Fourth Quarter and Full Year 2013 Results (Stock Exchange Announcement)

Release date: 04 February 2014
Fourth quarter and full year 2013
Fourth quarter 2012 Third quarter 2013 Fourth quarter 2013

$ million
Year 2013 Year 2012
1,488 3,504 1,042 Profit for the period(a) 23,451 11,017
521 (326) 465 Inventory holding (gains) losses, net of tax 230 411
2,009 3,178 1,507 Replacement cost profit(b) 23,681 11,428
1,843 514 1,302 Net (favourable) unfavourable impact of non-operating items and fair value accounting effects, net of tax(c) (10,253) 5,643
3,852 3,692 2,809 Underlying replacement cost profit(b)
13,428 17,071

10.53
0.63


20.19
1.21

16.84
1.01


19.57
1.17

8.06
0.48


15.02
0.90
Replacement cost profit
per ordinary share (cents)
per ADS (dollars)

Underlying replacement cost profit
per ordinary share (cents)
per ADS (dollars)

125.08
7.50


70.92
4.26

60.05
3.60


89.70
5.38
  • BP’s fourth-quarter replacement cost (RC) profit was $1,507 million, compared with $2,009 million for the same period in 2012. After adjusting for a net charge for non-operating items of $1,003 million and net unfavourable fair value accounting effects of $299 million (both on a post-tax basis), underlying RC profit for the fourth quarter was $2,809 million, compared with $3,852 million for the same period in 2012 with the reduction mainly arising due to lower profits in Upstream and Downstream which were partially offset by higher earnings from Rosneft compared with the earnings we reported for TNK-BP in the equivalent quarter of 2012(d). For the full year, RC profit was $23,681 million, compared with $11,428 million in 2012. After adjusting for a net gain for non-operating items of $10,533 million and net unfavourable fair value accounting effects of $280 million (both on a post-tax basis), underlying RC profit for the full year was $13,428 million, compared with $17,071 million for 2012. RC profit or loss for the group, underlying RC profit or loss and fair value accounting effects are non-GAAP measures and further information is provided on pages 3, 19 and 21.
  • All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net adverse impact on a pre-tax basis of $189 million for the quarter and $469 million for the full year. For further information on the Gulf of Mexico oil spill and its consequences, including information on utilization of the Deepwater Horizon Oil Spill Trust fund, see page 12 and Note 2 on pages 25 – 31. Information on the Gulf of Mexico oil spill is also included in Legal proceedings on pages 35 – 37.
  • Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the quarter and full year was $5.4 billion and $21.1 billion respectively, compared with $6.4 billion and $20.5 billion in the same periods of 2012. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the fourth quarter and full year was $5.3 billion and $21.2 billion respectively, compared with $5.8 billion and $22.9 billion in the same periods of 2012. We expect to see net cash provided by operating activities of between $30 billion and $31 billion in 2014(e), consistent with the cash flow objectives we set in 2011 as part of our 10-point plan.
  • Net debt at the end of the quarter was $25.2 billion, compared with $27.5 billion at the end of 2012. The ratio of net debt to net debt plus equity at the end of the quarter was 16.2% compared with 18.7% at the end of 2012. We will continue to target a net debt ratio in the 10-20% range, while uncertainties remain. Net debt and the ratio of net debt to net debt plus equity are non-GAAP measures. See page 4 for more information.
  • The reserves replacement ratio on a combined basis of subsidiaries and equity-accounted entities, was 129%(f) for the year, excluding the impact of acquisitions and disposals. Including the net growth in our Russian portfolio as a result of the change in our holdings, the reserves replacement ratio on a combined basis was 199%.
  • BP today announced a quarterly dividend of 9.5 cents per ordinary share ($0.57 per ADS), which is expected to be paid on 28 March 2014. The corresponding amount in sterling will be announced on 17 March 2014. See page 4 for further information.
  • Total capital expenditure for the fourth quarter was $7.2 billion, of which organic capital expenditure(g) was $7.1 billion. For the full year, total capital expenditure was $36.6 billion (including the Rosneft transaction), of which organic capital expenditure was $24.6 billion. In 2014, we expect organic capital expenditure to be around $24 billion to $25 billion. Disposal proceeds received in cash were $0.4 billion for the quarter and $22.0 billion for the full year. In October 2013, BP announced plans to divest a further $10 billion of assets before the end of 2015. BP has agreed around $1.7 billion of such further divestments to date.
  • The effective tax rate (ETR) on RC profit for the fourth quarter was 15% compared with 49% for the same period in 2012. For the full year the ETR on RC profit was 21% compared with 38% in 2012. Adjusting for non-operating items and fair value accounting effects, the underlying ETR in the fourth quarter was 24% compared with 16% for the same period in 2012. The underlying ETR was higher in the fourth quarter of 2013 mainly due to the absence of a number of one-off items which reduced the ETR in the fourth quarter of 2012. For the full year the underlying ETR was 35% compared with 30% in 2012, the underlying ETR was higher in 2013 mainly due to foreign exchange effects on deferred tax. For 2014 the underlying ETR is expected to be around 35%.
  • Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $378 million for the fourth quarter, compared with $467 million for the same period in 2012. For the full year, the respective amounts were $1,548 million and $1,638 million.
  • As at 31 December 2013, BP had bought back 753 million shares for a total amount of $5.5 billion, including fees and stamp duty, since the announcement on 22 March 2013 of a share repurchase programme with a total value of up to $8 billion expected to be fulfilled over 12 – 18 months from the date of the announcement.
  • Total production for the fourth quarter, including Rosneft, was 3.2 million barrels of oil equivalent per day. BP’s share of Rosneft production in the fourth quarter was 985 thousand barrels of oil equivalent per day.
  • The charge for depreciation, depletion and amortization was $13.5 billion in 2013 and we expect this to be around $1 billion higher in 2014. The expected increase reflects the expected ramp-up of production from new upstream projects, as well as the full-year impact of the Whiting refinery modernization project.

(a) Profit attributable to BP shareholders.
(b)
See page 3 for definitions of RC profit and underlying RC profit.
(c)
See pages 20 and 21 respectively for further information on non-operating items and fair value accounting effects.
(d)
Fourth quarter 2012 included 21 days of earnings for TNK-BP, for the period 1 October to 21 October, at which point equity accounting for TNK-BP ceased as it was classified as held for sale.
(e)
Assumes $100/bbl oil and $5/mmBtu Henry Hub gas. The projection includes BP’s estimate of the Rosneft dividend and the impact of payments in respect of federal criminal and securities claims with the US government and Securities and Exchange Commission where settlements have already been reached, but does not reflect any cash flows relating to other liabilities, contingent liabilities, settlements or contingent assets arising from the Gulf of Mexico oil spill, which may or may not arise at that time.
(f)
Includes BP’s share of TNK-BP’s production and reserves additions from 1 January 2013 to 20 March 2013, and BP’s share of Rosneft production and reserves additions from 21 March 2013 to 31 December 2013.
(g)
Organic capital expenditure excludes acquisitions, asset exchanges, and other inorganic capital expenditure. See page 18 for further information.

The commentaries above and on the above download are based on RC profit and should be read in conjunction with the cautionary statement.

Cautionary statement

Cautionary statement regarding forward-looking statements: The discussion in this results announcement contains certain forecasts, projections and forward-looking statements – that is, statements related to future, not past events – with respect to the financial condition, results of operation and businesses of BP and certain of the plans and objectives of BP with respect to these items. These statements may generally, but not always, be identified by the use of words such as ‘will’, ‘expects’, ‘is expected to’, ‘aims’, ‘should’, ‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’, ‘anticipates’, ‘plans’, ‘we see’ or similar expressions. In particular, among other statements, BP’s intentions in respect of its announced share repurchase programme, including the total value of shares expected to be purchased in connection therewith and programme timing; the expected range of net cash that will be provided by operating activities in 2014; BP’s target net debt ratio; the expected organic capital expenditures for 2014; BP’s plans to divest a further $10 billion of assets before the end of 2015; the expected underlying effective tax rate for 2014; the expected quarterly dividend payment and timing of the payment; the expected increase in the charge for depreciation, depletion and amortization in 2014; the expected ramp-up of production from new upstream projects; the expected level of reported production in the first quarter of 2014 and the impact of the expiry of the Abu Dhabi onshore concession and divestments on the expected level of reported production in the first quarter of 2014; the expected level of reported and underlying production for the full year 2014; the expected timing for satisfaction of conditions precedent to completion of BP’s planned purchase of an additional 3.3% equity stake in Shah Deniz and the South Caucasus Pipeline from Statoil; the expected timing for completion of the sale of the specialist global aviation turbine oils business; BP’s expectations regarding the improvement of refining margins and the challenging conditions in the fuels and petrochemicals environments in 2014; the expected increase in exposure to heavy crude differentials in the US due to the ramp-up of heavy crude processing at Whiting refinery; the expected range for Other businesses and corporate average quarterly charges in 2014; and certain statements regarding the legal and trial proceedings, court decisions, potential investigations and civil actions by regulators, government entities and/or other entities or parties, and the risks associated with such proceedings; are all forward looking in nature. By their nature, forward-looking statements involve risk and uncertainty 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 onstream; the timing and level of maintenance and/or turnaround activity; the nature, timing and volume of refinery additions and outages; the timing, quantum and nature of divestments; the receipt of relevant third-party and/or regulatory approvals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; economic and financial market conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; regulatory or legal actions including court decisions, the types of enforcement action pursued and the nature of remedies sought or imposed; the impact on our reputation following the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors, trading partners, creditors, rating agencies and others; decisions by Rosneft’s management and board of directors; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism, cyber-attacks or sabotage; and other factors discussed under “Principal risks and uncertainties” in our Form 6-K for the period ended 30 June 2013 and under “Risk factors” in BP Annual Report and Form 20-F 2012, each as filed with the US Securities and Exchange Commission.