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 12 January 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
BP Press Release
January 12, 2005
BP Fourth Quarter 2004 Trading Update
This trading update is aimed at providing certain estimates regarding revenue
and trading conditions experienced by BP in the fourth quarter ending December
31, 2004, and estimates of certain identified non-operating items expected to be
included in that quarter's result. The fourth 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 February 8, 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.
Resources Business : Exploration and Production
Marker Prices
4Q'03 2Q'04 3Q'04 4Q'04
Brent Dated ($/bbl) 29.43 35.32 41.54 43.85
WTI ($/bbl) 31.15 38.28 43.88 48.29
ANS USWC ($/bbl) 29.43 36.99 41.82 42.62
US gas Henry Hub first of month index
($/mmbtu) 4.58 6.00 5.75 7.07
UK gas price - National Balance Point
(p/therm) 27.30 20.70 23.63 28.48
Overview : Exploration and Production
Overall BP production in 4Q'04 is expected to be around 4,090 thousand barrels
of oil equivalent per day (mboed), up by some 4 per cent from 3,936 mboed in
4Q'03, and over 4 per cent higher than 3Q'04 production of 3,906 mboed. Average
production for 2004 as a whole is expected to be around 3,995 mboed, an increase
of more than 10 per cent compared to 2003.
Excluding Russia:
Production in 4Q'04, excluding volumes from our Russian operations, is expected
to be approximately 3,125 mboed, over 5 per cent higher than the 3Q'04 level of
2,961 mboed due to the continuing ramp-up of production in New Profit Centres
(60 mboed) and the end of the turnaround season in Alaska and the North Sea (120
mboed). During the quarter we achieved first production from the Holstein field
in the Deepwater Gulf of Mexico. The operational impacts on production from
Hurricane Ivan in the Gulf of Mexico and the blow-out in Temsah in Egypt are
expected to be around 80 mboed during the fourth quarter.
Relative to 3Q'04, liquids realisations did not increase as much as the markers,
reflecting discounts for heavier crudes and the timing of liftings. Relative to
3Q'04, gas realisations in North America did not increase as much as the Henry
Hub marker due to regional pricing differences.
Costs in 4Q'04 are expected to be around $250m more than in 3Q'04 due to higher
exploration write-offs, repairs necessary as a result of Hurricane Ivan in the
US and the Temsah incident in Egypt, and planned increases in seismic
investment.
The 4Q'04 impact of Unrealised Profit in Stock (UPIS) is expected to increase
earnings by approximately $70m.
Russia - BP net share
Production in mboed 4Q'03 2Q'04 3Q'04 4Q'04
TNK-BP: Oil 669 814 858 882
TNK-BP: Gas 51 77 87 83
Total 720 891 945 965
Marker Prices
Urals (NWE - cif) ($/bbl) 27.90 32.32 37.23 37.75
Urals (Med - cif ) ($/bbl) 27.98 32.60 37.41 38.82
Domestic Oil ($/bbl) 16.65 19.71 23.33 22.30
In 4Q'04, BP's net share of production from TNK-BP is anticipated to be
approximately 965 mboed, as shown in the table above. 2004 information includes
TNK-BP's interest in Slavneft.
During 4Q'04, Urals NWE marker prices increased by $0.52/bbl with the
differential to Brent widening to approx $6.10/bbl. Domestic oil prices
decreased slightly relative to 3Q'04 due to seasonal factors.
Increases in export duty rates became effective on August 1, 2004. The full
quarter impact of this increase in duties, along with the effect of lagged duty
reference prices, is expected to reduce 4Q operating profit by approximately
$170m relative to 3Q'04.
Customer facing Businesses
Refining Indicator Margins ($/bbl)
4Q'03 2Q'04 3Q'04 4Q'04
USA
- West Coast 6.09 15.41 11.28 10.36
- Gulf Coast 3.53 9.18 6.99 5.52
- Midwest 2.89 9.01 5.01 1.65
North West Europe 2.21 5.29 4.37 4.72
Singapore 2.20 2.80 5.48 8.02
Refining Global Indicator Margin* ($/bbl) 3.14 7.89 6.20 5.60
*The refining Global Indicator Margin (GIM) is a weighted average based on BP's
portfolio. Actual margins may vary because of refinery configuration, crude
slate and operating practices.
The fourth quarter's average global indicator refining margin is lower than the
previous quarter, but higher than a year earlier. The refining margins actually
experienced by BP's refineries are expected to be slightly higher than in 3Q'04.
Wider light/heavy spreads, higher clean fuels premia, locational advantages and
supply optimization all increased our realised margins relative to the generic
indicators. Marketing margins are expected to be above those of the previous
quarter. However the improvement in the Marketing operating environment relative
to 3Q is likely to be more than offset by a $300m charge primarily related to a
review of carrying values of marketing assets.
Petrochemicals
Weighted Chemicals Indicator Margin ($/te) *
4Q'03 2Q'04 3Q'04 4Q'04
109 129 138 n/a
*The Chemicals Indicator Margin is a weighted average of externally-based
product margins. It is based on market data collected by Nexant (formerly Chem
Systems) in their quarterly market analyses, then weighted on BP's product
portfolio. This is described more fully in the Group's quarterly results
releases.
Petrochemicals sales and margins continue to strengthen as industry utilization
rates rise. These benefits have partially been offset by foreign exchange
effects in Europe which continue to affect costs.
Gas, Power and Renewables
Gas margins are expected to be substantially higher than 3Q'04. NGL margins have
remained at similar levels to those seen in 3Q'04. Identified Non-Operating
Items
Exceptional and non-operating items in 4Q'04 are expected to amount to a charge
of around $2bn pre-tax. The majority of this charge relates to the
petrochemicals segment, reflecting business exits, the closure of facilities,
and asset impairments.
Interest Expense
The total interest charge is expected to grow by around one third compared with
3Q'04. The increase in interest expense is due to an increase in debt, higher
interest rates and a reduction in the discount rate applied to provisions under
UK GAAP.
Tax Rate
The effective tax rate for the quarter is expected to be around 35 per cent,
similar to the previous quarter. The full year rate is expected to average
around 35 per cent.
Gearing
Gearing for the quarter is expected to be just below the bottom end of our
target 25-35 per cent band. Debt has risen due to the impact of the Solvay joint
venture buyout and the normal 4Q phasing of German motor fuel excise taxes.
Share Purchases
During the quarter the company bought back for cancellation 201 million shares
for a total consideration of $2.0bn. For the year, the total number of shares
bought back for cancellation amounted to 822m at a cost of $7.5bn. Shares in
issue as at December 31, 2004 were 21,526 million. As in previous quarters, BP
has entered into an arrangement that allows it to continue the share buy back
programme during the close period commencing January 1.
Rules of Thumb
As indicated in BP's strategy presentation on March 29, 2004, 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. These rules of thumb are
approximate. In particular the impact of large movements in the trading
environment relative to that of 2003 may differ from those implied by the rules
of thumb. 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.
2004 Operating Environment Rules of Thumb: pre tax per yea
Full Year
Oil Price - Brent +/- $1/bbl $570m
Gas - Henry Hub +/- $ 0.10/mcf $110m
Refining - GIM +/- $ 1/bbl $1120m
Petrochemicals - CIM +/- $10/te $200m
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: 12 January 2005 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary