bp201510276k.htm
SECURITIES AND EXCHANGE COMMISSION
 
 
 
Washington, D.C. 20549
 
 
 
 
 
Form 6-K
 
 
 
Report of Foreign Issuer
 
 
 
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 
 
 

 
for the period ended October, 2015


BP p.l.c.
(Translation of registrant's name into English)
 
 

1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
 
 

Indicate  by check mark  whether the  registrant  files or will file annual
reports under cover Form 20-F or Form 40-F.
 
 
Form 20-F        |X|          Form 40-F
     ---------------               ----------------
 
 

Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby  furnishing  the  information to the
Commission  pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
     1934.
 
 

Yes                            No        |X|
      ---------------           ----------------
 

 
 
 


BP p.l.c.
Group results
Third quarter and nine months 2015
 
Top of page 1
FOR IMMEDIATE RELEASE                                         London 27 October 2015
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
1,290
(5,823)
46
 
Profit (loss) for the period(a)
 
(3,175)
8,187
1,095
(443)
1,188
 
Inventory holding (gains) losses*, net of tax
 
246
855
2,385
(6,266)
1,234
 
Replacement cost profit (loss)*
 
(2,929)
9,042
       
Net (favourable) unfavourable impact of
     
       
  non-operating items* and
     
652
7,579
585
 
  fair value accounting effects*, net of tax
 
8,638
855
3,037
1,313
1,819
 
Underlying replacement cost profit*
 
5,709
9,897
       
Replacement cost profit (loss)
     
12.97
(34.25)
6.73
 
    per ordinary share (cents)
 
(16.01)
49.04
0.78
(2.05)
0.40
 
    per ADS (dollars)
 
(0.96)
2.94
       
Underlying replacement cost profit
     
16.51
7.17
9.92
 
    per ordinary share (cents)
 
31.18
53.67
0.99
0.43
0.60
 
    per ADS (dollars)
 
1.87
3.22

·   
BP’s third-quarter replacement cost (RC) profit was $1,234 million, compared with $2,385 million a year ago. After adjusting for a net charge for non-operating items of $756 million and net favourable fair value accounting effects of $171 million (both on a post-tax basis), underlying RC profit for the third quarter was $1,819 million, compared with $3,037 million for the same period in 2014. For the nine months, RC loss was $2,929 million, compared with a profit of $9,042 million a year ago. After adjusting for a net charge for non-operating items of $8,655 million and net favourable fair value accounting effects of $17 million (both on a post-tax basis), underlying RC profit for the nine months was $5,709 million, compared with $9,897 million for the same period in 2014. Non-operating items include a restructuring charge of $151 million for the quarter and $638 million for the nine months. Cumulative restructuring charges from the beginning of the fourth quarter 2014 are expected to total around $2.5 billion by the end of 2016. 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 and 28.

·   
All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $426 million for the third quarter and $11,513 million for the nine months. For further information on the Gulf of Mexico oil spill and its consequences see page 10 and Note 2 on page 16. See also Legal proceedings on page 32.

·   
Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the third quarter and nine months was $5.2 billion and $13.3 billion respectively, compared with $9.4 billion and $25.5 billion for the same periods in 2014. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the third quarter and nine months was $5.4 billion and $14.3 billion respectively, compared with $9.4 billion and $25.8 billion for the same periods in 2014.

·   
Net debt* at 30 September 2015 was $25.6 billion, compared with $22.4 billion a year ago. The net debt ratio* at 30 September 2015 was 20.0%, compared with 15.0% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 24 for more information.

·   
Total capital expenditure on an accruals basis for the third quarter was $4.3 billion, compared with $5.3 billion for the same period in 2014. For both periods almost all of the capital expenditure was organic*. For the nine months, total capital expenditure on an accruals basis was $13.4 billion, of which organic capital expenditure was $13.2 billion, compared with $17.0 billion for the same period in 2014, of which organic capital expenditure was $16.3 billion. See page 26 for further information. Our current plans are for organic capital expenditure to be in the range $17-19 billion per annum in the near term and closer to $19 billion for 2015.

·  
BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 18 December 2015. The corresponding amount in sterling will be announced on 7 December 2015. See page 23 for further information.

*
 
For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 30.
(a)
Profit attributable to BP shareholders.
 


The commentaries above and following should be read in conjunction with the cautionary statement on page 35.


Top of page 2
Group headlines (continued)
 

·  
In October 2013, BP announced plans to divest a further $10 billion of assets before the end of 2015, having completed its earlier divestment programme of $38 billion. Transactions to date have reached around $7.8 billion. Disposal proceeds were $0.3 billion for the third quarter and $2.6 billion for the nine months. The nine-months amount includes proceeds from our Toledo refinery partner, Husky Energy, in place of capital commitments relating to the original divestment transaction that have not been subsequently sanctioned.

·  
The effective tax rate (ETR) on RC profit or loss for the third quarter and nine months was 52% and 45% respectively compared with 42% and 35% for the same periods in 2014. Excluding the one-off deferred tax adjustment in the first quarter 2015 as a result of the reduction in the UK North Sea supplementary charge, the ETR for the nine months was 27%. Adjusting for non-operating items, fair value accounting effects and the first-quarter 2015 one-off deferred tax adjustment, the underlying ETR in the third quarter and nine months was 39% and 32% respectively, compared with 41% and 36% for the same periods in 2014. The underlying ETR for both periods is lower than a year ago mainly due to changes in the geographical mix of profits partly offset by foreign exchange effects from a stronger US dollar.

·  
Finance costs and net finance expense relating to pensions and other post-retirement benefits were a charge of $474 million for the third quarter, compared with $358 million for the same period in 2014. For the nine months, the respective amounts were $1,196 million and $1,081 million.


Top of page 3
Analysis of RC profit (loss) before interest and tax
and reconciliation to profit (loss) for the period
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
       
RC profit (loss) before interest and tax*
     
3,311
228
743
 
    Upstream
 
1,343
12,019
1,231
1,628
2,562
 
    Downstream
 
6,273
2,958
107
510
382
 
    Rosneft
 
1,075
1,649
(432)
(455)
(378)
 
    Other businesses and corporate
 
(1,141)
(1,363)
(33)
(10,747)
(311)
 
    Gulf of Mexico oil spill response(a)
 
(11,381)
(313)
370
(39)
67
 
    Consolidation adjustment – UPII*
 
(101)
384
4,554
(8,875)
3,065
 
RC profit (loss) before interest and tax
 
(3,932)
15,334
       
Finance costs and net finance expense relating
     
(358)
(364)
(474)
 
  to pensions and other post-retirement benefits
 
(1,196)
(1,081)
(1,777)
3,013
(1,347)
 
Taxation on a RC basis
 
2,298
(5,022)
(34)
(40)
(10)
 
Non-controlling interests
 
(99)
(189)
2,385
(6,266)
1,234
 
RC profit (loss) attributable to BP shareholders
 
(2,929)
9,042
(1,585)
627
(1,726)
 
Inventory holding gains (losses)
 
(343)
(1,225)
       
Taxation (charge) credit on inventory holding
     
490
(184)
538
 
  gains and losses
 
97
370
       
Profit (loss) for the period attributable to
     
1,290
(5,823)
46
 
  BP shareholders
 
(3,175)
8,187

(a)
See Note 2 on page 16 for further information on the accounting for the Gulf of Mexico oil spill response.


Analysis of underlying RC profit before interest and tax
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
       
Underlying RC profit before interest and tax*
     
3,899
494
823
 
    Upstream
 
1,921
12,955
1,484
1,867
2,302
 
    Downstream
 
6,327
3,228
110
510
382
 
    Rosneft
 
1,075
1,405
(293)
(401)
(231)
 
    Other businesses and corporate
 
(922)
(1,220)
370
(39)
67
 
    Consolidation adjustment - UPII
 
(101)
384
5,570
2,431
3,343
 
Underlying RC profit before interest and tax
 
8,300
16,752
       
Finance costs and net finance expense relating to
     
(348)
(356)
(359)
 
  pensions and other post-retirement benefits
 
(1,064)
(1,052)
(2,151)
(722)
(1,155)
 
Taxation on an underlying RC basis
 
(1,428)
(5,614)
(34)
(40)
(10)
 
Non-controlling interests
 
(99)
(189)
3,037
1,313
1,819
 
Underlying RC profit attributable to BP shareholders
 
5,709
9,897

Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 4-9 for the segments.


Top of page 4
Upstream
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
3,312
225
716
 
Profit before interest and tax
 
1,331
12,013
(1)
3
27
 
Inventory holding (gains) losses*
 
12
6
3,311
228
743
 
RC profit before interest and tax
 
1,343
12,019
       
Net (favourable) unfavourable impact of
     
       
  non-operating items* and
     
588
266
80
 
  fair value accounting effects*
 
578
936
3,899
494
823
 
Underlying RC profit before interest and tax*(a)
 
1,921
12,955

(a)
See page 5 for a reconciliation to segment RC profit before interest and tax by region.

Financial results

The replacement cost profit before interest and tax for the third quarter and nine months was $743 million and $1,343 million respectively, compared with $3,311 million and $12,019 million for the same periods in 2014. The third quarter and nine months included a net non-operating charge of $118 million and $596 million respectively, compared with a net non-operating charge of $501 million and $741 million for the same periods a year ago. Fair value accounting effects in the third quarter and nine months had favourable impacts of $38 million and $18 million respectively, compared with unfavourable impacts of $87 million and $195 million in the same periods of 2014.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $823 million and $1,921 million respectively, compared with $3,899 million and $12,955 million for the same periods in 2014. The result for the third quarter reflected significantly lower liquids and gas realizations partly offset by lower costs, including the benefits from simplification and efficiency activities, and strong gas marketing and trading results. The result for the nine months reflected significantly lower liquids and gas realizations partly offset by lower costs and increased production. Costs were lower reflecting benefits from simplification and efficiency activities and lower exploration write-offs partly offset by rig cancellation costs.

Production

Production for the quarter was 2,242mboe/d, 4.4% higher than the third quarter of 2014. Underlying production* for the quarter decreased by 2.2%, mainly due to higher seasonal turnaround activity. For the nine months, production was 2,220mboe/d, 4.3% higher than in the same period of 2014. Underlying production for the nine months was flat versus 2014.

Key events

In July, BP was awarded five new blocks in the North Sea as part of the second tranche of the 28th licensing round by the UK Oil and Gas Authority. BP has been awarded 12 licences to date in this licensing round.

On 31 August, Maersk Oil announced approval by the UK Oil and Gas Authority of development plans for the Culzean field in the UK North Sea. Culzean is operated by Maersk Oil on behalf of its partners, JX Nippon and BP (16%).

In October, BP was provisionally awarded three blocks in the shallow waters of the Mediterranean Sea in Egypt, subject to government approval.

Also in October, the Western Flank A project (BP 17%) in offshore Western Australia, began production. The project is operated by Woodside.

Outlook

Third-quarter production benefited from the absence of seasonal adverse weather in the Gulf of Mexico. We expect fourth-quarter 2015 reported production to be slightly higher than the third quarter mainly reflecting recovery from planned seasonal turnaround activity.





The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35.



Top of page 5
Upstream
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
       
Underlying RC profit (loss) before interest and tax
     
1,181
(66)
(152)
 
US
 
(763)
3,331
2,718
560
975
 
Non-US
 
2,684
9,624
3,899
494
823
     
1,921
12,955
       
Non-operating items
     
125
(135)
(139)
 
US
 
(342)
(6)
(626)
(101)
21
 
Non-US(a)
 
(254)
(735)
(501)
(236)
(118)
     
(596)
(741)
       
Fair value accounting effects
     
(49)
(55)
26
 
US
 
(32)
(129)
(38)
25
12
 
Non-US
 
50
(66)
(87)
(30)
38
     
18
(195)
       
RC profit (loss) before interest and tax
     
1,257
(256)
(265)
 
US
 
(1,137)
3,196
2,054
484
1,008
 
Non-US
 
2,480
8,823
3,311
228
743
     
1,343
12,019
       
Exploration expense
     
142
194
61
 
US(b)
 
333
869
698
708
295
 
Non-US(a)(c)
 
1,097
1,308
840
902
356
     
1,430
2,177
       
Production (net of royalties)(d)
     
       
Liquids* (mb/d)
     
410
334
390
 
US
 
372
412
91
147
94
 
Europe
 
118
96
605
631
747
 
Rest of World
 
710
583
1,106
1,111
1,231
     
1,200
1,091
       
Natural gas (mmcf/d)
     
1,546
1,477
1,569
 
US
 
1,521
1,517
164
281
232
 
Europe
 
259
176
4,328
4,046
4,062
 
Rest of World
 
4,138
4,321
6,038
5,805
5,864
     
5,918
6,014
       
Total hydrocarbons* (mboe/d)
     
676
588
661
 
US
 
634
673
119
196
135
 
Europe
 
163
127
1,352
1,328
1,447
 
Rest of World
 
1,424
1,328
2,147
2,112
2,242
     
2,220
2,128
       
Average realizations(e)
     
91.42
56.69
44.01
 
Total liquids ($/bbl)
 
48.87
95.09
5.40
3.80
3.49
 
Natural gas ($/mcf)
 
3.91
5.75
61.61
40.04
33.25
 
Total hydrocarbons ($/boe)
 
36.68
64.19

(a)
Third quarter and nine months 2014 include a $375-million write-off relating to Block KG D6 in India. This is classified in the ‘other’ category of non-operating items. In addition, an impairment charge of $395 million was also recorded in relation to this block. See
page 27.
(b)
Third quarter and nine months 2014 include write-offs of $23 million and $544 million respectively, relating to the Utica shale acreage in Ohio, following the decision not to proceed with development plans.
(c)
Second quarter and nine months 2015 include a $432-million write-off in Libya. BP has declared force majeure in Libya and there is significant uncertainty on when drilling operations might be able to proceed.
(d)
Includes BP’s share of production of equity-accounted entities in the Upstream segment.
(e)
Based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.
 
Because of rounding, some totals may not agree exactly with the sum of their component parts.


Top of page 6
Downstream
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
(335)
2,234
875
 
Profit (loss) before interest and tax
 
5,892
1,702
1,566
(606)
1,687
 
Inventory holding (gains) losses*
 
381
1,256
1,231
1,628
2,562
 
RC profit before interest and tax
 
6,273
2,958
       
Net (favourable) unfavourable impact of
     
       
  non-operating items* and
     
253
239
(260)
 
  fair value accounting effects*
 
54
270
1,484
1,867
2,302
 
Underlying RC profit before interest and tax*(a)
 
6,327
3,228

(a)
See page 7 for a reconciliation to segment RC profit before interest and tax by region and by business.

Financial results

The replacement cost profit before interest and tax for the third quarter and nine months was $2,562 million and $6,273 million respectively, compared with $1,231 million and $2,958 million for the same periods in 2014.  

The 2015 results include a net non-operating gain of $43 million for the third quarter and a net non-operating charge of $42 million for the nine months, compared with net non-operating charges of $552 million and $780 million for the same periods in 2014 (see pages 7 and 27 for further information on non-operating items). Fair value accounting effects had favourable impacts of $217 million for the third quarter and unfavourable impacts of $12 million for the nine months, compared with favourable impacts of $299 million and $510 million in the same periods of 2014.  

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $2,302 million and $6,327 million respectively, compared with $1,484 million and $3,228 million for the same periods in 2014.

Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 7.

Fuels business

The fuels business reported an underlying replacement cost profit before interest and tax of $1,917 million for the third quarter and $5,107 million for the nine months, compared with $1,078 million and $2,294 million for the same periods in 2014. The results for the quarter and nine months reflect an improved refining environment and strong refining operations, benefits from our simplification and efficiency programmes leading to lower costs and strong fuels marketing performance reflecting retail volume and margin growth. The nine-months result also reflects a higher contribution from supply and trading in the first half.   

Lubricants business

The lubricants business reported an underlying replacement cost profit before interest and tax of $348 million in the third quarter and $1,090 million in the nine months, compared with $336 million and $958 million in the same periods last year. The results for the quarter and nine months reflect strong performance in growth markets and premium brands despite adverse foreign exchange impacts, and the benefits from our simplification and efficiency programmes leading to lower costs.  

Petrochemicals business

The petrochemicals business reported an underlying replacement cost profit before interest and tax of $37 million in the third quarter and $130 million in the nine months, compared with a profit of $70 million and a loss of $24 million in the same periods last year. The result for the quarter was impacted by a weaker environment and the results for the quarter and nine months reflect lower costs from simplification and efficiency programmes and improved operational performance.

Outlook

Looking forward to the fourth quarter, we expect reduced refining margins and lower seasonal demand to adversely impact fuels margins and volumes compared with the third quarter.



The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 35.


Top of page 7
Downstream
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
       
Underlying RC profit before interest and tax - 
     
       
  by region
     
603
576
885
 
US
 
2,122
1,346
881
1,291
1,417
 
Non-US
 
4,205
1,882
1,484
1,867
2,302
     
6,327
3,228
       
Non-operating items
     
(181)
63
51
 
US
 
110
(2)
(371)
(185)
(8)
 
Non-US
 
(152)
(778)
(552)
(122)
43
     
(42)
(780)
       
Fair value accounting effects
     
238
(48)
153
 
US
 
(22)
535
61
(69)
64
 
Non-US
 
10
(25)
299
(117)
217
     
(12)
510
       
RC profit before interest and tax
     
660
591
1,089
 
US
 
2,210
1,879
571
1,037
1,473
 
Non-US
 
4,063
1,079
1,231
1,628
2,562
     
6,273
2,958
       
Underlying RC profit (loss) before interest
     
       
  and tax - by business(a)(b)
     
1,078
1,394
1,917
 
Fuels
 
5,107
2,294
336
397
348
 
Lubricants
 
1,090
958
70
76
37
 
Petrochemicals
 
130
(24)
1,484
1,867
2,302
     
6,327
3,228
       
Non-operating items and fair value accounting
     
       
  effects(c)
     
196
(152)
295
 
Fuels
 
83
(6)
(5)
(87)
(25)
 
Lubricants
 
(126)
181
(444)
(10)
 
Petrochemicals
 
(11)
(445)
(253)
(239)
260
     
(54)
(270)
       
RC profit (loss) before interest and tax(a)(b)
     
1,274
1,242
2,212
 
Fuels
 
5,190
2,288
331
310
323
 
Lubricants
 
964
1,139
(374)
76
27
 
Petrochemicals
 
119
(469)
1,231
1,628
2,562
     
6,273
2,958
               
15.6
19.4
20.0
 
BP average refining marker margin (RMM)* ($/bbl)
 
18.2
14.8
       
Refinery throughputs (mb/d)
     
651
622
681
 
US
 
642
636
766
810
785
 
Europe
 
800
774
312
224
230
 
Rest of World
 
259
290
1,729
1,656
1,696
     
1,701
1,700
94.8
94.0
94.9
 
Refining availability* (%)
 
94.4
95.0
       
Marketing sales of refined products (mb/d)
     
1,197
1,145
1,121
 
US
 
1,122
1,167
1,240
1,160
1,272
 
Europe
 
1,202
1,178
522
569
542
 
Rest of World
 
572
527
2,959
2,874
2,935
     
2,896
2,872
2,439
2,649
2,718
 
Trading/supply sales of refined products
 
2,638
2,441
5,398
5,523
5,653
 
Total sales volumes of refined products
 
5,534
5,313
       
Petrochemicals production (kte)
     
932
946
877
 
US
 
2,728
2,972
1,048
852
976
 
Europe
 
2,800
2,915
1,676
1,898
2,004
 
Rest of World
 
5,565
4,599
3,656
3,696
3,857
     
11,093
10,486

(a)
Segment-level overhead expenses are included in the fuels business result.
(b)
BP’s share of income from petrochemicals at our Gelsenkirchen and Mülheim sites in Germany is reported in the fuels business.
(c)
For Downstream, fair value accounting effects arise solely in the fuels business.



 
Top of page 8
Rosneft
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015(a)
 
$ million
 
2015(a)
2014
87
534
370
 
Profit before interest and tax(b)
 
1,125
1,686
20
(24)
12
 
Inventory holding (gains) losses*
 
(50)
(37)
107
510
382
 
RC profit before interest and tax
 
1,075
1,649
3
 
Net charge (credit) for non-operating items*
 
(244)
110
510
382
 
Underlying RC profit before interest and tax*
 
1,075
1,405

Replacement cost profit before interest and tax for the third quarter and nine months was $382 million and $1,075 million respectively, compared with $107 million and $1,649 million for the same periods in 2014.

There were no non-operating items in the third quarter and nine months 2015, compared with a non-operating charge of $3 million and a gain of $244 million for the same periods in 2014.

After adjusting for non-operating items, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $382 million and $1,075 million respectively, compared with $110 million and $1,405 million for the same periods in 2014. Compared with the same period last year, the result for the third quarter was favourably impacted by foreign exchange movements partly offset by lower prices. For the nine months, the result was primarily affected by lower oil prices and favourable foreign exchange effects.

See also Group statement of comprehensive income – Share of items relating to equity-accounted entities, net of tax, and footnote (a), on page 12 for other foreign exchange effects.

In June, Rosneft’s Annual General Meeting of Shareholders approved the distribution of a dividend of 8.21 roubles per share. We received our share of this dividend in July 2015, which amounted to $271 million after the deduction of withholding tax.

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015(a)
     
2015(a)
2014
       
Production (net of royalties) (BP share)
     
817
815
810
 
Liquids* (mb/d)
 
813
822
1,073
1,172
1,125
 
Natural gas (mmcf/d)
 
1,173
1,044
1,002
1,017
1,003
 
Total hydrocarbons* (mboe/d)
 
1,016
1,002

(a)
The operational and financial information of the Rosneft segment for the third quarter and nine months is based on preliminary operational and financial results of Rosneft for the nine months ended 30 September 2015. Actual results may differ from these amounts.
(b)
The Rosneft segment result includes equity-accounted earnings arising from BP’s 19.75% shareholding in Rosneft as adjusted for the accounting required under IFRS relating to BP’s purchase of its interest in Rosneft and the amortization of the deferred gain relating to the disposal of BP’s interest in TNK-BP. These adjustments have increased the reported profit before interest and tax for the third quarter and nine months 2015, as shown in the table above, compared with the equivalent amount in Russian roubles that we expect Rosneft to report in its own financial statements under IFRS. BP’s share of Rosneft’s profit before interest and tax for each year-to-date period is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date. BP's share of Rosneft’s earnings after finance costs, taxation and non-controlling interests, as adjusted, is included in the BP group income statement within profit before interest and taxation.


Top of page 9
Other businesses and corporate
 

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
(432)
(455)
(378)
 
Profit (loss) before interest and tax
 
(1,141)
(1,363)
 
Inventory holding (gains) losses*
 
(432)
(455)
(378)
 
RC profit (loss) before interest and tax
 
(1,141)
(1,363)
139
54
147
 
Net charge (credit) for non-operating items*
 
219
143
(293)
(401)
(231)
 
Underlying RC profit (loss) before interest and tax*
 
(922)
(1,220)
       
Underlying RC profit (loss) before interest and tax
     
(102)
(144)
(126)
 
US
 
(332)
(427)
(191)
(257)
(105)
 
Non-US
 
(590)
(793)
(293)
(401)
(231)
     
(922)
(1,220)
       
Non-operating items
     
(144)
(10)
(127)
 
US
 
(138)
(141)
5
(44)
(20)
 
Non-US
 
(81)
(2)
(139)
(54)
(147)
     
(219)
(143)
       
RC profit (loss) before interest and tax
     
(246)
(154)
(253)
 
US
 
(470)
(568)
(186)
(301)
(125)
 
Non-US
 
(671)
(795)
(432)
(455)
(378)
     
(1,141)
(1,363)

Other businesses and corporate comprises biofuels and wind businesses, shipping, treasury (which includes interest income on the group's cash and cash equivalents), and corporate activities including centralized functions.

Financial results

The replacement cost loss before interest and tax for the third quarter and nine months was $378 million and $1,141 million respectively, compared with $432 million and $1,363 million for the same periods in 2014.

The third-quarter result included a net non-operating charge of $147 million, compared with a net non-operating charge of $139 million a year ago. For the nine months, the net non-operating charge was $219 million, compared with a net non-operating charge of $143 million a year ago.

After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the third quarter and nine months was $231 million and $922 million respectively, compared with $293 million and $1,220 million for the same periods in 2014. The nine-months charge is lower compared with the same period in 2014 mainly reflecting benefits from our simplification programmes and improved performance in our other businesses.

Biofuels

The net ethanol-equivalent production (which includes ethanol and sugar) for the third quarter and nine months was 359 million litres and 606 million litres respectively, compared with 255 million litres and 411 million litres for the same periods in 2014.

Wind

Net wind generation capacity*(a) was 1,588MW at 30 September 2015, compared with 1,590MW at 30 September 2014. BP’s net share of wind generation for the third quarter and nine months was 894GWh and 3,171GWh respectively, compared with 837GWh and 3,377GWh for the same periods in 2014.

(a)
Capacity figures include 32MW in the Netherlands managed by our Downstream segment.


Top of page 10
Gulf of Mexico oil spill
 

We announced on 2 July 2015 that BP Exploration & Production Inc. has reached agreements in principle with the US federal government and five Gulf states to settle all outstanding federal and state claims arising from the Deepwater Horizon oil spill. On 5 October 2015 the United States lodged the proposed Consent Decree with the court and BP entered into a definitive Settlement Agreement with the five Gulf states. The proposed Consent Decree and the Settlement Agreement are conditional upon each other and neither will become effective unless there is final court approval of the Consent Decree. Public comments on the proposed Consent Decree will be accepted until early December 2015 and a hearing has been scheduled by the court to consider approval of the Consent Decree in March 2016. The proposed Consent Decree and the Settlement Agreement do not cover claims relating to the 2012 class action settlements with the Plaintiffs’ Steering Committee, including business economic loss claims; private claims from other litigants not included within or who opted out of the class action settlements; or private securities litigation in MDL 2185.

A condition of the 2 July 2015 agreements in principle was that local government entities execute releases to BP’s satisfaction. BP has accepted releases received from the vast majority of local government entities and payments required under those releases were made during the third quarter.

For further details see Note 2 on page 16 and Legal proceedings on page 32.

Financial update

The replacement cost loss before interest and tax for the third quarter and nine months was $311 million and $11,381 million respectively, compared with $33 million and $313 million for the same periods last year. The third-quarter loss reflects additional business economic loss claims under the Plaintiffs’ Steering Committee settlements and adjustments to other provisions, as well as the ongoing costs of the Gulf Coast Restoration Organization. The loss for the first nine months also includes amounts provided for the agreements described above, and additional increases in the provision for business economic loss claims, associated claims administration costs and other items. The cumulative pre-tax charge recognized to date amounts to $55.0 billion.

The cumulative income statement charge does not include amounts for obligations that BP currently considers are not possible to measure reliably. The total amounts that will ultimately be paid by BP in relation to the incident will be dependent on many factors, as discussed under Provisions and contingent liabilities in Note 2 on page 18. These could have a material impact on our consolidated financial position, results and cash flows.  


Top of page 11
Financial statements
 

Group income statement

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
               
93,904
60,646
54,730
 
Sales and other operating revenues (Note 4)
 
169,572
279,571
119
156
327
 
Earnings from joint ventures – after interest and tax
 
587
389
272
670
504
 
Earnings from associates – after interest and tax
 
1,536
2,283
117
195
151
 
Interest and other income
 
466
605
355
133
167
 
Gains on sale of businesses and fixed assets
 
438
734
94,767
61,800
55,879
 
Total revenues and other income
 
172,599
283,582
75,492
44,748
41,063
 
Purchases
 
123,747
221,496
6,562
17,185
6,407
 
Production and manufacturing expenses
 
30,592
20,373
744
173
238
 
Production and similar taxes (Note 5)
 
773
2,546
3,956
3,765
3,737
 
Depreciation, depletion and amortization
 
11,338
11,297
       
Impairment and losses on sale of businesses
     
997
286
40
 
  and fixed assets
 
523
2,197
840
902
356
 
Exploration expense
 
1,430
2,177
3,207
2,989
2,699
 
Distribution and administration expenses
 
8,471
9,387
2,969
(8,248)
1,339
 
Profit (loss) before interest and taxation
 
(4,275)
14,109
285
289
398
 
Finance costs
 
968
849
       
Net finance expense relating to pensions and
     
73
75
76
 
  other post-retirement benefits
 
228
232
2,611
(8,612)
865
 
Profit (loss) before taxation
 
(5,471)
13,028
1,287
(2,829)
809
 
Taxation
 
(2,395)
4,652
1,324
(5,783)
56
 
Profit (loss) for the period
 
(3,076)
8,376
       
Attributable to
     
1,290
(5,823)
46
 
  BP shareholders
 
(3,175)
8,187
34
40
10
 
  Non-controlling interests
 
99
189
1,324
(5,783)
56
     
(3,076)
8,376
               
       
Earnings per share (Note 6)
     
       
Profit (loss) for the period attributable to
     
       
  BP shareholders
     
       
  Per ordinary share (cents)
     
7.01
(31.83)
0.25
 
    Basic
 
(17.35)
44.40
6.97
(31.83)
0.25
 
    Diluted
 
(17.35)
44.14
       
  Per ADS (dollars)
     
0.42
(1.91)
0.02
 
    Basic
 
(1.04)
2.66
0.42
(1.91)
0.02
 
    Diluted
 
(1.04)
2.65


Top of page 12
Financial statements (continued)
 

Group statement of comprehensive income

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
               
1,324
(5,783)
56
 
Profit (loss) for the period
 
(3,076)
8,376
       
Other comprehensive income
     
       
Items that may be reclassified subsequently
     
       
  to profit or loss
     
(3,434)
698
(2,247)
 
  Currency translation differences
 
(3,161)
(3,342)
       
  Exchange gains (losses) on translation of foreign
     
       
    operations reclassified to gain or loss on sale of
     
(3)
16
7
 
    businesses and fixed assets
 
23
(3)
1
 
  Available-for-sale investments marked to market
 
1
(1)
       
  Available-for-sale investments reclassified to the
     
 
    income statement
 
1
(144)
128
(70)
 
  Cash flow hedges marked to market
 
(154)
(44)
       
  Cash flow hedges reclassified to the
     
(21)
81
65
 
    income statement
 
220
(90)
(8)
4
7
 
  Cash flow hedges reclassified to the balance sheet
 
16
(11)
       
  Share of items relating to equity-accounted
     
(144)
329
(830)
 
    entities, net of tax(a)
 
(581)
(166)
(13)
(92)
268
 
  Income tax relating to items that may be reclassified
 
300
(4)
(3,767)
1,165
(2,800)
     
(3,336)
(3,660)
       
Items that will not be reclassified to profit or loss
     
       
  Remeasurements of the net pension and other
     
(1,051)
2,688
(551)
 
    post-retirement benefit liability or asset
 
1,569
(1,765)
       
  Share of items relating to equity-accounted
     
(1)
 
    entities, net of tax
 
(1)
5
       
  Income tax relating to items that will not be
     
257
(754)
80
 
    reclassified
 
(516)
478
(794)
1,934
(472)
     
1,052
(1,282)
(4,561)
3,099
(3,272)
 
Other comprehensive income
 
(2,284)
(4,942)
(3,237)
(2,684)
(3,216)
 
Total comprehensive income
 
(5,360)
3,434
       
Attributable to
     
(3,257)
(2,732)
(3,204)
 
  BP shareholders
 
(5,423)
3,252
20
48
(12)
 
  Non-controlling interests
 
63
182
(3,237)
(2,684)
(3,216)
     
(5,360)
3,434

(a)
Includes the effects of hedge accounting adopted by Rosneft from 1 October 2014 in relation to a portion of future export revenue denominated in US dollars. For further information see BP Annual Report and Form 20-F 2014 – Financial statements – Note 15.


Top of page 13
Financial statements (continued)
 

Group statement of changes in equity
 
   
BP
   
   
shareholders’
Non-controlling
Total
$ million
 
equity
interests
equity
         
At 1 January 2015
 
111,441
1,201
112,642
         
Total comprehensive income
 
(5,423)
63
(5,360)
Dividends
 
(5,118)
(71)
(5,189)
Share-based payments, net of tax
 
486
486
Share of equity-accounted entities’ changes in equity,
       
  net of tax
 
(3)
(3)
Transactions involving non-controlling interests
 
23
23
At 30 September 2015
 
101,383
1,216
102,599
         
   
BP
   
   
shareholders’
Non-controlling
Total
$ million
 
equity
interests
equity
         
At 1 January 2014
 
129,302
1,105
130,407
         
Total comprehensive income
 
3,252
182
3,434
Dividends
 
(4,121)
(215)
(4,336)
Repurchases of ordinary share capital
 
(3,147)
(3,147)
Share-based payments, net of tax
 
452
452
Share of equity-accounted entities’ changes in equity,
       
  net of tax
 
80
80
Transactions involving non-controlling interests
 
4
4
At 30 September 2014
 
125,818
1,076
126,894


Top of page 14
Financial statements (continued)
 

Group balance sheet

   
30 September
31 December
$ million
 
2015
2014
Non-current assets
     
Property, plant and equipment
 
130,124
130,692
Goodwill
 
11,692
11,868
Intangible assets
 
19,232
20,907
Investments in joint ventures
 
9,129
8,753
Investments in associates
 
9,804
10,403
Other investments
 
1,019
1,228
Fixed assets
 
181,000
183,851
Loans
 
544
659
Trade and other receivables
 
2,282
4,787
Derivative financial instruments
 
4,559
4,442
Prepayments
 
951
964
Deferred tax assets
 
1,850
2,309
Defined benefit pension plan surpluses
 
571
31
   
191,757
197,043
Current assets
     
Loans
 
332
333
Inventories
 
16,933
18,373
Trade and other receivables
 
25,862
31,038
Derivative financial instruments
 
3,824
5,165
Prepayments
 
2,038
1,424
Current tax receivable
 
607
837
Other investments
 
244
329
Cash and cash equivalents
 
31,702
29,763
   
81,542
87,262
Total assets
 
273,299
284,305
Current liabilities
     
Trade and other payables
 
34,700
40,118
Derivative financial instruments
 
2,844
3,689
Accruals
 
5,825
7,102
Finance debt
 
8,982
6,877
Current tax payable
 
1,318
2,011
Provisions
 
4,494
3,818
   
58,163
63,615
Non-current liabilities
     
Other payables
 
2,908
3,587
Derivative financial instruments
 
3,908
3,199
Accruals
 
964
861
Finance debt
 
48,423
45,977
Deferred tax liabilities
 
9,845
13,893
Provisions
 
36,578
29,080
Defined benefit pension plan and other post-retirement benefit plan deficits
 
9,911
11,451
   
112,537
108,048
Total liabilities
 
170,700
171,663
Net assets
 
102,599
112,642
Equity
     
BP shareholders’ equity
 
101,383
111,441
Non-controlling interests
 
1,216
1,201
   
102,599
112,642



Top of page 15
Financial statements (continued)
 

Condensed group cash flow statement

Third
Second
Third
     
Nine
Nine
quarter
quarter
quarter
     
months
months
2014
2015
2015
 
$ million
 
2015
2014
       
Operating activities
     
2,611
(8,612)
865
 
Profit (loss) before taxation
 
(5,471)
13,028
       
Adjustments to reconcile profit (loss) before taxation
     
       
  to net cash provided by operating activities
     
       
  Depreciation, depletion and amortization and
     
4,602
4,571
3,971
 
    exploration expenditure written off
 
12,470
12,977
       
  Impairment and (gain) loss on sale of businesses
     
642
153
(127)
 
    and fixed assets
 
85
1,463
       
  Earnings from equity-accounted entities, less
     
527
(654)
(295)
 
    dividends received
 
(1,225)
(1,237)
       
  Net charge for interest and other finance expense,
     
114
13
196
 
    less net interest paid
 
338
281
153
255
137
 
  Share-based payments
 
154
437
       
  Net operating charge for pensions and other post-
     
       
    retirement benefits, less contributions and benefit
     
(92)
(30)
(41)
 
    payments for unfunded plans
 
(128)
(299)
705
10,700
113
 
  Net charge for provisions, less payments
 
11,201
568
       
  Movements in inventories and other current and
     
1,744
492
1,231
 
   non-current assets and liabilities
 
(2,135)
2,083
(1,607)
(602)
(867)
 
  Income taxes paid
 
(1,962)
(3,794)
9,399
6,286
5,183
 
Net cash provided by operating activities
 
13,327
25,507
       
Investing activities
     
(5,256)
(4,529)
(4,357)
 
Capital expenditure
 
(13,522)
(16,646)
(3)
33
 
Acquisitions, net of cash acquired
 
33
(13)
(78)
(54)
(55)
 
Investment in joint ventures
 
(178)
(114)
(73)
(218)
(119)
 
Investment in associates
 
(424)
(208)
391
308
88
 
Proceeds from disposal of fixed assets
 
1,049
1,596
       
Proceeds from disposal of businesses, net of
     
194
224
200
 
  cash disposed
 
1,511
791
9
45
61
 
Proceeds from loan repayments
 
109
79
(4,816)
(4,224)
(4,149)
 
Net cash used in investing activities
 
(11,422)
(14,515)
       
Financing activities
     
(1,623)
 
Net repurchase of shares
 
(3,796)
2,780
83
117
 
Proceeds from long-term financing
 
7,988
9,615
(388)
(542)
(18)
 
Repayments of long-term financing
 
(2,867)
(3,345)
(527)
(13)
(115)
 
Net increase (decrease) in short-term debt
 
597
(507)
(1,122)
(1,691)
(1,718)
 
Dividends paid
– BP shareholders
 
(5,118)
(4,121)
(62)
(30)
(29)
   
– non-controlling interests
 
(71)
(215)
(942)
(2,193)
(1,763)
 
Net cash provided by (used in) financing activities
 
529
(2,369)
       
Currency translation differences relating to cash
     
(418)
286
(158)
 
  and cash equivalents
 
(495)
(414)
3,223
155
(887)
 
Increase (decrease) in cash and cash equivalents
 
1,939
8,209
27,506
32,434
32,589
 
Cash and cash equivalents at beginning of period
 
29,763
22,520
30,729
32,589
31,702
 
Cash and cash equivalents at end of period
 
31,702
30,729


Top of page 16
Financial statements (continued)
 

Notes

1.       Basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’.

The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December 2014 included in the BP Annual Report and Form 20-F 2014.

BP prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the periods presented.

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP Annual Report and Form 20-F 2015, which do not differ significantly from those used in BP Annual Report and Form 20-F 2014.


2.       Gulf of Mexico oil spill

(a) Overview

As a consequence of the Gulf of Mexico oil spill, BP continues to incur various costs and has also recognized liabilities for future costs. The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2014 – Financial statements – Note 2 and Legal proceedings on page 228 and on page 32 of this report.

The group income statement includes a pre-tax charge of $426 million for the third quarter and $11,513 million for the nine months of 2015 in relation to the Gulf of Mexico oil spill. The third-quarter charge reflects additional business economic loss claims under the Plaintiffs’ Steering Committee (PSC) settlement, finance costs and adjustments to provisions due to discounting effects, as well as the ongoing costs of the Gulf Coast Restoration Organization. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $55,008 million.

The cumulative income statement charge does not include amounts for obligations that BP considers are not possible, at this time, to measure reliably. For further information, see Provisions and contingent liabilities below.

The agreements in principle signed on 2 July 2015 to settle all federal and state claims and claims made by more than 400 local government entities were subject to execution of definitive agreements, including a Consent Decree with the United States and Gulf states with respect to the Clean Water Act penalty and natural resource damages and other claims, a Settlement Agreement with five Gulf states with respect to state claims for economic loss, property damage and other claims, and resolution to BP’s satisfaction of the economic loss, property damage and other claims with more than 400 local government entities. During the third quarter, the United States lodged with the court in MDL 2179 a proposed Consent Decree between the United States, the Gulf states and BP, and the Settlement Agreement with the five Gulf states was executed. The proposed Consent Decree is available for public comment until early December 2015 and is subject to final court approval. The Consent Decree and Settlement Agreement with the five Gulf states are conditional upon each other and neither will become effective unless there is final court approval of the Consent Decree. BP has accepted releases received from the vast majority of local government entities and payments required under those releases were made during the third quarter. For more information on the proposed Consent Decree and Settlement Agreement see Legal proceedings on page 32.

The agreements described above (the Agreements) significantly reduce the uncertainties faced by BP following the Gulf of Mexico oil spill in 2010. There continues to be uncertainty regarding the outcome or resolution of current or future litigation and the extent and timing of costs and liabilities relating to the incident not covered by the Agreements. The total amounts that will ultimately be paid by BP in relation to the incident will be dependent on many factors, as discussed under Provisions and contingent liabilities below, including in relation to any new information or future developments. These uncertainties could have a material impact on our consolidated financial position, results and cash flows.


Top of page 17
Financial statements (continued)
 

Notes

2.       Gulf of Mexico oil spill (continued)

The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items in those statements as set out below.

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
         
Income statement
     
 
33
10,747
311
 
Production and manufacturing expenses
 
11,381
313
 
(33)
(10,747)
(311)
 
Profit (loss) before interest and taxation
 
(11,381)
(313)
 
10
8
115
 
Finance costs
 
132
29
 
(43)
(10,755)
(426)
 
Profit (loss) before taxation
 
(11,513)
(342)
 
45
3,601
(87)
 
Taxation
 
3,626
99
 
2
(7,154)
(513)
 
Profit (loss) for the period
 
(7,887)
(243)


     
30 September
31 December
 
$ million
 
2015
2014
 
Balance sheet
     
 
Current assets
     
 
  Trade and other receivables
 
1,205
1,154
 
Current liabilities
     
 
  Trade and other payables
 
(797)
(655)
 
  Accruals
 
(40)
 
  Provisions
 
(2,523)
(1,702)
 
Net current assets (liabilities)
 
(2,155)
(1,203)
 
Non-current assets
     
 
  Trade and other receivables
 
223
2,701
 
Non-current liabilities
     
 
  Other payables
 
(2,068)
(2,412)
 
  Accruals
 
(187)
(169)
 
  Provisions
 
(14,304)
(6,903)
 
  Deferred tax
 
5,334
1,723
 
Net non-current assets (liabilities)
 
(11,002)
(5,060)
 
Net assets (liabilities)
 
(13,157)
(6,263)


 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
         
Cash flow statement - Operating activities
     
 
(43)
(10,755)
(426)
 
Profit (loss) before taxation
 
(11,513)
(342)
         
Adjustments to reconcile profit (loss)
     
         
  before taxation to net cash provided by
     
         
  operating activities
     
         
Net charge for interest and other finance
     
 
10
8
115
 
  expense, less net interest paid
 
132
29
 
586
10,607
235
 
Net charge for provisions, less payments
 
11,069
605
         
Movements in inventories and other current
     
 
(846)
34
(135)
 
  and non-current assets and liabilities
 
(696)
(1,457)
 
(293)
(106)
(211)
 
Pre-tax cash flows
 
(1,008)
(1,165)

Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $196 million and an outflow of $993 million in the third quarter and nine months of 2015 respectively. For the same periods in 2014, the amounts were an inflow of $42 million and an outflow of $313 million respectively.


Top of page 18
Financial statements (continued)
 

Notes

2.       Gulf of Mexico oil spill (continued)

Trust fund

BP established the Deepwater Horizon Oil Spill Trust (the Trust), funded in the amount of $20 billion, to satisfy legitimate individual and business claims, state and local government claims resolved by BP, final judgments and settlements, state and local response costs, and natural resource damages and related costs. Fines and penalties are not covered by the trust fund.

The funding of the Trust was completed in 2012. The obligation to fund the $20-billion trust fund, adjusted to take account of the time value of money, was recognized in full in 2010 and charged to the income statement. An asset has been recognized representing BP’s right to receive reimbursement from the trust fund. This is the portion of the estimated future expenditure provided for that will be settled by payments from the trust fund. During 2014, cumulative charges to be paid by the Trust reached $20 billion. Subsequent additional costs, over and above those provided within the $20 billion, are expensed to the income statement as incurred.

At 30 September 2015, $1,428 million of the provisions and payables are eligible to be paid from the Trust. The reimbursement asset is recorded within other receivables on the balance sheet, of which $1,205 million is classified as current and $223 million as non-current. During the third quarter of 2015, $1,376 million of provisions and $37 million of payables were paid from the Trust.

At 30 September 2015, the aggregate cash balances in the Trust and the associated qualifying settlement funds amounted to $2.2 billion, including $0.7 billion remaining in the seafood compensation fund which has yet to be distributed and $0.3 billion held for natural resource damage early restoration projects. When the cash balances in the trust funds are exhausted, payments in respect of legitimate claims and other costs will be made directly by BP.

(b) Provisions and contingent liabilities

BP has recorded certain provisions and disclosed certain contingent liabilities as a consequence of the Gulf of Mexico oil spill. These are described below and in more detail in BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.

Provisions

BP has recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, litigation and claims, and Clean Water Act penalties. Movements in each class of provision during the third quarter and nine months are presented in the table below.

         
Litigation
Clean
 
         
and
Water Act
 
 
$ million 
 
Environmental
claims
penalties
Total
 
At 1 July 2015
 
6,185
7,598
4,210
17,993
 
Net increase (decrease) in provision
 
(42)
443
(39)
362
 
Unwinding of discount
 
46
25
34
105
 
Change in discount rate
 
(34)
(15)
(26)
(75)
 
Reclassified to other payables
 
(130)
(130)
 
Utilization
– paid by BP
 
(52)
(52)
 
               
– paid by the trust fund
 
(21)
(1,355)
(1,376)
 
At 30 September 2015
 
6,004
6,644
4,179
16,827
 
Of which
– current
 
244
2,279
2,523
 
               
– non-current
 
5,760
4,365
4,179
14,304

         
Litigation
Clean
 
         
and
Water Act
 
       
Environmental
claims
penalties
Total
 
$ million 
         
 
At 1 January 2015
 
1,141
3,954
3,510
8,605
 
Net increase (decrease) in provision
 
5,402
5,257
661
11,320
 
Unwinding of discount
 
47
25
34
106
 
Change in discount rate
 
(34)
(15)
(26)
(75)
 
Reclassified to other payables
 
(459)
(125)
(584)
 
Utilization
– paid by BP
 
(22)
(154)
(176)
   
– paid by the trust fund
 
(71)
(2,298)
(2,369)
 
At 30 September 2015
 
6,004
6,644
4,179
16,827


Top of page 19
 
Financial statements (continued)
 

Notes

2.       Gulf of Mexico oil spill (continued)

Environmental
The environmental provision includes amounts payable for natural resource damage costs under the proposed Consent Decree. These amounts are payable in instalments over 16 years commencing one year after the court approves the Consent Decree; the majority of the unpaid balance of this natural resource damages settlement accrues interest at a fixed rate. The remaining amounts payable under the $1-billion early restoration framework agreement with natural resource trustees for the US and five Gulf states are also included in environmental provisions.

Litigation and claims
The litigation and claims provision includes amounts that can be estimated reliably for the future cost of settling claims by individuals and businesses for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of natural resources (Individual and Business Claims), and amounts provided under the Agreements in relation to state claims that have not yet been paid. Claims administration costs and legal costs have also been provided for. Amounts that cannot be measured reliably and which have therefore not been provided for are described under Contingent liabilities below.

Litigation and claims – PSC settlement
BP has provided for its best estimate of the cost associated with the 2012 PSC settlement agreements with the exception of the cost of business economic loss claims, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility. See BP Annual Report and Form 20-F 2014 – Financial statements – Note 2 and Legal proceedings on pages 228-237 for further details on the settlements with the PSC and related matters.

Management believes that no reliable estimate can currently be made of any business economic loss claims not yet processed or processed but not yet paid, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility.

The submission deadline for business economic loss claims passed on 8 June 2015; no further claims to the claims facility may be submitted. A significant number of business economic loss claims have been received but have not yet been processed and it is not possible to quantify the total value of the claims.

A revised policy for the matching of revenue and expenses for business economic loss claims was introduced in May 2014 and, of the claims assessable under the new policy, the majority have not yet been determined at this time. Uncertainties regarding the proper application of the revised policy to particular claims and categories of claims continue to arise as the claims administrator has applied the revised policy. There have been no, or only a small number of, claim determinations made under some of the specialized frameworks that have been put in place for particular industries and so determinations to date may not be representative of the total population of claims. In addition, while detailed data on pre-determination claims is not available due to a court order to protect claimant confidentiality, aggregated pre-determination data has recently been provided. While this data does provide some insights, it is not at a sufficient level of detail to obtain a complete or clear understanding of the composition of the underlying claims population.

There is limited data available to build up a track record of claims determinations under the policies and protocols that are now being applied following resolution of the matching and causation issues. We are unable to reliably estimate future trends of the number and proportion of claims that will be determined to be eligible, nor can we reliably estimate the value of such claims. A provision for such business economic loss claims will be established when these uncertainties are resolved and a reliable estimate can be made of the liability.

The current estimate for the total cost of those elements of the PSC settlement that BP considers can be reliably estimated, including amounts already paid, is $11.8 billion. The Deepwater Horizon Court Supervised Settlement Program (DHCSSP) has issued eligibility notices, many of which are disputed by BP, in respect of business economic loss claims of approximately $371 million which have not been provided for. The total cost of the PSC settlement is likely to be significantly higher than the amount recognized to date of $11.8 billion because the current estimate does not reflect business economic loss claims not yet processed or processed but not yet paid, except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility.


Top of page 20
Financial statements (continued)
 

Notes

2.       Gulf of Mexico oil spill (continued)

There continues to be a high level of uncertainty in relation to the amounts that ultimately will be paid in relation to current claims as described above and the outcomes of any further litigation including by parties excluded from, or parties who opted out of, the PSC settlement, as well as uncertainty arising from the PSC’s appeal to the Fifth Circuit of the District Court’s 31 March 2015 decision to deny its motion seeking to alter or amend the revised matching policy for business economic loss claims. There is also uncertainty as to the cost of administering the claims process under the DHCSSP and in relation to future legal costs. The timing of payment of provisions related to the PSC settlement is dependent upon ongoing claims facility activity and is therefore also uncertain.

Litigation and claims – other claims
The provision recognized for litigation and claims includes amounts agreed under the Agreements in relation to state claims. The amount provided in respect of state claims is payable over 18 years from the date the court approves the Consent Decree, of which $1 billion is due following the court approval of the Consent Decree. The vast majority of local government entities who filed claims have issued releases, which were accepted by BP; amounts due under those releases were paid during the third quarter.

Clean Water Act penalties
A provision has been recognized for penalties under Section 311 of the Clean Water Act, as determined in the Agreements. The amount is payable in instalments over 15 years, commencing one year after the court approves the Consent Decree. The unpaid balance of this penalty accrues interest at a fixed rate.

Provision movements and analysis of income statement charge
A net increase in provisions of $362 million and $11,320 million was recognized for the third quarter and nine months respectively. The third-quarter net increase arises primarily due to an increase in the litigation and claims provision for business economic loss claims. The remainder of the income statement charge mainly relates to finance costs and adjustments to provisions due to discounting effects. The net increase for the nine months also includes amounts provided for the Agreements, and additional increases in the litigation and claims provision for business economic loss claims, associated claims administration costs and other items. The following table shows an analysis of the income statement charge.

     
Third
Nine
Cumulative
     
quarter
months
since the
 
$ million 
 
2015
2015
incident
 
Environmental costs
 
(76)
5,427
8,650
 
Spill response costs
 
14,304
 
Litigation and claims costs
 
428
5,242
32,022
 
Clean Water Act penalties – amount provided
 
(65)
635
4,145
 
Other costs charged directly to the income statement
 
24
77
1,334
 
Recoveries credited to the income statement
 
(5,681)
 
Charge (credit) related to the trust fund
 
(137)
 
Other costs of the trust fund
 
8
 
Loss before interest and taxation
 
311
11,381
54,645
 
Finance costs
– related to the trust funds
 
137
   
– not related to the trust funds
 
115
132
226
 
Loss before taxation
 
426
11,513
55,008

Further information on provisions is provided in BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.


Top of page 21
Financial statements (continued)
 

Notes

2.       Gulf of Mexico oil spill (continued)

Contingent liabilities

BP currently considers that it is not possible to measure reliably other obligations arising from the incident, including:

·  
Claims asserted in civil litigation, including any further litigation by parties excluded from, or parties who opted out of, the PSC settlement, including as set out in Legal proceedings on pages 228-237 of BP Annual Report and Form 20-F 2014, except for claims covered by the Agreements.

·  
The cost of business economic loss claims under the PSC settlement not yet processed or processed but not yet paid (except where an eligibility notice has been issued and is not subject to appeal by BP within the claims facility).

·  
Any obligation that may arise from securities-related litigation.

·  
Any obligation in relation to other potential private or non-US government litigation or claims (except for those items provided for as described above under Provisions).

It is not practicable to estimate the magnitude or possible timing of payment of these contingent liabilities.

As a result of the Agreements, contingent liabilities are no longer disclosed in relation to Clean Water Act penalties, natural resource damages and state claims and the vast majority of local government entity claims. See additional information on the Agreements above and in Legal proceedings on page 32.

The magnitude and timing of all possible obligations in relation to the Gulf of Mexico oil spill continue to be subject to uncertainty.

See also BP Annual Report and Form 20-F 2014 – Financial statements – Note 2.


3.        Analysis of replacement cost profit (loss) before interest and tax and reconciliation
           to profit (loss) before taxation

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
 
3,311
228
743
 
Upstream
 
1,343
12,019
 
1,231
1,628
2,562
 
Downstream
 
6,273
2,958
 
107
510
382
 
Rosneft
 
1,075
1,649
 
(432)
(455)
(378)
 
Other businesses and corporate
 
(1,141)
(1,363)
 
4,217
1,911
3,309
     
7,550
15,263
 
(33)
(10,747)
(311)
 
Gulf of Mexico oil spill response
 
(11,381)
(313)
 
370
(39)
67
 
Consolidation adjustment – UPII*
 
(101)
384
 
4,554
(8,875)
3,065
 
RC profit (loss) before interest and tax
 
(3,932)
15,334
         
Inventory holding gains (losses)*
     
 
1
(3)
(27)
 
  Upstream
 
(12)
(6)
 
(1,566)
606
(1,687)
 
  Downstream
 
(381)
(1,256)
 
(20)
24
(12)
 
  Rosneft (net of tax)
 
50
37
 
2,969
(8,248)
1,339
 
Profit (loss) before interest and tax
 
(4,275)
14,109
 
285
289
398
 
Finance costs
 
968
849
         
Net finance expense relating to pensions
     
 
73
75
76
 
  and other post-retirement benefits
 
228
232
 
2,611
(8,612)
865
 
Profit (loss) before taxation
 
(5,471)
13,028
                 
         
RC profit (loss) before interest and tax*
     
 
1,800
(10,641)
324
 
US
 
(10,814)
4,568
 
2,754
1,766
2,741
 
Non-US
 
6,882
10,766
 
4,554
(8,875)
3,065
     
(3,932)
15,334


Top of page 22
 
Financial statements (continued)
 

Notes

4.        Sales and other operating revenues

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
         
By segment
     
 
15,879
11,036
10,357
 
Upstream
 
33,023
49,624
 
87,068
55,332
49,499
 
Downstream
 
152,956
258,237
 
530
512
552
 
Other businesses and corporate
 
1,492
1,373
 
103,477
66,880
60,408
     
187,471
309,234
                 
         
Less: sales and other operating revenues
     
         
  between segments
     
 
9,427
5,590
5,809
 
Upstream
 
16,962
28,373
 
(73)
402
(377)
 
Downstream
 
201
641
 
219
242
246
 
Other businesses and corporate
 
736
649
 
9,573
6,234
5,678
     
17,899
29,663
                 
         
Third party sales and other operating revenues
     
 
6,452
5,446
4,548
 
Upstream
 
16,061
21,251
 
87,141
54,930
49,876
 
Downstream
 
152,755
257,596
 
311
270
306
 
Other businesses and corporate
 
756
724
         
Total third party sales and other operating
     
 
93,904
60,646
54,730
 
  revenues
 
169,572
279,571
                 
         
By geographical area
     
 
34,678
21,824
20,680
 
US
 
61,345
105,010
 
66,402
43,130
37,778
 
Non-US
 
119,596
200,010
 
101,080
64,954
58,458
     
180,941
305,020
         
Less: sales and other operating revenues
     
 
7,176
4,308
3,728
 
  between areas
 
11,369
25,449
 
93,904
60,646
54,730
     
169,572
279,571


 
5.      Production and similar taxes

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
 
140
33
30
 
US
 
97
634
 
604
140
208
 
Non-US
 
676
1,912
 
744
173
238
     
773
2,546


 
6.        Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.


Top of page 23
 
Financial statements (continued)
 

Notes

 
6.        Earnings per share and shares in issue (continued)

For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
 
$ million
 
2015
2014
         
Results for the period
     
         
Profit (loss) for the period
     
 
1,290
(5,823)
46
 
  attributable to BP shareholders
 
(3,175)
8,187
 
1
 
Less: preference dividend
 
1
1
         
Profit (loss) attributable to BP
     
 
1,290
(5,824)
46
 
  ordinary shareholders
 
(3,176)
8,186
                 
         
Number of shares (thousand)(a)(b)
     
         
Basic weighted average number  
     
 
18,390,006
18,299,877
18,329,701
 
  of shares outstanding
 
18,304,504
18,436,995
 
3,065,001
3,049,979
3,054,950
 
ADS equivalent
 
3,050,750
3,072,832
                 
         
Weighted average number of
     
         
  shares outstanding used to
     
 
18,499,505
18,299,877
18,371,656
 
  calculate diluted earnings per share
 
18,304,504
18,544,448
 
3,083,250
3,049,979
3,061,942
 
ADS equivalent
 
3,050,750
3,090,741
                 
 
18,311,461
18,318,924
18,349,963
 
Shares in issue at period-end
 
18,349,963
18,311,461
 
3,051,910
3,053,154
3,058,327
 
ADS equivalent
 
3,058,327
3,051,910

(a)
Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.
(b)
If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.


 
7.        Dividends

Dividends payable

BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 18 December 2015 to shareholders and American Depositary Share (ADS) holders on the register on 6 November 2015. The corresponding amount in sterling is due to be announced on 7 December 2015, calculated based on the average of the market exchange rates for the four dealing days commencing on 1 December 2015. Holders of ADSs are expected to receive $0.600 per ADS (less applicable fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the third-quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.

Dividends paid

 
Third
Second
Third
     
Nine
Nine
 
quarter
quarter
quarter
     
months
months
 
2014
2015
2015
     
2015
2014
         
Dividends paid per ordinary share
     
 
9.750
10.000
10.000
 
  cents
 
30.000
29.000
 
5.959
6.530
6.549
 
  pence
 
19.749
17.473
 
58.50
60.00
60.00
 
Dividends paid per ADS (cents)
 
180.00
174.00
         
Scrip dividends
     
 
85.2
18.9