Document
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 31 March 2018
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:
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| Form 20-F x Form 40-F ¨ | |
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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)(1): ¨ |
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.
BP p.l.c. and subsidiaries
Form 6-K for the period ended 31 March 2018(a)
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1. | | | 3-13, 26-31, 32-34 |
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2. | | | 14-25 |
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3. | | | 32 |
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4. | | | 35 |
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5. | | | 36 |
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6. | | | 37 |
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7. | | | 38 |
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(a) | In this Form 6-K, references to the first quarter 2018 and first quarter 2017 refer to three-month periods ended 31 March 2018 and 31 March 2017 respectively. |
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(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 2017. |
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Group results first quarter 2018 |
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Highlights | Momentum continues into 2018 as BP delivers strong 1Q profit |
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• | Profit for the first quarter was $2,469 million, compared with $1,449 million for the same period in 2017, a rise of 70%. Underlying replacement cost profit* for the first quarter was $2,586 million, compared with $1,510 million for the same period in 2017, a rise of 71%. |
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• | Operating cash flow* in the quarter was $3,646 million including the impact of post-tax Gulf of Mexico oil spill payments of $1,714 million(a). Operating cash flow was also negatively impacted by a $1,810 million increase in working capital driven by higher oil prices and seasonal inventory builds. |
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• | Upstream reported the strongest quarter since third quarter 2014 on both a replacement cost and underlying basis. |
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• | Reported oil and gas production was 3.7 million barrels of oil equivalent a day in the quarter, 6% higher than the first quarter of 2017. Upstream production, excluding Rosneft, was 9% higher, supported by continued ramp up of major projects*. Upstream plant reliability* was 96% for the quarter. |
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• | First Upstream major project of 2018, Atoll in Egypt, started production; to date in 2018, final investment decisions have been taken on four new projects – in Oman, India and two in the UK North Sea. |
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• | Continued Downstream earnings growth with strong refining availability in the US. |
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• | Gulf of Mexico oil spill payments in the quarter were $1.6 billion on a pre-tax basis, including $1.2 billion for the final payment relating to the 2012 Department of Justice settlement. |
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• | BP continued its share buyback programme in the quarter, buying 18 million shares for a cost of $120 million. |
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• | Dividend unchanged at 10 cents per share. |
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(a) | Operating cash flow excluding Gulf of Mexico oil spill payments is a measure used by management and BP believes it is useful as it allows for meaningful comparisons between reporting periods. It is not however disclosed in this SEC filing because SEC regulations do not permit the inclusion of this non-GAAP metric. |
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Financial summary | | First |
| First |
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| quarter |
| quarter |
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$ million | | 2018 |
| 2017 |
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Profit for the period(a) | | 2,469 |
| 1,449 |
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Inventory holding (gains) losses*, before tax | | (92 | ) | (66 | ) |
Taxation charge (credit) on inventory holding gains and losses | | 12 |
| 29 |
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RC profit (loss)* | | 2,389 |
| 1,412 |
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Net (favourable) adverse impact of non-operating items* and fair value | | | |
accounting effects*, before tax | | 395 |
| 267 |
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Taxation charge (credit) on non-operating items and fair value accounting effects | | (198 | ) | (169 | ) |
Underlying RC profit | | 2,586 |
| 1,510 |
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Profit per ordinary share (cents) | | 12.40 |
| 7.42 |
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Profit per ADS (dollars) | | 0.74 |
| 0.45 |
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RC profit (loss) per ordinary share (cents)* | | 11.99 |
| 7.23 |
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RC profit (loss) per ADS (dollars) | | 0.72 |
| 0.43 |
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Underlying RC profit per ordinary share (cents)* | | 12.98 |
| 7.74 |
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Underlying RC profit per ADS (dollars) | | 0.78 |
| 0.46 |
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(a) | Profit attributable to BP shareholders. |
* See definitions in the Glossary on page 32. RC profit (loss), underlying RC profit and organic capital expenditure are non-GAAP measures.
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The commentary above and following should be read in conjunction with the cautionary statement on page 35. |
Group headlines
Results
For the first quarter, BP’s profit was $2,469 million, compared with $1,449 million for the same period in 2017.
RC profit was $2,389 million for the first quarter, compared with $1,412 million a year ago.
Underlying replacement cost (RC) profit was $2,586 million for the first quarter, compared with $1,510 million in 2017, mainly due to higher profits in Upstream, partially offset by a higher tax charge. Underlying RC profit is after adjusting RC profit for a net charge for non-operating items of $247 million and net favourable fair value accounting effects of $50 million (both on a post-tax basis).
See further information on pages 5, 27 and 28.
Non-operating items
Non-operating items amounted to a charge of $456 million pre-tax and $247 million post-tax for the quarter. See further information on page 27.
Effective tax rate
The effective tax rate (ETR) on the profit for the first quarter was 35%, compared with 29% for the same period in 2017. The ETR on RC profit or loss* for the first quarter was 36%, compared with 29% for the same period in 2017. Adjusting for non-operating items and fair value accounting effects, the underlying ETR* for the first quarter was 37%, compared with 33% for the same period a year ago. The underlying ETR for the first quarter was higher than a year ago mainly due to the absence of favourable foreign exchange impacts. In the current environment the underlying ETR in 2018 is expected to be above 40%. ETR on RC profit or loss and underlying ETR are non-GAAP measures.
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 June 2018. The corresponding amount in sterling will be announced on 11 June 2018. See page 24 for further information.
Share buybacks
BP repurchased 18 million ordinary shares at a cost of $120 million, including fees and stamp duty, during the first quarter of 2018.
Operating cash flow*
Operating cash flow in the quarter was $3,646 million including the impact of post-tax Gulf of Mexico oil spill payments of $1,714 million. Operating cash flow was also negatively impacted by a $1,810 million increase in working capital driven by higher oil prices and seasonal inventory builds. For the same period in 2017 operating cash flow was $2,114 million including the impact of post-tax Gulf of Mexico oil spill payments of $2,294 million.
Capital expenditure*
Total capital expenditure for the first quarter was $4.0 billion , compared with $4.1 billion for the same period in 2017.
Organic capital expenditure* for the first quarter was $3.5 billion, compared with $3.5 billion for the same period in 2017. We expect organic capital expenditure to be in the range of $15-16 billion for 2018.
Inorganic capital expenditure* for the first quarter was $0.4 billion, compared with $0.5 billion for the same period in 2017.
See page 26 for further information.
Divestment and other proceeds
Divestment proceeds* were $0.2 billion for the first quarter, compared with $0.3 billion for the same period in 2017.
Debt
Gross debt at 31 March 2018 was $62.2 billion compared with $61.8 billion a year ago. Gross debt ratio* at 31 March 2018 was 37.8%, compared with 38.4% a year ago.
Net debt* at 31 March 2018 was $40.0 billion, compared with $38.6 billion a year ago. Gearing* or net debt ratio* at 31 March 2018 was 28.1%, compared with 27.4% at the end of 2017 and 28.0% a year ago. Gearing was higher, following increases in working capital and higher Gulf of Mexico oil spill payments in the quarter. We continue to target gearing in the range of 20-30%. Net debt, net debt ratio and gearing are non-GAAP measures. See page 25 for more information.
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The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35. |
Analysis of underlying RC profit before interest and tax
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| | First |
| First |
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| | quarter |
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$ million | | 2018 |
| 2017 |
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Underlying RC profit before interest and tax* | | | |
Upstream | | 3,157 |
| 1,370 |
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Downstream | | 1,826 |
| 1,742 |
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Rosneft | | 247 |
| 99 |
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Other businesses and corporate | | (392 | ) | (440 | ) |
Consolidation adjustment – UPII* | | (160 | ) | (68 | ) |
Underlying RC profit before interest and tax | | 4,678 |
| 2,703 |
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Finance costs and net finance expense relating to pensions and other | | | |
post-retirement benefits | | (464 | ) | (387 | ) |
Taxation on an underlying RC basis | | (1,566 | ) | (763 | ) |
Non-controlling interests | | (62 | ) | (43 | ) |
Underlying RC profit attributable to BP shareholders | | 2,586 |
| 1,510 |
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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
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| | First |
| First |
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| | quarter |
| quarter |
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$ million | | 2018 |
| 2017 |
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RC profit (loss) before interest and tax* | | | |
Upstream | | 3,174 |
| 1,256 |
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Downstream | | 1,713 |
| 1,706 |
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Rosneft | | 247 |
| 99 |
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Other businesses and corporate(a) | | (571 | ) | (431 | ) |
Consolidation adjustment – UPII | | (160 | ) | (68 | ) |
RC profit (loss) before interest and tax | | 4,403 |
| 2,562 |
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Finance costs and net finance expense relating to pensions and other | | | |
post-retirement benefits | | (584 | ) | (513 | ) |
Taxation on a RC basis | | (1,368 | ) | (594 | ) |
Non-controlling interests | | (62 | ) | (43 | ) |
RC profit (loss) attributable to BP shareholders | | 2,389 |
| 1,412 |
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Inventory holding gains (losses) | | 92 |
| 66 |
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Taxation (charge) credit on inventory holding gains and losses | | (12 | ) | (29 | ) |
Profit for the period attributable to BP shareholders | | 2,469 |
| 1,449 |
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(a) | Includes costs related to the Gulf of Mexico oil spill. See page 13 and also Note 2 from page 20 for further information on the accounting for the Gulf of Mexico oil spill. |
Strategic progress
Upstream
Upstream production, excluding Rosneft, for the quarter was 2,605mboe/d, a rise of 9.1% on a year earlier, driven by the continued ramp up of production from major projects*. Upstream plant reliability* was 96%, the best quarterly performance on record. Upstream unit production costs* were higher due to increased wellwork* activity in the quarter, but are expected to show continued year-on-year improvement driven by strong operational performance.
The Atoll Phase One project, offshore Egypt, began gas production in the quarter, ahead of schedule and under budget. The project is the first of six Upstream major projects* expected to begin production during 2018.
Since the start of the year, BP has taken final investment decisions on four new projects: Ghazeer, the second phase of the Khazzan development in Oman; KG D6 Satellites, the second project in the integrated KG D6 development offshore India; and the Alligin and Vorlich fields in the UK North Sea.
BP has accessed new acreage in both the US and Mexican regions of the Gulf of Mexico, in the Campos basin offshore Brazil, in Sao Tome & Principe, in Newfoundland, Canada, in Madagascar and in Azerbaijan.
Downstream
Strong performance in fuels marketing; premium fuels volumes were 5% higher than last year and we continued the rollout of BP’s convenience partnership model across our network. The rapid development of BP’s retail presence in Mexico continued with the 200th retail site now open following market entry a year ago.
In manufacturing, BP’s US refineries processed higher levels of advantaged crude than a year ago and BP’s PTA plant in Zhuhai, China set a new production record.
Advancing the energy transition
BP published a new report detailing BP’s lower carbon activities and commitments and setting out targets including maintaining BP’s net operational greenhouse gas emissions at or below 2015 levels out to 2025.
Financial framework
Operating cash flow* in the quarter was $3,646 million including the impact of post-tax Gulf of Mexico oil spill payments of $1,714 million. Operating cash flow was also negatively impacted by a $1,810 million increase in working capital driven by higher oil prices and seasonal inventory builds.
Organic capital expenditure* was $3.5 billion in the first quarter and is expected to total $15-16 billion in 2018.
Divestments and other proceeds totalled $0.2 billion in the quarter. Total proceeds of $2-3 billion are expected in 2018.
Gulf of Mexico oil spill payments of $1.6 billion were made in the quarter, including the final charge under the 2012 Department of Justice criminal settlement. Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year.
Gearing* at the end of the quarter was 28.1%, within BP’s target band of 20-30%. With anticipated weighting of both Gulf of Mexico oil spill payments and divestment proceeds through the year, gearing is expected to trend down through the rest of the year.
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Operating metrics | | 1Q 2018 | | Financial metrics | | 1Q 2018 |
| (vs. 1Q 2017) | | | (vs. 1Q 2017) |
Tier 1 process safety events* | | 5 | | Underlying RC profiti | | $2.6bn |
| (-1) | | | (+$1.1bn) |
Reported recordable injury frequency* | | 0.21 | | Operating cash flow excluding Gulf of Mexico oil spill payments (post-tax) | | (b) |
| (-8%) | | | |
Group production | | 3,732mboe/d | | Organic capital expenditureii | | $3.5bn |
| (+5.7%) | | | — |
Upstream production (excludes Rosneft segment) | | 2,605mboe/d | | Gulf of Mexico oil spill payments (pre-tax)(c) | | $1.6bn |
| (+9.1%) | | | (-$0.7bn) |
Upstream unit production costs | | $7.69/boe | | Divestment proceeds | | $0.2bn |
| (+6.5%) | | | (-$0.1bn) |
BP-operated Upstream plant reliability(a) | | 95.9% | | Net debt ratio* (gearing)iii | | 28.1% |
| (+1.0) | | | (+0.1) |
Refining availability* | | 94.8% | | Dividend per ordinary share(d) | | 10.00 cents |
| (-0.4) | | | — |
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(a) | BP-operated Upstream operating efficiency* has been replaced with Upstream plant reliability as a group operating metric. It is more comparable with the equivalent metric disclosed for the Downstream, which is ‘Refining availability’. |
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(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 payments 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 quarter net cash provided by operating activities was $3.6 billion and post-tax Gulf of Mexico oil spill payments were $1.7 billion. |
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(c) | Amounts shown are pre-tax, 2017 amounts disclosed were post-tax. Pre-tax amounts give a better indication of the cash outflows arising in the period to settle outstanding liabilities. The equivalent amount on a post-tax basis was $1.7 billion, a reduction of $0.6 billion on the prior year. |
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(d) | Represents dividend announced in the quarter (vs. prior year quarter). |
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Nearest GAAP equivalent measures |
i | Profit for the period: | $2.5bn |
ii | Capital expenditure*: | $4.0bn |
iii | Gross debt ratio*: | 37.8% |
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The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35. |
Upstream
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| | First |
| First |
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| | quarter |
| quarter |
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$ million | | 2018 |
| 2017 |
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Profit before interest and tax | | 3,175 |
| 1,250 |
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Inventory holding (gains) losses* | | (1 | ) | 6 |
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RC profit before interest and tax | | 3,174 |
| 1,256 |
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Net (favourable) adverse impact of non-operating items* and fair value accounting effects* | | (17 | ) | 114 |
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Underlying RC profit (loss) before interest and tax*(a) | | 3,157 |
| 1,370 |
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(a) | See page 9 for a reconciliation to segment RC profit before interest and tax by region. |
Financial results
The replacement cost profit before interest and tax for the first quarter was $3,174 million, compared with $1,256 million for the same period in 2017. The first quarter included a net non-operating charge of $104 million, compared with a net charge of $360 million for the same period in 2017. Fair value accounting effects in the first quarter had a favourable impact of $121 million, compared with a favourable impact of $246 million in the same period of 2017.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the first quarter was $3,157 million, compared with $1,370 million for the same period in 2017. The result for the first quarter mainly reflected higher liquids and gas realizations, higher production due to the ramp-up of major projects* and higher gas marketing and trading results.
Production
Production for the quarter was 2,605mboe/d, 9.1% higher than the first quarter of 2017. Underlying production* for the quarter increased by 13.8%, due to the ramp-up of major projects. The first-quarter reported production reflects the sixth consecutive quarter of growth as well as the highest production since the fourth quarter of 2010.
Key events
On 12 February, BP announced the start of gas production from the Atoll Phase One project (BP 100%), offshore Egypt. Atoll is BP’s first major project to start in 2018.
Also on 12 February, BP confirmed that the governments of Mauritania and Senegal signed an Inter-Government Cooperation Agreement which will enable the development of the BP-operated Tortue/Ahmeyim gas project to continue to move towards a final investment decision.
In February, BP took final investment decisions on the two new North Sea developments, Alligin (BP operator 50%, Shell 50%) and Vorlich satellite fields (BP operator 66%, Ithaca Energy 34%).
In March, BP’s equity interest (14.67%) in the ADNOC Offshore concession in Abu Dhabi expired.
On 9 April, BP announced that, together with its partner the Oman Oil Company Exploration & Production, it has approved the development of Ghazeer (BP operator 60%, Oman Oil Company Exploration & Production 40%), the second phase of the Khazzan gas field in Oman.
On 12 April, BP and state-owned Brazilian oil company Petrobras announced the signing of a memorandum of understanding to form a strategic alliance to jointly explore potential business opportunities both in Brazil and beyond.
On 19 April, BP together with its partner Reliance Industries Limited, announced the sanction of the Satellite Cluster project, the second phase in the development of new deepwater gas fields in Block KG D6 (Reliance Industries Limited operator 60%, BP 30%, and NIKO 10%) off the east coast of India.
On 26 April, BP and the State Oil Company of the Azerbaijan Republic (SOCAR) signed a new production-sharing agreement* for the joint exploration and development of Block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea. The agreement is expected to be ratified by the Azerbaijani parliament before the summer recess.
Outlook
Looking ahead, we expect second-quarter reported production to be lower than the first quarter reflecting the expiration of the Abu Dhabi offshore concession and seasonal turnaround and maintenance activities.
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The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35. |
Upstream (continued)
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| | First |
| First |
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| | quarter |
| quarter |
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$ million | | 2018 |
| 2017 |
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Underlying RC profit before interest and tax | | | |
US | | 526 |
| 166 |
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Non-US | | 2,631 |
| 1,204 |
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| | 3,157 |
| 1,370 |
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Non-operating items | | | |
US | | (145 | ) | (12 | ) |
Non-US(a) | | 41 |
| (348 | ) |
| | (104 | ) | (360 | ) |
Fair value accounting effects | | | |
US | | (9 | ) | 192 |
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Non-US | | 130 |
| 54 |
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| | 121 |
| 246 |
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RC profit before interest and tax | | | |
US | | 372 |
| 346 |
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Non-US | | 2,802 |
| 910 |
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| | 3,174 |
| 1,256 |
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Exploration expense | | | |
US | | 309 |
| 40 |
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Non-US | | 205 |
| 372 |
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| | 514 |
| 412 |
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Of which: Exploration expenditure written off | | 426 |
| 261 |
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Production (net of royalties)(b) | | | |
Liquids* (mb/d) | | | |
US | | 448 |
| 448 |
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Europe | | 139 |
| 115 |
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Rest of World | | 731 |
| 827 |
|
| | 1,319 |
| 1,389 |
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Of which equity-accounted entities | | 175 |
| 213 |
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Natural gas (mmcf/d) | | | |
US | | 1,790 |
| 1,594 |
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Europe | | 217 |
| 263 |
|
Rest of World | | 5,456 |
| 3,934 |
|
| | 7,463 |
| 5,791 |
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Of which equity-accounted entities | | 478 |
| 530 |
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Total hydrocarbons* (mboe/d) | | | |
US | | 757 |
| 723 |
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Europe | | 177 |
| 160 |
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Rest of World | | 1,672 |
| 1,505 |
|
| | 2,605 |
| 2,388 |
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Of which equity-accounted entities | | 258 |
| 305 |
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Average realizations*(c) | | | |
Total liquids(d) ($/bbl) | | 61.40 |
| 49.87 |
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Natural gas ($/mcf) | | 3.78 |
| 3.50 |
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Total hydrocarbons ($/boe) | | 41.39 |
| 37.19 |
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(a) | First quarter 2017 includes an impairment charge arising following the announcement of the agreement to sell the Forties Pipeline System business to INEOS. |
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(b) | Includes BP’s share of production of equity-accounted entities in the Upstream segment. |
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(c) | Realizations are based on sales by consolidated subsidiaries only - this excludes equity-accounted entities. |
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(d) | Includes condensate, natural gas liquids and bitumen. |
Because of rounding, some totals may not agree exactly with the sum of their component parts.
Downstream
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| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Profit before interest and tax | | 1,782 |
| 1,804 |
|
Inventory holding (gains) losses* | | (69 | ) | (98 | ) |
RC profit before interest and tax | | 1,713 |
| 1,706 |
|
Net (favourable) adverse impact of non-operating items* | | | |
and fair value accounting effects* | | 113 |
| 36 |
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Underlying RC profit before interest and tax*(a) | | 1,826 |
| 1,742 |
|
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(a) | See page 11 for a reconciliation to segment RC profit before interest and tax by region and by business. |
Financial results
The replacement cost profit before interest and tax for the first quarter was $1,713 million, compared with $1,706 million for the same period in 2017.
The first quarter includes a net non-operating charge of $53 million, compared with a charge of $76 million for the same period in 2017. Fair value accounting effects had an adverse impact of $60 million in the first quarter, compared with a favourable impact of $40 million for the same period in 2017.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the first quarter was $1,826 million, compared with $1,742 million for the same period in 2017.
Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 11.
Fuels
The fuels business reported an underlying replacement cost profit before interest and tax of $1,398 million for the first quarter, compared with $1,200 million for the same period in 2017 driven by a higher refining result, partly offset by a lower supply and trading contribution compared with the strong delivery last year. The supply and trading contribution was, however, higher than the fourth quarter.
The refining result for the quarter reflects the benefit from higher North American heavy crude oil discounts, partially offset by pipeline capacity apportionment impacts. The result also benefited from increased commercial optimization, a higher level of advantaged feedstock processed in the US and a lower level of turnaround activity.
The fuels marketing result for the quarter reflects continued strong performance supported by premium fuel volume growth and the continued rollout of our convenience partnership model across our network.
In April, we signed a memorandum of understanding with state-owned Brazilian oil company Petrobras to explore potential joint commercial agreements in Brazil.
Lubricants
The lubricants business reported an underlying replacement cost profit before interest and tax of $331 million for the first quarter, compared with $393 million for the same period in 2017. The result for the quarter reflects continued premium brand growth, more than offset by the adverse lag impact of increasing base oil prices.
During the quarter we significantly strengthened our relationship with Renault through the continuation of our Renault Formula 1 sponsorship with Renault Sport Racing, and we are exploring new opportunities to work globally with the Renault-Nissan-Mitsubishi Alliance. This includes collaborating in a number of areas including fuel and lubricants supply and the joint development of advanced mobility solutions and new technologies.
Petrochemicals
The petrochemicals business reported an underlying replacement cost profit before interest and tax of $97 million for the first quarter, compared with $149 million for the same period in 2017. The result for the quarter reflects an improved margin environment and stronger margin optimization offset by a higher level of turnaround activity. The result was also impacted by the divestment of our interest in the SECCO joint venture, which completed in the fourth quarter of last year.
Outlook
Looking to the second quarter, we expect seasonally higher industry refining margins but lower discounts for North American heavy crude oil. We also expect a significantly higher level of turnaround activity.
|
|
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35. |
Downstream (continued)
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Underlying RC profit before interest and tax - by region | | | |
US | | 589 |
| 554 |
|
Non-US | | 1,237 |
| 1,188 |
|
| | 1,826 |
| 1,742 |
|
Non-operating items | | | |
US | | (17 | ) | (12 | ) |
Non-US | | (36 | ) | (64 | ) |
| | (53 | ) | (76 | ) |
Fair value accounting effects | | | |
US | | (121 | ) | (62 | ) |
Non-US | | 61 |
| 102 |
|
| | (60 | ) | 40 |
|
RC profit before interest and tax | | | |
US | | 451 |
| 480 |
|
Non-US | | 1,262 |
| 1,226 |
|
| | 1,713 |
| 1,706 |
|
| | | |
Underlying RC profit before interest and tax - by business(a)(b) | | | |
Fuels | | 1,398 |
| 1,200 |
|
Lubricants | | 331 |
| 393 |
|
Petrochemicals | | 97 |
| 149 |
|
| | 1,826 |
| 1,742 |
|
Non-operating items and fair value accounting effects(c) | | | |
Fuels | | (110 | ) | 4 |
|
Lubricants | | (3 | ) | (3 | ) |
Petrochemicals | | — |
| (37 | ) |
| | (113 | ) | (36 | ) |
RC profit before interest and tax(a)(b) | | | |
Fuels | | 1,288 |
| 1,204 |
|
Lubricants | | 328 |
| 390 |
|
Petrochemicals | | 97 |
| 112 |
|
| | 1,713 |
| 1,706 |
|
| | | |
BP average refining marker margin (RMM)* ($/bbl) | | 11.7 |
| 11.7 |
|
Refinery throughputs (mb/d) | | | |
US | | 715 |
| 694 |
|
Europe | | 797 |
| 801 |
|
Rest of World | | 249 |
| 181 |
|
| | 1,761 |
| 1,676 |
|
Refining availability* (%) | | 94.8 |
| 95.2 |
|
| | | |
Marketing sales of refined products (mb/d) | | | |
US | | 1,096 |
| 1,116 |
|
Europe | | 1,045 |
| 1,069 |
|
Rest of World | | 481 |
| 512 |
|
| | 2,622 |
| 2,697 |
|
Trading/supply sales of refined products | | 3,181 |
| 2,959 |
|
Total sales volumes of refined products | | 5,803 |
| 5,656 |
|
| | | |
Petrochemicals production (kte) | | | |
US | | 499 |
| 498 |
|
Europe | | 1,128 |
| 1,253 |
|
Rest of World | | 1,391 |
| 2,073 |
|
| | 3,018 |
| 3,824 |
|
| |
(a) | Segment-level overhead expenses are included in the fuels business result. |
| |
(b) | Results 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. |
Rosneft
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018(a) |
| 2017 |
|
Profit before interest and tax(b) | | 269 |
| 73 |
|
Inventory holding (gains) losses* | | (22 | ) | 26 |
|
RC profit before interest and tax | | 247 |
| 99 |
|
Net charge (credit) for non-operating items* | | — |
| — |
|
Underlying RC profit before interest and tax* | | 247 |
| 99 |
|
Financial results
Replacement cost (RC) profit before interest and tax and underlying RC profit before interest and tax for the first quarter was $247 million, compared with $99 million for the same period in 2017. There were no non-operating items in the first quarter of either year.
Compared with the same period in 2017, the result primarily reflects higher oil prices and a favourable foreign exchange impact.
On 25 April 2018, Rosneft announced that the board of directors had recommended that the annual general meeting (AGM) adopts a resolution to pay dividends of 6.65 roubles per ordinary share, which would bring the total dividend for 2017 to 10.48 roubles per ordinary share, which constitutes 50% of the company’s IFRS net profit. In addition to the dividend received in October 2017 in relation to the results for the first half of 2017, BP expects to receive later this year a dividend of 12.5 billion roubles, after the deduction of withholding tax subject to approval at the AGM.
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
| | 2018(a) |
| 2017 |
|
Production (net of royalties) (BP share) | | | |
Liquids* (mb/d) | | 902 |
| 912 |
|
Natural gas (mmcf/d) | | 1,307 |
| 1,334 |
|
Total hydrocarbons* (mboe/d) | | 1,127 |
| 1,142 |
|
| |
(a) | The operational and financial information of the Rosneft segment for the first quarter is based on preliminary operational and financial results of Rosneft for the three months ended 31 March 2018. 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 increase the reported profit before interest and tax, as shown in the table above, compared with the equivalent amount in Russian roubles in Rosneft's IFRS financial statements. 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. |
Other businesses and corporate
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Profit (loss) before interest and tax | | | |
Gulf of Mexico oil spill | | (86 | ) | (35 | ) |
Other | | (485 | ) | (396 | ) |
Profit (loss) before interest and tax | | (571 | ) | (431 | ) |
Inventory holding (gains) losses* | | — |
| — |
|
RC profit (loss) before interest and tax | | (571 | ) | (431 | ) |
Net charge (credit) for non-operating items* | | | |
Gulf of Mexico oil spill | | 86 |
| 35 |
|
Other | | 93 |
| (44 | ) |
Net charge (credit) for non-operating items | | 179 |
| (9 | ) |
Underlying RC profit (loss) before interest and tax* | | (392 | ) | (440 | ) |
Underlying RC profit (loss) before interest and tax | | | |
US | | (147 | ) | (197 | ) |
Non-US | | (245 | ) | (243 | ) |
| | (392 | ) | (440 | ) |
Non-operating items | | | |
US | | (148 | ) | (38 | ) |
Non-US | | (31 | ) | 47 |
|
| | (179 | ) | 9 |
|
RC profit (loss) before interest and tax | | | |
US | | (295 | ) | (235 | ) |
Non-US | | (276 | ) | (196 | ) |
| | (571 | ) | (431 | ) |
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 first quarter was $571 million, compared with $431 million for the same period in 2017.
The result included a net non-operating charge of $179 million, compared with a net non-operating gain of $9 million for the same period in 2017. See Note 2 on page 20 for more information on the Gulf of Mexico oil spill.
After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the first quarter was $392 million, compared with $440 million for the same period in 2017.
Alternative Energy
The net ethanol-equivalent production (which includes ethanol and sugar) for the first quarter was 7.6 million litres, as the harvest period started earlier in 2018. There was no production for the first quarter in 2017 due to the inter-harvest period.
Net wind generation capacity*(a) was 1,432MW at 31 March 2018 compared with 1,454MW at 31 March 2017. BP’s net share of wind generation for the first quarter was 1,217GWh, compared with 1,159GWh for the same period in 2017.
BP has re-entered solar with a new partnership with Lightsource to combine our scale, relationships and expertise in major projects with Lightsource’s expertise in developing solar projects. BP acquired a 43% equity share in Lightsource for a total consideration of $200 million, payable over three years on 31 January 2018 and has two seats on the board. Lightsource has rebranded as Lightsource BP.
| |
(a) | Capacity figures for 2017 include 23MW in the Netherlands managed by our Downstream segment. |
Financial statements
Group income statement
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
| | | |
Sales and other operating revenues (Note 4) | | 68,172 |
| 55,863 |
|
Earnings from joint ventures - after interest and tax | | 293 |
| 205 |
|
Earnings from associates - after interest and tax | | 414 |
| 151 |
|
Interest and other income | | 159 |
| 122 |
|
Gains on sale of businesses and fixed assets | | 105 |
| 45 |
|
Total revenues and other income | | 69,143 |
| 56,386 |
|
Purchases | | 51,512 |
| 40,975 |
|
Production and manufacturing expenses(a) | | 5,438 |
| 5,255 |
|
Production and similar taxes (Note 6) | | 368 |
| 468 |
|
Depreciation, depletion and amortization (Note 5) | | 3,931 |
| 3,842 |
|
Impairment and losses on sale of businesses and fixed assets | | 91 |
| 453 |
|
Exploration expense | | 514 |
| 412 |
|
Distribution and administration expenses | | 2,794 |
| 2,353 |
|
Profit (loss) before interest and taxation | | 4,495 |
| 2,628 |
|
Finance costs(a) | | 553 |
| 460 |
|
Net finance expense relating to pensions and other post retirement benefits | | 31 |
| 53 |
|
Profit (loss) before taxation | | 3,911 |
| 2,115 |
|
Taxation(a) | | 1,380 |
| 623 |
|
Profit (loss) for the period | | 2,531 |
| 1,492 |
|
Attributable to | | | |
BP shareholders | | 2,469 |
| 1,449 |
|
Non-controlling interests | | 62 |
| 43 |
|
| | 2,531 |
| 1,492 |
|
| | | |
Earnings per share (Note 7) | | | |
Profit (loss) for the period attributable to BP shareholders | | | |
Per ordinary share (cents) | | | |
Basic | | 12.40 |
| 7.42 |
|
Diluted | | 12.33 |
| 7.38 |
|
Per ADS (dollars) | | | |
Basic | | 0.74 |
| 0.45 |
|
Diluted | | 0.74 |
| 0.44 |
|
| |
(a) | See Note 2 for information on the impact of the Gulf of Mexico oil spill on these income statement line items. |
Condensed group statement of comprehensive income
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
| | | |
Profit (loss) for the period | | 2,531 |
| 1,492 |
|
Other comprehensive income | | | |
Items that may be reclassified subsequently to profit or loss | | | |
Currency translation differences | | 531 |
| 1,214 |
|
Exchange (gains) losses on translation of foreign operations reclassified to gain | | | |
or loss on sale of businesses and fixed assets | | — |
| 1 |
|
Available-for-sale investments | | — |
| 2 |
|
Cash flow hedges and costs of hedging | | (82 | ) | 129 |
|
Share of items relating to equity-accounted entities, net of tax | | 155 |
| 231 |
|
Income tax relating to items that may be reclassified | | (90 | ) | (125 | ) |
| | 514 |
| 1,452 |
|
Items that will not be reclassified to profit or loss | | | |
Remeasurements of the net pension and other post-retirement benefit liability or asset | | 865 |
| 727 |
|
Cash flow hedges that will subsequently be transferred to the balance sheet | | 13 |
| — |
|
Income tax relating to items that will not be reclassified | | (265 | ) | (246 | ) |
| | 613 |
| 481 |
|
Other comprehensive income | | 1,127 |
| 1,933 |
|
Total comprehensive income | | 3,658 |
| 3,425 |
|
Attributable to | | | |
BP shareholders | | 3,580 |
| 3,363 |
|
Non-controlling interests | | 78 |
| 62 |
|
| | 3,658 |
| 3,425 |
|
Group statement of changes in equity |
| | | | | | | |
| | BP shareholders’ |
| Non-controlling |
| Total |
|
$ million | | equity |
| interests |
| equity |
|
At 31 December 2017 | | 98,491 |
| 1,913 |
| 100,404 |
|
Adjustment on adoption of IFRS 9, net of tax(a) | | (180 | ) | — |
| (180 | ) |
At 1 January 2018 | | 98,311 |
| 1,913 |
| 100,224 |
|
| | | | |
Total comprehensive income | | 3,580 |
| 78 |
| 3,658 |
|
Dividends | | (1,828 | ) | (13 | ) | (1,841 | ) |
Cash flow hedges transferred to the balance sheet, net of tax | | 1 |
| — |
| 1 |
|
Repurchase of ordinary share capital | | (120 | ) | — |
| (120 | ) |
Share-based payments, net of tax | | 244 |
| — |
| 244 |
|
Transactions involving non-controlling interests, net of tax | | (1 | ) | — |
| (1 | ) |
At 31 March 2018 | | 100,187 |
| 1,978 |
| 102,165 |
|
| | | | |
| | BP shareholders’ |
| Non-controlling |
| Total |
|
$ million | | equity |
| interests |
| equity |
|
| | | | |
At 1 January 2017 | | 95,286 |
| 1,557 |
| 96,843 |
|
| | | | |
Total comprehensive income | | 3,363 |
| 62 |
| 3,425 |
|
Dividends | | (1,304 | ) | (15 | ) | (1,319 | ) |
Share-based payments, net of tax | | 177 |
| — |
| 177 |
|
Share of equity-accounted entities' changes in equity, net of tax | | 118 |
| — |
| 118 |
|
Transactions involving non-controlling interests, net of tax | | — |
| 38 |
| 38 |
|
At 31 March 2017 | | 97,640 |
| 1,642 |
| 99,282 |
|
| |
(a) | See Note 1 for further information. |
Group balance sheet
|
| | | | | |
| | 31 March |
| 31 December |
|
$ million | | 2018 |
| 2017 |
|
Non-current assets | | | |
Property, plant and equipment | | 129,002 |
| 129,471 |
|
Goodwill | | 11,710 |
| 11,551 |
|
Intangible assets | | 18,003 |
| 18,355 |
|
Investments in joint ventures | | 8,278 |
| 7,994 |
|
Investments in associates | | 17,652 |
| 16,991 |
|
Other investments | | 1,298 |
| 1,245 |
|
Fixed assets | | 185,943 |
| 185,607 |
|
Loans | | 571 |
| 646 |
|
Trade and other receivables | | 1,479 |
| 1,434 |
|
Derivative financial instruments | | 4,626 |
| 4,110 |
|
Prepayments | | 1,162 |
| 1,112 |
|
Deferred tax assets | | 4,176 |
| 4,469 |
|
Defined benefit pension plan surpluses | | 5,134 |
| 4,169 |
|
| | 203,091 |
| 201,547 |
|
Current assets | | | |
Loans | | 267 |
| 190 |
|
Inventories | | 20,802 |
| 19,011 |
|
Trade and other receivables | | 23,450 |
| 24,849 |
|
Derivative financial instruments | | 3,191 |
| 3,032 |
|
Prepayments | | 1,202 |
| 1,414 |
|
Current tax receivable | | 928 |
| 761 |
|
Other investments | | 114 |
| 125 |
|
Cash and cash equivalents | | 22,242 |
| 25,586 |
|
| | 72,196 |
| 74,968 |
|
Total assets | | 275,287 |
| 276,515 |
|
Current liabilities | | | |
Trade and other payables | | 42,995 |
| 44,209 |
|
Derivative financial instruments | | 2,664 |
| 2,808 |
|
Accruals | | 3,799 |
| 4,960 |
|
Finance debt | | 9,028 |
| 7,739 |
|
Current tax payable | | 2,103 |
| 1,686 |
|
Provisions | | 3,218 |
| 3,324 |
|
| | 63,807 |
| 64,726 |
|
Non-current liabilities | | | |
Other payables | | 13,961 |
| 13,889 |
|
Derivative financial instruments | | 3,657 |
| 3,761 |
|
Accruals | | 592 |
| 505 |
|
Finance debt | | 53,161 |
| 55,491 |
|
Deferred tax liabilities | | 8,284 |
| 7,982 |
|
Provisions | | 20,603 |
| 20,620 |
|
Defined benefit pension plan and other post-retirement benefit plan deficits | | 9,057 |
| 9,137 |
|
| | 109,315 |
| 111,385 |
|
Total liabilities | | 173,122 |
| 176,111 |
|
Net assets | | 102,165 |
| 100,404 |
|
Equity | | | |
BP shareholders’ equity | | 100,187 |
| 98,491 |
|
Non-controlling interests | | 1,978 |
| 1,913 |
|
Total equity | | 102,165 |
| 100,404 |
|
Condensed group cash flow statement
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Operating activities | | | |
Profit (loss) before taxation | | 3,911 |
| 2,115 |
|
Adjustments to reconcile profit (loss) before taxation to net cash provided by operating activities | | | |
Depreciation, depletion and amortization and exploration expenditure written off | | 4,357 |
| 4,103 |
|
Impairment and (gain) loss on sale of businesses and fixed assets | | (14 | ) | 408 |
|
Earnings from equity-accounted entities, less dividends received | | (536 | ) | (220 | ) |
Net charge for interest and other finance expense, less net interest paid | | 80 |
| 252 |
|
Share-based payments | | 237 |
| 162 |
|
Net operating charge for pensions and other post-retirement benefits, less | | | |
contributions and benefit payments for unfunded plans | | (202 | ) | (73 | ) |
Net charge for provisions, less payments | | 144 |
| (177 | ) |
Movements in inventories and other current and non-current assets and liabilities | | (3,398 | ) | (3,600 | ) |
Income taxes paid | | (933 | ) | (856 | ) |
Net cash provided by operating activities | | 3,646 |
| 2,114 |
|
Investing activities | | | |
Expenditure on property, plant and equipment, intangible and other assets | | (3,586 | ) | (3,823 | ) |
Acquisitions, net of cash acquired | | — |
| (42 | ) |
Investment in joint ventures | | (39 | ) | (20 | ) |
Investment in associates | | (338 | ) | (183 | ) |
Total cash capital expenditure | | (3,963 | ) | (4,068 | ) |
Proceeds from disposal of fixed assets | | 85 |
| 188 |
|
Proceeds from disposal of businesses, net of cash disposed | | 82 |
| 73 |
|
Proceeds from loan repayments | | 9 |
| 14 |
|
Net cash used in investing activities | | (3,787 | ) | (3,793 | ) |
Financing activities | | | |
Net issue (repurchase) of shares | | (110 | ) | — |
|
Proceeds from long-term financing | | 122 |
| 3,713 |
|
Repayments of long-term financing | | (1,157 | ) | (917 | ) |
Net increase (decrease) in short-term debt | | (349 | ) | 315 |
|
Increase in non-controlling interests | | (1 | ) | 30 |
|
Dividends paid - BP shareholders | | (1,829 | ) | (1,304 | ) |
- non-controlling interests | | (13 | ) | (15 | ) |
Net cash provided by (used in) financing activities | | (3,337 | ) | 1,822 |
|
Currency translation differences relating to cash and cash equivalents | | 145 |
| 167 |
|
Increase (decrease) in cash and cash equivalents | | (3,333 | ) | 310 |
|
Cash and cash equivalents at beginning of period(a) | | 25,575 |
| 23,484 |
|
Cash and cash equivalents at end of period | | 22,242 |
| 23,794 |
|
| |
(a) | See Note 1 for further information. |
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 2017 included in BP Annual Report and Form 20-F 2017.
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 2018, which are the same as those used in preparing BP Annual Report and Form 20-F 2017 with the exception of the implementation of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' from 1 January 2018.
New International Financial Reporting Standards adopted
BP has adopted IFRS 9 ‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with Customers’ with effect from 1 January 2018. Information on the implementation of new accounting standards is included in BP Annual Report and Form 20-F 2017 - Financial statements - Note 1 Significant accounting policies, judgements, estimates and assumptions - Impact of new International Financial Reporting Standards.
IFRS 9 ‘Financial Instruments’
The overall impact on transition to IFRS 9 including the impact upon the group's share of equity-accounted entities, was a reduction of $180 million in net assets, net of tax. This adjustment mainly relates to an increase in the credit reserve of financial assets in the scope of IFRS 9's impairment requirements. As permitted by IFRS 9 comparatives have not been restated. For certain line items in the balance sheet the closing balance at 31 December 2017 and the opening balance at 1 January 2018 therefore differ (as summarized below). Cash and cash equivalents at the beginning of 2018 in the Condensed group cash flow statement and Note 9 (Net debt) are the 1 January 2018 amounts included in the table below.
|
| | | | | | | |
| | | | Adjustment |
|
| | 31 December |
| 1 January |
| on adoption |
|
$ million | | 2017 |
| 2018 |
| of IFRS 9 |
|
Non-current | | | | |
Investments in equity-accounted entities | | 24,985 |
| 24,903 |
| (82 | ) |
Loans, trade and other receivables | | 2,080 |
| 2,069 |
| (11 | ) |
Deferred tax liability | | (7,982 | ) | (7,946 | ) | 36 |
|
Current | | | | |
Loans, trade and other receivables | | 25,039 |
| 24,927 |
| (112 | ) |
Cash and cash equivalents | | 25,586 |
| 25,575 |
| (11 | ) |
| | | | |
Net assets | | 100,404 |
| 100,224 |
| (180 | ) |
IFRS 15 ‘Revenue from Contracts with Customers’
BP has elected to apply the ‘modified retrospective’ approach to transition permitted by IFRS 15 under which comparative financial information is not restated. The standard did not have a material effect on the group's financial statements as at 1 January 2018 and so no transition adjustment has been made.
An analysis of revenue from contracts with customers by product is presented in Note 4. Amounts presented for comparative periods in 2017 include revenues determined in accordance with the group's previous accounting policies relating to revenue. The total amounts presented do not, therefore, represent the Revenue from contracts with customers that would have been reported for those periods had IFRS 15 been applied using a fully retrospective approach to transition but the differences are not significant.
Note 2. Gulf of Mexico oil spill
(a) Overview
The information presented in this note should be read in conjunction with Note 2 of the financial statements and pages 270-272 of Legal proceedings included in BP Annual Report and Form 20-F 2017.
The group income statement includes a pre-tax charge for the first quarter of $86 million which includes the latest estimate for claims and associated administration costs, and $120 million for finance costs relating to the unwinding of discounting effects relating to payables. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $65,971 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.
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Income statement | | | |
Production and manufacturing expenses | | 86 |
| 35 |
|
Profit (loss) before interest and taxation | | (86 | ) | (35 | ) |
Finance costs | | 120 |
| 126 |
|
Profit (loss) before taxation | | (206 | ) | (161 | ) |
Taxation | | 61 |
| 48 |
|
Profit (loss) for the period | | (145 | ) | (113 | ) |
|
| | | | | |
| | 31 March |
| 31 December |
|
$ million | | 2018 |
| 2017 |
|
Balance sheet | | | |
Current assets | | | |
Trade and other receivables | | 244 |
| 252 |
|
Current tax receivable | | 263 |
| — |
|
Current liabilities | | | |
Trade and other payables | | (894 | ) | (2,089 | ) |
Provisions | | (1,246 | ) | (1,439 | ) |
Net current assets (liabilities) | | (1,633 | ) | (3,276 | ) |
Non-current assets | | | |
Deferred tax assets | | 1,813 |
| 2,067 |
|
Non-current liabilities | | | |
Other payables | | (12,375 | ) | (12,253 | ) |
Provisions | | (985 | ) | (1,141 | ) |
Deferred tax liabilities | | 3,780 |
| 3,634 |
|
Net non-current assets (liabilities) | | (7,767 | ) | (7,693 | ) |
Net assets (liabilities) | | (9,400 | ) | (10,969 | ) |
Note 2. Gulf of Mexico oil spill (continued)
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Cash flow statement - Operating activities | | | |
Profit (loss) before taxation | | (206 | ) | (161 | ) |
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 | | 120 |
| 126 |
|
Net charge for provisions, less payments | | 54 |
| (5 | ) |
Movements in inventories and other current and non-current assets and liabilities | | (1,588 | ) | (2,254 | ) |
Pre-tax cash flows | | (1,620 | ) | (2,294 | ) |
Cash outflows in 2017 and 2018 shown above include payments made under the 2012 agreement with the US government to resolve all federal criminal claims arising from the incident. Included in the current quarter cash outflow is $1,209 million relating to the final payment under the 2012 Department of Justice plea agreement. Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $1,714 million in the first quarter. For the same period in 2017, the amount was an outflow of $2,294 million.
(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 January 2018 | | 2,580 |
|
Increase in provision | | 65 |
|
Reclassified to other payables | | (59 | ) |
Utilization | | (355 | ) |
At 31 March 2018 | | 2,231 |
|
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 reflects the latest estimate for the remaining costs associated with the 2012 Plaintiffs’ Steering Committee (PSC) settlement. These costs relate predominantly to business economic loss (BEL) claims and associated administration costs. The amounts ultimately payable may differ from the amount provided and the timing of payments is uncertain.
The settlement programme’s determination of BEL claims was substantially completed by the end of 2017. Nevertheless, a significant number of BEL claims determined by the settlement programme have been and continue to be appealed by BP and/or the claimants. The amount provided for includes the latest estimate of the amounts that are expected ultimately to be paid to resolve outstanding BEL claims. Claims under appeal will ultimately only be resolved once the full judicial appeals process has been concluded, including appeals to the Federal District Court and Fifth Circuit, as may be the case, or when settlements are reached with individual claimants. Depending upon the ultimate resolution of these claims (including how such resolution may be impacted by the May 2017 Fifth Circuit opinion), the amounts payable may differ from those currently provided.
The settlement programme is expected to issue determinations with respect to remaining BEL claims in the first half of 2018. There is uncertainty around how these claims will ultimately be determined, including in relation to the impact of the May 2017 Fifth Circuit opinion on the determination of such claims.
Payments to resolve outstanding claims under the PSC settlement are now expected to be made over a number of years. The timing of payments, however, 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.
Note 2. Gulf of Mexico oil spill (continued)
Other payables
Other payables include 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 2017 - Financial statements - Note 2.
