/FIRST ADD -- NYTU080 -- BP p.l.c. Earnings/



    LONDON, July 29 /CNW/ -

    
                                    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 the periods presented. All such adjustments are of a normal
recurring nature. The interim financial statements and notes included in this
report should be read in conjunction with the consolidated financial
statements and related notes for the year ended 31 December 2007 included in
BP Annual Report and Accounts 2007.
    BP prepares its consolidated financial statements included within its
Annual Report and Accounts in accordance with 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 Companies Act 1985. IFRS as adopted by the EU
differs in certain respects from IFRS as issued by the IASB, however, 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 the Annual Report and Accounts 2008, which do not differ
significantly from those used in BP Annual Report and Accounts 2007.
    
    2. Resegmentation and other changes to comparatives
    (a) Resegmentation
    
    On 11 October 2007, we announced our intention to simplify the
organizational structure of BP. From 1 January 2008, there are only two
business segments - Exploration and Production and Refining and Marketing. A
separate business, Alternative Energy, handles BP's low-carbon businesses and
future growth options outside oil and gas. This includes solar, wind,
gas-fired power, hydrogen, biofuels and coal conversion.
    
    As a result, and with effect from 1 January 2008:
    -- The Gas, Power and Renewables segment ceased to report separately.
    
    -- The natural gas liquids (NGLs), liquefied natural gas and gas and
power marketing and trading businesses were transferred from the Gas, Power
and Renewables segment to the Exploration and Production segment.
    -- The Alternative Energy business was transferred from the Gas, Power
and Renewables segment to Other businesses and corporate.
    -- The Emerging Consumers Marketing Unit was transferred from Refining
and Marketing to Alternative Energy.
    -- The Biofuels business was transferred from Refining and Marketing to
Alternative Energy.
    -- The Shipping business was transferred from Refining and Marketing to
Other businesses and corporate.
    As a result of the transfers identified above, Other businesses and
corporate has been redefined. It now consists of 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.
    Financial information for 2003 to 2007 has been restated to reflect the
resegmentation and is available in BP Financial and Operating Information
2003-2007 and to download from www.bp.com/investors. Quarterly data is
provided for 2004-2007 and annual data for 2003.


    
     2. Resegmentation and other changes to comparatives (continued)
    

    
                                              Resegmented      As reported
                                             First  Second     First Second
                                             half   quarter    half  quarter
                                             2007     2007     2007    2007
    $ million
    Total revenues
    Exploration and Production              18,170    9,028    8,910   4,483
    

    
    Refining and Marketing                 115,735   63,438  116,013  63,570
    Gas, Power and Renewables                    -        -    9,746   4,824
    Other businesses and corporate           1,214      617      450     206
    

    
    Total third party revenues             135,119   73,083  135,119  73,083
    

    
    Profit before interest and tax
    Exploration and Production              13,482    7,165   12,948   6,894
    Refining and Marketing                   5,078    3,983    5,110   3,981
    Gas, Power and Renewables                    -        -      441     235
    Other businesses and corporate            (268)    (171)    (277)   (162)
                                            18,292   10,977   18,222  10,948
    Consolidation adjustment                   (56)     (98)      14     (69)
    Profit before interest and tax          18,236   10,879   18,236  10,879
    (b) Revised income statement presentation
    
    We have implemented a minor change in the presentation of the group
income statement whereby the unwinding of the discount on provisions and on
other payables is now included within finance costs. Previously, this was
included within other finance income or expense. This line item has now been
renamed net finance income or expense relating to pensions and other
post-retirement benefits. This change does not affect profit before interest
and taxation, profit before taxation or profit for the period. The financial
information for comparative periods shows the revised presentation, as set out
below.


    
                                                               First  Second
                                                               half   quarter
                                                               2007    2007
    As reported
    $ million
    Profit before interest and taxation                       18,236  10,879
    Finance costs                                                515     251
    Other finance income                                        (189)    (96)
    Profit before taxation                                    17,910  10,724
    

    
    As amended
    $ million
    Profit before interest and taxation                       18,236  10,879
    Finance costs                                                648     317
    Net finance income relating to pensions and other
     post-retirement benefits                                   (322)   (162)
    Profit before taxation                                    17,910  10,724
    



    
     2. Resegmentation and other changes to comparatives (continued)
    (c) Revised definition of net debt
    
    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.

    
                                                                       First
                                                                        half
                                                                         and
                                                                      second
                                                                     quarter
                                                                        2007
    As reported
    $ million
    Net debt                                                          21,111
    Equity                                                            89,423
    

    
    Ratio of net debt to net debt plus equity                            19%
    

    
    As amended
    $ million
    Net debt                                                          20,732
    Equity                                                            89,423
    

    
    Ratio of net debt to net debt plus equity                            19%
    (d) Minor amendment to first quarter 2008 results
    
    On 13 May 2008, BP p.l.c. made a minor amendment to its first quarter
2008 results announcement.
    Subsequent to making the first quarter results announcement on 29 April
2008, it was discovered that a refining stock valuation error had led to the
value of group-wide inventories being reported as $26,855 million instead of
the correct figure of $26,588 million.
    The impact was not significant to the replacement cost profit
attributable to BP shareholders of $6,588 million for the first quarter of
2008, and this figure was therefore not amended.
    The profit (including inventory gains and losses) before interest and tax
for the Refining and Marketing segment was, however, stated to be $2,840
million instead of $2,573 million, a difference of $267 million. The group's
reported profit for the period attributable to BP shareholders, after tax, was
stated to be $7,619 million instead of $7,451 million, a difference of $168
million.
    The comparative figures for the first quarter 2008 in this second quarter
and half year results announcement have been corrected.


    
                                                        First quarter 2008
                                                      As amended  As reported
                                                             $ million
    

    
                                                    (except per share amounts)
    Group income statement
    Purchases                                            61,800      61,533
    Profit before taxation                               11,993      12,260
    Taxation                                              4,410       4,509
    Profit for the period                                 7,583       7,751
    

    
    Profit attributable to BP shareholders                7,451       7,619
    Inventory holding (gains) losses, net of tax           (863)     (1,031)
    

    
    Earnings per share - cents
    Profit attributable to BP shareholders
    Basic                                                 39.47       40.36
    Diluted                                               39.12       40.00
    

    
    Analysis of profit before interest and tax
    Refining and Marketing
    UK                                                       69          69
    Rest of Europe                                          944         944
    US                                                    1,115       1,382
    Rest of World                                           445         445
                                                          2,573       2,840
    Group balance sheet
    Inventories                                          26,588      26,855
    Deferred tax liabilities                             20,165      20,264
    Net assets                                           99,536      99,704
    BP shareholders' equity                              98,474      98,642
    


    
     3. Significant transaction in the first half
    
    In December 2007, BP signed a memorandum of understanding with Husky
Energy Inc. to form an integrated North American oil sands business. The
transaction was completed on 31 March 2008, with BP contributing its Toledo
refinery to a US jointly controlled entity to which Husky contributed $250
million cash and a payable of $2,590 million. In Canada, Husky contributed its
Sunrise field to a second jointly controlled entity, with BP contributing $250
million in cash and a payable of $2,290 million. The Toledo refinery assets
and associated liabilities were classified as a disposal group held for sale
at 31 December 2007.
    Both jointly controlled entities are owned 50:50 by BP and Husky and are
accounted for using the equity method.
    The amounts set out below reflect the initial recording of the
transaction at 31 March 2008 and subsequent closing adjustments.


