected level of Downstream turnaround activity; the expected higher margin capture in the fuels business in the third quarter of 2014 and the drivers thereof; BP's expectations regarding the continuation of a challenging environment and the expected impact of turnarounds in petrochemicals; and certain statements regarding the legal and trial proceedings, court decisions, potential investigations and civil actions by regulators, government entities and/or other entities or parties, and the risks associated with such proceedings; are all forward looking in nature. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors including the timing of bringing new fields onstream; the timing and level of maintenance and/or turnaround activity; the nature, timing and volume of refinery additions and outages; the timing, quantum and nature of divestments; the receipt of relevant third-party and/or regulatory approvals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; 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 court decisions, the types of enforcement action pursued and the nature of remedies sought or imposed; the impact on our reputation following the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors, trading partners, creditors, rating agencies and others; 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 under "Principal risks and uncertainties" herein.