Note 3. Analysis of replacement cost profit (loss) before interest and tax and reconciliation to profit (loss) before taxation
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Upstream | | 3,174 |
| 1,256 |
|
Downstream | | 1,713 |
| 1,706 |
|
Rosneft | | 247 |
| 99 |
|
Other businesses and corporate(a) | | (571 | ) | (431 | ) |
| | 4,563 |
| 2,630 |
|
Consolidation adjustment - UPII* | | (160 | ) | (68 | ) |
RC profit (loss) before interest and tax* | | 4,403 |
| 2,562 |
|
Inventory holding gains (losses)* | | | |
Upstream | | 1 |
| (6 | ) |
Downstream | | 69 |
| 98 |
|
Rosneft (net of tax) | | 22 |
| (26 | ) |
Profit (loss) before interest and tax | | 4,495 |
| 2,628 |
|
Finance costs | | 553 |
| 460 |
|
Net finance expense relating to pensions and other post-retirement benefits | | 31 |
| 53 |
|
Profit (loss) before taxation | | 3,911 |
| 2,115 |
|
| | | |
RC profit (loss) before interest and tax* | | | |
US | | 359 |
| 513 |
|
Non-US | | 4,044 |
| 2,049 |
|
| | 4,403 |
| 2,562 |
|
| |
(a) | Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information. |
Note 4. Sales and other operating revenues
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
By segment | | | |
Upstream | | 13,870 |
| 11,327 |
|
Downstream | | 61,406 |
| 50,080 |
|
Other businesses and corporate | | 343 |
| 285 |
|
| | 75,619 |
| 61,692 |
|
| | | |
Less: sales and other operating revenues between segments | | | |
Upstream | | 6,733 |
| 5,777 |
|
Downstream | | 482 |
| (86 | ) |
Other businesses and corporate | | 232 |
| 138 |
|
| | 7,447 |
| 5,829 |
|
| | | |
Third party sales and other operating revenues | | | |
Upstream | | 7,137 |
| 5,550 |
|
Downstream | | 60,924 |
| 50,166 |
|
Other businesses and corporate | | 111 |
| 147 |
|
Total sales and other operating revenues | | 68,172 |
| 55,863 |
|
| | | |
By geographical area | | | |
US | | 23,613 |
| 21,152 |
|
Non-US | | 51,240 |
| 40,020 |
|
| | 74,853 |
| 61,172 |
|
Less: sales and other operating revenues between areas | | 6,681 |
| 5,309 |
|
| | 68,172 |
| 55,863 |
|
| | | |
Sales and other operating revenues include the following in relation to revenues from contracts with customers: | | | |
Crude oil | | 14,917 |
| 10,996 |
|
Oil products | | 44,130 |
| 36,601 |
|
Natural gas, LNG and NGLs | | 5,159 |
| 3,838 |
|
Non-oil products and other revenues from contracts with customers | | 3,495 |
| 2,864 |
|
Revenues from contracts with customers(a) | | 67,701 |
| 54,299 |
|
| |
(a) | See Note 1 for further information. |
Note 5. Depreciation, depletion and amortization
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Upstream | | | |
US | | 1,088 |
| 1,237 |
|
Non-US | | 2,272 |
| 2,054 |
|
| | 3,360 |
| 3,291 |
|
Downstream | | | |
US | | 219 |
| 216 |
|
Non-US | | 302 |
| 279 |
|
| | 521 |
| 495 |
|
Other businesses and corporate | | | |
US | | 16 |
| 16 |
|
Non-US | | 34 |
| 40 |
|
| | 50 |
| 56 |
|
Total group | | 3,931 |
| 3,842 |
|
Note 6. Production and similar taxes
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
US | | 90 |
| 36 |
|
Non-US | | 278 |
| 432 |
|
| | 368 |
| 468 |
|
Note 7. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit (loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. During the quarter the company repurchased for cancellation 18 million ordinary shares for a total cost of $120 million, including transaction costs of $1 million, as part of the share buyback programme as announced on 31 October 2017. The number of shares in issue is reduced when shares are repurchased.
The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.
For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
|
Results for the period | | | |
Profit (loss) for the period attributable to BP shareholders | | 2,469 |
| 1,449 |
|
Less: preference dividend | | — |
| — |
|
Profit (loss) attributable to BP ordinary shareholders | | 2,469 |
| 1,449 |
|
| | | |
Number of shares (thousand)(a) | | | |
Basic weighted average number of shares outstanding | | 19,918,700 |
| 19,518,500 |
|
ADS equivalent | | 3,319,783 |
| 3,253,083 |
|
| | | |
Weighted average number of shares outstanding used to calculate diluted earnings per share | | 20,030,656 |
| 19,621,566 |
|
ADS equivalent | | 3,338,442 |
| 3,270,261 |
|
| | | |
Shares in issue at period-end | | 19,943,591 |
| 19,664,528 |
|
ADS equivalent | | 3,323,931 |
| 3,277,421 |
|
| |
(a) | Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans. |
Note 8. Dividends
Dividends payable
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 22 June 2018 to shareholders and American Depositary Share (ADS) holders on the register on 11 May 2018. The corresponding amount in sterling is due to be announced on 11 June 2018, calculated based on the average of the market exchange rates for the four dealing days commencing on 5 June 2018. Holders of ADSs are expected to receive $0.600 per ADS (less applicable fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the first quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
|
| | | | | |
| | First |
| First |
|
| | quarter |
| quarter |
|
| | 2018 |
| 2017 |
|
Dividends paid per ordinary share | | | |
cents | | 10.000 |
| 10.000 |
|
pence | | 7.169 |
| 8.159 |
|
Dividends paid per ADS (cents) | | 60.00 |
| 60.00 |
|
Scrip dividends | | | |
Number of shares issued (millions) | | 23.4 |
| 115.1 |
|
Value of shares issued ($ million) | | 155 |
| 642 |
|
Note 9. Net Debt*
|
| | | | | | | |
Net debt ratio* | | First |
| Fourth |
| First |
|
| | quarter |
| quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
| 2017 |
|
Gross debt | | 62,189 |
| 63,230 |
| 61,832 |
|
Fair value (asset) liability of hedges related to finance debt(a) | | 46 |
| 175 |
| 597 |
|
| | 62,235 |
| 63,405 |
| 62,429 |
|
Less: cash and cash equivalents | | 22,242 |
| 25,586 |
| 23,794 |
|
Net debt | | 39,993 |
| 37,819 |
| 38,635 |
|
Equity | | 102,165 |
| 100,404 |
| 99,282 |
|
Net debt ratio | | 28.1% | 27.4% | 28.0% |
|
| | | | | | | |
Analysis of changes in net debt | | First |
| Fourth |
| First |
|
| | quarter |
| quarter |
| quarter |
|
$ million | | 2018 |
| 2017 |
| 2017 |
|
Opening balance | | | | |
Finance debt | | 63,230 |
| 65,784 |
| 58,300 |
|
Fair value (asset) liability of hedges related to finance debt(a) | | 175 |
| (227 | ) | 697 |
|
Less: cash and cash equivalents(b) | | 25,575 |
| 25,780 |
| 23,484 |
|
Opening net debt | | 37,830 |
| 39,777 |
| 35,513 |
|
Closing balance | | | | |
Finance debt | | 62,189 |
| 63,230 |
| 61,832 |
|
Fair value (asset) liability of hedges related to finance debt(a) | | 46 |
| 175 |
| 597 |
|
Less: cash and cash equivalents | | 22,242 |
| 25,586 |
| 23,794 |
|
Closing net debt | | 39,993 |
| 37,819 |
| 38,635 |
|
Decrease (increase) in net debt | | (2,163 | ) | 1,958 |
| (3,122 | ) |
Movement in cash and cash equivalents (excluding exchange adjustments) | | (3,478 | ) | (223 | ) | 143 |
|
Net cash outflow (inflow) from financing(c) | | 1,384 |
| 2,511 |
| (3,111 | ) |
Other movements | | (27 | ) | (299 | ) | (66 | ) |
Movement in net debt before exchange effects | | (2,121 | ) | 1,989 |
| (3,034 | ) |
Exchange adjustments(c) | | (42 | ) | (31 | ) | |