REG - BP PLC - 3Q16 Part 1 of 1 <Origin Href="QuoteRef">BP.L</Origin> - Part 2
01/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSA9263Na
5,689 6,944
Current tax payable 1,411 1,080
Provisions 5,586 5,154
54,893 54,627
Liabilities directly associated with assets classified as held for sale (Note 3) 148 97
55,041 54,724
Non-current liabilities
Other payables 14,025 2,910
Derivative financial instruments 4,322 4,283
Accruals 483 890
Finance debt 53,308 46,224
Deferred tax liabilities 6,926 9,599
Provisions 23,039 35,960
Defined benefit pension plan and other post-retirement benefit plan deficits 12,275 8,855
114,378 108,721
Total liabilities 169,419 163,445
Net assets 92,797 98,387
Equity
BP shareholders' equity 91,376 97,216
Non-controlling interests 1,421 1,171
Total equity 92,797 98,387
Top of page 14
Financial statements (continued)
Condensed group cash flow statement
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Operating activities
865 (3,376) 1,329 Profit (loss) before taxation (2,912) (5,471)
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Depreciation, depletion and amortization and
3,971 3,897 4,183 exploration expenditure written off 11,971 12,470
Impairment and (gain) loss on sale of businesses
(127) (27) (1,891) and fixed assets (2,243) 85
Earnings from equity-accounted entities,
(295) (485) 259 less dividends received (250) (1,225)
Net charge for interest and other finance
196 113 204 expense less net interest paid 485 338
137 204 166 Share-based payments 629 154
Net operating charge for pensions and other post-
retirement benefits, less contributions and
(41) (56) (96) benefit payments for unfunded plans (120) (128)
113 4,565 (184) Net charge for provisions, less payments 5,116 11,201
Movements in inventories and other current and
1,231 (863) (1,001) non-current assets and liabilities (3,591) (2,135)
(867) (89) (461) Income taxes paid (822) (1,962)
5,183 3,883 2,508 Net cash provided by operating activities 8,263 13,327
Investing activities
(4,357) (4,283) (3,379) Capital expenditure (12,043) (13,522)
33 - - Acquisitions, net of cash acquired - 33
(55) (8) (1) Investment in joint ventures (13) (178)
(119) (196) (185) Investment in associates (474) (424)
88 153 590 Proceeds from disposal of fixed assets 981 1,049
Proceeds from disposal of businesses, net of
200 291 (21) cash disposed 1,181 1,511
61 6 9 Proceeds from loan repayments 61 109
(4,149) (4,037) (2,987) Net cash used in investing activities (10,307) (11,422)
Financing activities
117 2,710 3,925 Proceeds from long-term financing 9,373 7,988
(18) (1,318) (75) Repayments of long-term financing (4,952) (2,867)
(115) 300 (512) Net increase (decrease) in short-term debt (324) 597
- 368 323 Net increase (decrease) in non-controlling interests 761 -
(1,718) (1,169) (1,161) Dividends paid - BP shareholders (3,429) (5,118)
(29) (43) (31) - non-controllinginterests (83) (71)
(1,763) 848 2,469 Net cash provided by (used in) financing activities 1,346 529
Currency translation differences relating to cash
(158) (226) 13 and cash equivalents (171) (495)
(887) 468 2,003 Increase (decrease) in cash and cash equivalents (869) 1,939
32,589 23,049 23,517 Cash and cash equivalents at beginning of period 26,389 29,763
31,702 23,517 25,520 Cash and cash equivalents at end of period 25,520 31,702
Top of page 15
Financial statements (continued)
Notes
1. Basis of preparation
The interim financial information included in this report has been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for
a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report
should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December
2015 included in BP Annual Report and Form 20-F 2015.
BP prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS
as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006. IFRS as adopted
by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group's
consolidated financial statements for the periods presented.
The financial information presented herein has been prepared in accordance with the accounting policies expected to be used
in preparing BP Annual Report and Form 20-F 2016, which do not differ significantly from those used in BP Annual Report and
Form 20-F 2015.
In BP Annual Report and Form 20-F 2015 we disclosed a significant estimate or judgement relating to provisions arising from
the Gulf of Mexico oil spill in 2010. At that time, no reliable estimate could be made of any business economic loss (BEL)
claims under the Plaintiffs' Steering Committee (PSC) settlement that were not yet processed or processed but not yet paid,
except where an eligibility notice had been issued and was not subject to appeal by BP within the Deepwater Horizon Court
Supervised Settlement Program claims facility (DHCSSP). A reliable estimate could also not be made in relation to
securities-related litigation and other litigation, including economic loss and property damage claims from parties
excluded from and/or who opted out of the PSC settlement. No amounts were provided for these items and they were disclosed
as contingent liabilities.
As a result of developments during the second quarter of 2016 sufficient information now exists in order to make a reliable
estimate of the amounts that BP will pay relating to all outstanding BEL claims under the DHCSSP, securities class actions
and economic loss and property damage claims from parties who were excluded from and/or opted out of the PSC settlement.
Liabilities for these items were therefore recognized in the financial statements in the second quarter of 2016. See Note 2
for further information.
In BP Annual Report and Form 20-F 2015 - Financial statements - Note 1 we disclosed a significant estimate or judgement
relating to the recoverability of asset values, including oil and natural gas price assumptions used to estimate future
cash flows and the discount rates applied to determine the recoverable amounts of assets when performing impairment tests.
During the third quarter of 2016, the price assumptions and discount rates used in impairment tests were revised.
In the third quarter, the long-term price assumptions used to determine recoverable amount based on fair value less costs
of disposal from 2022 onwards were derived from $75 per barrel for Brent and $4/mmBtu for Henry Hub (both in 2015 prices)
inflated for the remaining life of the asset. To determine the recoverable amount based on value in use, the price
assumption was inflated to 2022 but from 2022 onwards was not inflated.
For both value-in-use and fair value less costs of disposal impairment tests performed during the third quarter, the price
assumptions used have been set such that there is a gradual transition over a five-year period from current market prices
to the long-term price assumptions for 2022, as noted above.
The post-tax discount rate applied to Upstream asset cash flows used to calculate fair value less costs of disposal in the
third quarter was 6%. For value-in-use calculations the pre-tax discount rate applied in the third quarter was 9%. For both
calculations a premium of 2% continues to be added for assets located in higher-risk countries.
See Note 4 for further information on impairment charges and reversals in the third quarter.
Top of page 16
Financial statements (continued)
Notes
2. Gulf of Mexico oil spill
(a) Overview
The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2015 - Financial
statements - Note 2 and Legal proceedings on page 237 and on page 31 of this report.
During the second quarter, significant progress was made in resolving outstanding claims arising from the 2010 Deepwater
Horizon accident and oil spill and a reliable estimate was determined for all remaining material liabilities arising from
the incident.
The group income statement includes a pre-tax charge of $189 million for the third quarter and $6,335 million for the nine
months in relation to the Gulf of Mexico oil spill. The cumulative pre-tax income statement charge since the incident, in
April 2010, amounts to $61,786 million. The charge for the third quarter comprises finance costs relating to unwinding of
discounting effects, functional costs and other items. As previously described in BP p.l.c. Group results - Second quarter
and half year 2016, it is now possible to reliably estimate the cost of resolving all outstanding business economic loss
claims under the Plaintiffs' Steering Committee (PSC) settlement and the cost of resolving economic loss and property
damage claims from individuals and businesses that either opted out of the PSC settlement and/or were excluded from that
settlement. The charge for the nine months is primarily attributable to the recognition of additional provisions for these
claims, as well as the cost of the securities claims settlement with the certified class of post-explosion ADS purchasers
which was agreed in June 2016.
The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods
presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items
in those statements as set out below.
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Income statement
311 5,106 66 Production and manufacturing expenses 5,966 11,381
(311) (5,106) (66) Profit (loss) before interest and taxation (5,966) (11,381)
115 123 123 Finance costs 369 132
(426) (5,229) (189) Profit (loss) before taxation (6,335) (11,513)
(87) 2,533 53 Taxation 2,837 3,626
(513) (2,696) (136) Profit (loss) for the period (3,498) (7,887)
30 September 31 December
$ million 2016 2015
Balance sheet
Current assets
Trade and other receivables 330 686
Prepayments 4 -
Current liabilities
Trade and other payables (1,979) (693)
Accruals - (40)
Provisions (3,348) (3,076)
Net current assets (liabilities) (4,993) (3,123)
Non-current assets
Deferred tax assets 7,824 -
Non-current liabilities
Other payables (13,293) (2,057)
Accruals - (186)
Provisions (1,784) (13,431)
Deferred tax liabilities - 5,200
Net non-current assets (liabilities) (7,253) (10,474)
Net assets (liabilities) (12,246) (13,597)
Top of page 17
Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Cashflow statement - Operating activities
(426) (5,229) (189) Profit (loss) before taxation (6,335) (11,513)
Adjustments to reconcile profit (loss)
before taxation to net cash provided
by operating activities
Net charge for interest and other finance
115 123 123 expense, less net interest paid 369 132
235 4,466 (494) Net charge for provisions, less payments 4,729 11,069
Movements in inventories and other current
(135) (971) (1,766) and non-current assets and liabilities (3,825) (696)
(211) (1,611) (2,326) Pre-tax cash flows (5,062) (1,008)
Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of
$2,326 million and an outflow of $4,849 million in the third quarter and nine months of 2016 respectively. For the same
periods in 2015, the amounts were an outflow of $196 million and an outflow of $993 million respectively.
Trust fund
During the first half of 2016, the remaining cash in the Deepwater Horizon Oil Spill Trust (the Trust) was exhausted and BP
commenced paying claims and other costs previously funded from the Trust. For certain costs, these payments are made by BP
into a qualified settlement fund, the fund then distributes the amounts to claimants; $835 million was paid into a
qualified settlement fund during the third quarter ($2,234 million during the nine months).
(b) Provisions and contingent liabilities
Provisions
BP had recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, litigation
and claims, and Clean Water Act penalties. Movements in the third quarter, all of which relate to litigation and claims
provisions, are presented in the table below.
$ million Total
At 1 July 2016 6,490
Net increase (decrease) in provision 50
Utilization - paid by BP (544)
- paid by settlement fund or Trust (864)
At 30 September 2016 5,132
Of which - current 3,348
- non-current 1,784
Movements in each class of provision during the nine months are presented in the table below.
Litigation Clean
and Water Act
Environmental claims penalties Total
$ million
At 1 January 2016 5,919 6,459 4,129 16,507
Net increase (decrease) in provision - 5,765 - 5,765
Unwinding of discount 52 25 38 115
Reclassified to Other payables (5,970) (3,741) (4,167) (13,878)
Utilization - paid by BP (1) (1,035) - (1,036)
- paid by settlement fund or
Trust - (2,341) - (2,341)
At 30 September 2016 - 5,132 - 5,132
Top of page 18
Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
Environmental
The environmental provisions relating to natural resource damage costs and the early restoration framework agreement were
reclassified to Other payables during the first quarter following approval by the Court in April 2016 of the Consent Decree
between the United States, the Gulf states and BP. Remaining amounts related to early restoration were paid during the
second quarter.
Litigation and claims
The litigation and claims provision includes amounts for the future cost of resolving claims by individuals and businesses
for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of
natural resources. Claims administration costs and legal costs have also been provided for.
At 31 December 2015, the litigation and claims provision included amounts provided under the state claims settlement
agreement with the Gulf states in relation to state claims that had not yet been paid. These amounts were reclassified to
Other payables during the first quarter and are payable over 18 years; $0.9 billion was paid during the third quarter.
Litigation and claims - PSC settlement
BP has provided for its best estimate of the cost associated with the 2012 PSC settlement. The provision has been
determined based upon an expected value of the remaining claims, including business economic loss claims. Claims are
determined by the DHCSSP in accordance with the PSC settlement agreement. Amounts to settle these claims are expected to be
paid by 2019. The amounts ultimately payable may differ from the amount provided.
Litigation and claims - Other claims
An estimate of the cost of the economic loss and property damage claims from individuals and businesses that either opted
out of the PSC settlement and/or were excluded from that settlement, most of which is expected to be paid by the end of
2016, is also recognized in provisions.
Clean Water Act penalties
The provision previously recognized for penalties under Section 311 of the Clean Water Act, as determined by the civil
settlement with the United States, was reclassified to Other payables during the first quarter following approval by the
Court of the Consent Decree. The amount is payable in instalments over 15 years, commencing April 2017. The unpaid balance
of this penalty accrues interest at a fixed rate.
Further information on provisions is provided in BP Annual Report and Form 20-F 2015 - Financial statements -Note 2.
Contingent liabilities
Any further outstanding Deepwater Horizon related claims are not expected to have a material impact on the group's
financial performance.
3. Non-current assets held for sale
On 15 January 2016 BP and Rosneft announced that they had signed definitive agreements to dissolve the German refining
joint operation Ruhr Oel GmbH (ROG). The restructuring will result in Rosneft taking ownership of ROG's interests in the
Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries. In exchange, BP will take sole ownership of the Gelsenkirchen
refinery and the solvent production facility DHC Solvent Chemie. Assets and associated liabilities relating to BP's share
of ROG's interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries are classified as held for sale in the group
balance sheet.
Top of page 19
Financial statements (continued)
Notes
4. Impairment of fixed assets
Included within the line item in the income statement for Impairment and losses on sale of businesses and fixed assets is a
net impairment reversal for the third quarter and nine months of $1,456 million and $1,550 million respectively.
The net impairment reversal in Upstream was $1,465 million for the third quarter and $1,561 million for the nine months.
For the third quarter, impairment reversals were $2,038 million offset by impairment charges of $573 million. The
impairment reversals relate predominantly to assets in Angola and the North Sea, the recoverable amounts for which were
calculated on a value-in-use basis.
The impairment reversals arose following a reduction in the discount rate applied and changes to future price assumptions
as explained in Note 1.
5. Analysis of replacement cost profit (loss) before interest and tax and
reconciliation to profit (loss) before taxation
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
743 (109) 1,196 Upstream (118) 1,343
2,562 1,405 978 Downstream 4,263 6,273
382 246 120 Rosneft 432 1,075
(689) (5,525) (441) Other businesses and corporate(a) (7,040) (12,522)
2,998 (3,983) 1,853 (2,463) (3,831)
67 (121) 17 Consolidation adjustment - UPII* (64) (101)
3,065 (4,104) 1,870 RC profit (loss) before interest and tax* (2,527) (3,932)
Inventory holding gains (losses)*
(27) 85 (13) Upstream 41 (12)
(1,687) 1,058 (35) Downstream 926 (381)
(12) 45 (12) Rosneft (net of tax) 29 50
1,339 (2,916) 1,810 Profit (loss) before interest and tax (1,531) (4,275)
398 414 433 Finance costs 1,241 968
Net finance expense relating to pensions
76 46 48 and other post-retirement benefits 140 228
865 (3,376) 1,329 Profit (loss) before taxation (2,912) (5,471)
RC profit (loss) before interest and tax
324 (5,394) (15) US (6,665) (10,814)
2,741 1,290 1,885 Non-US 4,138 6,882
3,065 (4,104) 1,870 (2,527) (3,932)
(a) Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information.
Top of page 20
Financial statements (continued)
Notes
6. Sales and other operating revenues
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
By segment
10,357 8,176 8,452 Upstream 24,059 33,023
50,921 42,809 43,488 Downstream 120,849 157,106
552 422 425 Other businesses and corporate 1,243 1,492
61,830 51,407 52,365 146,151 191,621
Less: sales and other operating revenues
between segments
5,809 4,301 4,952 Upstream 12,886 16,962
(377) 475 175 Downstream 768 201
246 189 191 Other businesses and corporate 496 736
5,678 4,965 5,318 14,150 17,899
Third party sales and other operating revenues
4,548 3,875 3,500 Upstream 11,173 16,061
51,298 42,334 43,313 Downstream 120,081 156,905
306 233 234 Other businesses and corporate 747 756
56,152 46,442 47,047 Total sales and other operating revenues 132,001 173,722
By geographical area
20,680 17,701 18,853 US 50,130 61,345
39,200 32,482 31,762 Non-US 91,390 123,746
59,880 50,183 50,615 141,520 185,091
Less: sales and other operating revenues
3,728 3,741 3,568 between areas 9,519 11,369
56,152 46,442 47,047 132,001 173,722
7. Production and similar taxes
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
30 67 32 US 117 97
208 191 180 Non-US 367 676
238 258 212 484 773
Top of page 21
Financial statements (continued)
Notes
8. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit for the period attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a
result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS
amount for the year-to-date period.
For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the
number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury
stock method.
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Results for the period
Profit (loss) for the period
46 (1,419) 1,620 attributable to BP shareholders (382) (3,175)
- 1 - Less: preference dividend 1 1
Profit (loss) attributable to BP
46 (1,420) 1,620 ordinary shareholders (383) (3,176)
Number of shares (thousand)(a)(b)
Basic weighted average number of
18,329,701 18,685,199 18,824,739 shares outstanding 18,660,397 18,304,504
3,054,950 3,114,200 3,137,456 ADS equivalent 3,110,066 3,050,750
Weighted average number of shares
outstanding used to calculate
18,371,656 18,685,199 18,920,920 diluted earnings per share 18,660,397 18,304,504
3,061,942 3,114,200 3,153,486 ADS equivalent 3,110,066 3,050,750
18,349,963 18,777,156 18,912,989 Shares in issue at period-end 18,912,989 18,349,963
3,058,327 3,129,526 3,152,164 ADS equivalent 3,152,164 3,058,327
(a) Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.
(b) If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.
9. Dividends
Dividends payable
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 16 December 2016
to shareholders and American Depositary Share (ADS) holders on the register on 11 November 2016. The corresponding amount
in sterling is due to be announced on 6 December 2016, calculated based on the average of the market exchange rates for the
four dealing days commencing on 30 November 2016. Holders of ADSs are expected to receive $0.600 per ADS (less applicable
fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of
new ordinary shares and ADS holders in the form of new ADSs. Details of the third-quarter dividend and timetable are
available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
Top of page 22
Financial statements (continued)
Notes
9. Dividends (continued)
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 2016 2015
Dividends paid per ordinary share
10.000 10.000 10.000 cents 30.000 30.000
6.549 6.917 7.558 pence 21.487 19.749
60.00 60.00 60.00 Dividends paid per ADS (cents) 180.00 180.00
Scrip dividends
18.5 134.4 130.0 Number of shares issued (millions) 418.8 53.1
110 695 714 Value of shares issued ($ million) 2,148 353
10. Net debt*
Net debt ratio*
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
57,405 55,727 58,997 Gross debt 58,997 57,405
Fair value (asset) liability of hedges related
(57) (1,279) (1,113) to finance debt(a) (1,113) (57)
57,348 54,448 57,884 57,884 57,348
31,702 23,517 25,520 Less: cash and cash equivalents 25,520 31,702
25,646 30,931 32,364 Net debt 32,364 25,646
102,599 94,108 92,797 Equity 92,797 102,599
20.0% 24.7% 25.9% Net debt ratio 25.9% 20.0%
Analysis of changes in net debt
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Opening balance
57,104 54,012 55,727 Finance debt 53,168 52,854
Fair value (asset) liability of hedges
315 (967) (1,279) related to finance debt(a) 379 (445)
32,589 23,049 23,517 Less: cash and cash equivalents 26,389 29,763
24,830 29,996 30,931 Opening net debt 27,158 22,646
Closing balance
57,405 55,727 58,997 Finance debt 58,997 57,405
Fair value (asset) liability of hedges
(57) (1,279) (1,113) related to finance debt(a) (1,113) (57)
31,702 23,517 25,520 Less: cash and cash equivalents 25,520 31,702
25,646 30,931 32,364 Closing net debt 32,364 25,646
(816) (935) (1,433) Decrease (increase) in net debt (5,206) (3,000)
Movement in cash and cash equivalents
(729) 694 1,990 (excluding exchange adjustments) (698) 2,434
Net cash outflow (inflow) from financing
16 (1,692) (3,338) (excluding share capital and dividends) (4,097) (5,718)
40 36 29 Other movements 424 50
(673) (962) (1,319) Movement in net debt before exchange effects (4,371) (3,234)
(143) 27 (114) Exchange adjustments (835) 234
(816) (935) (1,433) Decrease (increase) in net debt (5,206) (3,000)
(a) Derivative financial instruments entered into for the purpose of managing interest rate and foreign currency exchange risk associated with net debt with a fair value liability position of $1,323 million (second quarter 2016 liability of $1,440 million and third quarter 2015 liability of $1,349 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.
Top of page 23
Financial statements (continued)
Notes
11. Inventory valuation
A provision of $509 million was held at 30 September 2016 ($689 million at 30 June 2016 and $722 million at 30 September
2015) to write inventories down to their net realizable value. The net movement credited to the income statement during the
third quarter 2016 was $178 million (second quarter 2016 was a charge of $12 million and third quarter 2015 was a charge of
$144 million).
12. Statutory accounts
The financial information shown in this publication, which was approved by the Board of Directors on 31 October 2016, is
unaudited and does not constitute statutory financial statements. BP Annual Report and Form 20-F 2015 has been filed with
the Registrar of Companies in England and Wales. The report of the auditor on those accounts was unqualified and did not
contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.
Top of page 24
Additional information
Capital expenditure on an accruals basis*
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Capital expenditure on an accruals basis
4,287 3,919 3,622 Organic capital expenditure* 11,485 13,216
(33) 276 45 Inorganic capital expenditure* 321 126
4,254 4,195 3,667 11,806 13,342
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Organic capital expenditure by segment
Upstream
1,107 754 458 US 2,272 3,205
2,673 2,699 2,642 Non-US 7,924 8,531
3,780 3,453 3,100 10,196 11,736
Downstream
143 191 166 US 467 478
300 237 306 Non-US 698 789
443 428 472 1,165 1,267
Other businesses and corporate
11 12 2 US 15 33
53 26 48 Non-US 109 180
64 38 50 124 213
4,287 3,919 3,622 11,485 13,216
Organic capital expenditure by geographical area
1,261 957 626 US 2,754 3,716
3,026 2,962 2,996 Non-US 8,731 9,500
4,287 3,919 3,622 11,485 13,216
Reconciliation of additions to non-current assets to capital expenditure on an accruals basis
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
4,138 3,993 5,773 Additions to non-current assets(a) 13,701 13,704
8 12 7 Additions to other investments 25 19
Element of business combinations not related to
(41) - - non-current assets - (24)
164 190 (565) (Additions to) reductions in decommissioning asset (321) (307)
(15) - (1,548) Asset exchanges(b) (1,599) (50)
4,254 4,195 3,667 Capital expenditure on an accruals basis 11,806 13,342
(a) Includes additions to property, plant and equipment; goodwill; intangible assets; investments in joint ventures; and investments in associates.
(b) Third quarter and nine months 2016 principally relates to the contribution of BP's Norwegian upstream business into Aker BP ASA in exchange for a 30% interest in Aker BP ASA.
Top of page 25
Additional information (continued)
Non-operating items*
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Upstream
Impairment and gain (loss) on sale of businesses
(44) - 1,908 and fixed assets(a) 1,912 (351)
(35) - (8) Environmental and other provisions (8) (24)
(92) (3) (36) Restructuring, integration and rationalization costs (302) (340)
40 28 8 Fair value gain (loss) on embedded derivatives 49 102
13 (18) (407) Other(b) (534) 17
(118) 7 1,465 1,117 (596)
Downstream
Impairment and gain (loss) on sale of businesses
182 23 (11) and fixed assets 333 316
(92) (3) (72) Environmental and other provisions (75) (99)
(46) (54) (108) Restructuring, integration and rationalization costs (197) (256)
- - - Fair value gain (loss) on embedded derivatives - -
(1) (3) (5) Other (8) (3)
43 (37) (196) 53 (42)
Rosneft
Impairment and gain (loss) on sale of businesses
- - - and fixed assets - -
- - - Environmental and other provisions - -
- - - Restructuring, integration and rationalization costs - -
- - - Fair value gain (loss) on embedded derivatives - -
- - - Other - -
- - - - -
Other businesses and corporate
Impairment and gain (loss) on sale of businesses
(11) 4 (6) and fixed assets (2) (50)
(123) (35) (99) Environmental and other provisions (134) (127)
(13) (11) (10) Restructuring, integration and rationalization costs (69) (42)
- - - Fair value gain (loss) on embedded derivatives - -
(311) (5,106) (66) Gulf of Mexico oil spill(c) (5,966) (11,381)
- (1) - Other (55) -
(458) (5,149) (181) (6,226) (11,600)
(533) (5,179) 1,088 Total before interest and taxation (5,056) (12,238)
(115) (123) (123) Finance costs(c) (369) (132)
(648) (5,302) 965 Total before taxation (5,425) (12,370)
(108) 2,483 (16) Taxation credit (charge) 2,777 3,715
(756) (2,819) 949 Total after taxation for period (2,648) (8,655)
(a) See Notes 1 and 4 for further information on impairment charges and reversals.
(b) Third quarter and nine months 2016 include the write-off of $334 million in relation to the value ascribed to the BM-C-34 licence in Brazil as part of the accounting for the acquisition of upstream assets from Devon Energy in 2011 (see footnote (b) on page 5).
(c) See Note 2 for further details regarding costs relating to the Gulf of Mexico oil spill.
Top of page 26
Additional information (continued)
Non-GAAP information on fair value accounting effects
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Favourable (unfavourable) impact relative to
management's measure of performance
38 (145) (45) Upstream (293) 18
217 (71) (257) Downstream (547) (12)
255 (216) (302) (840) 6
(84) 68 81 Taxation credit (charge) 232 11
171 (148) (221) (608) 17
BP uses derivative instruments to manage the economic exposure relating to inventories above normal operating requirements
of crude oil, natural gas and petroleum products. Under IFRS, these inventories are recorded at historical cost. The
related derivative instruments, however, are required to be recorded at fair value with gains and losses recognized in
income because hedge accounting is either not permitted or not followed, principally due to the impracticality of
effectiveness testing requirements. Therefore, measurement differences in relation to recognition of gains and losses
occur. Gains and losses on these inventories are not recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity contracts are recognized in the income statement, from the
time the derivative commodity contract is entered into, on a fair value basis using forward prices consistent with the
contract maturity.
BP enters into commodity contracts to meet certain business requirements, such as the purchase of crude for a refinery or
the sale of BP's gas production. Under IFRS these contracts are treated as derivatives and are required to be fair valued
when they are managed as part of a larger portfolio of similar transactions. Gains and losses arising are recognized in the
income statement from the time the derivative commodity contract is entered into.
IFRS requires that inventory held for trading is recorded at its fair value using period-end spot prices whereas any
related derivative commodity instruments are required to be recorded at values based on forward prices consistent with the
contract maturity. Depending on market conditions, these forward prices can be either higher or lower than spot prices
resulting in measurement differences.
BP enters into contracts for pipelines and storage capacity, oil and gas processing and liquefied natural gas (LNG) that,
under IFRS, are recorded on an accruals basis. These contracts are risk-managed using a variety of derivative instruments,
which are fair valued under IFRS. This results in measurement differences in relation to recognition of gains and losses.
The way that BP manages the economic exposures described above, and measures performance internally, differs from the way
these activities are measured under IFRS. BP calculates this difference for consolidated entities by comparing the IFRS
result with management's internal measure of performance. Under management's internal measure of performance the inventory
and capacity contracts in question are valued based on fair value using relevant forward prices prevailing at the end of
the period, the fair values of certain derivative instruments used to risk manage LNG and oil and gas contracts are
deferred to match with the underlying exposure and the commodity contracts for business requirements are accounted for on
an accruals basis. We believe that disclosing management's estimate of this difference provides useful information for
investors because it enables investors to see the economic effect of these activities as a whole. The impacts of fair value
accounting effects, relative to management's internal measure of performance, are shown in the table above. A
reconciliation to GAAP information is set out below.
Third Second Third Nine Nine
quarter quarter quarter months months
2015 2016 2016 $ million 2016 2015
Upstream
Replacement cost profit (loss) before interest and
705 36 1,241 tax adjusted for fair value accounting effects 175 1,325
38 (145) (45) Impact of fair value accounting effects (293) 18
743 (109) 1,196 Replacement cost profit before interest and tax (118) 1,343
Downstream
Replacement cost profit before interest and tax
2,345 1,476 1,235 adjusted for fair value accounting effects 4,810 6,285
217 (71) (257) Impact of fair value accounting effects (547) (12)
2,562 1,405 978 Replacement cost profit before interest and tax 4,263 6,273
Total group
Profit (loss) before interest and tax adjusted for fair
1,084 (2,700) 2,112 value accounting effects (691) (4,281)
255 (216) (302) Impact of fair value accounting effects (840) 6
1,339 (2,916) 1,810 Profit (loss) before interest and tax (1,531) (4,275)
Top of page 27
Additional information (continued)
Realizations and marker prices
Third Second Third Nine Nine
quarter quarter quarter
- More to follow, for following part double click ID:nRSA9263NcRecent news on BP
See all newsREG - BP PLC - Director/PDMR Shareholding
AnnouncementREG - BP PLC - Annual Report and Form 20-F 2025 & Notice of AGM
AnnouncementREG - BP PLC - Directorate Change
AnnouncementREG - BP PLC - Total Voting Rights
AnnouncementREG - BP PLC - Director/PDMR Shareholding
Announcement