Form 6-K BP PLC For: Feb 02
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 02 February, 2021
BP p.l.c.
(Translation
of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file
annual
reports
under cover Form 20-F or Form 40-F.
Form
20-F |X| Form 40-F
---------------
----------------
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of
1934.
Yes No
|X|
|
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London 2 February 2021
|
|
BP p.l.c. Group results
|
|
Fourth quarter and full year 2020
|
For a
printer friendly copy of this announcement, please click on the
link below to open a PDF version.
http://www.rns-pdf.londonstockexchange.com/rns/6348N_1-2021-2-1.pdf
Highlights
|
Resilient operations and strategic progress in a challenging
environment
|
Bernard Looney – chief executive officer:
|
2020
will forever be remembered for the pain and sadness caused by
COVID-19. Lives were lost – livelihoods destroyed. Our sector
was hit hard as well. Road and air travel are down, as are oil
demand, prices and margins. It was also a pivotal year for the
company. We launched a net zero ambition, set a new strategy to
become an integrated energy company and created an offshore wind
business in the US. We began reinventing bp – with nearly 10
thousand people leaving the company. We strengthened our finances
– taking out costs and closing major divestments. And through
all of this, the underlying operations of the company remained safe
– one of our safest years – and reliable, and major new
projects were brought on line. I appreciate our team’s
commitment to deliver the energy the world needed and am grateful
for the support we received from investors and the communities
where we work. We expect much better days ahead for all of us in
2021.
|
Financial results and progress
-
Underlying
replacement cost profit for the quarter was $0.1 billion, similar
to the previous quarter. Performance was significantly impacted by
lower marketing performance in the Downstream, with volumes
remaining under pressure due to COVID-19 and continuing pressure on
refining margins and utilization. In addition, the result was
impacted by a significantly weaker result in gas marketing and
trading and higher exploration write-offs, partially offset by a
higher Rosneft contribution and a lower underlying tax charge. The
full-year result was a loss of $5.7 billion compared to $10 billion
profit in 2019, driven by lower oil and gas prices, significant
exploration write-offs and refining margins and depressed
demand.
-
Reported profit for
the quarter was $1.4 billion, compared with $0.5 billion loss in
the previous quarter. The result included $2.3 billion gain on
disposal from the sale of BP’s petrochemicals business. For
the full year, the reported loss was $20.3 billion, including
significant impairments and exploration write-offs taken in the
second quarter, compared with a profit of $4.0 billion in
2019.
-
Operating cash flow
for the quarter, excluding Gulf of Mexico oil spill payments of
$0.1 billion, was $2.4 billion. Compared to the third quarter, this
reflected the significant impact of lower marketing volumes in the
Downstream and a significantly weaker contribution from gas
marketing and trading. There was also the absence of the working
capital release and other working capital effects, absence of the
Rosneft dividend, and severance payments for reinvent bp, partly
offset by lower tax payments.
-
Proceeds from
divestments and other disposals in the quarter were $4.2 billion,
including $3.5 billion on completion of the petrochemicals
divestment. In February 2021, BP agreed to sell a 20% interest in
Oman's Block 61 for $2.6 billion subject to final adjustments. BP
has now completed or agreed transactions for over half of its
target of $25 billion in proceeds by 2025. BP expects proceeds from
divestments and other disposals of $4-6 billion in 2021, weighted
toward the second half.
-
At year end net
debt was $39 billion, down $1.4 billion over the quarter and $6.5
billion over the full year. Net debt is expected to increase in the
first half of 2021, driven by severance payments, the annual Gulf
of Mexico oil spill payment and payment following completion of the
offshore wind joint venture with Equinor. It is expected to then
fall in the second half with growing operating cash flow and the
receipt of divestment proceeds. BP continues to expect to reach our
$35 billion net debt target around fourth quarter 2021 and first
quarter 2022. This assumes oil prices in the range of $45-50 a
barrel and BP planning assumptions for RMM and gas
prices.
-
A dividend of 5.25
cents per share was announced for the quarter.
Performing while transforming
-
Operations were
strong in 2020, with full-year BP-operated refining availability of
96% and Upstream plant reliability of 94%. Safety performance was
also strong with both tier1/tier2 process safety events and
reported recordable injury frequency significantly lower than in
2019. Upstream unit production costs for the year were 6.5% lower
than 2019. Full-year Upstream production was 9.9% lower than 2019
primarily due to divestments.
-
BP continues to
make strong progress in reinventing its organization. The new
organization was in place at the start of 2021 and over half of the
approximately 10,000 people expected to leave BP as a result of the
reinvent programme had left by year-end. Around $1.4 billion in
people-related costs are expected associated with the reinvent
programme, with the majority of the cash outflow incurred in the
first half of 2021.
-
Four new Upstream
major projects began production in the year, including three in the
fourth quarter – Ghazeer in Oman, Vorlich in the UK and KG D6
R-cluster in India. In the quarter, the Trans Adriatic Pipeline
began gas deliveries, completing the Southern Gas Corridor pipeline
system.
-
Demonstrating the
resilience of BP's convenience offer, while retail fuel volumes
were 14% lower for the full year, BP's convenience gross margin
grew by 6%. Through the year, around 300 strategic convenience
sites were added to the network.
-
BP had developed
3.3GW net renewable generating capacity to FID by end-2020, 0.7GW
more than a year earlier. In January 2021 BP completed formation of
its strategic US offshore wind partnership with Equinor, including
the purchase of 50% in the Empire Wind and Beacon Wind projects.
The projects were also selected to supply 2.5GW of power to the
State of New York, adding to an existing commitment to supply
0.8GW.
-
Working in
partnership with other companies, BP has announced: plans to
develop a ‘green’ hydrogen project at its Lingen
refinery in Germany with Ørsted; a BP-operated multi-company
partnership to develop offshore infrastructure to support planned
UK carbon capture, use and storage projects; and agreements to
provide additional supplies of renewable energy to
Amazon.
Financial summary
|
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Fourth
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Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Profit (loss) for the period attributable to BP
shareholders
|
|
1,358
|
|
(450)
|
|
19
|
|
|
(20,305)
|
|
4,026
|
|
Inventory holding (gains) losses, net of tax
|
|
(533)
|
|
(194)
|
|
(23)
|
|
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2,201
|
|
(511)
|
|
RC profit (loss)
|
|
825
|
|
(644)
|
|
(4)
|
|
|
(18,104)
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3,515
|
|
Net
(favourable) adverse impact of non-operating items and fair value
accounting effects, net of tax
|
|
(710)
|
|
730
|
|
2,571
|
|
|
12,414
|
|
6,475
|
|
Underlying RC profit (loss)
|
|
115
|
|
86
|
|
2,567
|
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(5,690)
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9,990
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|
RC profit (loss) per ordinary share (cents)
|
|
4.08
|
|
(3.18)
|
|
(0.02)
|
|
|
(89.53)
|
|
17.32
|
|
RC profit (loss) per ADS (dollars)
|
|
0.24
|
|
(0.19)
|
|
0.00
|
|
|
(5.37)
|
|
1.04
|
|
Underlying RC profit (loss) per ordinary share (cents)
|
|
0.57
|
|
0.42
|
|
12.67
|
|
|
(28.14)
|
|
49.24
|
|
Underlying RC profit (loss) per ADS (dollars)
|
|
0.03
|
|
0.03
|
|
0.76
|
|
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(1.69)
|
|
2.95
|
|
RC
profit (loss), underlying RC profit, operating cash flow excluding
Gulf of Mexico oil spill payments, working capital, organic capital
expenditure and net debt are non-GAAP measures. These measures and
inventory holding gains and losses, non-operating items, fair value
accounting effects, divestment proceeds, RMM, major project,
convenience gross margin, Upstream plant reliability, refining
availability and divestment proceeds are defined in the Glossary on
page 32.
Top of
page 2
BP p.l.c. Group results
Fourth quarter and full year 2020
|
Murray Auchincloss – chief financial
officer:
|
These
results reflect a truly tough quarter, with a challenging price
environment and COVID-19 related demand impacts. Nonetheless, we
made strong progress in reducing net debt again, to $39 billion in
the quarter. We remain on track to meet our target of $35 billion
between the fourth quarter of 2021 and first quarter of 2022, which
will trigger the start of share buybacks, subject to maintaining a
strong investment grade credit rating.
|
COVID-19 Update
Strengthening finances:
-
BP's future
financial performance, including cash flows and net debt, will be
impacted by the extent and duration of the current market
conditions and the effectiveness of the actions that it and others
take, including its financial interventions. It is difficult to
predict when current supply and demand imbalances will be resolved
and what the ultimate impact of COVID-19 will be.
-
BP has continued to
progress its divestment programme towards delivery of $25 billion
of proceeds by 2025. The petrochemicals and Alaska midstream
disposals both completed in the fourth quarter. Divestment proceeds
for the full year were $5.5 billion.
-
Organic capital
expenditure in 2020 was $12.0 billion, in line with the guidance
given in April and compared with $15.2 billion in
2019.
-
Costs that are
directly attributable to COVID-19 were around $0.1 billion for the
quarter (full year 2020 around $0.4 billion).
-
At year end net
debt was $39 billion, and BP continues to actively manage the
profile of its debt portfolio. During the third quarter and January
2021, the group bought back an aggregate of $6 billion of debt. At
year-end BP had around $44 billion of liquidity, including cash and
undrawn revolving credit facilities.
-
Net debt is
expected to increase in the first half of 2021 before reducing in
the second half of the year supported by growing operating cash
flow and the receipt of divestment proceeds. BP continues to expect
to reach our $35 billion net debt target around fourth quarter 2021
and first quarter 2022. This assumes oil prices in the range of
$45-50 a barrel and BP planning assumptions for RMM and gas
prices.
Protecting our people and operations:
-
BP continues to
take steps to protect and support its staff through the pandemic.
The great majority of BP staff who are able to work from home
continue to do so. Precautions in operations and offices include:
reduced manning levels, changing working patterns, deploying
appropriate personal protective equipment (PPE) and enhanced
cleaning and social distancing measures at plants and retail sites.
Decisions on working practices are being taken with caution and in
compliance with local and national guidelines and
regulations.
-
BP is providing
enhanced support and guidance to staff on safety, health and
hygiene, homeworking and mental health.
-
While the pandemic
did not result in significant outages in our ongoing operations, it
resulted in delays to in-year major projects in the North Sea and
India and has impacted development of the Mad Dog 2, Tangguh
Expansion, Trinidad Cassia Compression and Greater Tortue Ahmeyin
Phase 1 major projects. However production from four major projects
commenced during the year.
-
Refinery utilization for the full year was around 6% lower than
2019 due to the impact of COVID-19 on demand, with refining margins
remaining extremely weak. Year on year, demand for retail fuels was
lower by 14% and for aviation by 50%. Despite this, convenience
gross margin grew by 6% at BP retail sites for the full
year.
-
Despite the
challenges of the environment, BP's operations have performed
safely and reliably over the course of the year. BP-operated
Upstream plant reliability was 94% and BP-operated refining
availability was 96% for the year.
Outlook:
-
From the oil supply
side, limited growth from non-OPEC+ countries coupled with active
market management from OPEC+ means that for 2021 we anticipate a
normalization of the currently high inventory levels.
-
Oil demand is
anticipated to recover in 2021. The speed and degree of the rebound
depends on governments’ policies and individuals’
self-imposed actions as vaccine distribution proceeds.
-
Oil prices have
risen since the end of October, supported by vaccine rollout
programmes and continued active supply management by OPEC+
countries. Prices are expected to remain subject to the decisions
of OPEC+, confidence in efforts to manage the rollout of
vaccination and further virus control measures.
-
We expect the US
gas market to tighten in 2021 as supply declines and demand for LNG
exports recovers. The current tightness on global LNG markets and
higher US gas prices will lift other regional gas
prices.
-
US gas markets are
likely to benefit from lower production and a recovery in
international LNG demand driven by demand in Asia.
-
In the first
quarter of 2021 we expect material impacts in Downstream as a
result of the pandemic, with increased COVID-19 restrictions
resulting in lower product demand. We expect industry refining
margins and utilization to remain under pressure. In our marketing
businesses we expect renewed COVID-19 restrictions to have a
greater impact on product demand, with January retail volumes down
by around 20% year on year, compared with a decline of 11% in the
fourth quarter.
-
BP will continue to
review all actions and respond to any further changes in prevailing
market conditions.
The commentary above and following should be read in conjunction
with the cautionary statement on page 36.
|
Top of
page 3
Group headlines
Results
For the
full year, underlying replacement cost (RC) loss* was $5,690
million, compared with a profit of $9,990 million in 2019.
Underlying RC loss is after adjusting RC loss* for a net charge for
non-operating items* of $12,191 million and net adverse fair value
accounting effects* of $223 million (both on a post-tax
basis).
RC loss
was $18,104 million for the full year, compared with a profit of
$3,515 million in 2019.
For the
fourth quarter, underlying RC profit was $115 million, compared
with $2,567 million in 2019. Underlying RC profit is after
adjusting RC profit for a net gain for non-operating items of
$1,166 million and net adverse fair value accounting effects of
$456 million (both on a post-tax basis).
RC
profit was $825 million for the fourth quarter, compared with a
loss of $4 million in 2019.
Profit
or loss for the fourth quarter and full year attributable to BP
shareholders was a profit of $1,358 million and a loss of $20,305
million respectively, compared with a profit of $19 million and
$4,026 million for the same periods in 2019.
See
further information on pages 4, 27 and 28.
Depreciation, depletion and amortization
The
charge for depreciation, depletion and amortization was $3.4
billion in the quarter and $14.9 billion in the full year, compared
with $4.4 billion and $17.8 billion for the same periods in 2019.
In 2021, we expect the full-year charge to be similar to the 2020
level.
Effective tax rate
The
effective tax rate (ETR) on RC profit or loss* for the fourth
quarter and full year was -141% and 16% respectively, compared with
102% and 51% for the same periods in 2019. Adjusting for
non-operating items and fair value accounting effects, the
underlying ETR* for the fourth quarter and full year was 40% and
-14% respectively, compared with 27% and 36% for the same periods a
year ago. The higher underlying ETR for the fourth quarter reflects
changes in the mix of profits and losses. The lower underlying ETR
for the full year mainly reflects the exploration write-offs with a
limited deferred tax benefit and the reassessment of deferred tax
asset recognition in the second quarter. The underlying ETR for
2021 is expected to be higher than 40% but is sensitive to the
impact that volatility in the current environment may have on the
geographical mix of the group’s profits and losses. ETR on RC
profit or loss and underlying ETR are non-GAAP
measures.
Dividend
BP
today announced a quarterly dividend of 5.25 cents per ordinary
share ($0.315 per ADS), which is expected to be paid on 26 March
2021. The corresponding amount in sterling is due to be announced
on 15 March 2021, calculated based on the average of the market
exchange rates for the four dealing days commencing on 9 March
2021. See page 24 for more information.
Share buybacks
BP
repurchased 120 million ordinary shares at a cost of $776 million
(including fees and stamp duty) in the full year 2020, all of which
was completed in the first quarter of 2020. In January 2020, the
share dilution buyback programme had fully offset the impact of
scrip dilution since the third quarter 2017.
|
Operating cash flow*
Operating
cash flow excluding Gulf of Mexico oil spill payments* was $2.4
billion for the fourth quarter and $13.8 billion for the full year.
These amounts include a working capital* build of $4.0 million in
the fourth quarter and $1.3 billion in the full year, after
adjusting for net inventory holding gains or losses* and working
capital effects of the Gulf of Mexico oil spill. The comparable
amount for the same periods in 2019 was $7.6 billion and $28.2
billion.
Operating
cash flow as reported in the group cash flow statement was $2.3
billion for the fourth quarter and $12.2 billion for the full year,
including a working capital build of $0.7 billion and $0.1 billion
respectively, compared with $7.6 billion and $25.8 billion for the
same periods in 2019.
See
page 30 and Glossary for further information on Gulf of Mexico oil
spill cash flows and on working capital.
Capital expenditure*
Organic
capital expenditure* for the fourth quarter and full year was $2.9
billion and $12.0 billion respectively, compared with $4.0 billion
and $15.2 billion for the same periods in 2019.
Inorganic
capital expenditure* for the fourth quarter and full year was $0.5
billion and $2.0 billion respectively, compared with $0.2 billion
and $4.2 billion for the same periods in 2019.
Organic
capital expenditure and inorganic capital expenditure are non-GAAP
measures. See page 26 for further information.
Divestment and other proceeds
Divestment
proceeds* for the fourth quarter and full year were $4.0 billion
and $5.5 billion respectively, including $3.5 billion and $3.9
billion of proceeds from the petrochemicals divestment
respectively. For the same periods in 2019 divestment proceeds were
$0.8 billion and $2.2 billion respectively.
In
addition, $0.2 billion was received in the fourth quarter in
relation to the sale of an interest in BP's New Zealand retail
property portfolio. For the full year, $1.1 billion in other
proceeds were received including from the TANAP pipeline
refinancing and the sale of an interest in BP's UK retail property
portfolio. Other proceeds for the fourth quarter and full year in
2019 were $0.6 billion.
Total
divestment and other proceeds for the quarter and full year in 2020
were $4.2 billion and $6.6 billion respectively. Total divestment
and other proceeds for the fourth quarter and full year in 2019
were $1.4 billion and $2.8 billion respectively.
Net debt* and gearing*
Net
debt at 31 December 2020 was $38.9 billion, compared with $45.4
billion a year ago. Gearing at 31 December 2020 was 31.3%, compared
with 31.1% a year ago. Gearing including leases* at 31 December
2020 was 36.0%, compared with 35.3% a year ago. Net debt, gearing
and gearing including leases are non-GAAP measures. See pages 25
and 29 for more information.
Reserves replacement ratio*
The
organic reserves replacement ratio on a combined basis of
subsidiaries and equity-accounted entities was 78% for the year.
Including acquisitions and divestments, the total reserves
replacement ratio was -5%.
|
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 32.
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
36.
|
Top of
page 4
Analysis of underlying RC profit (loss)* before interest and
tax
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
697
|
|
878
|
|
2,678
|
|
|
(5,041)
|
|
11,158
|
|
Downstream
|
|
126
|
|
636
|
|
1,438
|
|
|
3,088
|
|
6,419
|
|
Rosneft
|
|
311
|
|
(177)
|
|
412
|
|
|
56
|
|
2,419
|
|
Other
businesses and corporate
|
|
(89)
|
|
(130)
|
|
(250)
|
|
|
(1,040)
|
|
(1,280)
|
|
Consolidation
adjustment – UPII*
|
|
(77)
|
|
34
|
|
24
|
|
|
89
|
|
75
|
|
Underlying RC profit (loss) before interest and tax
|
|
968
|
|
1,241
|
|
4,302
|
|
|
(2,848)
|
|
18,791
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(568)
|
|
(610)
|
|
(781)
|
|
|
(2,523)
|
|
(3,041)
|
|
Taxation on an underlying RC basis
|
|
(158)
|
|
(402)
|
|
(955)
|
|
|
(743)
|
|
(5,596)
|
|
Non-controlling interests
|
|
(127)
|
|
(143)
|
|
1
|
|
|
424
|
|
(164)
|
|
Underlying RC profit (loss) attributable to BP
shareholders
|
|
115
|
|
86
|
|
2,567
|
|
|
(5,690)
|
|
9,990
|
|
Reconciliations
of underlying RC profit or loss attributable to BP shareholders to
the nearest equivalent IFRS measure are provided on page 1 for the
group and on pages 6-11 for the segments.
Analysis of RC profit (loss)* before interest and tax and
reconciliation to profit (loss) for the period
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
(592)
|
|
30
|
|
614
|
|
|
(21,547)
|
|
4,917
|
|
Downstream
|
|
1,245
|
|
915
|
|
1,433
|
|
|
3,418
|
|
6,502
|
|
Rosneft
|
|
270
|
|
(278)
|
|
503
|
|
|
(149)
|
|
2,316
|
|
Other
businesses and corporate
|
|
308
|
|
24
|
|
(1,432)
|
|
|
(683)
|
|
(2,771)
|
|
Consolidation
adjustment – UPII
|
|
(77)
|
|
34
|
|
24
|
|
|
89
|
|
75
|
|
RC profit (loss) before interest and tax
|
|
1,154
|
|
725
|
|
1,142
|
|
|
(18,872)
|
|
11,039
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(759)
|
|
(808)
|
|
(903)
|
|
|
(3,148)
|
|
(3,552)
|
|
Taxation on a RC basis
|
|
557
|
|
(418)
|
|
(244)
|
|
|
3,492
|
|
(3,808)
|
|
Non-controlling interests
|
|
(127)
|
|
(143)
|
|
1
|
|
|
424
|
|
(164)
|
|
RC profit (loss) attributable to BP shareholders
|
|
825
|
|
(644)
|
|
(4)
|
|
|
(18,104)
|
|
3,515
|
|
Inventory holding gains (losses)*
|
|
695
|
|
233
|
|
10
|
|
|
(2,868)
|
|
667
|
|
Taxation (charge) credit on inventory holding gains and
losses
|
|
(162)
|
|
(39)
|
|
13
|
|
|
667
|
|
(156)
|
|
Profit (loss) for the period attributable to BP
shareholders
|
|
1,358
|
|
(450)
|
|
19
|
|
|
(20,305)
|
|
4,026
|
|
Top of
page 5
Operational updates
Upstream
Upstream
production, which excludes Rosneft, for the full year averaged
2,375mboe/d, 9.9% lower than for 2019, driven primarily by
divestments in BPX Energy and Alaska. Underlying production* for
the full year was 3.5% lower than 2019.
For the
full year of 2020, BP-operated Upstream plant reliability* was
94.0% and Upstream unit production costs* of $6.39/boe were 6.5%
lower than in 2019.
Production
from three Upstream major projects started in the quarter –
the Ghazeer project in Oman, Vorlich in the UK North Sea and the KG
D6 R Cluster project offshore India. This follows the Gulf of
Mexico Atlantis Phase 3 project in the previous quarter. The Raven
project in Egypt is currently undergoing commissioning. The Trans Adriatic
Pipeline began gas deliveries, completing the Southern Gas Corridor
pipeline system.
BP
reached agreement to sell its interests in the Wamsutter asset in
Wyoming to Williams Field Services LLC. In February 2021 BP also
agreed to sell a 20% participating interest in Oman’s Block
61 to PTT Exploration and Production Public Company
Limited.
Downstream
BP-operated
refining availability for the full year was 96.0%. In the quarter
BP announced plans to cease production at the Kwinana refinery and
convert it to an import terminal, helping to secure ongoing fuel
supply for Western Australia.
BP
continued to make progress in fuels marketing in 2020, expanding
its retail network by more than 1,400 to over 20,300 sites
worldwide. This includes more than 1,900 strategic convenience
sites, around 300 more than a year earlier.
The
$5-billion sale of BP's petrochemicals business to INEOS completed
on 31 December and BP received the second payment of $3.6 billion,
less $0.1 billion of third-party indebtedness. Final payments
totalling $1 billion are expected in the first half of
2021.
Through
2020, the number of BP and joint venture operated electric vehicle
charging points increased to more than 10,000 worldwide, with
growth in the UK, Germany and through the DiDi joint venture in
China.
|
Strategic progress
At the
end of 2020, BP had developed 3.3GW net renewable generating
capacity to FID, compared with 2.6GW a year earlier.
The
formation of BP's strategic partnership with Equinor for offshore
wind opportunities in the US was completed in January 2021,
including BP's purchase of a 50% interest in the Empire Wind and
Beacon Wind projects. Empire Wind 2 and Beacon Wind 1 were selected
to provide New York state with additional offshore wind power
which, subject to negotiation of a purchase and sale agreement,
will bring the total secured by the projects to 3.3GW, 75% of the
maximum potential installed capacity across the
projects.
In the
quarter BP also acquired a majority stake in Finite Carbon, the
biggest developer of forest carbon offsets in the US. BP's
investment is expected to support the accelerated growth of the
business, including international expansion.
Financial framework
Operating cash flow excluding Gulf of Mexico oil spill
payments* was $13.8 billion for the full year of 2020, compared
with $28.2 billion for the same period in 2019.
Organic capital expenditure* for the full year of 2020 was
$12.0 billion. BP expects total capital expenditure, including
inorganic capital expenditure, to be around $13 billion in
2021.
Divestment and other proceeds were $6.6 billion for the full
year of 2020. BP has now completed or agreed transactions for over
half of its target of $25 billion in proceeds by 2025. BP expects
proceeds from divestments and other disposals of $4-6 billion in
2021, weighted toward the second half.
Gulf of Mexico oil spill payments on a post-tax basis were
$1.6 billion in the full year of 2020. Payments for 2021 are
expected to be around $1 billion on a post-tax basis.
Gearing* at 31 December 2020 was 31.3%, in part reflecting
the hybrid bond issue in the second quarter of 2020. See page 25
for more information.
|
Operating metrics
|
|
Year 2020
|
|
Financial metrics
|
|
Year 2020
|
|
(vs. Year 2019)
|
|
|
(vs. Year 2019)
|
||
Tier 1 and tier 2 process safety events
|
|
70
|
|
Underlying RC profit (loss)*
|
|
$(5.7)bn
|
|
(-28)
|
|
|
(-$15.7bn)
|
||
Reported recordable injury frequency*
|
|
0.132
|
|
Operating cash flow excluding Gulf of Mexico oil spill payments
(post-tax)
|
|
$13.8bn
|
|
(-20.7%)
|
|
|
(-$14.4bn)
|
||
Group production
|
|
3,473mboe/d
|
|
Organic capital expenditure
|
|
$12.0bn
|
|
(-8.1%)
|
|
|
(-$3.2bn)
|
||
Upstream production (excludes Rosneft segment)
|
|
2,375mboe/d
|
|
Gulf of Mexico oil spill payments (post-tax)
|
|
$1.6bn
|
|
(-9.9%)
|
|
|
(-$0.8bn)
|
||
Upstream unit production costs(a)
|
|
$6.39
6.39/boe
|
|
Divestment proceeds*
|
|
$5.5bn
|
|
(-6.5%)
|
|
|
(+$3.3bn)
|
||
BP-operated Upstream plant reliability
|
|
94.0%
|
|
Gearing
|
|
31.3%
|
|
(-0.4)
|
|
|
(+0.2)
|
||
BP-operated refining availability*
|
|
96.0%
|
|
Dividend per ordinary share(b)
|
|
5.25 cents
|
|
(+1.1)
|
|
|
(-50.0%)
|
||
|
|
|
|
Return on average capital employed*
|
|
(3.8)%
|
|
|
|
|
(-12.7)
|
(a)
Reflecting lower
costs and divestment impacts.
(b)
Represents dividend
announced in the quarter (vs. prior year quarter).
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
36.
|
Top of
page 6
Upstream
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Profit (loss) before interest and tax
|
|
(572)
|
|
38
|
|
614
|
|
|
(21,530)
|
|
4,909
|
|
Inventory holding (gains) losses*
|
|
(20)
|
|
(8)
|
|
—
|
|
|
(17)
|
|
8
|
|
RC profit (loss) before interest and tax
|
|
(592)
|
|
30
|
|
614
|
|
|
(21,547)
|
|
4,917
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
1,289
|
|
848
|
|
2,064
|
|
|
16,506
|
|
6,241
|
|
Underlying
RC profit (loss) before interest and tax*(a)
|
|
697
|
|
878
|
|
2,678
|
|
|
(5,041)
|
|
11,158
|
|
(a)
See page 7 for a
reconciliation to segment RC profit before interest and tax by
region.
Financial results
The
replacement cost loss before interest and tax for the fourth
quarter and full year was $592 million and $21,547 million
respectively, compared with a profit of $614 million and $4,917
million for the same periods in 2019. The fourth quarter and full
year included a net non-operating charge of $612 million and
$15,768 million respectively, compared with a net charge of $2,723
million and $6,947 million for the same periods in 2019. The net
non-operating charge for the quarter primarily reflects a net
impairment charge and a provision for restructuring costs partly
offset by disposal gains. The charge for the full year is
principally related to impairments associated with revisions to
long-term price assumptions. Fair value accounting effects in the
fourth quarter and full year had an adverse impact of $677 million
and $738 million respectively, compared with a favourable impact of
$659 million and $706 million in the same periods of
2019.
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 profit of $697
million and a loss of $5,041 million respectively, compared with a
profit of $2,678 million and $11,158 million for the same periods
in 2019. The result for the fourth quarter mainly reflects lower
liquids and gas realizations, lower production including the impact
of divestments, and a significantly weaker gas marketing and
trading contribution, partly offset by lower depreciation,
depletion and amortization. The result for the full year mainly
reflects lower liquids and gas realizations and the impact of
writing down certain exploration intangible carrying
values.
Production
Production
for the quarter was 2,155mboe/d, 20.1% lower than the fourth
quarter of 2019. This includes the impact of divestments mainly in
BPX Energy and Alaska. Underlying production* for the quarter
decreased by 11.1% mainly due to impacts from reduced capital
investment levels and decline, significant weather impacts from
hurricanes in the higher-margin US Gulf of Mexico and maintenance
activity.
For the
full year, production was 2,375mboe/d, 9.9% lower than the full
year of 2019 mainly due to the impact of divestments in BPX Energy
and Alaska. Underlying production for the full year decreased by
3.5% mainly due to impacts from reduced capital investment levels
and decline, and significant weather impacts from hurricanes in the
US Gulf of Mexico.
Key events
On 26
October, BP announced the start of production from the Qattameya
field in the North Damietta concession, located offshore Egypt (BP
operator 100%).
On 29
October, BP confirmed oil discoveries at the Cappahayden and
Cambriol prospects in the Flemish Pass basin, offshore
Newfoundland, Canada (Equinor operator 60%, BP 40%).
On 15
November, the Trans Adriatic Pipeline (TAP), an 878-km gas
transportation system crossing Greece, Albania, the Adriatic Sea
and Italy, became operational (BP 20%, SOCAR 20%, Snam 20%, Fluxys
19%, Enagás 16% and Axpo 5%), with first gas exports from
Azerbaijan to Europe commencing in December.
On 26
November, BP announced the start of production from the Vorlich
field in the UK North Sea (BP 66%, Ithaca Energy operator
34%).
On 15
December, BP signed an agreement to sell its interest in the
Wamsutter asset, located in the Greater Green River Basin, Wyoming,
US, to Williams Field Services LLC. Subject to approvals, the
transaction is expected to complete in first quarter
2021.
On 18
December, BP and Reliance Industries Limited (RIL) announced the
start of production from the R Cluster ultra-deep-water gas field
in block KG D6 off the east coast of India. (RIL operator 66.67%,
BP 33.33%).
On 1
February 2021, BP announced it has agreed to sell a 20%
participating interest in Oman’s Block 61 to PTT Exploration
and Production Public Company Limited (PTTEP). Subject to
approvals, the transaction is expected to complete in 2021 and
following which the participating interests in Block 61 will be: BP
operator 40%, OQ 30%, PTTEP 20%, and PETRONAS 10%.
Outlook
We
expect full-year 2021 underlying production to be slightly higher
than 2020 due to the ramp-up of major projects, primarily in gas
regions, partly offset by the impacts of reduced capital investment
and decline in lower-margin gas assets. We expect reported
production to be lower due to the impact of the ongoing divestment
programme.
We
expect first-quarter 2021 reported production to be slightly higher
than fourth-quarter 2020.
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
36.
|
Top of
page 7
Upstream (continued)
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
US
|
|
(100)
|
|
125
|
|
645
|
|
|
(2,396)
|
|
2,670
|
|
Non-US
|
|
797
|
|
753
|
|
2,033
|
|
|
(2,645)
|
|
8,488
|
|
|
|
697
|
|
878
|
|
2,678
|
|
|
(5,041)
|
|
11,158
|
|
Non-operating items(a)(b)
|
|
|
|
|
|
|
|
|||||
US
|
|
(101)
|
|
(114)
|
|
(2,451)
|
|
|
(2,969)
|
|
(6,265)
|
|
Non-US
|
|
(511)
|
|
(517)
|
|
(272)
|
|
|
(12,799)
|
|
(682)
|
|
|
|
(612)
|
|
(631)
|
|
(2,723)
|
|
|
(15,768)
|
|
(6,947)
|
|
Fair value accounting effects
|
|
|
|
|
|
|
|
|||||
US
|
|
104
|
|
57
|
|
120
|
|
|
198
|
|
(179)
|
|
Non-US
|
|
(781)
|
|
(274)
|
|
539
|
|
|
(936)
|
|
885
|
|
|
|
(677)
|
|
(217)
|
|
659
|
|
|
(738)
|
|
706
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
US
|
|
(97)
|
|
68
|
|
(1,686)
|
|
|
(5,167)
|
|
(3,774)
|
|
Non-US
|
|
(495)
|
|
(38)
|
|
2,300
|
|
|
(16,380)
|
|
8,691
|
|
|
|
(592)
|
|
30
|
|
614
|
|
|
(21,547)
|
|
4,917
|
|
Exploration expense
|
|
|
|
|
|
|
|
|||||
US
|
|
104
|
|
40
|
|
86
|
|
|
2,724
|
|
233
|
|
Non-US
|
|
110
|
|
150
|
|
180
|
|
|
7,556
|
|
731
|
|
|
|
214
|
|
190
|
|
266
|
|
|
10,280
|
|
964
|
|
Of
which: Exploration expenditure written off(b)
|
|
154
|
|
50
|
|
155
|
|
|
9,920
|
|
631
|
|
Production (net of
royalties)(c)(d)
|
|
|
|
|
|
|
|
|||||
Liquids* (mb/d)
|
|
|
|
|
|
|
|
|||||
US
|
|
359
|
|
363
|
|
517
|
|
|
424
|
|
482
|
|
Europe
|
|
160
|
|
143
|
|
149
|
|
|
154
|
|
141
|
|
Rest of World
|
|
600
|
|
623
|
|
662
|
|
|
651
|
|
666
|
|
|
|
1,119
|
|
1,129
|
|
1,328
|
|
|
1,229
|
|
1,288
|
|
Natural gas (mmcf/d)
|
|
|
|
|
|
|
|
|||||
US
|
|
1,232
|
|
1,419
|
|
2,317
|
|
|
1,561
|
|
2,358
|
|
Europe
|
|
320
|
|
265
|
|
275
|
|
|
282
|
|
185
|
|
Rest of World
|
|
4,459
|
|
4,774
|
|
5,354
|
|
|
4,800
|
|
5,279
|
|
|
|
6,011
|
|
6,457
|
|
7,945
|
|
|
6,643
|
|
7,823
|
|
Total hydrocarbons* (mboe/d)
|
|
|
|
|
|
|
|
|||||
US
|
|
571
|
|
608
|
|
916
|
|
|
694
|
|
888
|
|
Europe
|
|
215
|
|
188
|
|
196
|
|
|
202
|
|
173
|
|
Rest of World
|
|
1,369
|
|
1,446
|
|
1,585
|
|
|
1,479
|
|
1,576
|
|
|
|
2,155
|
|
2,243
|
|
2,698
|
|
|
2,375
|
|
2,637
|
|
Average realizations*(e)
|
|
|
|
|
|
|
|
|||||
Total
liquids(f)
($/bbl)
|
|
38.42
|
|
38.17
|
|
55.90
|
|
|
36.16
|
|
57.73
|
|
Natural gas ($/mcf)
|
|
3.10
|
|
2.56
|
|
3.12
|
|
|
2.75
|
|
3.39
|
|
Total hydrocarbons ($/boe)
|
|
28.48
|
|
26.42
|
|
36.42
|
|
|
26.31
|
|
38.00
|
|
(a)
Full year 2020
principally relates to impairments in a number of our businesses
resulting from the revisions to BP’s long-term price
assumptions. Full year 2020 also includes impairment charges
related to the disposal of our Alaska business. Fourth quarter and
full year 2019 include impairment charges related to the disposal
of heritage BPX Energy assets, Alaska and GUPCO divestment. See
Note 3 for further information.
(b)
Full year 2020
includes the write-off of $1,974 million relating to value ascribed
to certain licences as part of the accounting for the acquisition
of upstream assets in Brazil, India and the Gulf of Mexico and the
impairment of certain intangible assets in Mauritania and Senegal.
This has been classified within the ‘other’ category of
non-operating items. See Note 4 for further
information.
(c)
Includes BP’s
share of production of equity-accounted entities in the Upstream
segment.
(d)
Because of
rounding, some totals may not agree exactly with the sum of their
component parts.
(e)
Realizations are
based on sales by consolidated subsidiaries only – this
excludes equity-accounted entities.
(f)
Includes
condensate, natural gas liquids and bitumen.
Top of
page 8
Downstream
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Profit before interest and tax
|
|
1,895
|
|
1,106
|
|
1,412
|
|
|
622
|
|
7,187
|
|
Inventory holding (gains) losses*
|
|
(650)
|
|
(191)
|
|
21
|
|
|
2,796
|
|
(685)
|
|
RC profit before interest and tax
|
|
1,245
|
|
915
|
|
1,433
|
|
|
3,418
|
|
6,502
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
(1,119)
|
|
(279)
|
|
5
|
|
|
(330)
|
|
(83)
|
|
Underlying
RC profit before interest and tax*(a)
|
|
126
|
|
636
|
|
1,438
|
|
|
3,088
|
|
6,419
|
|
(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 $1,245 million and $3,418 million
respectively, compared with $1,433 million and $6,502 million for
the same periods in 2019.
The
fourth quarter and full year include a net non-operating gain of
$1,403 million and $479 million respectively, compared with a
charge of $28 million and $77 million for the same periods in 2019.
The gain for the quarter and full year reflects a profit of $2.3
billion on the sale of our petrochemicals business, which is
partially offset by restructuring costs and impairments. Fair value
accounting effects in the fourth quarter and full year had an
adverse impact of $284 million and $149 million respectively,
compared with a favourable impact of $23 million and $160 million
in the same periods in 2019.
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 $126 million and
$3,088 million respectively, compared with $1,438 million and
$6,419 million for the same periods in 2019.
Replacement
cost profit before interest and tax for the fuels, lubricants and
petrochemicals businesses is set out on page 9.
Fuels
The
fuels business reported an underlying replacement cost loss before
interest and tax of $169 million for the fourth quarter and a
profit of $2,037 million for the full year, compared with a profit
of $1,068 million and $4,759 million for the same periods in
2019.
The
result for the quarter and full year reflected an exceptionally
weak refining environment, with COVID-19 restrictions impacting
refining utilization and fuel volumes. The result for the full year
also reflected a higher contribution from supply and
trading.
Fuels
marketing demonstrated continued resilience, delivering significant
profit for the quarter and full year, despite COVID-19 which
adversely impacted retail fuel and aviation volumes by 14% and 50%
respectively for the full year.
The
refining loss for the quarter and full year reflects the continued
impact of historically low industry margins. For the full year,
although availability was strong at 96%, utilization was around 6%
lower than 2019 due to the impact of COVID-19 on demand. These
factors were partially offset by a lower level of turnaround
activity and lower costs. The result for the quarter was also
impacted by narrower heavy crude oil discounts compared with the
same period in 2019.
In the
quarter we announced our plans to cease production at our Kwinana
refinery and convert it to an import terminal, helping to secure
ongoing fuel supply for Western Australia.
During
the year we continued to progress our agenda to redefine
convenience, delivering a 6% growth in convenience gross margin*
for the full year, and we expanded our retail network by over 1,400
sites, to a total of 20,300, which now includes more than 1,900
strategic convenience sites.
We also
progressed our electrification agenda, growing our network to more
than 10,000 BP and joint venture operated EV charging points. This
included rolling out ultra-fast chargers at retail sites in the UK
and Germany, and the continued expansion of our electrification
joint venture with DiDi in China.
Lubricants
The
lubricants business reported an underlying replacement cost profit
before interest and tax of $262 million for the fourth quarter and
$818 million for the full year, compared with $333 million and
$1,258 million for the same periods in 2019. The result for the
quarter and full year reflects significant demand impacts, with
volumes lower than the prior quarter and 15% lower for the full
year. In the second half of the year we have seen volumes in growth
markets recover to 2019 levels as COVID-19 restrictions eased
during that period.
In 2020
we continued to expand our service offer, growing the number of
Castrol branded independent workshops by more than 4,000 to over
28,000 globally. We also continued to establish strong partnerships
with OEMs, with BMW selecting Castrol to be its exclusive supplier
of lubricants to all BMW and MINI authorized dealers across the US,
Canada and Mexico.
Petrochemicals
The
petrochemicals business reported an underlying replacement cost
profit before interest and tax of $33 million for the fourth
quarter and $233 million for the full year, compared with $37
million and $402 million for the same periods in 2019. The result
for the full year reflects the impact of COVID-19 on demand, and a
significantly weaker margin environment.
In
December we completed the divestment of BP’s petrochemicals
business to INEOS for a total consideration of $5 billion. Final
payments, totalling $1 billion are expected to be received in the
first half of 2021.
Outlook
Looking
to the first quarter of 2021, we expect industry refining margins
and utilization to remain under pressure. In our marketing
businesses we expect renewed COVID-19 restrictions to have a
greater impact on product demand, with January retail volumes down
by around 20% year on year, compared with a decline of 11% in the
fourth quarter.
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
36.
|
Top of
page 9
Downstream (continued)
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Underlying RC profit before interest and tax - by
region
|
|
|
|
|
|
|
|
|||||
US
|
|
(231)
|
|
96
|
|
556
|
|
|
1,141
|
|
2,190
|
|
Non-US
|
|
357
|
|
540
|
|
882
|
|
|
1,947
|
|
4,229
|
|
|
|
126
|
|
636
|
|
1,438
|
|
|
3,088
|
|
6,419
|
|
Non-operating items
|
|
|
|
|
|
|
|
|||||
US
|
|
890
|
|
(27)
|
|
(40)
|
|
|
800
|
|
(42)
|
|
Non-US
|
|
513
|
|
(119)
|
|
12
|
|
|
(321)
|
|
(35)
|
|
|
|
1,403
|
|
(146)
|
|
(28)
|
|
|
479
|
|
(77)
|
|
Fair value accounting
effects(a)
|
|
|
|
|
|
|
|
|||||
US
|
|
(125)
|
|
78
|
|
(37)
|
|
|
27
|
|
148
|
|
Non-US
|
|
(159)
|
|
347
|
|
60
|
|
|
(176)
|
|
12
|
|
|
|
(284)
|
|
425
|
|
23
|
|
|
(149)
|
|
160
|
|
RC profit before interest and tax
|
|
|
|
|
|
|
|
|||||
US
|
|
534
|
|
147
|
|
479
|
|
|
1,968
|
|
2,296
|
|
Non-US
|
|
711
|
|
768
|
|
954
|
|
|
1,450
|
|
4,206
|
|
|
|
1,245
|
|
915
|
|
1,433
|
|
|
3,418
|
|
6,502
|
|
Underlying RC profit before interest and tax - by
business(b)(c)
|
|
|
|
|
|
|
|
|||||
Fuels
|
|
(169)
|
|
222
|
|
1,068
|
|
|
2,037
|
|
4,759
|
|
Lubricants
|
|
262
|
|
326
|
|
333
|
|
|
818
|
|
1,258
|
|
Petrochemicals
|
|
33
|
|
88
|
|
37
|
|
|
233
|
|
402
|
|
|
|
126
|
|
636
|
|
1,438
|
|
|
3,088
|
|
6,419
|
|
Non-operating items and fair value accounting
effects(a)
|
|
|
|
|
|
|
|
|||||
Fuels
|
|
(1,037)
|
|
288
|
|
(41)
|
|
|
(1,754)
|
|
32
|
|
Lubricants
|
|
(121)
|
|
(7)
|
|
39
|
|
|
(179)
|
|
57
|
|
Petrochemicals
|
|
2,277
|
|
(2)
|
|
(3)
|
|
|
2,263
|
|
(6)
|
|
|
|
1,119
|
|
279
|
|
(5)
|
|
|
330
|
|
83
|
|
RC profit before interest and tax(b)(c)
|
|
|
|
|
|
|
|
|||||
Fuels
|
|
(1,206)
|
|
510
|
|
1,027
|
|
|
283
|
|
4,791
|
|
Lubricants
|
|
141
|
|
319
|
|
372
|
|
|
639
|
|
1,315
|
|
Petrochemicals
|
|
2,310
|
|
86
|
|
34
|
|
|
2,496
|
|
396
|
|
|
|
1,245
|
|
915
|
|
1,433
|
|
|
3,418
|
|
6,502
|
|
|
|
|
|
|
|
|
|
|||||
BP average refining marker margin (RMM)* ($/bbl)
|
|
5.9
|
|
6.2
|
|
12.4
|
|
|
6.7
|
|
13.2
|
|
|
|
|
|
|
|
|
|
|||||
Refinery throughputs (mb/d)
|
|
|
|
|
|
|
|
|||||
US
|
|
708
|
|
701
|
|
761
|
|
|
693
|
|
737
|
|
Europe
|
|
720
|
|
699
|
|
848
|
|
|
742
|
|
787
|
|
Rest of World
|
|
200
|
|
187
|
|
238
|
|
|
192
|
|
225
|
|
|
|
1,628
|
|
1,587
|
|
1,847
|
|
|
1,627
|
|
1,749
|
|
BP-operated refining availability* (%)
|
|
96.1
|
|
96.2
|
|
95.7
|
|
|
96.0
|
|
94.9
|
|
|
|
|
|
|
|
|
|
|||||
Marketing sales of refined products (mb/d)
|
|
|
|
|
|
|
|
|||||
US
|
|
1,055
|
|
1,083
|
|
1,156
|
|
|
1,011
|
|
1,145
|
|
Europe
|
|
801
|
|
849
|
|
1,051
|
|
|
823
|
|
1,073
|
|
Rest of World
|
|
457
|
|
422
|
|
537
|
|
|
441
|
|
509
|
|
|
|
2,313
|
|
2,354
|
|
2,744
|
|
|
2,275
|
|
2,727
|
|
Trading/supply sales of refined products
|
|
2,942
|
|
2,618
|
|
3,519
|
|
|
3,026
|
|
3,268
|
|
Total sales volumes of refined products
|
|
5,255
|
|
4,972
|
|
6,263
|
|
|
5,301
|
|
5,995
|
|
|
|
|
|
|
|
|
|
|||||
Petrochemicals production (kte)
|
|
|
|
|
|
|
|
|||||
US
|
|
640
|
|
541
|
|
518
|
|
|
2,201
|
|
2,267
|
|
Europe
|
|
1,241
|
|
1,325
|
|
1,141
|
|
|
5,183
|
|
4,714
|
|
Rest of World
|
|
1,261
|
|
1,211
|
|
1,353
|
|
|
4,896
|
|
5,133
|
|
|
|
3,142
|
|
3,077
|
|
3,012
|
|
|
12,280
|
|
12,114
|
|
(a)
For Downstream,
fair value accounting effects arise solely in the fuels business.
See page 28 for further information.
(b)
Segment-level
overhead expenses are included in the fuels business
result.
(c)
Results from
petrochemicals at our Gelsenkirchen and Mülheim sites in
Germany are reported in the fuels business.
Top of
page 10
Rosneft
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020(a)
|
2020
|
2019
|
|
2020(a)
|
2019
|
|||||
Profit
(loss) before interest and tax(b)(c)
|
|
295
|
|
(244)
|
|
534
|
|
|
(238)
|
|
2,306
|
|
Inventory holding (gains) losses*
|
|
(25)
|
|
(34)
|
|
(31)
|
|
|
89
|
|
10
|
|
RC profit (loss) before interest and tax
|
|
270
|
|
(278)
|
|
503
|
|
|
(149)
|
|
2,316
|
|
Net charge (credit) for non-operating items*
|
|
41
|
|
101
|
|
(91)
|
|
|
205
|
|
103
|
|
Underlying RC profit (loss) before interest and tax*
|
|
311
|
|
(177)
|
|
412
|
|
|
56
|
|
2,419
|
|
Financial results
Replacement
cost (RC) profit before interest and tax for the fourth quarter was
$270 million and RC loss for the full year was $149 million,
compared with a profit of $503 million and $2,316 million for the
same periods in 2019.
After
adjusting for non-operating items, the underlying RC profit before
interest and tax for the fourth quarter and full year was $311
million and $56 million respectively, compared with a profit of
$412 million and $2,419 million for the same periods in
2019.
Compared
with the same period in 2019, the result for the fourth quarter
primarily reflects lower oil prices partially offset by favourable
foreign exchange effects. Compared with the same period in 2019,
the result for the full year primarily reflects lower oil prices,
unfavourable foreign exchange and adverse duty lag
effects.
Key events
On 28
December, Rosneft announced completion of the acquisition of 100%
stakes in JSC Taimyrneftegaz and LLC Taimyrburservis, and the sale
of a 10% interest in LLC Vostok Oil.
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
|
|
2020(a)
|
2020
|
2019
|
|
2020(a)
|
2019
|
|||||
Production (net of royalties) (BP share)
|
|
|
|
|
|
|
|
|||||
Liquids* (mb/d)
|
|
876
|
|
858
|
|
923
|
|
|
877
|
|
923
|
|
Natural gas (mmcf/d)
|
|
1,360
|
|
1,260
|
|
1,306
|
|
|
1,286
|
|
1,279
|
|
Total hydrocarbons* (mboe/d)
|
|
1,111
|
|
1,075
|
|
1,148
|
|
|
1,098
|
|
1,144
|
|
(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 three months and full year ended 31
December 2020. Actual results may differ from these amounts.
Amounts reported for the fourth quarter are based on BP’s
22.01% average economic interest for the quarter (third quarter
2020 21.96% and fourth quarter 2019 19.75%). A preliminary
assessment of the fair values of the assets and liabilities
acquired and the consideration transferred in respect of the
acquisitions announced by Rosneft on 28 December is being
undertaken and the impact, if any, on BP’s accounting for its
equity-accounted investment in Rosneft will be updated once this
has been completed.
(b)
The Rosneft segment
result includes equity-accounted earnings arising from BP’s
economic interest in Rosneft as adjusted for accounting required
under IFRS relating to BP’s purchase of its interest in
Rosneft, and the amortization of the deferred gain relating to the
divestment of BP’s interest in TNK-BP.
(c)
BP’s adjusted
share of Rosneft’s earnings after Rosneft's own finance
costs, taxation and non-controlling interests is included in the BP
group income statement within profit before interest and taxation.
For each year-to-date period it is calculated by translating the
amounts reported in Russian roubles into US dollars using the
average exchange rate for the year to date.
Top of
page 11
Other businesses and corporate
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Profit (loss) before interest and tax
|
|
308
|
|
24
|
|
(1,432)
|
|
|
(683)
|
|
(2,771)
|
|
Inventory holding (gains) losses*
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
RC profit (loss) before interest and tax
|
|
308
|
|
24
|
|
(1,432)
|
|
|
(683)
|
|
(2,771)
|
|
Net
(favourable) adverse impact of non-operating items* and fair value
accounting effects*
|
|
(397)
|
|
(154)
|
|
1,182
|
|
|
(357)
|
|
1,491
|
|
Underlying RC profit (loss) before interest and tax*
|
|
(89)
|
|
(130)
|
|
(250)
|
|
|
(1,040)
|
|
(1,280)
|
|
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
US
|
|
(135)
|
|
(65)
|
|
(85)
|
|
|
(453)
|
|
(713)
|
|
Non-US
|
|
46
|
|
(65)
|
|
(165)
|
|
|
(587)
|
|
(567)
|
|
|
|
(89)
|
|
(130)
|
|
(250)
|
|
|
(1,040)
|
|
(1,280)
|
|
Non-operating items
|
|
|
|
|
|
|
|
|||||
US
|
|
(303)
|
|
(62)
|
|
(268)
|
|
|
(475)
|
|
(559)
|
|
Non-US
|
|
250
|
|
(50)
|
|
(914)
|
|
|
157
|
|
(932)
|
|
|
|
(53)
|
|
(112)
|
|
(1,182)
|
|
|
(318)
|
|
(1,491)
|
|
Fair value accounting effects
|
|
|
|
|
|
|
|
|||||
US
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Non-US
|
|
450
|
|
266
|
|
—
|
|
|
675
|
|
—
|
|
|
|
450
|
|
266
|
|
—
|
|
|
675
|
|
—
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|||||
US
|
|
(438)
|
|
(127)
|
|
(353)
|
|
|
(928)
|
|
(1,272)
|
|
Non-US
|
|
746
|
|
151
|
|
(1,079)
|
|
|
245
|
|
(1,499)
|
|
|
|
308
|
|
24
|
|
(1,432)
|
|
|
(683)
|
|
(2,771)
|
|
Other
businesses and corporate comprises our alternative energy business,
shipping, treasury, BP ventures and corporate activities including
centralized functions, and any residual costs of the Gulf of Mexico
oil spill.
Financial results
The
replacement cost result before interest and tax for the fourth
quarter and full year was a profit of $308 million and a loss of
$683 million respectively, compared with a loss of $1,432 million
and $2,771 million for the same periods in 2019.
The
results include a net non-operating charge of $53 million for the
fourth quarter and $318 million for the full year, compared with a
charge of $1,182 million and $1,491 million for the same periods in
2019. Fair value accounting effects in the fourth quarter and full
year had a favourable impact of $450 million and $675 million
respectively. See page 28 for further information.
After
adjusting for non-operating items and fair value accounting
effects, the underlying replacement cost loss before interest and
tax for the fourth quarter and full year was $89 million and $1,040
million respectively, compared with $250 million and $1,280 million
for the same periods in 2019. The results include an uplift in
valuation of a venture investment of $229 million for the fourth
quarter and $284 million for the full year.
Alternative Energy
BP's
net ethanol-equivalent production* for the fourth quarter and full
year averaged 14.9kb/d and 20.3kb/d respectively, compared with
11.6kb/d and 13.7kb/d for the 100% BP-owned business for the same
periods in 2019.
Net
wind generation capacity* was 1,071MW at 31 December 2020, compared
with 926MW at 31 December 2019. BP’s net share of wind
generation for the fourth quarter and full year was 902GWh and
2,806GWh respectively, compared with 785GWh and 2,752GWh for the
same periods in 2019.
In
December Lightsource BP developed to FID the 163MW Elm Branch and
153MW Briar Creek projects in the US, 50MW South Lowfield and 21MW
Thornham projects in the UK, taking their overall total capacity
developed to FID to 1,403MW for the full year.
In
January 2021 BP and Equinor formed a strategic partnership to
initially develop four projects in two existing leases located
offshore New York and Massachusetts which together are expected to
have a total generating capacity of 4.4GW. Early in January Empire
Wind 2 and Beacon Wind 1 projects were selected to provide New York
State with an additional 2.5GW of power and subject to negotiation
of a purchase and sale agreement will take total secured power
offtake agreements on the projects to 3.3GW which represents a
material de-risking of the overall project. Beyond these initial
projects, the strategic partnership expects to participate in
future offshore wind developments in the US.
In
December, BP finalized its investment in India’s Green Growth
Equity Fund (GGEF) with an initial investment of $30 million and a
total commitment of $70 million to the fund. The fund itself was
established in 2018 and is focused on identifying, investing in and
supporting growth in clean energy projects in India and is managed
by Lightsource BP and Everstone Capital.
We
continue to progress our aim to build material renewable energy
businesses by having developed 20GW of net renewable generating
capacity to FID by 2025. Overall we have developed a total of 3.3GW
of net renewable generating capacity to FID by 31 December 2020
across our businesses and are progressing a development pipeline
with projects across nine countries totalling 11GW net BP. In
addition our development teams are further evaluating potential
options totalling over 20GW.
Outlook
Other
businesses and corporate charges for 2021, excluding non-operating
items, fair value accounting effects and foreign exchange
volatility impact, are expected to be $1.2-1.4 billion although the
quarterly charge may vary quarter to quarter.
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
36.
|
Top of
page 12
Financial statements
Group income statement
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
|
|
|
|
|
|
|
|||||
Sales and other operating revenues (Note 6)
|
|
44,789
|
|
44,251
|
|
71,109
|
|
|
180,366
|
|
278,397
|
|
Earnings from joint ventures – after interest and
tax
|
|
214
|
|
73
|
|
163
|
|
|
(302)
|
|
576
|
|
Earnings from associates – after interest and
tax
|
|
575
|
|
(332)
|
|
640
|
|
|
(101)
|
|
2,681
|
|
Interest and other income
|
|
233
|
|
183
|
|
210
|
|
|
663
|
|
769
|
|
Gains on sale of businesses and fixed assets
|
|
2,757
|
|
27
|
|
48
|
|
|
2,874
|
|
193
|
|
Total revenues and other income
|
|
48,568
|
|
44,202
|
|
72,170
|
|
|
183,500
|
|
282,616
|
|
Purchases
|
|
32,803
|
|
31,645
|
|
53,444
|
|
|
132,104
|
|
209,672
|
|
Production and manufacturing expenses
|
|
6,111
|
|
5,073
|
|
5,809
|
|
|
22,494
|
|
21,815
|
|
Production and similar taxes (Note 8)
|
|
228
|
|
140
|
|
412
|
|
|
695
|
|
1,547
|
|
Depreciation, depletion and amortization (Note 7)
|
|
3,426
|
|
3,467
|
|
4,434
|
|
|
14,889
|
|
17,780
|
|
Impairment and losses on sale of businesses and fixed assets (Note
3)
|
|
1,168
|
|
294
|
|
3,657
|
|
|
14,381
|
|
8,075
|
|
Exploration expense (Note 4)
|
|
214
|
|
190
|
|
266
|
|
|
10,280
|
|
964
|
|
Distribution and administration expenses
|
|
2,769
|
|
2,435
|
|
2,996
|
|
|
10,397
|
|
11,057
|
|
Profit (loss) before interest and taxation
|
|
1,849
|
|
958
|
|
1,152
|
|
|
(21,740)
|
|
11,706
|
|
Finance costs
|
|
749
|
|
800
|
|
886
|
|
|
3,115
|
|
3,489
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
10
|
|
8
|
|
17
|
|
|
33
|
|
63
|
|
Profit (loss) before taxation
|
|
1,090
|
|
150
|
|
249
|
|
|
(24,888)
|
|
8,154
|
|
Taxation
|
|
(395)
|
|
457
|
|
231
|
|
|
(4,159)
|
|
3,964
|
|
Profit (loss) for the period
|
|
1,485
|
|
(307)
|
|
18
|
|
|
(20,729)
|
|
4,190
|
|
Attributable to
|
|
|
|
|
|
|
|
|||||
BP
shareholders
|
|
1,358
|
|
(450)
|
|
19
|
|
|
(20,305)
|
|
4,026
|
|
Non-controlling
interests
|
|
127
|
|
143
|
|
(1)
|
|
|
(424)
|
|
164
|
|
|
|
1,485
|
|
(307)
|
|
18
|
|
|
(20,729)
|
|
4,190
|
|
|
|
|
|
|
|
|
|
|||||
Earnings per share (Note 9)
|
|
|
|
|
|
|
|
|||||
Profit (loss) for the period attributable to BP
shareholders
|
|
|
|
|
|
|
|
|||||
Per
ordinary share (cents)
|
|
|
|
|
|
|
|
|||||
Basic
|
|
6.71
|
|
(2.22)
|
|
0.09
|
|
|
(100.42)
|
|
19.84
|
|
Diluted
|
|
6.68
|
|
(2.22)
|
|
0.09
|
|
|
(100.42)
|
|
19.73
|
|
Per
ADS (dollars)
|
|
|
|
|
|
|
|
|||||
Basic
|
|
0.40
|
|
(0.13)
|
|
0.01
|
|
|
(6.03)
|
|
1.19
|
|
Diluted
|
|
0.40
|
|
(0.13)
|
|
0.01
|
|
|
(6.03)
|
|
1.18
|
|
Top of
page 13
Condensed group statement of comprehensive income
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
|
|
|
|
|
|
|
|
|||||
Profit (loss) for the period
|
|
1,485
|
|
(307)
|
|
18
|
|
|
(20,729)
|
|
4,190
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|||||
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
|
|
|
|||||
Currency
translation differences
|
|
1,594
|
|
(166)
|
|
1,404
|
|
|
(1,843)
|
|
1,538
|
|
Exchange (gains)
losses on translation of foreign operations reclassified to gain or
loss on sale of businesses and fixed assets
|
|
(357)
|
|
—
|
|
880
|
|
|
(353)
|
|
880
|
|
Cash
flow hedges and costs of hedging
|
|
42
|
|
(90)
|
|
(76)
|
|
|
105
|
|
59
|
|
Share
of items relating to equity-accounted entities, net of
tax
|
|
(105)
|
|
308
|
|
43
|
|
|
312
|
|
82
|
|
Income
tax relating to items that may be reclassified
|
|
2
|
|
(16)
|
|
(39)
|
|
|
66
|
|
(70)
|
|
|
|
1,176
|
|
36
|
|
2,212
|
|
|
(1,713)
|
|
2,489
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
|
|
|
|
|||||
Remeasurements of
the net pension and other post-retirement benefit liability or
asset(a)
|
|
333
|
|
78
|
|
1,480
|
|
|
170
|
|
328
|
|
Cash
flow hedges that will subsequently be transferred to the balance
sheet
|
|
9
|
|
8
|
|
6
|
|
|
7
|
|
(3)
|
|
Income
tax relating to items that will not be reclassified
|
|
(89)
|
|
(16)
|
|
(459)
|
|
|
(105)
|
|
(157)
|
|
|
|
253
|
|
70
|
|
1,027
|
|
|
72
|
|
168
|
|
Other comprehensive income
|
|
1,429
|
|
106
|
|
3,239
|
|
|
(1,641)
|
|
2,657
|
|
Total comprehensive income
|
|
2,914
|
|
(201)
|
|
3,257
|
|
|
(22,370)
|
|
6,847
|
|
Attributable to
|
|
|
|
|
|
|
|
|||||
BP
shareholders
|
|
2,740
|
|
(364)
|
|
3,240
|
|
|
(21,983)
|
|
6,674
|
|
Non-controlling
interests
|
|
174
|
|
163
|
|
17
|
|
|
(387)
|
|
173
|
|
|
|
2,914
|
|
(201)
|
|
3,257
|
|
|
(22,370)
|
|
6,847
|
|
(a)
See Note 1 -
Pensions and other post retirement benefits for further
information.
Top of
page 14
Condensed group statement of changes in equity
|
|
BP shareholders’
|
Non-controlling interests
|
Total
|
|||||
$ million
|
|
equity
|
Hybrid bonds
|
Other interest
|
equity
|
||||
At 1 January 2020
|
|
98,412
|
|
—
|
|
2,296
|
|
100,708
|
|
|
|
|
|
|
|
||||
Total comprehensive income
|
|
(21,983)
|
|
256
|
|
(643)
|
|
(22,370)
|
|
Dividends
|
|
(6,367)
|
|
—
|
|
(238)
|
|
(6,605)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
6
|
|
—
|
|
—
|
|
6
|
|
Repurchase of ordinary share capital
|
|
(776)
|
|
—
|
|
—
|
|
(776)
|
|
Share-based payments, net of tax
|
|
726
|
|
—
|
|
—
|
|
726
|
|
Share
of equity-accounted entities’ changes in equity, net of
tax(a)
|
|
1,341
|
|
—
|
|
—
|
|
1,341
|
|
Issue of perpetual hybrid bonds
|
|
(48)
|
|
11,909
|
|
—
|
|
11,861
|
|
Payments on perpetual hybrid bonds
|
|
—
|
|
(89)
|
|
—
|
|
(89)
|
|
Tax on issue of perpetual hybrid bonds
|
|
3
|
|
—
|
|
—
|
|
3
|
|
Transactions
involving non-controlling interests, net of tax
|
|
(64)
|
|
—
|
|
827
|
|
763
|
|
At 31 December 2020
|
|
71,250
|
|
12,076
|
|
2,242
|
|
85,568
|
|
|
|
|
|
|
|
||||
|
|
BP shareholders’
|
Non-controlling interests
|
Total
|
|||||
$ million
|
|
equity
|
Hybrid bonds
|
Other interest
|
equity
|
||||
At 31 December 2018
|
|
99,444
|
|
—
|
|
2,104
|
|
101,548
|
|
Adjustment
on adoption of IFRS 16, net of tax(b)
|
|
(329)
|
|
—
|
|
(1)
|
|
(330)
|
|
At 1 January 2019
|
|
99,115
|
|
—
|
|
2,103
|
|
101,218
|
|
|
|
|
|
|
|
||||
Total comprehensive income
|
|
6,674
|
|
—
|
|
173
|
|
6,847
|
|
Dividends
|
|
(6,929)
|
|
—
|
|
(213)
|
|
(7,142)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
23
|
|
—
|
|
—
|
|
23
|
|
Repurchase of ordinary share capital
|
|
(1,511)
|
|
—
|
|
—
|
|
(1,511)
|
|
Share-based payments, net of tax
|
|
719
|
|
—
|
|
—
|
|
719
|
|
Share
of equity-accounted entities’ changes in equity, net of
tax
|
|
5
|
|
—
|
|
—
|
|
5
|
|
Transactions involving non-controlling interests, net of
tax
|
|
316
|
|
|
233
|
|
549
|
|
|
At 31 December 2019
|
|
98,412
|
|
—
|
|
2,296
|
|
100,708
|
|
(a)
Principally relates to a
non-controlling interest transaction entered into by
Rosneft.
(b) See
Note 1 in BP Annual Report and Form
20-F 2019 for further
information.
Top of
page 15
Group balance sheet
|
|
31 December
|
31 December
|
||
$ million
|
|
2020
|
2019
|
||
Non-current assets
|
|
|
|
||
Property, plant and equipment
|
|
114,836
|
|
132,642
|
|
Goodwill
|
|
12,480
|
|
11,868
|
|
Intangible assets
|
|
6,093
|
|
15,539
|
|
Investments in joint ventures
|
|
8,362
|
|
9,991
|
|
Investments in associates
|
|
18,975
|
|
20,334
|
|
Other investments
|
|
2,746
|
|
1,276
|
|
Fixed assets
|
|
163,492
|
|
191,650
|
|
Loans
|
|
840
|
|
630
|
|
Trade and other receivables
|
|
4,351
|
|
2,147
|
|
Derivative financial instruments
|
|
9,755
|
|
6,314
|
|
Prepayments
|
|
533
|
|
781
|
|
Deferred tax assets
|
|
7,744
|
|
4,560
|
|
Defined benefit pension plan surpluses
|
|
7,957
|
|
7,053
|
|
|
|
194,672
|
|
213,135
|
|
Current assets
|
|
|
|
||
Loans
|
|
458
|
|
339
|
|
Inventories
|
|
16,873
|
|
20,880
|
|
Trade and other receivables
|
|
17,948
|
|
24,442
|
|
Derivative financial instruments
|
|
2,992
|
|
4,153
|
|
Prepayments
|
|
1,269
|
|
857
|
|
Current tax receivable
|
|
672
|
|
1,282
|
|
Other investments
|
|
333
|
|
169
|
|
Cash and cash equivalents
|
|
31,111
|
|
22,472
|
|
|
|
71,656
|
|
74,594
|
|
Assets classified as held for sale (Note 2)
|
|
1,326
|
|
7,465
|
|
|
|
72,982
|
|
82,059
|
|
Total assets
|
|
267,654
|
|
295,194
|
|
Current liabilities
|
|
|
|
||
Trade and other payables
|
|
36,014
|
|
46,829
|
|
Derivative financial instruments
|
|
2,998
|
|
3,261
|
|
Accruals
|
|
4,650
|
|
5,066
|
|
Lease liabilities
|
|
1,933
|
|
2,067
|
|
Finance debt
|
|
9,359
|
|
10,487
|
|
Current tax payable
|
|
1,038
|
|
2,039
|
|
Provisions
|
|
3,761
|
|
2,453
|
|
|
|
59,753
|
|
72,202
|
|
Liabilities directly associated with assets classified as held for
sale (Note 2)
|
|
46
|
|
1,393
|
|
|
|
59,799
|
|
73,595
|
|
Non-current liabilities
|
|
|
|
||
Other payables
|
|
12,112
|
|
12,626
|
|
Derivative financial instruments
|
|
5,404
|
|
5,537
|
|
Accruals
|
|
852
|
|
996
|
|
Lease liabilities
|
|
7,329
|
|
7,655
|
|
Finance debt
|
|
63,305
|
|
57,237
|
|
Deferred tax liabilities
|
|
6,831
|
|
9,750
|
|
Provisions
|
|
17,200
|
|
18,498
|
|
Defined benefit pension plan and other post-retirement benefit plan
deficits
|
|
9,254
|
|
8,592
|
|
|
|
122,287
|
|
120,891
|
|
Total liabilities
|
|
182,086
|
|
194,486
|
|
Net assets
|
|
85,568
|
|
100,708
|
|
Equity
|
|
|
|
||
BP shareholders’ equity
|
|
71,250
|
|
98,412
|
|
Non-controlling interests
|
|
14,318
|
|
2,296
|
|
Total equity
|
|
85,568
|
|
100,708
|
|
Top of
page 16
Condensed group cash flow statement
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Operating activities
|
|
|
|
|
|
|
|
|||||
Profit (loss) before taxation
|
|
1,090
|
|
150
|
|
249
|
|
|
(24,888)
|
|
8,154
|
|
Adjustments to
reconcile profit (loss) before taxation to net cash provided by
operating activities
|
|
|
|
|
|
|
|
|||||
Depreciation,
depletion and amortization and exploration expenditure written
off
|
|
3,580
|
|
3,517
|
|
4,589
|
|
|
24,809
|
|
18,411
|
|
Impairment and
(gain) loss on sale of businesses and fixed assets
|
|
(1,589)
|
|
267
|
|
3,609
|
|
|
11,507
|
|
7,882
|
|
Earnings from
equity-accounted entities, less dividends received
|
|
(538)
|
|
1,018
|
|
(75)
|
|
|
1,845
|
|
(1,295)
|
|
Net
charge for interest and other finance expense, less net interest
paid
|
|
22
|
|
60
|
|
250
|
|
|
236
|
|
657
|
|
Share-based
payments
|
|
179
|
|
199
|
|
167
|
|
|
723
|
|
730
|
|
Net
operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded
plans
|
|
(182)
|
|
(46)
|
|
(43)
|
|
|
(282)
|
|
(238)
|
|
Net
charge for provisions, less payments
|
|
866
|
|
293
|
|
270
|
|
|
735
|
|
(176)
|
|
Movements in
inventories and other current and non-current assets and
liabilities
|
|
(715)
|
|
556
|
|
(306)
|
|
|
(85)
|
|
(2,918)
|
|
Income
taxes paid
|
|
(444)
|
|
(810)
|
|
(1,107)
|
|
|
(2,438)
|
|
(5,437)
|
|
Net cash provided by operating activities
|
|
2,269
|
|
5,204
|
|
7,603
|
|
|
12,162
|
|
25,770
|
|
Investing activities
|
|
|
|
|
|
|
|
|||||
Expenditure on
property, plant and equipment, intangible and other
assets
|
|
(2,922)
|
|
(2,577)
|
|
(3,936)
|
|
|
(12,306)
|
|
(15,418)
|
|
Acquisitions, net of cash acquired
|
|
(17)
|
|
(10)
|
|
(33)
|
|
|
(44)
|
|
(3,562)
|
|
Investment in joint ventures
|
|
(529)
|
|
(12)
|
|
(57)
|
|
|
(567)
|
|
(137)
|
|
Investment in associates
|
|
(23)
|
|
(1,037)
|
|
(83)
|
|
|
(1,138)
|
|
(304)
|
|
Total cash capital expenditure
|
|
(3,491)
|
|
(3,636)
|
|
(4,109)
|
|
|
(14,055)
|
|
(19,421)
|
|
Proceeds from disposal of fixed assets
|
|
439
|
|
32
|
|
24
|
|
|
491
|
|
500
|
|
Proceeds from disposal of businesses, net of cash
disposed
|
|
3,564
|
|
84
|
|
792
|
|
|
4,989
|
|
1,701
|
|
Proceeds from loan repayments
|
|
61
|
|
50
|
|
64
|
|
|
717
|
|
246
|
|
Net cash used in investing activities
|
|
573
|
|
(3,470)
|
|
(3,229)
|
|
|
(7,858)
|
|
(16,974)
|
|
Financing activities
|
|
|
|
|
|
|
|
|||||
Net issue (repurchase) of shares (Note 9)
|
|
—
|
|
—
|
|
(1,171)
|
|
|
(776)
|
|
(1,511)
|
|
Lease liability payments
|
|
(631)
|
|
(578)
|
|
(566)
|
|
|
(2,442)
|
|
(2,372)
|
|
Proceeds from long-term financing
|
|
2,619
|
|
2,587
|
|
1,879
|
|
|
14,736
|
|
8,597
|
|
Repayments of long-term financing
|
|
(3,191)
|
|
(4,307)
|
|
(360)
|
|
|
(12,179)
|
|
(7,118)
|
|
Net increase (decrease) in short-term debt
|
|
(906)
|
|
(2,630)
|
|
62
|
|
|
(1,234)
|
|
180
|
|
Issue of perpetual hybrid bonds
|
|
—
|
|
—
|
|
—
|
|
|
11,861
|
|
—
|
|
Payments on perpetual hybrid bonds
|
|
(62)
|
|
(27)
|
|
—
|
|
|
(89)
|
|
—
|
|
Payments relating to transactions involving non-controlling
interests (other)
|
|
—
|
|
—
|
|
—
|
|
|
(8)
|
|
—
|
|
Receipts relating to transactions involving non-controlling
interests (other)
|
|
173
|
|
483
|
|
566
|
|
|
665
|
|
566
|
|
Dividends paid - BP shareholders
|
|
(1,059)
|
|
(1,060)
|
|
(2,076)
|
|
|
(6,340)
|
|
(6,946)
|
|
-
non-controlling interests
|
|
(75)
|
|
(58)
|
|
(47)
|
|
|
(238)
|
|
(213)
|
|
Net cash provided by (used in) financing activities
|
|
(3,132)
|
|
(5,590)
|
|
(1,713)
|
|
|
3,956
|
|
(8,817)
|
|
Currency translation differences relating to cash and cash
equivalents
|
|
336
|
|
268
|
|
119
|
|
|
379
|
|
25
|
|
Increase (decrease) in cash and cash equivalents
|
|
46
|
|
(3,588)
|
|
2,780
|
|
|
8,639
|
|
4
|
|
Cash and cash equivalents at beginning of period
|
|
31,065
|
|
34,653
|
|
19,692
|
|
|
22,472
|
|
22,468
|
|
Cash
and cash equivalents at end of period(a)
|
|
31,111
|
|
31,065
|
|
22,472
|
|
|
31,111
|
|
22,472
|
|
(a)
Third quarter 2020
includes $316 million of cash and cash equivalents classified as
assets held for sale in the group balance sheet.
Top of
page 17
Notes
Note 1. Basis of preparation
The
results for the interim periods are unaudited and, in the opinion
of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2019 included in BP Annual Report and Form 20-F
2019.
The
directors consider it appropriate to adopt the going concern basis
of accounting in preparing the annual financial statements. The
impact of COVID-19 and the current economic environment has been
considered as part of the going concern assessment. Forecast
liquidity has been assessed under a number of stressed scenarios
performed to support this assertion. Reverse stress tests performed
indicated that the group will continue to operate as a going
concern for at least 12 months from the balance sheet date even if
the Brent price fell to zero.
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 adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
(EU) and in accordance with the provisions of the UK Companies Act
2006 as applicable to companies reporting under international
accounting standards. 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 2020 which are the same as those used in preparing
BP Annual Report and Form 20-F
2019 with the exception of the changes described in the
'Updates to significant accounting policies' section below. There
are no other new or amended standards or interpretations adopted
from 1 January 2020 onwards that have a significant impact on the
financial information.
Considerations in respect of COVID-19 and the current economic
environment
BP's
significant accounting judgements and estimates were disclosed in
BP Annual Report and Form 20-F
2019. These have been subsequently reviewed at the end of
each quarter to determine if any changes were required to those
judgements and estimates as a result of current market conditions.
The valuation of certain assets and liabilities is subject to a
greater level of uncertainty than when reported in BP Annual Report and Form 20-F 2019,
including those set out below.
Impairment testing assumptions
BP sees
the prospect of an enduring impact on the global economy as a
result of the COVID-19 pandemic, with the potential for weaker
demand for energy for a sustained period. BP’s management
also expects that the aftermath of the pandemic will accelerate the
pace of transition to a lower carbon economy and energy system
as countries seek to ‘build back better’ so that
their economies will be more resilient in the future. As a
result of all the above, during the second quarter, BP revised
its price assumptions for value-in-use impairment testing, lowering
them and extending the period covered to 2050. A summary of
the group’s revised price assumptions, in real 2020 terms, is
provided below:
|
|
|
2021
|
2025
|
2030
|
2040
|
2050
|
Brent oil ($/bbl)
|
|
|
50
|
50
|
60
|
60
|
50
|
Henry Hub gas ($/mmBtu)
|
|
|
3.00
|
3.00
|
3.00
|
3.00
|
2.75
|
As
disclosed in BP Annual Report and
Form 20-F 2019 - Note 1, the majority of BP’s reserves
and resources that support the carrying amount of the group’s
Upstream oil and gas properties are expected to be produced over
the next ten years. The revised assumptions for Brent oil and Henry
Hub gas for the next 10 years are lower by approximately 29% and
17%, respectively, than the average prices used to estimate
cash flows over this period as disclosed in BP Annual Report and Form 20-F 2019 -
Note 1. The revised impairment testing price assumptions are
lower, on average, by approximately 27% and 31% respectively
for the period from 2021 to 2050, than the prices referenced
in BP Annual Report and Form 20-F
2019 - Note 1.
