Form 6-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

for the period ended 30 June 2017

Commission File Number 1-06262

 

 

BP p.l.c.

(Translation of registrant’s name into English)

 

 

1 ST JAMES’S SQUARE, LONDON, SW1Y 4PD, ENGLAND

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

    Form 20-F               Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T

Rule 101(b)(1):  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T

Rule 101(b)(7):  

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NOS. 333-208478 AND 333-208478-01) OF BP CAPITAL MARKETS p.l.c. AND BP p.l.c.; THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-67206) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-79399) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-103924) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-123482) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-123483) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-131583) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-131584) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-132619) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-146868) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-146870) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-146873) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-173136) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-177423) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-179406) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-186462) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-186463) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-199015) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-200794) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-200795) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-207188) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-207189) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-210316) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-210318) OF BP p.l.c., AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

 

 


Table of Contents

BP p.l.c. and subsidiaries

Form 6-K for the period ended 30 June 2017(a)

 

         Page  
1.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period January-June 2017(b)

     3-15, 30-35, 37-39  
2.  

Consolidated Financial Statements including Notes to Consolidated Financial Statements for the period January-June 2017

     14-29  
3.  

Principal risks and uncertainties

     36  
4.  

Legal proceedings

     40  
5.  

Cautionary statement

     40  
6.  

Computation of Ratio of Earnings to Fixed Charges

     41  
7.  

Capitalization and Indebtedness

     42  
8.  

Recent credit ratings update

     43  
9.  

Signatures

     44  

 

(a) In this Form 6-K, references to the first half 2017 and first half 2016 refer to six-month periods ended 30 June 2017 and 30 June 2016 respectively. References to the second quarter 2017 and second quarter 2016 refer to the three-month periods ended 30 June 2017 and 30 June 2016 respectively.
(b) This discussion should be read in conjunction with the consolidated financial statements and related notes provided elsewhere in this Form 6-K and with the information, including the consolidated financial statements and related notes, in BP’s Annual Report on Form 20-F for the year ended 31 December 2016.

 

2


Table of Contents

Group results second quarter and half year 2017(a)

 

 

Highlights    Solid first half; strong operations, strong cash flow.
  

    Profit for the second quarter was $0.1 billion, underlying replacement cost (RC) profit* for the second quarter was $0.7 billion.

 

    Second-quarter operating cash flow* was $4.9 billion after post-tax Gulf of Mexico oil spill expenditure of $2.0 billion.

 

    Dividend unchanged at 10 cents per share.

 

    Second-quarter Upstream production was 10% higher than in the same period in 2016; first-half production was 6% higher.

 

    Upstream major projects on track; two new projects sanctioned in quarter; significant gas discoveries in Senegal and Trinidad announced; $753 million exploration write-off, predominantly in Angola.

 

    In Downstream, first-half fuels marketing earnings around 20% higher than in the first half of 2016.

 

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Sales and other operating revenues

     56,511        46,442        112,374        84,954  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) for the period(a)

     144        (1,419      1,593        (2,002

Inventory holding (gains) losses*, before tax

     586        (1,188      520        (1,056

Taxation charge (credit) on inventory holding gains and losses

     (177      360        (148      326  
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss)*

     553        (2,247      1,965        (2,732

Net (favourable) unfavourable impact of non-operating items* and fair value accounting effects*, before tax

     237        5,518        504        6,928  

Taxation charge (credit) on non-operating items and fair value accounting effects

     (106      (2,551      (275      (2,944
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit

     684        720        2,194        1,252  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) per ordinary share (cents)

     0.73        (7.60      8.12        (10.78

Profit (loss) per ADS (dollars)

     0.04        (0.46      0.49        (0.65

RC profit (loss) per ordinary share (cents)*

     2.80        (12.03      10.02        (14.71

RC profit (loss) per ADS (dollars)

     0.17        (0.72      0.60        (0.88

Underlying RC profit per ordinary share (cents)*

     3.47        3.85        11.19        6.73  

Underlying RC profit per ADS (dollars)

     0.21        0.23        0.67        0.40  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Profit attributable to BP shareholders.

 

Bob Dudley – Group chief executive:

 

“We continue to position BP for the new oil price environment, with a continued tight focus on costs, efficiency and discipline in capital spending. We delivered strong operational performance in the first half of 2017 and have considerable strategic momentum coming into the rest of the year and 2018, with rising production from our new Upstream projects and marketing growth in the Downstream.”

 

Brian Gilvary – Chief financial officer:

 

“Cash flow was strong in the first half – organic cash flow* exceeded organic capital expenditure* and dividends paid. While net debt* rose primarily due to Gulf of Mexico payments, we expect this will improve over the second half as these payments decline and divestment proceeds come in towards the end of the year.”

 

* See definitions in the Glossary on page 37. RC profit (loss), underlying RC profit, cash flow excluding Gulf of Mexico oil spill payments, organic capital expenditure and net debt are non-GAAP measures.

 

 

The commentary above and following should be read in conjunction with the cautionary statement on page 40.

 

 

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Table of Contents

Group headlines

 

Earnings

BP’s profit for the second quarter and half year was $144 million and $1,593 million respectively, compared with a loss of $1,419 million and a loss of $2,002 million for the same periods in 2016.

The second-quarter replacement cost (RC) profit was $553 million, compared with a loss of $2,247 million for the same period in 2016. After adjusting for a net charge for non-operating items of $215 million and net favourable fair value accounting effects of $84 million (both on a post-tax basis), underlying RC profit for the second quarter was $684 million, compared with $720 million for the same period in 2016.

For the half year, RC profit was $1,965 million, compared with a loss of $2,732 million a year ago. After adjusting for a net charge for non-operating items of $520 million and net favourable fair value accounting effects of $291 million (both on a post-tax basis), underlying RC profit for the half year was $2,194 million, compared with $1,252 million for the same period in 2016.

See further information on page 5.

Non-operating items

Non-operating items amounted to a charge of $359 million pre-tax and $215 million post-tax for the quarter and a charge of $912 million pre-tax and $520 million post-tax for the half year.

The Gulf of Mexico oil spill charge before interest and tax for the second quarter was $347 million to reflect the latest estimate for claims, including business economic loss claims, and associated administration costs. In addition, the half year also reflects an impairment charge in the first quarter due to the divestment of certain Upstream assets.

Effective tax rate

The effective tax rate (ETR) on the profit or loss for the second quarter and half year was 83% and 46% respectively, compared with 59% and 54% for the same periods in 2016. The ETR on RC profit or loss* for the second quarter and half year was 63% and 43% respectively, compared with 51% and 49% for the same periods in 2016. Adjusting for non-operating items and fair value accounting effects, the adjusted ETR* for the second quarter and half year was 60% and 45% respectively, compared with 21% and 20% for the same periods in 2016.

The adjusted ETR for the second quarter and half year is higher than a year ago mainly due to the exploration write-offs and changes in the mix of profits, notably the impact of the renewal of our interest in the Abu Dhabi onshore oil concession. We now expect the full year adjusted ETR to be above 40%.

Dividend

BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 22 September 2017. The corresponding amount in sterling will be announced on 12 September 2017. See page 23 for further information.

Operating cash flow*

Operating cash flow for the second quarter and half year was $4.9 billion and $7.0 billion respectively, after post-tax expenditure relating to the Gulf of Mexico oil spill of $2.0 billion and $4.3 billion. For the same periods in 2016 the equivalent amounts were $3.9 billion and $5.8 billion, after post-tax Gulf of Mexico oil spill expenditure of $1.4 billion and $2.5 billion.

Capital expenditure*

Total capital expenditure for the second quarter and half year was $4.5 billion and $8.6 billion respectively, compared with $4.5 billion and $9.0 billion for the same periods in 2016.

Organic capital expenditure* for the second quarter and half year was $4.3 billion and $7.9 billion respectively, compared with $4.2 billion and $8.7 billion for the same periods in 2016.

Inorganic capital expenditure* for the second quarter and half year was $0.1 billion and $0.7 billion respectively, compared with $0.3 billion for both periods in 2016.

Organic and inorganic capital expenditure are non-GAAP measures. See page 30 for further information.

Divestment proceeds*

Divestment proceeds were $0.5 billion for the second quarter and $0.7 billion for the half year, compared with $0.4 billion and $1.6 billion for the same periods in 2016.

Debt

Gross debt at 30 June 2017 was $63.0 billion compared with $55.7 billion a year ago. The ratio of gross debt to gross debt plus equity at 30 June 2017 was 39.0%, compared with 37.2% a year ago.

Net debt* at 30 June 2017 was $39.8 billion, compared with $30.9 billion a year ago. The net debt ratio* at 30 June 2017 was 28.8%, compared with 24.7% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 24 for more information.

 

 

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Table of Contents

Analysis of underlying RC profit before interest and tax

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Underlying RC profit before interest and tax*

           

Upstream

     710        29        2,080        (718

Downstream

     1,413        1,513        3,155        3,326  

Rosneft

     279        246        378        312  

Other businesses and corporate

     (366      (376      (806      (554

Consolidation adjustment - UPII*

     135        (121      67        (81
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit before interest and tax

     2,171        1,291        4,874        2,285  

Finance costs and net finance expense relating to pensions and other post-retirement benefits

     (420      (337      (807      (654

Taxation on an underlying RC basis

     (1,055      (205      (1,818      (325

Non-controlling interests

     (12      (29      (55      (54
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit attributable to BP shareholders

     684        720        2,194        1,252  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 3 for the group and on pages 8-13 for the segments.

