BP PLC — Earnings Release 2006

Jan 9, 2007

News Details

Ad-hoc | 9 January 2007 10:47

BP Fourth Quarter 2006 Trading Update

BP p.l.c. / Miscellaneous

Ad hoc announcement according to § 15 WpHG transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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January 9, 2007

BP Fourth Quarter 2006 Trading Update

This trading update is aimed at providing estimates regarding revenue and
trading conditions experienced by BP in the fourth quarter ending December
31, 2006. The fourth 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 February 6, 2007. In particular,
data is not available at this time that would allow quantification of
potential IFRS fair value accounting gains or charges, or of any potential
consolidation adjustment. 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.

Exploration and Production

Marker Prices 4Q’05 1Q’06 2Q’06 3Q’06 4Q’06
Brent Dated ($/bbl) 56.87 61.79 69.59 69.60 59.60
WTI ($/bbl) 60.01 63.29 70.46 70.44 59.90
ANS USWC ($/bbl) 57.89 60.89 68.84 69.02 55.47
US gas Henry Hub 13.00 9.01 6.80 6.58 6.56
first of month index
($/mmbtu)
UK gas price - 65.30 70.00 34.55 33.72 29.92
National Balance
Point (p/therm)
Urals (NWE – cif) 53.23 58.15 64.73 65.90 56.06
($/bbl)
Russian domestic oil 31.73 35.27 36.18 39.83 26.49
($/bbl)

Overall BP production in 4Q’06 is expected to be around 3,820 thousand
barrels of oil equivalent per day (mboed). Excluding volumes from TNK-BP
operations, production in 4Q’06 is expected to be around 2,890 mboed,
slightly higher than in 3Q’06. The recovery from the summer maintenance
season (primarily in the North Sea and Alaska) and continued ramp up of new
projects in Azerbaijan and North Africa is expected to be partly offset by
weather related delays to Alaskan loadings, unusually low seasonal gas
demand, OPEC quota restrictions, and reduced entitlements under Production
Sharing Contracts. BP’s net share of production from TNK-BP is expected to
be approximately 930 mboed, versus 948 mboed in 3Q’06, with the reduction
reflecting the impact of divestments. Relative to 3Q’06, the TNK-BP result
is expected to be adversely affected by an incremental tax lag of around
$300m, and the absence in 4Q’06 of the gain on divestment which amounted to
around $0.9bn in 3Q’06.

Refining and Marketing

$/bbl 4Q’05 1Q’06 2Q’06 3Q’06 4Q’06
USA
- West Coast 8.90 11.22 21.27 12.30 14.59
- Gulf Coast 11.64 10.86 17.74 11.47 7.92
- Midwest 7.91 4.89 14.75 11.50 5.42
North West Europe 5.51 2.88 5.78 4.54 2.49
Singapore 4.42 3.54 6.83 3.58 2.95
Refining Global 7.60 6.28 12.59 8.40 6.30
Indicator Margin*

* 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 configurations, crude slate and
operating practices.

The fourth quarter’s Global Indicator Margin (GIM) was lower than in both
3Q’06 and 4Q’05. Marketing margins are also expected to be significantly
lower than in both 3Q’06 and 4Q’05. The costs of turnaround activity are
expected to be higher than in either of such prior periods. A significant
negative impact related to IFRS fair value accounting is expected in 4Q’06,
compared to a significant positive impact in 3Q’06. The aggregate impact of
IFRS fair value accounting on the full year 2006 results is not expected to
be material.

Gas, Power and Renewables

GP&R margins for the quarter are expected to be significantly lower than
3Q’06, due to weaker NGL, gas and power trading margins. Lower margins are
expected to be largely offset by a positive impact related to IFRS fair
value accounting. The aggregate impact of IFRS fair value accounting on the
full year 2006 results is not expected to be material.

Other Businesses and Corporate

The 4Q’06 charge in Other Businesses and Corporate is expected to be in
line with guidance given in our February 2006 Strategy Presentation for an
annual charge of $900m +/- $200m.

Identified Non-Operating Items (NOIs)

Aggregate non-operating items in 4Q’06 are expected to amount to a small
gain.

Interest Expense

The total consolidated interest charge is expected to be around $150m.

Tax Rate

The effective tax rate for the quarter is expected to be around 25 per
cent, reflecting a number of favourable 4Q items.

Gearing

Gearing for the quarter is expected to be around 21 per cent, an increase
from the 3Q’06 level of 17 per cent due to the phasing of tax payments and
normal seasonal working capital movements.

Distributions to Shareholders

During the quarter the company bought back 310 million shares for a total
consideration of $3.5bn. Shares outstanding at December 29, 2006, excluding
treasury shares, were 19,510 million. As in previous quarters, BP has
entered into an arrangement that allows the share buy back programme to be
continued during the closed period which commenced on December 31. The
4Q’06 dividend of 9.825 cents per share announced at the time of our 3Q’06
results was paid in December. The dividend to be paid in 1Q’07 will be
announced on February 6, in conjunction with our 4Q’06 Stock Exchange
Announcement.

Rules of Thumb

Important note: The rules of thumb shown below were provided with BP’s
strategy update on February 7, 2006 and were intended to give directional
indicators of the impact of changes in the trading environment relative to
that of 2005 on BP’s 2006 full year pre-tax results. These rules of thumb
are approximate. Especially over short periods, changes in prices, margins,
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 realised 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. 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.

2006 Operating Environment Rules of Thumb: impact on replacement cost
pre-tax operating profit per year of changes relative to 2005 environment

                                       Full Year

Oil Price – Brent +/- $1/bbl $500m
Gas – Henry Hub +/- $ 0.10/mcf $80m
Refining – GIM +/- $ 1/bbl $950m

This trading update contains forward looking statements, particularly those
regarding oil and gas production; BP’s net share of production from TNK-BP;
refining and marketing margins; margins in the GP&R business; the charge in
Other Businesses & Corporate; the amount of non-operating items; the total
consolidated interest charge; the effective tax rate; and gearing. 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 trading update and
in BP Annual Report and Accounts 2005.

– ENDS –

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DGAP 09.01.2007

Language: English
Issuer: BP p.l.c.
1 St James's Square
SW1Y 4PD London Großbritannien
Phone: +44 (0) 207-496-4000
Fax: +44 (0) 207-496-4570
E-mail: ir@bp.com
WWW: www.bp.com
ISIN: GB0007980591
WKN: 850517
Indices:
Listed: Amtlicher Markt in SWX; Freiverkehr in Berlin-Bremen,
Stuttgart, München, Hamburg, Düsseldorf; Open Market in
Frankfurt

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