BP PLC — Earnings Release 2005

Jul 5, 2005

News Details

Ad-hoc | 5 July 2005 08:40

BP p.l.c.: BP 2Q05 Trading Update (Part 2 of 2)

Ad hoc announcement §15 WpHG – Part 2 BP p.l.c.: BP 2Q05 Trading Update (Part 2 of 2) Ad hoc announcement processed and transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— BP Second Quarter 2005 Trading Update (Part 2/2) Olefins and Derivatives Olefins and Derivatives margins weakened from the strong levels of 1Q’05, but have been partly offset by improved European refining margins. Overall volumes are expected to be higher compared to 1Q’05, reflecting the successful start- ups of the SECCO Joint Venture in China (BP 50 per cent) and an olefins unit in North America. Results for Olefins and Derivatives are now reported in Other Businesses and Corporate, but are also described separately in supplemental disclosures in our Stock Exchange Announcement. Consolidation Adjustment The consolidation adjustment, previously included in the E&P segment results, and 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 be negligible in 2Q’05. Identified Non-Operating Items (NOIs) On March 23, 2005, an explosion and fire occurred in the Isomerisation Unit of the BP Texas City refinery. A charge for claims arising from the incident is expected to be included in the 2Q’05 results. Other non-operating items in 2Q’05 are expected to amount to a total charge of around $500m, principally due to the mark to market of embedded derivatives. Interest Expense The total consolidated interest charge is expected to be slightly lower than in 1Q’05., due principally to the absence of a 1Q’05 charge related to BP’s decision to terminate certain financing leases related to Innovene assets. Tax Rate The effective tax rate for the quarter is expected to be around 32 per cent, similar to the prior quarter. Gearing Gearing for the quarter is expected to be 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 203 million shares for a total consideration of $2.1bn. Shares outstanding at June 29 2005, excluding treasury shares, were 21,179 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 July 1. The 2Q’05 dividend of 8.5 cents per share announced at the time of our 1Q’05 results was paid in June. The dividend to be paid in 3Q’05 will be announced on July 26 in conjunction with our 2Q’05 Stock Exchange Announcement. Rules of Thumb As indicated in BP’s quarterly results presentation and strategy update on February 8, 2005, the following rules of thumb can be used to estimate the impact of changes in the trading environment on BP’s 2004 full year pre-tax results. The rules of thumb relating to oil and gas price movements reflect prices broadly comparable to those of today. They have been revised to reflect the 2005 reporting and accounting changes. These rules of thumb are approximate. 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, 13 per cent 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 Full Year Oil Price – Brent +/- $1/bbl $500m Gas – Henry Hub +/- $ 0.10/mcf $100m Refining – GIM +/- $ 1/bbl $1100m End Part 2/2 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 05.07.2005 050840 Jul 05