    
                                                                     $million
    Income statement
    Gains on sale of businesses and fixed assets                        806
    Profit before taxation                                              806
    Taxation                                                            345
    Profit for the period                                               461
    

    
    Balance sheet
    Non-current assets - investments in jointly controlled entities   4,752
    Current liabilities - trade and other payables                      266
    Non-current liabilities
      Other payables                                                  2,024
      Deferred tax liabilities                                          653
                                                                      2,677
    Total liabilities                                                 2,943
    Net assets                                                        1,809
    

    
    Cash flow statement
    Investment in jointly controlled entities                          (250)
    

    
    Capital expenditure and acquisitions
    Exploration and Production                                        2,848
    Refining and Marketing                                            1,904
                                                                      4,752
    Including acquisitions and asset exchanges:                       1,904
    
    During the second quarter, equity-accounted earnings from these jointly
controlled entities amounted to $145 million.
    BP purchased refined products from the Toledo jointly controlled entity
during the second quarter amounting to $1,551 million. In addition, BP
purchased crude oil from third parties which it sold to the Toledo jointly
controlled entity under an agency agreement. The fees earned by BP for this
service, and the total amounts receivable and payable at 30 June 2008 under
these arrangements, were not significant. BP will also purchase refinery
feedstocks from the Sunrise jointly controlled entity once production
commences, which is expected in 2012. Notes


    
    4. Total revenues
    

    
     Second   First  Second
    quarter quarter quarter                                     First half
      2007    2008    2008                                     2008    2007
           $ million                                            $ million
                             By business
     17,002  24,065  26,294  Exploration and Production       50,359  33,349
     63,960  76,863  98,206  Refining and Marketing          175,069 117,124
        976   1,192   1,255  Other businesses and corporate    2,447   1,868
     81,938 102,120 125,755                                  227,875 152,341
    

    
                             Less: sales between businesses
      7,974  12,219  13,485  Exploration and Production       25,704  15,179
        522     269     960  Refining and Marketing            1,229   1,389
        359     409     407  Other businesses and corporate      816     654
      8,855  12,897  14,852                                   27,749  17,222
    

    
                             Third party revenues
      9,028  11,846  12,809  Exploration and Production       24,655  18,170
     63,438  76,594  97,246  Refining and Marketing          173,840 115,735
        617     783     848  Other businesses and corporate    1,631   1,214
     73,083  89,223 110,903  Total third party revenues      200,126 135,119
    

    
                             By geographical area
     27,630  36,897  48,202  UK                               85,099  51,730
     19,219  23,657  27,806  Rest of Europe                   51,463  35,875
     26,923  31,731  39,157  US                               70,888  50,073
     19,314  26,857  33,263  Rest of World                    60,120  36,658
     93,086 119,142 148,428                                  267,570 174,336
     20,003  29,919  37,525  Less: sales between areas        67,444  39,217
     73,083  89,223 110,903                                  200,126 135,119
    


    
     5. Production and similar taxes
    

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

    
          -     157      68  UK                                  225      67
        827   1,452   2,231  Overseas                          3,683   1,507
        827   1,609   2,299                                    3,908   1,574
    


    
     6. Finance costs
    

    
     Second   First  Second
    quarter quarter quarter                                     First half
      2007    2008    2008                                      2008    2007
           $ million                                             $ million
        345     382     316  Interest payable                    698     692
        (94)    (45)    (44) Capitalized                         (89)   (177)
                             Unwinding of discount on
         66      69      74  provisions                          143     133
                             Unwinding of discount on other
          -       -      35    payables                           35       -
        317     406     381                                      787     648
    


    7. Net finance income relating to pensions and other post-retirement
benefits

    
     Second   First  Second
    quarter quarter quarter                                     First half
      2007    2008    2008                                     2008    2007
           $ million                                            $ million
                             Interest on pension and other
                              post-retirement benefit plan
        546     612     612   liabilities                      1,224   1,084
                             Expected return on pension and
                              other post-retirement benefit
       (708)   (772)   (772)  plan assets                     (1,544) (1,406)
       (162)   (160)   (160)                                    (320)   (322)
    



