LONDON, Oct. 28 /PRNewswire-FirstCall/ -- Third Second Third
quarter quarter quarter Nine months 2007 2008(c) 2008 $million 2008
2007 % 4,406 9,358 8,049 Profit for the period(a) 24,501 16,446
Inventory holding (gains) (363) (2,612) 1,980 losses, net of tax(b)
(1,495) (1,471) 4,043 6,746 10,029 Replacement cost profit(b)
23,006 14,975 54 - per ordinary share 10.40 18.27 29.75 (pence)
64.69 39.17 - per ordinary share 21.27 35.83 53.43 (cents) 122.27
77.95 57 1.28 2.15 3.21 - per ADS (dollars) 7.34 4.68 (Logo:
http://www.newscom.com/cgi-bin/prnh/20000724/NYM120LOGO ) -- BP's
third-quarter replacement cost profit was $10,029 million, compared
with $4,043 million a year ago, an increase of 148%. For the nine
months, replacement cost profit was $23,006 million compared with
$14,975 million a year ago, up 54%. -- Non-operating items and fair
value accounting effects for the third quarter had a net $1,147
million favourable impact compared to a net $448 million
unfavourable impact for the third quarter of 2007. For the nine
months, the respective amounts were $632 million unfavourable and
$561 million favourable - see further details on page 3. The
largest non-operating item for the third quarter was a fair value
gain on embedded derivatives which amounted to $1,098 million on a
pre-tax basis. For the nine months, the fair value loss on embedded
derivatives amounted to $1,673 million on a pre-tax basis. -- Net
cash provided by operating activities for the quarter and nine
months was $14.9 billion and $32.5 billion compared with $6.4
billion and $20.4 billion respectively a year ago. -- The effective
tax rate on replacement cost profit for the third quarter was 33%
and for the nine months was 35%; a year ago, the rates were 33% and
32% respectively. -- Net debt at the end of the quarter was $22.0
billion compared to $22.2 billion a year ago. The ratio of net debt
to net debt plus equity was 17%, compared with 20% a year ago. --
Total capital expenditure and acquisitions was $8.9 billion for the
quarter and $23.7 billion for the nine months. Capital expenditure,
excluding acquisitions and asset exchanges and excluding the
accounting for our transactions with Husky (see page 26) and
Chesapeake (see page 17), was $5.2 billion for the quarter, $14.9
billion for the nine months and is expected to be around $21-22
billion for the year. Disposal proceeds were $365 million for the
quarter and $700 million for the nine months. -- The quarterly
dividend, to be paid in December, is 14 cents per share ($0.84 per
ADS) compared with 10.825 cents per share a year ago. For the nine
months, the dividend showed an increase of 30%. In sterling terms,
the quarterly dividend is 8.705 pence per share, compared with
5.308 pence per share a year ago; for the nine months, the increase
was 43%. During the quarter, the company repurchased 92.9 million
of its own shares for cancellation at a cost of $911 million. For
the nine months, share repurchases were 269.8 million at a cost of
$2.9 billion. (a) Profit attributable to BP shareholders. (b) With
effect from 1 January 2008, replacement cost profit excludes
inventory holding gains and losses net of tax. Comparative amounts
have been amended to the new basis. See page 2 for further details.
(c) Comparative data for 2008 has been amended. See Note 2(d) on
page 24 for further details. The commentaries above and following
are based on replacement cost profit and should be read in
conjunction with the cautionary statement on page 11. Analysis of
replacement cost profit and reconciliation to profit for the period
Third Second Third quarter quarter quarter Nine months 2007 2008(d)
2008 $million 2008 2007 6,307 10,771 12,709 Exploration and
Production 33,552 19,732 371 539 1,972 Refining and Marketing 3,760
3,917 Other businesses and (511) (314) (16) corporate (543) (782)
103 (221) 838 Consolidation adjustment(a) (167) 47 RC profit before
interest 6,270 10,775 15,503 and tax(b) 36,602 22,914 Finance costs
and net finance income relating to pensions and other (173) (221)
(238) post-retirement benefits (705) (499) Taxation on a
replacement (1,982) (3,696) (5,099) cost basis(c) (12,524) (7,221)
(72) (112) (137) Minority interest (367) (219) Replacement cost
profit Attributable to BP 4,043 6,746 10,029 shareholders(c) 23,006
14,975 Inventory holding gains 539 3,952 (2,978) (losses) 2,300
2,131 Taxation (charge) credit on inventory holding gains (176)
(1,340) 998 and losses (805) (660) Profit for the period
attributable to BP 4,406 9,358 8,049 shareholders 24,501 16,446 (a)
The consolidation adjustment in the third quarter of 2008 was
impacted by a significant fall in prices and a substantial
reduction in the volumes of equity crude within the refining and
marketing system. (b) Replacement cost profit reflects the current
cost of supplies. The replacement cost profit for the period is
arrived at by excluding from profit inventory holding gains and
losses. BP uses this measure to assist investors to assess BP's
performance from period to period. Replacement cost profit is not a
recognized GAAP measure. (c) Effective 1 January 2008, replacement
cost profit excludes inventory holding gains and losses and their
associated tax effect. Previously, replacement cost profit excluded
inventory gains and losses while the tax charge remained unadjusted
and included the tax effect on inventory holding gains and losses.
Comparative amounts have been amended to the new basis and the
impact of the change is shown in the table below. There is no
impact on profit for the period. (d) Comparative data for 2008 has
been amended. See Note 2(d) on page 24 for further details. Nine
Third months quarter $million 2007 2007 Replacement cost profit
attributable to BP shareholders -as previously reported 14,315
3,867 -tax effect on inventory holding gains and losses 660 176 -as
amended 14,975 4,043 Non-operating items and fair value accounting
effects Non-operating items(a) Third Second Third quarter quarter
quarter Nine months 2007 2008 2008 $million 2008 2007 10 (1,976)
1,118 Exploration and Production (1,234) 1,145 (344) (99) -
Refining and Marketing 510 194 Other businesses and (201) (123)
(128) corporate (332) (175) (535) (2,198) 990 (1,056) 1,164 174 770
(331) Taxation(b) 383 (365) (361) (1,428) 659 (673) 799 Fair value
accounting effects(c) Third Second Third quarter quarter quarter
Nine months 2007 2008 2008 $million 2008 2007 Exploration and
Production Unrecognized gains (losses) brought forward from 198 366
739 previous period 107 155 Unrecognized (gains) losses (234) (739)
(642) carried forward (642) (234) Favourable (unfavourable) impact
relative to management's measure of (36) (373) 97 performance (535)
(79) Refining and Marketing Unrecognized gains (losses) brought
forward from 274 328 489 previous period 429 72 Unrecognized
(gains) losses (367) (489) 147 carried forward 147 (367) Favourable
(unfavourable) impact relative to management's measure of (93)
(161) 636 performance 576 (295) (129) (534) 733 41 (374) 42 187
(245) Taxation(b) - 136 (87) (347) 488 41 (238) Total of
non-operating items and fair value accounting effects Third Second
Third quarter quarter quarter Nine months 2007 2008 2008 $million
2008 2007 (26) (2,349) 1,215 Exploration and Production (1,769)
1,066 (437) (260) 636 Refining and Marketing 1,086 (101) Other
businesses and (201) (123) (128) corporate (332) (175) (664)
(2,732) 1,723 (1,015) 790 216 957 (576) Taxation(b) 383 (229) (448)
(1,775) 1,147 (632) 561 (a) An analysis of non-operating items by
type is provided on page 20 and a geographical analysis is shown on
pages 7, 9 and 10. (b) Tax is calculated using the quarter's
effective tax rate on replacement cost profit. Amounts for
comparative periods have been amended to reflect a redefinition of
the effective tax rate on replacement cost profit arising as a
result of the exclusion of tax effects on inventory holding gains
and losses as described on page 2. (c) An explanation of fair value
accounting effects is provided on page 11. Per share amounts Third
Second Third quarter quarter quarter Nine months 2007 2008(c) 2008
2008 2007 Results for the period ($million) 4,406 9,358 8,049
Profit(a) 24,501 16,446 Replacement cost 4,043 6,746 10,029 profit
23,006 14,975 Shares in issue at period end 19,019,579 18,805,089
18,725,073 (thousand)(b) 18,725,073 19,019,579 - ADS equivalent
3,169,930 3,134,182 3,120,846 (thousand)(b) 3,120,846 3,169,930
Average number of shares outstanding 19,061,853 18,823,515
18,746,202 (thousand)(b) 18,815,131 19,209,757 - ADS equivalent
3,176,976 3,137,253 3,124,367 (thousand)(b) 3,135,855 3,201,626
Shares repurchased in the period 128,253 85,900 92,861 (thousand)
269,757 541,975 Per ordinary share (cents) Profit for the 23.18
49.70 42.93 period 130.21 85.61 RC profit for the 21.27 35.83 53.43
period 122.27 77.95 Per ADS (cents) Profit for the 139.08 298.20
257.58 period 781.26 513.66 RC profit for the 127.62 214.98 320.58
period 733.62 467.70 (a) Profit attributable to BP shareholders.
