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BP PLC BP. 3rd Quarter Results


Attachment:

  BP PLC (BP.) - 3rd Quarter Results

RNS Number : 8012P
BP PLC
30 October 2012
 



BP p.l.c.

Group results

Third quarter and nine months 2012

 

                                                        London 30 October 2012

FOR IMMEDIATE RELEASE


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         $ million
  5,043 (1,385)   5,434  Profit (loss) for the period(a)         9,964  18,015
    233   1,623   (747)  Inventory holding (gains) losses,       (110) (1,721)
                         net of tax
  5,276     238   4,687  Replacement cost profit(b)              9,854  16,294
                         Net (favourable) unfavourable impact
                         of non-operating
    187   3,447     483    items and fair value accounting       3,800     378
                         effects, net of tax(c)
  5,463   3,685   5,170  Underlying replacement cost            13,654  16,672
                         profit(b)
                         Replacement cost profit
  27.85    1.25   24.62  -    per ordinary share (cents)         51.82   86.28
   1.67    0.07    1.48  -    per ADS (dollars)                   3.11    5.18
                         Underlying replacement cost profit
  28.83   19.37   27.16  -    per ordinary share (cents)         71.81   88.28
   1.73    1.16    1.63  -    per ADS (dollars)                   4.31    5.30

 

·   BP's third-quarter replacement cost (RC) profit was $4,687 million,
compared with $5,276 million a year ago. After adjusting for a net loss from
non-operating items of $321 million and net unfavourable fair value accounting
effects of $162 million (both on a post-tax basis), underlying RC profit for
the third quarter was $5,170 million, compared with $5,463 million for the
same period last year. For the nine months, RC profit was $9,854 million,
compared with $16,294 million a year ago. After adjusting for a net loss from
non-operating items of $3,475 million and net unfavourable fair value
accounting effects of $325 million (both on a post-tax basis), underlying RC
profit for the nine months was $13,654 million, compared with $16,672 million
for the same period last year. RC profit or loss for the group, underlying RC
profit or loss and fair value accounting effects are non-GAAP measures and
further information is provided on pages 4, 19 and 21.

 

·   The group income statement included a net adverse impact relating to the
Gulf of Mexico oil spill, on a pre-tax basis, of $59 million for the third
quarter and $882 million for the nine months. All amounts relating to the Gulf
of Mexico oil spill have been treated as non-operating items. For further
information on the Gulf of Mexico oil spill and its consequences see pages
2 - 3, Note 2 on pages 23 - 28 and Legal proceedings on pages 32 - 40.

 

·   Finance costs and net finance income or expense relating to pensions and
other post-retirement benefits were $198 million for the third quarter,
compared with $234 million for the same period last year. For the nine months,
the respective amounts were $640 million and $722 million.

 

·   Including the impact of the Gulf of Mexico oil spill, net cash provided by
operating activities for the third quarter and nine months was $6.3 billion
and $14.1 billion respectively, compared with $6.9 billion and $17.1 billion
in the same periods of last year. Excluding amounts related to the Gulf of
Mexico oil spill, net cash provided by operating activities for the third
quarter and nine months was $6.4 billion and $17.1 billion respectively,
compared with $7.8 billion and $22.8 billion for the same periods of last
year. Reflecting our proposed transaction with Rosneft, we remain confident in
delivering more than 50% growth in net cash provided by operating activities
by 2014(d) assuming an oil price of $100 per barrel.

 

·   Net debt at the end of the quarter was $31.5 billion, compared with
$25.8 billion a year ago. The ratio of net debt to net debt plus equity was
20.9% compared with 18.9% a year ago. Net debt is a non-GAAP measure. See
page 5 for further information.

 

·   On 22 October 2012, BP announced that it had signed heads of terms for a
proposed transaction to sell its 50% share in TNK-BP to Rosneft for cash
consideration of $17.1 billion and Rosneft shares representing a 12.84% stake
in Rosneft. In addition, BP would use $4.8 billion of the cash consideration
to acquire a further 5.66% stake in Rosneft from the Russian government. For
further information, see page 11.

 

·   BP today announced a quarterly dividend of 9 cents per ordinary share
($0.54 per ADS), which is expected to be paid on 21 December 2012. The
corresponding amount in sterling will be announced on 10 December 2012. 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
bp.com/scrip.

 

(a) Profit (loss) attributable to BP shareholders.
(b) See footnote (a) on page 4 for definitions of RC profit and underlying RC
    profit.
(c) See pages 20 and 21 respectively for further information on non-operating
    items and fair value accounting effects.
(d) This projection reflects our expectation that all required payments into
    the $20-billion Deepwater Horizon Oil Spill Trust fund will have been
    completed prior to 2014. The projection does not reflect any cash flows
    relating to other liabilities, contingent liabilities, settlements or
    contingent assets arising from the Gulf of Mexico oil spill which may or
    may not arise at that time. As disclosed in Note 2 under Contingent
    liabilities on page 28, we are not able at this time to reliably estimate
    the amount or timing of a number of contingent liabilities.

 

 

The commentaries above and following are based on RC profit and should be read
in conjunction with the cautionary statement on page 13.

 

 

                                                                 Top of page 2

                         Group headlines (continued)


 

·   The effective tax rate on replacement cost profit for the third quarter
was 34%, compared with 31% a year ago. For the nine months the effective tax
rate on replacement cost profit was 34%, the same as a year ago. Recently
enacted changes to the taxation of UK oil and gas production resulted in a
$256-million deferred tax adjustment in the third quarter 2012. An earlier
change resulted in a $683-million deferred tax adjustment in the first quarter
2011. Excluding these adjustments the effective tax rate for the third quarter
and nine months of 2012 was 30% and 32% respectively and 31% for the
nine-month period for 2011. We now expect the full-year effective tax rate to
be at the lower end of the 34 to 36% range.

 

·   Total capital expenditure for the third quarter and nine months was
$6.1 billion and $17.2 billion respectively, of which organic capital
expenditure was $5.9 billion and $16.5 billion respectively(a). We now expect
2012 full-year organic capital expenditure to be between $22 billion and $23
billion. Disposal proceeds were $1.4 billion for the quarter and $4.6 billion
for the nine months.

 

·   Since the start of 2010, we have announced disposals for over $35 billion
against our target of $38 billion, which includes a total of $6 billion for
Upstream assets and $5 billion for Downstream assets since the end of the
second quarter. In addition, we announced the proposed transaction with
Rosneft for the sale of our share in TNK-BP, as described on page 1. (See
pages 6, 8 and 11 and Note 3 on pages 28 - 29 for further information on these
agreements.)

 

(a) Organic capital expenditure excludes acquisitions and asset exchanges, and
    expenditure associated with deepening our natural gas asset base (see page
    18).

 

 

                           Gulf of Mexico oil spill


 

Completing the response

 

We remain committed to meeting our responsibilities to the US federal, state
and local governments and communities of the Gulf Coast following the
Deepwater Horizon accident and oil spill in 2010 (the Incident). During the
third quarter of 2012, BP, working under the direction of the US Coast Guard's
Federal On-Scene Coordinator (FOSC), and collaboratively with the individual
federal and state entities, continued to work to meet the applicable clean-up
standards established by the Shoreline Clean-up Completion plan.

 

In late August 2012, Hurricane Isaac made landfall in the Gulf Coast and
deposits of buried residual oil were exposed by changes in the beach profile
on some Louisiana beaches where deep cleaning had not previously been allowed.
Response teams are continuing to excavate the uncovered residual material and
have submitted for approval plans for deep cleaning across these beach areas.
In other parts of the area of response, clean-up operations have largely
returned to pre-Isaac levels after an initial post-Isaac increase in tar
balls.

 

As at 29 September 2012, the FOSC had deemed removal actions complete on 3,941
miles of shoreline out of 4,375 miles in the area of response. A further 143
miles were awaiting approval of removal actions deemed complete or were
pending final monitoring. The remaining 291 miles were undergoing patrolling
and maintenance, which will continue until the shoreline segments meet the
applicable clean-up standards for the FOSC to determine that operational
removal activity is complete.

 

Economic restoration

 

As at 30 September 2012, BP had paid a total of over $8.8 billion for
individual, business and government entity claims, advances and other
payments, including payments made by BP prior to the establishment of the
Deepwater Horizon Oil Spill Trust (Trust). The amount includes over $7.1
billion paid to individual and business claimants, and $1.4 billion paid to
federal, state and local government entities for claims and advances. BP has
also paid an additional $298 million for contributions, settlements and other
payments for tourism, seafood testing and marketing, and behavioural health.

 

During the third quarter the Deepwater Horizon Court-Supervised Settlement
Program (DHCSSP) paid $66 million to individual and business "in-class"
claimants under the proposed economic loss settlement agreement reached
between BP and the Plaintiffs' Steering Committee (PSC). In addition, $21
million was paid to fund the Gulf Region Health Outreach Program and for
administration costs under the medical settlement agreement. The BP claims
programme is processing claims received from claimants not in the class as
determined by the settlement agreement or who have requested to opt out of the
settlement. There were 741 requests to opt out of the settlement class during
the third quarter.

 

Following the court's preliminary approval in May 2012 of the economic loss
and medical settlement agreements reached between BP and the PSC, we await the
outcome of the court's fairness hearing scheduled for 8 November 2012, which
will determine whether to grant final approval of the agreements.

 

 

                                                                 Top of page 3

                     Gulf of Mexico oil spill (continued)


 

Environmental restoration

 

During the third quarter we continued to work with scientists and trustee
agencies through the Natural Resource Damages (NRD) assessment process to
identify natural resources that may have been exposed to oil or otherwise
impacted by the oil spill, and to look for evidence of injury. To date, BP has
paid $819 million for NRD assessment efforts.

 

Under an agreement signed with federal and state agencies in April 2011, BP
voluntarily committed to provide up to $1 billion to fund early restoration
projects aimed at accelerating restoration efforts in the Gulf coast areas
that were impacted by the accident. The agreement enables work on restoration
projects to begin at the earliest opportunity, before funding is required by
the Oil Pollution Act 1990 (OPA 90). These projects will be funded from the
Trust. See Note 2 on pages 23 - 28.

 

As at 30 September 2012, $36 million has been funded towards the $60 million
estimated cost of the first tranche of the early restoration project plan.
This plan, which includes eight projects along the Gulf Coast, was finalized
in April 2012 by the Natural Resource Damage Assessment Trustee Council
following extensive public review. Collectively, these projects are intended
to restore and enhance wildlife and habitats, and provide additional access
for recreational use.

 

Financial update

 

The group income statement includes a pre-tax charge of $59 million for the
third quarter in relation to the Incident. The charge for the third quarter
reflects the regular quarterly costs of the Gulf Coast Restoration
Organization and adjustments to provisions. The total cumulative charge
recognized to date for the Incident amounts to $38.1 billion. The cumulative
income statement charge does not include amounts for obligations that BP
considers are not possible, at this time, to measure reliably, namely any
obligation relating to Natural Resource Damages claims under OPA 90 (other
than the estimated costs of the assessment phase and the costs of emergency
and early restoration agreements referred to in Note 2 on page 26) and other
potential litigation, fines, or penalties, other than as described under
Provisions in Note 2 on pages 26 - 28.

 

The total amounts that will ultimately be paid by BP in relation to all the
obligations relating to the Incident are subject to significant uncertainty
and the ultimate exposure and cost to BP will be dependent on many factors, as
discussed under Contingent liabilities on page 28, including in relation to
any new information or future developments. These could have a material impact
on our consolidated financial position, results of operations and cash flows.
The risks associated with the Incident could also heighten the impact of the
other risks to which the group is exposed, as further described under
Principal risks and uncertainties on pages 32 - 38 of our second-quarter 2012
results announcement.

 

Trust update

 

During the third quarter, BP made a contribution of $1,250 million to the
Trust. As at 30 September 2012, BP's cumulative contributions to the Trust
amounted to $19,140 million with a final payment of $860 million scheduled for
the fourth quarter of 2012. Under the terms of the settlement agreements with
the PSC, qualified settlement funds (QSFs) were established during the second
quarter, funded from the Trust, for the purpose of paying the costs of the
settlements.

 

Payments from the Trust and QSFs during the third quarter were $378 million
for individual and business claims through both the DHCSSP and the Gulf Coast
Claims Facility, medical settlement programme payments, NRD assessment and
early restoration, state and local government claims, DHCSSP expenses and
other resolved items. As at 30 September 2012, the cumulative amount paid from
the Trust and QSFs since inception was $8.2 billion, and the remaining cash
balances were $10.9 billion.

 

As at 30 September 2012, the cumulative charges for provisions to be paid from
the Trust and the associated reimbursement asset recognized amounted to $17.8
billion. The increased charge in the third quarter reflects higher provision
estimates for the DHCSSP costs and NRD assessment costs. A further $2.2
billion could be provided in subsequent periods for items covered by the
Trust, with no net impact on the income statement.

 

Legal proceedings and investigations

 

See Legal proceedings on pages 32 - 40 for details of legal proceedings,
including external investigations relating to the Incident.

