BP p.l.c. Group Results Second Quarter and Half Year 2008(a)



    
    LONDON, July 29 /CNW/ --
    


    
    Second   First  Second
    quarter quarter quarter                                First half
     2007    2008    2008   $ million                     2008    2007     %
    

    
     7,376   7,451   9,465   Profit for the period(b)    16,916  12,040
                             Inventory holding (gains)
                             losses,
    

    
      (888)   (863) (2,612)  net of tax(c)               (3,475) (1,108)
    


    
     6,488   6,588   6,853   Replacement cost profit(c)  13,441  10,932    23
    


    
     17.01   17.63   18.56   - per ordinary share (pence) 36.19   28.77
    

    
     33.75   34.90   36.40   - per ordinary share (cents) 71.30   56.68    26
      2.03    2.09    2.18   - per ADS (dollars)           4.28    3.40
    


    
    (Logo: http://www.newscom.com/cgi-bin/prnh/20000724/NYM120LOGO )
    
    -- BP's second-quarter replacement cost profit was $6,853 million,
compared with $6,488 million a year ago, an increase of 6%. For the half year,
replacement cost profit was $13,441 million compared with $10,932 million a
year ago, up 23%.
    -- Non-operating items and fair value accounting effects for the second
quarter had a net $1,775 million unfavourable impact compared to a net $973
million favourable impact in the second quarter of 2007. For the half year,
the respective amounts were $1,779 million unfavourable and $1,009 million
favourable - see further details on page 3. The largest non-operating item for
the second quarter and year-to-date was fair value losses on embedded
derivatives which amounted to $2,081 million and $2,771 million respectively
on a pre-tax basis.
    -- Net cash provided by operating activities for the quarter and half
year was $6.7 billion and $17.6 billion compared with $6.1 billion and $14.1
billion respectively a year ago.
    -- The effective tax rate on replacement cost profit for the second
quarter was 35% and for the half year was 36%; a year ago, the rates were 31%
and 32% respectively.
    -- Net debt at the end of the quarter was $25.7 billion compared to $20.7
billion a year ago. The ratio of net debt to net debt plus equity was 19%, the
same as a year ago.
    -- Capital expenditure, excluding acquisitions and asset exchanges, was
$5.5 billion for the quarter and for the half year was $12.6 billion. Total
capital expenditure and acquisitions was $5.8 billion for the quarter and
$14.8 billion for the half year. Capital expenditure, excluding acquisitions
and asset exchanges and excluding the accounting for our transaction with
Husky (see pages 26 and 27), is expected to be around $21-22 billion for the
year. Disposal proceeds were $59 million for the quarter and $335 million for
the half year.
    -- The quarterly dividend, to be paid in September, is 14 cents per share
($0.84 per ADS) compared with 10.825 cents per share a year ago. For the half
year, the dividend showed an increase of 30%. In sterling terms, the quarterly
dividend is 7.039 pence per share, compared with 5.278 pence per share a year
ago; for the half year, the increase was 33%. During the quarter, the company
repurchased 85.9 million of its own shares for cancellation at a cost of $1
billion. For the first half, share repurchases were 176.9 million at a cost of
$2 billion.
    (a) This results announcement also represents BP's half-yearly financial
report for the purposes of the Disclosure and Transparency Rules (DTR) made by
the UK Financial Services Authority (DTR 4.2 - Half-yearly financial reports).
In this context: (i) the condensed set of financial statements can be found on
pages 13 - 19 and 22 - 30; (ii) pages 1 - 11, 20 and 21 comprise the interim
management report; (iii) information on material related party transactions
that have taken place in the first six months of the year can be found in the
condensed set of financial statements on pages 13 - 19 and 22 - 30; and (iv)
the directors' responsibility statement and auditors' independent review
report can be found on page 12.
    
    (b) Profit attributable to BP shareholders.
    
    (c) With effect from 1 January 2008, replacement cost profit excludes
inventory holding gains and losses net of tax.  Comparative amounts have been
amended to the new basis. See page 2 for further details.
    The commentaries above and following are based on replacement cost profit
and should be read in conjunction with the cautionary statement on page 11.

    
     Analysis of replacement cost profit and reconciliation to profit for
                                  the period
    



    
    Second   First  Second
    quarter quarter quarter                                     First half
     2007    2008    2008     $ million                        2008     2007
    

    
    7,119   10,072  10,771   Exploration and Production      20,843   13,425
    2,742    1,249     539   Refining and Marketing           1,788    3,546
     (173)    (213)   (314)  Other businesses and corporate    (527)    (271)
      (98)    (195)    (39)  Consolidation adjustment          (234)     (56)
    9,590   10,913  10,957   RC profit before
                              interest and tax(a)            21,870   16,644
    

    
                              Finance costs and net finance
                               income relating to pensions and
    (155)    (246)   (221)     other post-retirement benefits  (467)    (326)
    
    Taxation on a replacement    (2,882)  (3,947) (3,760)   cost basis(b)    
             (7,707)  (5,239)
    
      (65)    (132)   (123)  Minority interest                 (255)    (147)
                             Replacement cost profit
                              attributable to
    6,488    6,588   6,853    BP shareholders(b)             13,441   10,932
    

    
    1,289    1,326   3,952   Inventory holding gains (losses) 5,278    1,592
                              Taxation (charge) credit on
                               inventory holding
     (401)    (463) (1,340)    gains and losses              (1,803)    (484)
                              Profit for the period
                               attributable to
    7,376    7,451   9,465     BP shareholders               16,916   12,040
    
    (a) Replacement cost profit reflects the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from profit
inventory holding gains and losses. BP uses this measure to assist investors
to assess BP's performance from period to period. Replacement cost profit is
not a recognized GAAP measure.
    (b) Effective 1 January 2008, replacement cost profit excludes inventory
holding gains and losses and their associated tax effect. Previously,
replacement cost profit excluded inventory gains and losses while the tax
charge remained unadjusted and included the tax effect on inventory holding
gains and losses.  Comparative amounts have been amended to the new basis and
the impact of the change is shown in the table below. There is no impact on
profit for the period.


    
                                                               First  Second
                                                                half  quarter
    $ million                                                   2007    2007
    

    
    Replacement cost profit attributable to BP shareholders
      -as previously reported                                  10,448   6,087
      -tax effect on inventory holding gains and losses           484     401
      -as amended                                              10,932   6,488
    



    
            Non-operating items and fair value accounting effects
    

    
    Non-operating items(a)
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
     2007    2008    2008  $ million                           2008     2007
    

    
      378    (376) (1,976)  Exploration and Production       (2,352)   1,135
      767     609     (99)  Refining and Marketing              510      538
       (8)    (81)   (123)  Other businesses and corporate     (204)      26
    1,137     152  (2,198)                                   (2,046)   1,699
     (347)    (56)    770   Taxation(b)                         714     (539)
      790      96  (1,428)                                   (1,332)   1,160
    


    
    Fair value accounting effects(c)
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
     2007    2008    2008    $ million                         2008     2007
                            Exploration and Production
                            Unrecognized gains (losses)
                             brought forward
      124     107     366    from previous period               107      155
                            Unrecognized (gains) losses
     (198)   (366)   (739)   carried forward                   (739)    (198)
                            Favourable (unfavourable) impact
                             relative to management's
      (74)   (259)   (373)   measure of performance            (632)     (43)
                            Refining and Marketing
                            Unrecognized gains (losses)
                             brought forward
      611     429     328    from previous period               429       72
                            Unrecognized (gains) losses
     (274)   (328)   (489)   carried forward                   (489)    (274)
                            Favourable (unfavourable) impact
                             relative to management's measure
      337     101    (161)   of performance                     (60)    (202)
      263    (158)   (534)                                     (692)    (245)
      (80)     58     187   Taxation(b)                         245       94
      183    (100)   (347)                                     (447)    (151)
    


    
    Total of non-operating items and fair value accounting effects
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
     2007    2008    2008   $ million                          2008     2007
    

    
      304    (635) (2,349)  Exploration and Production       (2,984)   1,092
    1,104     710    (260)  Refining and Marketing              450      336
       (8)    (81)   (123)  Other businesses and corporate     (204)      26
    1,400     (6)  (2,732)                                   (2,738)   1,454
     (427)     2      957   Taxation(b)                         959     (445)
      973     (4)  (1,775)                                   (1,779)   1,009
    
    (a) An analysis of non-operating items by type is provided on page 21 and
a geographical analysis is shown on pages 7, 9 and 10.
    (b) Tax is calculated using the quarter's effective tax rate on
replacement cost profit. Amounts for comparative periods have been amended to
reflect a redefinition of the effective tax rate on replacement cost profit
arising as a result of the exclusion of tax effects on inventory holding gains
and losses as described on page 2.

    (c) An explanation of fair value accounting effects is provided on page
11.


    
                              Per share amounts
    

    
         Second     First    Second
         quarter   quarter   quarter                            First half
          2007      2008      2008                            2008        2007
                                      Results for the
                                      period ($ million)
         7,376      7,451      9,465  Profit(a)             16,916      12,040
                                      Replacement
    

    
         6,488      6,588      6,853   cost profit          13,441      10,932
    

    
                                      Shares in issue at
                                       period end
    19,133,973 18,877,537 18,805,089   (thousand)(b)    18,805,089  19,133,973
    

    
                                      - ADS equivalent
     3,188,996  3,146,256  3,134,182    (thousand)(b)    3,134,182   3,188,996
    

    
                                      Average number of
                                       shares outstanding
    19,186,461 18,875,611 18,823,515   (thousand)(b)    18,849,504  19,284,938
    

    
                                      - ADS equivalent
     3,197,744  3,145,935  3,137,253  (thousand)(b)      3,141,584   3,214,156
    

    
                                      Shares repurchased
                                       in the period
       175,806     90,996    85,900   (thousand)           176,896     413,722
    

    
                                      Per ordinary share (cents)
                                      Profit for
         38.37      39.47     50.27    the period            89.74       62.43
                                      RC profit for
         33.75      34.90     36.40    the period            71.30       56.68
    

    
                                      Per ADS (cents)
                                      Profit for
        230.22     236.82    301.62    the period           538.44      374.58
                                      RC profit for
        202.50     209.40    218.40    the period           427.80      340.08
    

    
    (a) Profit attributable to BP shareholders.
    (b) Excludes treasury shares.
    


    
                                  Dividends
    


    
    Dividends payable
    
    BP today announced a dividend of 14 cents per ordinary share to be paid
in September. Holders of ordinary shares will receive 7.039 pence per share
and holders of American Depository Receipts (ADRs) $0.84 per ADS. The dividend
is payable on 8 September to shareholders on the register on 15 August.
Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in
the US Direct Access Plan will receive the dividend in the form of shares,
also on 8 September.

    
    Dividends paid
    

    
    Second   First  Second
    quarter quarter quarter                                     First half
     2007    2008    2008                                      2008     2007
                             Dividends paid per ordinary share
    10.325  13.525  13.525     cents                          27.050   20.650
     5.151   6.813   6.830     pence                          13.643   10.409
     61.95   81.15   81.15   Dividends paid per ADS (cents)   162.30   123.90
    



    
                 Net debt ratio - net debt: net debt + equity
    

    
    Second   First  Second
    quarter quarter quarter                                     First half
     2007    2008    2008    $ million                         2008     2007
    

    
    23,754  29,871  30,189   Gross debt                       30,189   23,754
                             Less: fair value asset
                             (liability) of hedges
       379   1,234     900    related to finance debt            900      379
    23,375  28,637  29,289                                    29,289   23,375
     2,643   4,820   3,593   Cash and cash equivalents         3,593    2,643
    20,732  23,817  25,696   Net debt                         25,696   20,732
    89,423  99,536 106,454   Equity                          106,454   89,423
        19%     19%     19%  Net debt ratio                       19%      19%
    
    Net debt and net debt ratio are non-GAAP measures. We believe that these
measures provide useful information to investors. Net debt enables investors
to see the economic effect of gross debt, related hedges and cash and cash
equivalents in total. The net debt ratio enables investors to see how
significant net debt is relative to equity from shareholders. Net debt has
been redefined to include the fair value of associated derivative financial
instruments that are used to hedge foreign exchange and interest rate risks
relating to finance debt, for which hedge accounting is claimed. The
derivatives are reported on the balance sheet within the headings 'Derivative
financial instruments'. Amounts for comparative periods are presented on a
consistent basis. See note 2(c) on page 25 for further information.


    
                          Exploration and Production
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
     2007    2008    2008   $ million                           2008    2007
    

    
     7,165  10,054  10,819  Profit before interest and tax(a) 20,873  13,482
       (46)     18     (48) Inventory holding (gains) losses     (30)    (57)
                            Replacement cost profit before
     7,119  10,072  10,771   interest and tax                 20,843  13,425
    

    
                            By region:
     1,105     923    (124) UK                                   799   2,227
       182     276     350  Rest of Europe                       626     909
     2,183   3,085   3,601  US                                 6,686   3,914
     3,649   5,788   6,944  Rest of World                     12,732   6,375
     7,119  10,072  10,771                                    20,843  13,425
    

    
    (a) Includes profit after interest and tax of equity-accounted entities.
    
    The replacement cost profit before interest and tax for the second
quarter and half year was $10,771 million and $20,843 million respectively,
increases of 51% and 55% over the same periods of 2007. The increases in both
periods were primarily due to higher oil and gas realizations. Partly
offsetting these were higher charges for non-operating items (see below) and
higher costs, primarily reflecting the impacts of sector-specific inflation,
higher depreciation and higher production taxes. The results also included
higher earnings from equity-accounted entities, primarily from TNK-BP due to
higher prices and the effect of lagged tax reference prices.
    The non-operating charge of $1,976 million in the second quarter
primarily comprised fair value losses on embedded derivatives partly offset by
the reversal of a previous impairment charge. In the first half, the net non-
operating charge was $2,352 million with the most significant item being fair
value losses on embedded derivatives partly offset by the reversal of certain
provisions and the reversal of a previous impairment charge. The corresponding
periods in 2007 contained net non-operating gains of $378 million and $1,135
million respectively. Additionally, in the second quarter, fair value
accounting effects had an unfavourable impact of $373 million compared with an
unfavourable impact of $74 million a year ago. For the first half, the
unfavourable effect was $632 million compared with an unfavourable effect of
$43 million a year ago.
    Reported production for the quarter was 3,830mboe/d, broadly flat with
the second quarter of 2007. After adjusting for the impact of lower
entitlement in our production-sharing agreements (PSAs), production was around
6% higher than the second quarter of 2007 reflecting the continued ramp-up of
production following the start-up of major projects in late 2007 and the first
half of 2008. We expect the quarterly phasing of underlying production during
the year to reflect the normal seasonal effects associated with turnaround
activity.
    Reported production for the half year was 3,871mboe/d, broadly flat with
the same period of the previous year. After adjusting for the effect of
entitlement changes in our PSAs, production for the half year was around 6%
higher than the same period of 2007.
    During the second quarter, we had first production from the Taurt (BP 50%
and operator) and Saqqara fields in Egypt. Saqqara is operated by the Gulf of
Suez Petroleum Company, an equal joint venture between Egyptian General
Petroleum Corporation and BP. In the Gulf of Mexico, we progressed the
commissioning of Thunder Horse (BP 75% and operator) with production from the
first well and on 3 July, first injection of water occurred at the Ursa
waterflood project (BP 22.69%).
    Also during the quarter, we had exploration success in the North Sea with
the Kinnoull discovery (BP 77% and operator) and we acquired three exploration
licences in the Canadian Beaufort Sea. On 28 July, we announced that BP and
its co-venturers have received authorization to develop a series of deepwater
oil discoveries in offshore Angola's Block 31 (BP 26.67% and operator) where
we have made 15 discoveries to date.
    On 17 July, we announced that we have agreed to acquire Chesapeake Energy
Corporation's interests in approximately 90,000 net acres of leasehold and
producing natural gas properties in the Arkoma Basin Woodford Shale play for
$1.75 billion in cash.
    In order to comply with the requirements of the Disclosure and
Transparency Rules (DTR) made by the UK Financial Services Authority, we
include here a summary of the principal disclosures made in our first-quarter
results announcement. At the start of the second quarter, production commenced
at Deep Water Gunashli (BP 34.1% and operator), we announced the Kodiak
discovery in the deepwater Gulf of Mexico and, jointly with ConocoPhillips,
announced that we have combined resources to start Denali - The Alaska Gas
Pipeline. During the first quarter, we had first production from the Mondo
field within the Kizomba C development in Angola. We also had exploration
success in Angola, Egypt and the North Sea.  We completed the deal with Husky
Energy Inc. to create an integrated North American oil sands business by means
of two separate joint ventures.


    
                          Exploration and Production
    

    
    Second   First  Second
    quarter quarter  quarter                                    First half
     2007    2008     2008   $ million                         2008    2007
    

    
                             Non-operating items
       164    (694) (2,082)  UK                               (2,776)    316
        (2)      -       -   Rest of Europe                        -     531
       178      (8)     (8)  US                                  (16)    171
        38     326     114   Rest of World                       440     117
       378    (376) (1,976)                                   (2,352)  1,135
    

    
                             Fair value accounting effects(a)
        (4)     17    (147)  UK                                 (130)     34
         -       -       -   Rest of Europe                        -       -
       (71)   (142)   (236)  US                                 (378)    (77)
         1    (134)     10   Rest of World                      (124)      -
       (74)   (259)   (373)                                     (632)    (43)
    

    
                             Exploration expense
         7      92       8   UK                                  100      27
         -       -       -   Rest of Europe                        -       -
        54      72      47   US                                  119     131
        94     129      63   Rest of World                       192     153
       155     293     118                                       411     311
    

    
                             Production (net of royalties)(b)
                             Liquids (mb/d) (net of royalties)(c)
       218     191     186   UK                                  188     227
        43      44      40   Rest of Europe                       42      52
       532     554     534   US                                  544     529
     1,656   1,664   1,648   Rest of World                     1,657   1,640
     2,449   2,453   2,408                                     2,431   2,448
    

    
                             Natural gas (mmcf/d)
                             (net of royalties)
       731     971     723   UK                                  847     818
        22      25      21   Rest of Europe                       23      32
     2,165   2,149   2,140   US                                2,144   2,164
     4,941   5,319   5,364   Rest of World                     5,342   5,165
     7,859   8,464   8,248                                     8,356   8,179
    

    
                             Total hydrocarbons (mboe/d)(d)
       344     358     311   UK                                  335     368
        47      48      43   Rest of Europe                       46      57
       905     925     903   US                                  914     902
     2,508   2,582   2,573   Rest of World                     2,576   2,530
     3,804   3,913   3,830                                     3,871   3,857
    

    
                             Average realizations(e)
     62.58   90.92  109.95   Total liquids ($/bbl)            100.66   57.96
      4.45    5.88    6.63   Natural gas ($/mcf)                6.25    4.66
     44.97   62.27   75.39   Total hydrocarbons ($/boe)        68.85   42.97
    
    (a) These effects represent the favourable (unfavourable) impact relative
to management's measure of performance. Further information on fair value
accounting effects is provided on pages 3 and 11.
    
    (b) Includes BP's share of production of equity-accounted entities.
    (c) Crude oil and natural gas liquids.
    
    (d) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels.
    (e) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
    Because of rounding, some totals may not agree exactly with the sum of
their component parts.


    
                            Refining and Marketing
    

    
    Second   First   Second
    quarter quarter  quarter                                      First half
     2007    2008     2008   $ million                          2008    2007
    

    
     3,983   2,573   4,430   Profit before interest and tax(a)  7,003   5,078
    (1,241) (1,324) (3,891)  Inventory holding (gains) losses  (5,215) (1,532)
                             Replacement cost profit (loss)
     2,742   1,249     539    before interest and tax           1,788   3,546
                             By region:
       937     107     118   UK                                   225     895
       584     629     429   Rest of Europe                     1,058     882
       966     154    (401)  US                                  (247)  1,095
       255     359     393   Rest of World                        752     674
     2,742   1,249     539                                      1,788   3,546
    

    
    (a) Includes profit after interest and tax of equity-accounted entities.
    
    The replacement cost profit before interest and tax for the second
quarter and half year was $539 million and $1,788 million respectively. The
results in the equivalent periods of 2007 were $2,742 million and $3,546
million respectively. The current-year results included a net non-operating
charge primarily relating to restructuring of $99 million in the second
quarter and a net non-operating gain of $510 million in the half year. A year
ago, the results included net non-operating gains of $767 million and $538
million respectively. Fair value accounting effects had unfavourable impacts
of $161 million for the current quarter and $60 million for the half year. A
year ago, the impact was $337 million favourable for the quarter and $202
million unfavourable for the half year.
    Compared with 2007, both the second quarter and half-year results
reflected the adverse impacts of significantly lower refining margins,
particularly in the US. This more than offset the benefits of the underlying
performance improvement of our US refining operations.
    The Fuels Value Chains (FVCs) were impacted by lower refining margins and
continued to experience lower sales volumes and generally flat or reduced
retail margins as a result of high fuel prices and lower demand. The average
refining Global Indicator Margin (GIM) and BP's actual refining margin for the
second quarter and half year both remained significantly lower than in 2007.
    Refining throughputs for the quarter and half year were 2,239mb/d and
2,202mb/d respectively, compared with 2,128mb/d and 2,180mb/d for the same
periods last year. The higher throughputs were mainly from the recoveries at
the Texas City and Whiting refineries, partially offset by the loss of
throughput from the disposal of the Coryton refinery and a reduced interest in
the Toledo refinery due to the Husky joint venture deal. Excluding portfolio
impacts, the underlying improvement in throughputs in the second quarter was
13% year-on-year. Solomon refining availability continued to improve, reaching
88.3% in the second quarter.
    Following the restoration of Whiting to its full clean fuel capacity of
360mb/d on 21 March, the Texas City refinery has successfully restored its
full crude capacity and the majority of its economic capability. The residue
hydrotreater at Texas City is being commissioned with the first train having
started up in mid-July. We have also taken the final investment decision on
the significant upgrading of the Whiting refinery, repositioning it to run
more than 80% Canadian heavy crude oil.
    We are making good progress with our focus on simplification and cost
efficiency. The lubricants and aviation businesses are on track to reduce
their geographical footprint, and the franchise model for our retail sites in
the US is also progressing well. Through these changes, together with the
implementation of the FVCs and the simplification of internal interfaces and
processes, we are on track to deliver the anticipated reduction in headcount.
    The International Businesses, in particular lubricants, continue to
perform strongly in a challenging environment.
    Refining margins in the third quarter to date remain lower than the
second quarter and substantially below the 2007 level. Higher energy costs
continue to impact refining earnings, more so in the US, offsetting the
benefits from the continuing recovery of our US refining operations and
availability. Refinery turnaround activities will be higher in the third
quarter than in the second. Our marketing businesses continue to be impacted
by the slowing of the OECD economies and the effects of high and rising
wholesale prices. The current volatile pricing environment is also proving
challenging for our supply optimization activities.
    In order to comply with the DTR requirements, we include here a summary
of the principal disclosures made in our first-quarter results announcement.
Our new 900ktepa Zhuhai purified terephthalic acid (PTA) plant was
successfully commissioned in early 2008. On 17 March 2008, BP and Irving Oil
entered into a memorandum of understanding to work together on the next phase
of the proposed Eider Rock refinery in Saint John, New Brunswick, Canada.


    
                            Refining and Marketing
    

    
    Second   First   Second
    quarter quarter  quarter                                     First half
     2007    2008     2008   $ million                          2008    2007
    

    
                             Non-operating items
       844     (49)    (10)  UK                                  (59)    681
       (44)    (85)    (32)  Rest of Europe                     (117)    (56)
       170     774     (16)  US                                  758     112
      (203)    (31)    (41)  Rest of World                       (72)   (199)
       767     609     (99)                                      510     538
    

    
                             Fair value accounting effects(a)
        83      (4)   (177)  UK                                 (181)    (98)
        48      36     (59)  Rest of Europe                      (23)   (117)
       174      95      53   US                                  148       9
        32     (26)     22   Rest of World                        (4)      4
       337     101    (161)                                      (60)   (202)
    

    
                             Refinery throughputs (mb/d)
       123       -       -   UK                                    -     136
       700     775     753   Rest of Europe                      764     670
       996   1,076   1,189   US                                1,133   1,074
       309     315     297   Rest of World                       305     300
     2,128   2,166   2,239   Total throughput                  2,202   2,180
      82.7    88.0    88.3   Refining availability (%)(b)       88.1    82.2
    

    
                             Oil sales volumes (mb/d)
                             Refined products
       343     321     315   UK                                  318     339
     1,271   1,244   1,236   Rest of Europe                    1,240   1,258
     1,579   1,455   1,498   US                                1,477   1,571
       615     692     716   Rest of World                       704     620
     3,808   3,712   3,765   Total marketing sales             3,739   3,788
     1,867   2,047   2,017   Trading/supply sales              2,032   1,947
     5,675   5,759   5,782   Total refined product sales       5,771   5,735
     2,161   1,860   1,848   Crude oil                         1,854   2,089
     7,836   7,619   7,630   Total oil sales                   7,625   7,824
    

    
                             Global Indicator Refining Margin
                             ($/bbl)(c)
      7.12    4.79    7.46   NWE                                6.12    5.65
     24.46    6.21    8.59   USGC                               7.40   17.34
     26.05    1.11    6.53   Midwest                            3.82   16.89
     22.71    5.91    9.94   USWC                               7.92   22.46
      6.01    4.76    9.41   Singapore                          7.09    5.43
     16.66    4.57    8.19   Average                            6.38   13.07
    

    
                             Chemicals production (kte)
       246     261     164   UK                                  425     502
       655     708     657   Rest of Europe                    1,365   1,403
     1,047   1,036   1,022   US                                2,058   2,123
     1,497   1,531   1,598   Rest of World                     3,129   3,017
     3,445   3,536   3,441   Total production                  6,977   7,045
    
    (a) These effects represent the favourable (unfavourable) impact relative
to management's measure of performance. Further information on fair value
accounting effects is provided on pages 3 and 11.
    (b) Refining availability is defined as the ratio of units which are
available for processing, regardless of whether they are actually being used,
to total capacity. Where there is planned maintenance, such capacity is not
regarded as being available.
    (c) The Global Indicator Refining Margin (GIM) is the average of regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude with
product yields characteristic of the typical level of upgrading complexity.
The regional indicator margins may not be representative of the actual margins
achieved by BP in any period because of BP's particular refinery
configurations and crude and product slate.


    
                        Other businesses and corporate
    

    
    Second   First   Second
    quarter quarter  quarter                                      First half
     2007    2008     2008   $ million                           2008    2007
    

    
                             Profit (loss) before interest
      (171)   (193)   (301)   and tax(a)                         (494)   (268)
        (2)    (20)    (13)  Inventory holding (gains) losses     (33)     (3)
                             Replacement cost profit (loss)
      (173)   (213)   (314)   before interest and tax            (527)   (271)
    

    
                             By region:
       (29)   (119)   (119)  UK                                  (238)    (55)
        (9)      -     (29)  Rest of Europe                       (29)     12
      (128)   (152)   (185)  US                                  (337)   (261)
        (7)     58      19   Rest of World                         77      33
      (173)   (213)   (314)                                      (527)   (271)
                             Results include:
                             Non-operating items
       (15)     (6)    (41)  UK                                   (47)    (15)
         -     (13)    (47)  Rest of Europe                       (60)     28
         7     (49)    (33)  US                                   (82)     13
         -     (13)     (2)  Rest of World                        (15)      -
        (8)    (81)   (123)                                      (204)     26
    

    
    (a) Includes profit after interest and tax of equity-accounted entities.
    
