6-K
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

for the period ended 31 December 2015

Commission File Number 1-06262

BP p.l.c.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

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


Table of Contents

BP p.l.c. and subsidiaries

Form 6-K for the period ended 31 December 2015(a)

 

 

 

         Page  

1.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period January-December 2015(b)

     3 – 12, 29 – 34   

2.

 

Consolidated Financial Statements including Notes to Consolidated Financial Statements for the period January-December 2015

     13 – 28   

3.

  Legal proceedings      35   

4.

  Cautionary statement      36   

5.

  Computation of Ratio of Earnings to Fixed Charges      37   

6.

  Capitalization and Indebtedness      38   

7.

  Recent credit ratings update      39   

8.

 

Recent executive team changes

     39   

9.

  Signatures      40   

 

(a) In this Form 6-K, references to the full year 2015 and full year 2014 refer to the full year periods ended 31 December 2015 and 31 December 2014 respectively. References to fourth quarter 2015 and fourth quarter 2014 refer to the three-month periods ended 31 December 2015 and 31 December 2014 respectively.
(b) This discussion should be read in conjunction with the consolidated financial statements and related notes provided elsewhere in this Form 6-K and with the information, including the consolidated financial statements and related notes, in BP’s Annual Report on Form 20-F for the year ended 31 December 2014.

 

 

 

2


Table of Contents

Group results fourth quarter and year end 2015

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  (4,407      (3,307   

Profit (loss) for the period(a)

     (6,482      3,780   
  3,438         1,074      

Inventory holding (gains) losses*, net of tax

     1,320         4,293   

 

 

    

 

 

       

 

 

    

 

 

 
  (969      (2,233   

Replacement cost profit (loss)*

     (5,162      8,073   

 

3,208

  

  

 

2,429

  

  

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

  

 

11,067

  

  

 

4,063

  

 

 

    

 

 

       

 

 

    

 

 

 
  2,239         196      

Underlying replacement cost profit*

     5,905         12,136   

 

 

    

 

 

       

 

 

    

 

 

 
  (24.18      (18.01   

Profit (loss) per ordinary share (cents)

     (35.39      20.55   
  (1.45      (1.08   

Profit (loss) per ADS (dollars)

     (2.12      1.23   
  (5.32      (12.16   

Replacement cost profit (loss) per ordinary share (cents)

     (28.18      43.90   
  (0.32      (0.73   

Replacement cost profit (loss) per ADS (dollars)

     (1.69      2.63   
  12.28         1.06      

Underlying replacement cost profit per ordinary share (cents)

     32.22         66.00   
  0.74         0.06       Underlying replacement cost profit per ADS (dollars)      1.93         3.96   

 

 

BP’s result for the fourth quarter was a loss of $3,307 million, compared with a loss of $4,407 million for the same period in 2014. BP’s fourth-quarter replacement cost (RC) loss was $2,233 million, compared with a loss of $969 million a year ago. After adjusting for a net charge for non-operating items of $2,617 million and net favourable fair value accounting effects of $188 million (both on a post-tax basis), underlying RC profit for the fourth quarter was $196 million, compared with $2,239 million for the same period in 2014. The net charge for non-operating items mainly relates to impairment charges in the Upstream segment and also reflects $450 million of restructuring charges for the group. The lower underlying result was mainly due to the Upstream segment which reported an underlying replacement cost loss of $728 million for the quarter. Cumulative restructuring charges from the beginning of the fourth quarter 2014 totalled $1.5 billion by the end of 2015. A further $1.0 billion of restructuring charges are expected to be incurred in 2016.

 

 

BP’s result for the full year was a loss of $6,482 million, compared with a profit of $3,780 million for the same period in 2014. For the full year, RC loss was $5,162 million, compared with a profit of $8,073 million a year ago. After adjusting for a net charge for non-operating items of $11,272 million and net favourable fair value accounting effects of $205 million (both on a post-tax basis), underlying RC profit for the full year was $5,905 million, compared with $12,136 million for the same period in 2014. 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 5 and 31.

 

 

All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $443 million for the fourth quarter and $11,956 million for the full year. For further information on the Gulf of Mexico oil spill and its consequences see page 12 and Note 2 on page 18. See also Legal proceedings on page 35.

 

 

Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the fourth quarter and full year was $5.8 billion and $19.1 billion respectively, compared with $7.2 billion and $32.8 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 fourth quarter and full year was $5.9 billion and $20.3 billion respectively, compared with $6.9 billion and $32.8 billion for the same periods in 2014.

 

 

Gross debt at 31 December 2015 was $53.2 billion compared with $52.9 billion a year ago. The ratio of gross debt to gross debt plus equity at 31 December 2015 was 35.1%, compared with 31.9% a year ago. Net debt* at 31 December 2015 was $27.2 billion, compared with $22.6 billion a year ago. The net debt ratio* at 31 December 2015 was 21.6%, compared with 16.7% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 27 for more information. We aim to maintain the net debt ratio, with some flexibility, at around 20%. We expect the net debt ratio to be above 20% whilst oil prices remain weak.

 

 

The reserves replacement ratio* on a combined basis of subsidiaries and equity-accounted entities was estimated at 61%(b) for the year, excluding the impact of acquisitions and disposals.

 

 

BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 24 March 2016. The corresponding amount in sterling will be announced on 14 March 2016. See page 26 for further information.

 

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 33.
(a) Profit attributable to BP shareholders.
(b) Includes estimated reserves data for Rosneft. The reserves replacement ratio will be finalized and reported in BP Annual Report and Form 20-F 2015 which is scheduled to be published in early March 2016.

 

 

The commentaries above and following should be read in conjunction with the cautionary statement on page 36.

 

 

 

 

3


Table of Contents

Group headlines (continued)

 

 

 

 

Total capital expenditure on an accruals basis for the fourth quarter was $6.1 billion, of which organic capital expenditure* was $5.5 billion, compared with $6.7 billion for the same period in 2014, of which organic capital expenditure was $6.6 billion. For the full year, total capital expenditure on an accruals basis was $19.5 billion, of which organic capital expenditure was $18.7 billion, compared with $23.8 billion for the same period in 2014, of which organic capital expenditure was $22.9 billion. See page 29 for further information. In 2016, we expect organic capital expenditure to be at the lower end of the range of $17-19 billion.

 

 

BP has now completed the $10-billion divestment programme that was announced in October 2013. Disposal proceeds were $0.2 billion for the fourth quarter and $2.8 billion for the full year. The full-year amount for disposal proceeds includes amounts received 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 the profit or loss for the fourth quarter and full year was 19% and 33% respectively, compared with 46% and 19% for the same periods in 2014. The ETR on RC profit or loss for the fourth quarter and full year was 12% and 34% respectively, compared with 70% and 26% 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 on the RC loss for the year was 22%. Adjusting for non-operating items, fair value accounting effects and the North Sea adjustment, the underlying ETR for the fourth quarter and full year was -20% and 31% respectively, compared with 38% and 36% for the same periods in 2014. The underlying ETR for the fourth quarter reflects tax credits associated with losses in the Upstream segment offsetting tax charges arising elsewhere. The full-year underlying ETR is lower than a year ago mainly due to changes in the geographical mix of profits. In the current environment, and with our existing portfolio of assets, the ETR in 2016 is expected to be lower than 2015 due to the anticipated mix of profits moving away from relatively high tax Upstream jurisdictions.

 

 

Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $457 million for the fourth quarter, compared with $381 million for the same period in 2014. For the full year, the respective amounts were $1,653 million and $1,462 million.

 

 

Reported production for the fourth quarter, including BP’s share of Rosneft’s production, was 3,397 thousand barrels of oil equivalent per day (mboe/d), compared with 3,214mboe/d for the same period in 2014 (see Upstream on page 6 and Rosneft on page 10). Reported production for the full year, including BP’s share of Rosneft’s production, was 3,277mboe/d, compared with 3,151mboe/d in 2014.

 

 

The charge for depreciation, depletion and amortization was $15.2 billion in 2015, the same as 2014. In 2016, we expect the charge to be similar to 2015.

 

 

Definitive agreements were signed in January 2016 to dissolve BP’s refining joint operation with Rosneft in Germany (see Note 3 for further information).

 

 

 

4


Table of Contents

Analysis of RC profit (loss) before interest and tax

and reconciliation to profit (loss) for the period

 

 

 

Fourth
quarter
2014

    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
    RC profit (loss) before interest and tax*     
  (3,085     (2,280 )  

Upstream

     (937     8,934   
  780        838     

Downstream

     7,111        3,738   
  451        235     

Rosneft

     1,310        2,100   
  (647     (627 )  

Other businesses and corporate

     (1,768     (2,010
  (468     (328  

Gulf of Mexico oil spill response(a)

     (11,709     (781
  257        65     

Consolidation adjustment – UPII*

     (36     641   

 

 

   

 

 

      

 

 

   

 

 

 
  (2,712     (2,097   RC profit (loss) before interest and tax      (6,029     12,622   
  (381     (457  

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

     (1,653     (1,462
  2,158        304      Taxation on a RC basis      2,602        (2,864
  (34     17      Non-controlling interests      (82     (223

 

 

   

 

 

      

 

 

   

 

 

 
  (969     (2,233   RC profit (loss) attributable to BP shareholders      (5,162     8,073   

 

 

   

 

 

      

 

 

   

 

 

 
  (4,985     (1,546   Inventory holding gains (losses)      (1,889     (6,210
  1,547        472      Taxation (charge) credit on inventory holding gains and losses      569        1,917   
  (4,407     (3,307   Profit (loss) for the period attributable to BP shareholders      (6,482     3,780   

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) See Note 2 on page 18 for further information on the accounting for the Gulf of Mexico oil spill response.

Analysis of underlying RC profit before interest and tax

 

 

 

Fourth
quarter
2014

    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
    Underlying RC profit before interest and tax*     
  2,246        (728  

Upstream

     1,193        15,201   
  1,213        1,218     

Downstream

     7,545        4,441   
  470        235     

Rosneft

     1,310        1,875   
  (120     (299  

Other businesses and corporate

     (1,221     (1,340
  257        65     

Consolidation adjustment – UPII

     (36     641   

 

 

   

 

 

      

 

 

   

 

 

 
  4,066        491      Underlying RC profit before interest and tax      8,791        20,818   
  (372     (342  

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

     (1,406     (1,424
  (1,421     30      Taxation on an underlying RC basis      (1,398     (7,035
  (34     17      Non-controlling interests      (82     (223

 

 

   

 

 

      

 

 

   

 

 

 
  2,239        196      Underlying RC profit attributable to BP shareholders      5,905        12,136   

 

 

   

 

 

      

 

 

   

 

 

 

Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 3 for the group and on pages 6-11 for the segments.

 

 

 

5


Table of Contents

Upstream

 

 

 

Fourth
quarter
2014

     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  (3,165      (2,298    Profit (loss) before interest and tax      (967      8,848   
  80         18       Inventory holding (gains) losses*      30         86   

 

 

    

 

 

       

 

 

    

 

 

 
  (3,085      (2,280    RC profit (loss) before interest and tax      (937      8,934   
  5,331         1,552      

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

     2,130         6,267   

 

 

    

 

 

       

 

 

    

 

 

 
  2,246         (728    Underlying RC profit (loss) before interest and tax*(a)      1,193         15,201   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) See page 7 for a reconciliation to segment RC profit before interest and tax by region.

Financial results

The replacement cost result before interest and tax for the fourth quarter and full year was a loss of $2,280 million and $937 million respectively, compared with a loss of $3,085 million and a profit of $8,934 million for the same periods in 2014. The fourth quarter and full year included a net non-operating charge of $1,639 million and $2,235 million respectively, compared with a net non-operating charge of $5,557 million and $6,298 million for the same periods a year ago. The net non-operating charge for the quarter relates mainly to a net impairment charge recorded in relation to a number of assets following a further fall in oil and gas prices in the quarter and changes to other assumptions. See Note 4 Impairment of fixed assets on page 23 for further information. Fair value accounting effects in the fourth quarter and full year had favourable impacts of $87 million and $105 million respectively, compared with favourable impacts of $226 million and $31 million in the same periods of 2014.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost result before interest and tax for the fourth quarter and full year was a loss of $728 million and a profit of $1,193 million respectively, compared with a profit of $2,246 million and $15,201 million for the same periods in 2014. The result for the fourth quarter reflected significantly lower liquids and gas realizations and lower gas marketing and trading results partly offset by lower costs, including lower exploration write-offs and benefits from simplification and efficiency activities. The result for the full year reflected significantly lower liquids and gas realizations, rig cancellation charges and lower gas marketing and trading results partly offset by lower costs including benefits from simplification and efficiency activities and lower exploration write-offs, and higher production.

Production

Production for the quarter was 2,369mboe/d, 8.3% higher than the fourth quarter of 2014. Underlying production* for the quarter increased by 1.7%, mainly due to improved operating efficiency, wellwork delivery and major project start-ups partly offset by planned maintenance activity. For the full year, production was 2,258mboe/d, 5.4% higher than in 2014. Underlying production for the full year was flat versus 2014.

Key events

In November, BP signed a Heads of Agreement with the Egyptian Minister of Petroleum regarding the acceleration of the development of the recent Atoll gas discovery. The Atoll discovery (BP 100%) in the North Damietta Offshore Concession in the East Nile Delta, offshore Egypt was announced in March 2015. Development of Atoll will be executed and operated by Pharaonic Petroleum Co. (PhPC), BP’s joint venture with EGAS and Eni.

Also in November, BP completed a transaction to acquire a 20% participatory interest in Taas-Yuryakh Neftegazodobycha LLC, a Rosneft subsidiary that will further develop the Srednebotuobinskoye oil and gas condensate field in Eastern Siberia.

In December, BP announced the completion of its acquisition of 22.75% in the North Alexandria Concession and 2.75% in the West Mediterranean Deep Water Concession from DEA Deutsche Erdoel AG. The acquisition will bring BP’s working interest in both concessions of the West Nile Delta project in Egypt to 82.75%.

The new Glen Lyon floating production storage and offload (FPSO) vessel has completed sea trials and sailed away from South Korea on 25 December. Glen Lyon is currently in tow to Norway for pre-installation works before travelling to the West of Shetlands for installation and future start of production. The new FPSO is the centrepiece to the Quad 204 project, which is redeveloping the Schiehallion and Loyal fields.

BP’s US Lower 48 Onshore business expanded its San Juan basin operations in December by acquiring all of Devon Energy’s assets in the region. The bulk of the acquired assets, which span northern New Mexico and southern Colorado, consist of Devon’s operated interest in the Northeast Blanco Unit. BP anticipates taking over operations of the unit’s 480 wells spread across 33,000 gross acres at the end of the first quarter of 2016, after receiving required government agency approvals.

Outlook

We expect full-year 2016 underlying production to be broadly flat with 2015. The actual reported outcome will depend on the exact timing of project start-ups, divestments, OPEC quotas and entitlement impacts in our production-sharing agreements*. We expect first-quarter 2016 reported production to be broadly flat with the fourth quarter 2015. Oil prices continue to be challenging in the near term.

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

 

 

6


Table of Contents

Upstream

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
      Underlying RC profit (loss) before interest and tax      
  1,007         (852    US      (1,615      4,338   
  1,239         124       Non-US      2,808         10,863   

 

 

    

 

 

       

 

 

    

 

 

 
  2,246         (728         1,193         15,201   

 

 

    

 

 

       

 

 

    

 

 

 
      Non-operating items      
  (30      (260    US      (602      (36
  (5,527      (1,379    Non-US(a)      (1,633      (6,262

 

 

    

 

 

       

 

 

    

 

 

 
  (5,557      (1,639         (2,235      (6,298

 

 

    

 

 

       

 

 

    

 

 

 
      Fair value accounting effects      
  152         (34    US      (66      23   
  74         121       Non-US      171         8   

 

 

    

 

 

       

 

 

    

 

 

 
  226         87            105         31   

 

 

    

 

 

       

 

 

    

 

 

 
      RC profit (loss) before interest and tax      
  1,129         (1,146    US      (2,283      4,325   
  (4,214      (1,134    Non-US      1,346         4,609   

 

 

    

 

 

       

 

 

    

 

 

 
  (3,085      (2,280         (937      8,934   

 

 

    

 

 

       

 

 

    

 

 

 
      Exploration expense      
  426         627       US(b)      960         1,295   
  1,029         296       Non-US(a)(c)      1,393         2,337   

 

 

    

 

 

       

 

 

    

 

 

 
  1,455         923            2,353         3,632   

 

 

    

 

 

       

 

 

    

 

 

 
      Production (net of royalties)(d)      
      Liquids* (mb/d)      
  407         401       US      379         411   
  85         131       Europe      121         94   
  656         795       Rest of World      732         602   

 

 

    

 

 

       

 

 

    

 

 

 
  1,149         1,326            1,232         1,106   

 

 

    

 

 

       

 

 

    

 

 

 
  166         176       Of which equity-accounted entities      172         170   

 

 

    

 

 

       

 

 

    

 

 

 
      Natural gas (mmcf/d)      
  1,526         1,547       US      1,528         1,519   
  163         287       Europe      266         173   
  4,332         4,214       Rest of World      4,157         4,324   

 

 

    

 

 

       

 

 

    

 

 

 
  6,021         6,048            5,951         6,016   

 

 

    

 

 

       

 

 

    

 

 

 
  415         452       Of which equity-accounted entities      456         431   

 

 

    

 

 

       

 

 

    

 

 

 
      Total hydrocarbons* (mboe/d)      
  670         668       US      643         673   
  114         180       Europe      167         123   
  1,403         1,521       Rest of World      1,448         1,347   

 

 

    

 

 

       

 

 

    

 

 

 
  2,187         2,369            2,258         2,143   

 

 

    

 

 

       

 

 

    

 

 

 
  238         254       Of which equity-accounted entities      251         245   

 

 

    

 

 

       

 

 

    

 

 

 
      Average realizations(e)      
  69.03         37.05       Total liquids(f) ($/bbl)      45.63         87.96   
  5.54         3.47       Natural gas ($/mcf)      3.80         5.70   
  51.53         29.54       Total hydrocarbons ($/boe)      34.78         60.85   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) Fourth quarter and full year 2014 include write-offs of $20 million and $395 million respectively relating to Block KG D6 in India. This is classified in the ‘other’ category of non-operating items. In addition, impairment charges of $20 million and $415 million for the same periods were also recorded in relation to this block. See page 30.
(b) Fourth quarter and full year 2015 include the write-off of costs relating to the Gila discovery in the deepwater Gulf of Mexico. Fourth quarter and full year 2014 include the write-off of costs relating to the Moccasin discovery in the deepwater Gulf of Mexico. Full year 2014 also includes a $544-million write-off relating to the Utica shale acreage in Ohio, following the decision not to proceed with development plans.
(c) Full year 2015 includes 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. Fourth quarter and full year 2014 include the write-off of $524 million relating to the Bourarhat Sud block licence in the Illizi Basin of Algeria.
(d) Includes BP’s share of production of equity-accounted entities in the Upstream segment.
(e) Realizations are based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.
(f) Includes condensate and bitumen.

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

 

 

 

7


Table of Contents

Downstream

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  (4,064      (644   

Profit (loss) before interest and tax

     5,248         (2,362
  4,844         1,482      

Inventory holding (gains) losses*

     1,863         6,100   

 

 

    

 

 

       

 

 

    

 

 

 
  780         838      

RC profit before interest and tax

     7,111         3,738   
  433         380      

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

     434         703   

 

 

    

 

 

       

 

 

    

 

 

 
  1,213         1,218      

Underlying RC profit before interest and tax*(a)

     7,545         4,441   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) See page 9 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 fourth quarter and full year was $838 million and $7,111 million respectively, compared with $780 million and $3,738 million for the same periods in 2014.

The 2015 results include a net non-operating charge of $548 million for the fourth quarter and a net non-operating charge of $590 million for the full year, compared with net non-operating charges of $790 million and $1,570 million for the same periods in 2014 (see pages 9 and 30 for further information on non-operating items). Fair value accounting effects had favourable impacts of $168 million for the fourth quarter and $156 million for the full year, compared with favourable impacts of $357 million and $867 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 fourth quarter and full year was $1,218 million and $7,545 million respectively, compared with $1,213 million and $4,441 million for the same periods in 2014. The full-year result is a record for Downstream.

Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 9.

Fuels business

The fuels business reported an underlying replacement cost profit before interest and tax of $888 million for the fourth quarter and $5,995 million for the full year, compared with $925 million and $3,219 million for the same periods in 2014. The result for the full year reflects a strong refining environment, improved refining margin optimization and operations, and lower costs from simplification and efficiency programmes. The result for the quarter reflects lower costs from simplification and efficiency programmes, offset by a weak supply and trading result.

On 15 January 2016 we announced that we had signed definitive agreements to dissolve our German refining joint operation with our partner Rosneft, which will refocus our refining business in the heart of Europe.

Lubricants business

The lubricants business reported an underlying replacement cost profit before interest and tax of $294 million in the fourth quarter and $1,384 million in the full year, compared with $313 million and $1,271 million for the same periods in 2014. The result for the quarter reflects continued strong margins offset by adverse foreign exchange impacts. The result for the full year reflects strong performance in growth markets and premium brands and lower costs from simplification and efficiency programmes. These full-year factors contributed to around a 20% growth in the underlying replacement cost profit before interest and tax, which was partially offset by adverse foreign exchange impacts.

Petrochemicals business

The petrochemicals business reported an underlying replacement cost profit before interest and tax of $36 million in the fourth quarter and $166 million in the full year, compared with a loss of $25 million and a loss of $49 million for the same periods in 2014. The results for the quarter and full year reflect improved operational performance and benefits from our simplification and efficiency programmes leading to lower costs.

Following a review of our petrochemicals portfolio to refocus our global business for long-term growth, on 6 January 2016 we announced the agreement to sell our Decatur petrochemicals complex in Alabama, US.

Outlook

Looking ahead, refining margins in the first quarter are expected to be lower than the fourth quarter.

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

 

 

8


Table of Contents

Downstream

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

Underlying RC profit before interest and tax - by region

     
  338         477      

US

     2,599         1,684   
  875         741      

Non-US

     4,946         2,757   

 

 

    

 

 

       

 

 

    

 

 

 
  1,213         1,218            7,545         4,441   

 

 

    

 

 

       

 

 

    

 

 

 
     

Non-operating items

     
  (337      (196   

US

     (86      (339
  (453      (352   

Non-US

     (504      (1,231

 

 

    

 

 

       

 

 

    

 

 

 
  (790      (548         (590      (1,570

 

 

    

 

 

       

 

 

    

 

 

 
     

Fair value accounting effects

     
  379         124      

US

     102         914   
  (22      44      

Non-US

     54         (47

 

 

    

 

 

       

 

 

    

 

 

 
  357         168            156         867   

 

 

    

 

 

       

 

 

    

 

 

 
     

RC profit before interest and tax

     
  380         405      

US

     2,615         2,259   
  400         433      

Non-US

     4,496         1,479   

 

 

    

 

 

       

 

 

    

 

 

 
  780         838            7,111         3,738   

 

 

    

 

 

       

 

 

    

 

 

 
     

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

     
  925         888      

Fuels

     5,995         3,219   
  313         294      

Lubricants

     1,384         1,271   
  (25      36      

Petrochemicals

     166         (49

 

 

    

 

 

       

 

 

    

 

 

 
  1,213         1,218            7,545         4,441   

 

 

    

 

 

       

 

 

    

 

 

 
     

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

     
  (383      (220   

Fuels

     (137      (389
  (45      (17   

Lubricants

     (143      136   
  (5      (143   

Petrochemicals

     (154      (450

 

 

    

 

 

       

 

 

    

 

 

 
  (433      (380         (434      (703

 

 

    

 

 

       

 

 

    

 

 

 
     

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

     
  542         668      

Fuels

     5,858         2,830   
  268         277      

Lubricants

     1,241         1,407   
  (30      (107   

Petrochemicals

     12         (499

 

 

    

 

 

       

 

 

    

 

 

 
  780         838            7,111         3,738   

 

 

    

 

 

       

 

 

    

 

 

 
  13.0         13.2      

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

     17.0         14.4   

 

 

    

 

 

       

 

 

    

 

 

 
     

Refinery throughputs (mb/d)

     
  657         700      

US

     657         642   
  807         776      

Europe

     794         782   
  318         238      

Rest of World

     254         297   

 

 

    

 

 

       

 

 

    

 

 

 
  1,782         1,714            1,705         1,721   

 

 

    

 

 

       

 

 

    

 

 

 
  94.8         95.5      

Refining availability* (%)

     94.7         94.9   

 

 

    

 

 

       

 

 

    

 

 

 
     

Marketing sales of refined products (mb/d)

     
  1,166         1,267      

US

     1,158         1,166   
  1,173         1,188      

Europe

     1,199         1,177   
  534         476      

Rest of World(d)

     478         529   

 

 

    

 

 

       

 

 

    

 

 

 
  2,873         2,931            2,835         2,872   
  2,470         2,883      

Trading/supply sales of refined products(d)

     2,770         2,448   

 

 

    

 

 

       

 

 

    

 

 

 
  5,343         5,814      

Total sales volumes of refined products

     5,605         5,320   

 

 

    

 

 

       

 

 

    

 

 

 
     

Petrochemicals production (kte)

     
  872         938      

US

     3,666         3,844   
  937         727      

Europe

     3,527         3,851   
  1,719         2,002      

Rest of World

     7,567         6,319   

 

 

    

 

 

       

 

 

    

 

 

 
  3,528         3,667            14,760         14,014   

 

 

    

 

 

       

 

 

    

 

 

 

 

(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.
(d) Prior quarters in 2015 include a minor reclassification between Marketing sales in Rest of World and Trading/supply sales of refined products.

 

 

 

9


Table of Contents

Rosneft

 

 

 

Fourth
quarter
2014

     Fourth
quarter
2015
(a)
     $ million    Year
2015
(a)
     Year
2014
 
  390         189       Profit before interest and tax(b)      1,314         2,076   
  61         46       Inventory holding (gains) losses*      (4      24   

 

 

    

 

 

       

 

 

    

 

 

 
  451         235       RC profit before interest and tax      1,310         2,100   
  19         —         Net charge (credit) for non-operating items*      —           (225

 

 

    

 

 

       

 

 

    

 

 

 
  470         235       Underlying RC profit before interest and tax*      1,310         1,875   

 

 

    

 

 

       

 

 

    

 

 

 

Replacement cost profit before interest and tax for the fourth quarter and full year was $235 million and $1,310 million respectively, compared with $451 million and $2,100 million for the same periods in 2014.

There were no non-operating items in the fourth quarter and full year 2015, compared with a non-operating charge of $19 million and a gain of $225 million for the same periods in 2014.

After adjusting for non-operating items, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $235 million and $1,310 million respectively, compared with $470 million and $1,875 million for the same periods in 2014. Compared with the same periods last year, the results for the fourth quarter and full year were primarily affected by lower oil prices, foreign exchange, and comparatively favourable duty lag effects.

See also Group statement of comprehensive income – Share of items relating to equity-accounted entities, net of tax, and footnote (a), on page 14 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.

 

Fourth
quarter
2014

     Fourth
quarter
2015
(a)
          Year
2015
(a)
     Year
2014
 
      Production (net of royalties) (BP share)      
  819         811       Liquids* (mb/d)      813         821   
  1,203         1,261       Natural gas (mmcf/d)      1,195         1,084   
  1,027         1,028       Total hydrocarbons* (mboe/d)      1,019         1,008   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) The operational and financial information of the Rosneft segment for the fourth quarter and full year is based on preliminary operational and financial results of Rosneft for the full year ended 31 December 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 fourth quarter and full year 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.

 

 

 

10


Table of Contents

Other businesses and corporate

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  (647      (627   

Profit (loss) before interest and tax

     (1,768      (2,010
  —           —        

Inventory holding (gains) losses*

     —           —     

 

 

    

 

 

       

 

 

    

 

 

 
  (647      (627   

RC profit (loss) before interest and tax

     (1,768      (2,010
  527         328      

Net charge (credit) for non-operating items*

     547         670   

 

 

    

 

 

       

 

 

    

 

 

 
  (120      (299   

Underlying RC profit (loss) before interest and tax*

     (1,221      (1,340

 

 

    

 

 

       

 

 

    

 

 

 
     

Underlying RC profit (loss) before interest and tax

     
  (167      (107   

US

     (439      (594
  47         (192   

Non-US

     (782      (746

 

 

    

 

 

       

 

 

    

 

 

 
  (120      (299         (1,221      (1,340

 

 

    

 

 

       

 

 

    

 

 

 
     

Non-operating items

     
  (219      (296   

US

     (434      (360
  (308      (32   

Non-US

     (113      (310

 

 

    

 

 

       

 

 

    

 

 

 
  (527      (328         (547      (670

 

 

    

 

 

       

 

 

    

 

 

 
     

RC profit (loss) before interest and tax

     
  (386      (403   

US

     (873      (954
  (261      (224   

Non-US

     (895      (1,056

 

 

    

 

 

       

 

 

    

 

 

 
  (647      (627         (1,768      (2,010

 

 

    

 

 

       

 

 

    

 

 

 

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 fourth quarter and full year was $627 million and $1,768 million respectively, compared with $647 million and $2,010 million for the same periods in 2014.

The fourth-quarter result included a net non-operating charge of $328 million, primarily relating to impairments, compared with a net charge of $527 million a year ago, which related to restructuring provisions and impairments. For the full year, the net non-operating charge was $547 million, compared with a net charge of $670 million in 2014.

After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the fourth quarter was $299 million, compared with $120 million for the same period in 2014. The underlying charge in the fourth quarter was higher than 2014 mainly due to a number of one-off credits in the fourth quarter 2014. For the full year, the underlying replacement cost loss before interest and tax was $1,221 million compared with $1,340 million in 2014.

Biofuels

The net ethanol-equivalent production (which includes ethanol and sugar) for the fourth quarter and full year was 189 million litres and 795 million litres respectively, compared with 242 million litres and 653 million litres for the same periods in 2014.

Wind

Net wind generation capacity*(a) was 1,588MW at 31 December 2015, the same as at 31 December 2014. BP’s net share of wind generation for the fourth quarter and full year was 1,253GWh and 4,424GWh respectively, compared with 1,240GWh and 4,617GWh for the same periods in 2014.

Outlook

In 2016, Other businesses and corporate average quarterly charges, excluding non-operating items, are expected to be around $300 million although this will fluctuate from quarter to quarter.

 

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

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 36.

 

 

 

 

11


Table of Contents

Gulf of Mexico oil spill

 

 

We announced on 2 July 2015 that BP Exploration & Production Inc. 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 along with more than 400 local government claims. On 5 October 2015, the United States lodged with the district court in MDL 2179 a proposed Consent Decree between the United States, the Gulf states and BP to fully and finally resolve any and all natural resource damages (NRD) claims of the United States, the Gulf states, and their respective natural resource trustees and all Clean Water Act (CWA) penalty claims, and certain other claims of the United States and the Gulf states. A hearing has been scheduled by the court to consider approval of the proposed Consent Decree in March 2016.

For further details see Note 2 on page 18.

Financial update

The replacement cost loss before interest and tax for the fourth quarter and full year was $328 million and $11,709 million respectively, compared with $468 million and $781 million for the same periods last year. The fourth-quarter loss reflects additional business economic loss claims under the Plaintiffs’ Steering Committee settlements and the ongoing costs of the Gulf Coast Restoration Organization, partially offset by adjustments to provisions due to discounting effects. The loss for the full year 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 $55.5 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.

 

 

 

12


Table of Contents

Financial statements

 

 

Group income statement

 

Fourth
quarter
2014
    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
  73,997        49,172     

Sales and other operating revenues (Note 6)(a)

     222,894        353,568   
  181        (615  

Earnings from joint ventures – after interest and tax

     (28     570   
  519        303     

Earnings from associates – after interest and tax

     1,839        2,802   
  238        145     

Interest and other income

     611        843   
  161        228     

Gains on sale of businesses and fixed assets

     666        895   

 

 

   

 

 

      

 

 

   

 

 

 
  75,096        49,233     

Total revenues and other income

     225,982        358,678   
  60,411        36,893     

Purchases(a)

     164,790        281,907   
  7,002        6,448     

Production and manufacturing expenses(b)

     37,040        27,375   
  412        263     

Production and similar taxes (Note 7)

     1,036        2,958   
  3,866        3,881     

Depreciation, depletion and amortization

     15,219        15,163   
  6,768        1,386     

Impairment and losses on sale of businesses and fixed assets (Note 4)

     1,909        8,965   
  1,455        923     

Exploration expense

     2,353        3,632   
  2,879        3,082     

Distribution and administration expenses

     11,553        12,266   

 

 

   

 

 

      

 

 

   

 

 

 
  (7,697     (3,643  

Profit (loss) before interest and taxation

     (7,918     6,412   
  299        379     

Finance costs(b)

     1,347        1,148   
  82        78     

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

     306        314   

 

 

   

 

 

      

 

 

   

 

 

 
  (8,078     (4,100  

Profit (loss) before taxation

     (9,571     4,950   
  (3,705     (776  

Taxation(b)

     (3,171     947   

 

 

   

 

 

      

 

 

   

 

 

 
  (4,373     (3,324  

Profit (loss) for the period

     (6,400     4,003   

 

 

   

 

 

      

 

 

   

 

 

 
   

Attributable to

    
  (4,407     (3,307  

BP shareholders

     (6,482     3,780   
  34        (17  

Non-controlling interests

     82        223   

 

 

   

 

 

      

 

 

   

 

 

 
  (4,373     (3,324        (6,400     4,003   

 

 

   

 

 

      

 

 

   

 

 

 
   

Earnings per share (Note 8)

    
   

Profit (loss) for the period attributable to BP shareholders

    
   

Per ordinary share (cents)

    
  (24.18     (18.01  

Basic

     (35.39     20.55   
  (24.18     (18.01  

Diluted

     (35.39     20.42   
   

Per ADS (dollars)

    
  (1.45     (1.08  

Basic

     (2.12     1.23   
  (1.45     (1.08  

Diluted

     (2.12     1.23   

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) Amounts reported in the prior quarters of 2015 for Sales and other operating revenues and Purchases have been amended, with no effect on profit for the period. See Note 6 for further information.
(b) See Note 2 for information on the impact of the Gulf of Mexico oil spill on these income statement line items.

 

 

 

13


Table of Contents

Financial statements (continued)

 

 

 

Group statement of comprehensive income

 

Fourth
quarter
2014
    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
  (4,373     (3,324  

Profit (loss) for the period

     (6,400     4,003   

 

 

   

 

 

      

 

 

   

 

 

 
   

Other comprehensive income

    
   

Items that may be reclassified subsequently to profit or loss

    
  (3,496     (958  

Currency translation differences

     (4,119     (6,838
  54        —       

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

     23        51   
  —          —       

Available-for-sale investments

     1        —     
  (111     (24  

Cash flow hedges marked to market

     (178     (155
  17        29     

Cash flow hedges reclassified to the income statement

     249        (73
  —          6     

Cash flow hedges reclassified to the balance sheet

     22        (11
  (2,418     (233  

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

     (814     (2,584
  151        (43  

Income tax relating to items that may be reclassified

     257        147   

 

 

   

 

 

      

 

 

   

 

 

 
  (5,803     (1,223        (4,559     (9,463

 

 

   

 

 

      

 

 

   

 

 

 
   

Items that will not be reclassified to profit or loss

    
  (2,825     2,570     

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

     4,139        (4,590
  (1     —       

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

     (1     4   
  856        (881  

Income tax relating to items that will not be reclassified

     (1,397     1,334   

 

 

   

 

 

      

 

 

   

 

 

 
  (1,970     1,689           2,741        (3,252

 

 

   

 

 

      

 

 

   

 

 

 
  (7,773     466     

Other comprehensive income

     (1,818     (12,715

 

 

   

 

 

      

 

 

   

 

 

 
  (12,146     (2,858  

Total comprehensive income

     (8,218     (8,712

 

 

   

 

 

      

 

 

   

 

 

 
   

Attributable to

    
  (12,155     (2,836  

BP shareholders

     (8,259     (8,903
  9        (22  

Non-controlling interests

     41        191   

 

 

   

 

 

      

 

 

   

 

 

 
  (12,146     (2,858        (8,218     (8,712

 

 

   

 

 

      

 

 

   

 

 

 

 

(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.

 

 

 

14


Table of Contents

Financial statements (continued)

 

 

 

Group statement of changes in equity

 

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

At 1 January 2015

     111,441        1,201        112,642   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     (8,259     41        (8,218

Dividends

     (6,659     (91     (6,750

Share-based payments, net of tax

     656        —          656   

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

     40        —          40   

Transactions involving non-controlling interests

     (3     20        17   
  

 

 

   

 

 

   

 

 

 

At 31 December 2015

     97,216        1,171        98,387   
  

 

 

   

 

 

   

 

 

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

At 1 January 2014

     129,302        1,105        130,407   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     (8,903     191        (8,712

Dividends

     (5,850     (255     (6,105

Repurchases of ordinary share capital

     (3,366     —          (3,366

Share-based payments, net of tax

     185        —          185   

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

     73        —          73   

Transactions involving non-controlling interests

     —          160        160   
  

 

 

   

 

 

   

 

 

 

At 31 December 2014

     111,441        1,201        112,642   
  

 

 

   

 

 

   

 

 

 

 

 

 

15


Table of Contents

Financial statements (continued)

 

 

 

Group balance sheet

 

$ million    31 December
2015
     31 December
2014
 

Non-current assets

     

Property, plant and equipment

     129,758         130,692   

Goodwill

     11,627         11,868   

Intangible assets

     18,660         20,907   

Investments in joint ventures

     8,412         8,753   

Investments in associates

     9,422         10,403   

Other investments

     1,002         1,228   
  

 

 

    

 

 

 

Fixed assets

     178,881         183,851   

Loans

     529         659   

Trade and other receivables

     2,216         4,787   

Derivative financial instruments

     4,409         4,442   

Prepayments

     1,003         964   

Deferred tax assets

     1,545         2,309   

Defined benefit pension plan surpluses

     2,647         31   
  

 

 

    

 

 

 
     191,230         197,043   
  

 

 

    

 

 

 

Current assets

     

Loans

     272         333   

Inventories

     14,142         18,373   

Trade and other receivables

     22,323         31,038   

Derivative financial instruments

     4,242         5,165   

Prepayments

     1,838         1,424   

Current tax receivable

     599         837   

Other investments

     219         329   

Cash and cash equivalents

     26,389         29,763   
  

 

 

    

 

 

 
     70,024         87,262   

Assets classified as held for sale (Note 3)

     578         —     
  

 

 

    

 

 

 
     70,602         87,262   
  

 

 

    

 

 

 

Total assets

     261,832         284,305   
  

 

 

    

 

 

 

Current liabilities

     

Trade and other payables

     31,949         40,118   

Derivative financial instruments

     3,239         3,689   

Accruals

     6,261         7,102   

Finance debt

     6,944         6,877   

Current tax payable

     1,080         2,011   

Provisions

     5,154         3,818   
  

 

 

    

 

 

 
     54,627         63,615   

Liabilities directly associated with assets classified as held for sale (Note 3)

     97         —     
  

 

 

    

 

 

 
     54,724         63,615   
  

 

 

    

 

 

 

Non-current liabilities

     

Other payables

     2,910         3,587   

Derivative financial instruments

     4,283         3,199   

Accruals

     890         861   

Finance debt

     46,224         45,977   

Deferred tax liabilities

     9,599         13,893   

Provisions

     35,960         29,080   

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

     8,855         11,451   
  

 

 

    

 

 

 
     108,721         108,048   
  

 

 

    

 

 

 

Total liabilities

     163,445         171,663   
  

 

 

    

 

 

 

Net assets

     98,387         112,642   
  

 

 

    

 

 

 

Equity

     

BP shareholders’ equity

     97,216         111,441   

Non-controlling interests

     1,171         1,201   
  

 

 

    

 

 

 
     98,387         112,642   
  

 

 

    

 

 

 

 

 

 

16


Table of Contents

Financial statements (continued)

 

 

 

Condensed group cash flow statement

 

Fourth
quarter
2014
    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
    Operating activities     
  (8,078     (4,100   Profit (loss) before taxation      (9,571     4,950   
   

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

    
  5,215        4,578      Depreciation, depletion and amortization and exploration expenditure written off      17,048        18,192   
  6,607        1,158      Impairment and (gain) loss on sale of businesses and fixed assets      1,243        8,070   
  (224     1,028      Earnings from equity-accounted entities, less dividends received      (197     (1,461
  49        164      Net charge for interest and other finance expense, less net interest paid      502        330   
  (58     167      Share-based payments      321        379   
  (664     (464  

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

     (592     (963
  551        591      Net charge for provisions, less payments      11,792        1,119   
  4,842        2,978      Movements in inventories and other current and non-current assets and liabilities      843        6,925   
  (993     (294   Income taxes paid      (2,256     (4,787

 

 

   

 

 

      

 

 

   

 

 

 
  7,247        5,806      Net cash provided by operating activities      19,133        32,754   

 

 

   

 

 

      

 

 

   

 

 

 
    Investing activities     
  (5,900     (5,126   Capital expenditure      (18,648     (22,546
  (118     (10   Acquisitions, net of cash acquired      23        (131
  (65     (87   Investment in joint ventures      (265     (179
  (128     (888   Investment in associates      (1,312     (336
  224        17      Proceeds from disposal of fixed assets      1,066        1,820   
  880        215      Proceeds from disposal of businesses, net of cash disposed      1,726        1,671   
  48        1      Proceeds from loan repayments      110        127   

 

 

   

 

 

      

 

 

   

 

 

 
  (5,059     (5,878   Net cash used in investing activities      (17,300     (19,574

 

 

   

 

 

      

 

 

   

 

 

 
    Financing activities     
  (793     —        Net repurchase of shares      —          (4,589
  2,779        185      Proceeds from long-term financing      8,173        12,394   
  (2,937     (3,559   Repayments of long-term financing      (6,426     (6,282
  (186)        (124   Net increase (decrease) in short-term debt      473        (693
  9        (5   Net increase (decrease) in non-controlling interests      (5     9   
  (1,729     (1,541   Dividends paid – BP shareholders      (6,659     (5,850
  (40     (20                             –  non-controlling interests      (91     (255

 

 

   

 

 

      

 

 

   

 

 

 
  (2,897     (5,064   Net cash provided by (used in) financing activities      (4,535     (5,266

 

 

   

 

 

      

 

 

   

 

 

 
  (257     (177   Currency translation differences relating to cash and cash equivalents      (672     (671

 

 

   

 

 

      

 

 

   

 

 

 
  (966     (5,313   Increase (decrease) in cash and cash equivalents      (3,374     7,243   

 

 

   

 

 

      

 

 

   

 

 

 
  30,729        31,702      Cash and cash equivalents at beginning of period      29,763        22,520   
  29,763        26,389      Cash and cash equivalents at end of period      26,389        29,763   

 

 

   

 

 

      

 

 

   

 

 

 

 

 

 

17


Table of Contents

Financial statements (continued)

 

 

 

Notes

 

1. Basis of preparation

The results for the interim periods and for the year ended 31 December 2015 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.

In BP Annual Report and Form 20-F 2014 we disclosed a significant estimate or judgement relating to the recoverability of asset carrying values, including the discount rates applied to estimates of future cash flows to determine the recoverable amount of assets when performing impairment tests. During the fourth quarter 2015 the discount rates used by the group in assessments of impairment were reviewed. The post-tax discount rate applied to cash flow analyses used to calculate fair value less costs of disposal in the fourth quarter was 7%. For value-in-use calculations, the pre-tax discount rate applied in the fourth quarter was 11%. For both calculations a premium of 2% continues to be added for assets located in higher risk countries. The group’s assumptions for long-term oil and gas prices were also revised downwards slightly for impairment tests in which the recoverable amount of Upstream assets is determined on the basis of fair value less costs of disposal. Impairment tests continue to utilize market-based forward prices for the first five years. Further details will be provided in BP Annual Report and Form 20-F 2015 which is expected to be published in early March 2016.

 

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 35 of this report.

The group income statement includes a pre-tax charge of $443 million for the fourth quarter and $11,956 million for the full year in relation to the Gulf of Mexico oil spill. The fourth-quarter charge reflects additional business economic loss claims under the Plaintiffs’ Steering Committee (PSC) settlement, finance costs and the ongoing costs of the Gulf Coast Restoration Organization, partially offset by adjustments to provisions due to discounting effects. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $55,451 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. The proposed Consent Decree between the United States, the Gulf states and BP was 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; a hearing has been scheduled by the court to consider approval of the proposed Consent Decree in March 2016. During the third quarter 2015, the Settlement Agreement with the five Gulf states was executed. 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 pages 32-34 of BP Third Quarter and nine months results 2015.

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 relating to the incident not covered by the Agreements. The total amounts

 

 

 

18


Table of Contents

Financial statements (continued)

 

 

Notes

 

2. Gulf of Mexico oil spill (continued)

 

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.

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.

 

Fourth
quarter
2014

     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

Income statement

     
  468         328      

Production and manufacturing expenses

     11,709         781   

 

 

    

 

 

       

 

 

    

 

 

 
  (468      (328   

Profit (loss) before interest and taxation

     (11,709      (781
  9         115      

Finance costs

     247         38   

 

 

    

 

 

       

 

 

    

 

 

 
  (477      (443   

Profit (loss) before taxation

     (11,956      (819
  163         (134   

Taxation

     3,492         262   

 

 

    

 

 

       

 

 

    

 

 

 
  (314      (577   

Profit (loss) for the period

     (8,464      (557

 

 

    

 

 

       

 

 

    

 

 

 

 

$ million    31 December 2015      31 December 2014  

Balance sheet

     

Current assets

     

Trade and other receivables

     686         1,154   

Current liabilities

     

Trade and other payables

     (693      (655

Accruals

     (40      —     

Provisions

     (3,076      (1,702
  

 

 

    

 

 

 

Net current assets (liabilities)

     (3,123      (1,203
  

 

 

    

 

 

 

Non-current assets

     

Trade and other receivables

     —           2,701   

Non-current liabilities

     

Other payables

     (2,057      (2,412

Accruals

     (186      (169

Provisions

     (13,431      (6,903

Deferred tax

     5,200         1,723   
  

 

 

    

 

 

 

Net non-current assets (liabilities)

     (10,474      (5,060
  

 

 

    

 

 

 

Net assets (liabilities)

     (13,597      (6,263
  

 

 

    

 

 

 

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

Cash flow statement - Operating activities

     
  (477      (443   

Profit (loss) before taxation

     (11,956      (819
     

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

     
  9         115      

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

     247         38   
  334         227      

Net charge for provisions, less payments

     11,296         939   
  3         (36   

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

     (732      (1,454

 

 

    

 

 

       

 

 

    

 

 

 
  (131      (137 )     Pre-tax cash flows      (1,145 )       (1,296

 

 

    

 

 

       

 

 

    

 

 

 

Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $137 million and an outflow of $1,130 million in the fourth quarter and full year of 2015 respectively. For the same periods in 2014, the amounts were an inflow of $304 million and an outflow of $9 million respectively.

 

 

 

19


Table of Contents

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 31 December 2015, $686 million of the provisions and payables are eligible to be paid from the Trust. The reimbursement asset is recorded within Trade and other receivables on the balance sheet, all of which is classified as current, as payment of all amounts covered by the remaining reimbursement asset may be requested during 2016. During 2015, $3,022 million of provisions and $147 million of payables were paid from the Trust.

At 31 December 2015, the remaining cash in the Trust not allocated for specific purposes was $25 million. This unallocated amount was exhausted in January 2016 and BP commenced paying claims and other costs not covered by the specific-purpose cash balances. The total cash remaining in the Trust and associated qualifying settlement funds, amounting to $1.4 billion, includes $0.7 billion in the seafood compensation fund, $0.2 billion held for natural resource damage early restoration projects and $0.5 billion held in relation to certain other specified costs under the PSC settlement.

(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 fourth quarter and full year are presented in the table below.

 

$ million    Environmental     Litigation
and claims
    Clean Water
Act  penalties
    Total  

At 1 October 2015

     6,004        6,644        4,179        16,827   

Net increase (decrease) in provision

     (9     575        —          566   

Unwinding of discount

     47        25        34        106   

Change in discount rate

     (115     (59     (84     (258

Utilization – paid by BP

     (1     (80     —          (81

                  – paid by the trust fund

     (7     (646     —          (653
  

 

 

   

 

 

   

 

 

   

 

 

 

At 31 December 2015

     5,919        6,459        4,129        16,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

Of which   – current

     227        2,849        —          3,076   

                  – non-current

     5,692        3,610        4,129        13,431   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Environmental     Litigation
and claims
    Clean Water
Act  penalties
    Total  
$ million                         

At 1 January 2015

     1,141        3,954        3,510        8,605   

Net increase (decrease) in provision

     5,393        5,832        661        11,886   

Unwinding of discount

     94        50        68        212   

Change in discount rate

     (149     (74     (110     (333

Reclassified to other payables

     (459     (125     —          (584

Utilization – paid by BP

     (23     (234     —          (257

                  – paid by the trust fund

     (78     (2,944     —          (3,022
  

 

 

   

 

 

   

 

 

   

 

 

 

At 31 December 2015

     5,919        6,459        4,129        16,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

20


Table of Contents

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. Amounts payable under the $1-billion early restoration framework agreement with natural resource trustees for the US and five Gulf states, that are not yet allocated to specific projects, 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 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 revised 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. Only a small proportion of claim determinations have been made under some of the specialized frameworks that have been put in place for particular industries, namely construction, agriculture, professional services and education, and so determinations to date may not be representative of the total population of claims. In addition, although some pre-determination data has been provided to BP, detailed data on the majority of pre-determination claims is not available due to a court order to protect claimant confidentiality. Therefore there is an insufficient level of detail to enable a complete or clear understanding of the composition of the underlying claims population.

There is insufficient 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 $12.4 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 $402 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 $12.4 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.

 

 

 

21


Table of Contents

Financial statements (continued)

 

 

Notes

 

2. Gulf of Mexico oil spill (continued)

 

There continues to be a high level of uncertainty with regards 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. 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 of 2015.

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 $566 million and $11,886 million was recognized for the fourth quarter and full year respectively. The fourth-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, offset by adjustments to provisions due to discounting effects. The net increase for the full year 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.

 

     Fourth            Cumulative  
     quarter     Year      since the  
$ million    2015     2015      incident  

Environmental costs

     (124     5,303         8,526   

Spill response costs

     —          —           14,304   

Litigation and claims costs

     516        5,758         32,538   

Clean Water Act penalties – amount provided

     (84     551         4,061   

Other costs charged directly to the income statement

     20        97         1,354   

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

     328        11,709         54,973   

Finance costs

  

– related to the trust funds

     —          —           137   
  

– not related to the trust funds

     115        247         341   
     

 

 

   

 

 

    

 

 

 

Loss before taxation

     443        11,956         55,451   
     

 

 

   

 

 

    

 

 

 

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

 

 

 

22


Table of Contents

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.

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. Non-current assets held for sale

On 15 January 2016 BP and Rosneft announced that they had signed definitive agreements to dissolve the German refining joint operation Ruhr Oel GmbH (ROG). The restructuring, which is expected to be completed in 2016, will result in Rosneft taking ownership of ROG’s interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries. In exchange, BP will take sole ownership of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie. Assets and associated liabilities relating to BP’s share of ROG’s interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries have been classified as held for sale in the group balance sheet at 31 December 2015.

 

4. Impairment of fixed assets

The net impairment loss for the fourth quarter and full year is $2,014 million and $2,357 million respectively. Of this total amount, $1,303 million and $1,646 million respectively is included within the line item in the income statement for Impairment and losses on sale of businesses and fixed assets. The remaining $711 million in the fourth quarter and full year relates to BP’s share of impairment charges recognized by equity-accounted entities included in the income statement line item Earnings from joint ventures – after interest and tax.

The fourth-quarter net impairment loss comprised $1,579 million in Upstream, $156 million in Downstream, and $279 million in Other businesses and corporate. The full-year net impairment loss comprised $1,960 million in Upstream, $87 million in Downstream, and $310 million in Other businesses and corporate.

The net impairment loss in Upstream, including BP’s share of impairment charges recognized by equity-accounted entities, comprised impairment losses of $2,572 million and $3,040 million for the fourth quarter and full year respectively, and impairment reversals of $993 million and $1,080 million for the same periods. Impairment losses have been recorded in a number of regions with the largest charge arising in Angola, a significant element of which relates to the Angola LNG plant. Impairment losses also included charges in relation to assets in the North Sea but these were more than offset by impairment reversals in relation to other assets in the region.

The impairment losses primarily arose as a result of a lower price environment, technical reserves revisions, and increases in decommissioning cost estimates for certain assets. The impairment reversals arose mainly as a result of decreases in cost estimates and a reduction in the discount rate applied, offsetting the impact of lower prices.

 

 

 

23


Table of Contents

Financial statements (continued)

 

 

Notes

 

 

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

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  (3,085      (2,280   

Upstream

     (937 )       8,934   
  780         838      

Downstream

     7,111         3,738   
  451         235      

Rosneft

     1,310         2,100   
  (647      (627   

Other businesses and corporate

     (1,768      (2,010

 

 

    

 

 

       

 

 

    

 

 

 
  (2,501      (1,834         5,716         12,762   
  (468      (328   

Gulf of Mexico oil spill response

     (11,709      (781
  257         65      

Consolidation adjustment – UPII*

     (36      641   

 

 

    

 

 

       

 

 

    

 

 

 
  (2,712      (2,097   

RC profit (loss) before interest and tax

     (6,029      12,622   
     

Inventory holding gains (losses)*

     
  (80      (18   

Upstream

     (30      (86
  (4,844      (1,482   

Downstream

     (1,863      (6,100
  (61      (46   

Rosneft (net of tax)

     4         (24

 

 

    

 

 

       

 

 

    

 

 

 
  (7,697      (3,643   

Profit (loss) before interest and tax

     (7,918      6,412   
  299         379      

Finance costs

     1,347         1,148   
  82         78      

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

     306         314   

 

 

    

 

 

       

 

 

    

 

 

 
  (8,078      (4,100   

Profit (loss) before taxation

     (9,571      4,950   

 

 

    

 

 

       

 

 

    

 

 

 
     

RC profit (loss) before interest and tax*

     
  683         (1,429   

US

     (12,243      5,251   
  (3,395      (668   

Non-US

     6,214         7,371   

 

 

    

 

 

       

 

 

    

 

 

 
  (2,712      (2,097         (6,029      12,622   

 

 

    

 

 

       

 

 

    

 

 

 

 

 

 

24


Table of Contents

Financial statements (continued)

 

 

Notes

 

 

6. Sales and other operating revenues

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

By segment

     
  15,800         10,212      

Upstream

     43,235         65,424   
  65,249         43,463      

Downstream(a)

     200,569         323,486   
  616         556      

Other businesses and corporate

     2,048         1,989   

 

 

    

 

 

       

 

 

    

 

 

 
  81,665         54,231            245,852         390,899   

 

 

    

 

 

       

 

 

    

 

 

 
     

Less: sales and other operating revenues between segments

     
  8,270         4,987      

Upstream

     21,949         36,643   
  (814      (133   

Downstream

     68         (173
  212         205      

Other businesses and corporate

     941         861   

 

 

    

 

 

       

 

 

    

 

 

 
  7,668         5,059            22,958         37,331   

 

 

    

 

 

       

 

 

    

 

 

 
     

Third party sales and other operating revenues

     
  7,530         5,225      

Upstream

     21,286         28,781   
  66,063         43,596      

Downstream(a)

     200,501         323,659   
  404         351      

Other businesses and corporate

     1,107         1,128   

 

 

    

 

 

       

 

 

    

 

 

 
  73,997         49,172      

Total sales and other operating revenues

     222,894         353,568   

 

 

    

 

 

       

 

 

    

 

 

 
     

By geographical area

     
  27,300         16,936      

US

     78,281         132,310   
  51,933         34,773      

Non-US(a)

     158,519         251,943   

 

 

    

 

 

       

 

 

    

 

 

 
  79,233         51,709            236,800         384,253   
  5,236         2,537      

Less: sales and other operating revenues between areas

     13,906         30,685   

 

 

    

 

 

       

 

 

    

 

 

 
  73,997         49,172            222,894         353,568   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) Amounts reported in the prior quarters of 2015 for Downstream and Total sales and other operating revenues have been amended. Amended Total sales and other operating revenues are $55,519 million for the first quarter 2015, $62,051 million for the second quarter 2015 and $56,152 million for the third quarter 2015. The previously reported amounts for Total sales and other operating revenues were $54,196 million, $60,646 million and $54,730 million respectively. Purchases have been amended by the same amounts and therefore there is no impact on reported profit.

 

7. Production and similar taxes

 

Fourth
quarter
2014

     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
  56         118      

US

     215         690   
  356         145      

Non-US

     821         2,268   

 

 

    

 

 

       

 

 

    

 

 

 
  412         263            1,036         2,958   

 

 

    

 

 

       

 

 

    

 

 

 

 

8. 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.

 

 

 

25


Table of Contents

Financial statements (continued)

 

 

Notes

 

8. 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.

 

Fourth
quarter
2014
     Fourth
quarter

2015
     $ million    Year
2015
     Year
2014
 
      Results for the period      
  (4,407      (3,307    Profit (loss) for the period attributable to BP shareholders      (6,482      3,780   
  1         1       Less: preference dividend      2         2   

 

 

    

 

 

       

 

 

    

 

 

 
  (4,408      (3,308    Profit (loss) attributable to BP ordinary shareholders      (6,484      3,778   

 

 

    

 

 

       

 

 

    

 

 

 
      Number of shares (thousand)(a)(b)      
  18,232,147         18,369,064       Basic weighted average number of shares outstanding      18,323,646         18,385,458   
  3,038,691         3,061,510       ADS equivalent      3,053,941         3,064,243   

 

 

    

 

 

       

 

 

    

 

 

 
  18,232,147         18,369,064      

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

     18,323,646         18,497,294   
  3,038,691         3,061,510       ADS equivalent      3,053,941         3,082,882   

 

 

    

 

 

       

 

 

    

 

 

 
  18,199,882         18,412,392       Shares in issue at period-end      18,412,392         18,199,882   
  3,033,313         3,068,732       ADS equivalent      3,068,732         3,033,313   

 

 

    

 

 

       

 

 

    

 

 

 

 

(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.

 

9. Dividends

Dividends payable

BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 24 March 2016 to shareholders and American Depositary Share (ADS) holders on the register on 12 February 2016. The corresponding amount in sterling is due to be announced on 14 March 2016, calculated based on the average of the market exchange rates for the four dealing days commencing on 8 March 2016. 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 fourth-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

 

Fourth
quarter
2014
     Fourth
quarter
2015
          Year
2015
     Year
2014
 
     

Dividends paid per ordinary share

     
  10.000         10.000      

cents

     40.000         39.000   
  6.377         6.634      

pence

     26.383         23.850   
  60.00         60.00      

Dividends paid per ADS (cents)

     240.00         234.00   

 

 

    

 

 

       

 

 

    

 

 

 
     

Scrip dividends

     
  13.7         49.7      

Number of shares issued (millions)

     102.8         165.6   
  95         289      

Value of shares issued ($ million)

     642         1,318   

 

 

    

 

 

       

 

 

    

 

 

 

 

 

 

26


Table of Contents

Financial statements (continued)

 

 

Notes

 

 

10. Net debt*

Net debt ratio*

 

Fourth
quarter
2014
    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
  52,854        53,168     

Gross debt

     53,168        52,854   
  (445     379     

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

     379        (445

 

 

   

 

 

      

 

 

   

 

 

 
  52,409        53,547           53,547        52,409   
  29,763        26,389     

Less: cash and cash equivalents

     26,389        29,763   

 

 

   

 

 

      

 

 

   

 

 

 
  22,646        27,158     

Net debt

     27,158        22,646   

 

 

   

 

 

      

 

 

   

 

 

 
  112,642        98,387     

Equity

     98,387        112,642   
  16.7     21.6  

Net debt ratio

     21.6     16.7

 

 

   

 

 

      

 

 

   

 

 

 

Analysis of changes in net debt

 

Fourth
quarter
2014
     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

Opening balance

     
  53,610         57,405      

Finance debt

     52,854         48,192   
  (434      (57   

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

     (445      (477
  30,729         31,702      

Less: cash and cash equivalents

     29,763         22,520   

 

 

    

 

 

       

 

 

    

 

 

 
  22,447         25,646      

Opening net debt

     22,646         25,195   

 

 

    

 

 

       

 

 

    

 

 

 
     

Closing balance

     
  52,854         53,168      

Finance debt

     53,168         52,854   
  (445      379      

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

     379         (445
  29,763         26,389      

Less: cash and cash equivalents

     26,389         29,763   

 

 

    

 

 

       

 

 

    

 

 

 
  22,646         27,158      

Closing net debt

     27,158         22,646   

 

 

    

 

 

       

 

 

    

 

 

 
  (199      (1,512   

Decrease (increase) in net debt

     (4,512      2,549   

 

 

    

 

 

       

 

 

    

 

 

 
  (709      (5,136   

Movement in cash and cash equivalents (excluding exchange adjustments)

     (2,702      7,914   
  344         3,498      

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

     (2,220      (5,419
  (3      (33   

Other movements

     17         (435

 

 

    

 

 

       

 

 

    

 

 

 
  (368      (1,671   

Movement in net debt before exchange effects

     (4,905      2,060   
  169         159      

Exchange adjustments

     393         489   

 

 

    

 

 

       

 

 

    

 

 

 
  (199      (1,512   

Decrease (increase) in net debt

     (4,512      2,549   

 

 

    

 

 

       

 

 

    

 

 

 

 

(a) Derivative financial instruments entered into for the purpose of managing interest rate and foreign currency exchange risk associated with net debt with a fair value liability position of $1,617 million (fourth quarter 2014 liability of $774 million) are not included in the calculation of net debt shown above as hedge accounting was not applied for these instruments.

 

11. Inventory valuation

A provision of $1,295 million was held at 31 December 2015 ($2,879 million at 31 December 2014) to write inventories down to their net realizable value. The net movement charged to the income statement during the fourth quarter 2015 was $583 million (fourth quarter 2014 was a charge of $1,924 million).

 

 

 

27


Table of Contents

Financial statements (continued)

 

 

Notes

 

 

12. Statutory accounts

The financial information shown in this publication, which was approved by the Board of Directors on 1 February 2016, is unaudited and does not constitute statutory financial statements.

 

 

 

28


Table of Contents

Additional information

 

 

Capital expenditure and acquisitions

 

Fourth
quarter
2014

     Fourth
quarter
2015
     $ million    Year
2015
     Year
2014
 
     

By segment Upstream

     
  1,560         1,313      

US

     4,560         6,203   
  3,546         3,841      

Non-US

     12,522         13,569   

 

 

    

 

 

       

 

 

    

 

 

 
  5,106         5,154            17,082         19,772   

 

 

    

 

 

       

 

 

    

 

 

 
     

Downstream

     
  265         224      

US

     702         942   
  984         633      

Non-US

     1,407         2,164   

 

 

    

 

 

       

 

 

    

 

 

 
  1,249         857            2,109         3,106   

 

 

    

 

 

       

 

 

    

 

 

 
     

Other businesses and corporate

     
  38         37      

US

     70         82   
  341         90      

Non-US

     270         821   

 

 

    

 

 

       

 

 

    

 

 

 
  379         127            340         903   

 

 

    

 

 

       

 

 

    

 

 

 
  6,734         6,138            19,531         23,781   

 

 

    

 

 

       

 

 

    

 

 

 
     

By geographical area

     
  1,863         1,574      

US

     5,332         7,227   
  4,871         4,564      

Non-US

     14,199         16,554   

 

 

    

 

 

       

 

 

    

 

 

 
  6,734         6,138            19,531         23,781   

 

 

    

 

 

       

 

 

    

 

 

 
     

Included above:

     
  150         22      

Acquisitions and asset exchanges

     49         420   
  27         584      

Other inorganic capital expenditure

     734         469   

 

 

    

 

 

       

 

 

    

 

 

 

Capital expenditure shown in the table above is presented on an accruals basis.

 

 

 

29


Table of Contents

Additional information (continued)

 

 

 

Non-operating items*

 

Fourth
quarter
2014

    Fourth
quarter
2015
    $ million    Year
2015
    Year
2014
 
   

Upstream

    
  (5,685     (853  

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

     (1,204     (6,576
  (1     —       

Environmental and other provisions

     (24     (60
  (100     (70  

Restructuring, integration and rationalization costs

     (410     (100
  187        18     

Fair value gain (loss) on embedded derivatives

     120        430   
  42        (734  

Other(b)(c)

     (717     8   

 

 

   

 

 

      

 

 

   

 

 

 
  (5,557     (1,639        (2,235     (6,298

 

 

   

 

 

      

 

 

   

 

 

 
   

Downstream

    
  (614     (185  

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

     131        (1,190
  (5     (9  

Environmental and other provisions

     (108     (133
  (158     (351  

Restructuring, integration and rationalization costs

     (607