BP PLC — Earnings Release 2005

Oct 4, 2005

News Details

Ad-hoc | 4 October 2005 09:27

BP p.l.c.: BP Third Quarter 2005 Trading Update part1

Ad hoc announcement §15 WpHG – Part 1 BP Third Quarter 2005 Trading Update BP p.l.c.: BP Third Quarter 2005 Trading Update part1 Ad hoc announcement processed and transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— part 1 of 2 October 4th, 2005 BP Third Quarter 2005 Trading Update This trading update is aimed at providing estimates regarding revenue and trading conditions experienced by BP in the third quarter ending September 30, 2005, and estimates of identified non-operating items expected to be included in that quarter’s result. The third quarter margin, price, realisation, cost, production and other data referred to below are currently provisional, some being drawn from figures applicable to the first month or so of the quarter. All such data are subject to change and may differ quite considerably from the final numbers that will be reported on October 25, 2005. This trading update is produced in order to provide greater disclosure to investors and potential investors of currently expected outcomes, and to ensure that they all receive equal access to the same information at the same time. Impact of Hurricanes Katrina and Rita The trading conditions experienced by BP in the third quarter of 2005 were significantly impacted by Hurricanes Katrina and Rita and their aftermath. These effects include profits foregone due to lost oil and gas production from the US Gulf of Mexico, where BP is a leading producer, as well as reduced refinery runs at BP’s Texas City refinery and reduced marketing margins as a result of the sharp rise in wholesale petroleum product prices following disruption to the US refining system. Additional costs were incurred due to facilities damage, clean up and repairs. Although it is not yet possible to exactly quantify these impacts, BP currently estimates that the impact of these factors on third quarter replacement cost profit before interest and tax will be in excess of $700m. Resources Business: Exploration and Production Marker Prices 3Q’04 4Q’04 1Q’05 2Q’05 3Q’05 Brent Dated ($/bbl) 41.54 43.85 47.62 51.63 61.63 WTI ($/bbl) 43.88 48.29 49.88 53.08 63.18 ANS USWC ($/bbl) 41.82 42.62 45.07 50.01 60.91 US gas Henry Hub first of month index ($/mmbtu) 5.75 7.07 6.27 6.74 8.53 UK gas price – National Balance Point (p/therm) 23.63 28.51 37.96 30.15 29.26 Urals (NWE – cif) ($/bbl) 37.23 37.75 42.54 48.08 57.13 Russian domestic Oil ($/bbl) 23.33 22.30 19.14 27.39 36.60 Overall BP production in 3Q’05 is expected to be lower than 2Q’05 reflecting the impact of Hurricanes Katrina and Rita (circa 145 thousand barrels of oil equivalent a day, mboed) in the Gulf of Mexico and the planned maintenance season (circa 160 mboed) primarily in the North Sea, which was approximately 45 mboed higher than the 3Q’04 level. These two locations represent some of our highest margin volumes. Excluding volumes from TNK-BP operations, production in 3Q is expected to be around 2,800 mboed. BP’s net share of production from TNK-BP is anticipated to be approximately 1,000 mboed. Adjusting for the impact of Hurricanes Katrina and Rita (with an expected full year impact of around 80 mboed) and the impact of higher prices on production sharing contracts (with an expected full year impact of around 50 mboed), BP’s average production for the year is expected to be in line with the range of 4,100 – 4,200 mboed indicated in our presentation of February 8, 2005. Relative to 2Q’05, liquids realisations have increased by less than the increase in marker prices as a result of widening differentials. In the US, gas basin differentials have widened significantly, and our estimated realisations have increased around $0.50/mcf, compared with a rise of around $1.80/mmbtu rise in the Henry Hub marker. Approximately $100m of additional costs were incurred in the quarter to secure and repair the Thunder Horse facility. Sector specific cost inflation continues to reflect the increasing strength in commodity prices. Refining and Marketing Refining Indicator Margins ($/bbl) 3Q’04 4Q’04 1Q’05 2Q’05 3Q’05 USA – West Coast 11.28 10.36 12.88 14.53 17.57 – Gulf Coast 6.99 5.52 7.30 9.37 17.12 – Midwest 5.01 1.65 3.84 7.45 13.40 North West Europe 4.37 4.72 2.84 5.68 7.78 Singapore 5.48 8.02 4.98 6.30 6.52 Refining Global Indicator Margin* ($/bbl.) 6.39 5.69 5.94 8.42 12.35 *The refining Global Indicator Margin (GIM) is a generic indicator. Actual margins realised by BP may vary significantly due to a variety of factors, including specific refinery configuration, crude slate and operating practices. The third quarter’s average refining Global Indicator Margin (GIM) was higher than in both 2Q’05 and 3Q’04. The rise in BP’s actual realised margins was around half the increase indicated by the GIM. This was due to actual yields differing from the generic industry yield structure reflected in the GIM calculation, and the impacts on refining availability of continuing Texas City plant shut downs and hurricane effects. Third quarter marketing and retail margins were down significantly on 2Q’05, with the overall marketing result expected to be negative. This was due to the sharp rise in wholesale product prices, which squeezed marketing margins. Gas, Power and Renewables Due to strong contributions from the gas marketing and NGL businesses, margins in the GP&R business are expected to be slightly higher than both 2Q’05 and 3Q’04. end of part 1 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 040927 Okt 05