BP PLC — Annual Report 2006

Feb 6, 2007

BP Full Year 2006 Results and Strategy Update 6 February 2007

John Browne

Group Chief Executive

Cautionary Statement

Forward Looking Statements Cautionary Statement

This presentation and the associated slides and discussion contain forward looking statements, particularly those regarding capital expenditure, capital investments, spending on integrity management, annual charges, cost inflation, production and impact of delays in projects on production, expected return to capacity of projects, share buybacks and other distributions to shareholders, group costs, divestment proceeds and their use, effective tax rate, future performance, gearing, growth opportunities, global economic growth, global oil demand growth, oil and gas prices, performance, oil and gas production, production growth, refining margins, refining availability and capacity, outlook for refining environment, the timing of major projects and their contribution to BP net resources and the application of technology. By their nature, forward-looking statements involve risks and uncertainties 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 on stream; future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; natural disasters and adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed elsewhere in this presentation.

Reconciliations to GAAP - This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at www.bp.com

Cautionary Note to US Investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as "resources" and "non-proved reserves", that the SEC's guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F/A, SEC File No. 1-06262, available from us at 1 St James's Square, London SW1Y 4PD. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

February 2007

John Browne

Group Chief Executive

Agenda

• •Review of 2006
• •Strategy and performance in context
• •Trading environment
• • 2007 priorities
  • Business updates
• •Financial framework
• •2007 guidance
• •Q&A

2006: Financial results

• • Replacement cost profit
  • $22.3bn, up 15%
  • Per share 111.1¢, up 22%
• •Post tax operating cash flow $28.2bn, up 5%
• • Quarterly dividend per share 10.325¢
  • Up 5% vs. last quarter
  • Up 10% vs. last year
• • Distributed $23.2bn to shareholders: $15.5bn by share buybacks
• •Divestment proceeds of $6.3bn
• •Gearing at 20%, bottom of target range

2006: Incidents and responses

•Texas City

•

Implementing Baker Panel's process safety recommendations

Prudhoe Bay and Thunder Horse

• Embedding learning across the company
• •Propane trading

2006: Milestones

• •2006 reserve replacement 113%
• • 10 new discoveries including Kaskida, Titania, Urano and in Uvatarea
• •New upstream access: Pakistan, India and Oman
• • Start -up of 9 new upstream projects
• • Re-commissioning of Texas City continues
• •Significant progress in Alternative Energy
• •$3bn Whiting refinery investment sanctioned

Byron Grote

Chief Financial Officer

Trading environment

Financial results

Change vs. 4Q 2005

ffRlhhttttesusoreourquarer	$bn	%	%hpersare
Rlfittt•epacemencospro	39	%()21	%()6
Pfiildiii/ltt•roncungnvenorygansosses	29	%()22	%()16
Nhiddbiiiitttt•eaeeaaecsprovyoprngcvs	50	%17	%24
Diiddbidttt•venoepanexquarer	/h¢esar03215	%01+
		Chan	2005egvs
ffRllltesusoruyear	$bn	%	%hpersare
fRlittt•epacemencospro	223	%15	%22
fPiildiii/ltt•nnnenanerocugvorygsosss	220	()%2	%4
Nhiddbiiiitttt•ecasproeoperangacesvyv	282	%5	%11

Exploration & Production

• •Lower gas realizations
• •Lower volumes
• •Sector specific inflation
• •Greater integrity spend
• • Higher non -cash costs
• • TNK-BP
  • Absence of disposal gain
  • Lagged tax reference prices
• • Non-Operating Items (NOI) Embedded derivatives

Refining & Marketing

Gas, Power & Renewables • Lower NGL and marketing & trading contribution • Smaller fair value gain • Non-Operating Item (NOI) Disposals 0.00.10.20.30.40.50.60.74Q 05 NOI Underlying 4Q 06 255(307) Non-operating items 436 Underlying result 129 Total result 470 215$m $m Pre-tax $bn

Other business & corporate • 2006 underlying charge consistent with prior guidance (0.5) (0.4) (0.3) (0.2) (0.1) 0.0(88) (64) Non-operating items (345) Underlying result (409) Total result (276) (188) 4Q 05 NOI Underlying 4Q 06 $m $m Pre-tax $bn

Guidance on 2007 items

• • OB&C: annual charge of $900m ±$200m
• •Full year effective tax rate: 37%
• • Rules of thumb: Full year (pre-tax) $m Oil price Brent ±$1/bbl 500 Gas price Henry Hub ±$0.1/mmbtu 90 Refining margin GIM ±$1/bbl 950
  • Note: Rules of thumb provided are approximate.
    • Actual impacts will depend on:
    • •Volumes / portfolio mix
    • •Absolute price level
    • •Refining availability

Sources and uses of cashPost tax $bn 2005 2006 3540

Disposals Operations Buybacks DividendsOrganic capex Disposals Operations Buybacks DividendsOrganic capex Acquisitions* 26.7 28.2051015202530SourcesUses Sources Uses

* Acquisitions include Rosneft IPO

Shareholder distributions

John Browne

Group Chief Executive

Strategy

E&P

• • Focus on the most prolific hydrocarbon basins and the biggest fields
• •Build leadership positions in these areas
• • Manage decline of existing producing assets and divest when appropriate

Gas

•Access to premium gas markets

R&M

• • Integrated chains of supply based around complex efficient refineries
• •Marketing
• •Build acetic acid and PTA capacity in Asia

Alternative Energy

•Build sustainable low carbon business

Strategic indicators

	9915	2006	Ritao
()Pdibdtoconmoeru	1428	3926	27
()Pdi/hb/ADR/trouconsareoeyr	028	034	15
()Rbbeservesnoe	84	177	21
()RhbADR//eeeaeesrvssro	45	35	21
(%)Sfhilditttaeoasnoapoconrgru	15	37	25
fNbi00bd1t>meroconresmuu	3	8	na
()fTliiibdttoarenngcapacym	2000	2881	14
()Afiibdeaeenesemvrgrryz	201	215	81
($)Shi/ADRareprce	255	*671	26
$()Mkiliibtttaeaaannrcpso	47	*220	64

* At 31/12/06

Daily prices Source: Plattsquotes

Source: oil demand, BP estimate; GDP, '00 -'06 Oxford Economic Forecasting

Oil supply growth and surplus capacity

Source: BP

'04 –'06 BP estimates

Source: Plattsquotes

Chart uses daily "common" Henry Hub prices; annual averages are based on the "monthly Platts index" Source: Plattsquotes

Daily margins BP Global Indicator Margin (GIM); 2006 portfolio basis

2007 priorities

• • Safety
  • Personal safety
  • Process safety
  • Environment

•Performance

Safety in operations 1999 to 2006

HiPO: High Potential Incident; MIA: Major Incident Announcement * Excludes Innovene

Focus on process safety

• • Actions under way to improve integrity of plant and operations
  • Implementing new standards
  • Implementing new Operations Management System
• • Baker Panel recommendations accepted – provides further learning
• • Sustaining level of integrity management spending Around $1bn increase over 2006

2007 priorities

• •Safety
• • Performance
  • Deliver upstream projects
    • Atlantis by end 2007
    • Thunder Horse by end 2008
  • Texas City
    • Expected to be processing 400,000 bpd by end of 2007

Tony Hayward

Group Chief Executive Designate

Exploration & Access

Exploration

•Deepwater Gulf of Mexico

• Kaskida
• • Angola
  • Titania and Urano
• • TNK-BP
  • Uvat area

Access

• •Oman
• •Pakistan
• •India
• •Gulf of Mexico lease sale

Reserves replacement for subsidiaries + associates, excludes the effects of acquisitions & divestments, SEC basis

Major projects 2006 key start ups

• • Azerbaijan BTC Pipeline / East Azeri
• • Algeria
  • In Amenas
• • Trinidad
  • Cannonball
• • Egypt Temsah Redevelopment
• • Angola −Dalia

Major projects 2007 key start ups

• • Angola
  • Greater Plutonio
  • Rosa
  • −Kizomba A Phase 2
• • Gulf of Mexico
  • Atlantis
  • King Subsea
• • Trinidad
  • Red Mango
• • North America Gas
  • −San Juan Coal Bed Methane expansion

Existing Profit Centres Alaska, North Sea, North America Gas, Latin America, Egypt, Middle East

•Production lower than forecast in Alaska and North Sea

• Increased levels of downtime
• Reduced operational efficiency
• Infill drilling activity slippage -tight supply chain
• • Resource base strong -reservoirs performing as expected
• • Other EPCs strong performance
  • North America Gas
  • −Pan American Energy
  • −Egypt

Bob Dudley

President and CEO TNK-BP

TNK–BP

The strategy remains unchanged

Resources to Reserves to Production

• •Production growth of 30% since 2003
• •Licence extensions
• •New Resource Access of 5 Bn boe risked, 60% Exploration Success rate

Margin Enhancement

• •$600m Ryazan Modernization, Increased Refining throughputs > 15%
• • Retail Expansion, TNK re -branding and BP Ultimate launch
• •Marketing business growth (Lubes, Bitumen)

Gas

• •Associated Gas Utilization Programme
• •Foundation of major gas projects

TNK–BP production and capex 2003 –2007

TNK-BP projection for 2007

Major projects and new access

Underpinning the future

• • The four promises made in February 2003:
  • Production Growth
  • Technology Transfer
  • Corporate Governance
  • Good Corporate Citizen of Russia
• • Organisational Capability – building a world -class company

Tony Hayward

Group Chief Executive Designate

E&P investment: 2004 –2007

2006 Capex excludes Rosneft BP projection for 2007 TNK-BP and PAE are self-funding

Margin pressures

• Inflationary pressure on operating costs partly mitigated by

• −Supply chain management
• Focussing activity on the most material opportunities
• •Government take increasing

•Rising depreciation per barrel

1Reported production associated with assets divested between 2001 and 2006 inclusive

2Retained - 1/1/07 Portfolio

Production outlook

Guidance impacted by:

• •Focus on safety and operational efficiency
• • PSC entitlements -$40/bbl to $60/bbl price assumption
• •2006 divestments
• •Gulf of Mexico project delays
• • TNK-BP project phasing
• • Conservatism
  • Greater allowance for unplanned downtime
  • −Operational efficiency
  • Unexpected events
  • −Activity deferred to increase value

Production guidance

Guidance based on current portfolio at $60/barrel:

2007

3.8 -3.9 mmboedEffectively flat vs 2006 after allowing for divestment impact

By 2009 More than 4.0 mmboed

By 2012 More than 4.3 mmboed

Reserve base strong : portfolio lengthening : sustainable growth

BP estimates for 2007, 2009 and 2012

Resource growth & progression 2002 –2006

Totals in billion boeProved reserves SEC basis

•Recovery to date: 19%

•Proved reserves: 28%

•

12 years of current production

Today's non -proved recovery limit: 49%

• Additional 29 years of current production
• •The future: 1% improvement = 2 billion boe

E&P –a sustainable future

• • Focussed and successful exploration and access strategy
• • 13 year track record of 100%+ reserves replacement continues*
• • Sustainable growth
  • More than 4.3 mmboed by 2012
• •Strong and growing resource base
• • Challenges : Alaska and North Sea operational performance, major project delays, margin pressure as a result of cost inflation, rising depreciation and government take
• •Response: Discipline, focus & technology

* SEC basis, 5 year moving average BP estimates for 2012

John Manzoni

Chief Executive, Refining & Marketing

R&M: Key messages

•Focus on safety and integrity

• •Improvement from 2006
• •Disciplined execution of strategy

Baker Panel

•Implement panel recommendations

• Recommendations in line with actions already underway; more to do

• BP committed to becoming an industry leader in process safety

• Integrity spend in US refineries increased from $1.2bn (2005) to $1.7bn per year (2007-10)

BP estimates for 2007-2010

BP estimates for 2007-2008

BP estimates for 2007-2008

Marketing: Cost efficiency

BP estimates for 2007

R&M: Key messages

•Focus on safety and integrity

• •Improvement from 2006
• •Disciplined execution of strategy

John Browne

Group Chief Executive

Gas, Power & Renewables

• •Gas remains an important part of the portfolio
• •Growing LNG marketing and trading business
• •Second largest gas producers among IOCs
• •World's largest marketer and trader among IOCs
• •Wind capacity 450 MW by end 2007
• •Solar capacity 300 MW by end 2007

BP estimates for 2007

Investment

$bn	2005	2006	2007e
Capital expenditure	13.9	$15.9*$	~18
Exploration & Production	10.1	$12.1*$	$\sim$ 13
Refining & Marketing	2.8	3.1	$\sim$ 4
Gas, Power, Renewables & Other	$1.0^{\circ}$	0.7	$\sim$ 1

Organic capex only *Excludes $1bn investment in Rosneft IPO BP estimates for 2007

Historical dividend

Dividends as paid basis

Impact of share buyback programme 2006 vs. 2001

	Ablhttesougrow%()	Phhteaersrgrow-%()
Rltepacemencosfitpro	t631	915
Chfasomritoperaons	61	80
Diiddenv	95	97
Pditroucon	15	29

2007 guidance

•Production

• 3.8 3.9 mmboed assuming $60/bbl oil price and current portfolio
• • Organic capex
  • Around $18bn
• • Total Group costs
  • Expected to grow in line with sector inflation
• • Distribution policy unchanged
  • Distribute 100% of all excess free cash flow to shareholders

BP estimates

Summary

• •Priorities: safety and performance
• •High-quality asset base
• •Acting on lessons learned from 2005-06

•Robust and unchanged financial framework

Questions & answers

London

John BrowneGroup Chief Executive

Byron Grote Chief Financial Officer

Tony Hayward Group Chief Executive Designate

Bob Dudley Chief Executive Officer TNK-BP

John Manzoni Chief Executive R&M

Vivienne CoxChief Executive GP&R

New York

Bob MaloneChairman & President, BP America Inc.

David AllenGroup Managing Director & Chief of Staff

Iain ConnGroup Managing Director

Andy Inglis Chief Executive E&P