TIDMBP.
RNS Number : 4197J
BP PLC
29 March 2018
BP P.L.C. ANNUAL FINANCIAL REPORT - DTR 6.3.5 DISCLOSURE
BP p.l.c. ('the Company')
The Company announces that the BP Annual Report and Form 20-F
2017 has been published. This document is publicly available via a
direct link at www.bp.com/annualreport. This follows the release on
6 February 2018 of the Company's unaudited Fourth Quarter and Full
Year 2017 results announcement (the 'Preliminary
Announcement').
In compliance with 9.6.1 of the Listing Rules, on 29 March 2018
the Company submitted a copy of the BP Annual Report and Form 20-F
2017
to the National Storage Mechanism.
This document will shortly be available for inspection at
http://www.morningstar.co.uk/uk/NSM
The BP Annual Report and Form 20-F 2017 will be delivered to the
Registrar of Companies in due course and copies of this document
may also be obtained from:
The Company Secretary's Office
BP p.l.c.
1 St James's Square
London
SW1Y 4PD
Tel: +44 (0)20 7496 4000
The Disclosure Guidance and Transparency Rules (DTR) require
that an announcement of the publication of an Annual Report should
include the disclosure of such information from the Annual Report
as is of a type that would be required to be disseminated in a
Half-yearly Report in compliance with the DTR 6.3.5(2) disclosure
requirement. Accordingly the following disclosures are made in the
Appendices below. References to page numbers and notes to the
accounts made in the following Appendices, refer to page numbers
and notes to the accounts in the BP Annual Report and Form 20-F
2017. This announcement should be read in conjunction with, and is
not a substitute for reading, the full BP Annual Report and Form
20-F 2017.
The extracts from BP Annual Report and Form 20-F 2017 included
in this announcement contain certain forecasts, projections and
forward-looking statements - that is, statements related to future,
not past events and circumstances - with respect to the financial
condition, results of operations and businesses of BP and certain
of the plans and objectives of BP with respect to these items.
These statements may generally, but not always, be identified by
the use of words such as 'will', 'expects', 'is expected to',
'aims', 'should', 'may', 'objective', 'is likely to', 'intends',
'believes', 'anticipates', 'plans', 'we see' or similar
expressions. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will or may occur in the future and are outside
of the control of BP. Actual results may differ materially from
those expressed in such statements, depending on a variety of
factors, including the specific factors identified in the
discussions accompanying such forward-looking statements and other
factors discussed elsewhere in BP Annual Report and Form 20-F
2017.
APPIX A - AUDIT REPORTS
Audited financial statements for 2017 are contained in the BP
Annual Report and Form 20-F 2017. The Independent Auditor's Report
on the consolidated financial statements is set out in full on
pages 116-122 of the BP Annual Report and Form 20-F 2017. The
Independent Auditor's Report on the consolidated financial
statements is unqualified and does not contain any statements under
section 498(2) or section 498(3) of the Companies Act 2006.
APPIX B - DIRECTORS' RESPONSIBILITY STATEMENT
The following statement is extracted in full and is unedited
text from page 113 of the BP Annual Report and Form 20-F 2017. This
statement relates solely to the BP Annual Report and Form 20-F 2017
and is not connected to the extracted information set out in this
announcement or the Preliminary Announcement.
Directors' responsibility statement
The directors confirm that to the best of their knowledge:
-- The consolidated financial statements, prepared in accordance
with IFRS as issued by the IASB, IFRS as adopted by the EU and in
accordance with the provisions of the Companies Act 2006, give a
true and fair view of the assets, liabilities, financial position
and profit or loss of the group.
-- The parent company financial statements, prepared in
accordance with United Kingdom generally accepted accounting
practice, give a true and fair view of the assets, liabilities,
financial position, performance and cash flows of the company.
-- The management report, which is incorporated in the strategic
report and directors' report, includes a fair review of the
development and performance of the business and the position of the
group, together with a description of the principal risks and
uncertainties that they face.
C-H Svanberg
Chairman
29 March 2018
APPIX C - RISKS AND UNCERTAINITIES
The principal risks and uncertainties relating to the Company
are set out on pages 57-58 of the BP Annual Report and Form 20-F
2017. The following is extracted in full and unedited text from the
BP Annual Report and Form 20-F 2017:
Risk factors
The risks discussed below, separately or in combination, could
have a material adverse effect on the implementation of our
strategy, our business, financial performance, results of
operations, cash flows, liquidity, prospects, shareholder value and
returns and reputation.
Strategic and commercial risks
Prices and markets - our financial performance is impacted by
fluctuating prices of oil, gas, refined products, technological
change, exchange rate fluctuations, and the general macroeconomic
outlook.
Oil, gas and product prices are subject to international supply
and demand and margins can be volatile. Political developments,
increased supply from new oil and gas sources, technological
change, global economic conditions and the influence of OPEC can
impact supply and demand and prices for our products. Decreases in
oil, gas or product prices could have an adverse effect on revenue,
margins, profitability and cash flows. If significant or for a
prolonged period, we may have to write down assets and re-assess
the viability of certain projects, which may impact future cash
flows, profit, capital expenditure<<and ability to maintain
our long-term investment programme. Conversely, an increase in oil,
gas and product prices may not improve margin performance as there
could be increased fiscal take, cost inflation and more onerous
terms for access to resources. The profitability of our refining
and petrochemicals activities can be volatile, with periodic
over-supply or supply tightness in regional markets and
fluctuations in demand.
Exchange rate fluctuations can create currency exposures and
impact underlying costs and revenues. Crude oil prices are
generally set in US dollars, while products vary in currency. Many
of our major project<<development costs are denominated in
local currencies, which may be subject to fluctuations against the
US dollar.
Access, renewal and reserves progression - our inability to
access, renew and progress upstream resources in a timely manner
could adversely affect our long-term replacement of reserves.
Delivering our group strategy depends on our ability to
continually replenish a strong exploration pipeline of future
opportunities to access and produce oil and natural gas.
Competition for access to investment opportunities, heightened
political and economic risks in certain countries where significant
hydrocarbon basins are located and increasing technical challenges
and capital commitments may adversely affect our strategic
progress. This, and our ability to progress upstream resources and
sustain long-term reserves replacement, could impact our future
production and financial performance.
Major project delivery - failure to invest in the best
opportunities or deliver major projects successfully could
adversely affect our financial performance.
We face challenges in developing major projects, particularly in
geographically and technically challenging areas. Operational
challenges and poor investment choice, efficiency or delivery at
any major project that underpins production or production growth
could adversely affect our financial performance.
Geopolitical - exposure to a range of political developments and
consequent changes to the operating and regulatory environment
could cause business disruption.
We operate and may seek new opportunities in countries and
regions where political, economic and social transition may take
place. Political instability, changes to the regulatory environment
or taxation, international sanctions, expropriation or
nationalization of property, civil strife, strikes, insurrections,
acts of terrorism and acts of war may disrupt or curtail our
operations or development activities. These may in turn cause
production to decline, limit our ability to pursue new
opportunities, affect the recoverability of our assets or cause us
to incur additional costs, particularly due to the long-term nature
of many of our projects and significant capital expenditure
required.