The
group has identified Upstream oil and gas properties with carrying
amounts totalling approximately $45 billion where the headroom,
based on the most recent impairment tests performed, was less than
or equal to 20% of the carrying value. A change in price or other
assumptions within the next financial year may result in a
recoverable amount of one or more of these assets above or below
the current carrying amount and therefore there is a significant
risk of impairment reversals or charges in that
period.
The
discount rates used in value-in-use impairment testing were also
formally reassessed in the fourth quarter. Despite changing
economic and geopolitical outlooks, as the discount rates are set
using a number of parameters that are applicable to longer-term
assets, the post-tax discount rate, as disclosed in BP Annual Report and Form 20-F 2019,
remains unchanged. Pre-tax discount rates typically ranged from 7%
to 15% (2019 7% to 13%). Post-tax premiums for certain higher-risk
countries are 1% to 3% (2019 1% to 4%). The revisions to these
rates did not have a material impact.
Provisions
The
nominal risk-free discount rate applied to provisions is reviewed
on a quarterly basis. Recent changes in long-dated US government
bond yields have not affected the group's overall assessment of the
discount rate applied to the group's provisions and therefore the
rate, as disclosed in BP Annual Report and Form 20-F 2019,
remains unchanged. The timing and amount of cash flows relating to
the group's existing provisions were reviewed during the fourth
quarter and did not change significantly compared to the provisions
balance reported as at 31 December 2019.
Top of
page 18
Note 1. Basis of preparation (continued)
Pensions and other post-retirement benefits
The
group's defined benefit pension plans are reviewed quarterly to
determine any changes to the fair value of the plan assets or
present value of the defined benefit obligations. As a result of
the review during the fourth quarter of 2020, the group's total net
defined benefit pension plan deficit as at 31 December 2020 is $1.3
billion, a reduction in the deficit of $0.6 billion and $0.2
billion from 30 September 2020 and 31 December 2019 respectively.
This reduction in deficit and the overall actuarial gains of $0.3
billion during 4Q were predominantly driven by the adoption of
approved assumption changes. The impact of further decreases in the
UK, US and Eurozone discount rates were largely offset by asset
performance and reduction in inflation rates. The current
environment is likely to continue to affect the values of the plan
assets and obligations resulting in potential volatility in the
amount of the net defined benefit pension plan surplus/deficit
recognized.
Impairment of financial assets measured at amortized
cost
The
estimate of the loss allowance recognized on financial assets
measured at amortized cost using an expected credit loss approach
was determined not to be a significant accounting estimate in
preparing BP Annual Report and
Form 20-F 2019. Expected credit loss allowances are,
however, reviewed and updated quarterly. Allowances are recognized
on assets where there is evidence that the asset is credit-impaired
and on a forward-looking expected credit loss basis for assets that
are not credit-impaired. The current economic environment and
future credit risk outlook have been considered in updating the
estimate of loss allowances although the full economic impact of
COVID-19 on the forward-looking expected credit loss is subject to
significant uncertainty due to the limited forward-looking
information currently available.
Whilst
credit risk has increased since 31 December 2019, there has also
been a significant reduction in the group's trade and other
receivables balance. Therefore, the total expected credit loss
allowances recognized as at 31 December 2020 have not significantly
increased from the amounts disclosed in BP Annual Report and Form 20-F 2019 -
Financial statements - Note 21 Valuation and qualifying
accounts.
The
group continues to believe that the calculation of expected credit
loss allowances is not a significant accounting estimate. The group
continues to apply its credit policy as disclosed in BP Annual Report and Form 20-F 2019 -
Financial statements - Note 29 Financial instruments and financial
risk factors - credit risk.
Income taxes
None of
the group's deferred tax assets in BP Annual Report and Form 20-F 2019
were determined to be a significant accounting estimate. The
carrying amounts are, however, reviewed and updated quarterly to
the extent that there are changes in the probability
of sufficient taxable profits being available to utilize
the reported deferred tax assets. The group has recognized deferred
tax assets as at 31 December 2020 of $7.7 billion, an increase of
$3.1 billion from 31 December 2019. The group continues to believe
that the measurement of its deferred tax assets is not a
significant accounting estimate.
Other accounting judgements and estimates
All
other significant accounting judgements and estimates disclosed in
BP Annual Report and Form 20-F
2019 remain applicable and no new significant accounting
judgements or estimates have been identified specifically arising
from the impact of COVID-19.
Updates to significant accounting policies
Hybrid bond issuance
On 17
June 2020, a group subsidiary issued perpetual subordinated hybrid
bonds in EUR, GBP and USD for a US dollar equivalent amount of
$11.9 billion. As the group has the unconditional right to avoid
transferring cash or another financial asset in relation to these
hybrid bonds, they are classified as equity instruments and
reported within non-controlling interests in the condensed
consolidated financial statements. The contractual terms of
these instruments allow the group to defer coupon payments and the
repayment of principal indefinitely, however their terms and
conditions stipulate that any deferred payments must be made in the
event of an announcement of an ordinary share or parity equity
dividend distribution or certain share repurchases or
redemptions.
Change in accounting policy - Interest Rate Benchmark Reform:
Amendments to IFRS 9 'Financial instruments'
Financial
authorities in the US, UK, EU and other territories are currently
undertaking reviews of key interest rate benchmarks such as the
London Inter-bank Offered Rate (LIBOR) with a view to replacing
them with alternative benchmarks. Uncertainty around the method and
timing of transition from Inter-bank Offered Rates (IBORs) to
alternative risk-free rates (RfRs) may impact the assessment of
whether hedge accounting can be applied to certain hedging
relationships.
BP is
significantly exposed to benchmark interest rate components e.g.
USD LIBOR, GBP LIBOR, EURIBOR and CHF LIBOR. All of the group's
existing fair value hedge relationships are directly affected by
interest rate benchmark reform as they all manage interest rate
risk. Further information about the group’s fair value hedges
is included in BP Annual Report
and Form 20-F 2019 - Financial statements - Note 30
Derivative financial instruments - Fair value hedges.
BP
adopted the amendments to IFRS 9 and IFRS 7 ‘Financial
Instruments: Disclosures’ relating to interest rate benchmark
reform with effect from 1 January 2020. This first phase of
amendments provides temporary relief from applying specific hedge
accounting requirements to hedging relationships directly affected
by interest rate benchmark reforms.
The
reliefs provided by the amendments allow BP, in the event that
significant uncertainty around the reforms arises, to assume
that:
-
the interest rate
benchmark component of fair value hedges only needs to be assessed
as separately identifiable at initial designation; and
-
the interest rate
benchmark is not altered for the purposes of assessing the economic
relationship between the hedged item and the hedging instrument for
fair value hedges.
In
accordance with the transition provisions, the amendments have been
adopted retrospectively to hedging relationships that existed at
the start of the current reporting period and will be applied to
new hedging relationships designated after that date.
Top of
page 19
Note 1. Basis of preparation (continued)
The
reliefs have meant that the uncertainty over the interest rate
benchmark reforms has not resulted in discontinuation of hedge
accounting for any of BP’s fair value hedges.
The
second phase of IFRS amendments were issued by the IASB in August
2020 to address the financial reporting impacts of transitioning
from IBORs to RfRs. These amendments will be effective for BP from
1 January 2021.The amendments have been endorsed by the EU and the
UK. BP has an internal working group to monitor and manage the
transition to alternative benchmark rates and are currently
assessing the impact on contracts and arrangements that are linked
to existing interest rate benchmarks, for example, borrowings,
leases and derivative contracts. BP is also participating on
external committees and task forces dedicated to interest rate
benchmark reform.
Change in accounting policy - physically settled derivative
contracts
In
March 2019, the IFRS Interpretations Committee
(“IFRIC”) issued an agenda decision on the application
of IFRS 9 to the physical settlement of contracts to buy or sell a
non-financial item, such as commodities, that are not accounted for
as 'own-use' contracts. IFRIC concluded that such contracts are
settled by the delivery or receipt of a non-financial item in
exchange for both cash and the settlement of the derivative asset
or liability.
BP
routinely enters into forward sale and purchase contracts. As
described in the group's accounting policy for revenue in BP Annual
Report and Form 20-F 2019, revenue recognized at the time such
contracts were physically settled was measured at the contractual
transaction price and was presented together with revenue from
contracts with customers in those financial
statements.
BP
changed its accounting policy for these contracts, in accordance
with the conclusions included in the agenda decision, with effect
from 1 April 2020, as follows:
-
Revenues and
purchases from such contracts are measured at the contractual
transaction price plus the carrying amount of the related
derivative at the date of settlement. Realized derivative gains and
losses on physically settled derivative contracts are included in
other revenues.
-
There is no
significant effect on current period or comparative information for
‘Sales and other operating revenues’ and
‘Purchases’ as presented in the group income statement,
therefore no comparative information has been
restated.
-
There is no
significant effect on net assets or on comparative information for
‘Profit before taxation’ or ‘Profit after
taxation’ as presented in the group income statement,
therefore no comparative information has been
restated.
In
addition, BP chose to change its presentation of revenues from
physically settled derivative sales contracts from 1 January 2020.
Revenues from physically settled derivative sales contracts are no
longer presented together with revenue from contracts with
customers. They are now presented as other revenues. Comparative
information in Note 6 for revenue from contracts with customers and
other revenues have been re-presented to align with the current
period.
Voluntary changes to significant accounting policies - not yet
adopted
Net presentation of revenues and purchases relating to physically
settled derivative contracts from 1 January 2021
As
described above, BP routinely enters into transactions for the sale
and purchase of commodities that are physically settled and meet
the definition of a derivative financial instrument. These
contracts are within the scope of IFRS 9 and as such, prior to
settlement, changes in the fair value of these derivative contracts
are presented as gains and losses within other operating revenues.
The group has presented revenues and purchases for such contracts
on a gross basis in the income statement upon physical settlement.
These transactions have historically represented a substantial
portion of the revenues and purchases reported in the group’s
financial statements.
The
group has determined that revenues and purchases relating to such
transactions should, in future, be presented as a net gain or loss
within other operating revenues. This will provide reliable and
more relevant information for users of the accounts as the
group’s revenue recognition will be more closely aligned with
its assessment of ‘Scope 3’ emissions from its
products, its ‘Net Zero’ ambition and how management
monitors and manages performance of such contracts. In the
group’s 2021 financial statements, comparative information
for Sales and other operating revenues and Purchases in the
consolidated income statements for 2019 and 2020 will be
restated.
Change in segmentation for 2021 financial reporting
The
group's reportable segments are expected to change for 2021
financial reporting consistent with a change in the way that
resources will be allocated and performance assessed by the chief
operating decision maker, who for BP is the chief executive
officer. The group's reportable segments are expected to be
Customers and products, Gas and low carbon energy, Oil production
and operations and Rosneft. These are also expected to be the
group's operating segments. At 31 December 2020, the group's
reportable segments were Upstream, Downstream and
Rosneft.
Customers
and products is expected to comprise the group's convenience and
mobility business, which manages the sale of fuels to wholesale and
retail customers, convenience products, aviation fuels, and Castrol
lubricants; and refining, supply and trading. The petrochemicals
business will also be reported in restated comparative information
as part of the customers and products segment up to its sale in
December 2020. The customers and products segment is expected,
therefore, to be substantially unchanged from the former Downstream
segment with the exception of the Petrochemicals
disposal.
Gas and
low carbon energy is expected to comprise regions with upstream
businesses that predominantly produce natural gas, gas trading
activities and the group's renewables businesses, including
biofuels, solar and wind. In the group's financial reporting for
2020, gas producing regions are part of the Upstream segment and
the group's renewables businesses are part of 'Other businesses and
corporate'.
Oil
production and operations is expected to comprise regions with
upstream activities that predominantly produce crude oil. In the
group's financial reporting for 2020, these activities are part of
the Upstream segment.
Top of
page 20
Note 1. Basis of preparation (continued)
The
Rosneft segment is expected to continue to include equity-accounted
earnings from the group's investment in Rosneft.
Segmental
information presented in these financial statements is based on the
segment structure as at 31 December 2020.
In the
group's financial reporting for 2021, comparative information for
2019 and 2020 will be restated to reflect the changes in reportable
segments. It is expected that reporting under the new segment
structure will begin with the first quarter 2021 interim financial
statements.
Note 2. Non-current assets held for sale
The
carrying amount of assets classified as held for sale at 31
December 2020 is $1,326 million, with associated liabilities of $46
million.
The
balance consists primarily of a 20% participating interest from
BP’s 60% participating interest in Block 61 in Oman. As
announced on 1 February 2021, BP has agreed to sell this interest
to PTT Exploration and Production Public Company Limited of
Thailand for a total consideration of up to $2.6 billion, subject
to final adjustments. Under the terms of the agreement, BP will
receive $2,450 million on completion, with up to an additional $140
million receivable contingent on pre-agreed future conditions.
Subject to approvals, the transaction is expected to complete
during 2021. Assets of $1,298 million and associated liabilities of
$10 million have been classified as held for sale in the group
balance sheet at 31 December 2020.
Transactions
that have been classified as held for sale during 2020, but have
now completed, are described below.
Upstream segment
On 27
August 2019, BP announced that it had agreed to sell its Alaska
operations and interests to Hilcorp Energy for up to $5.6 billion,
subject to customary closing adjustments. The sale included
BP’s upstream and midstream business in the state, including
BP Exploration (Alaska) Inc., which owned BP’s upstream oil
and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s
49% interest in the Trans Alaska Pipeline System (TAPS). These
assets and associated liabilities were classified as held for sale
in the 31 December 2019 group balance sheet. The disposal of BP
Exploration (Alaska) Inc. completed on 30 June 2020. The disposal
of BP's interest in TAPS and other midstream assets completed on 18
December 2020. BP retained the decommissioning liability relating
to its interest in TAPS, which will be partially offset by a 30%
cost reimbursement from Hilcorp.
Downstream segment
On 29
June 2020 BP announced that it had agreed to sell its global
petrochemicals business to INEOS for a total consideration of $5
billion, subject to customary closing adjustments. The assets and
liabilities of the business were classified as held for sale from
that date until the disposal completed on 31 December 2020.
Under the terms of the agreement, INEOS paid BP a deposit of
$400 million and a further $3.6 billion on completion, less
$0.1 billion of third-party indebtedness remaining in
petrochemicals on completion. The remaining $1 billion is payable
in instalments of $100 million in each of March, April and May
2021, and $700 million by the end of June 2021 at the
latest. The business had interests in manufacturing plants in
Asia, Europe and the US, including interests held in
equity-accounted entities. A gain on disposal of $2,270 million was
recognised in the fourth quarter 2020, which included a $340
million gain relating to the reclassification of accumulated
foreign exchange from reserves.
Note 3. Impairment and losses on sale of businesses and fixed
assets
Impairment
and losses on sale of businesses and fixed assets for the fourth
quarter and full year 2020 were $1,168 million and $14,381 million
and include net impairment charges of $777 million and $13,700
million respectively. Impairment charges also arose in certain
equity-accounted entities in the full year. The BP shares of these
charges, amounting to $847 million for the full year, are reported
in the line items 'Earnings from joint ventures' and 'Earnings from
associates' in the group income statement.
Upstream segment
Net
impairment charges in the Upstream segment were $674 million and
$12,831 million for the fourth quarter and full year
respectively.
Impairment
charges for the full year mainly relate to producing assets and
principally arose as a result of changes to the group’s oil
and gas price assumptions. They include amounts in Azerbaijan, BPX
Energy, Canada, India, Mauritania & Senegal, the North Sea, and
Trinidad. The recoverable amounts of the cash generating units
within these businesses were based on value-in-use
calculations.
Impairment
charges for the full year also include amounts relating to the
disposal of the group’s interests in its Alaska
business.
The BP
share of impairment charges arising in equity-accounted entities
reported in the Upstream segment in the full year was $545
million.
Downstream segment
Net
impairment charges in the Downstream segment were $104 million and
$840 million for the fourth quarter and full year respectively.
These principally relate to portfolio changes in the fuels
business, including the conversion of Kwinana refinery to an import
terminal.
Top of
page 21
Note 4. Exploration expense
Exploration
expense in the fourth quarter and full year was $214 million and
$10,280 million and includes exploration expenditure write-offs of
$154 million and $9,920 million respectively. All exploration
expenditure is recorded within the Upstream segment.
The
exploration write-offs principally arose following management's
re-assessment of expectations to extract value from certain
exploration prospects as a result of a review of the group's
long-term strategic plan and changes in the group's price
assumptions. The exploration write-offs for the full year
principally arose in Angola, Brazil, Canada, Egypt, the Gulf of
Mexico and India.
Note 5. Analysis of replacement cost profit (loss) before interest
and tax and reconciliation to profit (loss) before
taxation
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Upstream
|
|
(592)
|
|
30
|
|
614
|
|
|
(21,547)
|
|
4,917
|
|
Downstream
|
|
1,245
|
|
915
|
|
1,433
|
|
|
3,418
|
|
6,502
|
|
Rosneft
|
|
270
|
|
(278)
|
|
503
|
|
|
(149)
|
|
2,316
|
|
Other businesses and corporate
|
|
308
|
|
24
|
|
(1,432)
|
|
|
(683)
|
|
(2,771)
|
|
|
|
1,231
|
|
691
|
|
1,118
|
|
|
(18,961)
|
|
10,964
|
|
Consolidation adjustment – UPII*
|
|
(77)
|
|
34
|
|
24
|
|
|
89
|
|
75
|
|
RC profit (loss) before interest and tax*
|
|
1,154
|
|
725
|
|
1,142
|
|
|
(18,872)
|
|
11,039
|
|
Inventory holding gains (losses)*
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
20
|
|
8
|
|
—
|
|
|
17
|
|
(8)
|
|
Downstream
|
|
650
|
|
191
|
|
(21)
|
|
|
(2,796)
|
|
685
|
|
Rosneft
(net of tax)
|
|
25
|
|
34
|
|
31
|
|
|
(89)
|
|
(10)
|
|
Profit (loss) before interest and tax
|
|
1,849
|
|
958
|
|
1,152
|
|
|
(21,740)
|
|
11,706
|
|
Finance costs
|
|
749
|
|
800
|
|
886
|
|
|
3,115
|
|
3,489
|
|
Net
finance expense relating to pensions and other post-retirement
benefits
|
|
10
|
|
8
|
|
17
|
|
|
33
|
|
63
|
|
Profit (loss) before taxation
|
|
1,090
|
|
150
|
|
249
|
|
|
(24,888)
|
|
8,154
|
|
|
|
|
|
|
|
|
|
|||||
RC profit (loss) before interest and tax*
|
|
|
|
|
|
|
|
|||||
US
|
|
(21)
|
|
105
|
|
(1,603)
|
|
|
(4,016)
|
|
(2,759)
|
|
Non-US
|
|
1,175
|
|
620
|
|
2,745
|
|
|
(14,856)
|
|
13,798
|
|
|
|
1,154
|
|
725
|
|
1,142
|
|
|
(18,872)
|
|
11,039
|
|
Top of
page 22
Note 6. Sales and other operating revenues
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
By segment
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
7,742
|
|
7,797
|
|
13,955
|
|
|
34,197
|
|
54,501
|
|
Downstream
|
|
41,513
|
|
40,256
|
|
64,251
|
|
|
162,974
|
|
250,897
|
|
Other businesses and corporate
|
|
422
|
|
391
|
|
538
|
|
|
1,716
|
|
1,788
|
|
|
|
49,677
|
|
48,444
|
|
78,744
|
|
|
198,887
|
|
307,186
|
|
|
|
|
|
|
|
|
|
|||||
Less: sales and other operating revenues between
segments
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
3,963
|
|
3,647
|
|
6,823
|
|
|
17,130
|
|
27,034
|
|
Downstream
|
|
486
|
|
124
|
|
384
|
|
|
158
|
|
973
|
|
Other businesses and corporate
|
|
439
|
|
422
|
|
428
|
|
|
1,233
|
|
782
|
|
|
|
4,888
|
|
4,193
|
|
7,635
|
|
|
18,521
|
|
28,789
|
|
|
|
|
|
|
|
|
|
|||||
Third party sales and other operating revenues
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
3,779
|
|
4,150
|
|
7,132
|
|
|
17,067
|
|
27,467
|
|
Downstream
|
|
41,027
|
|
40,132
|
|
63,867
|
|
|
162,816
|
|
249,924
|
|
Other businesses and corporate
|
|
(17)
|
|
(31)
|
|
110
|
|
|
483
|
|
1,006
|
|
Total sales and other operating revenues
|
|
44,789
|
|
44,251
|
|
71,109
|
|
|
180,366
|
|
278,397
|
|
|
|
|
|
|
|
|
|
|||||
By geographical area
|
|
|
|
|
|
|
|
|||||
US
|
|
15,980
|
|
16,513
|
|
24,148
|
|
|
63,829
|
|
95,495
|
|
Non-US
|
|
33,886
|
|
32,328
|
|
54,450
|
|
|
134,945
|
|
208,031
|
|
|
|
49,866
|
|
48,841
|
|
78,598
|
|
|
198,774
|
|
303,526
|
|
Less: sales and other operating revenues between areas
|
|
5,077
|
|
4,590
|
|
7,489
|
|
|
18,408
|
|
25,129
|
|
|
|
44,789
|
|
44,251
|
|
71,109
|
|
|
180,366
|
|
278,397
|
|
|
|
|
|
|
|
|
|
|||||
Revenues from contracts with
customers(a)
|
|
|
|
|
|
|
|
|||||
Sales and other operating revenues include the following in
relation to revenues from contracts with customers:
|
|
|
|
|
|
|
|
|||||
Crude oil
|
|
1,185
|
|
1,366
|
|
1,880
|
|
|
5,048
|
|
9,141
|
|
Oil
products(b)
|
|
16,216
|
|
16,642
|
|
25,946
|
|
|
63,564
|
|
102,408
|
|
Natural gas, LNG and NGLs
|
|
3,252
|
|
2,844
|
|
4,871
|
|
|
12,726
|
|
18,909
|
|
Non-oil
products and other revenues from contracts with
customers(b)
|
|
2,608
|
|
2,624
|
|
2,878
|
|
|
9,840
|
|
12,169
|
|
Revenue from contracts with customers
|
|
23,261
|
|
23,476
|
|
35,575
|
|
|
91,178
|
|
142,627
|
|
Other
operating revenues(c)
|
|
21,528
|
|
20,775
|
|
35,534
|
|
|
89,188
|
|
135,770
|
|
Total sales and other operating revenues
|
|
44,789
|
|
44,251
|
|
71,109
|
|
|
180,366
|
|
278,397
|
|
(a)
Amounts shown for
revenue from contracts with customers and other operating revenues
for fourth quarter and full year 2019 have been represented to
align with the current period. See Note 1 Change in accounting
policy - physically settled derivative contracts for further
information.
(b) An amendment of $341 million has been made to
amounts presented for oil products and non-oil products and other
revenues from contracts with customers for the third quarter 2020
with no overall effect on revenue from contracts with
customers.
(c)
Principally relates
to physically settled derivative sales contracts.
Top of
page 23
Note 7. Depreciation, depletion and amortization
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Upstream
|
|
|
|
|
|
|
|
|||||
US
|
|
818
|
|
842
|
|
1,150
|
|
|
3,772
|
|
4,672
|
|
Non-US
|
|
1,679
|
|
1,713
|
|
2,371
|
|
|
7,447
|
|
9,560
|
|
|
|
2,497
|
|
2,555
|
|
3,521
|
|
|
11,219
|
|
14,232
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
US
|
|
337
|
|
336
|
|
343
|
|
|
1,359
|
|
1,335
|
|
Non-US
|
|
411
|
|
407
|
|
417
|
|
|
1,631
|
|
1,586
|
|
|
|
748
|
|
743
|
|
760
|
|
|
2,990
|
|
2,921
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
US
|
|
19
|
|
13
|
|
14
|
|
|
63
|
|
55
|
|
Non-US
|
|
162
|
|
156
|
|
139
|
|
|
617
|
|
572
|
|
|
|
181
|
|
169
|
|
153
|
|
|
680
|
|
627
|
|
Total group
|
|
3,426
|
|
3,467
|
|
4,434
|
|
|
14,889
|
|
17,780
|
|
Note 8. Production and similar taxes
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
US
|
|
17
|
|
14
|
|
89
|
|
|
57
|
|
315
|
|
Non-US
|
|
211
|
|
126
|
|
323
|
|
|
638
|
|
1,232
|
|
|
|
228
|
|
140
|
|
412
|
|
|
695
|
|
1,547
|
|
Note 9. Earnings per share and shares in issue
Basic
earnings per ordinary share (EpS) amounts are calculated by
dividing the profit (loss) for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares
outstanding during the period. No share buybacks were carried out
during the quarter. A total of 120 million ordinary shares were
repurchased for cancellation in the full year, as part of the share
buyback programme announced on 31 October 2017. The shares had a
total cost of $776 million, including transaction costs of $4
million. The number of shares in issue is reduced when shares are
repurchased.
The
calculation of EpS is performed separately for each discrete
quarterly period, and for the year-to-date period. As a result, the
sum of the discrete quarterly EpS amounts in any particular
year-to-date period may not be equal to the EpS amount for the
year-to-date period.
For the
diluted EpS calculation the weighted average number of shares
outstanding during the period is adjusted for the number of shares
that are potentially issuable in connection with employee
share-based payment plans using the treasury stock
method.
Top of
page 24
Note 9. Earnings per share and shares in issue
(continued)
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Results for the period
|
|
|
|
|
|
|
|
|||||
Profit (loss) for the period attributable to BP
shareholders
|
|
1,358
|
|
(450)
|
|
19
|
|
|
(20,305)
|
|
4,026
|
|
Less: preference dividend
|
|
—
|
|
—
|
|
—
|
|
|
1
|
|
1
|
|
Profit
(loss) attributable to BP ordinary shareholders
|
|
1,358
|
|
(450)
|
|
19
|
|
|
(20,306)
|
|
4,025
|
|
|
|
|
|
|
|
|
|
|||||
Number of shares (thousand)(a)(b)
|
|
|
|
|
|
|
|
|||||
Basic
weighted average number of shares outstanding
|
|
20,233,240
|
|
20,251,199
|
|
20,254,234
|
|
|
20,221,514
|
|
20,284,859
|
|
ADS equivalent
|
|
3,372,206
|
|
3,375,199
|
|
3,375,705
|
|
|
3,370,252
|
|
3,380,809
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average
number of shares outstanding used to calculate diluted earnings per
share
|
|
20,329,326
|
|
20,251,199
|
|
20,351,808
|
|
|
20,221,514
|
|
20,399,670
|
|
ADS equivalent
|
|
3,388,221
|
|
3,375,199
|
|
3,391,968
|
|
|
3,370,252
|
|
3,399,945
|
|
|
|
|
|
|
|
|
|
|||||
Shares in issue at period-end
|
|
20,264,027
|
|
20,254,417
|
|
20,241,170
|
|
|
20,264,027
|
|
20,241,170
|
|
ADS equivalent
|
|
3,377,337
|
|
3,375,736
|
|
3,373,528
|
|
|
3,377,337
|
|
3,373,528
|
|
(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. The numbers of potentially issuable shares that have been
excluded from the calculation for the third quarter 2020 and full
year 2020 are 81,097 thousand (ADS equivalent 13,516 thousand) and
101,450 thousand (ADS equivalent 16,908 thousand)
respectively.
Note 10. Dividends
Dividends payable
BP
today announced an interim dividend of 5.25 cents per ordinary
share which is expected to be paid on 26 March 2021 to ordinary
shareholders and American Depositary Share (ADS) holders on the
register on 19 February 2021. The ex-dividend date will be 18
February 2021. The corresponding amount in sterling is due to be
announced on 15 March 2021, calculated based on the average of the
market exchange rates for the four dealing days commencing on 9
March 2021. Holders of ADSs are expected to receive $0.315 per
ADS (less applicable fees). The board has decided not to offer a
scrip dividend alternative in respect of the fourth quarter 2020
dividend. Ordinary shareholders and ADS holders (subject to certain
exceptions) will be able to participate in a dividend reinvestment
programme. Details of the fourth quarter dividend and timetable are
available at bp.com/dividends and further details of
the dividend reinvestment programmes are available at bp.com/drip.
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Dividends paid per ordinary share
|
|
|
|
|
|
|
|
|||||
cents
|
|
5.250
|
|
5.250
|
|
10.250
|
|
|
31.500
|
|
41.000
|
|
pence
|
|
3.917
|
|
4.043
|
|
7.825
|
|
|
24.458
|
|
31.977
|
|
Dividends paid per ADS (cents)
|
|
31.50
|
|
31.50
|
|
61.50
|
|
|
189.00
|
|
246.00
|
|
Scrip dividends
|
|
|
|
|
|
|
|
|||||
Number of shares issued (millions)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
208.9
|
|
Value of shares issued ($ million)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1,387
|
|
Top of
page 25
Note 11. Net debt
Net debt*
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Finance
debt(a)(b)
|
|
72,664
|
|
72,828
|
|
67,724
|
|
|
72,664
|
|
67,724
|
|
Fair
value (asset) liability of hedges related to finance
debt(c)
|
|
(2,612)
|
|
(1,384)
|
|
190
|
|
|
(2,612)
|
|
190
|
|
|
|
70,052
|
|
71,444
|
|
67,914
|
|
|
70,052
|
|
67,914
|
|
Less:
cash and cash equivalents(b)
|
|
31,111
|
|
31,065
|
|
22,472
|
|
|
31,111
|
|
22,472
|
|
Net debt
|
|
38,941
|
|
40,379
|
|
45,442
|
|
|
38,941
|
|
45,442
|
|
Total equity
|
|
85,568
|
|
82,155
|
|
100,708
|
|
|
85,568
|
|
100,708
|
|
Gearing*
|
|
31.3%
|
33.0%
|
31.1%
|
|
31.3%
|
31.1%
|
(a)
The fair value of
finance debt at 31 December 2020 was $76,092 million (31 December
2019 $69,376 million).
(b)
Third quarter 2020
includes $316 million of cash and $19 million of finance debt
included in assets and liabilities held for sale in the group
balance sheet.
(c)
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 $236 million
(third quarter 2020 liability of $372 million and fourth quarter
2019 liability of $601 million) are not included in the calculation
of net debt shown above as hedge accounting is not applied for
these instruments.
As part
of actively managing its debt portfolio, on 18 December 2020 BP
exercised its option to redeem finance debt with an outstanding
aggregate principal amount of $2.0 billion on 22 January 2021. In
addition, in the third quarter, the group bought back $4.0 billion
equivalent of euro and sterling bonds and terminated derivatives
associated with the debt bought back. These transactions have no
significant impact on net debt or gearing.
On 17
June 2020 the group issued perpetual hybrid bonds with a US dollar
equivalent value of $11.9 billion. See Note 1 for further
information.
Note 12. Inventory valuation
A
provision of $216 million was held against hydrocarbon inventories
at 31 December 2020 ($544 million at 30 September 2020 and $290
million at 31 December 2019) to write them down to their net
realizable value.
Note 13. Statutory accounts
The
financial information shown in this publication, which was approved
by the Board of Directors on 1 February 2021, is unaudited and does
not constitute statutory financial statements. Audited financial
information will be published in BP Annual Report and Form 20-F 2020. BP Annual
Report and Form 20-F 2019 has been filed with the Registrar
of Companies in England and Wales. The report of the auditor on
those accounts was unqualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying the report and did not contain a statement under
section 498(2) or section 498(3) of the UK Companies Act
2006.
Top of
page 26
Additional information
Capital expenditure*
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Capital expenditure on a cash basis
|
|
|
|
|
|
|
|
|||||
Organic capital expenditure*
|
|
2,949
|
|
2,512
|
|
3,958
|
|
|
12,034
|
|
15,238
|
|
Inorganic
capital expenditure*(a)(b)
|
|
542
|
|
1,124
|
|
151
|
|
|
2,021
|
|
4,183
|
|
|
|
3,491
|
|
3,636
|
|
4,109
|
|
|
14,055
|
|
19,421
|
|
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Organic capital expenditure by segment
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
|
|
|
|
|
|
|||||
US
|
|
566
|
|
589
|
|
1,029
|
|
|
3,341
|
|
4,019
|
|
Non-US
|
|
1,463
|
|
1,367
|
|
2,029
|
|
|
6,009
|
|
7,885
|
|
|
|
2,029
|
|
1,956
|
|
3,058
|
|
|
9,350
|
|
11,904
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
US
|
|
237
|
|
139
|
|
258
|
|
|
632
|
|
913
|
|
Non-US
|
|
527
|
|
345
|
|
522
|
|
|
1,698
|
|
2,084
|
|
|
|
764
|
|
484
|
|
780
|
|
|
2,330
|
|
2,997
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
US
|
|
14
|
|
13
|
|
15
|
|
|
80
|
|
47
|
|
Non-US
|
|
142
|
|
59
|
|
105
|
|
|
274
|
|
290
|
|
|
|
156
|
|
72
|
|
120
|
|
|
354
|
|
337
|
|
|
|
2,949
|
|
2,512
|
|
3,958
|
|
|
12,034
|
|
15,238
|
|
Organic capital expenditure by geographical area
|
|
|
|
|
|
|
|
|||||
US
|
|
817
|
|
741
|
|
1,302
|
|
|
4,053
|
|
4,979
|
|
Non-US
|
|
2,132
|
|
1,771
|
|
2,656
|
|
|
7,981
|
|
10,259
|
|
|
|
2,949
|
|
2,512
|
|
3,958
|
|
|
12,034
|
|
15,238
|
|
(a)
On 31 October 2018,
BP acquired from BHP Billiton Petroleum (North America) Inc. 100%
of the issued share capital of Petrohawk Energy Corporation, a
wholly owned subsidiary of BHP that holds a portfolio of
unconventional onshore US oil and gas assets. The entire
consideration payable of $10,268 million, after customary closing
adjustments, was paid in instalments between July 2018 and April
2019. The amounts presented as inorganic capital expenditure
include $3,480 million for the full year 2019 relating to this
transaction.
(b)
Fourth quarter and
full year 2020 includes a $500 million deposit in respect of the
strategic partnership with Equinor. Third quarter and full year
2020 include $1 billion relating to an investment in a 49% interest
in the group's Indian fuels and mobility venture with Reliance
industries. Full year 2020 and 2019 also include amounts relating
to the 25-year extension to our ACG production-sharing agreement*
in Azerbaijan.
Top of
page 27
Non-operating items*
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Upstream
|
|
|
|
|
|
|
|
|||||
Gains on sale of businesses and fixed assets
|
|
256
|
|
10
|
|
38
|
|
|
360
|
|
143
|
|
Impairment
and losses on sale of businesses and fixed assets(a)
|
|
(856)
|
|
(274)
|
|
(2,718)
|
|
|
(13,214)
|
|
(7,036)
|
|
Environmental and other provisions
|
|
20
|
|
(9)
|
|
(32)
|
|
|
(2)
|
|
(32)
|
|
Restructuring,
integration and rationalization costs(b)
|
|
(209)
|
|
(164)
|
|
(13)
|
|
|
(401)
|
|
(89)
|
|
Other(c)(d)
|
|
177
|
|
(194)
|
|
2
|
|
|
(2,511)
|
|
67
|
|
|
|
(612)
|
|
(631)
|
|
(2,723)
|
|
|
(15,768)
|
|
(6,947)
|
|
Downstream
|
|
|
|
|
|
|
|
|||||
Gains
on sale of businesses and fixed assets(e)
|
|
2,310
|
|
16
|
|
7
|
|
|
2,320
|
|
51
|
|
Impairment
and losses on sale of businesses and fixed assets(a)
|
|
(313)
|
|
(20)
|
|
(23)
|
|
|
(1,136)
|
|
(123)
|
|
Environmental and other provisions
|
|
(33)
|
|
—
|
|
(77)
|
|
|
(33)
|
|
(78)
|
|
Restructuring,
integration and rationalization costs(b)
|
|
(522)
|
|
(142)
|
|
71
|
|
|
(633)
|
|
85
|
|
Other
|
|
(39)
|
|
—
|
|
(6)
|
|
|
(39)
|
|
(12)
|
|
|
|
1,403
|
|
(146)
|
|
(28)
|
|
|
479
|
|
(77)
|
|
Rosneft
|
|
|
|
|
|
|
|
|||||
Other
|
|
(41)
|
|
(101)
|
|
91
|
|
|
(205)
|
|
(103)
|
|
|
|
(41)
|
|
(101)
|
|
91
|
|
|
(205)
|
|
(103)
|
|
Other businesses and corporate
|
|
|
|
|
|
|
|
|||||
Gains on sale of businesses and fixed assets
|
|
191
|
|
1
|
|
3
|
|
|
194
|
|
(1)
|
|
Impairment and losses on sale of businesses and fixed
assets
|
|
2
|
|
—
|
|
(916)
|
|
|
(19)
|
|
(916)
|
|
Environmental and other provisions
|
|
(122)
|
|
(32)
|
|
(203)
|
|
|
(177)
|
|
(231)
|
|
Restructuring,
integration and rationalization costs(b)
|
|
(60)
|
|
(156)
|
|
(1)
|
|
|
(262)
|
|
6
|
|
Gulf of Mexico oil spill
|
|
(140)
|
|
(63)
|
|
(63)
|
|
|
(255)
|
|
(319)
|
|
Other(f)
|
|
76
|
|
138
|
|
(2)
|
|
|
201
|
|
(30)
|
|
|
|
(53)
|
|
(112)
|
|
(1,182)
|
|
|
(318)
|
|
(1,491)
|
|
Total before interest and taxation
|
|
697
|
|
(990)
|
|
(3,842)
|
|
|
(15,812)
|
|
(8,618)
|
|
Finance
costs(g)
|
|
(191)
|
|
(198)
|
|
(122)
|
|
|
(625)
|
|
(511)
|
|
Total before taxation
|
|
506
|
|
(1,188)
|
|
(3,964)
|
|
|
(16,437)
|
|
(9,129)
|
|
Taxation credit (charge) on non-operating items
|
|
593
|
|
(6)
|
|
822
|
|
|
4,345
|
|
1,943
|
|
Taxation
– impact of foreign exchange(h)
|
|
67
|
|
85
|
|
—
|
|
|
(99)
|
|
—
|
|
Total after taxation for period
|
|
1,166
|
|
(1,109)
|
|
(3,142)
|
|
|
(12,191)
|
|
(7,186)
|
|
(a)
See Note 3 for
further information. Also included in impairment charges in the
fourth quarter and full year 2020 for Upstream is $156 million in
relation to the likely disposal of an exploration
asset.
(b)
Fourth quarter and
third quarter 2020 include recognized provisions for restructuring
costs for plans that were formalized during the
quarters.
(c)
Full year 2020
includes exploration write-offs of $1,974 million relating to fair
value ascribed to certain licences as part of the accounting at the
time of acquisition of upstream assets in Brazil, India and the
Gulf of Mexico and the impairment of certain intangible assets in
Mauritania and Senegal.
(d)
Full year 2020
includes $545 million net impairments reported by
equity-accounted entities.
(e)
Fourth quarter and
full year 2020 include a gain of $2.3 billion on the sale of our
petrochemicals business.
(f)
From first quarter
2020, BP is presenting temporary valuation differences associated
with the group’s interest rate and foreign currency exchange
risk management of finance debt as non-operating items. These
amounts represent: (i) the impact of ineffectiveness and the
amortisation of cross currency basis resulting from the application
of fair value hedge accounting; and (ii) the net impact of foreign
currency exchange movements on finance debt and associated
derivatives where hedge accounting is not applied. Relevant amounts
in the comparative periods presented were not
material.
(g)
All periods
presented include the unwinding of discounting effects relating to
Gulf of Mexico oil spill payables. Fourth quarter, third quarter
and full year 2020 also include the income statement impact
associated with the buyback of finance debt. See Note 11 for
further information.
(h)
From first quarter
2020, BP is presenting certain foreign exchange effects on tax as
non-operating items. These amounts represent the impact of: (i)
foreign exchange on deferred tax balances arising from the
conversion of local currency tax base amounts into functional
currency, and (ii) taxable gains and losses from the retranslation
of US dollar-denominated intra-group loans to local currency.
Relevant amounts in the comparative periods presented were not
material.
Top of
page 28
Non-GAAP information on fair value accounting effects
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Favourable (adverse) impact relative to management’s measure
of performance
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
(677)
|
|
(217)
|
|
659
|
|
|
(738)
|
|
706
|
|
Downstream
|
|
(284)
|
|
425
|
|
23
|
|
|
(149)
|
|
160
|
|
Other businesses and corporate
|
|
450
|
|
266
|
|
—
|
|
|
675
|
|
—
|
|
|
|
(511)
|
|
474
|
|
682
|
|
|
(212)
|
|
866
|
|
Taxation credit (charge)
|
|
55
|
|
(95)
|
|
(111)
|
|
|
(11)
|
|
(155)
|
|
|
|
(456)
|
|
379
|
|
571
|
|
|
(223)
|
|
711
|
|
Fair
value accounting effects reflect differences in the way that BP
manages the economic exposure and measures performance relating to
certain activities and the way these activities are measured under
IFRS. They relate to certain of the group's commodity,
interest rate and currency risk exposures as detailed
below.
BP uses
derivative instruments to manage the economic exposure relating to
inventories above normal operating requirements of crude oil,
natural gas and petroleum products. Under IFRS, these inventories
are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories, other than net realizable value provisions, are not
recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value
basis using forward prices consistent with the contract
maturity.
BP
enters into physical commodity contracts to meet certain business
requirements, such as the purchase of crude for a refinery or the
sale of BP’s gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS
require that inventory held for trading is recorded at its fair
value using period-end spot prices, whereas any related derivative
commodity instruments are required to be recorded at values based
on forward prices consistent with the contract maturity. Depending
on market conditions, these forward prices can be either higher or
lower than spot prices, resulting in measurement
differences.
BP
enters into contracts for pipelines and other transportation,
storage capacity, oil and gas processing, liquefied natural gas
(LNG) and certain gas and power contracts that, under IFRS, are
recorded on an accruals basis. These contracts
are risk-managed using a variety of derivative instruments that are
fair valued under IFRS. This results in measurement differences in
relation to recognition of gains and losses.
The way
that BP manages the economic exposures described above, and
measures performance internally, differs from the way these
activities are measured under IFRS. BP calculates this difference
for consolidated entities by comparing the IFRS result with
management’s internal measure of performance. Under
management’s internal measure of performance the inventory,
transportation and capacity contracts in question are valued based
on fair value using relevant forward prices prevailing at the end
of the period. The fair values of
derivative instruments used to risk manage certain oil, gas, power
and other contracts, are deferred to match with the underlying
exposure and the commodity contracts for business requirements are
accounted for on an accruals basis. We believe that disclosing
management’s estimate of this difference provides useful
information for investors because it enables investors to see the
economic effect of these activities as a whole.
Fair
value accounting effects also include changes in the fair value of
the near-term portions of LNG contracts that fall within BP’s
risk management framework. LNG contracts are not considered
derivatives, because there is insufficient market liquidity, and
they are therefore accrual accounted under IFRS. However, oil and
natural gas derivative financial instruments (used to risk manage
the near-term portions of the LNG contracts) are fair valued under
IFRS. The fair value accounting effect reduces timing differences
between recognition of the derivative financial instruments used to
risk manage the LNG contracts and the recognition of the LNG
contracts themselves, which therefore gives a better representation
of performance in each period.
In
addition, from the second quarter 2020 fair value accounting
effects include changes in the fair value of derivatives entered
into by the group to manage currency exposure and interest rate
risks relating to hybrid bonds to their respective first call
periods. The hybrid bonds which were issued on 17 June 2020
are classified as equity instruments and were recorded in the
balance sheet at that date at their USD equivalent issued value.
Under IFRS these equity instruments are not remeasured from period
to period, and do not qualify for application of hedge accounting.
The derivative instruments relating to the hybrid bonds, however,
are required to be recorded at fair value with mark to market gains
and losses recognized in the income statement. Therefore,
measurement differences in relation to the recognition of gains and
losses occur. The fair value accounting effect, which is reported
in the Other businesses and corporate segment in the table above,
eliminates the fair value gains and losses of these derivative
financial instruments that are recognized in the income
statement. We believe that this gives a better representation
of performance, by more appropriately reflecting the economic
effect of these risk management activities, in each
period.
Top of
page 29
Net debt including leases
Net debt including leases*
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Net debt
|
|
38,941
|
|
40,379
|
|
45,442
|
|
|
38,941
|
|
45,442
|
|
Lease liabilities
|
|
9,262
|
|
9,282
|
|
9,722
|
|
|
9,262
|
|
9,722
|
|
Net
partner (receivable) payable for leases entered into on behalf of
joint operations
|
|
(7)
|
|
(41)
|
|
(158)
|
|
|
(7)
|
|
(158)
|
|
Net debt including leases
|
|
48,196
|
|
49,620
|
|
55,006
|
|
|
48,196
|
|
55,006
|
|
Total
equity
|
|
85,568
|
|
82,155
|
|
100,708
|
|
|
85,568
|
|
100,708
|
|
Gearing including leases*
|
|
36.0%
|
37.7%
|
35.3%
|
|
36.0%
|
35.3%
|
Readily marketable inventory* (RMI)
|
|
31 December
|
31 December
|
||
$ million
|
|
2020
|
2019
|
||
RMI at fair value*
|
|
6,528
|
|
6,837
|
|
Paid-up RMI*
|
|
3,365
|
|
3,217
|
|
Readily
marketable inventory (RMI) is oil and oil products inventory held
and price risk-managed by BP’s integrated supply and trading
function (IST) which could be sold to generate funds if required.
Paid-up RMI is RMI that BP has paid for.
We
believe that disclosing the amounts of RMI and paid-up RMI is
useful to investors as it enables them to better understand and
evaluate the group’s inventories and liquidity position by
enabling them to see the level of discretionary inventory held by
IST and to see builds or releases of liquid trading
inventory.
See the
Glossary on page 32 for a more detailed definition of RMI. RMI at
fair value, paid-up RMI and unpaid RMI are non-GAAP measures. A
reconciliation of total inventory as reported on the group balance
sheet to paid-up RMI is provided below.
|
|
31 December
|
31 December
|
||
$ million
|
|
2020
|
2019
|
||
Reconciliation of total inventory to paid-up RMI
|
|
|
|
||
Inventories as reported on the group balance sheet under
IFRS
|
|
16,873
|
|
20,880
|
|
Less:
(a) inventories that are not oil and oil products and (b) oil and
oil product inventories that are not risk-managed by
IST
|
|
(10,810)
|
|
(14,280)
|
|
|
|
6,063
|
|
6,600
|
|
Plus: difference between RMI at fair value and RMI on an IFRS
basis
|
|
465
|
|
237
|
|
RMI at fair value
|
|
6,528
|
|
6,837
|
|
Less: unpaid RMI* at fair value
|
|
(3,163)
|
|
(3,620)
|
|
Paid-up RMI
|
|
3,365
|
|
3,217
|
|
Top of
page 30
Gulf of Mexico oil spill
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Net
cash provided by operating activities as per condensed group cash
flow statement
|
|
2,269
|
|
5,204
|
|
7,603
|
|
|
12,162
|
|
25,770
|
|
Exclude
net cash from operating activities relating to the Gulf of Mexico
oil spill on a post-tax basis
|
|
88
|
|
142
|
|
(42)
|
|
|
1,608
|
|
2,429
|
|
Operating cash flow, excluding Gulf of Mexico oil spill
payments*
|
|
2,357
|
|
5,346
|
|
7,561
|
|
|
13,770
|
|
28,199
|
|
Net
cash from operating activities relating to the Gulf of Mexico oil
spill on a pre-tax basis amounted to an outflow of $116 million and
$1,786 million in the fourth quarter and full year of 2020
respectively. For the same periods in 2019, the amount was an
outflow of $125 million and $2,694 million respectively. Net cash
outflows relating to the Gulf of Mexico oil spill in 2020 and 2019
include payments made under the 2016 consent decree and settlement
agreement with the United States and the five Gulf coast
states.
|
|
31 December
|
31 December
|
||
$ million
|
|
2020
|
2019
|
||
Trade and other payables
|
|
(11,387)
|
|
(12,480)
|
|
Provisions
|
|
(49)
|
|
(189)
|
|
Gulf of Mexico oil spill payables and provisions
|
|
(11,436)
|
|
(12,669)
|
|
Of
which - current
|
|
(1,444)
|
|
(1,800)
|
|
|
|
|
|
||
Deferred tax asset
|
|
5,471
|
|
5,526
|
|
On 22
January 2021, the United States District Court for the Eastern
District of Louisiana issued an order determining the completion of
all claims processing operations of the Deepwater Horizon Court
Supervised Settlement Programme (DHCSSP). The DHCSSP was
established in 2012 to administer claims pursuant to the Economic
and Property Damages Settlement Agreement (EPD Settlement
Agreement). The Court also concluded that future issues concerning
EPD Settlement Agreement claims would be time barred under the
DHCSSP and the claim administrator would proceed to complete
post-closure administrative wind down activities. The provision
presented in the table above reflects the latest estimate for the
remaining costs associated with the Gulf of Mexico oil spill. The
amounts ultimately payable may differ from the amount provided and
the timing of payments is uncertain. Further information relating
to the Gulf of Mexico oil spill, including the DHCSSP and
information on the nature and expected timing of payments relating
to provisions and other payables, is provided in BP Annual Report and Form 20-F 2019 -
Financial statements - Notes 7, 9, 20, 22, 23, 29, 33 and
pages 319 to 320 of Legal proceedings.
Working capital* reconciliation
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
$ million
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Movements in
inventories and other current and non-current assets and
liabilities as per condensed group cash flow statement
|
|
(715)
|
|
556
|
|
(306)
|
|
|
(85)
|
|
(2,918)
|
|
Adjustments to
exclude movements in inventories and other current and non-current
assets and liabilities for the Gulf of Mexico oil
spill
|
|
41
|
|
165
|
|
91
|
|
|
1,580
|
|
2,586
|
|
Adjusted for Inventory holding gains (losses)* (Note
5)
|
|
|
|
|
|
|
|
|||||
Upstream
|
|
20
|
|
8
|
|
—
|
|
|
17
|
|
(8)
|
|
Downstream
|
|
650
|
|
191
|
|
(21)
|
|
|
(2,796)
|
|
685
|
|
Working
capital release (build)
|
|
(4)
|
|
920
|
|
(236)
|
|
|
(1,284)
|
|
345
|
|
Top of
page 31
Realizations* and marker prices
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
Average realizations(a)
|
|
|
|
|
|
|
|
|||||
Liquids* ($/bbl)
|
|
|
|
|
|
|
|
|||||
US
|
|
32.40
|
|
31.74
|
|
49.34
|
|
|
33.06
|
|
51.88
|
|
Europe
|
|
43.39
|
|
43.52
|
|
63.01
|
|
|
41.79
|
|
63.95
|
|
Rest of World
|
|
41.60
|
|
41.46
|
|
60.34
|
|
|
37.42
|
|
61.50
|
|
BP Average
|
|
38.42
|
|
38.17
|
|
55.90
|
|
|
36.16
|
|
57.73
|
|
Natural gas ($/mcf)
|
|
|
|
|
|
|
|
|||||
US
|
|
1.76
|
|
1.29
|
|
1.65
|
|
|
1.30
|
|
1.93
|
|
Europe
|
|
5.37
|
|
2.34
|
|
4.06
|
|
|
3.13
|
|
4.01
|
|
Rest of World
|
|
3.37
|
|
2.99
|
|
3.77
|
|
|
3.25
|
|
4.10
|
|
BP Average
|
|
3.10
|
|
2.56
|
|
3.12
|
|
|
2.75
|
|
3.39
|
|
Total hydrocarbons* ($/boe)
|
|
|
|
|
|
|
|
|||||
US
|
|
24.20
|
|
22.04
|
|
31.84
|
|
|
23.25
|
|
33.30
|
|
Europe
|
|
39.39
|
|
36.14
|
|
51.91
|
|
|
35.52
|
|
56.87
|
|
Rest of World
|
|
29.28
|
|
27.40
|
|
37.91
|
|
|
26.91
|
|
39.23
|
|
BP Average
|
|
28.48
|
|
26.42
|
|
36.42
|
|
|
26.31
|
|
38.00
|
|
Average oil marker prices ($/bbl)
|
|
|
|
|
|
|
|
|||||
Brent
|
|
44.16
|
|
42.94
|
|
63.08
|
|
|
41.84
|
|
64.21
|
|
West Texas Intermediate
|
|
42.63
|
|
40.91
|
|
56.88
|
|
|
39.25
|
|
57.03
|
|
Western Canadian Select
|
|
31.57
|
|
31.62
|
|
37.70
|
|
|
28.53
|
|
43.42
|
|
Alaska North Slope
|
|
44.82
|
|
42.75
|
|
64.32
|
|
|
42.20
|
|
65.00
|
|
Mars
|
|
43.26
|
|
42.01
|
|
57.85
|
|
|
40.20
|
|
60.84
|
|
Urals (NWE – cif)
|
|
44.29
|
|
42.83
|
|
60.74
|
|
|
41.71
|
|
62.96
|
|
Average natural gas marker prices
|
|
|
|
|
|
|
|
|||||
Henry
Hub gas price(b) ($/mmBtu)
|
|
2.67
|
|
1.98
|
|
2.50
|
|
|
2.08
|
|
2.63
|
|
UK Gas – National Balancing Point (p/therm)
|
|
40.46
|
|
21.06
|
|
31.77
|
|
|
24.93
|
|
34.70
|
|
(a)
Based on sales of
consolidated subsidiaries only – this excludes equity-accounted
entities.
(b)
Henry Hub First of
Month Index.
Exchange rates
|
|
Fourth
|
Third
|
Fourth
|
|
|
|
|||||
|
|
quarter
|
quarter
|
quarter
|
|
Year
|
Year
|
|||||
|
|
2020
|
2020
|
2019
|
|
2020
|
2019
|
|||||
$/£ average rate for the period
|
|
1.32
|
|
1.29
|
|
1.29
|
|
|
1.28
|
|
1.28
|
|
$/£ period-end rate
|
|
1.36
|
|
1.28
|
|
1.31
|
|
|
1.36
|
|
1.31
|
|
|
|
|
|
|
|
|
|
|||||
$/€ average rate for the period
|
|
1.19
|
|
1.17
|
|
1.11
|
|
|
1.14
|
|
1.12
|
|
$/€ period-end rate
|
|
1.23
|
|
1.17
|
|
1.12
|
|
|
1.23
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|||||
$/AUD average rate for the period
|
|
0.73
|
|
0.71
|
|
0.68
|
|
|
0.69
|
|
0.69
|
|
$/AUD period-end rate
|
|
0.77
|
|
0.71
|
|
0.70
|
|
|
0.77
|
|
0.70
|
|
|
|
|
|
|
|
|
|
|||||
Rouble/$ average rate for the period
|
|
76.16
|
|
73.74
|
|
63.74
|
|
|
72.32
|
|
64.73
|
|
Rouble/$ period-end rate
|
|
74.44
|
|
77.57
|
|
61.98
|
|
|
74.44
|
|
61.98
|
|
Top of
page 32
Legal proceedings
For a
full discussion of the group’s material legal proceedings,
see pages 319-320 of BP Annual
Report and Form 20-F 2019.
Glossary
Non-GAAP
measures are provided for investors because they are closely
tracked by management to evaluate BP’s operating performance
and to make financial, strategic and operating decisions. Non-GAAP
measures are sometimes referred to as alternative performance
measures.
Capital expenditure is total cash capital expenditure as
stated in the condensed group cash flow statement.
Consolidation adjustment – UPII is unrealized profit
in inventory arising on inter-segment transactions.
Convenience gross margin comprises store
gross margin as well as other merchandise and service contribution,
not considered as retail fuels or store gross margin, received from
the retail service stations operated under a BP brand.
Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement.
Effective tax rate (ETR) on replacement cost (RC) profit or
loss is a non-GAAP measure. The ETR on RC profit or loss is
calculated by dividing taxation on a RC basis by RC profit or loss
before tax. Information on RC profit or loss is provided below. BP
believes it is helpful to disclose the ETR on RC profit or loss
because this measure excludes the impact of price changes on the
replacement of inventories and allows for more meaningful
comparisons between reporting periods. The nearest equivalent
measure on an IFRS basis is the ETR on profit or loss for the
period.
Ethanol-equivalent production (which includes ethanol and sugar) is
converted to thousands of barrels a day at 6.289 million litres = 1
thousand barrels divided by the total number of days in the period
reported.
Fair value accounting effects are non-GAAP adjustments to
our IFRS profit (loss). They reflect the difference between the way
BP manages the economic exposure and internally measures
performance of certain activities and the way those activities are
measured under IFRS. Further information on fair value accounting
effects is provided on page 28.
Gearing and net debt are non-GAAP measures. Net debt is
calculated as finance debt, as shown in the balance sheet, plus the
fair value of associated derivative financial instruments that are
used to hedge foreign currency exchange and interest rate risks
relating to finance debt, for which hedge accounting is applied,
less cash and cash equivalents. Gearing is defined as the ratio of
net debt to the total of net debt plus total equity. BP believes
these measures provide useful information to investors. Net debt
enables investors to see the economic effect of finance debt,
related hedges and cash and cash equivalents in total. Gearing
enables investors to see how significant net debt is relative to
total equity. The derivatives are reported on the balance sheet
within the headings ‘Derivative financial instruments’.
The nearest equivalent GAAP measures on an IFRS basis are finance
debt and finance debt ratio. A reconciliation of finance debt to
net debt is provided on page 25.
We are
unable to present reconciliations of forward-looking information
for gearing to finance debt and total equity, because without
unreasonable efforts, we are unable to forecast accurately certain
adjusting items required to present a meaningful comparable GAAP
forward-looking financial measure. These items include fair value
asset (liability) of hedges related to finance debt and cash and
cash equivalents, that are difficult to predict in advance in order
to include in a GAAP estimate.
Gearing including leases and net debt including leases are
non-GAAP measures. Net debt including leases is calculated as net
debt plus lease liabilities, less the net amount of partner
receivables and payables relating to leases entered into on behalf
of joint operations. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. BP believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group’s lease portfolio on net
debt and gearing. The nearest equivalent GAAP measures on an IFRS
basis are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt including leases is provided on page
29.
Hydrocarbons – Liquids
and natural gas. Natural gas is converted to oil equivalent at 5.8
billion cubic feet = 1 million barrels.
Inorganic capital expenditure is a subset of capital
expenditure and is a non-GAAP measure. Inorganic capital
expenditure comprises consideration in business combinations and
certain other significant investments made by the group. It is
reported on a cash basis. BP believes that this measure provides
useful information as it allows investors to understand how
BP’s management invests funds in projects which expand the
group’s activities through acquisition. Further information
and a reconciliation to GAAP information is provided on page
26.
Inventory holding gains and losses represent the difference
between the cost of sales calculated using the replacement cost of
inventory and the cost of sales calculated on the first-in
first-out (FIFO) method after adjusting for any changes in
provisions where the net realizable value of the inventory is lower
than its cost. Under the FIFO method, which we use for IFRS
reporting, the cost of inventory charged to the income statement is
based on its historical cost of purchase or manufacture, rather
than its replacement cost. In volatile energy markets, this can
have a significant distorting effect on reported income. The
amounts disclosed represent the difference between the charge to
the income statement for inventory on a FIFO basis (after adjusting
for any related movements in net realizable value provisions) and
the charge that would have arisen based on the replacement cost of
inventory. For this purpose, the replacement cost of inventory is
calculated using data from each operation’s production and
manufacturing system, either on a monthly basis, or separately for
each transaction where the system allows this approach. The amounts
disclosed are not separately reflected in the financial statements
as a gain or loss. No adjustment is made in respect of the cost of
inventories held as part of a trading position and certain other
temporary inventory positions. See Replacement cost (RC) profit or
loss definition below.
Top of
page 33
Glossary (continued)
Liquids – Liquids for Upstream and Rosneft comprises
crude oil, condensate and natural gas liquids. For Upstream,
liquids also includes bitumen.
Major projects have a BP net investment of at least $250
million, or are considered to be of strategic importance to BP or
of a high degree of complexity.
Net wind generation capacity is the sum of the rated
capacities of the assets/turbines that have entered into commercial
operation, including BP’s share of equity-accounted
entities.
Non-operating items are charges and credits included in the
financial statements that BP discloses separately because it
considers such disclosures to be meaningful and relevant to
investors. They are items that management considers not to be part
of underlying business operations and are disclosed in order to
enable investors better to understand and evaluate the
group’s reported financial performance. Non-operating items
within equity-accounted earnings are reported net of incremental
income tax reported by the equity-accounted entity. An analysis of
non-operating items by region is shown on pages 7, 9 and 11, and by
segment and type is shown on page 27.
Operating cash flow is net cash
provided by (used in) operating activities as stated in the
condensed group cash flow statement. When used in the context of a
segment rather than the group, the terms refer to the
segment’s share thereof.
Operating cash flow excluding Gulf of Mexico oil spill
payments is a non-GAAP measure. It is calculated by
excluding post-tax operating cash flows relating to the Gulf of
Mexico oil spill from net cash provided by operating activities as
reported in the condensed group cash flow statement. BP believes
net cash provided by operating activities excluding amounts related
to the Gulf of Mexico oil spill is a useful measure as it allows
for more meaningful comparisons between reporting periods. The
nearest equivalent measure on an IFRS basis is net cash provided by
operating activities.
Organic capital expenditure is a subset of capital
expenditure and is a non-GAAP measure. Organic capital expenditure
comprises capital expenditure less inorganic capital expenditure.
BP believes that this measure provides useful information as it
allows investors to understand how BP’s management invests
funds in developing and maintaining the group’s assets. An
analysis of organic capital expenditure by segment and region, and
a reconciliation to GAAP information is provided on page
26.
We are
unable to present reconciliations of forward-looking information
for organic capital expenditure to total cash capital expenditure,
because without unreasonable efforts, we are unable to forecast
accurately the adjusting item, inorganic capital expenditure, that
is difficult to predict in advance in order to derive the nearest
GAAP estimate.
Production-sharing agreement/contract (PSA/PSC) is an
arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return, if
exploration is successful, the oil company receives entitlement to
variable physical volumes of hydrocarbons, representing recovery of
the costs incurred and a stipulated share of the production
remaining after such cost recovery.
Readily marketable inventory (RMI) is inventory held and
price risk-managed by our integrated supply and trading function
(IST) which could be sold to generate funds if required. It
comprises oil and oil products for which liquid markets are
available and excludes inventory which is required to meet
operational requirements and other inventory which is not price
risk-managed. RMI is reported at fair value. Inventory held by the
Downstream fuels business for the purpose of sales and marketing,
and all inventories relating to the lubricants and petrochemicals
businesses, are not included in RMI.
Paid-up
RMI excludes RMI which has not yet been paid for. For inventory
that is held in storage, a first-in first-out (FIFO) approach is
used to determine whether inventory has been paid for or not.
Unpaid RMI is RMI which has not yet been paid for by BP. RMI at
fair value, Paid-up RMI and Unpaid RMI are non-GAAP measures.
Further information is provided on page 29.
Realizations are the result of dividing revenue generated
from hydrocarbon sales, excluding revenue generated from purchases
made for resale and royalty volumes, by revenue generating
hydrocarbon production volumes. Revenue generating hydrocarbon
production reflects the BP share of production as adjusted for any
production which does not generate revenue. Adjustments may include
losses due to shrinkage, amounts consumed during processing, and
contractual or regulatory host committed volumes such as
royalties.
Refining availability represents Solomon
Associates’ operational availability for BP-operated
refineries, which is defined as the percentage of the year that a
unit is available for processing after subtracting the annualized
time lost due to turnaround activity and all planned mechanical,
process and regulatory downtime.
The
Refining marker
margin (RMM) is the average of regional indicator margins
weighted for BP’s crude refining capacity in each region.
Each regional marker margin is based on product yields and a marker
crude oil deemed appropriate for the region. The regional indicator
margins may not be representative of the margins achieved by BP in
any period because of BP’s particular refinery configurations
and crude and product slate.
Top of
page 34
Glossary (continued)
Replacement cost (RC) profit or loss reflects the
replacement cost of inventories sold in the period and is arrived
at by excluding inventory holding gains and losses from profit or
loss. RC profit or loss for the group is not a recognized GAAP
measure. BP believes this measure is useful to illustrate to
investors the fact that crude oil and product prices can vary
significantly from period to period and that the impact on our
reported result under IFRS can be significant. Inventory holding
gains and losses vary from period to period due to changes in
prices as well as changes in underlying inventory levels. In order
for investors to understand the operating performance of the group
excluding the impact of price changes on the replacement of
inventories, and to make comparisons of operating performance
between reporting periods, BP’s management believes it is
helpful to disclose this measure. The nearest equivalent measure on
an IFRS basis is profit or loss attributable to BP shareholders. A
reconciliation to GAAP information is provided on page 1. RC profit
or loss before interest and tax is the measure of profit or loss
that is required to be disclosed for each operating segment under
IFRS.
RC profit or loss per share is a non-GAAP measure. Earnings
per share is defined in Note 9. RC profit or loss per share is
calculated using the same denominator. The numerator used is RC
profit or loss attributable to BP shareholders rather than profit
or loss attributable to BP shareholders. BP believes it is helpful
to disclose the RC profit or loss per share because this measure
excludes the impact of price changes on the replacement of
inventories and allows for more meaningful comparisons between
reporting periods. The nearest equivalent measure on an IFRS basis
is basic earnings per share based on profit or loss for the period
attributable to BP shareholders.
Reported recordable injury frequency measures the number of
reported work-related employee and contractor incidents that result
in a fatality or injury per 200,000 hours worked. This represents
reported incidents occurring within BP’s operational HSSE
reporting boundary. That boundary includes BP’s own operated
facilities and certain other locations or situations.
Reserves replacement ratio is the extent to which the
year’s production has been replaced by proved reserves added
to our reserve base. The ratio is expressed in oil-equivalent terms
and includes changes resulting from discoveries, improved recovery
and extensions and revisions to previous estimates, but excludes
changes resulting from acquisitions and disposals. The reserves
replacement ratio will be reported in BP Annual Report and Form 20-F
2020.
Return on average capital employed (ROACE) is a non-GAAP
measure and is underlying replacement cost profit, after adding
back non-controlling interest and interest expense net of tax,
divided by average capital employed (total equity plus finance
debt), excluding cash and cash equivalents and goodwill. Interest
expense is finance costs excluding lease interest and the unwinding
of the discount on provisions and other payables, and for full year
2020 interest expense was $1,808 million (2019 $2,032 million)
before tax. BP believes it is helpful to disclose the ROACE because
this measure gives an indication of the company's capital
efficiency. The nearest GAAP measures of the numerator and
denominator are profit or loss for the period attributable to BP
shareholders and average capital employed
respectively.
Solomon availability – See Refining availability
definition.
Technical service contract (TSC) – Technical service
contract is an arrangement through which an oil and gas company
bears the risks and costs of exploration, development and
production. In return, the oil and gas company receives entitlement
to variable physical volumes of hydrocarbons, representing recovery
of the costs incurred and a profit margin which reflects
incremental production added to the oilfield.
Tier 1 and tier 2 process safety events – Tier 1
events are losses of primary containment from a process of greatest
consequence – causing harm to a member of the workforce,
damage to equipment from a fire or explosion, a community impact or
exceeding defined quantities. Tier 2 events are those of lesser
consequence. These represent reported incidents occurring within
BP’s operational HSSE reporting boundary. That boundary
includes BP’s own operated facilities and certain other
locations or situations.
Underlying effective tax rate (ETR) is a non-GAAP measure.
The underlying ETR is calculated by dividing taxation on an
underlying replacement cost (RC) basis by underlying RC profit or
loss before tax. Taxation on an underlying RC basis is taxation on
a RC basis for the period adjusted for taxation on non-operating
items and fair value accounting effects. Information on underlying
RC profit or loss is provided below. BP believes it is helpful to
disclose the underlying ETR because this measure may help investors
to understand and evaluate, in the same manner as management, the
underlying trends in BP’s operational performance on a
comparable basis, period on period. The nearest equivalent measure
on an IFRS basis is the ETR on profit or loss for the
period.
We are
unable to present reconciliations of forward-looking information
for underlying ETR to ETR on profit or loss for the period, because
without unreasonable efforts, we are unable to forecast accurately
certain adjusting items required to present a meaningful comparable
GAAP forward-looking financial measure. These items include the
taxation on inventory holding gains and losses, non-operating items
and fair value accounting effects, that are difficult to predict in
advance in order to include in a GAAP estimate.
Underlying production – 2020 underlying production,
when compared with 2019, is production after adjusting for
acquisitions and divestments, curtailments, and entitlement impacts
in our production-sharing agreements/contracts and technical
service contract.
Top of
page 35
Glossary (continued)
Underlying RC profit or loss is RC profit or loss after
adjusting for non-operating items and fair value accounting
effects. Underlying RC profit or loss and adjustments for fair
value accounting effects are not recognized GAAP measures. See
pages 27 and 28 for additional information on the non-operating
items and fair value accounting effects that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the events and their financial impact. BP believes
that underlying RC profit or loss is a useful measure for investors
because it is a measure closely tracked by management to evaluate
BP’s operating performance and to make financial, strategic
and operating decisions and because it may help investors to
understand and evaluate, in the same manner as management, the
underlying trends in BP’s operational performance on a
comparable basis, period on period, by adjusting for the effects of
these non-operating items and fair value accounting effects. The
nearest equivalent measure on an IFRS basis for the group is profit
or loss attributable to BP shareholders. The nearest equivalent
measure on an IFRS basis for segments is RC profit or loss before
interest and taxation. A reconciliation to GAAP information is
provided on page 1.
Underlying RC profit or loss per share is a non-GAAP
measure. Earnings per share is defined in Note 9. Underlying RC
profit or loss per share is calculated using the same denominator.
The numerator used is underlying RC profit or loss attributable to
BP shareholders rather than profit or loss attributable to BP
shareholders. BP believes it is helpful to disclose the underlying
RC profit or loss per share because this measure may help investors
to understand and evaluate, in the same manner as management, the
underlying trends in BP’s operational performance on a
comparable basis, period on period. The nearest equivalent measure
on an IFRS basis is basic earnings per share based on profit or
loss for the period attributable to BP shareholders.
Upstream plant reliability (BP-operated) is calculated
taking 100% less the ratio of total unplanned plant deferrals
divided by installed production capacity. Unplanned plant deferrals
are associated with the topside plant and where applicable the
subsea equipment (excluding wells and reservoir). Unplanned plant
deferrals include breakdowns, which does not include Gulf of Mexico
weather related downtime.
Upstream unit production cost is calculated as production
cost divided by units of production. Production cost does not
include ad valorem and severance taxes. Units of production are
barrels for liquids and thousands of cubic feet for gas. Amounts
disclosed are for BP subsidiaries only and do not include
BP’s share of equity-accounted entities.
Working capital – Change in working capital is
movements in inventories and other current and non-current assets
and liabilities as reported in the condensed group cash flow
statement. Change in working capital adjusted for inventory holding
gains/losses is a non-GAAP measure. It is calculated by adjusting
for inventory holding gains/losses reported in the period and this
therefore represents what would have been reported as movements in
inventories and other current and non-current assets and
liabilities, if the starting point in determining net cash provided
by operating activities had been replacement cost profit rather
than profit for the period. The nearest equivalent measure on an
IFRS basis for this is movements in inventories and other current
and non-current assets and liabilities. In the context of
describing operating cash flow excluding Gulf of Mexico oil spill
payments, change in working capital also excludes movements in
inventories and other current and non-current assets and
liabilities relating to the Gulf of Mexico oil spill. See page 30
for further details.
BP
utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Top of
page 36
Cautionary statement
In order to utilize the ‘safe harbor’ provisions of the
United States Private Securities Litigation Reform Act of 1995 (the
‘PSLRA’) and the general doctrine of cautionary
statements, BP is providing the following cautionary statement: The
discussion in this results announcement contains 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. In particular, the following,
among other statements, are all forward looking in nature:
expectations regarding the COVID-19 pandemic, including its risks,
impacts, consequences and challenges and BP’s response, the
impact on BP’s financial performance (including cash flows
and net debt), operations and credit losses, and the impact on the
trading environment, oil and gas prices, and global GDP;
expectations regarding the shape of the COVID-19 recovery and the
pace of transition to a lower-carbon economy and energy system;
plans, expectations and assumptions regarding oil and gas demand,
supply or prices, the timing of production of reserves; plans and
expectations regarding the divestment programme, including the
amount and timing of proceeds in 2021 and reaching $25 billion of
proceeds by 2025; expectations with respect to completion of
transactions and the timing and amount of proceeds of agreed
disposals, including further payments from INEOS in respect of the
completed sale of BP’s petrochemicals business and the
completion of the sale of BP’s interest in the Wamsutter
asset; plans and expectations with respect to the total amount of
organic capital expenditure and the DD&A charge in 2021; plans
and expectations with respect to the total capital expenditure for
2021; plans and expectations regarding net debt, including delivery
of the target of $35 billion; plans and expectations regarding new
joint ventures and other agreements, including partnerships with
Equinor, Ørsted, Amazon and BP’s multi-company
partnership to develop offshore infrastructure to support planned
UK carbon capture, use and storage projects, as well as plans and
expectations related to BP’s stake in Finite Carbon; plans
and expectations regarding BP’s strategic priorities;
expectations regarding quarterly dividends and share buybacks;
expectations regarding demand for BP’s products in the
Upstream and Downstream; expectations regarding Downstream refining
margins, utilization, marketing volumes and product demand;
expectations regarding BP’s future financial performance and
cash flows; plans and expectations with respect to the
implementation and impact of BP’s strategic reinvention and
redesign of its organization, including the ongoing reduction of
approximately 10,000 jobs, and the amount and timing of associated
costs; expectations regarding the underlying effective tax rate for
2021; plans and expectations regarding BP’s renewable energy
and alternative energy businesses, including BP’s ambition to
reach 20GW of net renewable generating capacity to FID by the end
of 2025; plans and expectations regarding Upstream and Downstream
projects, including the conversion of the Kwinana refinery;
expectations regarding Upstream first-quarter and full-year 2021
reported and underlying production and related major project
ramp-up, capital investments, divestment and maintenance activity;
expectations regarding the timing of implementation of new
accounting policies; expectations regarding price assumptions used
in accounting estimates; expectations regarding the Other
businesses and corporate charges for 2021; expectations regarding
the timing and amount of future payments relating to the Gulf of
Mexico oil spill, including expectations regarding the completion
of the claims processing operations of the Deepwater Horizon Court
Supervised Settlement Programme; and expectations regarding
operational and financial results or acquisitions or divestments by
Rosneft, including expectations regarding the ongoing assessment of
the fair values of the assets and liabilities acquired and the
consideration paid in respect of the acquisitions announced by
Rosneft on 28 December 2020 and the impact, if any, on BP’s
accounting for its equity-accounted investment in Rosneft of such
acquisitions. 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
the control of BP. Actual results may differ materially from those
expressed in such statements, depending on a variety of factors,
including: the extent and duration of the impact of current market
conditions including the volatility of oil prices, the impact of
COVID-19, overall global economic and business conditions impacting
our business and demand for our products as well as the specific
factors identified in the discussions accompanying such
forward-looking statements; changes in consumer preferences and
societal expectations; the pace of development and adoption of
alternative energy solutions; the receipt of relevant third party
and/or regulatory approvals; the timing and level of maintenance
and/or turnaround activity; the timing and volume of refinery
additions and outages; the timing of bringing new fields onstream;
the timing, quantum and nature of certain acquisitions and
divestments; future levels of industry product supply, demand and
pricing, including supply growth in North America; OPEC quota
restrictions; PSA and TSC effects; operational and safety problems;
potential lapses in product quality; economic and financial market
conditions generally or in various countries and regions; political
stability and economic growth in relevant areas of the world;
changes in laws and governmental regulations; regulatory or legal
actions including the types of enforcement action pursued and the
nature of remedies sought or imposed; the actions of prosecutors,
regulatory authorities and courts; delays in the processes for
resolving claims; amounts ultimately payable and timing of payments
relating to the Gulf of Mexico oil spill; exchange rate
fluctuations; development and use of new technology; recruitment
and retention of a skilled workforce; the success or otherwise of
partnering; the actions of competitors, trading partners,
contractors, subcontractors, creditors, rating agencies and others;
our access to future credit resources; business disruption and
crisis management; the impact on our reputation of ethical
misconduct and non-compliance with regulatory obligations; trading
losses; major uninsured losses; decisions by Rosneft’s
management and board of directors; the actions of contractors;
natural disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and
acts of terrorism; cyber-attacks or sabotage; and other factors
discussed elsewhere in this report, as well those factors discussed
under “Principal risks and uncertainties” in our
results announcement for the period ended 30 June 2020 and under
“Risk factors” in BP Annual Report and Form 20-F 2019
as filed with the US Securities and Exchange
Commission.
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Contacts
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London
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Houston
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Press Office
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David Nicholas
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Brett Clanton
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+44 (0)20 7496 4708
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+1 281 366 8346
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Investor Relations
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Craig Marshall
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Geoff Carr
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bp.com/investors
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+44 (0)20 7496 4962
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+1 281 892 3065
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BP
p.l.c.’s LEI Code 213800LH1BZH3D16G760
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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BP
p.l.c.
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(Registrant)
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Dated: 02
February 2021
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/s/ Ben
J. S. Mathews
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------------------------
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Ben J.
S. Mathews
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Company
Secretary
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