    Other businesses and corporate comprises the Alternative Energy business,
Shipping, the group's aluminium asset, Treasury (which includes interest
income on the group's cash and cash equivalents) and corporate activities
worldwide.
    The replacement cost profit before interest and tax for the second
quarter was a loss of $314 million, compared with a loss of $173 million a
year ago. For the half year, the replacement cost profit before interest and
tax was a loss of $527 million, compared with a loss of $271 million a year
ago.
    The net non-operating charge for the second quarter and half year was
$123 million and $204 million, respectively. The second-quarter loss included
a $75 million restructuring charge and a net charge of $48 million for
impairment and other provisions. The prior year included a net non-operating
charge of $8 million in the second quarter and a net gain of $26 million in
the half year.
    Following the first-quarter announcement that Alternative Energy and
Dominion had entered into a joint venture to develop a wind farm in Indiana,
construction of the Fowler Ridge installation commenced in May. As previously
announced, we formed a joint venture with NRG Energy, Inc. for the development
and operation of the Sherbino Mesa wind farm in Texas.
    In June, we initiated a further wind project, Flat Ridge in Kansas, a
partnership with Westar Energy, Inc. and on 30 June, we acquired the Whiting
Clean Energy facility, a 525MW natural-gas fired combined-cycle cogeneration
power plant, from NiSource, Inc.
    In order to comply with the DTR requirements, we include here a summary
of the principal additional disclosures made in our first-quarter results
announcement. During the first quarter, Alternative Energy announced its
intention to pursue development options for a hydrogen power plant in Abu
Dhabi with Abu Dhabi Future Energy Company (Masdar). In the first quarter,
Alternative Energy announced its intention to take a 50% stake in Tropical
BioEnergia SA, an ethanol refining joint venture in Brazil established by
Brazilian companies Santelisa Vale and Maeda Group and, on 10 June, we
completed this acquisition.


    
                                                     Second    First   Second
                                                     quarter  quarter  quarter
                                                      2008     2008     2007
    

    
    Wind - net rated capacity as at period end
     (megawatts)(a)                                     172      172       32
    Solar - cell production capacity as at period end
     (megawatts)(b)                                     255      228      201
    
    (a) Net wind capacity is the sum of the rated capacities of the
assets/turbines that have entered into commercial operation, including BP's
share of equity-accounted entities. The equivalent capacities on a gross-JV
basis (which includes 100% of the capacity of equity-accounted entities where
BP has partial ownership) are 373MW as at the second quarter of 2008, 373MW as
at the first quarter of 2008 and 32MW as at the second quarter last year.
    (b) Solar capacity is the theoretical cell production capacity per annum
of in-house manufacturing facilities.
    
    Information on fair value accounting effects
    
    BP uses derivative instruments to manage the economic exposure relating
to inventories above normal operating requirements of crude oil, natural gas
and petroleum products as well as certain contracts to supply physical volumes
at future dates. Under IFRS, these inventories and contracts are recorded at
historic cost and on an accruals basis, respectively. The related derivative
instruments, however, are required to be recorded at fair value with gains and
losses recognized in income because hedge accounting is either not permitted
or not followed, principally due to the impracticality of effectiveness
testing requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these inventories
and contracts are not recognized until the commodity is sold in a subsequent
accounting period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement from the time the derivative
commodity contract is entered into on a fair value basis using forward prices
consistent with the contract maturity.
    IFRS requires that inventory held for trading be recorded at its fair
value using period end spot prices whereas any related derivative commodity
instruments are required to be recorded at values based on forward prices
consistent with the contract maturity. Depending on market conditions, these
forward prices can be either higher or lower than spot prices resulting in
measurement differences.
    BP enters into contracts for pipelines and storage capacity which, under
IFRS, are recorded on an accruals basis. These contracts are risk managed
using a variety of derivative instruments which are fair valued under IFRS.
This results in measurement differences in relation to recognition of gains
and losses.
    The way that BP manages the economic exposures described above, and
measures performance internally, differs from the way these activities are
measured under IFRS. BP calculates this difference by comparing the IFRS
result with management's internal measure of performance, under which the
inventory and the supply and capacity contracts in question are valued based
on fair value using relevant forward prices prevailing at the end of the
period. We believe that disclosing management's estimate of this difference
provides useful information for investors because it enables investors to see
the economic effect of these activities as a whole. The impacts of fair value
accounting effects, relative to management's internal measure of performance,
are shown in the table on page 3. Information for all quarters of 2006 and
2007 can be found at http://www.bp.com/FVAE.
    
    Principal risks and uncertainties
    
    The principal risks and uncertainties for the remaining six months of the
year are described in the Risk Factors section on pages 9 and 10 of BP Annual
Report and Accounts 2007. Information in relation to our investment in TNK-BP
is included in Note 9 on page 30 of this second quarter and half year result
announcement.
    Cautionary Statement: The foregoing discussion contains forward-looking
statements particularly those regarding capital expenditure, expected phasing
of underlying production, results of simplification and cost efficiency
measures, refinery turnaround activities, the continuing impact of higher
energy costs on refining earnings, of slowing OECD economies and high and
rising wholesale prices on the marketing businesses as well as the impact of a
volatile pricing environment on supply optimization activities. By their
nature, forward-looking statements involve risk and uncertainty and actual
results may differ from those expressed in such statements depending on a
variety of factors including the following: the timing of bringing new fields
onstream; industry product supply; demand and pricing; operational problems;
general economic conditions (including inflation); political stability and
economic growth in relevant areas of the world; changes in laws and
governmental regulations and quotas; exchange rate fluctuations; development
and use of new technology; the success or otherwise of partnering; the actions
of competitors; natural disasters and adverse weather conditions; changes in
public expectations and other changes to business conditions; wars and acts of
terrorism or sabotage; and other factors discussed in this announcement.  For
more information you should refer to our Annual Report and Accounts 2007 and
our 2007 Annual Report on Form 20-F filed with the US Securities and Exchange
Commission.


    
                   Statement of directors' responsibilities
    
    The directors confirm that, to the best of their knowledge, the condensed
set of financial statements on pages 13 - 19 and 22 - 30 has been prepared in
accordance with IAS 34 'Interim Financial Reporting', and that the interim
management report on pages 1 - 11, 20 - 21 includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8.
    The directors of BP p.l.c. are listed in BP Annual Report and Accounts
2007, with the exception of Dr D C Allen who retired from the board on 31
March 2008 and Dr W E Massey who retired from the board on 17 April 2008.
    
    By order of the board
    

    
    Tony Hayward                         Byron Grote
    Group Chief Executive                Chief Financial Officer
    

    
    28 July 2008                         28 July 2008
    



    
                    Independent review report to BP p.l.c.
    
    We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six months
ended 30 June 2008 which comprises the group income statement, group balance
sheet, group statement of recognized income and expense, movement in
shareholders' equity, group cash flow statement, the related tables on pages
18, 19 and 22, and notes 1 to 11. We have read the other information contained
in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
    This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements (UK and Ireland)
2410, 'Review of Interim Financial Information Performed by the Independent
Auditor of the Entity' issued by the Auditing Practices Board for use in the
United Kingdom (ISRE 2410). To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our
work, for this report, or for the conclusions we have formed.
    
    Directors' responsibilities
    
    The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
    As disclosed in Note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB) and IFRS as
adopted by the European Union (EU). The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
issued by the IASB and as adopted by the EU.
    