    
     8. Analysis of changes in net debt
    

    
     Second  First  Second
    quarter quarter quarter                                     First half
      2007    2008    2008                                      2008   2007
           $ million                                             $ million
                             Opening balance
     23,728  31,045  29,871  Finance debt                      31,045 24,010
      1,956   3,562   4,820  Less: Cash and cash equivalents    3,562  2,590
                             Less: FV asset (liability) of
        328     666   1,234   hedges related to finance debt      666    298
     21,444  26,817  23,817  Opening net debt                  26,817 21,122
                             Closing balance
     23,754  29,871  30,189  Finance debt                      30,189 23,754
      2,643   4,820   3,593  Less: Cash and cash equivalents    3,593  2,643
                             Less: FV asset (liability) of
        379   1,234     900   hedges related to finance debt      900    379
     20,732  23,817  25,696  Closing net debt                  25,696 20,732
        712   3,000  (1,879) Decrease (increase) in net debt    1,121    390
                             Movement in cash and cash
                              equivalents excluding
        661   1,224  (1,225)  (exchange adjustments)               (1)    16
                             Net cash outflow (inflow)
                              from financing
         79   1,784    (517)  (excluding share capital)         1,267    413
        (13)     (7)   (114) Other movements                     (121)   (24)
                             Movement in net debt before
        727   3,001  (1,856)  exchange effects                  1,145    405
        (15)     (1)    (23) Exchange adjustments                 (24)   (15)
        712   3,000  (1,879) Decrease (increase) in net debt    1,121    390
    
    Net debt has been redefined, for further information see Note 2. Amounts
for comparative periods are presented on a consistent basis.
    
    9. TNK-BP operational and financial information
    Second   First  Second
    quarter quarter quarter                                      First half
      2007    2008    2008                                       2008   2007
    

    
                             Production (Net of royalties)
                             (BP share)
        837     818     825  Crude oil (mb/d)                     821    835
        441     512     546  Natural gas (mmcf/d)                 529    503
        913     906     919  Total hydrocarbons (mboe/d)(a)       913    922
    

    
            $ million                                            $ million
    

    
                             Income statement (BP share)
      1,016   1,209   2,026  Profit before interest and tax     3,235  1,372
        (64)    (76)    (56) Finance costs                       (132)  (126)
       (188)   (331)   (524) Taxation                            (855)  (291)
        (78)    (58)    (95) Minority interest                   (153)  (107)
        686     744   1,351  Net Income                         2,095    848
                             Cash Flow
        500   1,200       -  Dividends received                 1,200    500
    



    
    Balance Sheet                                        30 June 31 December
                                                            2008        2007
    Investments in jointly controlled entities             9,712       8,817
    
    (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels
    A number of differences have arisen between BP and Alfa, Access/Renova
group (AAR), the shareholders of TNK-BP Limited. These differences include
disputes with regard to the provision of services by BP specialists to the
TNK-BP group, the employment of non-Russian nationals by the TNK-BP group, the
board of director nomination process for certain subsidiaries of the TNK-BP
group, including TNK-BP Holding, and the tenure of TNK-BP's chief executive
officer, Robert (Bob) Dudley. AAR has been reported as stating that it intends
to initiate legal proceedings with regard to certain of these matters. In
addition, a minority shareholder in TNK-BP Holding has filed a suit in Russia
against certain subsidiaries of TNK-BP and BP Exploration Services Limited
alleging that an agreement for BP specialists to provide services to the TNK-
BP group is invalid and demanding repayment of sums paid to BP for such
services. On 23 July, the court ruled in favour of the minority shareholder on
the validity issue. BP expects to appeal this decision. A ruling on the claim
for repayment has been postponed pending the outcome of such appeal. On 24
July, Mr Dudley announced his decision to leave Russia temporarily. He will
continue as TNK-BP's chief executive officer. TNK-BP and certain executives,
including Mr Dudley, as well as certain BP group companies, are also the
subject of a number of tax, labour and other regulatory investigations in
Russia.
    BP continues to work to resolve these matters. However, currently, it is
not possible to predict the ultimate outcome if these matters remain
unresolved.


    
    10. Third quarter results
    

    
    BP's third quarter results will be announced on 28 October 2008.
    


    
    11. Statutory accounts
    
    The financial information shown in this publication is unaudited and does
not constitute statutory financial statements. BP Annual Report and Accounts
2007 has been filed with the Registrar of Companies; the report of the
auditors on those accounts was unqualified and did not contain a statement
under section 237(2) or section 237(3) of the Companies Act 1985.




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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