(b) Excludes treasury shares. (c) Comparative data for 2008 has
been amended. See Note 2(d) on page 24 for further details.
Dividends Dividends payable BP today announced a dividend of 14
cents per ordinary share to be paid in December. Holders of
ordinary shares will receive 8.705 pence per share and holders of
American Depository Receipts (ADRs) $0.84 per ADS. The dividend is
payable on 8 December to shareholders on the register on 14
November. Participants in the Dividend Reinvestment Plan (DRIP) or
the DRIP facility in the US Direct Access Plan will receive the
dividend in the form of shares, also on 8 December. Dividends paid
Third Second Third quarter quarter quarter Nine months 2007 2008
2008 2008 2007 Dividends paid per ordinary share 10.825 13.525
14.000 cents 41.050 31.475 5.278 6.830 7.039 pence 20.682 15.687
64.95 81.15 84.00 Dividends paid per ADS (cents) 246.30 188.85 Net
debt ratio - net debt: net debt + equity Third Second Third quarter
quarter quarter Nine months 2007 2008(a) 2008 $million 2008 2007
25,245 30,189 28,300 Gross debt 28,300 25,245 Less: fair value
asset (liability) of hedges 640 900 149 related to finance debt 149
640 24,605 29,289 28,151 28,151 24,605 2,410 3,593 6,142 Cash and
cash equivalents 6,142 2,410 22,195 25,696 22,009 Net debt 22,009
22,195 91,494 105,965 106,790 Equity 106,790 91,494 20% 20% 17% Net
debt ratio 17% 20% (a) Comparative data for 2008 has been amended.
See Note 2(d) on page 24 for further details. Net debt and net debt
ratio are non-GAAP measures. We believe that these measures provide
useful information to investors. Net debt enables investors to see
the economic effect of gross debt, related hedges and cash and cash
equivalents in total. The net debt ratio enables investors to see
how significant net debt is relative to equity from shareholders.
Net debt has been redefined to include the fair value of associated
derivative financial instruments that are used to hedge foreign
exchange and interest rate risks relating to finance debt, for
which hedge accounting is claimed. The derivatives are reported on
the balance sheet within the headings 'Derivative financial
instruments'. Amounts for comparative periods are presented on a
consistent basis. See Note 2(c) on page 24 for further information.
Exploration and Production Third Second Third quarter quarter
quarter Nine months 2007 2008 2008 $million 2008 2007 6,297 10,819
12,545 Profit before interest and tax(a) 33,418 19,779 Inventory
holding (gains) 10 (48) 164 losses 134 (47) Replacement cost profit
before 6,307 10,771 12,709 Interest and tax 33,552 19,732 By
region: 633 (124) 2,488 UK 3,287 2,860 227 350 424 Rest of Europe
1,050 1,136 1,775 3,601 3,739 US 10,425 5,689 3,672 6,944 6,058
Rest of World 18,790 10,047 6,307 10,771 12,709 33,552 19,732 (a)
Includes profit after interest and tax of equity-accounted
entities. The replacement cost profit before interest and tax for
the third quarter and first nine months of 2008 was $12,709 million
and $33,552 million respectively, increases of 102% and 70% over
the same periods of 2007. The increases in both periods were
primarily due to higher oil and gas realizations. Additionally, the
results reflected a higher contribution from the gas marketing and
trading business, but were impacted by higher production taxes and
higher depreciation. Costs were higher, driven by sector-specific
inflation, but this was substantially mitigated by reductions
resulting from our focus on cost control. The results also included
higher earnings from equity-accounted entities, primarily from
TNK-BP. The third-quarter result benefited from gains from
non-operating items (see below). The net non-operating gain of
$1,118 million in the third quarter primarily comprises fair value
gains on embedded derivatives. In the first nine months, the net
non-operating charge was $1,234 million with the most significant
item being fair value losses on embedded derivatives partly offset
by the reversal of certain provisions and of a previous impairment
charge. The corresponding periods in 2007 contained net
non-operating gains of $10 million and $1,145 million respectively.
Additionally, in the third quarter, fair value accounting effects
had a favourable impact of $97 million compared with an
unfavourable impact of $36 million a year ago. For the first nine
months, the unfavourable effect was $535 million compared with an
unfavourable effect of $79 million a year ago. Reported production
for the quarter was 3,664mboe/d, slightly higher than the third
quarter of 2007. After adjusting for the impact of lower
entitlement in our production-sharing agreements (PSAs), production
was around 5% higher than the third quarter of 2007. The continued
ramp-up of production following the start-up of major projects in
late 2007 and the first half of 2008 more than offset the impacts
of hurricanes in the Gulf of Mexico and other operational events in
the third quarter. Reported production for the first nine months
was 3,802mboe/d, slightly higher than the same period of the
previous year. After adjusting for the effect of entitlement
changes in our PSAs, production for the first nine months was
around 6% higher than the same period of 2007. In the Gulf of
Mexico, we progressed the commissioning of Thunder Horse (BP 75%
and operator) with the start-up of the second well. In Australia,
the North West Shelf Venture's fifth LNG processing train became
fully operational and, shortly after the end of the quarter, its
third major offshore gas production facility (Angel) began
producing. BP is one of six equal participants in the North West
Shelf Project. Also during the quarter, Sonatrach announced
exploration success in Algeria with the Tin Zaouatene-1 (TZN-1)
discovery in the Bourarhet Sud Blocks 230 & 231 (BP 49% and
operator). Shortly after the end of the quarter, we announced a
discovery in the Freedom prospect in the deepwater Gulf of Mexico
(BP 25% and operator) and, jointly with Sonangol, we announced
Dione, our sixteenth discovery in ultra-deepwater Block 31,
offshore Angola (BP 26.67% and operator). In August, we completed
the acquisition of Chesapeake Energy Corporation's interests in
approximately 90,000 net acres of leasehold and producing natural
gas properties in the Arkoma Basin Woodford Shale play for $1.75
billion. In addition, in September, we acquired a 25% interest in
Chesapeake's Fayetteville Shale assets in Arkansas for $1.9
billion. As a result of this transaction, BP acquired approximately
135,000 net acres of leasehold. In the fourth quarter, we expect
increased production reflecting normal seasonal patterns,
continuing project ramp-ups and recovery from the hurricanes in the
Gulf of Mexico and other operational events in the third quarter.
Exploration and Production Third Second Third quarter quarter
quarter Nine months 2007 2008 2008 $million 2008 2007 Non-operating
items 21 (2,082) 1,093 UK (1,683) 337 7 - - Rest of Europe - 538
(15) (8) 3 US (13) 156 (3) 114 22 Rest of World 462 114 10 (1,976)
1,118 (1,234) 1,145 Fair value accounting effects(a) (22) (147) 11
UK (119) 12 - - - Rest of Europe - - (19) (236) 136 US (242) (96) 5
10 (50) Rest of World (174) 5 (36) (373) 97 (535) (79) Exploration
expense 2 8 5 UK 105 29 - - - Rest of Europe - - 60 47 59 US 178
191 182 63 168 Rest of World 360 335 244 118 232 643 555 Production
(net of royalties)(b) Liquids (mb/d) (net of royalties)(c) 151 186
146 UK 174 202 52 40 44 Rest of Europe 42 52 475 534 473 US 520 510
1,614 1,648 1,620 Rest of World 1,645 1,632 2,292 2,408 2,283 2,381
2,396 Natural gas (mmcf/d) (net of royalties) 582 723 504 UK 732
739 26 21 23 Rest of Europe 23 30 2,186 2,140 2,094 US 2,127 2,171
5,085 5,364 5,390 Rest of World 5,358 5,138 7,879 8,248 8,011 8,240
8,078 Total hydrocarbons (mboe/d)(d)( ) 251 311 233 UK 300 329 57
43 47 Rest of Europe 46 57 851 903 834 US 887 885 2,492 2,573 2,550
Rest of World 2,569 2,517 3,651 3,830 3,664 3,802 3,788 Average
realizations(e) 71.12 109.95 111.47 Total liquids ($/bbl) 103.96
62.00 3.93 6.63 6.49 Natural gas ($/mcf) 6.32 4.42 46.36 75.39
73.49 Total hydrocarbons ($/boe) 70.31 44.05 (a) These effects
represent the favourable (unfavourable) impact relative to
management's measure of performance. Further information on fair
value accounting effects is provided on pages 3 and 11. (b)
Includes BP's share of production of equity-accounted entities. (c)
Crude oil and natural gas liquids. (d) Natural gas is converted to
oil equivalent at 5.8 billion cubic feet = 1 million barrels. (e)
Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities. Because of rounding, some totals may not
agree exactly with the sum of their component parts. Refining and
Marketing Third Second Third quarter quarter quarter Nine months
2007 2008 2008 $million 2008 2007 Profit before interest 931 4,430
(823) and tax(a) 6,180 6,009 Inventory holding (560) (3,891) 2,795
(gains) losses (2,420) (2,092) Replacement cost profit (loss)
before interest 371 539 1,972 and tax 3,760 3,917 By region: 19 118
188 UK 413 914 492 429 1,045 Rest of Europe 2,103 1,374 (522) (401)
338 US 91 573 382 393 401 Rest of World 1,153 1,056 371 539 1,972
3,760 3,917 (a) Includes profit after interest and tax of
equity-accounted entities. The replacement cost profit before
interest and tax for the third quarter and nine months was $1,972
million and $3,760 million respectively. The results in the
equivalent periods of 2007 were $371 million and $3,917 million
respectively. The net impact of non-operating items, which is
included in the results, was nil in the quarter and was a gain of
$510 million in the nine months. A year ago, the results included a
net non-operating charge of $344 million for the quarter and a net
non-operating gain of $194 million for the nine months. Fair value
accounting effects had favourable impacts of $636 million for the
current quarter and $576 million for the nine months. A year ago,
the impacts were unfavourable by $93 million for the quarter and
$295 million for the nine months. We continue to make good progress
with the turnaround of the segment, delivering underlying
year-on-year performance improvement in both Fuels Value Chains
(FVCs) and International Businesses, against a weaker external
business environment. Compared with 2007, the third-quarter result
benefited from stronger commercial refining, supply and trading
performance in the FVCs and improved marketing performance,
partially offset by a negative foreign exchange effect caused by
the strengthening of the US dollar. For the nine months, in
addition to these factors, improved refinery operations have in
part mitigated the impact of a considerably lower refining margin
environment. The International Businesses continued to deliver a
strong performance in the third quarter. Progress on our efficiency
improvements has helped to offset the effects of inflation and
higher energy costs. Refining throughputs for the quarter and nine
months were 2,185mb/d and 2,197mb/d respectively, compared with
2,148mb/d and 2,169mb/d for the same periods last year, the
increases being primarily driven by the recoveries at the Texas
City and Whiting refineries, partially offset by the net loss of
throughput from previous disposals and acquisitions. Solomon
availability was 4.3 percentage points higher than a year ago.
Relative to the second quarter of 2008, it was slightly lower, as a
result of the disruption at the Texas City refinery in September
caused by Hurricane Ike. Most of the refinery units were restarted
within two weeks after the hurricane shutdown. In addition, we
successfully started up the second residue hydrotreater train on 1
October and have completed mechanical work on ultraformer number 3.
This unit is expected to start production during the fourth
quarter, completing the restoration of the economic capability of
Texas City refinery. On 29 August 2008, BP announced an agreement
with Enbridge Inc. to develop a new delivery system to transport
Canadian heavy crude oil from Flanagan, Illinois, to Houston and
Texas City, Texas. The system is expected to be in service by late
2012 with an initial capacity of 250,000 barrels per day. The joint
investment of the phased capacity additions is expected to be in
the range of $1-2 billion. Refinery turnaround activities are
expected to be higher in the fourth quarter than in the third. The
slowing of global economies, exacerbated by the current instability
in global financial markets, remains a key risk to our marketing
and supply businesses. Refining and Marketing Third Second Third
quarter quarter quarter Nine months 2007 2008 2008 $million 2008
2007 Non-operating items (4) (10) 9 UK (50) 677 (16) (32) (10) Rest
of Europe (127) (72) (316) (16) 13 US 771 (204) (8) (41) (12) Rest
of World (84) (207) (344) (99) - 510 194 Fair value accounting
effects(a) 45 (177) 270 UK 89 (53) 2 (59) 122 Rest of Europe 99
(115) (142) 53 174 US 322 (133) 2 22 70 Rest of World 66 6 (93)
(161) 636 576 (295) Refinery throughputs (mb/d) - - - UK - 90 735
753 730 Rest of Europe 753 691 1,109 1,189 1,158 US 1,141 1,086 304
297 297 Rest of World 303 302 2,148 2,239 2,185 Total throughput
2,197 2,169 Refining availability 83.4 88.3 87.7 (%)(b) 88.0 82.6
Oil sales volumes (mb/d) Refined products 350 315 303 UK 313 343
1,329 1,236 1,281 Rest of Europe 1,254 1,282 1,535 1,498 1,453 US
1,468 1,559 641 716 662 Rest of World 690 627 3,855 3,765 3,699
Total marketing sales 3,725 3,811 1,687 2,017 2,107 Trading/supply
sales 2,057 1,860 Total refined product 5,542 5,782 5,806 sales
5,782 5,671 1,709 1,848 1,511 Crude oil 1,739 1,964 7,251 7,630
7,317 Total oil sales 7,521 7,635 Global Indicator Refining Margin
($/bbl)(c) 3.82 7.46 7.13 NWE 6.46 5.03 12.58 8.59 9.87 USGC 8.22
15.74 14.31 6.53 10.47 Midwest 6.04 16.02 6.90 9.94 7.07 USWC 7.64
17.22 4.52 9.41 5.90 Singapore 6.69 5.12 8.05 8.19 8.03 Average
6.93 11.38 Chemicals production (kte) 237 164 144 UK 569 739 587
657 711 Rest of Europe 2,076 1,990 1,117 1,022 850 US 2,908 3,240
1,569 1,598 1,358 Rest of World 4,487 4,586 3,510 3,441 3,063 Total
production 10,040 10,555 (a) These effects represent the favourable
(unfavourable) impact relative to management's measure of
performance. Further information on fair value accounting effects
is provided on pages 3 and 11. (b) Solomon refining availability is
defined as the ratio of units which are available for processing,
regardless of whether they are actually being used, to total
capacity. Where there is planned maintenance, such capacity is not
regarded as being available. (c) The Global Indicator Refining
Margin (GIM) is the average of regional indicator margins weighted
for BP's crude refining capacity in each region. Each regional
indicator margin is based on a single representative crude with
product yields characteristic of the typical level of upgrading
complexity. The regional indicator margins may not be
representative of the actual margins achieved by BP in any period
because of BP's particular refinery configurations and crude and
product slate. Other businesses and corporate Third Second Third
quarter quarter quarter Nine months 2007 2008 2008 $million 2008
2007 Profit (loss) before (522) (301) (35) interest and tax(a)
(529) (790) Inventory holding 11 (13) 19 (gains) losses (14) 8
Replacement cost profit (loss) before interest (511) (314) (16) and
tax (543) (782) By region: 112 (119) 385 UK 147 57 (120) (29) (78)