    Our responsibility
    
    Our responsibility is to express to the company a conclusion on the
condensed set of financial statements in the half-yearly financial report
based on our review.
    
    Scope of review
    
    We conducted our review in accordance with ISRE 2410. A review of interim
financial information consists of making enquiries primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
    
    Conclusion
    
    Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2008 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
issued by the IASB and as adopted by the EU and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.

    
    Ernst & Young LLP
    London
    28 July 2008
    



    
                            Group income statement
    

    
    Second   First  Second
    quarter quarter quarter                                     First half
     2007    2008    2008                                      2008    2007
          $ million                                             $ million
    

    
                            Sales and other
    71,872  87,745 108,747   operating revenues               196,492 133,179
                            Earnings from jointly controlled
                             entities - after
       910     975   1,752   interest and tax                   2,727   1,243
                            Earnings from associates - after
       173     225     251   interest and tax                     476     336
       128     278     153  Interest and other revenues           431     361
    

    
    73,083  89,223 110,903  Total revenues (Note 4)           200,126 135,119
                            Gains on sale of businesses
     1,309     925      79   and fixed assets                   1,004   1,989
    

    
    74,392  90,148 110,982  Total revenues and other income   201,130 137,108
    


    
    49,983  61,800  77,317  Purchases                         139,117  92,643
                            Production and manufacturing
     6,276   6,799   7,408   expenses                          14,207  12,028
                            Production and similar taxes
       827   1,609   2,299  (Note 5)                            3,908   1,574
                            Depreciation, depletion and
     2,535   2,782   2,850   amortization                       5,632   5,054
                            Impairment and losses on sale of
       455      40      23   businesses and fixed assets           63     678
       155     293     118  Exploration expense                   411     311
                            Distribution and administration
     3,565   3,896   3,977   expenses                           7,873   7,022
                            Fair value (gain) loss on
      (283)    690   2,081   embedded derivatives               2,771    (438)
                            Profit before interest and
    10,879  12,239  14,909   taxation                          27,148  18,236
       317     406     381  Finance costs (Note 6)                787     648
                            Net finance income relating to
                             pensions and other post-
      (162)   (160)   (160)  retirement benefits (Note 7)        (320)   (322)
    10,724  11,993  14,688  Profit before taxation             26,681  17,910
     3,283   4,410   5,100  Taxation                            9,510   5,723
     7,441   7,583   9,588  Profit for the period              17,171  12,187
                            Attributable to:
     7,376   7,451   9,465  BP shareholders                    16,916  12,040
        65     132     123  Minority interest                     255     147
     7,441   7,583   9,588                                     17,171  12,187
                            Earnings per share - cents
                            Profit for the period attributable
                            to BP shareholders
     38.37   39.47   50.27  Basic                               89.74   62.43
     38.18   39.12   49.80  Diluted                             88.92   62.12
    



    
                             Group balance sheet
    

    
                                                         30 June   31 December
                                                           2008        2007
                                                              $ million
    Non-current assets
    Property, plant and equipment                        101,787      97,989
    Goodwill                                              11,016      11,006
    Intangible assets                                      7,386       6,652
    Investments in jointly controlled entities            24,883      18,113
    Investments in associates                              4,601       4,579
    Other investments                                      1,981       1,830
    Fixed assets                                         151,654     140,169
    Loans                                                  1,057         999
    Other receivables                                        958         968
    Derivative financial instruments                      12,077       3,741
    Prepayments                                            1,128       1,083
    Defined benefit pension plan surplus                   9,086       8,914
                                                         175,960     155,874
    Current assets
    Loans                                                    173         165
    Inventories                                           35,182      26,554
    Trade and other receivables                           48,482      38,020
    Derivative financial instruments                      16,075       6,321
    Prepayments                                            4,153       3,589
    Current tax receivable                                   195         705
    Cash and cash equivalents                              3,593       3,562
                                                         107,853      78,916
    Assets classified as held for sale                         -       1,286
                                                         107,853      80,202
    Total assets                                         283,813     236,076
    Current liabilities
    Trade and other payables                              54,029      43,152
    Derivative financial instruments                      15,593       6,405
    Accruals and deferred income                           7,019       6,640
    Finance debt                                          16,638      15,394
    Current tax payable                                    5,681       3,282
    Provisions                                             2,080       2,195
                                                         101,040      77,068
    Liabilities directly associated with the assets
     classified as held for sale                               -         163
                                                         101,040      77,231
    Non-current liabilities
    Other payables                                         2,821       1,251
    Derivative financial instruments                      15,116       5,002
    Accruals and deferred income                             882         959
    Finance debt                                          13,551      15,651
    Deferred tax liabilities                              20,935      19,215
    Provisions                                            13,447      12,900
    Defined benefit pension plan and other
      post-retirement benefit plan deficits                9,567       9,215
                                                          76,319      64,193
    Total liabilities                                    177,359     141,424
    Net assets                                           106,454      94,652
    Equity
    BP shareholders' equity                              105,356      93,690
    Minority interest                                      1,098         962
                                                         106,454      94,652
    



    
               Group statement of recognized income and expense
    

    
    Second   First  Second
    quarter quarter quarter                                    First half
     2007    2008    2008                                      2008    2007
           $ million                                             $ million
    

    
       621     778     255  Currency translation differences   1,033     795
                            Exchange gain on translation of
                             foreign operations
                             transferred to gain on sale of
      (128)      -       -   businesses and fixed assets           -    (147)
                            Available-for-sale investments
         6    (191)    322   marked to market                    131    (103)
                            Available-for-sale investments -
                             recycled to the
         -      (5)      -   income statement                     (5)      -
        13      74      49  Cash flow hedges marked to market    123      41
                            Cash flow hedges - recycled to the
       (21)     (2)      1   income statement                     (1)    (81)
                            Cash flow hedges - recycled to the
         -     (23)    (18)  balance sheet                       (41)     (7)
       105    (118)    107  Taxation                             (11)     28
                            Net income (expense) recognized
       596     513     716   directly in equity                1,229     526
     7,441   7,583   9,588  Profit for the period             17,171  12,187
                            Total recognized income and
     8,037   8,096  10,304   expense for the period           18,400  12,713
                            Attributable to:
     7,967   7,960  10,182    BP shareholders                 18,142  12,545
        70     136     122    Minority interest                  258     168
     8,037   8,096  10,304                                    18,400  12,713
    


    
                       Movement in shareholders' equity
    

    
                                                         BP
                                               shareholders' Minority  Total
                                                  equity     interest  equity
    $ million
    At 31 December 2007                            93,690       962    94,652
    

    
    Currency translation differences (net of tax)   1,093         3     1,096
    Available-for-sale investments (net of tax)       161         -       161
    Cash flow hedges (net of tax)                      76         -        76
    Tax on share-based payments                      (104)        -      (104)
    Profit for the period                          16,916       255    17,171
    Total recognized income and expense
     for the period                                18,142       258    18,400
    

    
    Dividends                                      (5,099)     (122)   (5,221)
    Repurchase of ordinary share capital           (1,796)        -    (1,796)
    Share-based payments                              419         -       419
    

    
    At 30 June 2008                               105,356     1,098   106,454
    



    
                          Group cash flow statement
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
      2007    2008    2008                                     2008     2007
           $ million                                             $ million
                            Operating activities
    10,724  11,993  14,688  Profit before taxation            26,681   17,910
                            Adjustments to reconcile profits
                             before tax to net cash provided
                             by operating activities
                            Exploration expenditure
        60     184      44   written off                         228      115
                            Depreciation, depletion and
     2,535   2,782   2,850   amortization                      5,632    5,054
                            Impairment and (gain) loss on
                             sale of businesses
      (854)   (885)    (56)  and fixed assets                   (941)  (1,311)
                            Earnings from jointly controlled
    (1,083) (1,200) (2,003)  entities and associates          (3,203)  (1,579)
                            Dividends received from jointly
                             controlled entities
       813   1,387     512   and associates                    1,899    1,042
                            Working capital and other
    (6,109) (3,367) (9,317)  movements                       (12,684)  (7,167)
                            Net cash provided by operating
     6,086  10,894   6,718   activities                       17,612   14,064
                            Investing activities
    (4,334) (4,435) (4,713) Capital expenditure               (9,148)  (7,979)
      (111)      -    (209) Acquisitions, net of cash acquired  (209)  (1,198)
                            Investment in jointly controlled
       (12)   (366)   (247)  entities                           (613)     (21)
       (65)     (4)     (3) Investment in associates              (7)    (109)
                            Proceeds from disposal of fixed
       836     276      59   assets                              335    1,146
                            Proceeds from disposal of
     1,905       -       -   businesses, net of cash disposed      -    2,513
        33     122     212  Proceeds from loan repayments        334       78
       374       -       -  Other                                  -      374
                            Net cash (used in) provided by
    (1,374) (4,407) (4,901)  investing activities             (9,308)  (5,196)
                            Financing activities
    (1,918)   (889)   (928) Net repurchase of shares          (1,817)  (4,320)
     1,513   2,177     655  Proceeds from long-term financing  2,832    2,871
       (93)   (537) (1,654) Repayments of long-term financing (2,191)  (1,227)
                            Net increase (decrease) in
    (1,499) (3,424)  1,516  short-term debt                   (1,908)  (2,057)
                            Dividends paid
    (1,983) (2,554) (2,545)          - BP shareholders        (5,099)  (3,984)
       (71)    (36)    (86)          - Minority interest        (122)    (135)
                            Net cash (used in) provided by
    (4,051) (5,263) (3,042)  financing activities             (8,305)  (8,852)
                            Currency translation differences
                             relating to cash
        26      34      (2)  and cash equivalents                 32       37
                            Increase (decrease) in cash and
       687   1,258  (1,227)  cash equivalents                     31       53
                            Cash and cash equivalents at
     1,956   3,562   4,820  beginning of period                3,562    2,590
                            Cash and cash equivalents at
     2,643   4,820   3,593   end of period                     3,593    2,643
    



    
                          Group cash flow statement
    

    
    Second    First  Second
    quarter  quarter quarter                                      First half
     2007     2008    2008                                      2008    2007
           $ million                                              $ million
                              Working capital and other
                               movements
       (93)    (97)    (118)  Interest receivable                (215)   (188)
       103      99      110   Interest received                   209     188
       317     406      381   Finance costs                       787     648
      (335)   (366)    (396)  Interest paid                      (762)   (668)
                              Net finance income relating to
                               pensions and other
      (162)   (160)    (160)   post-retirement benefits          (320)   (322)
       107      65      173   Share-based payments                238     182
                              Net operating charge for pensions
                               and other post-retirement
                               benefits, less contributions
                               and benefit payments for
       (31)    117       46    unfunded plans                     163    (118)
                              Net charge for provisions, less
      (257)   (165)     (40)   payments                          (205)   (414)
                              (Increase) decrease in
      (683)    543   (8,485)   inventories                     (7,942) (1,331)
                              (Increase) decrease in other
                               current and
      (621) (9,844) (18,626)   non-current assets             (28,470)  2,518
                              Increase (decrease) in other
                               current and
    (2,429)  7,995   21,219    non-current liabilities         29,214  (4,429)
    (2,025) (1,960)  (3,421)  Income taxes paid                (5,381) (3,233)
    

    
    (6,109) (3,367)  (9,317)                                  (12,684) (7,167)
    



    
                     Capital expenditure and acquisitions
    

    
    Second    First  Second
    quarter  quarter quarter                                     First half
      2007    2008    2008                                      2008    2007
           $ million                                             $ million
                            By business
    

    
                            Exploration and Production
       198     225     256  UK                                   481     420
       108     168     165  Rest of Europe                       333     195
     1,542   1,215   1,801  US                                 3,016   2,609
     1,886   4,394   1,727  Rest of World(a)                   6,121   3,533
     3,734   6,002   3,949                                     9,951   6,757
                            Refining and Marketing
        90      53      77  UK                                   130     160
       266     216     379  Rest of Europe(b)                    595   1,476
       380   2,297     662  US(a)                              2,959     649
       118     102     126  Rest of World                        228     198
       854   2,668   1,244                                     3,912   2,483
                            Other businesses and corporate
        34      71      45  UK                                   116      78
         3      13      12  Rest of Europe                        25      12
        63     267     463  US                                   730     114
         8      24      89  Rest of World                        113      12
       108     375     609                                       984     216
     4,696   9,045   5,802                                    14,847   9,456
                            By geographical area
       322     349     378  UK                                   727     658
       377     397     556  Rest of Europe                       953   1,683
     1,985   3,779   2,926  US                                 6,705   3,372
     2,012   4,520   1,942  Rest of World                      6,462   3,743
     4,696   9,045   5,802                                    14,847   9,456
                            Included above:
                            Acquisitions and asset
       332   1,964     324   exchanges(a)(b)                   2,288   1,445
    
    (a) First quarter 2008 includes capital expenditure of $2,848 million in
Exploration and Production and an asset exchange of $1,793 million in Refining
and Marketing relating to the formation of an integrated North American oil
sands business.  Second quarter 2008 includes a further $111 million in
Refining and Marketing reflecting closing adjustments relating to this
transaction.  For further information see Note 3.
    (b) First half 2007 includes $1,132 million for the acquisition of
Chevron's Netherlands manufacturing company.


    
                                Exchange rates
    

    
    Second   First  Second
    quarter quarter quarter                                     First half
     2007    2008    2008                                      2008    2007
    

    
                            US dollar/sterling average rate
     1.99    1.98    1.97    for the period                     1.97    1.97
     2.00    1.99    1.99   US dollar/sterling period-end rate  1.99    2.00
                            US dollar/euro average rate for
     1.35    1.50    1.56    the period                         1.53    1.33
     1.35    1.58    1.58   US dollar/euro period-end rate      1.58    1.35
    



    
                  Analysis of profit before interest and tax
    

    
    Second    First  Second
    quarter  quarter quarter                                    First half
      2007    2008    2008                                     2008    2007
           $ million                                            $ million
                            By business
    

    
                            Exploration and Production
     1,105     923    (124) UK                                   799   2,227
       183     276     350  Rest of Europe                       626     910
     2,204   3,090   3,639  US                                 6,729   3,944
     3,673   5,765   6,954  Rest of World                     12,719   6,401
     7,165  10,054  10,819                                    20,873  13,482
    

    
                            Refining and Marketing
     1,002      69     124  UK                                   193     906
     1,029     944   1,722  Rest of Europe                     2,666   1,510
     1,633   1,115   1,730  US                                 2,845   1,929
       319     445     854  Rest of World                      1,299     733
     3,983   2,573   4,430                                     7,003   5,078
    

    
                            Other businesses and corporate
       (29)   (119)   (119) UK                                  (238)    (55)
        (8)      -     (29) Rest of Europe                       (29)     13
      (127)   (132)   (172) US                                  (304)   (259)
        (7)     58      19  Rest of World                         77      33
      (171)   (193)   (301)                                     (494)   (268)
    10,977  12,434  14,948                                    27,382  18,292
       (98)   (195)    (39) Consolidation adjustment            (234)    (56)
    10,879  12,239  14,909  Total for period                  27,148  18,236
    

    
                            By geographical area
     2,080     873    (120) UK                                   753   3,078
     1,213   1,163   2,065  Rest of Europe                     3,228   2,458
     3,622   3,926   5,144  US                                 9,070   5,554
     3,964   6,277   7,820  Rest of World                     14,097   7,146
    10,879  12,239  14,909  Total for period                  27,148  18,236
    



    
         Analysis of replacement cost profit before interest and tax
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
      2007    2008    2008                                      2008    2007
           $ million                                             $ million
                            By business
    

    
                            Exploration and Production
     1,105     923    (124) UK                                   799   2,227
       182     276     350  Rest of Europe                       626     909
     2,183   3,085   3,601  US                                 6,686   3,914
     3,649   5,788   6,944  Rest of World                     12,732   6,375
     7,119  10,072  10,771                                    20,843  13,425
                            Refining and Marketing
       937     107     118  UK                                   225     895
       584     629     429  Rest of Europe                     1,058     882
       966     154    (401) US                                  (247)  1,095
       255     359     393  Rest of World                        752     674
     2,742   1,249     539                                     1,788   3,546
                            Other businesses and corporate
       (29)   (119)   (119) UK                                  (238)    (55)
        (9)      -     (29) Rest of Europe                       (29)     12
      (128)   (152)   (185) US                                  (337)   (261)
        (7)     58      19  Rest of World                         77      33
      (173)   (213)   (314)                                     (527)   (271)
     9,688  11,108  10,996                                    22,104  16,700
       (98)   (195)    (39) Consolidation adjustment            (234)    (56)
     9,590  10,913  10,957  Total for period                  21,870  16,644
                            By geographical area
     2,015     911    (126) UK                                   785   3,067
       766     849     771  Rest of Europe                     1,620   1,827
     2,933   2,940   2,962  US                                 5,902   4,689
     3,876   6,213   7,350  Rest of World                     13,563   7,061
     9,590  10,913  10,957  Total for period                  21,870  16,644
    


    
                       Analysis of non-operating items
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
      2007    2008    2008                                      2008    2007
           $ million                                             $ million
                            By business
    

    
                            Exploration and Production
                            Impairment and gain (loss) on sale
       102      21     111   of businesses and fixed assets      132     707
         -       -      (5) Environmental and other provisions    (5)      -
                            Restructuring, integration and
         -     (44)      -   rationalization costs               (44)      -
                            Fair value gain (loss) on embedded
       276    (684) (2,082) derivatives                       (2,766)    428
        -      331       -  Other                                331       -
       378    (376) (1,976)                                   (2,352)  1,135
                            Refining and Marketing
                            Impairment and gain (loss) on sale
       767     814     (13)  of businesses and fixed assets      801     588
         -       -       -  Environmental and other provisions     -       -
                            Restructuring, integration and
         -    (205)    (86) rationalization costs               (291)      -
                            Fair value gain (loss) on embedded
         -       -       -   derivatives                           -       -
         -       -       -  Other                                  -     (50)
       767     609     (99)                                      510     538
                            Other businesses and corporate
                            Impairment and gain (loss) on sale
                            of businesses
       (15)     50     (42)   and fixed assets                     8      16
         -       -       -  Environmental and other provisions     -       -
                            Restructuring, integration and
         -     (58)    (75) rationalization costs               (133)      -
                            Fair value gain (loss) on embedded
         7      (6)      1  derivatives                           (5)     10
         -     (67)     (7) Other                                (74)      -
        (8)    (81)   (123)                                     (204)     26
    

    
     1,137     152  (2,198) Total before taxation             (2,046)  1,699
      (347)    (56)    770  Taxation credit (charge)(a)          714    (539)
       790      96  (1,428) Total after taxation for period   (1,332)  1,160
    
    (a) Tax on non-operating items is calculated using the quarter's
effective tax rate on replacement cost profit. Amounts for comparative periods
have been amended to reflect a redefinition of the effective tax rate on
replacement cost profit arising as a result of the exclusion of tax effects on
inventory holding gains and losses as described on page 2.


    
                        Realizations and marker prices
    

    
    Second   First  Second
    quarter quarter quarter                                      First half
      2007    2008    2008                                      2008    2007
    

    
                            Average realizations(a)
                            Liquids ($/bbl)(b)
     63.82   94.86  128.56  UK                                111.49   59.47
     59.42   87.57  101.88  US                                 95.23   55.57
     64.76   92.04  111.23  Rest of World                     101.58   59.36
     62.58   90.92  109.95  BP Average                        100.66   57.96
                            Natural gas ($/mcf)
      4.84    8.08    8.39  UK                                  8.21    6.19
      5.94    6.73    8.76  US                                  7.74    5.85
      3.56    4.97    5.26  Rest of World                       5.11    3.74
      4.45    5.88    6.63  BP Average                          6.25    4.66
    

    
                            Average oil marker prices ($/bbl)
     68.76   96.71  121.18  Brent                             109.05   63.22
     64.89   97.86  123.81  West Texas Intermediate           111.14   61.53
     65.77   96.53  123.61  Alaska North Slope US West Coast  110.40   60.86
     62.16   90.89  116.82  Mars                              104.17   57.76
     65.03   93.35  117.47  Urals (NWE - cif)                 105.50   59.65
     39.56   46.86   63.15  Russian domestic oil               55.01   33.48
                            Average natural gas marker prices
      7.55    8.03   10.94  Henry Hub gas price ($/mmbtu)(c)    9.49    7.16
                            UK Gas - National Balancing Point
     20.24   52.94   60.72  (p/therm)                          56.86   21.31
    
    (a) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
    
    (b) Crude oil and natural gas liquids.
    (c) Henry Hub First of Month Index.

    




For further information:

For further information: Press Office - London: Roddy Kennedy, +44 (0)20
7496 4624, or United States: Ronnie Chappell, +1-281-366-5174; or Investor
Relations - London: Fergus MacLeod, +44 (0)20 7496 4717, or United States:
Rachael MacLean, +1-281-366-6766 Web Site: http://www.bp.com                
http://www.bp.com/investors

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