Analysis of RC profit (loss) before interest and tax and reconciliation to profit (loss) for the period

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

RC profit (loss) before interest and tax*

           

Upstream

     795        (109      2,051        (1,314

Downstream

     1,567        1,405        3,273        3,285  

Rosneft

     279        246        378        312  

Other businesses and corporate(a)

     (721      (5,525      (1,152      (6,599

Consolidation adjustment - UPII

     135        (121      67        (81
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax

     2,055        (4,104      4,617        (4,397

Finance costs and net finance expense relating to pensions and other post-retirement benefits

     (541      (460      (1,054      (900

Taxation on a RC basis

     (949      2,346        (1,543      2,619  

Non-controlling interests

     (12      (29      (55      (54
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) attributable to BP shareholders

     553        (2,247      1,965        (2,732
  

 

 

    

 

 

    

 

 

    

 

 

 

Inventory holding gains (losses)

     (586      1,188        (520      1,056  

Taxation (charge) credit on inventory holding gains and losses

     177        (360      148        (326
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) for the period attributable to BP shareholders

     144        (1,419      1,593        (2,002
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Includes costs related to the Gulf of Mexico oil spill. See page 13 and also Note 2 from page 18 for further information on the accounting for the Gulf of Mexico oil spill.

 

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Table of Contents

Strategic progress

 

Upstream

 

Upstream operating performance was strong in the first half, underpinned by 6% production growth and an 18% reduction in unit production costs.

 

BP’s major projects programme is on track to deliver 800,000boe/d of new production by 2020. Three projects have already come online in 2017, Persephone in Australia and Juniper in Trinidad are in final commissioning, and Khazzan Phase 1 in Oman and Zohr in Egypt are expected online before year end. In the second quarter, BP sanctioned development of two new major gas projects: ‘R-Series’ in India and Angelin in Trinidad.

 

BP announced four gas discoveries in the first half. One in Egypt and two in Trinidad may support future developments and the major Yakaar discovery offshore Senegal marked a further step in building BP’s new business in Mauritania and Senegal. BP decided to exit some exploration assets in Angola, leading to higher exploration write-offs in the second quarter.

 

Downstream

 

BP’s fuels marketing business continues to make good strategic progress; first-half earnings were around 20% higher than in the first half of 2016.

 

Premium fuel volumes continue to grow and around 90 new convenience partnership sites have been added so far this year. In lubricants, BP signed an agreement to be the exclusive premium brand sold by Kroger, the largest supermarket chain in the US.

 

In refining, BP increased the level of advantaged feedstock processed in the US and, in petrochemicals, BP’s industry-leading PTA technology is now operational at all its key PTA sites.

  

Financial framework

 

Operating cash flow* in the first half of 2017, after post-tax expenditure relating to the Gulf of Mexico oil spill of $4.3 billion, was $7.0 billion, with $4.9 billion in the second quarter, after post-tax expenditure relating to the Gulf of Mexico oil spill of $2.0 billion. This compares with $5.8 billion for the first half of 2016, after post-tax Gulf of Mexico oil spill expenditure of $2.5 billion.

 

Organic capital expenditure* of $4.3 billion in the second quarter brought the total for the first half of 2017 to $7.9 billion. BP continues to intend to keep annual organic capital expenditure in the range $15-17 billion.

 

In the first half of 2017, operating cash flow, excluding Gulf of Mexico payments*, exceeded organic capital expenditure and cash dividend payments.

 

BP expects divestments of $4.5-5.5 billion in 2017, with proceeds weighted to the second half of the year. Divestment proceeds for the first half of 2017 were $0.7 billion.

 

Gulf of Mexico oil spill payments were $2.0 billion in the second quarter and $4.3 billion in the first half of 2017. Payments are expected to be considerably lower in the second half, and the 2017 full-year estimate is unchanged at $4.5-5.5 billion. The additional charge in the second quarter is not expected to have any significant effect on forecast cash flows in the second half of 2017.

 

BP continues to target a gearing* range of 20-30%. At the end of the second quarter, gearing was 28.8%.

 

Operating

metrics

      

First half 2017

(vs. First half 2016)

      

Financial

metrics

      

First half 2017

(vs. First half 2016)

 

    

 

    

 

    

 

Safety

Tier 1 process safety events*

    

11

(+2)

     Underlying RC profiti     

$2.2bn

(+$0.9bn)

 

    

 

    

 

    

 

Safety

Reported recordable injury frequency*

    

0.22

(-3%)

     Operating cash flow excluding Gulf of Mexico oil spill payments      (b)

 

    

 

    

 

    

 

Group production     

3,544mboe/d

(+8%)

     Organic capital expenditureii     

$7.9bn

(-$0.8bn)

 

    

 

    

 

    

 

Upstream production excluding Rosneft segment     

2,410mboe/d

(+6%)

     Gulf of Mexico oil spill payments     

$4.3bn

(+$1.8bn)

 

    

 

    

 

    

 

Upstream unit production costs*     

$7.20/boe

(-18%)

     Divestment proceeds     

$0.7bn

(-$0.9bn)

 

    

 

    

 

    

 

BP-operated Upstream operating efficiency*(a)      81.4%      Net debt ratio (gearing)iii     

28.8%

(+4.1)

 

    

 

    

 

    

 

Refining availability*     

94.8%

(-0.5)

     Dividend per ordinary share     

10.00 cents

(–)

 

    

 

    

 

    

 

 

(a)    Reported on a one-quarter lagged basis and represents 1Q 2017 actuals only.        (b)    SEC regulations do not permit inclusion of this non-GAAP metric in this SEC filing. Operating cash flow excluding Gulf of Mexico oil spill payments is calculated by excluding post-tax expenditure relating to the Gulf of Mexico oil spill from net cash provided by operating activities, as reported in the condensed group cash flow statement. For the first half, net cash provided by operating activities was $7.0 billion and post-tax Gulf of Mexico oil spill expenditure was $4.3 billion.

 

Nearest GAAP equivalent measures
    i    Profit for the period:    $1.6bn
    ii    Capital expenditure*:    $8.6bn
    iii    Gross debt ratio:    39.0%

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 40.

 

 

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INTENTIONALLY BLANK

 

7


Table of Contents

Upstream

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Sales and other operating revenues(a)

     10,493        8,176        21,820        15,607  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before interest and tax

     796        (24      2,046        (1,260

Inventory holding (gains) losses*

     (1      (85      5        (54
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax

     795        (109      2,051        (1,314

Net (favourable) unfavourable impact of non-operating items* and fair value accounting effects*

     (85      138        29        596  
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit (loss) before interest and tax*(b)

     710        29        2,080        (718
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Includes sales to other segments
(b) See page 9 for a reconciliation to segment RC profit before interest and tax by region.

Financial results

Sales and other operating revenues for the second quarter and half year were $10 billion and $22 billion respectively, compared with $8 billion and $16 billion for the corresponding periods in 2016. For the second quarter and half year, revenues were higher mainly due to higher realizations, increased production, and higher gas marketing and trading revenues.

The replacement cost profit before interest and tax for the second quarter and half year was $795 million and $2,051 million respectively, compared with a loss of $109 million and $1,314 million for the same periods in 2016. The second quarter and half year included a net non-operating charge of $21 million and $381 million respectively, compared with a net non-operating gain of $7 million and a charge of $348 million for the same periods in 2016. Fair value accounting effects in the second quarter and half year had a favourable impact of $106 million and $352 million respectively, compared with an unfavourable impact of $145 million and $248 million in the same periods of 2016.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the second quarter and half year was $710 million and $2,080 million respectively, compared with a profit of $29 million and a loss of $718 million for the same periods in 2016. The result for the second quarter and half year mainly reflected higher liquids and gas realizations, and higher production including the impact of the Abu Dhabi concession renewal and major project start-ups, partly offset by higher exploration write-offs largely in Angola and higher depreciation, depletion and amortization.

Production

Production for the quarter was 2,431mboe/d, 9.9% higher than the second quarter of 2016. Underlying production* for the quarter increased by 7.0%, due to the ramp-up of major projects. For the first half, production was 2,410mboe/d, 6.4% higher than in the same period of 2016. First-half underlying production was 5% higher than the same period of 2016 due to major project start-ups.

Key events

On 8 May, BP along with joint venture partner Kosmos Energy announced the Yakaar gas discovery located at Cayar Offshore Profond block offshore Senegal (BP 60% (following completion on 3 July of the acquisition by BP of Timis Corp’s working interest), Kosmos 30%, and Petrosen 10%).

On 10 May, BP announced the start of gas production from the first two fields, Taurus and Libra, of the West Nile Delta development in Egypt (BP operator 82.75 % and DEA Deutsche Erdoel AG 17.25%).

On 22 May, BP announced first oil from the redeveloped Schiehallion Area, following completion of the Quad 204 project in the west of Shetland region, offshore UK (BP operator 36%, Shell 54%, and Siccar Point Energy 10%).

On 2 June, BP Trinidad and Tobago LLC (bpTT) announced the sanction for the development of its Angelin offshore gas project. On the same day, bpTT also announced that it has made two significant gas discoveries with the Savannah and Macadamia exploration wells.

On 15 June, BP and Reliance Industries Limited (RIL) announced the development of the R-Series project in Block KG D6 off the east coast of India (RIL operator 60%, BP 30%, and NIKO 10%).

This builds on the progress announced in our first-quarter results, which comprised the following: BP’s previously announced transaction with Kosmos Energy in Senegal was approved by the Senegal Minister of Energy and of Development of Renewable Energies; BP completed the purchase of a 10% interest from Eni (operator, 90%) in the Shorouk concession offshore Egypt; BP announced its third gas discovery in the North Damietta Offshore Concession (BP 100%) in the East Nile Delta, Egypt; BP announced that it had agreed to sell its Forties Pipeline System (FPS) business and other associated interests and facilities to INEOS; and bpTT announced the start-up of the Trinidad onshore compression project.

Outlook

Looking ahead, we expect third-quarter reported production to be broadly flat with the second quarter with the continued ramp-up of major projects offset by seasonal turnaround and maintenance activities.

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 40.

 

 

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Table of Contents

Upstream (continued)

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Underlying RC profit (loss) before interest and tax

           

US

     179        (305      345        (972

Non-US

     531        334        1,735        254  
  

 

 

    

 

 

    

 

 

    

 

 

 
     710        29        2,080        (718
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-operating items

           

US

     (34      (57      (46      (220

Non-US(a)

     13        64        (335      (128
  

 

 

    

 

 

    

 

 

    

 

 

 
     (21      7        (381      (348
  

 

 

    

 

 

    

 

 

    

 

 

 

Fair value accounting effects

           

US

     92        (57      284        (90

Non-US

     14        (88      68        (158
  

 

 

    

 

 

    

 

 

    

 

 

 
     106        (145      352        (248
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax

           

US

     237        (419      583        (1,282

Non-US

     558        310        1,468        (32
  

 

 

    

 

 

    

 

 

    

 

 

 
     795        (109      2,051        (1,314
  

 

 

    

 

 

    

 

 

    

 

 

 

Exploration expense

           

US

     25        48        65        160  

Non-US(b)

     825        302        1,197        444  
  

 

 

    

 

 

    

 

 

    

 

 

 
     850        350        1,262        604  
  

 

 

    

 

 

    

 

 

    

 

 

 

Of which: Exploration expenditure written off(b)

     753        260        1,014        421  
  

 

 

    

 

 

    

 

 

    

 

 

 

Production (net of royalties)(c)

           

Liquids*(d) (mb/d)

           

US

     418        401        433        402  

Europe

     122        117        118        122  

Rest of World(d)

     812        706        819        737  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,352        1,224        1,371        1,261  
  

 

 

    

 

 

    

 

 

    

 

 

 

Of which equity-accounted entities

     202        176        208        173  
  

 

 

    

 

 

    

 

 

    

 

 

 

Natural gas (mmcf/d)

           

US

     1,576        1,666        1,585        1,634  

Europe

     274        238        269        263  

Rest of World

     4,410        3,829        4,173        3,924  
  

 

 

    

 

 

    

 

 

    

 

 

 
     6,260        5,733        6,026        5,822  
  

 

 

    

 

 

    

 

 

    

 

 

 

Of which equity-accounted entities

     558        497        544        482  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total hydrocarbons*(d) (mboe/d)

           

US

     689        688        706        684  

Europe

     169        158        165        168  

Rest of World(d)

     1,572        1,366        1,539        1,413  
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,431        2,212        2,410        2,265  
  

 

 

    

 

 

    

 

 

    

 

 

 

Of which equity-accounted entities

     298        262        301        256  
  

 

 

    

 

 

    

 

 

    

 

 

 

Average realizations*(e)

           

Total liquids(d)(f) ($/bbl)

     46.27        39.68        48.09        34.44  

Natural gas ($/mcf)

     3.19        2.66        3.34        2.75  

Total hydrocarbons(d) ($/boe)

     33.59        28.66        35.37        26.16  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  First half 2017 relates primarily to an impairment charge arising following the announcement on 3 April 2017 of the agreement to sell the Forties Pipeline System business to INEOS.
(b)  Second quarter 2017 predominantly relates to the write-off of exploration well and lease costs in Angola. First half 2017 includes the write-off of exploration wells in Egypt.
(c)  Includes BP’s share of production of equity-accounted entities in the Upstream segment.
(d)  A minor adjustment has been made to comparative periods in 2016. See page 35 for more information.
(e) Realizations are based on sales by consolidated subsidiaries only - this excludes equity-accounted entities.
(f)  Includes condensate, natural gas liquids and bitumen.

Because of rounding, some totals may not agree exactly with the sum of their component parts.

 

9


Table of Contents

Downstream

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Sales and other operating revenues(a)

     52,195        42,809        102,275        77,361  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before interest and tax

     988        2,463        2,792        4,246  

Inventory holding (gains) losses*

     579        (1,058      481        (961
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit before interest and tax

     1,567        1,405        3,273        3,285  

Net (favourable) unfavourable impact of non-operating items* and fair value accounting effects*

     (154      108        (118      41  
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit before interest and tax*(b)

     1,413        1,513        3,155        3,326  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Includes sales to other segments.
(b)  See page 11 for a reconciliation to segment RC profit before interest and tax by region and by business.

Financial results

Sales and other operating revenues for the second quarter and half year were $52 billion and $102 billion respectively, compared with $43 billion and $77 billion for the corresponding periods in 2016. The increase in the second quarter and half year was mainly due to higher oil prices and sales volumes.

The replacement cost profit before interest and tax for the second quarter and first half was $1,567 million and $3,273 million respectively, compared with $1,405 million and $3,285 million for the same periods in 2016.

The second quarter and half year include a net non-operating gain of $138 million and $62 million respectively, compared with a net non-operating charge of $37 million and a net non-operating gain of $249 million for the same periods in 2016. Fair value accounting effects had a favourable impact of $16 million in the second quarter and $56 million for the half year, compared with an unfavourable impact of $71 million and $290 million for the same periods in 2016.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the second quarter and half year was $1,413 million and $3,155 million respectively, compared with $1,513 million and $3,326 million for the same periods in 2016.

Replacement cost profit before interest and tax for fuels, lubricants and petrochemicals is set out on page 11.

Fuels business

The fuels business reported an underlying replacement cost profit before interest and tax of $908 million for the second quarter and $2,108 million for the half year, compared with $1,011 million and $2,327 million for the same periods in 2016, driven by higher fuels marketing and refining results which were more than offset by a significantly lower supply and trading contribution for both the quarter and half year.

The fuels marketing result for the quarter and half year reflects continued growth supported by the rollout of our convenience partnership sites and higher premium volumes. For the half year, the fuels marketing result was around 20% higher than the same period last year.

The refining result for the quarter and half year benefited from stronger refining commercial optimization, partially offset by a higher level of turnaround activity. The half year also benefited from improved industry refining margins which were partially offset by narrower North American heavy crude oil differentials.

In the second quarter, we signed a memorandum of understanding with Reliance Industries Limited to jointly explore options to develop differentiated retail and aviation fuels, mobility and advanced low carbon energy businesses in India.

On 18 July we announced that we are evaluating the formation and initial public offering of a master limited partnership to enhance shareholder value and to support BP’s strategy to grow its US midstream business.

Lubricants business

The lubricants business reported an underlying replacement cost profit before interest and tax of $355 million for the second quarter and $748 million for the half year, compared with $412 million and $796 million for the same periods in 2016.

During the quarter, we announced an agreement to be the exclusive premium lubricants brand sold by Kroger, the largest supermarket chain in the US.

Petrochemicals business

The petrochemicals business reported an underlying replacement cost profit before interest and tax of $150 million for the second quarter and $299 million for the half year, compared with $90 million and $203 million for the same periods in 2016. The result for the second quarter and half year reflects an improved margin environment as well as lower costs reflecting the continued benefit from our simplification and efficiency programmes.

On 27 April, we announced our intention to divest our 50% shareholding in our Shanghai SECCO Petrochemical Company Limited joint venture in China for a consideration of $1.7 billion. This transaction is subject to regulatory approvals.

Outlook

In the third quarter, we expect a similar level of industry refining margins and that North American heavy crude oil differentials will remain under pressure.

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 40.

