BP Posts 3Q Profits, Declares Dividend for December
BP's third-quarter replacement cost profit was $4,981 million, compared with $10,029 million a year ago, a decrease of 50%. For the nine months, replacement cost profit was $10,508 million compared with $23,006 million a year ago, down 54%.
- Non-operating items and fair value accounting effects for the third quarter had a net $307 million favorable impact compared with a net $1,147 million favourable impact in the third quarter of 2008. For the nine months, the respective amounts were $315 million favorable and $632 million unfavorable
- Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $311 million for the third quarter, compared with $238 million for the same period last year. For the nine months, the respective amounts were $1,000 million and $705 million. The net increase in cost was primarily due to a reduction in the expected return on pension plan assets.
- The effective tax rate on replacement cost profit for the third quarter and nine months was 29% and 33% respectively, compared with 33% and 35% a year ago. The decrease was due to a higher proportion of income from associates and jointly controlled entities (which are included net of tax), foreign exchange effects and adjustments to tax provisions. We now expect the full-year effective tax rate to be around 32-33%.
- Net cash provided by operating activities for the quarter and nine months was $8.1 billion and $20.4 billion compared with $14.9 billion and $32.5 billion respectively a year ago.
- Net debt at the end of the quarter was $26.3 billion. The ratio of net debt to net debt plus equity was 21% compared with 17% a year ago.
- Cash costs(b) for the nine months are more than $3 billion lower than for the same period a year ago and for the full year are expected to be around $4 billion lower.
- Total capital expenditure, including acquisitions and asset exchanges, for the third quarter and nine months was $5.0 billion and $14.4 billion respectively. Capital expenditure, excluding acquisitions and asset exchanges, is expected to be around $20 billion for the year. Disposal proceeds were $0.6 billion for the quarter and $1.6 billion for the nine months.
- • The quarterly dividend, to be paid in December, is 14 cents per share ($0.84 per ADS), the same as a year ago. In sterling terms, the quarterly dividend is 8.512 pence per share, compared with 8.705 pence per share a year ago, a decrease of 2%.
(a) Profit attributable to BP shareholders.
(b) Cash costs are a subset of production and manufacturing expenses plus distribution and administration expenses. They
represent the substantial majority of the expenses in these line items but exclude associated non-operating items and certain
costs that are variable, primarily with volumes (such as freight costs). They are the operating and overhead costs that are
most directly under management control.
BP today announced a dividend of 14 cents per ordinary share to be paid in December. Holders of ordinary shares will receive 8.512 pence per share and holders of American Depositary Receipts $0.84 per ADS. The dividend is payable on December 7, 2009 to shareholders on the register on November 13, 2009. Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in the US Direct Access Plan will receive the dividend in the form of shares, also on December 7, 2009.
Exploration and Production
The replacement cost profit before interest and tax for the third quarter and first nine months of 2009 was $6,929 million and $16,295 million respectively, decreases of 45% and 51% compared with the same periods in 2008. The decreases in both periods were primarily due to lower realizations, partly offset by the impact of higher production and lower costs. Both periods were impacted by higher depreciation. The first nine months of 2009 also reflected lower earnings from equity-accounted entities, primarily TNK-BP.
The third quarter and first nine months also benefited from net non-operating gains of $471 million and $1,289 million respectively, primarily related to fair value gains on embedded derivatives and gains on the sale of operations. The corresponding periods in 2008 reflected a net non-operating gain of $1,118 million and a net non-operating charge of $1,234 million respectively. Additionally, in the third quarter, fair value accounting effects had a favorable impact of $180 million compared with a favourable impact of $97 million a year ago. For the first nine months, the favorable impact was $473 million compared with an unfavorable impact of $535 million in the same period of 2008.
Production for the quarter was 3,917mboe/d, 7% higher than the third quarter of 2008. This increase primarily reflects continued strong operational performance and the absence of hurricanes, which impacted the third quarter of 2008. After adjusting for entitlement impacts in our production-sharing agreements (PSAs) and the effect of OPEC quota restrictions, the increase was still 7%. Adjusting for hurricanes, which impacted our production in the third quarter of 2008, production was 4% higher. Unit production costs in the quarter were 18% lower than the third quarter of 2008 after adjusting production for the impact of hurricanes.
Production for the first nine months was 3,979mboe/d, more than 4% higher than the same period last year. After adjusting for the effect of entitlement changes in our PSAs and the effect of OPEC quota restrictions, production was more than 5% higher than the same period of 2008. After adjusting for the effect of hurricanes, production was 4% higher than the same period of 2008.
During the quarter, we announced a giant discovery at the Tiber prospect in the deepwater US Gulf of Mexico (BP 62% and operator).
On October 1, Sonangol and BP announced the Tebe oil discovery in the ultra-deepwater Block 31, offshore Angola (BP 26.67% and operator). This is the nineteenth discovery made by BP in Block 31.