BP : Third Quarter 2014 Results (Stock Exchange Announcement)

• Stock Exchange Announcement(pdf, 328.0KB) /content/dam/bp/pdf/investors/bp_third_quarter_2014_results.pdf/content/dam/bp/pdf/investors/bp_third_quarter_2014_results.pdf/content/dam/bp/pdf/investors/bp_third_quarter_2014_results.pdfnull

• BP's third-quarter replacement cost (RC) profit was $2,385 million, compared with $3,178 million a year ago. After adjusting for a net charge for non-operating items of $798 million and net favourable fair value accounting effects of $146 million (both on a post-tax basis), underlying RC profit for the third quarter 2014 was $3,037 million, compared with $3,692 million for the same period in 2013. For the nine months, RC profit was $9,042 million, compared with $22,174 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 $1,055 million and net favourable fair value accounting effects of $200 million (both on a post-tax basis), underlying RC profit for the nine months was $9,897 million, compared with $10,619 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 29.
• All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $43 million for the quarter and $342 million for the nine months. In its decision on 4 September 2014 in the Trial of Phase 1 of MDL 2179, the federal district court in New Orleans ruled that under the US Clean Water Act, the discharge of oil was the result of the gross negligence and wilful misconduct of BP Exploration & Production Inc. (BPXP) and that BPXP is therefore subject to enhanced civil penalties. BP intends to appeal this ruling. For the reasons described in Note 2, no adjustment has been made to the provision previously recognized for the liability under the Clean Water Act.
• As at 30 September 2014, the cumulative charges to be paid from the Deepwater Horizon Oil Spill Trust fund reached $20 billion. Subsequent additional costs, over and above those provided within the $20 billion, will be charged to the income statement as they arise. For further information on the Gulf of Mexico oil spill and its consequences see page 10 and Note 2 on page 16. See also Legal proceedings on page 33.
• Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the quarter and nine months was $9.4 billion and $25.5 billion respectively, compared with $6.3 billion and $15.7 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 third quarter and nine months was $9.4 billion and $25.8 billion respectively, compared with $6.3 billion and $15.9 billion respectively for the same periods in 2013.
• Net debt at 30 September 2014 was $22.4 billion, compared with $20.1 billion a year ago. The ratio of net debt to net debt plus equity at 30 September 2014 was 15.0%, compared with 13.3% a year ago. Net debt and the ratio of net debt to net debt plus equity are non-GAAP measures. See page 25 for more information.
• Total capital expenditure on an accruals basis for the third quarter was $5.3 billion, almost all of which was organic*. For the nine months, total capital expenditure on an accruals basis was $17.0 billion, of which organic capital expenditure was $16.3 billion. Organic capital expenditure for the full year 2014 is expected to be around $23 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 $4.0 billion of such further divestments to date. Disposal proceeds received in cash were $0.6 billion for the quarter and $2.4 billion for the nine months.
• BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 19 December 2014. The corresponding amount in sterling will be announced on 8 December 2014. See page 25 for further information.
• The effective tax rate (ETR) on RC profit for the third quarter and nine months was 42% and 35% respectively, compared with 31% and 22% for the same periods in 2013. Adjusting for non-operating items and fair value accounting effects, the underlying ETR in the third quarter and nine months was 41% and 36% respectively, compared with 31% and 38% for the same periods in 2013. The underlying ETR was higher for the third quarter 2014 due to a lower level of equity-accounted earnings (which are reported net of tax) and foreign exchange impacts on deferred tax, compared to the corresponding period in 2013.
• Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $358 million for the third quarter, compared with $397 million for the same period in 2013. For the nine months, the respective amounts were $1,081 million and $1,170 million.
• BP repurchased 209 million ordinary shares at a cost of $1.6 billion, including fees and stamp duty, during the third quarter of 2014. For the nine months, BP repurchased 507 million ordinary shares at a cost of $4.1 billion, including fees and stamp duty. The $8-billion share repurchase programme announced on 22 March 2013 was completed in July 2014. Ongoing share repurchases continue to be funded from the $10-billion divestment programme described above.
• Reported production for the third quarter, including BP's share of Rosneft's production, was 3,149 thousand barrels of oil equivalent per day (mboe/d), compared with 3,172mboe/d for the same period in 2013. This reflected the Abu Dhabi onshore concession expiry, partly offset by increased production from higher-margin areas in Upstream and higher production in Rosneft. Reported production for the nine months, including BP's share of Rosneft's production, was 3,130mboe/d, compared with 2,938mboe/d for the same period in 2013 which includes Rosneft production for the period 21 March to 30 September averaged over the nine months.

(a) Profit attributable to BP shareholders.

The commentaries above and on the above download are based on RC profit and should be read in conjunction with the cautionary statement.

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 the divestment of $10 billion in assets by the end of 2015; the expected organic capital expenditure for full year 2014; the expected quarterly dividend payment and timing of the payment; the expected level of fourth-quarter reported production; the expected level of Downstream turnaround activity; the expected decrease in seasonal demand and its impact on margins in both the fuels and petrochemicals businesses; 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" in our Form 6-K for the period ended 30 June 2014 and under "Risk factors" in BP Annual Report and Form 20-F 2013, each as filed with the US Securities and Exchange Commission.