Edgar Filing: BP PLC

bp201510276k.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

for the period ended October, 2015

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 Form 20-F or Form 40-F.

Form 20-F        |X|          Form 40-F
     ---------------               ----------------

Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
     1934.

Yes                            No        |X|
      ---------------           ----------------

BP p.l.c.

Group results

Third quarter and nine months 2015

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FOR IMMEDIATE RELEASE London 27 October 2015

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
1,290	(5,823)	46	Profit (loss) for the period(a)	(3,175)	8,187
1,095	(443)	1,188	Inventory holding (gains) losses*, net of tax	246	855
2,385	(6,266)	1,234	Replacement cost profit (loss)*	(2,929)	9,042
			Net (favourable) unfavourable impact of
			non-operating items* and
652	7,579	585	fair value accounting effects*, net of tax	8,638	855
3,037	1,313	1,819	Underlying replacement cost profit*	5,709	9,897
			Replacement cost profit (loss)
12.97	(34.25)	6.73	per ordinary share (cents)	(16.01)	49.04
0.78	(2.05)	0.40	per ADS (dollars)	(0.96)	2.94
			Underlying replacement cost profit
16.51	7.17	9.92	per ordinary share (cents)	31.18	53.67
0.99	0.43	0.60	per ADS (dollars)	1.87	3.22

BP’s third-quarter replacement cost (RC) profit was $1,234 million, compared with $2,385 million a year ago. After adjusting for a net charge for non-operating items of $756 million and net favourable fair value accounting effects of $171 million (both on a post-tax basis), underlying RC profit for the third quarter was $1,819 million, compared with $3,037 million for the same period in 2014. For the nine months, RC loss was $2,929 million, compared with a profit of $9,042 million a year ago. After adjusting for a net charge for non-operating items of $8,655 million and net favourable fair value accounting effects of $17 million (both on a post-tax basis), underlying RC profit for the nine months was $5,709 million, compared with $9,897 million for the same period in 2014. Non-operating items include a restructuring charge of $151 million for the quarter and $638 million for the nine months. Cumulative restructuring charges from the beginning of the fourth quarter 2014 are expected to total around $2.5 billion by the end of 2016. RC profit or loss for the group, underlying RC profit or loss and fair value accounting effects are non-GAAP measures and further information is provided on pages 3 and 28.

All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $426 million for the third quarter and $11,513 million for the nine months. For further information on the Gulf of Mexico oil spill and its consequences see page 10 and Note 2 on page 16. See also Legal proceedings on page 32.

Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the third quarter and nine months was $5.2 billion and $13.3 billion respectively, compared with $9.4 billion and $25.5 billion for the same periods in 2014. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the third quarter and nine months was $5.4 billion and $14.3 billion respectively, compared with $9.4 billion and $25.8 billion for the same periods in 2014.

·	Net debt* at 30 September 2015 was $25.6 billion, compared with $22.4 billion a year ago. The net debt ratio* at 30 September 2015 was 20.0%, compared with 15.0% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 24 for more information.

Total capital expenditure on an accruals basis for the third quarter was $4.3 billion, compared with $5.3 billion for the same period in 2014. For both periods almost all of the capital expenditure was organic*. For the nine months, total capital expenditure on an accruals basis was $13.4 billion, of which organic capital expenditure was $13.2 billion, compared with $17.0 billion for the same period in 2014, of which organic capital expenditure was $16.3 billion. See page 26 for further information. Our current plans are for organic capital expenditure to be in the range $17-19 billion per annum in the near term and closer to $19 billion for 2015.

·	BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 18 December 2015. The corresponding amount in sterling will be announced on 7 December 2015. See page 23 for further information.

*	For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 30.
(a)	Profit attributable to BP shareholders.

The commentaries above and following should be read in conjunction with the cautionary statement on page 35.

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Group headlines (continued)

In October 2013, BP announced plans to divest a further $10 billion of assets before the end of 2015, having completed its earlier divestment programme of $38 billion. Transactions to date have reached around $7.8 billion. Disposal proceeds were $0.3 billion for the third quarter and $2.6 billion for the nine months. The nine-months amount includes proceeds from our Toledo refinery partner, Husky Energy, in place of capital commitments relating to the original divestment transaction that have not been subsequently sanctioned.

The effective tax rate (ETR) on RC profit or loss for the third quarter and nine months was 52% and 45% respectively compared with 42% and 35% for the same periods in 2014. Excluding the one-off deferred tax adjustment in the first quarter 2015 as a result of the reduction in the UK North Sea supplementary charge, the ETR for the nine months was 27%. Adjusting for non-operating items, fair value accounting effects and the first-quarter 2015 one-off deferred tax adjustment, the underlying ETR in the third quarter and nine months was 39% and 32% respectively, compared with 41% and 36% for the same periods in 2014. The underlying ETR for both periods is lower than a year ago mainly due to changes in the geographical mix of profits partly offset by foreign exchange effects from a stronger US dollar.

·	Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $474 million for the third quarter, compared with $358 million for the same period in 2014. For the nine months, the respective amounts were $1,196 million and $1,081 million.

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Analysis of RC profit (loss) before interest and tax

and reconciliation to profit (loss) for the period

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			RC profit (loss) before interest and tax*
3,311	228	743	Upstream	1,343	12,019
1,231	1,628	2,562	Downstream	6,273	2,958
107	510	382	Rosneft	1,075	1,649
(432)	(455)	(378)	Other businesses and corporate	(1,141)	(1,363)
(33)	(10,747)	(311)	Gulf of Mexico oil spill response(a)	(11,381)	(313)
370	(39)	67	Consolidation adjustment – UPII*	(101)	384
4,554	(8,875)	3,065	RC profit (loss) before interest and tax	(3,932)	15,334
			Finance costs and net finance expense relating
(358)	(364)	(474)	to pensions and other post-retirement benefits	(1,196)	(1,081)
(1,777)	3,013	(1,347)	Taxation on a RC basis	2,298	(5,022)
(34)	(40)	(10)	Non-controlling interests	(99)	(189)
2,385	(6,266)	1,234	RC profit (loss) attributable to BP shareholders	(2,929)	9,042
(1,585)	627	(1,726)	Inventory holding gains (losses)	(343)	(1,225)
			Taxation (charge) credit on inventory holding
490	(184)	538	gains and losses	97	370
			Profit (loss) for the period attributable to
1,290	(5,823)	46	BP shareholders	(3,175)	8,187

(a)	See Note 2 on page 16 for further information on the accounting for the Gulf of Mexico oil spill response.

Analysis of underlying RC profit before interest and tax

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Underlying RC profit before interest and tax*
3,899	494	823	Upstream	1,921	12,955
1,484	1,867	2,302	Downstream	6,327	3,228
110	510	382	Rosneft	1,075	1,405
(293)	(401)	(231)	Other businesses and corporate	(922)	(1,220)
370	(39)	67	Consolidation adjustment - UPII	(101)	384
5,570	2,431	3,343	Underlying RC profit before interest and tax	8,300	16,752
			Finance costs and net finance expense relating to
(348)	(356)	(359)	pensions and other post-retirement benefits	(1,064)	(1,052)
(2,151)	(722)	(1,155)	Taxation on an underlying RC basis	(1,428)	(5,614)
(34)	(40)	(10)	Non-controlling interests	(99)	(189)
3,037	1,313	1,819	Underlying RC profit attributable to BP shareholders	5,709	9,897

Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 4-9 for the segments.

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Upstream

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
3,312	225	716	Profit before interest and tax	1,331	12,013
(1)	3	27	Inventory holding (gains) losses*	12	6
3,311	228	743	RC profit before interest and tax	1,343	12,019
			Net (favourable) unfavourable impact of
			non-operating items* and
588	266	80	fair value accounting effects*	578	936
3,899	494	823	Underlying RC profit before interest and tax*(a)	1,921	12,955

(a)	See page 5 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 third quarter and nine months was $743 million and $1,343 million respectively, compared with $3,311 million and $12,019 million for the same periods in 2014. The third quarter and nine months included a net non-operating charge of $118 million and $596 million respectively, compared with a net non-operating charge of $501 million and $741 million for the same periods a year ago. Fair value accounting effects in the third quarter and nine months had favourable impacts of $38 million and $18 million respectively, compared with unfavourable impacts of $87 million and $195 million in the same periods of 2014.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $823 million and $1,921 million respectively, compared with $3,899 million and $12,955 million for the same periods in 2014. The result for the third quarter reflected significantly lower liquids and gas realizations partly offset by lower costs, including the benefits from simplification and efficiency activities, and strong gas marketing and trading results. The result for the nine months reflected significantly lower liquids and gas realizations partly offset by lower costs and increased production. Costs were lower reflecting benefits from simplification and efficiency activities and lower exploration write-offs partly offset by rig cancellation costs.

Production

Production for the quarter was 2,242mboe/d, 4.4% higher than the third quarter of 2014. Underlying production* for the quarter decreased by 2.2%, mainly due to higher seasonal turnaround activity. For the nine months, production was 2,220mboe/d, 4.3% higher than in the same period of 2014. Underlying production for the nine months was flat versus 2014.

Key events

In July, BP was awarded five new blocks in the North Sea as part of the second tranche of the 28th licensing round by the UK Oil and Gas Authority. BP has been awarded 12 licences to date in this licensing round.

On 31 August, Maersk Oil announced approval by the UK Oil and Gas Authority of development plans for the Culzean field in the UK North Sea. Culzean is operated by Maersk Oil on behalf of its partners, JX Nippon and BP (16%).

In October, BP was provisionally awarded three blocks in the shallow waters of the Mediterranean Sea in Egypt, subject to government approval.

Also in October, the Western Flank A project (BP 17%) in offshore Western Australia, began production. The project is operated by Woodside.

Outlook

Third-quarter production benefited from the absence of seasonal adverse weather in the Gulf of Mexico. We expect fourth-quarter 2015 reported production to be slightly higher than the third quarter mainly reflecting recovery from planned seasonal turnaround activity.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35.

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Upstream

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Underlying RC profit (loss) before interest and tax
1,181	(66)	(152)	US	(763)	3,331
2,718	560	975	Non-US	2,684	9,624
3,899	494	823		1,921	12,955
			Non-operating items
125	(135)	(139)	US	(342)	(6)
(626)	(101)	21	Non-US(a)	(254)	(735)
(501)	(236)	(118)		(596)	(741)
			Fair value accounting effects
(49)	(55)	26	US	(32)	(129)
(38)	25	12	Non-US	50	(66)
(87)	(30)	38		18	(195)
			RC profit (loss) before interest and tax
1,257	(256)	(265)	US	(1,137)	3,196
2,054	484	1,008	Non-US	2,480	8,823
3,311	228	743		1,343	12,019
			Exploration expense
142	194	61	US(b)	333	869
698	708	295	Non-US(a)(c)	1,097	1,308
840	902	356		1,430	2,177
			Production (net of royalties)(d)
			Liquids* (mb/d)
410	334	390	US	372	412
91	147	94	Europe	118	96
605	631	747	Rest of World	710	583
1,106	1,111	1,231		1,200	1,091
			Natural gas (mmcf/d)
1,546	1,477	1,569	US	1,521	1,517
164	281	232	Europe	259	176
4,328	4,046	4,062	Rest of World	4,138	4,321
6,038	5,805	5,864		5,918	6,014
			Total hydrocarbons* (mboe/d)
676	588	661	US	634	673
119	196	135	Europe	163	127
1,352	1,328	1,447	Rest of World	1,424	1,328
2,147	2,112	2,242		2,220	2,128
			Average realizations(e)
91.42	56.69	44.01	Total liquids ($/bbl)	48.87	95.09
5.40	3.80	3.49	Natural gas ($/mcf)	3.91	5.75
61.61	40.04	33.25	Total hydrocarbons ($/boe)	36.68	64.19

(a)	Third quarter and nine months 2014 include a $375-million write-off relating to Block KG D6 in India. This is classified in the ‘other’ category of non-operating items. In addition, an impairment charge of $395 million was also recorded in relation to this block. See page 27.
(b)	Third quarter and nine months 2014 include write-offs of $23 million and $544 million respectively, relating to the Utica shale acreage in Ohio, following the decision not to proceed with development plans.
(c)	Second quarter and nine months 2015 include a $432-million write-off in Libya. BP has declared force majeure in Libya and there is significant uncertainty on when drilling operations might be able to proceed.
(d)	Includes BP’s share of production of equity-accounted entities in the Upstream segment.
(e)	Based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.
Because of rounding, some totals may not agree exactly with the sum of their component parts.

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Downstream

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
(335)	2,234	875	Profit (loss) before interest and tax	5,892	1,702
1,566	(606)	1,687	Inventory holding (gains) losses*	381	1,256
1,231	1,628	2,562	RC profit before interest and tax	6,273	2,958
			Net (favourable) unfavourable impact of
			non-operating items* and
253	239	(260)	fair value accounting effects*	54	270
1,484	1,867	2,302	Underlying RC profit before interest and tax*(a)	6,327	3,228

(a)	See page 7 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 third quarter and nine months was $2,562 million and $6,273 million respectively, compared with $1,231 million and $2,958 million for the same periods in 2014.

The 2015 results include a net non-operating gain of $43 million for the third quarter and a net non-operating charge of $42 million for the nine months, compared with net non-operating charges of $552 million and $780 million for the same periods in 2014 (see pages 7 and 27 for further information on non-operating items). Fair value accounting effects had favourable impacts of $217 million for the third quarter and unfavourable impacts of $12 million for the nine months, compared with favourable impacts of $299 million and $510 million in the same periods of 2014.

Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 7.

Fuels business

The fuels business reported an underlying replacement cost profit before interest and tax of $1,917 million for the third quarter and $5,107 million for the nine months, compared with $1,078 million and $2,294 million for the same periods in 2014. The results for the quarter and nine months reflect an improved refining environment and strong refining operations, benefits from our simplification and efficiency programmes leading to lower costs and strong fuels marketing performance reflecting retail volume and margin growth. The nine-months result also reflects a higher contribution from supply and trading in the first half.

Lubricants business

The lubricants business reported an underlying replacement cost profit before interest and tax of $348 million in the third quarter and $1,090 million in the nine months, compared with $336 million and $958 million in the same periods last year. The results for the quarter and nine months reflect strong performance in growth markets and premium brands despite adverse foreign exchange impacts, and the benefits from our simplification and efficiency programmes leading to lower costs.

Petrochemicals business

The petrochemicals business reported an underlying replacement cost profit before interest and tax of $37 million in the third quarter and $130 million in the nine months, compared with a profit of $70 million and a loss of $24 million in the same periods last year. The result for the quarter was impacted by a weaker environment and the results for the quarter and nine months reflect lower costs from simplification and efficiency programmes and improved operational performance.

Outlook

Looking forward to the fourth quarter, we expect reduced refining margins and lower seasonal demand to adversely impact fuels margins and volumes compared with the third quarter.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35.

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Downstream

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Underlying RC profit before interest and tax -
			by region
603	576	885	US	2,122	1,346
881	1,291	1,417	Non-US	4,205	1,882
1,484	1,867	2,302		6,327	3,228
			Non-operating items
(181)	63	51	US	110	(2)
(371)	(185)	(8)	Non-US	(152)	(778)
(552)	(122)	43		(42)	(780)
			Fair value accounting effects
238	(48)	153	US	(22)	535
61	(69)	64	Non-US	10	(25)
299	(117)	217		(12)	510
			RC profit before interest and tax
660	591	1,089	US	2,210	1,879
571	1,037	1,473	Non-US	4,063	1,079
1,231	1,628	2,562		6,273	2,958
			Underlying RC profit (loss) before interest
			and tax - by business(a)(b)
1,078	1,394	1,917	Fuels	5,107	2,294
336	397	348	Lubricants	1,090	958
70	76	37	Petrochemicals	130	(24)
1,484	1,867	2,302		6,327	3,228
			Non-operating items and fair value accounting
			effects(c)
196	(152)	295	Fuels	83	(6)
(5)	(87)	(25)	Lubricants	(126)	181
(444)	–	(10)	Petrochemicals	(11)	(445)
(253)	(239)	260		(54)	(270)
			RC profit (loss) before interest and tax(a)(b)
1,274	1,242	2,212	Fuels	5,190	2,288
331	310	323	Lubricants	964	1,139
(374)	76	27	Petrochemicals	119	(469)
1,231	1,628	2,562		6,273	2,958

15.6	19.4	20.0	BP average refining marker margin (RMM)* ($/bbl)	18.2	14.8
			Refinery throughputs (mb/d)
651	622	681	US	642	636
766	810	785	Europe	800	774
312	224	230	Rest of World	259	290
1,729	1,656	1,696		1,701	1,700
94.8	94.0	94.9	Refining availability* (%)	94.4	95.0
			Marketing sales of refined products (mb/d)
1,197	1,145	1,121	US	1,122	1,167
1,240	1,160	1,272	Europe	1,202	1,178
522	569	542	Rest of World	572	527
2,959	2,874	2,935		2,896	2,872
2,439	2,649	2,718	Trading/supply sales of refined products	2,638	2,441
5,398	5,523	5,653	Total sales volumes of refined products	5,534	5,313
			Petrochemicals production (kte)
932	946	877	US	2,728	2,972
1,048	852	976	Europe	2,800	2,915
1,676	1,898	2,004	Rest of World	5,565	4,599
3,656	3,696	3,857		11,093	10,486

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

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Rosneft

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015(a)	$ million	2015(a)	2014
87	534	370	Profit before interest and tax(b)	1,125	1,686
20	(24)	12	Inventory holding (gains) losses*	(50)	(37)
107	510	382	RC profit before interest and tax	1,075	1,649
3	–	–	Net charge (credit) for non-operating items*	–	(244)
110	510	382	Underlying RC profit before interest and tax*	1,075	1,405

Replacement cost profit before interest and tax for the third quarter and nine months was $382 million and $1,075 million respectively, compared with $107 million and $1,649 million for the same periods in 2014.

There were no non-operating items in the third quarter and nine months 2015, compared with a non-operating charge of $3 million and a gain of $244 million for the same periods in 2014.

After adjusting for non-operating items, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $382 million and $1,075 million respectively, compared with $110 million and $1,405 million for the same periods in 2014. Compared with the same period last year, the result for the third quarter was favourably impacted by foreign exchange movements partly offset by lower prices. For the nine months, the result was primarily affected by lower oil prices and favourable foreign exchange effects.

See also Group statement of comprehensive income – Share of items relating to equity-accounted entities, net of tax, and footnote (a), on page 12 for other foreign exchange effects.

In June, Rosneft’s Annual General Meeting of Shareholders approved the distribution of a dividend of 8.21 roubles per share. We received our share of this dividend in July 2015, which amounted to $271 million after the deduction of withholding tax.

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015(a)		2015(a)	2014
			Production (net of royalties) (BP share)
817	815	810	Liquids* (mb/d)	813	822
1,073	1,172	1,125	Natural gas (mmcf/d)	1,173	1,044
1,002	1,017	1,003	Total hydrocarbons* (mboe/d)	1,016	1,002

(a)

The operational and financial information of the Rosneft segment for the third quarter and nine months is based on preliminary operational and financial results of Rosneft for the nine months ended 30 September 2015. 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 disposal of BP’s interest in TNK-BP. These adjustments have increased the reported profit before interest and tax for the third quarter and nine months 2015, as shown in the table above, compared with the equivalent amount in Russian roubles that we expect Rosneft to report in its own financial statements under IFRS. BP’s share of Rosneft’s profit before interest and tax for each year-to-date period is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date. BP's share of Rosneft’s earnings after finance costs, taxation and non-controlling interests, as adjusted, is included in the BP group income statement within profit before interest and taxation.

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Other businesses and corporate

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
(432)	(455)	(378)	Profit (loss) before interest and tax	(1,141)	(1,363)
–	–	–	Inventory holding (gains) losses*	–	–
(432)	(455)	(378)	RC profit (loss) before interest and tax	(1,141)	(1,363)
139	54	147	Net charge (credit) for non-operating items*	219	143
(293)	(401)	(231)	Underlying RC profit (loss) before interest and tax*	(922)	(1,220)
			Underlying RC profit (loss) before interest and tax
(102)	(144)	(126)	US	(332)	(427)
(191)	(257)	(105)	Non-US	(590)	(793)
(293)	(401)	(231)		(922)	(1,220)
			Non-operating items
(144)	(10)	(127)	US	(138)	(141)
5	(44)	(20)	Non-US	(81)	(2)
(139)	(54)	(147)		(219)	(143)
			RC profit (loss) before interest and tax
(246)	(154)	(253)	US	(470)	(568)
(186)	(301)	(125)	Non-US	(671)	(795)
(432)	(455)	(378)		(1,141)	(1,363)

Other businesses and corporate comprises biofuels and wind businesses, shipping, treasury (which includes interest income on the group's cash and cash equivalents), and corporate activities including centralized functions.

Financial results

The replacement cost loss before interest and tax for the third quarter and nine months was $378 million and $1,141 million respectively, compared with $432 million and $1,363 million for the same periods in 2014.

The third-quarter result included a net non-operating charge of $147 million, compared with a net non-operating charge of $139 million a year ago. For the nine months, the net non-operating charge was $219 million, compared with a net non-operating charge of $143 million a year ago.

After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the third quarter and nine months was $231 million and $922 million respectively, compared with $293 million and $1,220 million for the same periods in 2014. The nine-months charge is lower compared with the same period in 2014 mainly reflecting benefits from our simplification programmes and improved performance in our other businesses.

Biofuels

The net ethanol-equivalent production (which includes ethanol and sugar) for the third quarter and nine months was 359 million litres and 606 million litres respectively, compared with 255 million litres and 411 million litres for the same periods in 2014.

Wind

Net wind generation capacity*(a) was 1,588MW at 30 September 2015, compared with 1,590MW at 30 September 2014. BP’s net share of wind generation for the third quarter and nine months was 894GWh and 3,171GWh respectively, compared with 837GWh and 3,377GWh for the same periods in 2014.

(a)	Capacity figures include 32MW in the Netherlands managed by our Downstream segment.

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Gulf of Mexico oil spill

We announced on 2 July 2015 that BP Exploration & Production Inc. has reached agreements in principle with the US federal government and five Gulf states to settle all outstanding federal and state claims arising from the Deepwater Horizon oil spill. On 5 October 2015 the United States lodged the proposed Consent Decree with the court and BP entered into a definitive Settlement Agreement with the five Gulf states. The proposed Consent Decree and the Settlement Agreement are conditional upon each other and neither will become effective unless there is final court approval of the Consent Decree. Public comments on the proposed Consent Decree will be accepted until early December 2015 and a hearing has been scheduled by the court to consider approval of the Consent Decree in March 2016. The proposed Consent Decree and the Settlement Agreement do not cover claims relating to the 2012 class action settlements with the Plaintiffs’ Steering Committee, including business economic loss claims; private claims from other litigants not included within or who opted out of the class action settlements; or private securities litigation in MDL 2185.

A condition of the 2 July 2015 agreements in principle was that local government entities execute releases to BP’s satisfaction. BP has accepted releases received from the vast majority of local government entities and payments required under those releases were made during the third quarter.

For further details see Note 2 on page 16 and Legal proceedings on page 32.

Financial update

The replacement cost loss before interest and tax for the third quarter and nine months was $311 million and $11,381 million respectively, compared with $33 million and $313 million for the same periods last year. The third-quarter loss reflects additional business economic loss claims under the Plaintiffs’ Steering Committee settlements and adjustments to other provisions, as well as the ongoing costs of the Gulf Coast Restoration Organization. The loss for the first nine months also includes amounts provided for the agreements described above, and additional increases in the provision for business economic loss claims, associated claims administration costs and other items. The cumulative pre-tax charge recognized to date amounts to $55.0 billion.

The cumulative income statement charge does not include amounts for obligations that BP currently considers are not possible to measure reliably. The total amounts that will ultimately be paid by BP in relation to the incident will be dependent on many factors, as discussed under Provisions and contingent liabilities in Note 2 on page 18. These could have a material impact on our consolidated financial position, results and cash flows.

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Financial statements

Group income statement

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014

93,904	60,646	54,730	Sales and other operating revenues (Note 4)	169,572	279,571
119	156	327	Earnings from joint ventures – after interest and tax	587	389
272	670	504	Earnings from associates – after interest and tax	1,536	2,283
117	195	151	Interest and other income	466	605
355	133	167	Gains on sale of businesses and fixed assets	438	734
94,767	61,800	55,879	Total revenues and other income	172,599	283,582
75,492	44,748	41,063	Purchases	123,747	221,496
6,562	17,185	6,407	Production and manufacturing expenses	30,592	20,373
744	173	238	Production and similar taxes (Note 5)	773	2,546
3,956	3,765	3,737	Depreciation, depletion and amortization	11,338	11,297
			Impairment and losses on sale of businesses
997	286	40	and fixed assets	523	2,197
840	902	356	Exploration expense	1,430	2,177
3,207	2,989	2,699	Distribution and administration expenses	8,471	9,387
2,969	(8,248)	1,339	Profit (loss) before interest and taxation	(4,275)	14,109
285	289	398	Finance costs	968	849
			Net finance expense relating to pensions and
73	75	76	other post-retirement benefits	228	232
2,611	(8,612)	865	Profit (loss) before taxation	(5,471)	13,028
1,287	(2,829)	809	Taxation	(2,395)	4,652
1,324	(5,783)	56	Profit (loss) for the period	(3,076)	8,376
			Attributable to
1,290	(5,823)	46	BP shareholders	(3,175)	8,187
34	40	10	Non-controlling interests	99	189
1,324	(5,783)	56		(3,076)	8,376

			Earnings per share (Note 6)
			Profit (loss) for the period attributable to
			BP shareholders
			Per ordinary share (cents)
7.01	(31.83)	0.25	Basic	(17.35)	44.40
6.97	(31.83)	0.25	Diluted	(17.35)	44.14
			Per ADS (dollars)
0.42	(1.91)	0.02	Basic	(1.04)	2.66
0.42	(1.91)	0.02	Diluted	(1.04)	2.65

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Financial statements (continued)

Group statement of comprehensive income

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014

1,324	(5,783)	56	Profit (loss) for the period	(3,076)	8,376
			Other comprehensive income
			Items that may be reclassified subsequently
			to profit or loss
(3,434)	698	(2,247)	Currency translation differences	(3,161)	(3,342)
			Exchange gains (losses) on translation of foreign
			operations reclassified to gain or loss on sale of
(3)	16	7	businesses and fixed assets	23	(3)
–	1	–	Available-for-sale investments marked to market	1	(1)
			Available-for-sale investments reclassified to the
–	–	–	income statement	–	1
(144)	128	(70)	Cash flow hedges marked to market	(154)	(44)
			Cash flow hedges reclassified to the
(21)	81	65	income statement	220	(90)
(8)	4	7	Cash flow hedges reclassified to the balance sheet	16	(11)
			Share of items relating to equity-accounted
(144)	329	(830)	entities, net of tax(a)	(581)	(166)
(13)	(92)	268	Income tax relating to items that may be reclassified	300	(4)
(3,767)	1,165	(2,800)		(3,336)	(3,660)
			Items that will not be reclassified to profit or loss
			Remeasurements of the net pension and other
(1,051)	2,688	(551)	post-retirement benefit liability or asset	1,569	(1,765)
			Share of items relating to equity-accounted
–	–	(1)	entities, net of tax	(1)	5
			Income tax relating to items that will not be
257	(754)	80	reclassified	(516)	478
(794)	1,934	(472)		1,052	(1,282)
(4,561)	3,099	(3,272)	Other comprehensive income	(2,284)	(4,942)
(3,237)	(2,684)	(3,216)	Total comprehensive income	(5,360)	3,434
			Attributable to
(3,257)	(2,732)	(3,204)	BP shareholders	(5,423)	3,252
20	48	(12)	Non-controlling interests	63	182
(3,237)	(2,684)	(3,216)		(5,360)	3,434

(a)	Includes the effects of hedge accounting adopted by Rosneft from 1 October 2014 in relation to a portion of future export revenue denominated in US dollars. For further information see BP Annual Report and Form 20-F 2014 – Financial statements – Note 15.

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Financial statements (continued)

Group statement of changes in equity

	BP
	shareholders’	Non-controlling	Total
$ million	equity	interests	equity

At 1 January 2015	111,441	1,201	112,642

Total comprehensive income	(5,423)	63	(5,360)
Dividends	(5,118)	(71)	(5,189)
Share-based payments, net of tax	486	–	486
Share of equity-accounted entities’ changes in equity,
net of tax	(3)	–	(3)
Transactions involving non-controlling interests	–	23	23
At 30 September 2015	101,383	1,216	102,599

	BP
	shareholders’	Non-controlling	Total
$ million	equity	interests	equity

At 1 January 2014	129,302	1,105	130,407

Total comprehensive income	3,252	182	3,434
Dividends	(4,121)	(215)	(4,336)
Repurchases of ordinary share capital	(3,147)	–	(3,147)
Share-based payments, net of tax	452	–	452
Share of equity-accounted entities’ changes in equity,
net of tax	80	–	80
Transactions involving non-controlling interests	–	4	4
At 30 September 2014	125,818	1,076	126,894

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Financial statements (continued)

Group balance sheet

	30 September	31 December
$ million	2015	2014
Non-current assets
Property, plant and equipment	130,124	130,692
Goodwill	11,692	11,868
Intangible assets	19,232	20,907
Investments in joint ventures	9,129	8,753
Investments in associates	9,804	10,403
Other investments	1,019	1,228
Fixed assets	181,000	183,851
Loans	544	659
Trade and other receivables	2,282	4,787
Derivative financial instruments	4,559	4,442
Prepayments	951	964
Deferred tax assets	1,850	2,309
Defined benefit pension plan surpluses	571	31
	191,757	197,043
Current assets
Loans	332	333
Inventories	16,933	18,373
Trade and other receivables	25,862	31,038
Derivative financial instruments	3,824	5,165
Prepayments	2,038	1,424
Current tax receivable	607	837
Other investments	244	329
Cash and cash equivalents	31,702	29,763
	81,542	87,262
Total assets	273,299	284,305
Current liabilities
Trade and other payables	34,700	40,118
Derivative financial instruments	2,844	3,689
Accruals	5,825	7,102
Finance debt	8,982	6,877
Current tax payable	1,318	2,011
Provisions	4,494	3,818
	58,163	63,615
Non-current liabilities
Other payables	2,908	3,587
Derivative financial instruments	3,908	3,199
Accruals	964	861
Finance debt	48,423	45,977
Deferred tax liabilities	9,845	13,893
Provisions	36,578	29,080
Defined benefit pension plan and other post-retirement benefit plan deficits	9,911	11,451
	112,537	108,048
Total liabilities	170,700	171,663
Net assets	102,599	112,642
Equity
BP shareholders’ equity	101,383	111,441
Non-controlling interests	1,216	1,201
	102,599	112,642

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Financial statements (continued)

Condensed group cash flow statement

Third	Second	Third			Nine	Nine
quarter	quarter	quarter			months	months
2014	2015	2015	$ million		2015	2014
			Operating activities
2,611	(8,612)	865	Profit (loss) before taxation		(5,471)	13,028
			Adjustments to reconcile profit (loss) before taxation
			to net cash provided by operating activities
			Depreciation, depletion and amortization and
4,602	4,571	3,971	exploration expenditure written off		12,470	12,977
			Impairment and (gain) loss on sale of businesses
642	153	(127)	and fixed assets		85	1,463
			Earnings from equity-accounted entities, less
527	(654)	(295)	dividends received		(1,225)	(1,237)
			Net charge for interest and other finance expense,
114	13	196	less net interest paid		338	281
153	255	137	Share-based payments		154	437
			Net operating charge for pensions and other post-
			retirement benefits, less contributions and benefit
(92)	(30)	(41)	payments for unfunded plans		(128)	(299)
705	10,700	113	Net charge for provisions, less payments		11,201	568
			Movements in inventories and other current and
1,744	492	1,231	non-current assets and liabilities		(2,135)	2,083
(1,607)	(602)	(867)	Income taxes paid		(1,962)	(3,794)
9,399	6,286	5,183	Net cash provided by operating activities		13,327	25,507
			Investing activities
(5,256)	(4,529)	(4,357)	Capital expenditure		(13,522)	(16,646)
(3)	–	33	Acquisitions, net of cash acquired		33	(13)
(78)	(54)	(55)	Investment in joint ventures		(178)	(114)
(73)	(218)	(119)	Investment in associates		(424)	(208)
391	308	88	Proceeds from disposal of fixed assets		1,049	1,596
			Proceeds from disposal of businesses, net of
194	224	200	cash disposed		1,511	791
9	45	61	Proceeds from loan repayments		109	79
(4,816)	(4,224)	(4,149)	Net cash used in investing activities		(11,422)	(14,515)
			Financing activities
(1,623)	–	–	Net repurchase of shares		–	(3,796)
2,780	83	117	Proceeds from long-term financing		7,988	9,615
(388)	(542)	(18)	Repayments of long-term financing		(2,867)	(3,345)
(527)	(13)	(115)	Net increase (decrease) in short-term debt		597	(507)
(1,122)	(1,691)	(1,718)	Dividends paid	– BP shareholders	(5,118)	(4,121)
(62)	(30)	(29)		– non-controlling interests	(71)	(215)
(942)	(2,193)	(1,763)	Net cash provided by (used in) financing activities		529	(2,369)
			Currency translation differences relating to cash
(418)	286	(158)	and cash equivalents		(495)	(414)
3,223	155	(887)	Increase (decrease) in cash and cash equivalents		1,939	8,209
27,506	32,434	32,589	Cash and cash equivalents at beginning of period		29,763	22,520
30,729	32,589	31,702	Cash and cash equivalents at end of period		31,702	30,729

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Financial statements (continued)

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 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 2014 included in the BP Annual Report and Form 20-F 2014.

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 2015, which do not differ significantly from those used in BP Annual Report and Form 20-F 2014.

2. Gulf of Mexico oil spill

(a) Overview

As a consequence of the Gulf of Mexico oil spill, BP continues to incur various costs and has also recognized liabilities for future costs. The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2014 – Financial statements – Note 2 and Legal proceedings on page 228 and on page 32 of this report.

The group income statement includes a pre-tax charge of $426 million for the third quarter and $11,513 million for the nine months of 2015 in relation to the Gulf of Mexico oil spill. The third-quarter charge reflects additional business economic loss claims under the Plaintiffs’ Steering Committee (PSC) settlement, finance costs and adjustments to provisions due to discounting effects, as well as the ongoing costs of the Gulf Coast Restoration Organization. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $55,008 million.

The cumulative income statement charge does not include amounts for obligations that BP considers are not possible, at this time, to measure reliably. For further information, see Provisions and contingent liabilities below.

The agreements in principle signed on 2 July 2015 to settle all federal and state claims and claims made by more than 400 local government entities were subject to execution of definitive agreements, including a Consent Decree with the United States and Gulf states with respect to the Clean Water Act penalty and natural resource damages and other claims, a Settlement Agreement with five Gulf states with respect to state claims for economic loss, property damage and other claims, and resolution to BP’s satisfaction of the economic loss, property damage and other claims with more than 400 local government entities. During the third quarter, the United States lodged with the court in MDL 2179 a proposed Consent Decree between the United States, the Gulf states and BP, and the Settlement Agreement with the five Gulf states was executed. The proposed Consent Decree is available for public comment until early December 2015 and is subject to final court approval. The Consent Decree and Settlement Agreement with the five Gulf states are conditional upon each other and neither will become effective unless there is final court approval of the Consent Decree. BP has accepted releases received from the vast majority of local government entities and payments required under those releases were made during the third quarter. For more information on the proposed Consent Decree and Settlement Agreement see Legal proceedings on page 32.

The agreements described above (the Agreements) significantly reduce the uncertainties faced by BP following the Gulf of Mexico oil spill in 2010. There continues to be uncertainty regarding the outcome or resolution of current or future litigation and the extent and timing of costs and liabilities relating to the incident not covered by the Agreements. The total amounts that will ultimately be paid by BP in relation to the incident will be dependent on many factors, as discussed under Provisions and contingent liabilities below, including in relation to any new information or future developments. These uncertainties could have a material impact on our consolidated financial position, results and cash flows.

Top of page 17

Financial statements (continued)

Notes

2. Gulf of Mexico oil spill (continued)

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.

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Income statement
33	10,747	311	Production and manufacturing expenses	11,381	313
(33)	(10,747)	(311)	Profit (loss) before interest and taxation	(11,381)	(313)
10	8	115	Finance costs	132	29
(43)	(10,755)	(426)	Profit (loss) before taxation	(11,513)	(342)
45	3,601	(87)	Taxation	3,626	99
2	(7,154)	(513)	Profit (loss) for the period	(7,887)	(243)

	30 September	31 December
$ million	2015	2014
Balance sheet
Current assets
Trade and other receivables	1,205	1,154
Current liabilities
Trade and other payables	(797)	(655)
Accruals	(40)	–
Provisions	(2,523)	(1,702)
Net current assets (liabilities)	(2,155)	(1,203)
Non-current assets
Trade and other receivables	223	2,701
Non-current liabilities
Other payables	(2,068)	(2,412)
Accruals	(187)	(169)
Provisions	(14,304)	(6,903)
Deferred tax	5,334	1,723
Net non-current assets (liabilities)	(11,002)	(5,060)
Net assets (liabilities)	(13,157)	(6,263)

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Cash flow statement - Operating activities
(43)	(10,755)	(426)	Profit (loss) before taxation	(11,513)	(342)
			Adjustments to reconcile profit (loss)
			before taxation to net cash provided by
			operating activities
			Net charge for interest and other finance
10	8	115	expense, less net interest paid	132	29
586	10,607	235	Net charge for provisions, less payments	11,069	605
			Movements in inventories and other current
(846)	34	(135)	and non-current assets and liabilities	(696)	(1,457)
(293)	(106)	(211)	Pre-tax cash flows	(1,008)	(1,165)

Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $196 million and an outflow of $993 million in the third quarter and nine months of 2015 respectively. For the same periods in 2014, the amounts were an inflow of $42 million and an outflow of $313 million respectively.

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Financial statements (continued)

Notes

2. Gulf of Mexico oil spill (continued)

Trust fund

BP established the Deepwater Horizon Oil Spill Trust (the Trust), funded in the amount of $20 billion, to satisfy legitimate individual and business claims, state and local government claims resolved by BP, final judgments and settlements, state and local response costs, and natural resource damages and related costs. Fines and penalties are not covered by the trust fund.

The funding of the Trust was completed in 2012. The obligation to fund the $20-billion trust fund, adjusted to take account of the time value of money, was recognized in full in 2010 and charged to the income statement. An asset has been recognized representing BP’s right to receive reimbursement from the trust fund. This is the portion of the estimated future expenditure provided for that will be settled by payments from the trust fund. During 2014, cumulative charges to be paid by the Trust reached $20 billion. Subsequent additional costs, over and above those provided within the $20 billion, are expensed to the income statement as incurred.

At 30 September 2015, $1,428 million of the provisions and payables are eligible to be paid from the Trust. The reimbursement asset is recorded within other receivables on the balance sheet, of which $1,205 million is classified as current and $223 million as non-current. During the third quarter of 2015, $1,376 million of provisions and $37 million of payables were paid from the Trust.