 

 

                                                                 Top of page 4

    Analysis of underlying RC profit and RC profit before interest and tax
                 and reconciliation to profit for the period


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter  $ million                              months  months
   2011    2012    2012  Underlying RC profit before interest     2012    2011
                         and tax(a)
  6,287   4,401   4,369    Upstream                             15,060  19,301
  1,666   1,129   3,004    Downstream                            5,057   5,254
    939     452   1,294    TNK-BP(b)                             2,903   3,147
  (406)   (540)   (574)    Other businesses and corporate      (1,550) (1,038)
  (213)     457    (64)    Consolidation adjustment - UPII(c)    (148)   (240)
  8,273   5,899   8,029  Underlying RC profit before interest   21,322  26,424
                         and tax
                         Finance costs and net finance income
                         or expense
                           relating to pensions and other
  (220)   (208)   (195)    post-retirement benefits              (627)   (677)
(2,413) (1,961) (2,598)  Taxation on an underlying RC basis    (6,869) (8,767)
  (177)    (45)    (66)  Minority interest                       (172)   (308)
  5,463   3,685   5,170  Underlying RC profit attributable to   13,654  16,672
                         BP shareholders
                         Non-operating items and fair value
                         accounting
                           effects(a)
    461 (1,488)     541    Upstream                              (258)     501
  (173) (2,865)   (601)    Downstream                          (3,534)   (344)
      -       -    (12)    TNK-BP, net of tax                    (105)       -
     76      18   (523)    Other businesses and corporate        (741)   (368)
  (541)   (843)    (56)    Gulf of Mexico oil spill              (869)   (308)
                         response(d)
  (177) (5,178)   (651)  Total before interest and taxation    (5,507)   (519)
   (14)     (4)     (3)  Finance costs(e)                         (13)    (45)
      4   1,735     171  Taxation credit (charge)(f)             1,720     186
  (187) (3,447)   (483)  Total after taxation for the period   (3,800)   (378)
                         RC profit before interest and tax(a)
  6,748   2,913   4,910    Upstream                             14,802  19,802
  1,493 (1,736)   2,403    Downstream                            1,523   4,910
    939     452   1,282    TNK-BP(b)                             2,798   3,147
  (330)   (522) (1,097)    Other businesses and corporate      (2,291) (1,406)
  (541)   (843)    (56)    Gulf of Mexico oil spill              (869)   (308)
                         response(d)
  (213)     457    (64)    Consolidation adjustment - UPII(c)    (148)   (240)
  8,096     721   7,378  RC profit before interest and tax      15,815  25,905
                         Finance costs and net finance income
                         or
                           expense relating to pensions and
                         other
  (234)   (212)   (198)    post-retirement benefits              (640)   (722)
(2,409)   (226) (2,427)  Taxation on a RC basis                (5,149) (8,581)
  (177)    (45)    (66)  Minority interest                       (172)   (308)
  5,276     238   4,687  RC profit attributable to BP            9,854  16,294
                         shareholders
  (372) (2,324)   1,059  Inventory holding gains (losses)          172   2,533
                         Taxation (charge) credit on
                         inventory holding gains
    139     701   (312)     and losses                            (62)   (812)
                         Profit (loss) for the period
                         attributable to BP
  5,043 (1,385)   5,434    shareholders                          9,964  18,015

 

(a) Replacement cost (RC) profit or loss reflects the replacement cost of
    supplies and is arrived at by excluding inventory holding gains and losses
    from profit or loss. RC profit or loss is the measure of profit or loss
    for each operating segment that is required to be

    disclosed under International Financial Reporting Standards (IFRS). RC
    profit or loss for the group is not a recognized GAAP measure. For further
    information on RC profit or loss, see page 19. 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 fair value
    accounting effects are not recognized GAAP measures. On pages 20 and 21
    respectively, we provide 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.
(b) Net of finance costs, taxation and minority interest.
(c) The consolidation adjustment - unrealized profit in inventory (UPII) for
    the second quarter of 2012 was impacted by lower margins (driven by lower
    prices and a higher average cost of production due to a different mix of
    equity crude within inventory).
(d) See Note 2 on pages 23 - 28 for further information on the accounting for
    the Gulf of Mexico oil spill response.
(e) Finance costs relate to the Gulf of Mexico oil spill. See Note 2 on pages
    23 - 28 for further details.
(f) For the Gulf of Mexico oil spill and certain impairment losses in the
    second quarter 2012, tax is based on US statutory tax rates.  For other
    items, with the exception of TNK-BP items (which are reported net of tax),
    tax is calculated using the group's discrete quarterly effective tax rate
    (adjusted for the Gulf of Mexico oil spill, certain impairment losses in
    the second quarter 2012, equity-accounted earnings from the first quarter
    2012 onwards and the deferred tax adjustments relating to changes to the
    taxation of UK oil and gas production ($683 million for the first quarter
    2011 and $256 million for the third quarter 2012)).

                                       

                                       

                                                                 Top of page 5

                              Per share amounts


 

  Third  Second   Third                                         Nine   Nine
quarter quarter quarter                                       months months
   2011    2012    2012                                         2012   2011
                         Per ordinary share (cents)
  26.62  (7.29)   28.54  Profit (loss) for the period          52.40  95.39
  27.85    1.25   24.62  RC profit for the period              51.82  86.28
  28.83   19.37   27.16  Underlying RC profit for the period   71.81  88.28
                         Per ADS (dollars)
   1.60  (0.44)    1.71  Profit (loss) for the period           3.14   5.72
   1.67    0.07    1.48  RC profit for the period               3.11   5.18
   1.73    1.16    1.63  Underlying RC profit for the period    4.31   5.30

 

The amounts shown above are calculated based on the basic weighted average
number of shares outstanding. See Note 6 on page 30 for details of the
calculation of earnings per share.

 

 

                 Net debt ratio - net debt: net debt + equity


 

   Third   Second    Third                                       Nine     Nine
 quarter  quarter  quarter                                     months   months
    2011     2012     2012                                       2012     2011
                            $ million
  45,283   47,662   49,077  Gross debt                         49,077   45,283
   1,454    1,067    1,572  Less: fair value asset of           1,572    1,454
                            hedges related to finance debt
  43,829   46,595   47,505                                     47,505   43,829
  17,997   14,881   16,041  Less: Cash and cash equivalents    16,041   17,997
  25,832   31,714   31,464  Net debt                           31,464   25,832
 110,659  113,323  118,773  Equity                            118,773  110,659
   18.9%    21.9%    20.9%  Net debt ratio                      20.9%    18.9%

 

See Note 7 on page 31 for further details on finance debt.

 

Net debt and net debt ratio are non-GAAP measures. Net debt includes the fair
value of associated derivative financial instruments that are used to hedge
foreign exchange and interest rate risks relating to finance debt, for which
hedge accounting is claimed. The derivatives are reported on the balance sheet
within the headings 'Derivative financial instruments'. We believe that net
debt and net debt ratio provide useful information to investors. Net debt
enables investors to see the economic effect of gross debt, related hedges and
cash and cash equivalents in total. The net debt ratio enables investors to
see how significant net debt is relative to equity from shareholders.

 

 

                                  Dividends


 

Dividends payable

 

BP today announced a dividend of 9 cents per ordinary share expected to be
paid in December. The corresponding amount in sterling will be announced on
10 December 2012, calculated based on the average of the market exchange rates
for the four dealing days commencing on 4 December 2012. Holders of American
Depositary Shares (ADSs) will receive $0.54 per ADS. The dividend is due to be
paid on 21 December 2012 to shareholders and ADS holders on the register on
9 November 2012. 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 third-quarter
dividend and timetable are available at bp.com/dividends and details of the
scrip dividend programme are available at bp.com/scrip.

 

Dividends paid

 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         Dividends paid per ordinary share
  7.000   8.000   8.000      cents                              24.000  21.000
  4.316   5.150   5.017      pence                              15.263  12.934
  42.00   48.00   48.00  Dividends paid per ADS (cents)         144.00  126.00
                         Scrip dividends
   14.8    11.1    15.0      Number of shares issued              65.7   154.2
                         (millions)
    101      73     105      Value of shares issued ($             484   1,136
                         million)

 

                                                                              

                                                                 Top of page 6

                                   Upstream


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         $ million
  6,763   2,877   4,922  Profit before interest and tax         14,694  19,896
   (15)      36    (12)  Inventory holding (gains) losses          108    (94)
  6,748   2,913   4,910  RC profit before interest and tax      14,802  19,802
                         Net (favourable) unfavourable impact
                         of non-operating
  (461)   1,488   (541)    items and fair value accounting         258   (501)
                         effects
  6,287   4,401   4,369  Underlying RC profit before interest   15,060  19,301
                         and tax(a)

 

(a) See footnote (a) on page 4 for information on underlying RC profit and see
    page 7 for a reconciliation to segment RC profit before interest and tax
    by region.

     

 

The replacement cost profit before interest and tax for the third quarter and
nine months was $4,910 million and $14,802 million respectively, compared with
$6,748 million and $19,802 million for the same periods in 2011. The third
quarter was impacted by a net non-operating gain of $516 million, primarily
due to gains on disposals, compared with a net gain of $500 million in 2011.
For the nine months, the net non-operating charge was $157 million, mainly
relating to impairment charges offset by gains on disposals, compared with a
net gain of $546 million in the same period last year. In the third quarter,
fair value accounting effects had a favourable impact of $25 million compared
with an unfavourable impact of $39 million in 2011. For the nine months, fair
value accounting effects had an unfavourable impact of $101 million compared
with an unfavourable impact of $45 million in 2011.

 

After adjusting for non-operating items and fair value accounting effects, the
underlying replacement cost profit before interest and tax for the third
quarter and nine months was $4,369 million and $15,060 million respectively,
compared with $6,287 million and $19,301 million a year ago. The results in
both periods of 2012 were impacted by lower realizations, higher costs
(primarily the impact of higher depreciation, depletion and amortization, as
well as ongoing sector inflation), and lower production. The persistently low
Henry Hub gas price means that our North American gas business is continuing
to operate at a loss.

 

Production for the quarter was 2,259mboe/d, 2.7% lower than the third quarter
of 2011. After adjusting for the effect of divestments and entitlement impacts
in our production-sharing agreements (PSAs), production increased by 3.4%.
This primarily reflected major project start-ups and improved operating
performance in Angola, and increased volumes in other areas, partly offset by
natural field decline and the seasonal impacts of maintenance activity. For
the nine months, production was 2,328mboe/d, 5.3% lower than in the same
period last year. After adjusting for the effect of divestments and PSA
entitlement impacts, production for the nine months was 1.0% higher than a
year ago.

 

Looking ahead we expect fourth-quarter reported production to be higher than
the third quarter as we exit the maintenance season, and see the continuing
benefit of our major project start-ups. The extent of the increased production
will likely be muted by the timing of Gulf of Mexico and North Sea divestments
expected to be completed during the fourth quarter.

 

We continue to expect full-year production in 2012 to be broadly flat with
2011, after adjusting for divestments, and the impact of entitlement effects
in our PSAs.

 

Reported production for the full year is expected to be lower than 2011 due to
the impact of divestments which we estimate at around 120mboe/d. The actual
reported production outcome for the year will depend on the exact timing of
divestments and project start-ups, OPEC quotas, and entitlement impacts in
PSAs.

 

We continued to make strategic progress. In August, we announced the sale of
the Sunray and Hemphill gas processing plants in Texas, together with their
associated gas gathering system, to Eagle Rock Energy Partners for $228
million in cash. The transaction closed on 1 October.

 

In September, we announced the sanction of the Clair Ridge development, west
of Shetland, UK. This is the first major project using our proprietary reduced
salinity water injection technology (LoSal®).

 

Also in September, we announced the agreement to sell our interests in the
Marlin hub, Horn Mountain, Holstein, Ram Powell and Diana Hoover assets in the
deepwater Gulf of Mexico to Plains Exploration and Production Company for
$5.55 billion, subject to regulatory approvals, certain pre-emption rights and
customary post-closing adjustments. Additionally we announced the agreement to
sell our interest in the Draugen field in the Norwegian Sea to AS Norske Shell
for $240 million.

 

In October, we announced the successful start-up of the Devenick gas project
in the central North Sea, which will provide an important new source of
domestic gas for the UK. We also signed PSAs for three deepwater exploration
blocks offshore Uruguay following our successful bids in their second offshore
licensing round in March 2012.

 

 

                                                                 Top of page 7

                                   Upstream


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter  $ million                              months  months
   2011    2012    2012  Underlying RC profit before interest     2012    2011
                         and tax
                         By region
  1,473     628     741  US                                      3,027   4,798
  4,814   3,773   3,628  Non-US                                 12,033  14,503
  6,287   4,401   4,369                                         15,060  19,301
                         Non-operating items
   (32) (2,273)     465  US                                      (861)   (758)
    532     778      51  Non-US                                    704   1,304
    500 (1,495)     516                                          (157)     546
                         Fair value accounting effects(a)
    (9)      61    (28)  US                                       (38)     (2)
   (30)    (54)      53  Non-US                                   (63)    (43)
   (39)       7      25                                          (101)    (45)
                         RC profit (loss) before interest and
                         tax
  1,432 (1,584)   1,178  US                                      2,128   4,038
  5,316   4,497   3,732  Non-US                                 12,674  15,764
  6,748   2,913   4,910                                         14,802  19,802
                         Exploration expense
     52     413      35  US(b)                                     510     985
     48     203     255  Non-US(c)                                 656     193
    100     616     290                                          1,166   1,178
                         Production (net of royalties)(d)
                         Liquids (mb/d)(e)
    388     350     356  US                                        387     458
    120     119      95  Europe                                    112     145
    684     681     697  Rest of World                             683     688
  1,192   1,150   1,148                                          1,182   1,291
                         Natural gas (mmcf/d)
  1,819   1,648   1,545  US                                      1,670   1,852
    214     478     339  Europe                                    439     325
  4,516   4,399   4,559  Rest of World                           4,541   4,590
  6,549   6,525   6,443                                          6,650   6,767
                         Total hydrocarbons (mboe/d)(f)
    702     635     622  US                                        675     778
    157     201     153  Europe                                    188     201
  1,462   1,439   1,483  Rest of World                           1,466   1,478
  2,321   2,275   2,259                                          2,328   2,457
                         Average realizations(g)
 103.53  100.89   99.00  Total liquids ($/bbl)                  102.79  101.11
   4.95    4.54    4.77  Natural gas ($/mcf)                      4.67    4.56
  63.74   60.17   60.68  Total hydrocarbons ($/boe)              61.69   61.91

 

(a) These effects represent the favourable (unfavourable) impact relative to
    management's measure of performance. Further information on fair value
    accounting effects is provided on page 21.
(b) Second quarter and nine months 2012 include $308 million classified within
    the 'other' category of non-operating items (nine months 2011
    $395 million).
(c) Nine months 2011 includes $44 million classified within the 'other'
    category of non-operating items.
(d) Includes BP's share of production of equity-accounted entities in the
    Upstream segment.
(e) Crude oil and natural gas liquids.
(f) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
    million barrels.
(g) Based on sales of consolidated subsidiaries only - this excludes
    equity-accounted entities.
 

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

 

 

                                                                 Top of page 8

                                  Downstream


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         $ million
  1,117 (3,935)   3,385  Profit (loss) before interest and tax   1,801   7,304
    376   2,199   (982)  Inventory holding (gains) losses        (278) (2,394)
  1,493 (1,736)   2,403  RC profit (loss) before interest and    1,523   4,910
                         tax
                         Net (favourable) unfavourable impact
                         of non-operating
    173   2,865     601    items and fair value accounting       3,534     344
                         effects
  1,666   1,129   3,004  Underlying RC profit before interest    5,057   5,254
                         and tax(a)

 

(a) See footnote (a) on page 4 for information on underlying RC profit and see
    page 9 for a reconciliation to segment RC profit before interest and tax
    by region and by business.

 

The replacement cost profit before interest and tax for the third quarter and
nine months was $2,403 million and $1,523 million respectively, compared with
a profit of $1,493 million and $4,910 million for the same periods last year.

 

The results include net non-operating charges of $315 million for the third
quarter, largely reflecting the reassessment of environmental provisions and
$3,099 million for the nine months mainly relating to impairments. For the
same periods last year there were net non-operating charges of $227 million
for the third quarter and $462 million for the nine months (see pages 9 and 20
for further information on non-operating items). Fair value accounting effects
had an unfavourable impact of $286 million for the third quarter and $435
million for the nine months, compared with favourable impacts of $54 million
and $118 million in the same periods a year ago.

 

After adjusting for non-operating items and fair value accounting effects, the
segment delivered a record quarterly underlying replacement cost profit before
interest and tax of $3,004 million for the third quarter, compared with $1,666
million for the same period in 2011. For the nine months, underlying
replacement cost profit before interest and tax was $5,057 million compared
with $5,254 million a year ago.

 

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

 

The fuels business benefited from strong operations in the third quarter, with
refining throughputs at the highest level for seven years and some 10% higher
than the second quarter. This, coupled with a favourable refining environment,
helped us to deliver a record underlying replacement cost profit before
interest and tax of $2,713 million in the third quarter and $3,981 million in
the nine months, compared with $1,184 million and $3,243 million in the same
periods of last year. Compared with the same period a year ago, the third
quarter also benefited from the positive impacts of prior month pricing of
barrels into our US refining system, partly mitigating the negative impacts
seen in the second quarter. For the nine months, compared with the same period
last year, the benefits of the stronger refining environment were partially
offset by a significantly weaker supply and trading contribution despite a
recovery in the third quarter.

 

During the quarter, we announced the agreement to sell the Carson refinery in
California and related assets in the region, including marketing and logistics
assets to Tesoro Corporation for $2.5 billion. Completion of the deal is
subject to regulatory and other approvals and is expected to occur before
mid-2013. In October, we also announced the agreement to sell our Texas City
refinery and a portion of its retail and logistics network in the south-east
US to Marathon Petroleum Corporation for an estimated $2.5 billion. Completion
of the deal is expected in early 2013, subject to regulatory and other
approvals. See Note 3 on page 29 for further details of these agreements.

 

Looking ahead to the fourth quarter, we expect refining margins to decline
from the unusually high levels seen in the third quarter. As indicated in our
second-quarter announcement, we will imminently commence a planned
transitional outage to replace the largest of three crude units at the Whiting
refinery, which temporarily reduces the refinery's crude capacity by more than
50%. This is part of our major project to enable the refinery to process
significantly more Canadian heavy crude. It is expected that the work will be
completed by mid-year 2013, in time for the start-up of the whole project in
the second half of 2013. In addition, we expect to carry out major turnarounds
at two of our refineries in the fourth quarter.

 

The lubricants business delivered an underlying replacement cost profit before
interest and tax of $311 million in the third quarter and $956 million in the
nine months, compared with $247 million and $987 million in the same periods
last year, reflecting continued robust performance despite a difficult
marketing environment.

 

The petrochemicals business delivered an underlying replacement cost loss
before interest and tax of $20 million in the third quarter and a profit of
$120 million in the nine months, compared with a profit of $235 million and
$1,024 million in the same periods last year. This reflected continued
weakness in margins globally resulting from recent capacity additions in Asia,
high feedstock prices for aromatics production and lower demand.

 

Looking ahead, we expect petrochemicals margins to remain depressed in the
fourth quarter.

 

In September, we announced that we had agreed to sell all of our purified
terephthalic acid interest in BP Chemicals (Malaysia) Sdn Bhd, to Reliance
Global Holdings Pte. Ltd. for $230 million and the sale was completed in
October 2012.