Rest of Europe (107) (108) (363) (185) (288) US (625) (624) (140)
19 (35) Rest of World 42 (107) (511) (314) (16) (543) (782) Results
include: Non-operating items 1 (41) (20) UK (67) (14) (11) (47) (2)
Rest of Europe (62) 17 (195) (33) (105) US (187) (182) 4 (2) (1)
Rest of World (16) 4 (201) (123) (128) (332) (175) (a) Includes
profit after interest and tax of equity-accounted entities. Other
businesses and corporate comprises the Alternative Energy business,
Shipping, the group's aluminium asset, Treasury (which includes
interest income on the group's cash and cash equivalents) and
corporate activities worldwide. The replacement cost profit before
interest and tax for the third quarter was a loss of $16 million,
compared with a loss of $511 million a year ago. This result
reflects a higher contribution from the operating businesses and
lower corporate costs. For the nine months, the replacement cost
loss before interest and tax was $543 million in 2008 compared with
a loss of $782 million a year ago. The net non-operating charge was
$128 million for the third quarter and $332 million for the nine
months. The third-quarter result included a $30 million
restructuring charge, a $76 million net charge in relation to new,
and revisions to existing, environmental and other provisions and a
net charge of $22 million for impairment and other provisions. The
prior year included a net non-operating charge of $201 million in
the third quarter and $175 million for the nine months. On 15
September, Alternative Energy announced BP's first bioethanol
production from its Brazilian biofuels joint venture, Tropical
BioEnergia, a significant milestone in the implementation of BP's
biofuels strategy. Tropical BioEnergia farms sugar cane and refines
it into fuel in a new 435 million litres per year (115 million US
gallons per year) refinery. BP's investment in Tropical BioEnergia
is the largest made by any international oil company into Brazil's
ethanol market. In August, BP and Verenium Corporation announced
the creation of a strategic partnership to accelerate the
development and commercialization of cellulosic ethanol. Under the
initial phase of the strategic alliance, Verenium is to receive $90
million in funding from BP over 18 months in exchange for rights to
current and future technology held within the partnership. Also in
August, BP started commercial operations at its Silver Star wind
farm in Texas, a 60MW gross capacity installation in partnership
with Clipper Windpower, Inc. and at Edom Hills, California, a 20MW
wholly-owned wind farm. On 20 October, BP started commercial
operations of phase 1 of the Sherbino wind farm in Texas. The first
150MW of the project, which has a potential capacity of 750MW, has
been built through a 50:50 joint venture with Padoma Wind Power
LLC, a wholly owned subsidiary of NRG Energy, Inc. Third Second
Third quarter quarter quarter 2008 2008 2007 Wind - net rated
capacity as at period end (megawatts)(a) 243 172 32 Solar - cell
production capacity as at period end (megawatts)(b) 277 255 201 (a)
Net wind capacity is the sum of the rated capacities of the
assets/turbines that have entered into commercial operation,
including BP's share of equity-accounted entities. The equivalent
capacities on a gross-JV basis (which includes 100% of the capacity
of equity- accounted entities where BP has partial ownership) are
453MW as at the third quarter of 2008, 373MW as at the second
quarter of 2008 and 32MW as at the third quarter last year. (b)
Solar capacity is the theoretical cell production capacity per
annum of in-house manufacturing facilities. Information on fair
value accounting effects BP uses derivative instruments to manage
the economic exposure relating to inventories above normal
operating requirements of crude oil, natural gas and petroleum
products as well as certain contracts to supply physical volumes at
future dates. Under IFRS, these inventories and contracts are
recorded at historic cost and on an accruals basis, respectively.
The related derivative instruments, however, are required to be
recorded at fair value with gains and losses recognized in income
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories and contracts are not recognized until the commodity is
sold in a subsequent accounting period. Gains and losses on the
related derivative commodity contracts are recognized in the income
statement from the time the derivative commodity contract is
entered into on a fair value basis using forward prices consistent
with the contract maturity. IFRS requires that inventory held for
trading be recorded at its fair value using period end spot prices
whereas any related derivative commodity instruments are required
to be recorded at values based on forward prices consistent with
the contract maturity. Depending on market conditions, these
forward prices can be either higher or lower than spot prices
resulting in measurement differences. BP enters into contracts for
pipelines and storage capacity which, under IFRS, are recorded on
an accruals basis. These contracts are risk managed using a variety
of derivative instruments which are fair valued under IFRS. This
results in measurement differences in relation to recognition of
gains and losses. The way that BP manages the economic exposures
described above, and measures performance internally, differs from
the way these activities are measured under IFRS. BP calculates
this difference by comparing the IFRS result with management's
internal measure of performance, under which the inventory and the
supply and capacity contracts in question are valued based on fair
value using relevant forward prices prevailing at the end of the
period. We believe that disclosing management's estimate of this
difference provides useful information for investors because it
enables investors to see the economic effect of these activities as
a whole. The impacts of fair value accounting effects, relative to
management's internal measure of performance, are shown in the
table on page 3. Information for all quarters of 2006 and 2007 can
be found at http://www.bp.com/FVAE. Cautionary Statement: The
foregoing discussion contains forward-looking statements
particularly those regarding capital expenditure, increased
production, expected refinery turnaround activities and the
continuing risk of slowing global economies, exacerbated by the
global credit freeze, to our marketing and supply businesses. By
their nature, forward-looking statements involve risk and
uncertainty and actual results may differ from those expressed in
such statements depending on a variety of factors including the
following: the timing of bringing new fields onstream; industry
product supply; demand and pricing; operational problems; general
economic conditions (including inflation); political stability and
economic growth in relevant areas of the world; changes in laws and
governmental regulations and quotas; exchange rate fluctuations;
development and use of new technology; the success or otherwise of
partnering; the actions of competitors; natural disasters and
adverse weather conditions; changes in public expectations and
other changes to business conditions; wars and acts of terrorism or
sabotage; and other factors discussed in this announcement. For
more information you should refer to our Annual Report and Accounts
2007 and our 2007 Annual Report on Form 20-F filed with the US
Securities and Exchange Commission. Group income statement Third
Second Third quarter quarter quarter Nine months 2007 2008(a) 2008
2008 2007 $million $million Sales and other 71,334 108,747 103,174
operating revenues 299,666 204,513 Earnings from jointly controlled
entities - 900 1,752 1,172 after interest and tax 3,899 2,143
Earnings from associates 204 251 155 - after interest and tax 631
540 172 153 135 Interest and other revenues 566 533 72,610 110,903
104,636 Total revenues (Note 4) 304,762 207,729 Gains on sale of
businesses 228 79 193 and fixed assets 1,197 2,217 Total revenues
and other 72,838 110,982 104,829 income 305,959 209,946 51,810
77,499 77,234 Purchases 217,122 144,453 Production and 6,297 7,408
7,549 manufacturing expenses 21,756 18,325 Production and similar
921 2,299 1,886 taxes (Note 5) 5,794 2,495 Depreciation, depletion
2,505 2,850 2,653 and amortization 8,285 7,559 Impairment and
losses on sale of businesses and 129 23 54 fixed assets 117 807 244
118 232 Exploration expense 643 555 Distribution and 4,137 3,977
3,794 administration expenses 11,667 11,159 Fair value (gain) loss
(14) 2,081 (1,098) on embedded derivatives 1,673 (452) Profit
before interest 6,809 14,727 12,525 and taxation 38,902 25,045 337
381 391 Finance costs (Note 6) 1,178 985 Net finance income
relating to pensions and other post-retirement (164) (160) (153)
benefits (Note 7) (473) (486) 6,636 14,506 12,287 Profit before
taxation 38,197 24,546 2,158 5,036 4,101 Taxation 13,329 7,881
4,478 9,470 8,186 Profit for the period 24,868 16,665 Attributable
to: 4,406 9,358 8,049 BP shareholders 24,501 16,446 72 112 137
Minority interest 367 219 4,478 9,470 8,186 24,868 16,665 Earnings
per share - cents Profit for the period attributable to BP
shareholders 23.18 49.70 42.93 Basic 130.21 85.61 23.07 49.23 42.56
Diluted 129.04 85.19 (a) Comparative data for 2008 has been
amended. See Note 2(d) for further details. Group balance sheet 30
September 31 December 2008 2007 $million Non-current assets
Property, plant and equipment 102,889 97,989 Goodwill 10,566 11,006
Intangible assets 10,040 6,652 Investments in jointly controlled
entities 24,862 18,113 Investments in associates 4,199 4,579 Other
investments 1,250 1,830 Fixed assets 153,806 140,169 Loans 1,151
999 Other receivables 896 968 Derivative financial instruments
5,309 3,741 Prepayments 1,194 1,083 Defined benefit pension plan
surplus 8,494 8,914 170,850 155,874 Current assets Loans 167 165
Inventories 27,277 26,554 Trade and other receivables 39,201 38,020
Derivative financial instruments 8,384 6,321 Prepayments 3,769
3,589 Current tax receivable 332 705 Cash and cash equivalents
6,142 3,562 85,272 78,916 Assets classified as held for sale -
1,286 85,272 80,202 Total assets 256,122 236,076 Current
liabilities Trade and other payables 43,948 43,152 Derivative
financial instruments 9,187 6,405 Accruals 6,825 6,640 Finance debt
14,258 15,394 Current tax payable 4,013 3,282 Provisions 2,074
2,195 80,305 77,068 Liabilities directly associated with the assets
classified as held for sale - 163 80,305 77,231 Non-current
liabilities Other payables 2,809 1,251 Derivative financial
instruments 7,915 5,002 Accruals 863 959 Finance debt 14,042 15,651
Deferred tax liabilities 21,573 19,215 Provisions 12,744 12,900
Defined benefit pension plan and other post-retirement benefit plan
deficits 9,081 9,215 69,027 64,193 Total liabilities 149,332
141,424 Net assets 106,790 94,652 Equity BP shareholders' equity
105,704 93,690 Minority interest 1,086 962 106,790 94,652 Group
statement of recognized income and expense Third Second Third
quarter quarter quarter Nine months 2007 2008(a) 2008 2008 2007
$million $million Currency translation 788 255 (3,125) differences
(2,092) 1,583 Exchange gain on translation of foreign operations
transferred to gain on sale of businesses and fixed - - - assets -
(147) Available-for-sale investments marked to (13) 322 (703)
market (572) (116) Available-for-sale investments - recycled to - -
(15) the income statement (20) - Cash flow hedges marked to 139 49
(594) market (471) 180 Cash flow hedges - recycled (5) 1 16 to the
income statement 15 (86) Cash flow hedges - recycled (2) (18) (20)
to the balance sheet (61) (9) 90 107 203 Taxation 192 118 Net
income (expense) recognized directly in 997 716 (4,238) equity
(3,009) 1,523 4,478 9,470 8,186 Profit for the period 24,868 16,665
Total recognized income and expense for the 5,475 10,186 3,948
period 21,859 18,188 Attributable to: 5,372 10,075 3,825 BP
shareholders 21,503 17,917 103 111 123 Minority interest 356 271
5,475 10,186 3,948 21,859 18,188 (a) Comparative data for 2008 has
been amended. See Note 2(d) for further details. Movement in
shareholders' equity BP shareholders' Minority Total equity
interest equity $million At 31 December 2007 93,690 962 94,652
Currency translation differences (net of tax) (1,822) (11) (1,833)
Available-for-sale investments (net of tax) (542) - (542) Cash flow
hedges (net of tax) (441) - (441) Tax on share-based payments (193)
- (193) Profit for the period 24,501 367 24,868 Total recognized
income and expense for the period 21,503 356 21,859 Dividends
(7,723) (232) (7,955) Repurchase of ordinary share capital (2,414)
- (2,414) Share-based payments 648 - 648 At 30 September 2008
105,704 1,086 106,790 Group cash flow statement Third Second Third
quarter quarter quarter Nine months 2007 2008(a) 2008 2008 2007
$million $million Operating activities 6,636 14,506 12,287 Profit
before taxation 38,197 24,546 Adjustments to Reconcile profits
before tax to net cash provided by operating activities Exploration
expenditure 146 44 98 written off 326 261 Depreciation, depletion
2,505 2,850 2,653 and amortization 8,285 7,559 Impairment and
(gain) loss on sale of businesses and fixed (99) (56) (139) assets
(1,080) (1,410) Earnings from jointly controlled entities and
(1,104) (2,003) (1,327) associates (4,530) (2,683) Dividends
received from jointly controlled 1,060 512 759 entities and
associates 2,658 2,102 Working capital and (2,788) (9,135) 533
other movements (11,380) (9,955) Net cash provided by 6,356 6,718
14,864 operating activities 32,476 20,420 Investing activities
(4,336) (4,713) (7,748) Capital expenditure (16,896) (12,315)
Acquisitions, net of (27) (209) - cash acquired (209) (1,225)
Investment in jointly (122) (247) (194) controlled entities (807)
(143) (37) (3) (14) Investment in associates (21) (146) Proceeds
from disposal of 211 59 365 fixed assets 700 1,357 Proceeds from
disposal of businesses, net of cash - - - disposed - 2,513 Proceeds
from loan 45 212 150 repayments 484 123 - - (200) Other (200) 374
Net cash (used in) provided by investing (4,266) (4,901) (7,641)
activities (16,949) (9,462) Financing activities (1,441) (928)
(814) Net repurchase of shares (2,631) (5,761) Proceeds from
long-term 107 655 397 financing 3,229 2,978 Repayments of long-term
(369) (1,654) (65) financing (2,256) (1,596) Net increase
(decrease) 1,426 1,516 (1,380) in short-term debt (3,288) (631)
Dividends paid (2,066) (2,545) (2,624) - BP shareholders (7,723)
(6,050) (24) (86) (110) - Minority interest (232) (159) Net cash
(used in) provided by financing (2,367) (3,042) (4,596) activities
(12,901) (11,219) Currency translation differences relating to cash
and cash 44 (2) (78) equivalents (46) 81 Increase (decrease) in
cash and cash (233) (1,227) 2,549 equivalents 2,580 (180) Cash and
cash equivalents 2,643 4,820 3,593 at beginning of period 3,562
2,590 Cash and cash equivalents 2,410 3,593 6,142 at end of period
6,142 2,410 (a) Comparative data for 2008 has been amended. See
Note 2(d) for further details. Group cash flow statement Third
Second Third quarter quarter quarter Nine months 2007 2008(a) 2008
2008 2007 $million $million Working capital and other movements
(154) (118) (96) Interest receivable (311) (342) 152 110 89
Interest received 298 340 337 381 391 Finance costs 1,178 985 (300)
(396) (206) Interest paid (968) (968) Net finance income relating
to pensions and other post-retirement (164) (160) (153) benefits
(473) (486) 129 173 128 Share-based payments 366 311 Net operating
charge for pensions and other post-retirement benefits, less
contributions and benefit payments for (61) 46 (14) unfunded plans
149 (179) Net charge for provisions, 362 (40) 92 less payments
(113) (52) (Increase) decrease in (803) (8,303) 6,096 inventories
(1,075) (2,134) (Increase) decrease in other current and 956
(18,626) 22,470 non-current assets (6,000) 3,474 Increase
(decrease) in other current and (104) 21,219 (23,736) non-current
liabilities 5,478 (4,533) (3,138) (3,421) (4,528) Income taxes paid
(9,909) (6,371) (2,788) (9,135) 533 (11,380) (9,955) (a)
Comparative data for 2008 has been amended. See Note 2(d) for
further details. Capital expenditure and acquisitions Third Second
Third quarter quarter quarter Nine months 2007 2008 2008 2008 2007
$million $million By business Exploration and Production 279 256
323 UK 804 699 124 165 173 Rest of Europe 506 319 1,176 1,801 5,252
US(a) 8,268 3,785 1,721 1,727 1,682 Rest of World(b) 7,803 5,254
3,300 3,949 7,430 17,381 10,057 Refining and Marketing 127 77 77 UK
207 287 379 379 323 Rest of Europe(c) 918 1,855 466 662 564 US(b)
3,523 1,115 155 126 152 Rest of World 380 353 1,127 1,244 1,116
5,028 3,610 Other businesses and corporate 35 45 55 UK 171 113 6 12
8 Rest of Europe 33 18 81 463 228 US 958 195 23 89 21 Rest of World
134 35 145 609 312 1,296 361 4,572 5,802 8,858 23,705 14,028 By
geographical area 441 378 455 UK 1,182 1,099 509 556 504 Rest of
Europe 1,457 2,192 1,723 2,926 6,044 US 12,749 5,095 1,899 1,942
1,855 Rest of World 8,317 5,642 4,572 5,802 8,858 23,705 14,028
Included above: 2 324 - Acquisitions and asset exchanges(b)(c)
2,288 1,447 Capital expenditure, excluding acquisitions and asset
exchanges and excluding the accounting for our transactions with
Husky (see page 26) and Chesapeake (see note (a) below), was $5,229
million for the quarter and $14,940 million for the nine months.
(a) Third quarter 2008 includes capital expenditure of $3,652
million in Exploration and Production relating to the purchase of
all of Chesapeake Energy Corporation's interest in the Arkoma Basin
Woodford Shale assets and the purchase of a 25% interest in
Chesapeake's Fayetteville Shale assets. (b) During the first
quarter 2008 there was capital expenditure of $2,848 million in
Exploration and Production and an asset exchange of $1,793 million
in Refining and Marketing relating to the formation of an
integrated North American oil sands business with Husky Energy,
Inc. Second quarter 2008 includes a further $111 million in
Refining and Marketing reflecting closing adjustments relating to
this transaction. Third quarter 2008 includes a reduction of $23
million in Exploration and Production reflecting closing
adjustments relating to this transaction. For further information
see Note 3. (c) Nine months ended 30 September 2007 includes $1,132
million for the acquisition of Chevron's Netherlands manufacturing
company. Exchange rates Third Second Third quarter quarter quarter
Nine months 2007 2008 2008 2008 2007 US dollar/sterling average
rate 2.02 1.97 1.89 for the period 1.95 1.99 US dollar/sterling
period-end 2.02 1.99 1.81 rate 1.81 2.02 US dollar/euro average
rate for 1.37 1.56 1.50 the period 1.52 1.34 1.42 1.58 1.44 US
dollar/euro period-end rate 1.44 1.42 Analysis of profit before
interest and tax Third Second Third quarter quarter quarter Nine
months 2007 2008(a) 2008 2008 2007 $million $million By business
Exploration and Production 633 (124) 2,488 UK 3,287 2,860 227 350
424 Rest of Europe 1,050 1,137 1,774 3,639 3,677 US 10,406 5,718
3,663 6,954 5,956 Rest of World 18,675 10,064 6,297 10,819 12,545
33,418 19,779 Refining and Marketing (13) 124 30 UK 223 893 623
1,722 172 Rest of Europe 2,838 2,133 (131) 1,730 (1,343) US 1,502
1,798 452 854 318 Rest of World 1,617 1,185 931 4,430 (823) 6,180
6,009 Other businesses and corporate 112 (119) 385 UK 147 57 (121)
(29) (78) Rest of Europe (107) (108) (373) (172) (307) US (611)
(632) (140) 19 (35) Rest of World 42 (107) (522) (301) (35) (529)
(790) 6,706 14,948 11,687 39,069 24,998 103 (221) 838 Consolidation
adjustment (167) 47 6,809 14,727 12,525 Total for period 38,902
25,045 By geographical area 731 (120) 2,904 UK 3,657 3,809 718
1,581 807 Rest of Europe 3,281 3,176 1,364 5,449 2,657 US 11,713
6,918 3,996 7,817 6,157 Rest of World 20,251 11,142 6,809 14,727
12,525 Total for period 38,902 25,045 (a) Comparative data for 2008
has been amended. See Note 2(d) for further details. Analysis of
replacement cost profit before interest and tax Third Second Third
quarter quarter quarter Nine months 2007 2008(a) 2008 2008 2007
$million $million By business Exploration and Production 633 (124)
2,488 UK 3,287 2,860 227 350 424 Rest of Europe 1,050 1,136 1,775
3,601 3,739 US 10,425 5,689 3,672 6,944 6,058 Rest of World 18,790
10,047 6,307 10,771 12,709 33,552 19,732 Refining and Marketing 19
118 188 UK 413 914 492 429 1,045 Rest of Europe 2,103 1,374 (522)
(401) 338 US 91 573 382 393 401 Rest of World 1,153 1,056 371 539
1,972 3,760 3,917 Other businesses and corporate 112 (119) 385 UK
147 57 (120) (29) (78) Rest of Europe (107) (108) (363) (185) (288)
US (625) (624) (140) 19 (35) Rest of World 42 (107) (511) (314)
(16) (543) (782) 6,167 10,996 14,665 36,769 22,867 103 (221) 838
Consolidation adjustment (167) 47 6,270 10,775 15,503 Total for
period 36,602 22,914 By geographical area 763 (126) 3,062 UK 3,847
3,830 590 287 1,680 Rest of Europe 2,546 2,417 983 3,267 4,419 US
10,307 5,672 3,934 7,347 6,342 Rest of World 19,902 10,995 6,270
10,775 15,503 Total for period 36,602 22,914 (a) Comparative data
for 2008 has been amended. See Note 2(d) for further details.
Analysis of non-operating items Third Second Third quarter quarter
quarter Nine months 2007 2008 2008 2008 2007 $million $million By
business Exploration and Production Impairment and gain (loss) on
sale of businesses 1 111 33 and fixed assets 165 708 Environmental
and other (12) (5) (7) provisions (12) (12) Restructuring,
integration - - (6) and rationalization costs (50) - Fair value
gain (loss) on 21 (2,082) 1,098 embedded derivatives (1,668) 449 -
- - Other 331 - 10 (1,976) 1,118 (1,234) 1,145 Refining and
Marketing Impairment and gain (loss) on sale of businesses 105 (13)
114 and fixed assets 915 693 Environmental and other (138) - (62)
provisions (62) (138) Restructuring, integration - (86) (52) and
rationalization costs (343) - Fair value gain (loss) on - - -
embedded derivatives - - (311) - - Other - (361) (344) (99) - 510
194 Other businesses and corporate Impairment and gain (loss) on
sale of businesses (7) (42) (8) and fixed assets - 9 Environmental
and other (35) - (76) provisions (76) (35) Restructuring,
integration - (75) (30) and rationalization costs (163) - Fair
value gain (loss) on (7) 1 - embedded derivatives (5) 3 (152) (7)
(14) Other (88) (152) (201) (123) (128) (332) (175) (535) (2,198)
990 Total before taxation (1,056) 1,164 174 770 (331) Taxation
credit (charge)(a) 383 (365) Total after taxation for (361) (1,428)
659 period (673) 799 (a) Tax on non-operating items is calculated
using the quarter's effective tax rate on replacement cost profit.
Amounts for comparative periods have been amended to reflect a
redefinition of the effective tax rate on replacement cost profit
arising as a result of the exclusion of tax effects on inventory
holding gains and losses as described on page 2. Realizations and
marker prices Third Second Third quarter quarter quarter Nine
months 2007 2008 2008 2008 2007 Average realizations(a) Liquids
($/bbl)(b) 72.99 128.56 99.80 UK 108.21 62.88 67.47 101.88 112.03
US 100.36 59.30 73.56 111.23 114.59 Rest of World 105.62 63.88
71.12 109.95 111.47 BP Average 103.96 62.00 Natural gas ($/mcf)
4.89 8.39 8.28 UK 8.23 5.84 4.64 8.76 7.88 US 7.79 5.44 3.42 5.26
5.61 Rest of World 5.28 3.63 3.93 6.63 6.49 BP Average 6.32 4.42
Average oil marker prices ($/bbl) 74.74 121.18 115.09 Brent 111.11
67.12 75.24 123.81 118.07 West Texas Intermediate 113.49 66.15
76.31 123.61 117.16 Alaska North Slope US West Coast 112.68 66.06
69.37 116.82 112.85 Mars 107.11 61.67 71.98 117.47 113.32 Urals
(NWE - cif) 108.18 63.82 41.95 63.15 52.94 Russian domestic oil
54.31 36.33 Average natural gas marker prices Henry Hub gas price
6.16 10.94 10.25 ($/mmbtu)(c) 9.74 6.83 30.58 60.72 61.48 UK Gas -
National Balancing Point (p/therm) 58.44 24.45 (a) Based on sales
of consolidated subsidiaries only - this excludes equity-accounted
entities. (b) Crude oil and natural gas liquids. (c) Henry Hub
First of Month Index. Notes 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 the periods presented. All such
adjustments are of a normal recurring nature. The interim financial
statements and notes included in this report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2007 included in BP Annual
Report and Accounts 2007. BP prepares its consolidated financial
statements included within its Annual Report and Accounts in
accordance with 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 Companies Act 1985. IFRS as adopted by the EU
differs in certain respects from IFRS as issued by the IASB,
however, 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 the Annual
Report and Accounts 2008, which do not differ significantly from
those used in BP Annual Report and Accounts 2007. 2. Resegmentation
and other changes to comparatives (a) Resegmentation On 11 October
2007, we announced our intention to simplify the organizational
structure of BP. From 1 January 2008, there are only two business
segments - Exploration and Production and Refining and Marketing. A
separate business, Alternative Energy, handles BP's low-carbon
businesses and future growth options outside oil and gas. This
includes solar, wind, gas-fired power, hydrogen, biofuels and coal
conversion. As a result, and with effect from 1 January 2008: --
The Gas, Power and Renewables segment ceased to report separately.
-- The natural gas liquids (NGLs), liquefied natural gas and gas
and power marketing and trading businesses were transferred from
the Gas, Power and Renewables segment to the Exploration and
Production segment. -- The Alternative Energy business was
transferred from the Gas, Power and Renewables segment to Other
businesses and corporate. -- The Emerging Consumers Marketing Unit
was transferred from Refining and Marketing to Alternative Energy.
-- The Biofuels business was transferred from Refining and
Marketing to Alternative Energy. -- The Shipping business was
transferred from Refining and Marketing to Other businesses and
corporate. As a result of the transfers identified above, Other
businesses and corporate has been redefined. It now consists of the
Alternative Energy business, Shipping, the group's aluminium asset,
Treasury (which includes interest income on the group's cash and
cash equivalents) and corporate activities worldwide. Financial
information for 2003 to 2007 has been restated to reflect the
resegmentation and is available in BP Financial and Operating
Information 2003-2007 and to download from
http://www.bp.com/investors. Quarterly data is provided for
2004-2007 and annual data for 2003. Notes 2. Resegmentation and
other changes to comparatives (continued) Resegmented As reported
Nine Third Nine Third months quarter months quarter 2007 2007 2007
2007 $million Total revenues Exploration and Production 26,584
8,414 13,442 4,532 Refining and Marketing 179,251 63,516 179,653
63,640 Gas, Power and Renewables - - 13,910 4,164 Other businesses
and corporate 1,894 680 724 274 Total third party revenues 207,729
72,610 207,729 72,610 Profit before interest and tax Exploration
and Production 19,779 6,297 19,295 6,347 Refining and Marketing
6,009 931 6,046 936 Gas, Power and Renewables - - 370 (71) Other
businesses and corporate (790) (522) (739) (462) 24,998 6,706
24,972 6,750 Consolidation adjustment 47 103 73 59 Profit before
interest and tax 25,045 6,809 25,045 6,809 (b) Revised income
statement presentation We have implemented a minor change in the
presentation of the group income statement whereby the unwinding of
the discount on provisions and on other payables is now included
within finance costs. Previously, this was included within other
finance income or expense. This line item has now been renamed net
finance income or expense relating to pensions and other
post-retirement benefits. This change does not affect profit before
interest and taxation, profit before taxation or profit for the
period. The financial information for comparative periods shows the
revised presentation, as set out below. Nine Third months quarter
2007 2007 As reported ----------- $million Profit before interest
and taxation 25,045 6,809 Finance costs 777 262 Other finance
income (278) (89) Profit before taxation 24,546 6,636 As amended
---------- $million Profit before interest and taxation 25,045
6,809 Finance costs 985 337 Net finance income relating to pensions
and other post-retirement benefits (486) (164) Profit before
taxation 24,546 6,636 Notes 2. Resegmentation and other changes to
comparatives (continued) (c) Revised definition of net debt Net
debt has been redefined to include the fair value of associated
derivative financial instruments that are used to hedge foreign
exchange and interest rate risks relating to finance debt, for
which hedge accounting is claimed. The derivatives are reported on
the balance sheet within the headings 'Derivative financial
instruments'. Amounts for comparative periods are presented on a
consistent basis. Nine months and third quarter 2007 As reported
----------- $million Net debt 22,835 Equity 91,494 Ratio of net
debt to net debt plus equity 20% As amended ---------- $million Net
debt 22,195 Equity 91,494 Ratio of net debt to net debt plus equity
20% (d) Amendment to first and second quarter 2008 consolidation
adjustment The consolidation adjustment for the nine months amounts
to $167 million. The consolidation adjustments for the first and
second quarters of 2008 have been amended from the amounts
previously reported to correct for an error in the calculation for
the elimination of unrealised profit arising on transfers of
inventory between business segments. The amounts as previously
reported and as amended are set out below. The impact of these
errors was immaterial for 2007 and so comparative data for 2007 has
not been amended. First Second First quarter quarter half 2008 2008
2008 Consolidation adjustment $million As previously reported (195)
(39) (234) As amended (784) (221) (1,005) Profit for the period
attributable to BP shareholders and replacement cost profit
attributable to BP shareholders have been reduced by $357 million
and $107 million, after tax, for the first and second quarters
respectively. The error had no impact on the results of the
Exploration and Production and Refining and Marketing segments or
Other businesses and corporate, which are unchanged. Further
details of the main income statement and balance sheet items
impacted by this change are shown in the following tables. Notes
First quarter Second quarter First half 2008 2008 2008 As As As As
As As reported amended reported amended reported amended $ million
(except per share amounts) Group income statement Profit before
taxation 11,993 11,404 14,688 14,506 26,681 25,910 Taxation 4,410
4,192 5,100 5,036 9,510 9,228 Profit for the period 7,583 7,212
9,588 9,470 17,171 16,682 Profit for the period attributable to BP
shareholders 7,451 7,094 9,465 9,358 16,916 16,452 Replacement cost
profit RC profit before interest and tax 10,913 10,324 10,957
10,775 21,870 21,099 Finance costs and net finance income relating
to pensions and other post- retirement benefits (246) (246) (221)
(221) (467) (467) Taxation on a replacement cost basis (3,947)
(3,729) (3,760) (3,696) (7,707) (7,425) Minority interest (132)
(118) (123) (112) (255) (230) Replacement cost profit for the
period attributable to BP shareholders 6,588 6,231 6,853 6,746
13,441 12,977 Earnings per ordinary share - cents Profit for the