 

 

10


Table of Contents

Downstream (continued)

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  
Underlying RC profit before interest and tax - by region            

US

     283        386        837        926  

Non-US

     1,130        1,127        2,318        2,400  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,413        1,513        3,155        3,326  
  

 

 

    

 

 

    

 

 

    

 

 

 
Non-operating items            

US

     28        17        16        130  

Non-US

     110        (54      46        119  
  

 

 

    

 

 

    

 

 

    

 

 

 
     138        (37      62        249  
  

 

 

    

 

 

    

 

 

    

 

 

 
Fair value accounting effects            

US

     10        (78      (52      (165

Non-US

     6        7        108        (125
  

 

 

    

 

 

    

 

 

    

 

 

 
     16        (71      56        (290
  

 

 

    

 

 

    

 

 

    

 

 

 
RC profit before interest and tax            

US

     321        325        801        891  

Non-US

     1,246        1,080        2,472        2,394  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,567        1,405        3,273        3,285  
  

 

 

    

 

 

    

 

 

    

 

 

 
Underlying RC profit before interest and tax - by business(a)(b)            

Fuels

     908        1,011        2,108        2,327  

Lubricants

     355        412        748        796  

Petrochemicals

     150        90        299        203  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,413        1,513        3,155        3,326  
  

 

 

    

 

 

    

 

 

    

 

 

 
Non-operating items and fair value accounting effects(c)            

Fuels

     159        (93      163        (38

Lubricants

     (2      (3      (5      (4

Petrochemicals

     (3      (12      (40      1  
  

 

 

    

 

 

    

 

 

    

 

 

 
     154        (108      118        (41
  

 

 

    

 

 

    

 

 

    

 

 

 
RC profit before interest and tax(a)(b)            

Fuels

     1,067        918        2,271        2,289  

Lubricants

     353        409        743        792  

Petrochemicals

     147        78        259        204  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,567        1,405        3,273        3,285  
  

 

 

    

 

 

    

 

 

    

 

 

 

BP average refining marker margin (RMM)* ($/bbl)

     13.8        13.8        12.8        12.2  
  

 

 

    

 

 

    

 

 

    

 

 

 
Refinery throughputs (mb/d)            

US

     708        668        702        683  

Europe

     782        805        791        806  

Rest of World

     198        231        189        235  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,688        1,704        1,682        1,724  
  

 

 

    

 

 

    

 

 

    

 

 

 

Refining availability* (%)

     94.5        95.7        94.8        95.3  
  

 

 

    

 

 

    

 

 

    

 

 

 
Marketing sales of refined products (mb/d)            

US

     1,177        1,115        1,146        1,093  

Europe

     1,153        1,170        1,111        1,157  

Rest of World

     497        515        505        502  
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,827        2,800        2,762        2,752  

Trading/supply sales of refined products

     2,996        2,875        2,978        2,843  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total sales volumes of refined products

     5,823        5,675        5,740        5,595  
  

 

 

    

 

 

    

 

 

    

 

 

 
Petrochemicals production (kte)            

US

     672        558        1,170        1,454  

Europe

     1,365        909        2,618        1,901  

Rest of World

     2,001        1,967        4,074        3,876  
  

 

 

    

 

 

    

 

 

    

 

 

 
     4,038        3,434        7,862        7,231  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Segment-level overhead expenses are included in the fuels business result.
(b)  BP’s share of income from petrochemicals at our Gelsenkirchen and Mülheim sites in Germany is reported in the fuels business.
(c)  For Downstream, fair value accounting effects arise solely in the fuels business.

 

11


Table of Contents

Rosneft

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017(a)      2016      2017(a)      2016  

Profit before interest and tax(b)

     271        291        344        353  

Inventory holding (gains) losses*

     8        (45      34        (41
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit before interest and tax

     279        246        378        312  

Net charge (credit) for non-operating items*

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit before interest and tax*

     279        246        378        312  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial results

Replacement cost profit before interest and tax and underlying replacement cost profit before interest and tax for the second quarter and half year was $279 million and $378 million respectively, compared with $246 million and $312 million for the same periods in 2016. There were no non-operating items in the second quarter and half year of either year.

Compared with the same periods in 2016, the result for the second quarter was primarily affected by higher oil prices and adverse duty lag effects. For the half year, the result was primarily affected by higher oil prices, adverse foreign exchange and adverse duty lag effects.

BP’s two nominees, Bob Dudley and Guillermo Quintero, were re-elected to Rosneft’s board by the annual general meeting (AGM) on 22 June. The AGM also adopted a resolution to pay dividends of 5.98 roubles per ordinary share. In July BP received a dividend in relation to the 2016 annual results of $190 million, after the deduction of withholding tax.

Key events

In April Rosneft completed the acquisition of a 100% interest in the Kondaneft project that is developing four licence areas in the Khanty-Mansiysk Autonomous District in West Siberia. The acquisition price was approximately $700 million.

On 29 June Rosneft completed the transaction for the sale of a 20% interest in its Verkhnechonskneftegaz subsidiary to the Beijing Gas Group, for around $1.1 billion.

 

     Second      Second      First      First  
     quarter      quarter      half      half  
     2017(a)      2016      2017(a)      2016  
Production (net of royalties) (BP share)            

Liquids* (mb/d)

     902        812        907        810  

Natural gas (mmcf/d)

     1,302        1,266        1,318        1,274  

Total hydrocarbons* (mboe/d)

     1,126        1,030        1,134        1,029  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  The operational and financial information of the Rosneft segment for the second quarter and first half of the year is based on preliminary operational and financial results of Rosneft for the six months ended 30 June 2017. Actual results may differ from these amounts.
(b)  The Rosneft segment result includes equity-accounted earnings arising from BP’s 19.75% shareholding in Rosneft as adjusted for the 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. These adjustments have increased the reported profit before interest and tax for the second quarter and first half 2017, as shown in the table above, compared with the equivalent amount in Russian roubles that we expect Rosneft to report in its own financial statements under IFRS. BP’s share of Rosneft’s profit before interest and tax for each year-to-date period is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date. BP’s share of Rosneft’s earnings after finance costs, taxation and non-controlling interests, as adjusted, is included in the BP group income statement within profit before interest and taxation.

 

12


Table of Contents

Other businesses and corporate

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Sales and other operating revenues(a)

     326        422        611        818  
  

 

 

    

 

 

    

 

 

    

 

 

 
Profit (loss) before interest and tax            

Gulf of Mexico oil spill

     (347      (5,106      (382      (5,900

Other

     (374      (419      (770      (699
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before interest and tax

     (721      (5,525      (1,152      (6,599

Inventory holding (gains) losses*

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax

     (721      (5,525      (1,152      (6,599
Net charge (credit) for non-operating items*            

Gulf of Mexico oil spill

     347        5,106        382        5,900  

Other

     8        43        (36      145  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net charge (credit) for non-operating items

     355        5,149        346        6,045  
  

 

 

    

 

 

    

 

 

    

 

 

 

Underlying RC profit (loss) before interest and tax*

     (366      (376      (806      (554
  

 

 

    

 

 

    

 

 

    

 

 

 
Underlying RC profit (loss) before interest and tax            

US

     (104      (109      (301      (219

Non-US

     (262      (267      (505      (335
  

 

 

    

 

 

    

 

 

    

 

 

 
     (366      (376      (806      (554
  

 

 

    

 

 

    

 

 

    

 

 

 
Non-operating items            

US

     (350      (5,136      (388      (5,984

Non-US

     (5      (13      42        (61
  

 

 

    

 

 

    

 

 

    

 

 

 
     (355      (5,149      (346      (6,045
  

 

 

    

 

 

    

 

 

    

 

 

 
RC profit (loss) before interest and tax            

US

     (454      (5,245      (689      (6,203

Non-US

     (267      (280      (463      (396
  

 

 

    

 

 

    

 

 

    

 

 

 
     (721      (5,525      (1,152      (6,599
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Includes sales to other segments.

Other businesses and corporate comprises our alternative energy business, shipping, treasury, corporate activities including centralized functions, and the 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 $721 million and $1,152 million respectively, compared with $5,525 million and $6,599 million for the same periods in 2016.

The results included a net non-operating charge of $355 million for the second quarter and $346 million for the half year, compared with a net non-operating charge of $5,149 million and $6,045 million for the same periods in 2016.

After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the second quarter and half year was $366 million and $806 million respectively, compared with $376 million and $554 million for the same periods in 2016. The underlying charge for the half year was impacted by adverse foreign exchange effects, which had a favourable effect in the same period in 2016.

Alternative energy – biofuels, wind

The net ethanol-equivalent production (which includes ethanol and sugar) for the second quarter was 227 million litres, compared with 283 million litres for the same period in 2016.

Net wind generation capacity*(a) was 1,432MW at 30 June 2017 compared with 1,477MW at 30 June 2016. BP’s net share of wind generation for the second quarter and half year was 1,053GWh and 2,212GWh respectively, compared with 1,060GWh and 2,407GWh for the same periods in 2016.

 

(a)  Capacity figures for 2016 include 23MW in the Netherlands managed by our Downstream segment.

