UK: BP Fourth Quarter and Full-Year 2010 Results
* BP’s fourth-quarter replacement cost profit was $4,614 million, compared with $3,447 million a year ago. For the full year, replacement cost loss was $4,914 million compared with a profit of $13,955 million a year ago.
* The group income statement for the fourth quarter and full year reflects a pre-tax charge of $1.0 billion and $40.9 billion respectively related to the Gulf of Mexico oil spill. All charges relating to the incident have been treated as non-operating items. For further information on the Gulf of Mexico oil spill and its consequences see pages 3 – 5, Note 2 on pages 24 – 29 and Legal proceedings on pages 34 – 38. Further information on BP’s fourth-quarter results is provided below.
* Non-operating items and fair value accounting effects for the fourth quarter, on a post-tax basis, had a net favourable impact of $250 million compared with a net unfavourable impact of $937 million in the fourth quarter of 2009. For the full year, the respective net unfavourable impacts were $25,436 million and $622 million. See pages 6, 20 and 21 for further details.
* The effective tax rate on replacement cost profit or loss for the fourth quarter and full year was 34% and 32% respectively, compared with 34% and 33% a year ago. Excluding the impact of the Gulf of Mexico oil spill, the effective tax rate for the fourth quarter was 33% and for the full year was 31%. In 2011, we expect the effective tax rate to be in the range 32-34%.
* Including the impact of the Gulf of Mexico oil spill, net cash used in operating activities for the fourth quarter was $0.2 billion and net cash provided by operating activities for the full year was $13.6 billion, compared with net cash provided in the same periods of last year of $7.3 billion and $27.7 billion respectively. The amounts for 2010 included a net cash outflow of $5.4 billion and $16.0 billion for the fourth quarter and full year respectively relating to the Gulf of Mexico oil spill.
* On 14 January 2011, BP and Rosneft Oil Company (Rosneft) announced that they had agreed a strategic global alliance. BP and Rosneft have agreed to seek to form a joint venture to explore and, if successful, develop three licence blocks on the Russian Arctic continental shelf. BP and Rosneft have entered into a related share swap agreement whereby, upon completion, BP will receive approximately 9.5% of Rosneft’s shares in exchange for BP issuing new ordinary shares to Rosneft with an aggregate value of approximately $7.8 billion (as at close of trading in London on 14 January 2011), resulting in Rosneft holding 5% of BP’s ordinary voting shares. See further information in Note 6 on page 31, Note 10 on page 33 and in Legal proceedings on page 38.
* Our 2010 reported reserves replacement ratio(b), excluding acquisitions and disposals, was 106% (details of which will be provided in BP Annual Report and Form 20-F 2010).
* Following a strategic review, we intend to divest the Texas City refinery and the southern part of our US West Coast Fuels Value Chain, including the Carson refinery, by the end of 2012 subject to all necessary legal and regulatory approvals. BP will ensure current obligations at Texas City are fulfilled.
* BP announced the resumption of quarterly dividend payments. The quarterly dividend to be paid on 28 March 2011 is 7 cents per share ($0.42 per ADS). The corresponding amount in sterling will be announced on 14 March 2011. A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the scrip dividend programme are available at www.bp.com/scrip.
* Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $346 million for the fourth quarter, compared with $302 million for the same period last year. For the full year, the respective amounts were $1,123 million and $1,302 million.
* Cash costs(c) for the fourth quarter and full year were slightly lower than in the same periods a year ago. In 2011 we expect a slight increase. Cash costs do not include amounts relating to the Gulf of Mexico oil spill.
* Total capital expenditure for the fourth quarter and full year was $5.5 billion and $23.0 billion respectively. Organic capital expenditure(d) in the fourth quarter and full year was $5.2 billion and $18.2 billion respectively. Organic capital expenditure for 2011 is expected to be around $20 billion. Disposal proceeds were $7.4 billion for the quarter, including $4.9 billion for deposits received relating to transactions expected to complete in subsequent periods. For the full year, disposal proceeds were $17.0 billion, which included $6.2 billion of deposits at 31 December 2010. We plan to deliver around $13 billion of further disposal proceeds in 2011.
* Depreciation, depletion and amortization in 2011 is expected to be around $0.5 billion higher than in 2010.
* Net debt at the end of the quarter was $25.9 billion, compared with $26.2 billion a year ago. The ratio of net debt to net debt plus equity was 21% compared with 20% a year ago. The group intends to reduce the net debt ratio to within the range of 10% – 20%.
Source: BP, February 1, 2011;