Second quarter 2008 results

Release date: 29 July 2008
Download the full version of our second quarter results using the link below.
Second quarter 2008 results (SEA) (pdf, 183KB)
A webcast presentation was hosted by Tony Hayward, Chief Executive Officer, and Byron Grote, Chief Financial Officer. The presentation discussed BP’s second quarter 2008 results, and was be followed by a question and answer session. An archive of the presentation is now available.
Webcast archive and podcast
Second quarter and half year 2008(a)
Second quarter First quarter Second quarter $ million First half
2007 2008 2008 2008 2007 %

7,376 7,451 9,465 Profit for the period(b) 16,916 12,040
(888) (863) (2,612) Inventory holding (gains) losses, net of tax(c) (3,475) (1,108)

6,488 6,588 6,853 Replacement cost profiT(c) 13,441 10,932 23

17.01 17.63 18.56 – per ordinary share (pence) 36.19 28.77
33.75 34.90 36.40 – per ordinary share (cents) 71.30 56.68 26
2.03 2.09 2.18 – per ADS (dollars) 4.28 3.40

BP’s second-quarter replacement cost profit was $6,853 million, compared with $6,488 million a year ago, an increase of 6%. For the half year, replacement cost profit was $13,441 million compared with $10,932 million a year ago, up 23%.
Non-operating items and fair value accounting effects for the second quarter had a net $1,775 million unfavourable impact compared to a net $973 million favourable impact in the second quarter of 2007. For the half year, the respective amounts were $1,779 million unfavourable and $1,009 million favourable – see further details on page 3. The largest non-operating item for the second quarter and year-to-date was fair value losses on embedded derivatives which amounted to $2,081 million and $2,771 million respectively on a pre-tax basis.
Net cash provided by operating activities for the quarter and half year was $6.7 billion and $17.6 billion compared with $6.1 billion and $14.1 billion respectively a year ago.
The effective tax rate on replacement cost profit for the second quarter was 35% and for the half year was 36%; a year ago, the rates were 31% and 32% respectively.
Net debt at the end of the quarter was $25.7 billion compared to $20.7 billion a year ago. The ratio of net debt to net debt plus equity was 19%, the same as a year ago.
Capital expenditure, excluding acquisitions and asset exchanges, was $5.5 billion for the quarter and for the half year was $12.6 billion. Total capital expenditure and acquisitions was $5.8 billion for the quarter and $14.8 billion for the half year. Capital expenditure, excluding acquisitions and asset exchanges and excluding the accounting for our transaction with Husky (see pages 26 and 27), is expected to be around $21-22 billion for the year. Disposal proceeds were $59 million for the quarter and $335 million for the half year.
The quarterly dividend, to be paid in September, is 14 cents per share ($0.84 per ADS) compared with 10.825 cents per share a year ago. For the half year, the dividend showed an increase of 30%. In sterling terms, the quarterly dividend is 7.039 pence per share, compared with 5.278 pence per share a year ago; for the half year, the increase was 33%. During the quarter, the company repurchased 85.9 million of its own shares for cancellation at a cost of $1 billion. For the first half, share repurchases were 176.9 million at a cost of $2 billion.
(a) This results announcement also represents BP’s half-yearly financial report for the purposes of the Disclosure and Transparency Rules (DTR) made by the UK Financial Services Authority (DTR 4.2 – Half-yearly financial reports). In this context: (i) the condensed set of financial statements can be found on pages 13 – 19 and 22 – 30; (ii) pages 1 – 11, 20 and 21 comprise the interim management report; (iii) information on material related party transactions that have taken place in the first six months of the year can be found in the condensed set of financial statements on pages 13 – 19 and 22 – 30; and (iv) the directors’ responsibility statement and auditors’ independent review report can be found on page 12.
(b) Profit attributable to BP shareholders.
(c) With effect from 1 January 2008, replacement cost profit excludes inventory holding gains and losses net of tax. Comparative amounts have been amended to the new basis. See page 2 for further details.

Forward-Looking Statements Cautionary Statement:
This presentation and the associated slides and discussion contain forward looking statements, particularly those regarding oil and gas prices and impact of price changes; continuing operational momentum; underlying production growth and effects of production-sharing agreements; expected start up and timing of projects; impact of seasonal turnarounds on volumes and costs; expected financial benefits of higher refinery throughputs; expected benefit from continued increase in refining availability; impact of higher energy costs and planned turnarounds on refinery earnings; impact of slowing economies and rising wholesale prices on marketing businesses; expected growth in oil demand; impact of planned refinery startup on global gasoline supplies; reduction in corporate overheads; expected timing of financial benefits of lower overheads and simplified business model; annual charge; effective tax rate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; natural disasters and adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed elsewhere in this presentation.
Reconciliations to GAAP:
This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at
Cautionary Note to US Investors:
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as “resources” and “non-proved reserves”, that the SEC’s guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262, available from us at 1 St James’s Square, London SW1Y 4PD. You can also obtain this form from the SEC by calling 1-800-SEC-0330. In this section
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Second quarter 2008 results (pdf, 183KB)