Events in or relating to Russia, including trade restrictions
and other sanctions, could adversely impact our income and
investment in or relating to Russia. Our ability to pursue business
objectives and to recognize production and reserves relating to
these investments could also be adversely impacted.
Liquidity, financial capacity and financial, including credit,
exposure - failure to work within our financial framework could
impact our ability to operate and result in financial loss.
Failure to accurately forecast or work within our financial
framework could impact our ability to operate and result in
financial loss. Trade and other receivables, including overdue
receivables, may not be recovered and a substantial and unexpected
cash call or funding request could disrupt our financial framework
or overwhelm our ability to meet our obligations.
An event such as a significant operational incident, legal
proceedings or a geopolitical event in an area where we have
significant activities, could reduce our credit ratings. This could
potentially increase financing costs and limit access to financing
or engagement in our trading activities on acceptable terms, which
could put pressure on the group's liquidity. Credit rating
downgrades could also trigger a requirement for the company to
review its funding arrangements with the BP pension trustees and
may cause other impacts on financial performance. In the event of
extended constraints on our ability to obtain financing, we could
be required to reduce capital expenditure or increase asset
disposals in order to provide additional liquidity. See Liquidity
and capital resources on page 251 and Financial statements - Note
27.
Joint arrangements and contractors - varying levels of control
over the standards, operations and compliance of our partners,
contractors and sub-contractors could result in legal liability and
reputational damage.
We conduct many of our activities through joint
arrangements<<, associates<<or with contractors and
sub-contractors where we may have limited influence and control
over the performance of such operations. Our partners and
contractors are responsible for the adequacy of the resources and
capabilities they bring to a project. If these are found to be
lacking, there may be financial, operational or safety risks for
BP. Should an incident occur in an operation that BP participates
in, our partners and contractors may be unable or unwilling to
fully compensate us against costs we may incur on their behalf or
on behalf of the arrangement. Where we do not have operational
control of a venture, we may still be pursued by regulators or
claimants in the event of an incident.
Digital infrastructure and cyber security - breach of our
digital security or failure of our digital infrastructure including
loss or misuse of sensitive information could damage our
operations, increase costs and damage our reputation.
The oil and gas industry is subject to fast-evolving risks from
cyber threat actors, including nation states, criminals,
terrorists, hacktivists and insiders. A breach or failure of our
digital infrastructure - including control systems - due to
breaches of our cyber defences, or those of third parties,
negligence, intentional misconduct or other reasons, could
seriously disrupt our operations. This could result in the loss or
misuse of data or sensitive information, injury to people,
disruption to our business, harm to the environment or our assets,
legal or regulatory breaches and legal liability. Furthermore, the
rapid detection of attempts to gain unauthorized access to our
digital infrastructure, often through the use of sophisticated and
co-ordinated means, is a challenge and any delay or failure to
detect could compound these potential harms. These could result in
significant costs including the cost of remediation or reputational
consequences.
Climate change and the transition to a lower carbon economy -
policy, legal, regulatory, technology and market change related to
the issue of climate change could increase costs, reduce demand for
our products, reduce revenue and limit certain growth
opportunities.
Changes in laws, regulations, policies, obligations, social
attitudes and customer preferences relating to the transition to a
lower carbon economy could have a cost impact on our business,
including increasing compliance and litigation costs, and could
impact our strategy. Such changes could lead to constraints on
production and supply and access to new reserves. Technological
improvements or innovations that support the transition to a lower
carbon economy, and customer preferences or regulatory incentives
related to such changes that alter fuel or power choices, such as
towards low emission energy sources, could impact demand for oil
and gas. Depending on the nature and speed of any such changes and
our response, this could adversely affect the demand for our
products, investor sentiment, our financial performance and our
competitiveness. See Climate change on page 50.
Competition - inability to remain efficient, maintain a high
quality portfolio of assets, innovate and retain an appropriately
skilled workforce could negatively impact delivery of our strategy
in a highly competitive market.
Our strategic progress and performance could be impeded if we
are unable to control our development and operating costs and
margins, or to sustain, develop and operate a high-quality
portfolio of assets efficiently. We could be adversely affected if
competitors offer superior terms for access rights or licences, or
if our innovation in areas such as exploration, production,
refining, manufacturing, renewable energy or new technologies lags
the industry. Our performance could also be negatively impacted if
we fail to protect our intellectual property.
Our industry faces increasing challenge to recruit and retain
skilled and experienced people in the fields of science,
technology, engineering and mathematics. Successful recruitment,
development and retention of specialist staff is essential to our
plans.
Crisis management and business continuity - failure to address
an incident effectively could potentially disrupt our business.
Our business activities could be disrupted if we do not respond,
or are perceived not to respond, in an appropriate manner to any
major crisis or if we are not able to restore or replace critical
operational capacity.
Insurance - our insurance strategy could expose the group to
material uninsured losses.
BP generally purchases insurance only in situations where this
is legally and contractually required. Some risks are insured with
third parties and reinsured by group insurance companies. Uninsured
losses could have a material adverse effect on our financial
position, particularly if they arise at a time when we are facing
material costs as a result of a significant operational event which
could put pressure on our liquidity and cash flows.
Safety and operational risks
Process safety, personal safety, and environmental risks -
exposure to a wide range of health, safety, security and
environmental risks could result in regulatory action, legal
liability, business interruption, increased costs, damage to our
reputation and potentially denial of our licence to operate.
Technical integrity failure, natural disasters, extreme weather
or a change in its frequency or severity, human error and other
adverse events or conditions could lead to loss of containment of
hydrocarbons or other hazardous materials or constrained
availability of resources used in our operating activities, as well
as fires, explosions or other personal and process safety
incidents, including when drilling wells, operating facilities and
those associated with transportation by road, sea or pipeline.
There can be no certainty that our operating management
system<<or other policies and procedures will adequately
identify all process safety, personal safety and environmental
risks or that all our operating activities will be conducted in
conformance with these systems. See Safety and security on page
47.
Such events or conditions, including a marine incident, or
inability to provide safe environments for our workforce and the
public while at our facilities, premises or during transportation,
could lead to injuries, loss of life or environmental damage. As a
result we could face regulatory action and legal liability,
including penalties and remediation obligations, increased costs
and potentially denial of our licence to operate. Our activities
are sometimes conducted in hazardous, remote or environmentally
sensitive locations, where the consequences of such events or
conditions could be greater than in other locations.
Drilling and production - challenging operational environments
and other uncertainties could impact drilling and production
activities.
Our activities require high levels of investment and are
sometimes conducted in challenging environments such as those prone
to natural disasters and extreme weather, which heightens the risks
of technical integrity failure. The physical characteristics of an
oil or natural gas field, and cost of drilling, completing or
operating wells is often uncertain. We may be required to curtail,
delay or cancel drilling operations because of a variety of
factors, including unexpected drilling conditions, pressure or
irregularities in geological formations, equipment failures or
accidents, adverse weather conditions and compliance with
governmental requirements.
Security - hostile acts against our staff and activities could
cause harm to people and disrupt our operations.
Acts of terrorism, piracy, sabotage and similar activities
directed against our operations and facilities, pipelines,
transportation or digital infrastructure could cause harm to people
and severely disrupt operations. Our activities could also be
severely affected by conflict, civil strife or political
unrest.
Product quality - supplying customers with off-specification
products could damage our reputation, lead to regulatory action and
legal liability, and impact our financial performance.
Failure to meet product quality standards could cause harm to
people and the environment, damage our reputation, result in
regulatory action and legal liability, and impact financial
performance.
Compliance and control risks
US government settlements - failure to comply with the terms of
our settlements with the US Environmental Protection Agency related
to the Gulf of Mexico oil spill may expose us to further penalties
or liabilities or could result in suspension or debarment of
certain BP entities.
Failure to satisfy the requirements or comply with the terms of
the administrative agreement with the US Environmental Protection
Agency (EPA), under which BP agreed to a set of safety and
operations, ethics and compliance and corporate governance
requirements, could result in suspension or debarment of certain BP
entities.
Regulation - changes in the regulatory and legislative
environment could increase the cost of compliance, affect our
provisions and limit our access to new growth opportunities.
Governments that award exploration and production interests may
impose specific drilling obligations, environmental, health and
safety controls, controls over the development and decommissioning
of a field and possibly, nationalization, expropriation,
cancellation or non-renewal of contract rights. Royalties and taxes
tend to be high compared with those imposed on similar commercial
activities, and in certain jurisdictions there is a degree of
uncertainty relating to tax law interpretation and changes.
Governments may change their fiscal and regulatory frameworks in
response to public pressure on finances, resulting in increased
amounts payable to them or their agencies.
Such factors could increase the cost of compliance, reduce our
profitability in certain jurisdictions, limit our opportunities for
new access, require us to divest or write down certain assets or
curtail or cease certain operations, or affect the adequacy of our
provisions for pensions, tax, decommissioning, environmental and
legal liabilities. Potential changes to pension or financial market
regulation could also impact funding requirements of the group.
Following the Gulf of Mexico oil spill, we may be subjected to a
higher level of fines or penalties imposed in relation to any
alleged breaches of laws or regulations, which could result in
increased costs.
Ethical misconduct and non-compliance - ethical misconduct or
breaches of applicable laws by our businesses or our employees
could be damaging to our reputation, and could result in
litigation, regulatory action and penalties.
Incidents of ethical misconduct or non-compliance with
applicable laws and regulations, including anti-bribery and
corruption and anti-fraud laws, trade restrictions or other
sanctions, or non-compliance with the recommendations of the ethics
monitor appointed under the terms of the EPA settlements, could
damage our reputation, result in litigation, regulatory action and
penalties.
Treasury and trading activities - ineffective oversight of
treasury and trading activities could lead to business disruption,
financial loss, regulatory intervention or damage to our
reputation.
We are subject to operational risk around our treasury and
trading activities in financial and commodity markets, some of
which are regulated. Failure to process, manage and monitor a large
number of complex transactions across many markets and currencies
while complying with all regulatory requirements could hinder
profitable trading opportunities. There is a risk that a single
trader or a group of traders could act outside of our delegations
and controls, leading to regulatory intervention and resulting in
financial loss, fines and potentially damaging our reputation. See
Financial statements - Note 27.
Reporting - failure to accurately report our data could lead to
regulatory action, legal liability and reputational damage.
External reporting of financial and non-financial data,
including reserves estimates, relies on the integrity of systems
and people. Failure to report data accurately and in compliance
with applicable standards could result in regulatory action, legal
liability and damage to our reputation.
APPIX D - RELATED PARTY TRANSACTIONS
Disclosures in relation to the related party transactions are
set out on pages 158-160 and page 274 of the BP Annual Report and
Form 20-F 2017. The following is extracted in full and unedited
text from the BP Annual Report and Form 20-F 2017:
Extract from Note 14 Investments in joint ventures, BP Annual
Report and Form 20-F 2017, page 158:
Transactions between the group and its joint ventures are
summarized below.
$ million
Sales to joint ventures 2017 2016 2015
========================== ========= ============ ========= ============ ========= =============
Amount
Amount Amount receivable
receivable receivable at
at at 31
Product Sales 31 December Sales 31 December Sales December
LNG, crude oil and
oil products, natural
gas 2,929 352 2,760 291 2,841 245
=========================== ========= ============ ========= ============ ========= ===========
$ million
Purchases from joint
ventures 2017 2016 2015
========================== ========= ============ ========= ============ ========= =============
Amount
Amount Amount payable
payable payable at
at at 31
Product Purchases 31 December Purchases 31 December Purchases December
LNG, crude oil and
oil products, natural
gas, refinery operating
costs, plant processing
fees 1,257 176 943 120 861 104
=========================== ========= ============ ========= ============ ========= ===========
The terms of the outstanding balances receivable from joint
ventures are typically 30 to 45 days. The balances are unsecured
and will be settled in cash. There are no significant provisions
for doubtful debts relating to these balances and no significant
expense recognized in the income statement in respect of bad or
doubtful debts. Dividends receivable are not included in the table
above.
Extract from Note 15 Investments in associates, BP Annual Report
and Form 20-F 2017, page 160:
Transactions between the group and its associates are summarized
below.
$ million
Sales to associates 2017 2016 2015
============================== ========= =========== ========= =========== ========= =============
Amount Amount Amount
receivable receivable receivable
at at at
31 31 31
Product Sales December Sales December Sales December
LNG, crude oil and
oil products, natural
gas 2,261 216 4,210 765 5,302 1,058
$ million
============================== ========= =========== ========= =========== ========= =============
Purchases from associates 2017 2016 2015
============================== ========= =========== ========= =========== ========= =============
Amount Amount Amount
payable payable payable
at at at
31 31 31
Product Purchases December Purchases December Purchases December
============================== ========= =========== ========= =========== ========= =============
Crude oil and oil products,
natural gas, transportation
tariff 11,613 1,681 8,873 2,000 11,619 2,026
=============================== ========= =========== ========= =========== ========= ===========
In addition to the transactions shown in the table above, in
2016 the group completed the dissolution of its German refining
joint operation with Rosneft. In 2015, the group acquired a 20%
participatory interest in Taas-Yuryakh Neftegazodobycha, a Rosneft
subsidiary.
The terms of the outstanding balances receivable from associates
are typically 30 to 45 days. The balances are unsecured and will be
settled in cash. There are no significant provisions for doubtful
debts relating to these balances and no significant expense
recognized in the income statement in respect of bad or doubtful
debts. Dividends receivable are not included in the table
above.
The majority of the sales to and purchases from associates
relate to crude oil and oil products transactions with Rosneft.
BP has commitments amounting to $13,932 million (2016 $15,344
million), primarily in relation to contracts with its associates
for the purchase of transportation capacity.
Extract from BP Annual Report and Form 20-F 2017, page 274:
Related-party transactions
Transactions between the group and its significant joint
ventures and associates are summarized in Financial statements -
Note 14 and Note 15. In the ordinary course of its business, the
group enters into transactions with various organizations with
which some of its directors or executive officers are associated.
Except as described in this report, the group did not have any
material transactions or transactions of an unusual nature with,
and did not make loans to, related parties in the period commencing
1 January 2017 to 14 March 2018.
APPIX E - IMPORTANT EVENTS DURING THE YEAR
For a full glossary of terms, see BP Annual Report and Form 20-F
2017, pages 289-293.
1. Extracted in full and unedited text from the Chairman's
letter, BP Annual Report and Form 20-F 2017, pages 6-7:
Dear fellow shareholder,
In 2017, the global economy continued to be strong and to grow
while concerns around the geopolitical environment increased. For
BP, as a global business, this was the backdrop to our
operations.
Against this background we have had a strong year. A year in
which there was delivery and growth across all our businesses as
Bob describes later in his letter. This was achieved with continued
strong focus on safety. It's an impressive performance from a great
team. They are now fully into their stride and are performing very
well.
All of this gave us confidence to continue the dividend at 10
cents per ordinary share through 2017 and shareholders can still
take dividends in shares rather than cash. In the fourth quarter we
restarted share buybacks to offset the dilutive effects of the
scrip shares.
It remains the board's policy to grow sustainable free cash flow
and distributions to shareholders.
So, a strong year and an important first year in the delivery of
the commitment we made in 2016 to shareholders. So, I'd like to
take stock and reflect on where BP is now and the progress that
we've made over the past eight years.
BP's path
We were faced with a crisis in 2010 that could have threatened
the very being of the company. A crisis that should never have
happened. It required resolute action on many fronts to see us
through and it is a great tribute to everyone in BP that the
foundations were laid for our recovery.
This involved doing things differently and thinking differently.
We had to act simultaneously on many fronts. We had to address the
issues in the US while restructuring our investments in Russia -
and all the while ensuring that we had a clear strategy for
delivering value for our shareholders. All of this in a world that
is looking towards a transition to lower carbon.
In addressing these challenges, BP showed a deep resilience.
With the leadership of Bob and his team the whole organization was
engaged with the board playing a full role.
It is from this resilience that we have been able to set a clear
strategy with goals out to 2021. A strategy which will grow BP and
be responsive to the many changes that are happening in the world
around us.
Our challenge for the future
Our goals aim to balance society's need for more energy with our
clear ambition of playing our part in the transition to a lower
carbon world. We are investing for the future in both hydrocarbons
and in technologies which will be important in that transition. The
world is changing quickly, quicker than we have seen before. There
is no one solution and no one right way ahead. Our approach is
clearly aimed at being flexible and responsive.
Whatever scenario we look at, whether from BP or the IEA, there
will need to be investment to ensure that sufficient hydrocarbons
are available during the transition for the years to come. The
world will continue to need supplies of hydrocarbons. We need the
understanding and trust of society to make these investments to
meet this global demand. Renewables cannot be developed quickly
enough to meet the increasing need for energy.
This is not a choice between two investment approaches, both are
needed for the world to be able to grow. Our strategic priorities
address this. We are committed and we demonstrate that commitment
in reports that we will soon publish.
Remuneration
Executive remuneration remains a clear issue of focus for
shareholders and society. I would like to thank our shareholders
for the support which you gave to our new remuneration report at
the 2017 AGM. This was an important step forward in regaining your
confidence. As is clear from Dame Ann Dowling's letter later in
this report, we are implementing this policy in a considered way.
As is the case with the way remuneration works, there are awards
maturing which are governed by our previous policy. We have
carefully considered the impact of these. Working with the
executives, the committee has exercised appropriate discretion to
reflect your experience as shareholders over the past three
years.
Ann will be standing down from this committee at the AGM after
three years in the chair. I would like to thank her for all the
work that she has done in leading the committee through some very
difficult times. Paula Reynolds will take the chair of this
committee.
The board
The board has continued to work with Bob and his team on many
issues relating to our strategy, our oversight of the risks that BP
faces and our understanding of the evolving challenges of the lower
carbon transition.
Our oversight of these risks is principally carried out through
the work of our committees. However there are certain risks, such
as cyber security, where it is important that it is considered by
the board.
As a board we know that we can only bring long-term value to our
shareholders if we understand the needs of and serve the
communities in which we work. We need to listen to and be
responsive to the voices of those communities and of our own
employees.
Membership of the board continues to evolve. Paul Anderson will
be retiring at the AGM in May. Paul joined the board two months
before the Deepwater Horizon accident. He has very deep experience
of the energy industry and has been a major source of advice and
counsel to me and to the board over these years. Paul has made a
great contribution to the board and its committees over some
difficult times. I thank him on my own behalf and on behalf of the
board.
Melody Meyer was elected to the board at the 2017 AGM. Melody
has an extensive career in global oil and gas at Chevron. The board
is proposing that Dame Alison Carnwath be elected as a director at
the 2018 AGM. Alison has extensive financial experience both as
anexecutive and non-executive. She has worked with global
organizations and will bring a broad range of skills to the BP
board and to the audit committee which she will join upon
appointment. Both these appointments emphasize the board's
commitment to diversity. This will continue to enhance independent
thinking and healthy challenge.
Our purpose
BP has a clear purpose. Our role is to produce energy which can
power economic growth and lift people out of poverty. We need to do
this in a way that responds to the ambition of a world for a low
carbon future. We have made considerable progress in 2017. It has
been a great year, but we must not be complacent. We are in a
competitive environment in a quickly changing world and our
business needs to be ready to meet those demands.
Bob and his team have once again done an excellent job in
steering BP through this year and setting a course for the future.
Thank you to Bob and the team, to my colleagues on the board and to
all our employees for all their work during the year. My thanks
also go to you our shareholders for your support of BP.
I will be standing down during 2018 at some time after the May
AGM and as I look back I feel good about the company. It's in a
great position to grow. I am sure that I will have the opportunity
to thank you for the support you have given me in due course.
Carl-Henric Svanberg
Chairman
29 March 2018
2. Extracted in full and unedited text from the Group chief
executive's letter, BP Annual Report and Form 20-F 2017, pages
8-9:
Dear fellow shareholder,
In this report last year, BP set out a five-year strategy and
promised a story of growth. One year into that five-year plan I am
pleased to report that your company has just delivered a
significant year of both disciplined execution and exciting
growth.
In many ways it was an extraordinary year for BP. Here are some
of the headlines:
-- Underlying profit $6.2 billion.
-- Upstream production up 12%.
-- Record earnings in Downstream.
-- Our most successful year for exploration since 2004.
-- Group reserves replacement ratio the highest in 10 years.
Of course, we were helped by an improving oil price. But that
only tells part of the story. 2017 was a year where we again
maintained our improved trend in safety performance for most of our
main personal and process safety metrics, although we have seen a
slight increase in our tier 1 events. Better safety and improved
operational reliability, combined with strong discipline in our
cash and capital costs, fed through into our financial
performance.
In a complex and uncertain world this may seem like a simple
equation - safe and reliable operations plus cost discipline is
good for the bottom line. But it works and the numbers prove
this.
We plan for the long term and we also measure our progress year
on year and quarter by quarter.
We were disappointed that we had to increase the provision
relating to claims associated with the Gulf of Mexico spill,
although we made real progress during the year in our efforts to
close out the remaining claims. The claims facility is now winding
down although a number of claims remain to be resolved.
Our five-year plan
As I said, last year we set out our strategic priorities. Simply
put, these are designed to meet the dual challenge: to produce more
of the affordable energy that the world needs while producing and
delivering it in new ways, with fewer emissions, that society
wants.
The key to this dual challenge is to recognize that this is not
just a race to renewables, it's a race to lower greenhouse gas
emissions. So, while we are fully committed to the energy
transition that is underway, we also see a lot of uncertainty
around the pace and path of how this will unfold.
Our aim is to build a strong and flexible strategy with a
high-quality portfolio and the ability to adapt quickly as the pace
and path become clearer.
That means in the Upstream we are focused on growing oil and gas
in a way that offers us advantages in terms of margin and value,
with the reduced emissions in mind.
In the Downstream we continue to develop advantaged
manufacturing and marketing businesses that can create value from
existing, new and emerging markets.
We are preparing for a low carbon future by investing in new
companies and technologies across BP while also leveraging
knowledge from the development of our existing Alternative Energy
businesses.
And we are modernizing how BP works, using technology and data
to work more efficiently and digitizing our processes.
Disciplined execution in 2017
We said that 2017 would be a very important year for BP. We set
out ambitious plans for the year and we delivered on them.
We promised to start up seven major projects in the Upstream. We
brought these online and under budget for the portfolio as a whole.
These projects, along with the six we brought online in 2016, have
contributed to a 12% increase in our production. That helps to put
us on track to deliver 900,000 barrels of new production per day by
2021. We also strengthened our portfolio with our most successful
year of exploration since 2004, sanctioned three exciting new
projects in Trinidad, India and the Gulf of Mexico and added 143%
reserves replacement for the group.
In the Downstream we promised to grow earnings. In fact, we had
our best ever year, with a replacement cost profit of $7.2 billion,
driven by strong earnings growth in our marketing and manufacturing
businesses. This came from volume growth in our premium fuels and
lubricants, the growth of our successful convenience retail
partnerships around the world and strong performance in
manufacturing.
Exciting growth opportunities
This is a time of transformational change for our industry. An
era of abundant resources and a changing fuel mix mean that we must
be competitive today and adapt fast to change for tomorrow. So, we
must modernize how we work, embrace new advanced technologies and
maintain our downward pressure on costs. We are already in action
across BP.
In the Upstream we are growing gas and advantaged oil on many
fronts: signing a 25-year extension to our ACG production-sharing
agreement<< in Azerbaijan; strengthening our relationship
with Petrobras and accessing the prolific Santos basin in Brazil;
extending our innovative alliance with Kosmos in West Africa;
growing in Norway though our Aker BP joint venture; and adding
production from onshore Abu Dhabi following the deepening of our
long-term strategic relationship with the Abu Dhabi National Oil
Company (ADNOC) at the end of 2016.
In the Downstream we are building competitively advantaged
businesses; extending our differentiated retail fuels offer in
material new markets such as Mexico, India, Indonesia and China;
entering into a new joint venture with DongMing Petrochemical as
part of a focused growth strategy in China; renewing and creating
new partnerships in lubricants with Renault Nissan, Ford, VW and
Volvo.
At the same time, we must look to produce and deliver energy in
new ways, with fewer emissions, to help meet the world's climate
goals. At BP we have been working on this challenge for over two
decades and that has informed our approach today: working to reduce
emissions in our operations; improving the products our customers
use to help them reduce their emissions; creating new low carbon
businesses and offers that complement our existing portfolio.
In the low carbon space, we entered into a new partnership with
Lightsource a global leader in the development, acquisition and
long-term management of large-scale solar projects. In new
ventures, we have a pipeline of more than 40 active investments
with more than 200 partners looking to exploit opportunities in
advanced mobility, bio products, carbon management and low carbon
power and storage.
These are a few examples that I believe show we are in great
shape to act where we see opportunity to make a real difference to
this transition and, at the same time, create value for our
shareholders.
Strength in relationships
The world is changing fast and there is a lot of uncertainty of
what the future will actually look like. To stay competitive a
company needs to be in tune with society. While we are making
progress with issues such as gender and ethnicity representation,
we recognize we still have more to do. Beyond having the right
strategy, to succeed and thrive in uncertainty requires strong and
trusting relationships. I am grateful to our partners, host
governments and other stakeholders who have stood by us in hard
times and continue to work with us to help shape our future and the
future energy landscape.
I am also grateful to you, our shareholders who have shown great
patience while we stabilized BP and built up our resilience. I hope
you see our recent performance as signs that this patience is being
rewarded.
And last, but not least, I want to thank the global BP team. I
don't believe there is another company of our size and scale that
can adapt and manage change better than we can. This spirit of
invention and purpose has been alive across BP for over a century
and will carry us forward into what, I believe, is a very bright
future.
Bob Dudley
Group chief executive
29 March 2018
3. Extracted in full and unedited text from "Group performance",
BP Annual Report and Form 20-F 2017, pages 21-24:
Financial and operating performance
$ million except
per share amounts
2017 2016 2015
Profit (loss) before interest and
taxation 9,474 (430) (7,918)
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (2,294) (1,865) (1,653)
Taxation (3,712) 2,467 3,171
Non-controlling interests (79) (57) (82)
Profit (loss) for the year(b) 3,389 115 (6,482)
Inventory holding (gains) losses<<,
before tax (853) (1,597) 1,889
Taxation charge (credit) on inventory
holding gains and losses 225 483 (569)
Replacement cost profit (loss)<< 2,761 (999) (5,162)
Net (favourable) adverse impact of
non-operating items<< and fair value
accounting effects<<, before tax 3,730 6,746 15,067
Taxation charge (credit) on non-operating
items and fair value accounting effects (325) (3,162) (4,000)
Underlying replacement cost profit 6,166 2,585 5,905
================================================== ====== ====== ======
Dividends paid per share - cents 40.00 40.00 40.00
- pence 30.979 29.418 26.383
================================================== ====== ====== ======
(a) This does not form part of BP's Annual Report on Form 20-F
as filed with the SEC.
(b) Profit attributable to BP shareholders.
Results
Profit for the year ended 31 December 2017 was $3.4 billion,
compared with $115 million in 2016. Excluding inventory holding
gains, replacement cost (RC) profit was $2.8 billion, compared with
a loss of $1.0 billion in 2016. After adjusting for non-operating
items of $3.3 billion and net adverse fair value accounting effects
of $96 million (both on a post-tax basis), underlying RC profit for
the year ended 31 December 2017 was $6.2 billion, an increase of
$3.6 billion compared with 2016. The increase was predominantly due
to higher results in both Upstream and Downstream segments. The
Upstream result reflected higher oil and gas prices and increased
production. The Downstream result reflected strong refining
performance, including an improved margin environment and growth in
fuels marketing.
The profit for the year ended 31 December 2016 was $115 million,
compared with a loss of $6.5 billion in 2015. Excluding inventory
holding gains, RC loss was $1.0 billion, compared with a loss of
$5.2 billion in 2015. After adjusting for non-operating items of
$2.8 billion and net adverse fair value accounting effects of $0.8
billion (both on a post-tax basis), underlying RC profit for the
year ended 31 December 2016 was $2.6 billion, a decrease of $3.3
billion compared with 2015. The reduction was predominantly due to
lower results in both the Upstream and Downstream segments
reflecting lower oil and gas prices and the weaker refining
environment.
Non-operating items
The net charge for non-operating items was $3.6 billion pre-tax
and $3.3 billion post tax in 2017. The post-tax non-operating
charge includes a charge of $1.7 billion recognized in the fourth
quarter relating to business economic loss and other claims
associated with the Gulf of Mexico oil spill and a $0.9 billion
deferred tax charge following the change in the US tax rate enacted
in December 2017. In addition, the net charge also reflects an
impairment charge in relation to upstream assets.
The net charge for non-operating items of $5.7 billion pre-tax
and $2.8 billion post tax in 2016 mainly related to additional
charges for the Gulf of Mexico oil spill which were partially
offset by net impairment reversals. Non-operating items in 2016
also included a restructuring charge of $0.8 billion (2015 $1.1
billion).
More information on non-operating items and fair value
accounting effects can be found on pages 250 and 294. See Financial
statements - Note 2 for further information on the impact of the
Gulf of Mexico oil spill on BP's financial results.
Taxation
The charge for corporate income taxes in 2017 includes a one-off
deferred tax charge of $0.9 billion in respect of the revaluation
of deferred tax assets and liabilities following the reduction in
the US federal corporate income tax rate from 35% to 21% enacted in
December 2017. The effective tax rate (ETR) on the profit or loss
for the year was 52% in 2017, 107% in 2016 and 33% in 2015. The ETR
for all three years was impacted by various one-off items.
Adjusting for inventory holding impacts, non-operating items
which include the impact of the US tax rate change, fair value
accounting effects and the deferred tax adjustments as a result of
the reductions in the UK North Sea supplementary charge in 2016 and
2015, the adjusted ETR<< on RC profit was 38% in 2017 (2016
23%, 2015 31%). The adjusted ETR for 2017 is higher than 2016
predominantly due to changes in the geographical mix of profits,
notably the impact of the renewal of our interest in the Abu Dhabi
onshore oil concession. The adjusted ETR for 2016 was lower than
2015 predominantly due to changes in the geographical mix of
profits as a result of the lower oil price and the absence of
foreign exchange impacts from the strengthening of the US dollar in
2015.
In the current environment, the adjusted ETR in 2018 is expected
to be above 40%.
Cash flow and net debt information
$ million
==========================================
2017 2016 2015
========================================== ============ ============ ==============
Operating cash flow excluding Gulf
of Mexico oil spill payments(a) 24,098 17,583 20,263
Operating cash flow 18,931 10,691 19,133
Net cash used in investing activities (14,077) (14,753) (17,300)
Net cash provided by (used in) financing
activities (3,296) 1,977 (4,535)
Cash and cash equivalents at end of
year 25,586 23,484 26,389
=========================================== =========== =========== ===========
Capital expenditure<<(b)
Organic capital expenditure<< (16,501) (16,675) N/A
Inorganic capital expenditure<< (1,339) (777) N/A
(17,840) (17,452) (20,202)
=========== =========== ===========
Gross debt 63,230 58,300 53,168
Net debt<< 37,819 35,513 27,158
Gross debt ratio<< (%) 38.6% 37.6% 35.1%
Nebt debt ratio<< (%) 27.4% 26.8% 21.6%
=========================================== ============ ============ ==============
(a) This does not form part of BP's Annual Report on Form 20-F
as filed with the SEC.
(b) From 2017 onwards we are reporting organic, inorganic and
total capital expenditure on a cash basis which were previously
reported on an accruals basis. This aligns with BP's
financial framework and is now consistent with other financial
metrics used when comparing sources and uses of cash. An analysis
of capital expenditure on a cash basis for 2015 is not
available.
Operating cash flow
Net cash provided by operating activities for the year ended 31
December 2017 was $18.9 billion, $8.2 billion higher than the $10.7
billion reported in 2016. Operating cash flow in 2017 reflects $5.3
billion of pre-tax cash outflows related to the Gulf of Mexico oil
spill (2016 $7.1 billion). Compared with 2016, operating cash flows
in 2017 were impacted by improved business results, including a
more favourable price environment and higher production, working
capital effects, and a $2.5 billion increase in income taxes
paid.
Movements in inventories and other current and non-current
assets and liabilities adversely impacted cash flow in the year by
$3.4 billion. There was an adverse impact on working capital from
the Gulf of Mexico oil spill of $5.2 billion. Other working capital
effects, arising from a variety of different factors had a
favourable effect of $1.8 billion. Receivables and inventories
increased during the year principally due to higher oil prices. The
effect of this on operating cash flow was more than offset by a
corresponding increase in payables. BP actively manages its working
capital balances to optimize cash flow.
There was a decrease in net cash provided by operating
activities of $8.4 billion in 2016 compared with 2015, of which
$6.0 billion related to higher pre-tax cash outflows associated
with the Gulf of Mexico oil spill. Cash flows were impacted by the
continuing low oil price environment, with a lower average oil
price in 2016 compared with 2015, working capital effects, and a
reduction of $0.7 billion in income taxes paid.
Movements in inventories and other current and non-current
assets and liabilities adversely impacted cash flow in 2016 by $3.2
billion. There was an adverse impact from the Gulf of Mexico oil
spill of $4.8 billion. Other working capital effects, arising from
a variety of different factors, had a favourable impact of $1.6
billion. Inventories increased during 2016 because volumes were
increased in our trading business to benefit from market
opportunities, and due to higher prices towards the end of the
year. The increase in inventory was largely offset by a
corresponding increase in payables, limiting the increase in
working capital.
Net cash used in investing activities
Net cash used in investing activities for the year ended 31
December 2017 decreased by $0.7 billion compared with 2016.
The decrease mainly reflected an increase of $0.8 billion in
disposal proceeds.
The decrease of $2.5 billion in 2016 compared with 2015
reflected a reduction in cash outflow in respect of capital
expenditure, including investment in joint ventures<<and
associates<<, of $2.8 billion. The reduction in cash capital
expenditure in 2016 reflected the group's response to the lower oil
price environment.
There were no significant cash flows in respect of acquisitions
in 2017, 2016 and 2015.
The group has had significant levels of capital investment for
many years. Total capital expenditure for 2017 was $17.8 billion
(2016 $17.5 billion), of which organic capital expenditure was
$16.5 billion (2016 $16.7 billion). Sources of funding are
fungible, but the majority of the group's funding requirements for
new investment comes from cash generated by existing operations. We
expect organic capital expenditure to be in the range of $15-16
billion in 2018.
Disposal proceeds for 2017 were $3.4 billion (2016 $2.6 billion,
2015 $2.8 billion), including amounts received for the disposal of
our interest in the SECCO joint venture. In addition, we received
$0.8 billion in relation to the initial public offering of BP
Midstream Partners LP's common units, shown within financing
activities in the cash flow statement, and total proceeds for the
year were $4.3 billion. In 2016 disposal proceeds included amounts
received for the sale of certain midstream assets in the Downstream
fuels business and our Decatur petrochemicals complex. In addition,
we received $0.6 billion in relation to the sale of 20% from our
shareholding in Castrol India Limited, shown within financing
activities in the cash flow statement, giving total proceeds of
$3.2 billion for the year. We expect disposal proceeds to be in the
range of $2-3 billion in 2018.
Net cash used in financing activities
Net cash used in financing activities for the year ended 31
December 2017 was $3.3 billion, compared with $2.0 billion provided
by financing activities in 2016. This was mainly the result of a
reduction of $3.5 billion in net proceeds from financing. The total
dividend paid in cash in 2017 was $1.5 billion higher than in 2016,
see below for further information.
In 2016 the net cash provided by financing activities reflected
higher net proceeds from financing of $3.6 billion ($4.0 billion
higher net proceeds from long-term debt offset by a decrease of
$0.4 billion in short-term debt). In addition, there was a cash
inflow of $0.9 billion relating to increases in non-controlling
interests, including the sale of 20% from our shareholding in
Castrol India Limited described above. The total dividend paid in
cash in 2016 was $2.1 billion lower than in 2015 - see below for
further information.
Total dividends distributed to shareholders in 2017 were 40.00
cents per share, the same as 2016. This amounted to a total
distribution to shareholders of $7.9 billion (2016 $7.5 billion,
2015 $7.3 billion), of which shareholders elected to receive $1.7
billion (2016 $2.9 billion, 2015 $0.6 billion) in shares under the
scrip dividend programme. The total amount distributed in cash
amounted to $6.2 billion during the year (2016 $4.6 billion, 2015
$6.7 billion).
Debt
Gross debt at the end of 2017 increased by $4.9 billion from the
end of 2016. The gross debt ratio<<at the end of 2017
increased by 1%. Net debt at the end of 2017 increased by $2.3
billion from the 2016 year-end position. The net debt
ratio<<at the end of 2017 increased by 0.6%.
We continue to target a net debt ratio in the range of 20-30%.
Net debt and the net debt ratio are non-GAAP measures. See
Financial statements - Note 25 for gross debt, which is the nearest
equivalent measure on an IFRS basis, and for further information on
net debt.
Cash and cash equivalents at the end of 2017 were $2.1 billion
higher than 2016.
For information on financing the group's activities, see
Financial statements - Note 27 and Liquidity and capital resources
on page 251.
4. Extracted in full and unedited text from "Upstream", BP
Annual Report and Form 20-F 2017, pages 28-29:
Upstream
Financial performance
$ million
2017 2016 2015
Sales and other operating revenues(a) 45,440 33,188 43,325
RC profit (loss) before interest and
tax 5,221 574 (937)
Net (favourable) adverse impact of
non-operating items<<and fair value
accounting effects<< 644 (1,116) 2,130
Underlying RC profit (loss) before
interest and tax 5,865 (542) 1,193
========================================
Organic capital expenditure<< (b) 13,763 14,344 N/A
(a) Includes sales to other segments.
(b) A reconciliation to GAAP information at the group level is
provided on page 249. Organic capital expenditure on a cash basis
in 2015 is not available.
Financial results
Sales and other operating revenues for 2017 increased compared
with 2016, primarily reflecting higher liquids realizations, higher
production and higher gas marketing and trading revenues. The
decrease in 2016 compared with 2015 primarily reflected lower
liquids and gas realizations and lower gas marketing and trading
revenues.
Replacement cost profit before interest and tax for the segment
included a net non-operating charge of $671 million. This primarily
relates to impairment charges associated with a number of assets,
following changes in reserves estimates, and the decision to
dispose of certain assets. See Financial statements - Note 4 for
further information. Fair value accounting effects had a favourable
impact of $27 million relative to management's view of
performance.
The 2016 result included a net non-operating gain of $1,753
million, primarily related to the reversal of impairment charges
associated with a number of assets, following a reduction in the
discount rate applied and changes to future price assumptions. Fair
value accounting effects had an adverse impact of $637 million. The
2015 result included a net non-operating charge of $2,235 million,
primarily related to a net impairment charge associated with a
number of assets, following a further fall in oil and gas prices
and changes to other assumptions. Fair value accounting effects had
a favourable impact of $105 million relative to management's view
of performance.
After adjusting for non-operating items and fair value
accounting effects, the underlying replacement cost result before
interest and tax was a profit, compared with a loss in 2016. This
improved result primarily reflected higher liquids realizations,
and higher production including the impact of the Abu Dhabi onshore
concession renewal and major projects start-ups, partly offset by
higher depreciation, depletion and amortization, and higher
exploration write-offs.
Compared with 2015 the 2016 result reflected significantly lower
liquids and gas realizations, as well as adverse foreign exchange
impacts and lower gas marketing and trading results. This was
partly offset by lower costs including benefits from simplification
and efficiency activities, lower exploration write-offs, lower
depreciation, depletion and amortization expense and lower rig
cancellation charges.
Organic capital expenditure on a cash basis was $13.8
billion.
In total, disposal transactions generated $1.2 billion in
proceeds in 2017, with a corresponding reduction in net proved
reserves of 10.6mmboe within our subsidiaries. The major disposal
transactions during 2017 were the disposal of 25% of our interest
in the Magnus field in the UK and a portion of our interests in the
Perdido offshore hub in the US. More information on disposals is
provided in Upstream analysis by region on page 253 and Financial
statements - Note 3.
5. Extracted in full and unedited text from "Downstream", BP
Annual Report and Form 20-F 2017, pages 34-37:
Downstream
Extract from BP Annual Report and Form 20-F 2017, page 34:
Financial performance
$ million
2017 2016 2015
Sale of crude oil through spot and
term contracts 47,702 31,569 38,386
Marketing, spot and term sales of
refined products 159,475 126,419 148,925
Other sales and operating revenues 12,676 9,695 13,258
Sales and other operating revenues(a) 219,853 167,683 200,569
========================================
RC profit before interest and tax(b)
Fuels 4,679 3,337 5,858
Lubricants 1,457 1,439 1,241
Petrochemicals 1,085 386 12
======= ======= =======
7,221 5,162 7,111
======================================= ======= ======= =======
Net (favourable) adverse impact of
non-operating items<< and fair value
accounting effects<<
Fuels 193 390 137
Lubricants 22 84 143
Petrochemicals (469) (2) 154
======= ======= =======
(254) 472 434
======================================= ======= ======= =======
Underlying RC profit before interest
and tax(b)
Fuels 4,872 3,727 5,995
Lubricants 1,479 1,523 1,384
Petrochemicals 616 384 166
======= ======= =======
6,967 5,634 7,545
======================================= ======= ======= =======
Organic capital expenditure<<(c) 2,399 2,102 N/A
======================================== ======= ======= =========
(a) Includes sales to other segments.
(b) Income from petrochemicals produced at our Gelsenkirchen and
Mulheim sites in German is reported in the fules business.
Segement-level overhead expenses are included in
the fuels business result.
(c) A reconciliation to GAAP information at the group level is
provided on page 249. Organic capital expenditure on a cash basis
in 2015 is not available.
Financial results
Sales and other operating revenues in 2017 were higher due to
higher crude and product prices as well as higher sales volumes.
Sales and other operating revenues in 2016 were lower than 2015 due
to lower crude and product prices.
