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BP PLC BP. BP REPORTS STRONG 3Q RESULTS, RAISES DIVIDEND



  BP PLC (BP.) - BP REPORTS STRONG 3Q RESULTS, RAISES DIVIDEND

RNS Number : 8204P
BP PLC
30 October 2012
 



press release

 

 

30 October 2012

                                       

                  BP REPORTS STRONG THIRD QUARTER RESULTS, 

                               RAISES DIVIDEND

 

•      Underlying 3Q 2012 replacement cost profit $5.2 billion; a 40 per  cent 
increase on previous quarter.

 

•      Increases quarterly dividend by 12.5  per cent, to 9c a share,  payable 
in 4Q 2012.

 

•      On track for delivery of strategic 10-point plan to 2014.

 

•      Plans  to  deliver  long-term  free  cash  flow  growth;  focusing  and 
de-risking the portfolio and increasing investment in upstream.

 

 

BP today  announced its  financial  results for  the  third quarter  of  2012, 
reporting underlying replacement cost profit, adjusted for non-operating items
and fair  value accounting  effects, of  $5.2 billion.  It also  announced  an 
increase in its quarterly dividend to 9c  per share - an increase of 12.5  per 
cent - expected to be paid in the fourth quarter.

 

In a call with financial analysts  later today, the company will also  provide 
an update  of progress  against  its strategic  10-point  plan for  2014,  and 
outline its future direction.

 

"BP's performance and the  strong progress we are  making in transforming  the 
company give us the confidence to increase distributions to our shareholders,"
said group chief executive Bob Dudley. "We  are on track with our strategy  to 
2014 and are laying  the right foundations for  sustainable growth during  the 
coming decade."

 

BP expects  to generate  future  growth through  increased investment  in  new 
upstream  projects  in  higher-margin  areas   and  through  new  access   and 
exploration. BP's  business  portfolio  is expected  to  become  more  tightly 
focused around its strong existing positions and its key operating strengths.

 

3Q 2012 Results

Third quarter underlying replacement cost profit was $5.2 billion, compared to
$3.7 billion reported for the previous quarter and $5.5 billion for the  third 
quarter of 2011, which was prior to a number of significant divestments.

 

The quarter's results benefited from  a strong performance in BP's  downstream 
business, where good  operational delivery capitalised  on increased  refining 
margins. In the  upstream, performance was  similar to the  second quarter  as 
increased production from new  projects and completion  of turnarounds in  the 
Gulf of Mexico was offset by seasonal maintenance in North Sea and Alaska  and 
the impact of Hurricane Isaac in the Gulf. In addition, more stable oil prices
in the third quarter resulted in  some positive reversal of the unusual  price 
effects seen in the second quarter earnings, such as Russian duty lag.

 

Operating cash flow in the quarter was  $6.3 billion. At the end of the  third 
quarter, gearing was 20.9 per cent compared to 21.9 per cent at the end of the
previous quarter.  Gearing is  expected  to reduce  as  the company  works  to 
complete the divestment programme and ends payments into the $20 billion Trust
Fund.

 

Production of oil and gas, excluding  TNK-BP, was 2.26 million barrels of  oil 
equivalent a day  (mmboed), broadly similar  to the second  quarter and 3  per 
cent lower than a year ago. Production  is expected to increase in the  fourth 
quarter as the maintenance  season completes and the  benefit of new  projects 
continues, but offset partially by the timing of Gulf of Mexico and North  Sea 
divestments expected to complete in the  fourth quarter. BP's share of  TNK-BP 
production in the quarter was 1mmboed,  slightly more than in the same  period 
last year.

 

BP's downstream segment delivered record quarterly underlying earnings. Strong
operational performance in the fuels  business - with refining throughputs  at 
the highest level  for seven years  - captured the  benefits of the  quarter's 
notably high  refining margins.  Contributions from  supply and  trading  also 
returned to more normal  levels. Refining margins are  expected to decline  in 
the fourth quarter in line with  seasonal trends. Refining throughput is  also 
expected to be lower due to turnarounds and the start of a transitional outage
to replace the largest of three crude  units at our Whiting refinery, as  part 
of the major upgrade project.

 

Strategic Progress

On October 22,  BP announced that  it had agreed  heads of terms  to sell  its 
shareholding in TNK-BP to Rosneft for  a mixture of shares and cash.  Combined 
with BP's existing 1.25 per cent shareholding, the proposed sale would  result 
in BP holding a 19.75 per cent interest in Rosneft and receiving $12.3 billion
in cash. The parties currently anticipate the proposed transaction to complete
in the first  half of 2013,  subject to certain  customary closing  conditions 
including governmental, regulatory and antitrust approvals.  

 

"Rosneft is a great company with great opportunities," said Dudley. "I believe
our agreement will remove considerable uncertainty for our shareholders  about 
BP's future in Russia and will secure for BP a valuable and truly  distinctive 
position in  one  of  the world's  largest  and  most important  oil  and  gas 
provinces."

 

As set out in  the 10-point plan,  BP expects to bring  15 new major  upstream 
projects into  production  by  the end  of  2014,  11 of  which  are  in  four 
higher-margin areas: the Gulf of Mexico, Angola, Azerbaijan and the North Sea.
All of these projects are on track.

 

With the start of production from the Devenick field in the North Sea in early
October, three of the six projects scheduled  for start-up in 2012 are now  on 
line; the remaining three are expected to start up before the end of the year.
In the downstream,  the Whiting  refinery modernisation  programme remains  on 
schedule to start-up in the second half of 2013.

 

As it  moves beyond  2014, BP  expects  to increase  its investment  into  the 
upstream to drive development  and growth in  higher-margin areas and  sustain 
the pace of new access and exploration.

 

Since early 2010 BP has accessed twice the new acreage it had accessed in  the 
previous nine years,  creating a much  larger exploration prospect  inventory. 
This has  also  increased the  company's  exposure to  new  exploration  areas 
outside areas of traditional focus; half  of the prospect inventory is now  in 
new plays and half in proven plays in known basins. 

 

Nine exploration wells  are expected to  be completed in  2012, increasing  to 
15-25 exploration wells  a year  going forward.  Between 2012  and 2015,  BP's 
drilling programme is expected to test 15 new plays, in addition to  deepening 
in existing core areas.

 

BP's portfolio  of world-class  downstream businesses  has been  focused  over 
recent years through  significant portfolio  rationalisation and  investments, 
including the Whiting upgrade project. With this repositioning expected to  be 
largely complete by the end of next year, the downstream is expected to become
significantly more free cash flow generative, delivering material and  growing 
cash to the Group.

 

BP will continue to  reshape and focus its  business portfolio around its  key 
operating strengths. Since  the end  of the  second quarter  BP has  announced 
agreements for divestments with a total  value of over $11 billion,  including 
for the Texas City and Carson refineries and associated assets and a number of
non-strategic deepwater fields in the Gulf of Mexico. Since the start of  2010 
BP has now announced  disposals for a  total of over  $35 billion against  its 
target of $38  billion; this does  not include the  proposed transaction  with 
Rosneft for the sale of BP's share in TNK-BP.

 

"This highly successful divestment programme is about fundamentally  reshaping 
and repositioning  our  upstream  portfolio.  It  gives  BP  a  differentiated 
competitive position which  plays to our  strengths in exploration,  deepwater 
fields, giant fields and gas value chains. It is also biased to oil, which  we 
believe has higher returns potential," said Dudley.

 

BP expects to make a final payment  of $860 million into the $20 billion  Gulf 
of Mexico Trust Fund in  the fourth quarter of 2012.  At the end of the  third 
quarter, the cash  balances in  the Trust  Fund and  the Qualified  Settlement 
Funds amounted  to $10.9  billion,  with $19.1  billion contributed  and  $8.2 
billion paid out.

 

In its results stock exchange announcement  also issued today, BP included  an 
update on the status of  the legal proceedings related  to Gulf of Mexico  oil 
spill.

 

The US Department of Justice (DoJ)  has been conducting an investigation  into 
the Gulf of  Mexico oil  spill regarding  civil and  criminal laws.  BP is  in 
ongoing discussions  with  the DoJ  and  other federal  agencies  regarding  a 
possible settlement  of these  claims and  whilst  it is  ready to  settle  on 
reasonable  terms,  a  number  of  unresolved  issues  remain  and  there   is 
significant uncertainty as to whether an agreement will ultimately be reached.
BP has repeatedly said that  it is willing to  settle on reasonable terms  but 
otherwise continues to prepare vigorously for the start of trial MDL 2179, now
scheduled for late February 2013.

 

Bob Dudley concluded: "BP is becoming a tightly-focused oil and gas company. I
am confident we  will be well-positioned  to grow long  term sustainable  free 
cash flow and create value for our shareholders."

 

 

Further information:

 

·      BP press office, London: +44 (0)20 7496 4076, bppress@bp.com

 

 

 

 

 

Cautionary statement:

 

This press release contains certain forward-looking statements with respect to
the operations and businesses of BP and certain of the plans and objectives of
BP with respect to  these items. These statements  generally, but not  always, 
are identified by the use of words such as "will", "expected to", "is intended
to", "projected" or similar expressions. In particular, these include  certain 
statements regarding:  expectations regarding  the  '10-point plan'  and  BP's 
strategy to 2014; expectations regarding future investment and the pace of new
access and exploration in Upstream; BP's plans to deliver long-term free  cash 
flow growth; expectations regarding BP's portfolio in the future; the expected
quarterly dividend  payment;  the  expected  level  of  gearing;  expectations 
regarding future  levels of  reported production,  refining margins,  refining 
throughput and refinery turnarounds; the timing of and prospects for  upgrades 
to the Whiting refinery; expectations  regarding the Rosneft transaction;  the 
prospects for, timing  and composition  of future  projects; expectations  for 
drilling and rig activity; expectations regarding the timing and prospects  of 
BP's re-positioning of Downstream;  prospects for BP's $38-billion  divestment 
programme; the timing and  quantum of contributions  to the $20-billion  Trust 
fund; and the  prospects for  and expected timing  of certain  investigations, 
claims, settlements,  hearings,  trials  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 ability of the parties to  the 
Rosneft transaction to  negotiate satisfactory definitive  agreements and  the 
terms thereof; the  actions of  regulators and the  timing of  the receipt  of 
governmental and  regulatory  approvals; 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; 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 
Stock Exchange Announcement 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.

 

 

                                  -- ENDS --

 

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
QRTURVNRUSARORA -0- Oct/30/2012 07:01 GMT
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