 

 

                                                                 Top of page 9

                                  Downstream


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter  $ million                              months  months
   2011    2012    2012  Underlying RC profit before interest     2012    2011
                         and tax -
                           by region
    927     450   1,723  US                                      2,462   1,782
    739     679   1,281  Non-US                                  2,595   3,472
  1,666   1,129   3,004                                          5,057   5,254
                         Non-operating items
  (184) (2,433)   (229)  US                                    (2,750)   (439)
   (43)   (245)    (86)  Non-US                                  (349)    (23)
  (227) (2,678)   (315)                                        (3,099)   (462)
                         Fair value accounting effects(a)
     18     (1)   (388)  US                                      (432)      41
     36   (186)     102  Non-US                                    (3)      77
     54   (187)   (286)                                          (435)     118
                         RC profit (loss) before interest and
                         tax
    761 (1,984)   1,106  US                                      (720)   1,384
    732     248   1,297  Non-US                                  2,243   3,526
  1,493 (1,736)   2,403                                          1,523   4,910
                         Underlying RC profit before interest
                         and tax -
                           by business(b)(c)
  1,184     781   2,713  Fuels                                   3,981   3,243
    247     320     311  Lubricants                                956     987
    235      28    (20)  Petrochemicals                            120   1,024
  1,666   1,129   3,004                                          5,057   5,254
                         Non-operating items and fair value
                         accounting
                           effects(a)
  (190) (2,863)   (592)  Fuels                                 (3,523)   (434)
     16     (2)     (8)  Lubricants                               (10)      89
      1       -     (1)  Petrochemicals                            (1)       1
  (173) (2,865)   (601)                                        (3,534)   (344)
                         RC profit (loss) before interest and
                         tax(b)(c)
    994 (2,082)   2,121  Fuels                                     458   2,809
    263     318     303  Lubricants                                946   1,076
    236      28    (21)  Petrochemicals                            119   1,025
  1,493 (1,736)   2,403                                          1,523   4,910
  12.51   15.84   19.50  BP Average refining marker margin       15.65   12.49
                         (RMM) ($/bbl)(d)
                         Refinery throughputs (mb/d)
  1,371   1,295   1,403  US                                      1,306   1,252
    776     706     791  Europe                                    757     764
    283     281     318  Rest of World                             292     302
  2,430   2,282   2,512                                          2,355   2,318
   95.3    94.5    95.0  Refining availability (%)(e)             94.8    94.7
                         Marketing sales volumes (mb/d)(f)
  1,411   1,409   1,432  US                                      1,397   1,398
  1,353   1,279   1,268  Europe                                  1,254   1,306
    592     603     571  Rest of World                             583     605
  3,356   3,291   3,271                                          3,234   3,309
  2,358   2,568   2,393  Trading/supply sales                    2,447   2,448
  5,714   5,859   5,664  Total refined product sales             5,681   5,757
                         Petrochemicals production (kte)
  1,127   1,110     900  US                                      3,088   3,028
    955     998     993  Europe(c)                               3,002   2,990
  1,504   1,750   1,686  Rest of World                           5,253   5,268
  3,586   3,858   3,579                                         11,343  11,286

 

 (a) Fair value accounting effects represent the favourable (unfavourable)
     impact relative to management's measure of performance. For Downstream,
     these arise solely in the fuels business. Further information is provided
     on page 21.
 (b) Segment-level overhead expenses are included in the fuels business
     result.
 (c) BP's share of income from petrochemicals at our Gelsenkirchen and Mülheim
     sites in Germany is reported in the fuels business.
 (d) The RMM is the average of regional indicator margins weighted for BP's
     crude refining capacity in each region. They 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. The quarterly
     regional marker margins can be found on bp.com and are updated weekly.
 (e) Refining availability represents Solomon Associates' operational
     availability, 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 maintenance downtime.
 (f) Marketing sales do not include volumes relating to crude oil.

                                       

                                       

                                       

                                                                Top of page 10

                                  TNK-BP(a)


 

  Third  Second   Third                                            Nine   Nine
quarter quarter quarter                                          months months
   2011    2012    2012                                            2012   2011
                         $ million
  1,558     852   1,818  Profit before interest and tax           4,151  4,503
   (36)    (27)    (20)  Finance costs                             (83)  (105)
  (486)   (393)   (310)  Taxation                                 (934)  (970)
  (108)    (69)   (141)  Minority interest                        (334)  (251)
    928     363   1,347  Net income (BP share)(b)                 2,800  3,177
     11      89    (65)  Inventory holding (gains) losses, net      (2)   (30)
                         of tax
    939     452   1,282  Net income on a RC basis                 2,798  3,147
      -       -      12  Net charge (credit) for non-operating      105      -
                         items(c), net of tax
    939     452   1,294  Net income on an underlying RC           2,903  3,147
                         basis(d)
                         Cash flow
    425       -       -  Dividends received                         690  2,059
                         Production (net of royalties) (BP
                         share)
    883     881     876  Crude oil (mb/d)                           879    866
    664     779     728  Natural gas (mmcf/d)                       773    686
    998   1,016   1,002  Total hydrocarbons (mboe/d)(e)           1,012    985

 

Balance sheet             30 September 31 December
                                  2012        2011
Investments in associates       12,126      10,013

 

(a) All amounts shown relate to BP's 50% share in TNK-BP.
(b) TNK-BP is an associate accounted for using the equity method and therefore
    BP's share of TNK-BP's earnings after interest and tax is included in the
    group income statement within BP's profit before interest and tax.
(c) Disclosure of non-operating items for TNK-BP began in the first quarter of
    2012.
(d) See footnote (a) on page 4 for information on underlying RC profit.
(e) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
    million barrels.

 

The net income on a replacement cost basis from BP's investment in TNK-BP for
the third quarter and nine months was $1,282 million and $2,798 million
respectively, compared with $939 million and $3,147 million for the same
periods a year ago.

 

The third quarter included a net charge for non-operating items of $12
million, relating to environmental provisions partly offset by gains on
disposal. The net non-operating charge of $105 million for the nine months
also included an impairment charge relating to the Lisichansk refinery in the
Ukraine. Prior to 2012, non-operating items relating to BP's investment in
TNK-BP were not identified or disclosed.

 

After adjusting for non-operating items, the net income on an underlying
replacement cost basis from BP's investment in TNK-BP for the third quarter
and nine months was $1,294 million and $2,903 million respectively, compared
with $939 million and $3,147 million for the same periods in 2011. The primary
factors impacting the third-quarter result, compared with the same period last
year, were positive foreign exchange effects and the impact of the tax
reference price lag on Russian export duties in the rising price environment.
For the nine months, the reduction was driven by the negative impact of export
duty lag and lower realizations, partially offset by positive foreign exchange
effects.

 

Total hydrocarbon production for the third quarter was 1,002mboe/d, slightly
higher than the same period in 2011, and 1,012mboe/d for the nine months, 3%
higher than a year ago. After adjusting for the effect of the acquisition of
BP's upstream interests in Vietnam and Venezuela, production for the third
quarter was slightly lower than the same period in 2011, and for the nine
months was 1% higher than a year ago, with the ramp-up of recent new
developments offsetting a decline in mature fields.

 

On 20 August, TNK-BP announced that it sold OJSC Novosibirskneftegaz and OJSC
Severnoeneftegaz as part of its strategy to optimize the asset portfolio and
reduce costs.

 

 

                                                                Top of page 11

                                    TNK-BP


 

Agreement in principle with Rosneft

 

On 22 October 2012, BP announced that it had signed heads of terms for a
proposed transaction to sell its 50% share in TNK-BP to Rosneft. The proposed
transaction consists of two tranches:

 

(i)       BP would sell its 50% shareholding in TNK-BP to Rosneft for cash
consideration of $17.1 billion and Rosneft shares representing a 12.84% stake
in Rosneft; and

 

(ii)      BP intends to use $4.8 billion of the cash consideration to acquire
a further 5.66% stake in Rosneft from the Russian government. BP would acquire
the Rosneft shares from the Russian government at a price of $8 per share
(representing a premium of 12% to the Rosneft share closing price on the bid
date, 18 October 2012).

 

Signing of the definitive agreements is conditional on the Russian government
agreeing to the sale of the 5.66% stake in Rosneft and it is intended that the
TNK-BP sale and this further investment in Rosneft would complete on the same
day. Therefore, on completion of the proposed transaction, BP would acquire a
total 18.5% stake in Rosneft and net $12.3 billion in cash. This would result
in BP holding 19.75% of Rosneft stock, when aggregated with BP's 1.25% current
holding in Rosneft. At this level of ownership, BP expects to be able to
account for its share of Rosneft's earnings, production and reserves on an
equity basis. In addition, BP expects to have two seats on Rosneft's
nine-person main board.

 

In accordance with the heads of terms, BP and Rosneft have an exclusivity
period of 90 days to negotiate fully termed sale and purchase agreements.
After signing definitive agreements, completion would be subject to certain
customary closing conditions, including governmental, regulatory and
anti-trust approvals, and is currently anticipated to occur during the first
half of 2013. In addition, BP will agree not to dispose of any of the Rosneft
shares acquired in the transaction for at least 360 days following the
completion of the transaction.

 

Following this agreement, BP's investment in TNK-BP meets the criteria to be
classified as an asset held for sale. Consequently, BP will cease equity
accounting for its share of TNK-BP's earnings from the date of the
announcement. BP will continue to report its share of TNK-BP's production and
reserves until the transaction closes.

 

 

                                                                Top of page 12

                        Other businesses and corporate


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         $ million
  (330)   (522) (1,097)  Profit (loss) before interest and     (2,291) (1,391)
                         tax
      -       -       -  Inventory holding (gains) losses            -    (15)
  (330)   (522) (1,097)  RC profit (loss) before interest and  (2,291) (1,406)
                         tax
   (76)    (18)     523  Net charge (credit) for                   741     368
                         non-operating items
                         Underlying RC profit (loss) before
                         interest
  (406)   (540)   (574)    and tax(a)                          (1,550) (1,038)
                         By region
                         Underlying RC profit (loss) before
                         interest
                           and tax(a)
  (182)   (185)   (218)  US                                      (568)   (527)
  (224)   (355)   (356)  Non-US                                  (982)   (511)
  (406)   (540)   (574)                                        (1,550) (1,038)
                         Non-operating items
  (112)    (92)   (494)  US                                      (728)   (123)
    188     110    (29)  Non-US                                   (13)   (245)
     76      18   (523)                                          (741)   (368)
                         RC profit (loss) before interest and
                         tax
  (294)   (277)   (712)  US                                    (1,296)   (650)
   (36)   (245)   (385)  Non-US                                  (995)   (756)
  (330)   (522) (1,097)                                        (2,291) (1,406)

 

(a) See footnote (a) on page 4 for information on underlying RC profit or
    loss.

 

Other businesses and corporate comprises the Alternative Energy business,
Shipping, Treasury (which includes interest income on the group's cash and
cash equivalents), and corporate activities worldwide.

 

The replacement cost loss before interest and tax for the third quarter and
nine months was $1,097 million and $2,291 million respectively, compared with
$330 million and $1,406 million for the same periods last year.

 

The third-quarter result included a net non-operating charge of $523 million,
primarily asset impairments and environmental provisions, compared with a net
non-operating gain of $76 million a year ago. For the nine months the net
non-operating charge was $741 million, compared with a net charge of
$368 million a year ago.

 

After adjusting for non-operating items, the underlying replacement cost loss
before interest and tax for the third quarter and nine months was $574 million
and $1,550 million respectively, compared with $406 million and $1,038 million
for the same periods last year. The third quarter was impacted by increased
corporate costs, while the movement for the nine months was primarily due to
foreign exchange effects, increased corporate costs and the sale of our
aluminium business in 2011.

 

In Alternative Energy, net wind generation capacity(b) at the end of the third
quarter was 1,274MW (1,988MW gross), compared with 774MW (1,362MW gross) at
the end of the same period a year ago. BP's net share of wind generation from
our 13 US wind farms for the third quarter was 628GWh (964GWh gross), compared
with 420GWh (763GWh gross) in the same period a year ago. For the nine months,
BP's net share was 2,572GWh (4,061GWh gross), compared with 1,669GWh (2,997GWh
gross) a year ago.

 

In our biofuels business, BP's net share of ethanol-equivalent(c) production
for the third quarter was 206 million litres (BP interest 100%) compared with
183 million litres (228 million litres gross) in the same period a year
ago(d). For the nine months, BP's net share of ethanol-equivalent production
was 304 million litres (BP interest 100%) compared with 278 million litres
(353 million litres gross) a year ago.

 

(b) 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. The gross data is the equivalent
    capacity on a gross-JV basis, which includes 100% of the capacity of
    equity-accounted entities where BP has partial ownership. Capacity figures
    include 32MW in the Netherlands managed by our Downstream segment.
(c) Ethanol-equivalent production includes ethanol and sugar.
(d) BP acquired the remaining 50% of Tropical Bioenergia on 22 November 2011.

 

 

                                                                Top of page 13

                             Cautionary statement


 

Cautionary statement regarding forward-looking statements: The discussion in
this results announcement contains forward-looking statements, particularly
those regarding BP's expectations for delivering more than 50% growth in net
cash provided by operating activities by 2014; the expected level of 2012
full-year organic capital expenditure; the expected quarterly dividend
payment; the expected terms of and timing of the execution of definitive
agreements in respect of BP's proposed transaction with Rosneft concerning the
sale of BP's stake in TNK-BP to Rosneft and the related acquisition by BP of
shares in Rosneft (the Rosneft transaction); the expected timing of completion
of the Rosneft transaction; the expected level of BP's holding of Rosneft
stock following completion of the Rosneft transaction; expectations regarding
the accounting treatment of BP's expected share of Rosneft's earnings and the
reporting of production and reserves; prospects for BP's level of
representation on Rosneft's board of directors; BP's intentions to retain
Rosneft shares received in the Rosneft transaction for at least 360 days
following the completion of the transaction; BP's intentions to continue to
patrol and maintain certain shoreline segments impacted by the Gulf of Mexico
oil spill; the expected timing of the fairness hearing in connection with the
final approval of the settlement agreements with the Plaintiffs' Steering
Committee (PSC); the source of funding for BP's $1-billion commitment to early
restoration projects, and the prospects for these early restoration projects;
the expected quantum of funds remaining in the $20-billion Trust fund in
subsequent periods; the expected level of reported production in the fourth
quarter of 2012, and the expected level of full-year reported production in
2012; the expected level of full-year production (as adjusted for divestments
and the impact of entitlement effects in BP's PSAs) in 2012; the timing of and
prospects for the completion of planned and announced divestments, including
the disposals of the Carson refinery and the Texas City refinery; the expected
level of refining margins in the fourth quarter of 2012; the expected level of
refinery turnarounds in the fourth quarter of 2012; the timing of and
prospects for upgrades to the Whiting refinery; the expected level of
petrochemicals margins in the fourth quarter of 2012 and the prospects for and
expected timing of certain investigations, claims, hearings, settlements and
litigation outcomes. 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. Actual results may differ from those
expressed in such statements, depending on a variety of factors including the
timing of bringing new fields onstream; the timing of divestments; future
levels of industry product supply; demand and pricing; OPEC quota
restrictions; PSA effects; operational problems; general economic conditions;
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; the impact on our reputation following the Gulf of Mexico oil spill;
exchange rate fluctuations; development and use of new technology; the success
or otherwise of partnering; the actions of competitors, trading partners,
creditors, rating agencies and others; natural disasters and adverse weather
conditions; changes in public expectations and other changes to business
conditions; wars and acts of terrorism or sabotage; and other factors
discussed under "Principal risks and uncertainties" in our Form 6-K for the
period ended 30 June 2012 and under "Risk factors" in our Annual Report and
Form 20-F 2011 as filed with the US Securities and Exchange Commission.

 

 

                                                                Top of page 14

                            Group income statement


 

  Third  Second   Third                                          Nine     Nine
quarter quarter quarter                                        months   months
   2011    2012    2012                                          2012     2011
                         $ million
 95,383  93,341  90,591  Sales and other operating revenues   277,972  282,076
                         (Note 4)
                         Earnings from jointly controlled
                         entities - after
    300      88     235    interest and tax                       613    1,093
  1,108     545   1,548  Earnings from associates - after       3,353    3,772
                         interest and tax
    151     176     137  Interest and other income                488      426
    790     742     610  Gains on sale of businesses and        2,285    2,753
                         fixed assets
 97,732  94,892  93,121  Total revenues and other income      284,711  290,120
 73,825  75,522  68,148  Purchases                            215,313  213,827
  7,809   7,889   7,093  Production and manufacturing          21,703   20,517
                         expenses(a)
  2,021   1,827   1,912  Production and similar taxes (Note     6,085    6,208
                         5)
  2,647   2,877   3,200  Depreciation, depletion and            9,285    8,153
                         amortization
                         Impairment and losses on sale of
                         businesses
    211   4,821     486    and fixed assets                     5,447    1,653
    100     616     290  Exploration expense                    1,166    1,178
  3,693   3,213   3,627  Distribution and administration        9,968   10,048
                         expenses
  (298)   (270)    (72)  Fair value (gain) loss on embedded     (243)       98
                         derivatives
  7,724 (1,603)   8,437  Profit (loss) before interest and     15,987   28,438
                         taxation
    298     267     256  Finance costs(a)                         806      920
                         Net finance income relating to
   (64)    (55)    (58)    pensions and other                   (166)    (198)
                         post-retirement benefits
  7,490 (1,815)   8,239  Profit (loss) before taxation         15,347   27,716
  2,270   (475)   2,739  Taxation(a)                            5,211    9,393
  5,220 (1,340)   5,500  Profit (loss) for the period          10,136   18,323
                         Attributable to
  5,043 (1,385)   5,434    BP shareholders                      9,964   18,015
    177      45      66    Minority interest                      172      308
  5,220 (1,340)   5,500                                        10,136   18,323
                         Earnings per share - cents (Note
                         6)
                         Profit (loss) for the period
                         attributable to
                           BP shareholders
  26.62  (7.29)   28.54  Basic                                  52.40    95.39
  26.28  (7.29)   28.39  Diluted                                52.05    94.22

 

(a) See Note 2 on pages 23 - 28 for further details of the impact of the Gulf
    of Mexico oil spill on the income statement line items.

 

 

                                                                Top of page 15

                   Group statement of comprehensive income


 

  Third  Second   Third                                           Nine    Nine
quarter quarter quarter                                         months  months
   2011    2012    2012                                           2012    2011
                         $ million
  5,220 (1,340)   5,500  Profit (loss) for the                  10,136  18,323
                         period
(1,483) (1,038)     747  Currency translation                      295   (425)
                         differences
                         Exchange (gains)
                         losses on translation
                         of
                           foreign operations
                         transferred to gain or
                         loss
      6    (12)      12    on sales of                               -      19
                         businesses and fixed
                         assets
                         Actuarial gain (loss)
                         relating to pensions
                         and
      - (2,301)     192    other                                 (689)       -
                         post-retirement
                         benefits
  (338)   (109)      61  Available-for-sale                         16   (167)
                         investments marked to
                         market
                         Available-for-sale
                         investments - recycled
      2       -       -    to the income                             -     (3)
                         statement
  (125)    (96)      48  Cash flow hedges                           27      68
                         marked to market
   (70)      28      29  Cash flow hedges -     The story has
                         recycled to the income been
                         statement              truncated,
                                               
[TRUNCATED]
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