SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 04 April 2005
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
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Press Release
April 4, 2005
BP First Quarter 2005 Trading Update
This trading update is aimed at providing certain estimates regarding revenue
and trading conditions experienced by BP in the first quarter ending March 31,
2005, and estimates of certain identified non-operating items expected to be
included in that quarter's result. The first quarter margin, price, realisation,
cost, production and other data referred to below are currently provisional,
some being drawn from figures applicable to the first month or so of the
quarter. All such data are subject to change and may differ quite considerably
from the final numbers that will be reported on April 26, 2005. The statement is
produced in order to provide greater disclosure to investors and potential
investors of currently expected outcomes, and to ensure that they all receive
equal access to the same information at the same time.
As described in the technical presentation on March 14, BP's first quarter
results will be reported under International Financial Reporting Standards
(IFRS). In adopting IFRS, BP has decided to discontinue the use of pro forma
reporting for the ARCO and Burmah Castrol acquisitions.
Compared with pro forma, our first quarter results will reflect depreciation of
the fair market value step-up related to these acquisitions. In 4Q'04 and 1Q'04
this depreciation amounted to $124m and $141m, excluding impairments of $151m
and $63m respectively.
Compared to UK GAAP, goodwill related to acquisitions will no longer be
amortised under IFRS. Goodwill amortisation in 4Q'04 and 1Q'04 was $351m and
$360m respectively.
In respect of equity accounted entities, such as TNK-BP, results under IFRS will
be shown after interest and tax charges and minority interest. BP's consolidated
interest and tax expense and minority interest will be reduced by an exactly
offsetting amount, so the consolidated post tax result is not affected. The
impact of post tax and interest reporting for equity accounted entities on the
segment results in 4Q'04 was a reduction of $469m, and in 1Q'04 a reduction of
$244m, principally in the Exploration and Production segment result. Full
details are shown in note 8 of the restated 2004 Stock Exchange Announcement
(SEA) released on March 14.
Results for our Olefins and Derivatives business, now named Innovene and which
includes the Grangemouth and Lavera refineries, will be reported as part of
Other Businesses and Corporate. Full details are shown in note 7 of the restated
SEA.
Comparative data for each of the quarters of 2004 has been restated to reflect
these and other reporting changes. Full details are available on www.bp.com/
investors.
Resources Business : Exploration and Production
Marker Prices
1Q'04 2Q'04 3Q'04 4Q'04 1Q'05
Brent Dated ($/bbl) 32.03 35.32 41.54 43.85 47.62
WTI ($/bbl) 35.30 38.28 43.88 48.29 49.88
ANS USWC ($/bbl) 34.22 36.99 41.82 42.62 45.07
US gas Henry Hub first of month index
($/mmbtu) 5.69 6.00 5.75 7.07 6.27
UK gas price - National Balance Point
(p/therm) 24.59 20.70 23.63 28.51 37.96
Urals (NWE - cif) ($/bbl) 29.01 32.32 37.23 37.75 42.54
Russian domestic Oil ($/bbl) 17.08 19.71 23.33 22.30 19.14
Overall BP production in 1Q'05 is expected to be around 4,090 mboed, broadly in
line with 4Q'04. Excluding volumes from our Russian operations, production in
1Q'05 is expected to be approximately 3,130 mboed, broadly similar to the 4Q'04
level. BP's net share of production from TNK-BP in 1Q'05 is anticipated to be
approximately 960 mboed. BP's average production for 2005 as a whole is expected
to be in the range 4,100 - 4,200 mboed as indicated in our presentation on
February 8, 2005.
Relative to 4Q'04 both liquids and gas realisations have moved broadly in line
with marker prices.
Refining and Marketing
Refining Indicator Margins ($/bbl)
1Q'04 2Q'04 3Q'04 4Q'04 1Q'05
USA
- West Coast 8.06 15.41 11.28 10.36 12.88
- Gulf Coast 6.92 9.18 6.99 5.52 7.30
- Midwest 4.67 9.01 5.01 1.65 3.84
North West Europe 2.73 5.29 4.37 4.72 2.84
Singapore 3.42 2.80 5.48 8.02 4.98
Refining Global Indicator Margin*
($/bbl.) 4.89 8.28 6.39 5.69 5.94
*The refining Global Indicator Margin (GIM) is a weighted average based on BP's
portfolio. The overall refining GIM has been restated from that published in
2004 due to the transfer of the Grangemouth and Lavera refineries to O&D. Actual
margins may vary because of refinery configuration, crude slate and operating
practices.
The first quarter's average refining Global Indicator Margin (GIM) was slightly
above that in the previous quarter, and higher than a year earlier. However, the
refining margins actually experienced by BP's refineries are expected to be
below those in 4Q'04, due to higher scheduled turnaround activity and negative
foreign exchange impacts compared with last quarter. Marketing margins have
decreased sharply in the first quarter relative to the previous quarter, and
were also below those of a year ago, reflecting pressure from rising crude and
product prices. Within the Aromatics and Acetyls businesses, which are now
reported as part of the Refining & Marketing segment, tight market conditions
and high industry utilisation rates continued to support margins at similar
levels to 4Q'04.
Gas, Power and Renewables
Both NGL and gas marketing margins are expected to be lower than those seen in
4Q'04, and similar to the level of 1Q'04.
Other Businesses and Corporate (including Olefins and Derivatives)
Other Businesses and Corporate
Other Business and Corporate results, excluding Olefins and Derivatives, are
expected to be in line with guidance given in our February '05 investor webcast
for an annual charge of $900m +/- $200m, indicating expected charges of around
$175 - 275m per quarter during 2005.
Olefins and Derivatives
Olefins & Derivatives margins strengthened significantly in 1Q'05, as industry
utilization rates rose. Overall production volumes are expected to be in line
with 4Q'04. Results for Olefins and Derivatives, which includes Innovene, are
now reported in Other Businesses and Corporate, but will be described separately
in supplemental disclosures in our Stock Exchange Announcement.
Consolidation Adjustment
The consolidation adjustment, previously included in the E&P segment results,
and which removes the margin on sales between segments (mainly sales of Alaskan
crude oil to US West Coast refining and marketing operations) is expected to
decrease BP's pre-tax result by around $140m in 1Q'05.
Identified Non-Operating Items (NOIs)
Non-operating items in 1Q'05 are expected to amount to a credit of around $1.0bn
pre-tax. This includes $1.1bn of disposal gains, mainly related to the sale of
BP's interest in Ormen Lange and the Interconnector pipeline. The Group
effective tax rate will apply to these items.
Interest Expense
The total consolidated interest charge is expected to be around $60m higher than
in 4Q'04. This includes the impact of higher market interest rates and a 1Q'05
charge related to BP's decision to terminate certain financing leases related to
Innovene assets.
Tax Rate
The effective tax rate for the quarter is expected to be around 32-33 per cent,
in line with the guidance given on March 14 for the impact of IFRS.
Gearing
Gearing for the quarter is expected to be at the bottom end of our 20-30 per
cent band for net debt to net debt plus equity. As announced on March 14, we
have adjusted the band to maintain the economic substance of our financial
framework in view of the 2005 reporting changes. Debt has fallen due to the
impact of the normal release of working capital as a result of the 1Q phasing of
German motor fuel excise taxes, and the receipt of the remaining proceeds from
the sale of our interest in the Ormen Lange field in Norway.
Distributions to Shareholders
During the quarter the company bought back 193m shares for a total consideration
of $2.0bn. Shares outstanding at March 31 2005, excluding treasury shares, were
21,368m. As in previous quarters, BP has entered into an arrangement that allows
it to continue the share buy back programme during the closed period commencing
on April 1.
The 1Q'05 dividend of 8.5 cents per share announced at the time of our 4Q'04
results was paid in March. The dividend to be paid in 2Q'05 will be announced on
April 26 in conjunction with our 1Q'05 Stock Exchange Announcement.
Rules of Thumb
As indicated in BP's quarterly results presentation and strategy update on
February 8, 2005, the following rules of thumb can be used to estimate the
impact of changes in the trading environment on BP's 2004 full yearpre-tax
results. The rules of thumb relating to oil and gas price movements reflect
prices broadly comparable to those of today. They have been revised to reflect
the 2005 reporting and accounting changes. These rules of thumb are approximate
and incorporate the impact of the 2005 reporting changes noted above. Particular
differences may arise due to higher government shares of Exploration and
Production revenues in some jurisdictions at current price levels, as well as
from variations between the refining Global Indicator Margin (GIM) and BP's
realized refining margins due to crude price levels and differentials, product
price movements and other factors. Many other factors will affect BP's earnings
quarter by quarter. Actual results in individual quarters may therefore differ
significantly from the estimates implied by the application of these rules.
2005 Operating Environment Rules of Thumb: impact on operating profit per year
Full Year
Oil Price - Brent +/- $1/bbl $500m
Gas - Henry Hub +/- $ 0.10/mcf $100m
Refining - GIM +/- $ 1/bbl $1100m
- ENDS -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: 04 April 2005 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary