BP PLC — Earnings Release 2005

Oct 4, 2005

News Details

Ad-hoc | 4 October 2005 09:29

BP p.l.c.: BP Third Quarter 2005 Trading Update part 2

Ad hoc announcement §15 WpHG – Part 2 BP Third Quarter 2005 Trading Update BP p.l.c.: BP Third Quarter 2005 Trading Update part 2 Ad hoc announcement processed and transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— part 2 of 2 Other Businesses and Corporate (including Olefins and Derivatives) Other Businesses and Corporate Other Business and Corporate results, excluding Olefins and Derivatives, are expected to be in line with guidance given in our February ’05 investor webcast for an annual charge of $900m +/- $200m, indicating an expected quarterly charge of around $175 – $275m in 2005. Olefins and Derivatives Olefins and Derivatives margins weakened from the levels of 2Q’05 due to feedstock costs rising faster than end product prices. Results for Olefins and Derivatives are reported in Other Businesses and Corporate, and will be described separately in supplemental disclosures in our Stock Exchange Announcement. Consolidation Adjustment The consolidation adjustment, which removes the margin on sales between segments (mainly sales of Alaskan crude oil to US West Coast refining and marketing operations), is expected to amount to a charge of around $300m. Identified Non-Operating Items (NOIs) Non-operating items in 3Q’05 are expected to amount to a total charge of around $500m, of which approximately $450m relates to the annual review of environmental and other provisions. Interest Expense The total consolidated interest charge is expected to be similar to 2Q’05 and a year ago. Tax Rate The effective tax rate for the quarter is expected to be between 32% and 33%, slightly above the level in the first half of the year. Gearing Gearing for the quarter is expected to remain slightly below the bottom end of our 20-30 per cent band for net debt to net debt plus equity, reflecting continued strong cash generation. Distributions to Shareholders During the quarter the company bought back 327 million shares for a total consideration of $3.7bn. Shares outstanding at September 28, 2005, excluding treasury shares and including the second issue of shares to AAR in respect of TNK-BP, were 20,984 million. As in previous quarters, BP has entered into an arrangement that allows it to continue the share buy back programme during the closed period commencing on October 3. The 3Q’05 dividend of 8.925 cents per share announced at the time of our 2Q’05 results was paid in September. The dividend to be paid in 4Q’05 will be announced on October 25 in conjunction with our 3Q’05 Stock Exchange Announcement. Rules of Thumb Important note: The rules of thumb shown below were provided with BP’s strategy update on February 8, 2005 and were intended to give directional indicators of the impact of changes in the trading environment relative to that of 2004 on BP’s 2005 full year pre-tax results. These rules of thumb are approximate. As prices and margins have deviated sharply from those seen in 2004, and volatility has increased, these rules of thumb have become less accurate in quantifying the impact of changes. Especially over short periods, changes in differentials, seasonal demand patterns, and other factors can be material. Particular differences may arise due to higher government shares of Exploration and Production revenues in some jurisdictions at current price levels, as well as from variations between the refining Global Indicator Margin (GIM) and BP’s realized refining margins due to crude price levels and differentials, product price movements and other factors. The GIM rule of thumb reflects the sensitivity to the overall group to changes in refining margins. Within the refining rule of thumb shown below, about 13% of the sensitivity shown relates to the refineries transferred to the Olefins and Derivatives business. Many other factors will affect BP’s earnings quarter by quarter. Actual results in individual quarters may therefore differ significantly from the estimates implied by the application of these rules of thumb. 2005 Operating Environment Rules of Thumb: impact on operating profit per year of changes relative to 2004 environment Full Year Oil Price – Brent +/- $1/bbl $500m Gas – Henry Hub +/- $ 0.10/mcf $100m Refining – GIM +/- $ 1/bbl $1100m -ENDS- end of part 2 BP p.l.c. 1 St James’s Square London, SW1Y 4PD United Kingdom ISIN: GB0007980591 WKN: 850517 Listed: Amtlicher Markt in Düsseldorf (Dt. Zertifikate DE0008618737), Frankfurt (General Standard) und Hamburg; Freiverkehr in Berlin-Bremen, Hamburg, Hannover, München und Stuttgart End of ad hoc announcement (c)DGAP 04.10.2005 040929 Okt 05