period attributable to BP shareholders 39.47 37.58 50.27 49.70
89.74 87.28 RC profit for the period attributable to BP
shareholders 34.90 33.01 36.40 35.83 71.30 68.84 Group balance
sheet Inventories 26,588 25,999 35,182 34,411 35,182 34,411
Deferred tax liabilities 20,165 19,947 20,935 20,653 20,935 20,653
Net assets 99,536 99,165 106,454 105,965 106,454 105,965 BP
shareholders' equity 98,474 98,117 105,356 104,892 105,356 104,892
Notes 3. Significant transaction in the nine months In December
2007, BP signed a memorandum of understanding with Husky Energy
Inc. to form an integrated North American oil sands business. The
transaction was completed on 31 March 2008, with BP contributing
its Toledo refinery to a US jointly controlled entity to which
Husky contributed $250 million cash and a payable of $2,590
million. In Canada, Husky contributed its Sunrise field to a second
jointly controlled entity, with BP contributing $250 million in
cash and a payable of $2,267 million. The Toledo refinery assets
and associated liabilities were classified as a disposal group held
for sale at 31 December 2007. Both jointly controlled entities are
owned 50:50 by BP and Husky and are accounted for using the equity
method. The amounts set out below reflect the initial recording of
the transaction at 31 March 2008 and subsequent closing
adjustments. $million Income statement Gains on sale of businesses
and fixed assets 806 Profit before taxation 806 Taxation 345 Profit
for the period 461 Balance sheet Non-current assets - investments
in jointly controlled entities 4,729 Current liabilities - trade
and other payables 266 Non-current liabilities Other payables 2,001
Deferred tax liabilities 653 2,654 Total liabilities 2,920 Net
assets 1,809 Cash flow statement Investment in jointly controlled
entities (250) Capital expenditure and acquisitions Exploration and
Production 2,825 Refining and Marketing 1,904 4,729 Including
acquisitions and asset exchanges: 1,904 During the nine months,
equity-accounted earnings from these jointly controlled entities
amounted to $154 million. BP purchased refined products from the
Toledo jointly controlled entity during the nine months amounting
to $2,710 million. In addition, BP purchased crude oil from third
parties which it sold to the Toledo jointly controlled entity under
an agency agreement. The fees earned by BP for this service, and
the total amounts receivable and payable at 30 September 2008 under
these arrangements, were not significant. BP will also purchase
refinery feedstocks from the Sunrise jointly controlled entity once
production commences, which is expected in 2012. Notes 4. Total
revenues Third Second Third quarter quarter quarter Nine months
2007 2008 2008 2008 2007 $million $million By business 14,769
26,294 24,694 Exploration and Production 75,053 48,118 63,743
98,206 92,458 Refining and Marketing 267,527 180,867 1,002 1,255
1,494 Other businesses and corporate 3,941 2,870 79,514 125,755
118,646 346,521 231,855 Less: sales between businesses 6,355 13,485
13,043 Exploration and Production 38,747 21,534 227 960 403
Refining and Marketing 1,632 1,616 322 407 564 Other businesses and
corporate 1,380 976 6,904 14,852 14,010 41,759 24,126 Third party
revenues 8,414 12,809 11,651 Exploration and Production 36,306
26,584 63,516 97,246 92,055 Refining and Marketing 265,895 179,251
680 848 930 Other businesses and corporate 2,561 1,894 72,610
110,903 104,636 Total third party revenues 304,762 207,729 By
geographical area 25,218 48,202 40,830 UK 125,929 76,948 19,686
27,806 27,230 Rest of Europe 78,693 55,561 26,533 39,157 37,714 US
108,602 76,606 19,456 33,263 31,889 Rest of World 92,009 56,114
90,893 148,428 137,663 405,233 265,229 18,283 37,525 33,027 Less:
sales between areas 100,471 57,500 72,610 110,903 104,636 304,762
207,729 5. Production and similar taxes Third Second Third quarter
quarter quarter Nine months 2007 2008 2008 2008 2007 $million
$million (34) 68 57 UK 282 33 955 2,231 1,829 Overseas 5,512 2,462
921 2,299 1,886 5,794 2,495 6. Finance costs Third Second Third
quarter quarter quarter Nine months 2007 2008 2008 2008 2007
$million $million 348 316 314 Interest payable 1,012 1,040 (86)
(44) (31) Capitalized (120) (263) 75 74 75 Unwinding of discount on
provisions 218 208 Unwinding of discount on - 35 33 other payables
68 - 337 381 391 1,178 985 Notes 7. Net finance income relating to
pensions and other post-retirement benefits Third Second Third
quarter quarter quarter Nine months 2007 2008 2008 2008 2007
$million $million Interest on pension and other post-retirement 555
612 594 benefit plan liabilities 1,818 1,639 Expected return on
pension and other post-retirement (719) (772) (747) benefit plan
assets (2,291) (2,125) (164) (160) (153) (473) (486) 8. Analysis of
changes in net debt Third Second Third quarter quarter quarter Nine
months 2007 2008 2008 2008 2007 $million $million Opening balance
23,754 29,871 30,189 Finance debt 31,045 24,010 Less: Cash and cash
2,643 4,820 3,593 equivalents 3,562 2,590 Less: FV asset
(liability) of hedges related to 379 1,234 900 finance debt 666 298
20,732 23,817 25,696 Opening net debt 26,817 21,122 Closing balance
25,245 30,189 28,300 Finance debt 28,300 25,245 Less: Cash and cash
2,410 3,593 6,142 equivalents 6,142 2,410 Less: FV asset
(liability) of hedges related to 640 900 149 finance debt 149 640
22,195 25,696 22,009 Closing net debt 22,009 22,195 Decrease
(increase) in net (1,463) (1,879) 3,687 debt 4,808 (1,073) Movement
in cash and cash equivalents excluding (277) (1,225) 2,627
(exchange adjustments) 2,626 (261) Net cash outflow (inflow) from
financing (excluding (1,164) (517) 1,048 share capital) 2,315 (751)
(21) (114) (8) Other movements (129) (45) Movement in net debt
before (1,462) (1,856) 3,667 exchange effects 4,812 (1,057) (1)
(23) 20 Exchange adjustments (4) (16) Decrease (increase) in net
(1,463) (1,879) 3,687 debt 4,808 (1,073) Net debt has been
redefined, for further information see Note 2. Amounts for
comparative periods are presented on a consistent basis. Notes 9.
TNK-BP operational and financial information Third Second Third
quarter quarter quarter Nine months 2007 2008 2008 2008 2007
Production (Net of royalties) (BP share) 830 825 833 Crude oil
(mb/d) 825 833 364 546 579 Natural gas (mmcf/d) 546 456 892 919 932
Total hydrocarbons (mboe/d)(a) 919 912 $million $million Income
statement (BP share) Profit before interest and 1,094 2,026 1,345
tax 4,580 2,466 (67) (56) (71) Finance costs (203) (193) (289)
(524) (369) Taxation (1,224) (580) (66) (95) (56) Minority interest
(209) (173) 672 1,351 849 Net income 2,944 1,520 Cash flow 800 -
300 Dividends received 1,500 1,300 Balance Sheet 30 September 31
December 2008 2007 Investments in jointly controlled entities 9,621
8,817 Trade and other receivables - Dividends receivable 640 - (a)
Natural gas is converted to oil equivalent at 5.8 billion cubic
feet = 1 million barrels. As previously announced on 4 September
2008, BP and Alfa Access-Renova signed a Memorandum of
Understanding. The Memorandum of Understanding sets out the
parties' agreement in principle, subject to execution of definitive
agreements, to new commercial principles relating to the governance
of TNK-BP, to the potential future sale, at an appropriate time and
subject to certain conditions, of up to 20% of a subsidiary of
TNK-BP through an initial public offering, and to address the
claims between them. Negotiations continue between the parties to
reach agreement on definitive documentation. 10. Inventory
valuation Due to falling oil prices, an expense of $1,217 million
has been recognized in the third quarter 2008 and $1,127 million in
the nine months ended 30 September 2008 representing the write-down
of inventories to their net realisable value. This affects profit
for the period only; replacement cost profit is unaffected. 11.
Fourth quarter results BP's fourth quarter results will be
announced on 3 February 2009. 12. Statutory accounts The financial
information shown in this publication, which was approved by the
Board of Directors on 27 October 2008, is unaudited and does not
constitute statutory financial statements. BP Annual Report and
Accounts 2007 has been filed with the Registrar of Companies; the
report of the auditors on those accounts was unqualified and did
not contain a statement under section 237(2) or section 237(3) of
the Companies Act 1985. http://www.bp.com/investors
http://www.newscom.com/cgi-bin/prnh/20000724/NYM120LOGO
http://photoarchive.ap.org/ DATASOURCE: BP p.l.c. CONTACT: Press
Office, London: Roddy Kennedy, +44(0)20-7496-4624, or United
States: Ronnie Chappell, +1-281-366-5174, or Investor Relations:
London: Fergus MacLeod, +44(0)20-7496-4717, or United States:
Rachael MacLean, +1-281-366-6766, all of BP Web Site:
http://www.bp.com/FVAE http://www.bp.com/investors
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