At 30 September 2015, the aggregate cash balances in the Trust and the associated qualifying settlement funds amounted to $2.2 billion, including $0.7 billion remaining in the seafood compensation fund which has yet to be distributed and $0.3 billion held for natural resource damage early restoration projects. When the cash balances in the trust funds are exhausted, payments in respect of legitimate claims and other costs will be made directly by BP.

(b) Provisions and contingent liabilities

BP has recorded certain provisions and disclosed certain contingent liabilities as a consequence of the Gulf of Mexico oil spill. These are described below and in more detail in BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.

Provisions

BP has recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, litigation and claims, and Clean Water Act penalties. Movements in each class of provision during the third quarter and nine months are presented in the table below.

			Litigation	Clean
			and	Water Act
$ million		Environmental	claims	penalties	Total
At 1 July 2015		6,185	7,598	4,210	17,993
Net increase (decrease) in provision		(42)	443	(39)	362
Unwinding of discount		46	25	34	105
Change in discount rate		(34)	(15)	(26)	(75)
Reclassified to other payables		(130)	–	–	(130)
Utilization	– paid by BP	–	(52)	–	(52)
	– paid by the trust fund	(21)	(1,355)	–	(1,376)
At 30 September 2015		6,004	6,644	4,179	16,827
Of which	– current	244	2,279	–	2,523
	– non-current	5,760	4,365	4,179	14,304

			Litigation	Clean
			and	Water Act
		Environmental	claims	penalties	Total
$ million
At 1 January 2015		1,141	3,954	3,510	8,605
Net increase (decrease) in provision		5,402	5,257	661	11,320
Unwinding of discount		47	25	34	106
Change in discount rate		(34)	(15)	(26)	(75)
Reclassified to other payables		(459)	(125)	–	(584)
Utilization	– paid by BP	(22)	(154)	–	(176)
	– paid by the trust fund	(71)	(2,298)	–	(2,369)
At 30 September 2015		6,004	6,644	4,179	16,827

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Financial statements (continued)

Notes

2. Gulf of Mexico oil spill (continued)

Environmental

The environmental provision includes amounts payable for natural resource damage costs under the proposed Consent Decree. These amounts are payable in instalments over 16 years commencing one year after the court approves the Consent Decree; the majority of the unpaid balance of this natural resource damages settlement accrues interest at a fixed rate. The remaining amounts payable under the $1-billion early restoration framework agreement with natural resource trustees for the US and five Gulf states are also included in environmental provisions.

Litigation and claims

The litigation and claims provision includes amounts that can be estimated reliably for the future cost of settling 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 (Individual and Business Claims), and amounts provided under the Agreements in relation to state claims that have not yet been paid. Claims administration costs and legal costs have also been provided for. Amounts that cannot be measured reliably and which have therefore not been provided for are described under Contingent liabilities below.

Litigation and claims – PSC settlement

BP has provided for its best estimate of the cost associated with the 2012 PSC settlement agreements with the exception of the cost of business economic loss claims, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility. See BP Annual Report and Form 20-F 2014 – Financial statements – Note 2 and Legal proceedings on pages 228-237 for further details on the settlements with the PSC and related matters.

Management believes that no reliable estimate can currently be made of any business economic loss claims not yet processed or processed but not yet paid, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility.

The submission deadline for business economic loss claims passed on 8 June 2015; no further claims to the claims facility may be submitted. A significant number of business economic loss claims have been received but have not yet been processed and it is not possible to quantify the total value of the claims.

A revised policy for the matching of revenue and expenses for business economic loss claims was introduced in May 2014 and, of the claims assessable under the new policy, the majority have not yet been determined at this time. Uncertainties regarding the proper application of the revised policy to particular claims and categories of claims continue to arise as the claims administrator has applied the revised policy. There have been no, or only a small number of, claim determinations made under some of the specialized frameworks that have been put in place for particular industries and so determinations to date may not be representative of the total population of claims. In addition, while detailed data on pre-determination claims is not available due to a court order to protect claimant confidentiality, aggregated pre-determination data has recently been provided. While this data does provide some insights, it is not at a sufficient level of detail to obtain a complete or clear understanding of the composition of the underlying claims population.

There is limited data available to build up a track record of claims determinations under the policies and protocols that are now being applied following resolution of the matching and causation issues. We are unable to reliably estimate future trends of the number and proportion of claims that will be determined to be eligible, nor can we reliably estimate the value of such claims. A provision for such business economic loss claims will be established when these uncertainties are resolved and a reliable estimate can be made of the liability.

The current estimate for the total cost of those elements of the PSC settlement that BP considers can be reliably estimated, including amounts already paid, is $11.8 billion. The Deepwater Horizon Court Supervised Settlement Program (DHCSSP) has issued eligibility notices, many of which are disputed by BP, in respect of business economic loss claims of approximately $371 million which have not been provided for. The total cost of the PSC settlement is likely to be significantly higher than the amount recognized to date of $11.8 billion because the current estimate does not reflect business economic loss claims not yet processed or processed but not yet paid, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility.

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Financial statements (continued)

Notes

2. Gulf of Mexico oil spill (continued)

There continues to be a high level of uncertainty in relation to the amounts that ultimately will be paid in relation to current claims as described above and the outcomes of any further litigation including by parties excluded from, or parties who opted out of, the PSC settlement, as well as uncertainty arising from the PSC’s appeal to the Fifth Circuit of the District Court’s 31 March 2015 decision to deny its motion seeking to alter or amend the revised matching policy for business economic loss claims. There is also uncertainty as to the cost of administering the claims process under the DHCSSP and in relation to future legal costs. The timing of payment of provisions related to the PSC settlement is dependent upon ongoing claims facility activity and is therefore also uncertain.

Litigation and claims – other claims

The provision recognized for litigation and claims includes amounts agreed under the Agreements in relation to state claims. The amount provided in respect of state claims is payable over 18 years from the date the court approves the Consent Decree, of which $1 billion is due following the court approval of the Consent Decree. The vast majority of local government entities who filed claims have issued releases, which were accepted by BP; amounts due under those releases were paid during the third quarter.

Clean Water Act penalties

A provision has been recognized for penalties under Section 311 of the Clean Water Act, as determined in the Agreements. The amount is payable in instalments over 15 years, commencing one year after the court approves the Consent Decree. The unpaid balance of this penalty accrues interest at a fixed rate.

Provision movements and analysis of income statement charge

A net increase in provisions of $362 million and $11,320 million was recognized for the third quarter and nine months respectively. The third-quarter net increase arises primarily due to an increase in the litigation and claims provision for business economic loss claims. The remainder of the income statement charge mainly relates to finance costs and adjustments to provisions due to discounting effects. The net increase for the nine months also includes amounts provided for the Agreements, and additional increases in the litigation and claims provision for business economic loss claims, associated claims administration costs and other items. The following table shows an analysis of the income statement charge.

		Third	Nine	Cumulative
		quarter	months	since the
$ million		2015	2015	incident
Environmental costs		(76)	5,427	8,650
Spill response costs		–	–	14,304
Litigation and claims costs		428	5,242	32,022
Clean Water Act penalties – amount provided		(65)	635	4,145
Other costs charged directly to the income statement		24	77	1,334
Recoveries credited to the income statement		–	–	(5,681)
Charge (credit) related to the trust fund		–	–	(137)
Other costs of the trust fund		–	–	8
Loss before interest and taxation		311	11,381	54,645
Finance costs	– related to the trust funds	–	–	137
	– not related to the trust funds	115	132	226
Loss before taxation		426	11,513	55,008

Further information on provisions is provided in BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.

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Financial statements (continued)

Notes

2. Gulf of Mexico oil spill (continued)

Contingent liabilities

BP currently considers that it is not possible to measure reliably other obligations arising from the incident, including:

·	Claims asserted in civil litigation, including any further litigation by parties excluded from, or parties who opted out of, the PSC settlement, including as set out in Legal proceedings on pages 228-237 of BP Annual Report and Form 20-F 2014, except for claims covered by the Agreements.

·	The cost of business economic loss claims under the PSC settlement not yet processed or processed but not yet paid (except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility).

·	Any obligation that may arise from securities-related litigation.

·	Any obligation in relation to other potential private or non-US government litigation or claims (except for those items provided for as described above under Provisions).

It is not practicable to estimate the magnitude or possible timing of payment of these contingent liabilities.

As a result of the Agreements, contingent liabilities are no longer disclosed in relation to Clean Water Act penalties, natural resource damages and state claims and the vast majority of local government entity claims. See additional information on the Agreements above and in Legal proceedings on page 32.

The magnitude and timing of all possible obligations in relation to the Gulf of Mexico oil spill continue to be subject to uncertainty.

See also BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.

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

to profit (loss) before taxation

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
3,311	228	743	Upstream	1,343	12,019
1,231	1,628	2,562	Downstream	6,273	2,958
107	510	382	Rosneft	1,075	1,649
(432)	(455)	(378)	Other businesses and corporate	(1,141)	(1,363)
4,217	1,911	3,309		7,550	15,263
(33)	(10,747)	(311)	Gulf of Mexico oil spill response	(11,381)	(313)
370	(39)	67	Consolidation adjustment – UPII*	(101)	384
4,554	(8,875)	3,065	RC profit (loss) before interest and tax	(3,932)	15,334
			Inventory holding gains (losses)*
1	(3)	(27)	Upstream	(12)	(6)
(1,566)	606	(1,687)	Downstream	(381)	(1,256)
(20)	24	(12)	Rosneft (net of tax)	50	37
2,969	(8,248)	1,339	Profit (loss) before interest and tax	(4,275)	14,109
285	289	398	Finance costs	968	849
			Net finance expense relating to pensions
73	75	76	and other post-retirement benefits	228	232
2,611	(8,612)	865	Profit (loss) before taxation	(5,471)	13,028

			RC profit (loss) before interest and tax*
1,800	(10,641)	324	US	(10,814)	4,568
2,754	1,766	2,741	Non-US	6,882	10,766
4,554	(8,875)	3,065		(3,932)	15,334

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Financial statements (continued)

Notes

4. Sales and other operating revenues

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			By segment
15,879	11,036	10,357	Upstream	33,023	49,624
87,068	55,332	49,499	Downstream	152,956	258,237
530	512	552	Other businesses and corporate	1,492	1,373
103,477	66,880	60,408		187,471	309,234

			Less: sales and other operating revenues
			between segments
9,427	5,590	5,809	Upstream	16,962	28,373
(73)	402	(377)	Downstream	201	641
219	242	246	Other businesses and corporate	736	649
9,573	6,234	5,678		17,899	29,663

			Third party sales and other operating revenues
6,452	5,446	4,548	Upstream	16,061	21,251
87,141	54,930	49,876	Downstream	152,755	257,596
311	270	306	Other businesses and corporate	756	724
			Total third party sales and other operating
93,904	60,646	54,730	revenues	169,572	279,571

			By geographical area
34,678	21,824	20,680	US	61,345	105,010
66,402	43,130	37,778	Non-US	119,596	200,010
101,080	64,954	58,458		180,941	305,020
			Less: sales and other operating revenues
7,176	4,308	3,728	between areas	11,369	25,449
93,904	60,646	54,730		169,572	279,571

5. Production and similar taxes

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
140	33	30	US	97	634
604	140	208	Non-US	676	1,912
744	173	238		773	2,546

6. Earnings per share and shares in issue

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

The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.

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Financial statements (continued)

Notes

6. Earnings per share and shares in issue (continued)

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.

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015	$ million	2015	2014
			Results for the period
			Profit (loss) for the period
1,290	(5,823)	46	attributable to BP shareholders	(3,175)	8,187
–	1	–	Less: preference dividend	1	1
			Profit (loss) attributable to BP
1,290	(5,824)	46	ordinary shareholders	(3,176)	8,186

			Number of shares (thousand)(a)(b)
			Basic weighted average number
18,390,006	18,299,877	18,329,701	of shares outstanding	18,304,504	18,436,995
3,065,001	3,049,979	3,054,950	ADS equivalent	3,050,750	3,072,832

			Weighted average number of
			shares outstanding used to
18,499,505	18,299,877	18,371,656	calculate diluted earnings per share	18,304,504	18,544,448
3,083,250	3,049,979	3,061,942	ADS equivalent	3,050,750	3,090,741

18,311,461	18,318,924	18,349,963	Shares in issue at period-end	18,349,963	18,311,461
3,051,910	3,053,154	3,058,327	ADS equivalent	3,058,327	3,051,910

(a)	Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.
(b)	If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.

7. Dividends

Dividends payable

BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 18 December 2015 to shareholders and American Depositary Share (ADS) holders on the register on 6 November 2015. The corresponding amount in sterling is due to be announced on 7 December 2015, calculated based on the average of the market exchange rates for the four dealing days commencing on 1 December 2015. 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 third-quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.

Dividends paid

Third	Second	Third		Nine	Nine
quarter	quarter	quarter		months	months
2014	2015	2015		2015	2014
			Dividends paid per ordinary share
9.750	10.000	10.000	cents	30.000	29.000
5.959	6.530	6.549	pence	19.749	17.473
58.50	60.00	60.00	Dividends paid per ADS (cents)	180.00	174.00
			Scrip dividends
85.2