Replacement cost (RC) profit before interest and tax for the
year ended 31 December 2017 included a net non-operating gain of
$389 million, primarily reflecting the gain on disposal of our
share in the SECCO joint venture<<in petrochemicals. The 2016
result included a net non-operating charge of $24 million, mainly
relating to a gain on disposal in our fuels business which was more
than offset by restructuring and other charges, while the 2015
result included a net non-operating charge of $590 million, mainly
relating to restructuring charges. In addition, fair value
accounting effects had an adverse impact of $135 million, compared
with an adverse impact of $448 million in 2016 and a favourable
impact of $156 million in 2015.
After adjusting for non-operating items and fair value
accounting effects, underlying RC profit before interest and tax in
2017 was $6,967 million.
Our fuels business
Underlying RC profit before interest and tax for our fuels
business was higher compared with 2016, reflecting stronger
refining performance and growth in fuels marketing, partially
offset by a weaker contribution from supply and trading. Compared
with 2015, the 2016 result was lower, reflecting a significantly
weaker refining environment and the impact from a particularly
large turnaround at our Whiting refinery. This was partially offset
by lower costs, reflecting the benefits from our simplification and
efficiency programmes, an increased fuels marketing performance
driven by retail growth and higher refining margin capture in our
operations.
Extract from BP Annual Report and Form 20-F 2017, page 37:
Our lubricants business
The lubricants business delivered an underlying RC profit before
interest and tax that was similar compared with 2016 - which in
turn was higher compared with 2015. The 2017 results reflected
growth in premium brands and growth markets, offset by the adverse
lag impact of increasing base oil prices. The 2016 results also
reflected continued strong performance in growth markets and
premium brands as well as lower costs achieved through
simplification and efficiency programmes.
Extract from BP Annual Report and Form 20-F 2017, page 37:
Our petrochemicals business
In 2017 the petrochemicals business delivered a higher
underlying RC profit before interest and tax compared with 2016 -
which in turn was higher than 2015. The 2017 result reflected an
improved margin environment, stronger margin optimization, the
benefits from our efficiency programmes and a lower level of
turnaround activity. This was partially offset by the impact of the
divestment of our interest in the SECCO joint venture, which
completed in the fourth quarter of 2017 and was classified as held
for sale in the group balance sheet at 30 September. In 2017 we
reduced our cash breakeven by more than 40% compared with 2014,
making our business more resilient to volatility in the
environment. Compared with 2015, the higher result in 2016
reflected strong operations and margin capture supported by the
continued rollout of our latest advanced technology, as well as
benefits from a slightly improved environment particularly in
olefins and derivatives.
6. Extracted in full and unedited text from "Rosneft", BP Annual
Report and Form 20-F 2017, page 40:
Rosneft
Rosneft segment performance
BP's investment in Rosneft is managed and reported as a separate
segment under IFRS. The segment result includes equity-accounted
earnings, representing BP's 19.75% share of the profit or loss of
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. See Financial statements - Note 15 for further
information.
$ million
2017 2016 2015
Profit before interest and tax(a b) 923 643 1,314
Inventory holding (gains) losses<< (87) (53) (4)
RC profit before interest and tax<< 836 590 1,310
======================================== === === =====
Net change (credit) for non-operating
items<< - (23) -
======================================== ==== === ========
Underlying RC profit before interest
and tax<< 836 567 1,310
======================================== === === =====
(a) BP's share of Rosneft's earnings after finance costs,
taxation and non-controlling interests is included in the BP group
income statement within profit before interest and
taxation.
(b) Includes $(2) million (2016 $3 million, 2015 $16 million) of
foreign exchange (gain)/losses arising on the dividend
received.
Financial results
Replacement cost (RC) profit before interest and tax for the
segment for 2016 included a non-operating gain of $23 million,
whereas the 2017 and 2015 results did not include any non-operating
items.
After adjusting for non-operating items, the increase in the
underlying RC profit before interest and tax compared with 2016
primarily reflected higher oil prices. The result also benefited
from a $163-million gain representing the BP share of a voluntary
out-of-court settlement between Sistema, Sistema-Invest and the
Rosneft subsidiary, Bashneft. These positive effects were partially
offset by adverse foreign exchange effects. Compared with 2015, the
2016 result was primarily affected by lower oil prices and
increased government take, partially offset by favourable duty lag
effects. See also Financial statements - Notes 15 and 30 for other
foreign exchange effects.
7. Extracted in full and unedited text from "Other business and
corporate", BP Annual Report and Form 20-F 2017, page 41:
Other businesses and corporate
Financial performance
$ million
2017 2016 2015
Sales and other operating revenues(a) 1,469 1,667 2,048
======================================== ====== ====== =======
RC profit before interest and tax<<
Gulf of Mexico oil spill (2,687) (6,640) (11,709)
Other (1,758) (1,517) (1,768)
RC profit (loss) before interest and
tax (4,445) (8,157) (13,477)
Net adverse impact of non-operating
items<<
Gulf of Mexico oil spill 2,687 6,640 11,709
Other 160 279 547
Net charge (credit) for non-operating
items 2,847 6,919 12,256
====== ====== =======
Underlying RC profit (loss) before
interest and tax<< (1,598) (1,238) (1,221)
======================================== ====== ====== =======
Organic capital expenditure<<(b) 339 229 N/A
======================================== ====== ====== ==========
(a) Includes sales to other segments.
(b) A reconciliation to GAAP information at the group level is
provided on page 249. Organic capital expenditure on a cash basis
in 2015 is not available.
The replacement cost (RC) loss before interest and tax for the
year ended 31 December 2017 was $4,445 million (2016 $8,157
million, 2015 $13,477 million). The 2017 result included a net
charge for non-operating items of $2,847 million, primarily
relating to costs for the Gulf of Mexico oil spill (2016 $6,919
million, 2015 $12,256 million). For further information, see
Financial statements - Note 2.
After adjusting for these non-operating items, the underlying RC
loss before interest and tax for the year ended 31 December 2017
was $1,598 million, higher than 2016 due to weaker business
results, higher corporate costs and adverse foreign exchange
effects which had a favourable effect in 2016. The underlying RC
loss before interest and tax in 2016 was $1,238 million, similar to
the loss of $1,221 million in 2015.
8. Extracted in full and unedited text from "Gulf of Mexico oil
spill", BP Annual Report and Form 20-F 2017, page 41:
Gulf of Mexico Oil Spill
Further significant progress was made in 2017 toward resolving
outstanding matters related to the 2010 Gulf of Mexico oil spill.
The court supervised settlement programme's determination of
business economic claims was substantially completed, although a
significant number of individual claims determined have been and
continue to be appealed by BP and/or the claimants. Determinations
with respect to remaining business economic loss claims are
expected to be issued in the first half of 2018.
The process safety monitor's term of appointment came to an end
in January 2018. The ethics monitor's term of appointment will come
to an end in 2019 and we continue to work with him to review
ongoing progress.
A further $2.7 billion pre-tax charge was recorded in 2017 and
the cumulative pre-tax income statement charge since the incident
in April 2010 amounted to $65.8 billion as at 31 December 2017. For
further information, see Financial statements - Note 2.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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