 

13


Table of Contents

Financial statements

Group income statement

 

     Second      Second     First      First  
     quarter      quarter     half      half  

$ million

   2017      2016     2017      2016  

Sales and other operating revenues (Note 4)

     56,511        46,442       112,374        84,954  

Earnings from joint ventures - after interest and tax

     160        274       365        303  

Earnings from associates - after interest and tax

     371        380       522        522  

Interest and other income

     127        101       249        246  

Gains on sale of businesses and fixed assets

     197        79       242        417  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues and other income

     57,366        47,276       113,752        86,442  

Purchases

     42,713        32,752       83,850        59,355  

Production and manufacturing expenses(a)

     5,761        10,446       11,016        16,965  

Production and similar taxes (Note 5)

     189        258       495        272  

Depreciation, depletion and amortization (Note 4)

     3,793        3,637       7,635        7,367  

Impairment and losses on sale of businesses and fixed assets

     51        52       504        65  

Exploration expense

     850        350       1,262        604  

Distribution and administration expenses

     2,540        2,697       4,893        5,155  
  

 

 

    

 

 

   

 

 

    

 

 

 

Profit (loss) before interest and taxation

     1,469        (2,916     4,097        (3,341

Finance costs(a)

     487        414       947        808  

Net finance expense relating to pensions and other post-retirement benefits

     54        46       107        92  
  

 

 

    

 

 

   

 

 

    

 

 

 

Profit (loss) before taxation

     928        (3,376     3,043        (4,241

Taxation(a)

     772        (1,986     1,395        (2,293
  

 

 

    

 

 

   

 

 

    

 

 

 

Profit (loss) for the period

     156        (1,390     1,648        (1,948
  

 

 

    

 

 

   

 

 

    

 

 

 

Attributable to

          

BP shareholders

     144        (1,419     1,593        (2,002

Non-controlling interests

     12        29       55        54  
  

 

 

    

 

 

   

 

 

    

 

 

 
     156        (1,390     1,648        (1,948
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per share (Note 6)

          

Profit (loss) for the period attributable to

          

BP shareholders

          

Per ordinary share (cents)

          

Basic

     0.73        (7.60     8.12        (10.78

Diluted

     0.72        (7.60     8.08        (10.78

Per ADS (dollars)

          

Basic

     0.04        (0.46     0.49        (0.65

Diluted

     0.04        (0.46     0.48        (0.65
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(a)  See Note 2 for information on the impact of the Gulf of Mexico oil spill on these income statement line items.

 

14


Table of Contents

Group statement of comprehensive income

 

     Second     Second     First     First  
     quarter     quarter     half     half  

$ million

   2017     2016     2017     2016  

Profit (loss) for the period

     156       (1,390     1,648       (1,948
  

 

 

   

 

 

   

 

 

   

 

 

 
Other comprehensive income         

Items that may be reclassified subsequently to profit or loss

        

Currency translation differences

     (103     (35     1,111       839  

Exchange gains (losses) on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets

     4       —         5       6  

Available-for-sale investments

     1       —         3      
—  
 

Cash flow hedges marked to market

     81       (289     129       (351

Cash flow hedges reclassified to the income statement

     31       16       73       39  

Cash flow hedges reclassified to the balance sheet

     36       6       75       19  

Share of items relating to equity-accounted entities, net of tax

     72       197       303       487  

Income tax relating to items that may be reclassified

     4       80       (121     (6
  

 

 

   

 

 

   

 

 

   

 

 

 
     126       (25     1,578       1,033  
  

 

 

   

 

 

   

 

 

   

 

 

 

Items that will not be reclassified to profit or loss

        

Remeasurements of the net pension and other post-retirement benefit liability or asset

     318       (1,763     1,045       (2,985

Income tax relating to items that will not be reclassified

     (102     592       (348     994  
  

 

 

   

 

 

   

 

 

   

 

 

 
     216       (1,171     697       (1,991
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

     342       (1,196     2,275       (958
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     498       (2,586     3,923       (2,906
  

 

 

   

 

 

   

 

 

   

 

 

 
Attributable to         

BP shareholders

     472       (2,604     3,835       (2,955

Non-controlling interests

     26       18       88       49  
  

 

 

   

 

 

   

 

 

   

 

 

 
     498       (2,586     3,923       (2,906
  

 

 

   

 

 

   

 

 

   

 

 

 

Group statement of changes in equity

 

$ million

   BP
shareholders’
equity
    Non-
controlling
interests
    Total
equity
 

At 1 January 2017

     95,286       1,557       96,843  
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     3,835       88       3,923  

Dividends

     (2,850     (77     (2,927

Share-based payments, net of tax

     334       —         334  

Share of equity-accounted entities’ change in equity, net of tax

     198       —         198  

Transactions involving non-controlling interests

     —         90       90  
  

 

 

   

 

 

   

 

 

 

At 30 June 2017

     96,803       1,658       98,461  
  

 

 

   

 

 

   

 

 

 

$ million

   BP
shareholders’
equity
    Non-controlling
interests
    Total
equity
 

At 1 January 2016

     97,216       1,171       98,387  
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     (2,955     49       (2,906

Dividends

     (2,268     (52     (2,320

Share-based payments, net of tax

     447       —         447  

Share of equity-accounted entities’ change in equity, net of tax

     65       —         65  

Transactions involving non-controlling interests

     221       214       435  
  

 

 

   

 

 

   

 

 

 

At 30 June 2016

     92,726       1,382       94,108  
  

 

 

   

 

 

   

 

 

 

 

15


Table of Contents

Group balance sheet

 

     30 June      31 December  

$ million

   2017      2016  

Non-current assets

     

Property, plant and equipment

     130,715        129,757  

Goodwill

     11,395        11,194  

Intangible assets

     17,399        18,183  

Investments in joint ventures

     8,550        8,609  

Investments in associates

     15,408        14,092  

Other investments

     1,048        1,033  
  

 

 

    

 

 

 
Fixed assets      184,515        182,868  

Loans

     540        532  

Trade and other receivables

     1,425        1,474  

Derivative financial instruments

     4,446        4,359  

Prepayments

     1,076        945  

Deferred tax assets

     5,114        4,741  

Defined benefit pension plan surpluses

     1,281        584  
  

 

 

    

 

 

 
     198,397        195,503  
  

 

 

    

 

 

 
Current assets      

Loans

     268        259  

Inventories

     16,449        17,655  

Trade and other receivables

     20,350        20,675  

Derivative financial instruments

     2,218        3,016  

Prepayments

     1,222        1,486  

Current tax receivable

     864        1,194  

Other investments

     77        44  

Cash and cash equivalents

     23,270        23,484  
  

 

 

    

 

 

 
     64,718        67,813  
  

 

 

    

 

 

 

Total assets

     263,115        263,316  
  

 

 

    

 

 

 
Current liabilities      

Trade and other payables

     36,642        37,915  

Derivative financial instruments

     2,295        2,991  

Accruals

     4,221        5,136  

Finance debt

     7,385        6,634  

Current tax payable

     1,716        1,666  

Provisions

     2,583        4,012  
  

 

 

    

 

 

 
     54,842        58,354  
  

 

 

    

 

 

 
Non-current liabilities      

Other payables

     12,556        13,946  

Derivative financial instruments

     4,210        5,513  

Accruals

     489        469  

Finance debt

     55,619        51,666  

Deferred tax liabilities

     7,435        7,238  

Provisions

     20,501        20,412  

Defined benefit pension plan and other post-retirement benefit plan deficits

     9,002        8,875  
  

 

 

    

 

 

 
     109,812        108,119  
  

 

 

    

 

 

 

Total liabilities

     164,654        166,473  
  

 

 

    

 

 

 

Net assets

     98,461        96,843  
  

 

 

    

 

 

 
Equity      

BP shareholders’ equity

     96,803        95,286  

Non-controlling interests

     1,658        1,557  
  

 

 

    

 

 

 

Total equity

     98,461        96,843  
  

 

 

    

 

 

 

 

16


Table of Contents

Condensed group cash flow statement

 

$ million

   Second
quarter
2017
    Second
quarter
2016
    First
half
2017
    First
half
2016
 
Operating activities        

Profit (loss) before taxation

     928       (3,376     3,043       (4,241

Adjustments to reconcile profit (loss) before taxation taxation to net cash provided by operating activities

        

Depreciation, depletion and amortization and exploration expenditure written off

     4,546       3,897       8,649       7,788  

Impairment and (gain) loss on sale of businesses and fixed assets

     (146     (27     262       (352

Earnings from equity-accounted entities, less dividends received

     (103     (485     (323     (509

Net charge for interest and other finance expense, less net interest paid

     84       113       336       281  

Share-based payments

     156       204       318       463  

Net operating charge for pensions and other post-retirement benefits, less contributions and benefit payments for unfunded plans

     54       (56     (19     (24

Net charge for provisions, less payments

     183       4,565       6       5,300  

Movements in inventories and other current and non-current assets and liabilities

     3       (863     (3,597     (2,590

Income taxes paid

     (815)       (89)       (1,671)       (361)  

Net cash provided by operating activities

     4,890       3,883       7,004       5,755  
  

 

 

   

 

 

   

 

 

   

 

 

 
Investing activities         

Expenditure on property, plant and equipment, intangible and other assets

     (4,181     (4,283     (8,004     (8,664

Acquisitions, net of cash acquired

     (123     —         (165     —    

Investment in joint ventures

     (10     (8     (30     (12

Investment in associates

     (174     (196     (357     (289
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cash capital expenditure

     (4,488     (4,487     (8,556     (8,965

Proceeds from disposal of fixed assets

     312       153       500       391  

Proceeds from disposal of businesses, net of cash disposed

     140       291       213       1,202  

Proceeds from loan repayments

     19       6       33       52  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (4,017     (4,037     (7,810     (7,320
  

 

 

   

 

 

   

 

 

   

 

 

 
Financing activities         

Proceeds from long-term financing

     1,720       2,710       5,433       5,448  

Repayments of long-term financing

     (1,463     (1,318     (2,380     (4,877

Net increase (decrease) in short-term debt

     (299     300       16       188  

Net increase (decrease) in non-controlling interests

     51       368       81       438  

Dividends paid - BP shareholders

     (1,546     (1,169     (2,850     (2,268

  - non-controlling interests

     (62     (43     (77     (52
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (1,599     848       223       (1,123
  

 

 

   

 

 

   

 

 

   

 

 

 

Currency translation differences relating to cash and cash equivalents

     202       (226     369       (184
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (524     468       (214     (2,872
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     23,794       23,049       23,484       26,389  

Cash and cash equivalents at end of period

     23,270       23,517       23,270       23,517  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

17


Table of Contents

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 2016 included in BP Annual Report and Form 20-F 2016.

The directors have made an assessment of the group’s ability to continue as a going concern and consider it appropriate to adopt the going concern basis of accounting in preparing these interim financial statements.

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. IFRS as adopted by the EU differs 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 2017, which do not differ significantly from those used in BP Annual Report and Form 20-F 2016.

Note 2. Gulf of Mexico oil spill

(a) Overview

The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2016 – Financial statements – Note 2 and Legal proceedings on page 261.

The group income statement includes a pre-tax charge for the second quarter of $347 million to reflect the latest estimate for claims, including business economic loss claims, and associated administration costs, and $121 million for finance costs relating to the unwinding of discounting effects. The equivalent amounts for the half year were $382 million and $247 million respectively. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $63,214 million.

The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items in those statements as set out below.

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Income statement

           

Production and manufacturing expenses

     347        5,106        382        5,900  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before interest and taxation

     (347      (5,106      (382      (5,900

Finance costs

     121        123        247        246  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before taxation

     (468      (5,229      (629      (6,146

Taxation

     154        2,533        202        2,784  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) for the period

     (314      (2,696      (427      (3,362
  

 

 

    

 

 

    

 

 

    

 

 

 

 

18


Table of Contents

Note 2. Gulf of Mexico oil spill (continued)

 

     30 June      31 December  

$ million

   2017      2016  

Balance sheet

     

Current assets

     

Trade and other receivables

     172        194  

Current liabilities

     

Trade and other payables

     (2,202      (3,056

Provisions

     (955      (2,330
  

 

 

    

 

 

 

Net current assets (liabilities)

     (2,985      (5,192
  

 

 

    

 

 

 

Non-current assets

     

Deferred tax assets

     3,001        2,973  

Non-current liabilities

     

Other payables

     (12,151      (13,522

Provisions

     —          (112

Deferred tax liabilities

     5,294        5,119  
  

 

 

    

 

 

 

Net non-current assets (liabilities)

     (3,856      (5,542
  

 

 

    

 

 

 

Net assets (liabilities)

     (6,841      (10,734
  

 

 

    

 

 

 

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Cash flow statement - Operating activities

           

Profit (loss) before taxation

     (468      (5,229      (629      (6,146

Adjustments to reconcile profit (loss) before taxation to net cash provided by operating activities

           

Net charge for interest and other finance expense, less net interest paid

     121        123        247        246  

Net charge for provisions, less payments

     298        4,466        293        5,223  

Movements in inventories and other current and non-current assets and liabilities

     (1,976      (971      (4,230      (2,059
  

 

 

    

 

 

    

 

 

    

 

 

 

Pre-tax cash flows

     (2,025      (1,611      (4,319      (2,736
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash outflows in 2016 and 2017 include payments made under the 2012 agreement with the US government to resolve all federal criminal claims arising from the incident and the 2016 consent decree and settlement agreement with the United States and the five Gulf coast states. Included in the current quarter cash outflow are payments of $379 million and $490 million relating to Clean Water Act penalties and natural resource damages settlements respectively. Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $2,025 million and $4,319 million in the second quarter and first half of 2017 respectively. For the same periods in 2016, the amount was an outflow of $1,398 million and $2,523 million respectively.

 

19


Table of Contents

Note 2. Gulf of Mexico oil spill (continued)

(b) Provisions and other payables

Provisions

Movements in the remaining provision, which relates to litigation and claims, are shown in the table below.

 

$ million

      

At 1 April 2017

     1,350  

Net increase in provision

     337  

Reclassified to other payables

     (94

Utilization

     (638
  

 

 

 

At 30 June 2017

     955  
  

 

 

 

Movements in the remaining provision during the first half are shown in the table below.

 

$ million

      

At 1 January 2017

     2,442  

Net increase in provision

     362  

Reclassified to other payables

     (690

Utilization

     (1,159
  

 

 

 

At 30 June 2017

     955  
  

 

 

 

The provision includes amounts for the future cost of resolving claims by individuals and businesses for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of natural resources.

PSC settlement

The provision for the cost associated with the 2012 Plaintiffs’ Steering Committee (PSC) settlement has been increased in the second quarter to reflect the latest estimate for claims, including business economic loss claims and associated administration costs. However, the amounts ultimately payable may differ from the amount provided and the timing of payments is uncertain.

A significant number of claims determined by the settlement programme have been and may be appealed by BP and/or the claimants. Depending upon the resolution of these claims, the amount payable may differ from what is currently provided for. There is additional uncertainty in relation to the impact of the recent Fifth Circuit decision (on the policy addressing the matching of revenue with expenses in relation to business economic loss claims), including on those business economic loss claims that have not yet been determined and those that are under appeal within the settlement programme (see Legal proceedings on page 40 for further details on the Fifth Circuit decision).

Amounts to resolve remaining claims under the PSC settlement are now expected to be substantially paid by the end of 2018. The timing of payments is uncertain, and in particular, will be impacted by how long it takes to resolve claims that have been appealed and may be appealed in the future.

Other payables

Other payables include amounts payable under the 2012 agreement with the US government to resolve all federal criminal claims arising from the incident, amounts payable under the consent decree and settlement agreement with the United States and the five Gulf coast states for natural resource damages, state claims and Clean Water Act penalties, BP’s remaining commitment to fund the Gulf of Mexico Research Initiative, and amounts payable for certain economic loss and property damage claims.

Further information on provisions, other payables, and contingent liabilities is provided in BP Annual Report and Form 20-F 2016 - Financial statements - Note 2.

 

20


Table of Contents

Note 3. Analysis of replacement cost profit (loss) before interest and tax and reconciliation to profit (loss) before taxation

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

Upstream

     795        (109      2,051        (1,314

Downstream

     1,567        1,405        3,273        3,285  

Rosneft

     279        246        378        312  

Other businesses and corporate(a)

     (721      (5,525      (1,152      (6,599
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,920        (3,983      4,550        (4,316

Consolidation adjustment - UPII*

     135        (121      67        (81
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax*

     2,055        (4,104      4,617        (4,397

Inventory holding gains (losses)*

           

Upstream

     1        85        (5      54  

Downstream

     (579      1,058        (481      961  

Rosneft (net of tax)

     (8      45        (34      41  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before interest and tax

     1,469        (2,916      4,097        (3,341

Finance costs

     487        414        947        808  

Net finance expense relating to pensions and other post-retirement benefits

     54        46        107        92  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) before taxation

     928        (3,376      3,043        (4,241
  

 

 

    

 

 

    

 

 

    

 

 

 

RC profit (loss) before interest and tax

           

US

     302        (5,394      815        (6,650

Non-US

     1,753        1,290        3,802        2,253  
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,055        (4,104      4,617        (4,397
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information.

 

21


Table of Contents

Note 4. Segmental analysis

 

Sales and other operating revenues    Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  
By segment            

Upstream

     10,493        8,176        21,820        15,607  

Downstream

     52,195        42,809        102,275        77,361  

Other businesses and corporate

     326        422        611        818  
  

 

 

    

 

 

    

 

 

    

 

 

 
     63,014        51,407        124,706        93,786  
  

 

 

    

 

 

    

 

 

    

 

 

 

Less: sales and other operating revenues between segments

           

Upstream

     6,161        4,301        11,938        7,934  

Downstream

     208        475        122        593  

Other businesses and corporate

     134        189        272        305  
  

 

 

    

 

 

    

 

 

    

 

 

 
     6,503        4,965        12,332        8,832  
  

 

 

    

 

 

    

 

 

    

 

 

 

Third party sales and other operating revenues

           

Upstream

     4,332        3,875        9,882        7,673  

Downstream

     51,987        42,334        102,153        76,768  

Other businesses and corporate

     192        233        339        513  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total sales and other operating revenues

     56,511        46,442        112,374        84,954  
  

 

 

    

 

 

    

 

 

    

 

 

 
By geographical area            

US

     21,577        17,701        42,729        31,277  

Non-US

     41,103        32,482        81,123        59,628  
  

 

 

    

 

 

    

 

 

    

 

 

 
     62,680        50,183        123,852        90,905  

Less: sales and other operating revenues between areas

     6,169        3,741        11,478        5,951  
  

 

 

    

 

 

    

 

 

    

 

 

 
     56,511        46,442        112,374        84,954  
  

 

 

    

 

 

    

 

 

    

 

 

 
Depreciation, depletion and amortization    Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  
Upstream            

US

     1,133        1,064        2,370        2,153  

Non-US

     2,090        1,993        4,144        4,097  
  

 

 

    

 

 

    

 

 

    

 

 

 
     3,223        3,057        6,514        6,250  
  

 

 

    

 

 

    

 

 

    

 

 

 
Downstream            

US

     219        210        435        420  

Non-US

     274        279        553        546  
  

 

 

    

 

 

    

 

 

    

 

 

 
     493        489        988        966  
  

 

 

    

 

 

    

 

 

    

 

 

 
Other businesses and corporate            

US

     16        20        32        35  

Non-US

     61        71        101        116  
  

 

 

    

 

 

    

 

 

    

 

 

 
     77        91        133        151  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total group

     3,793        3,637        7,635        7,367  
  

 

 

    

 

 

    

 

 

    

 

 

 

Note 5. Production and similar taxes

 

     Second      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  

US

     41        67        77        85  

Non-US

     148        191        418        187  
  

 

 

    

 

 

    

 

 

    

 

 

 
        189           258           495           272  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Note 6. Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

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      Second      First      First  
     quarter      quarter      half      half  

$ million

   2017      2016      2017      2016  
Results for the period            

Profit (loss) for the period attributable to BP shareholders

     144        (1,419      1,593        (2,002

Less: preference dividend

     1        1        1        1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit (loss) attributable to BP ordinary shareholders

     143        (1,420      1,592        (2,003
  

 

 

    

 

 

    

 

 

    

 

 

 
Number of shares (thousand)(a)(b)            

Basic weighted average number of shares outstanding

     19,686,613        18,685,199        19,602,785        18,577,135  

ADS equivalent

     3,281,102        3,114,200        3,267,130        3,096,189  
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of shares outstanding used to calculate diluted earnings per share

     19,783,548        18,685,199        19,713,151        18,577,135  

ADS equivalent

     3,297,258        3,114,200        3,285,525        3,096,189  
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares in issue at period-end

     19,738,566        18,777,156        19,738,566        18,777,156  

ADS equivalent

     3,289,761        3,129,526        3,289,761        3,129,526  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.

Note 7. Dividends

Dividends payable

BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 22 September 2017 to shareholders and American Depositary Share (ADS) holders on the register on 11 August 2017. The corresponding amount in sterling is due to be announced on 12 September 2017, calculated based on the average of the market exchange rates for the four dealing days commencing on 6 September 2017. Holders of ADSs are expected to receive $0.600 per ADS (less applicable fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the second quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.

 

     Second      Second      First      First  
     quarter      quarter      half      half  
     2017      2016      2017      2016  
Dividends paid per ordinary share            

cents

     10.000        10.000        20.000        20.000  

pence

     7.756        6.917        15.915        13.929  

Dividends paid per ADS (cents)

     60.00        60.00        120.00        120.00  
  

 

 

    

 

 

    

 

 

    

 

 

 

Scrip dividends

           

Number of shares issued (millions)

     70.1        134.4        185.2        288.8  

Value of shares issued ($ million)

     420        695        1,062        1,434  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Note 8. Net Debt*

 

Net debt ratio *    Second     Second     First     First  
     quarter     quarter     half     half  

$ million

   2017     2016     2017     2016  

Gross debt

     63,004       55,727       63,004       55,727  

Fair value (asset) liability of hedges related to finance debt(a)

     60       (1,279     60       (1,279
  

 

 

   

 

 

   

 

 

   

 

 

 
     63,064       54,448       63,064       54,448  

Less: cash and cash equivalents

     23,270       23,517       23,270       23,517  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net debt

     39,794       30,931       39,794       30,931  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity

     98,461       94,108       98,461       94,108  

Net debt ratio

     28.8     24.7     28.8     24.7
  

 

 

   

 

 

   

 

 

   

 

 

 
Analysis of changes in net debt    Second     Second     First     First  
     quarter     quarter     half     half  

$ million

   2017     2016     2017     2016  
Opening balance         

Finance debt

     61,832       54,012       58,300       53,168  

Fair value (asset) liability of hedges related to finance debt(a)

     597       (967     697       379  

Less: cash and cash equivalents

     23,794       23,049       23,484       26,389  
  

 

 

   

 

 

   

 

 

   

 

 

 

Opening net debt

     38,635       29,996       35,513       27,158  
  

 

 

   

 

 

   

 

 

   

 

 

 
Closing balance         

Finance debt

     63,004       55,727       63,004       55,727  

Fair value (asset) liability of hedges related to finance debt(a)

     60       (1,279     60       (1,279

Less: cash and cash equivalents

     23,270       23,517       23,270       23,517  
  

 

 

   

 

 

   

 

 

   

 

 

 

Closing net debt

     39,794       30,931       39,794       30,931  
  

 

 

   

 

 

   

 

 

   

 

 

 

Decrease (increase) in net debt

     (1,159     (935     (4,281     (3,773
  

 

 

   

 

 

   

 

 

   

 

 

 

Movement in cash and cash equivalents
(excluding exchange adjustments)

     (726     694       (583     (2,688

Net cash outflow (inflow) from financing
(excluding share capital and dividends)

     42       (1,692     (3,069     (759

Other movements

     (13     36       (79     395  
  

 

 

   

 

 

   

 

 

   

 

 

 

Movement in net debt before exchange effects

     (697     (962     (3,731     (3,052

Exchange adjustments

     (462     27       (550     (721
  

 

 

   

 

 

   

 

 

   

 

 

 

Decrease (increase) in net debt

     (1,159     (935     (4,281     (3,773
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 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 $1,167 million (second quarter 2016 liability of $1,440 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.

Note 9. Inventory valuation

A provision of $635 million was held at 30 June 2017 ($689 million at 30 June 2016) to write inventories down to their net realizable value. The net movement charged to the income statement during the second quarter 2017 was $132 million (second quarter 2016 was a charge of $12 million).

Note 10. Statutory accounts

The financial information shown in this publication, which was approved by the Board of Directors on 31 July 2017, is unaudited and does not constitute statutory financial statements. Audited financial information will be published in BP Annual Report and Form 20-F 2017.

 

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Note 11. Condensed consolidating information on certain US subsidiaries

BP p.l.c. fully and unconditionally guarantees the payment obligations of its 100%-owned subsidiary BP Exploration (Alaska) Inc. under the BP Prudhoe Bay Royalty Trust. The following financial information for BP p.l.c., BP Exploration (Alaska) Inc. and all other subsidiaries on a condensed consolidating basis is intended to provide investors with meaningful and comparable financial information about BP p.l.c. and its subsidiary issuers of registered securities and is provided pursuant to Rule 3-10 of Regulation S-X in lieu of the separate financial statements of each subsidiary issuer of public debt securities. Non-current assets for BP p.l.c. includes investments in subsidiaries recorded under the equity method for the purposes of the condensed consolidating financial information. Equity-accounted income of subsidiaries is the group’s share of profit related to such investments. The eliminations and reclassifications column includes the necessary amounts to eliminate the intercompany balances and transactions between BP p.l.c., BP Exploration (Alaska) Inc. and other subsidiaries. The financial information presented in the following tables for BP Exploration (Alaska) Inc. incorporates subsidiaries of BP Exploration (Alaska) Inc. using the equity method of accounting and excludes the BP group’s midstream operations in Alaska that are reported through different legal entities and that are included within the ‘other subsidiaries’ column in these tables. BP p.l.c. also fully and unconditionally guarantees securities issued by BP Capital Markets p.l.c. and BP Capital Markets America Inc. These companies are 100%-owned finance subsidiaries of BP p.l.c.

 

     Issuer     Guarantor                     
     BP                  Eliminations        
Income statement    Exploration           Other      and     BP  
$ million    (Alaska) Inc.     BP p.l.c.     subsidiaries      reclassifications     group  
First half 2017            

Sales and other operating revenues

     1,614       —         112,355        (1,595     112,374  

Earnings from joint ventures - after interest and tax

     —         —         365        —         365  

Earnings from associates - after interest and tax

     —         —         522        —         522  

Equity-accounted income of subsidiaries - after interest and tax

     —         2,055       —          (2,055     —    

Interest and other income

     1       134       613        (499     249  

Gains on sale of businesses and fixed assets

     —         —         242        —         242  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
Total revenues and other income      1,615       2,189       114,097        (4,149     113,752  

Purchases

     516       —         84,929        (1,595     83,850  

Production and manufacturing expenses

     580       —         10,436        —         11,016  

Production and similar taxes

     46       —         449        —         495  

Depreciation, depletion and amortization

     415       —         7,220        —         7,635  

Impairment and losses on sale of businesses and fixed assets

     —         —         504        —         504  

Exploration expense

     —         —         1,262        —         1,262  

Distribution and administration expenses

     11       254       4,678        (50     4,893  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
Profit (loss) before interest and taxation      47       1,935       4,619        (2,504     4,097  

Finance costs

     3       371       1,022        (449     947  

Net finance (income) expense relating to pensions and other post-retirement benefits

     —         (7     114        —         107  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
Profit (loss) before taxation      44       1,571       3,483        (2,055     3,043  

Taxation

     (13     (22     1,430        —         1,395  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
Profit (loss) for the period      57       1,593       2,053        (2,055     1,648  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
Attributable to            

BP shareholders

     57       1,593       1,998        (2,055     1,593  

Non-controlling interests

     —         —         55        —         55  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
     57       1,593       2,053        (2,055     1,648  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

25


Table of Contents

Note 11. Condensed consolidating information on certain US subsidiaries (continued)

 

     Issuer     Guarantor                    
     BP                 Eliminations        
Statement of comprehensive income    Exploration           Other     and     BP  
$ million    (Alaska) Inc.     BP p.l.c.     subsidiaries     reclassifications     group  
First half 2017           

Profit (loss) for the period

     57       1,593       2,053       (2,055     1,648  

Other comprehensive income

     —         578       1,697       —         2,275  

Equity-accounted other comprehensive income of subsidiaries

     —         1,664       —         (1,664     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     57       3,835       3,750       (3,719     3,923  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Attributable to           

BP shareholders

     57       3,835       3,662       (3,719     3,835  

Non-controlling interests

     —         —         88       —         88  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     57       3,835       3,750       (3,719     3,923  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Issuer     Guarantor                    
     BP                 Eliminations        
Income statement    Exploration           Other     and     BP  
$ million    (Alaska) Inc.     BP p.l.c.     subsidiaries     reclassifications     group  
First half 2016           

Sales and other operating revenues

     1,215       —         84,950       (1,211     84,954  

Earnings from joint ventures - after interest and tax

     —         —         303       —         303  

Earnings from associates - after interest and tax

     —         —         522       —         522  

Equity-accounted income of subsidiaries - after interest and tax

     —         (1,725     —         1,725       —    

Interest and other income

     40       142       348       (284     246  

Gains on sale of businesses and fixed assets

     —         —         417       —         417  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total revenues and other income      1,255       (1,583     86,540       230       86,442  

Purchases

     324       —         60,242       (1,211     59,355  

Production and manufacturing expenses

     659       —         16,306       —         16,965  

Production and similar taxes

     67       —         205       —         272  

Depreciation, depletion and amortization

     310       —         7,057       —         7,367  

Impairment and losses on sale of businesses and fixed assets

     —         —         65       —         65  

Exploration expense

     —         —         604       —         604  

Distribution and administration expenses

     (6     459       4,725       (23     5,155  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Profit (loss) before interest and taxation      (99     (2,042     (2,664     1,464       (3,341

Finance costs

     42       69       958       (261     808  

Net finance (income) expense relating to pensions and other post-retirement benefits

     —         (43     135       —         92  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Profit (loss) before taxation      (141     (2,068     (3,757     1,725       (4,241

Taxation

     (70     (66     (2,157     —         (2,293
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     (71     (2,002     (1,600     1,725       (1,948
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Attributable to           

BP shareholders

     (71     (2,002     (1,654     1,725       (2,002

Non-controlling interests

     —         —         54       —         54  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (71     (2,002     (1,600     1,725       (1,948
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

26


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Note 11. Condensed consolidating information on certain US subsidiaries (continued)

 

     Issuer     Guarantor                    
     BP                 Eliminations        
Statement of comprehensive income    Exploration           Other     and     BP  
$ million    (Alaska) Inc.     BP p.l.c.     subsidiaries     reclassifications     group  
First half 2016           

Profit (loss) for the period

     (71     (2,002     (1,600     1,725       (1,948

Other comprehensive income

     —         (1,102     144       —         (958

Equity-accounted other comprehensive income of subsidiaries

     —         149       —         (149     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     (71     (2,955     (1,456     1,576       (2,906
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Attributable to           

BP shareholders

     (71     (2,955     (1,505     1,576       (2,955

Non-controlling interests

     —         —         49       —         49  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (71     (2,955     (1,456     1,576       (2,906
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Issuer     Guarantor                    
     BP                 Eliminations        
Balance sheet    Exploration           Other     and     BP  
$ million    (Alaska) Inc.     BP p.l.c.     subsidiaries     reclassifications     group  
At 30 June 2017           
Non-current assets           

Property, plant and equipment

     7,153       —         123,562       —         130,715  

Goodwill

     —         —         11,395       —         11,395  

Intangible assets

     583       —         16,816       —         17,399  

Investments in joint ventures

     —         —         8,550       —         8,550  

Investments in associates

     —         2       15,406       —         15,408  

Other investments

     —         —         1,048       —         1,048  

Subsidiaries - equity-accounted basis

     —         160,769       —         (160,769     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fixed assets

     7,736       160,771       176,777       (160,769     184,515  

Loans

     —         —         34,655       (34,115     540  

Trade and other receivables

     —         —         1,425       —         1,425  

Derivative financial instruments

     —         —         4,446       —         4,446  

Prepayments

     —         —         1,076       —         1,076  

Deferred tax assets

     —         —         5,114       —         5,114  

Defined benefit pension plan surpluses

     —         1,174       107       —         1,281  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     7,736       161,945       223,600       (194,884     198,397  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Current assets           

Loans

     —         —         268       —         268  

Inventories

     284       —         16,165       —         16,449  

Trade and other receivables

     2,604       3,210       27,410       (12,874     20,350  

Derivative financial instruments

     —         —         2,218       —         2,218  

Prepayments

     65       —         1,157       —         1,222  

Current tax receivable

     —         —         864       —         864  

Other investments

     —         —         77       —         77  

Cash and cash equivalents

     —         —         23,270       —         23,270  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2,953       3,210       71,429       (12,874     64,718  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total assets      10,689       165,155       295,029       (207,758     263,115  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Current liabilities           

Trade and other payables

     576       7,067       41,873       (12,874     36,642  

Derivative financial instruments

     —         —         2,295       —         2,295  

Accruals

     83       (40     4,178       —         4,221  

Finance debt

     —         —         7,385       —         7,385  

Current tax payable

     5       —         1,711       —         1,716  

Provisions

     1       —         2,582       —         2,583  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     665       7,027       60,024       (12,874     54,842  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-current liabilities           

Other payables

     1       34,115       12,555       (34,115     12,556  

Derivative financial instruments

     —         —         4,210       —         4,210  

Accruals

     —         29       460       —         489  

Finance debt

     —         —         55,619       —         55,619  

Deferred tax liabilities

     1,272       405       5,758       —         7,435  

Provisions

     1,403       —         19,098       —         20,501  

Defined benefit pension plan and other post-retirement benefit plan deficits

     —         235       8,767       —         9,002  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2,676       34,784       106,467       (34,115     109,812  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total liabilities      3,341       41,811       166,491       (46,989     164,654  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Net assets      7,348       123,344       128,538       (160,769     98,461  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Equity           

BP shareholders’ equity

     7,348       123,344       126,880       (160,769     96,803  

Non-controlling interests

     —         —         1,658       —         1,658  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     7,348       123,344       128,538       (160,769     98,461  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

27


Table of Contents

Note 11. Condensed consolidating information on certain US subsidiaries (continued)

 

     Issuer      Guarantor                      
     BP                    Eliminations        
Balance sheet    Exploration             Other      and     BP  
$ million    (Alaska) Inc.      BP p.l.c.      subsidiaries      reclassifications     group  
At 31 December 2016              
Non-current assets              

Property, plant and equipment

     7,405        —          122,352        —         129,757  

Goodwill

     —          —          11,194        —         11,194  

Intangible assets

     578        —          17,605        —         18,183  

Investments in joint ventures

     —          —          8,609        —         8,609  

Investments in associates

     —          2        14,090        —         14,092  

Other investments

     —          —          1,033        —         1,033  

Subsidiaries - equity-accounted basis

     —          156,864        —          (156,864     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Fixed assets      7,983        156,866        174,883        (156,864     182,868  

Loans

     9        —          34,941        (34,418     532  

Trade and other receivables

     —          2,951        1,474        (2,951     1,474  

Derivative financial instruments

     —          —          4,359        —         4,359  

Prepayments

     —          —          945        —         945  

Deferred tax assets

     —          —          4,741        —         4,741  

Defined benefit pension plan surpluses

     —          528        56        —         584  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     7,992        160,345        221,399        (194,233     195,503  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Current assets              

Loans

     —          —          259        —         259  

Inventories

     249        —          17,406        —         17,655  

Trade and other receivables

     2,583        487        24,660        (7,055     20,675  

Derivative financial instruments

     —          —          3,016        —         3,016  

Prepayments

     7        —          1,479        —         1,486  

Current tax receivable

     —          —          1,194        —         1,194  

Other investments

     —          —          44        —         44  

Cash and cash equivalents

     —          50        23,434        —         23,484  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     2,839        537        71,492        (7,055     67,813  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Total assets      10,831        160,882        292,891        (201,288     263,316  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Current liabilities              

Trade and other payables

     722        4,096        40,152        (7,055     37,915  

Derivative financial instruments

     —          —          2,991        —         2,991  

Accruals

     116        129        4,891        —         5,136  

Finance debt

     —          —          6,634        —         6,634  

Current tax payable

     11        —          1,655        —         1,666  

Provisions

     2        —          4,010        —         4,012  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     851        4,225        60,333        (7,055     58,354  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Non-current liabilities              

Other payables

     20        34,389        16,906        (37,369     13,946  

Derivative financial instruments

     —          —          5,513        —         5,513  

Accruals

     —          43        426        —         469  

Finance debt

     —          —          51,666        —         51,666  

Deferred tax liabilities

     1,279        179        5,780        —         7,238  

Provisions

     1,390        —          19,022        —         20,412  

Defined benefit pension plan and other post-retirement benefit plan deficits

     —          219        8,656        —         8,875  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     2,689        34,830        107,969        (37,369     108,119  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Total liabilities      3,540        39,055        168,302        (44,424     166,473  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Net assets      7,291        121,827        124,589        (156,864     96,843  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Equity              

BP shareholders’ equity

     7,291        121,827        123,032        (156,864     95,286  

Non-controlling interests

     —          —          1,557        —         1,557  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     7,291        121,827        124,589        (156,864     96,843