Blueprint
 
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 01 November2016
 
 
BP p.l.c.
(Translation of registrant's name into English)
 
 
 
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
 
 
 
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
 
 
Form 20-F |X| Form 40-F
--------------- ----------------
 
 
 
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
 
 
 
Yes No |X|
--------------- --------------
 
 
 
 
 
BP p.l.c.
Group results
Third quarter and nine months 2016
 
Top of page1
FOR IMMEDIATE RELEASE London 1 November 2016
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
 months
months
2015
2016
2016
 
$ million
 
2016
2015
46
(1,419)
1,620
 
Profit (loss) for the period(a)
 
(382)
(3,175)
1,188
(828)
41
 
Inventory holding (gains) losses*, net of tax
 
(689)
246
1,234
(2,247)
1,661
 
Replacement cost profit (loss)*
 
(1,071)
(2,929)
 
 
 
 
Net (favourable) unfavourable
 
 
 
 
 
 
 
  impact of non-operating items* and
 
 
 
585
2,967
(728)
 
  fair value accounting effects*, net of tax
 
3,256
8,638
1,819
720
933
 
Underlying replacement cost profit*
 
2,185
5,709
 
 
 
 
Replacement cost profit (loss)*
 
 
 
6.73
(12.03)
8.82
 
    per ordinary share (cents)
 
(5.74)
(16.01)
0.40
(0.72)
0.53
 
    per ADS (dollars)
 
(0.34)
(0.96)
 
 
 
 
Underlying replacement cost profit*
 
 
 
9.92
3.85
4.96
 
    per ordinary share (cents)
 
11.70
31.18
0.60
0.23
0.30
 
    per ADS (dollars)
 
0.70
1.87
 
BP’s third-quarter replacement cost (RC) profit was $1,661 million, compared with $1,234 million a year ago. After adjusting for a net gain for non-operating items of $949 million and net unfavourable fair value accounting effects of $221 million (both on a post-tax basis), underlying RC profit for the third quarter was $933 million, compared with $1,819 million for the same period in 2015. For the first nine months of 2016 the RC loss was $1,071 million, compared with a loss of $2,929 million for the first nine months of 2015. Both periods were impacted by charges associated with the Deepwater Horizon accident and oil spill following the settlement of federal, state and local government claims in 2015 and additional provisions this year, when a reliable estimate for all the remaining material liabilities was determined. After adjusting for a net charge for non-operating items of $2,648 million and net unfavourable fair value accounting effects of $608 million (both on a post-tax basis), underlying RC profit for the nine months was $2,185 million, compared with $5,709 million for the same period in 2015. RC profit or loss for the group and underlying RC profit or loss are non-GAAP measures and further information is provided on page 3.
 
Non-operating items for the quarter reflect impairment reversals in the Upstream segment and for the nine months also reflect additional provisions recorded in the second quarter in relation to the Gulf of Mexico oil spill. Non-operating items also include a restructuring charge of $154 million for the quarter and $568 million for the nine months. Cumulative restructuring charges from the beginning of the fourth quarter 2014 totalled $2.1 billion by the end of the third quarter 2016. We now expect restructuring to continue throughout 2017.
 
All amounts, including finance costs, relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $189 million for the third quarter and $6,335 million for the nine months. For further information on the Gulf of Mexico oil spill and its consequences see page 9 and Note 2 on page 16. See also Legal proceedings on page 31.
 
Net cash provided by operating activities for the third quarter and nine months was $2.5 billion and $8.3 billion respectively, compared with $5.2 billion and $13.3 billion for the same periods in 2015. Excluding post-tax amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities* for the third quarter and nine months was $4.8 billion and $13.1 billion respectively, compared with $5.4 billion and $14.3 billion for the same periods in 2015.
 
Net debt* at 30 September 2016 was $32.4 billion, compared with $25.6 billion a year ago. The net debt ratio* at 30 September 2016 was 25.9%, compared with 20.0% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 22 for more information.
 
BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 16 December 2016. The corresponding amount in sterling will be announced on 6 December 2016. See page 21 for further information.
 
*
 
For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 28.
 
       (a)     
Profit attributable to BP shareholders.
 
 
 
 
The commentaries above and following should be read in conjunction with the cautionary statement on page 32.
 
 
 
Top of page 2
Group headlines (continued)
 
 
Capital expenditure on an accruals basis* for the third quarter was $3.7 billion, of which organic capital expenditure* was $3.6 billion, compared with $4.3 billion for the same period in 2015, almost all of which was organic. For the nine months, capital expenditure on an accruals basis was $11.8 billion, of which organic capital expenditure was $11.5 billion, compared with $13.3 billion for the same period in 2015, of which organic capital expenditure was $13.2 billion. See page 24 for further information. Organic capital expenditure for 2016 is now expected to be around $16 billion, and in the range $15-17 billion in 2017.
 
Disposal proceeds, as per the cash flow statement, were $0.6 billion for the third quarter and $2.2 billion for the nine months, compared with $0.3 billion and $2.6 billion for the same periods in 2015. In addition, $0.3 billion was received in the third quarter in relation to the sale of 8.5% from our shareholding in Castrol India Limited (for the nine months, $0.6 billion was received in relation to the sale of 20% of the shareholding).
 
The effective tax rate (ETR) on RC profit or loss* for the third quarter and nine months was -16% and 73% respectively, compared with 52% and 45% for the same periods in 2015. Excluding non-operating items, fair value accounting effects and the impact of the reduction in the rate of the UK North Sea supplementary charge in the third quarter (and the first quarter 2015), the adjusted ETR* for the third quarter and nine months was 37% and 25% respectively, compared with 39% and 32% for the same periods in 2015. The adjusted ETR for the quarter and the nine months is lower than a year ago mainly due to foreign exchange effects and changes in the geographical mix of profits.
 
 
Top of page 3
Analysis of RC profit (loss) before interest and tax
and reconciliation to profit (loss) for the period
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
RC profit (loss) before interest and tax*
 
 
 
743
(109)
1,196
 
    Upstream
 
(118)
1,343
2,562
1,405
978
 
    Downstream
 
4,263
6,273
382
246
120
 
    Rosneft
 
432
1,075
(689)
(5,525)
(441)
 
    Other businesses and corporate(a)
 
(7,040)
(12,522)
67
(121)
17
 
    Consolidation adjustment – UPII*
 
(64)
(101)
3,065
(4,104)
1,870
 
RC profit (loss) before interest and tax
 
(2,527)
(3,932)
 
 
 
 
Finance costs and net finance expense relating to
 
 
 
(474)
(460)
(481)
 
  pensions and other post-retirement benefits
 
(1,381)
(1,196)
(1,347)
2,346
229
 
Taxation on a RC basis
 
2,848
2,298
(10)
(29)
43
 
Non-controlling interests
 
(11)
(99)
1,234
(2,247)
1,661
 
RC profit (loss) attributable to BP shareholders
 
(1,071)
(2,929)
(1,726)
1,188
(60)
 
Inventory holding gains (losses)
 
996
(343)
 
 
 
 
Taxation (charge) credit on inventory holding
 
 
 
538
(360)
19
 
  gains and losses
 
(307)
97
 
 
 
 
Profit (loss) for the period attributable to
 
 
 
46
(1,419)
1,620
 
  BP shareholders
 
(382)
(3,175)
 
(a)   
 
Includes costs related to the Gulf of Mexico oil spill. See page 9 and also Note 2 on page 16 for further information on the accounting for the Gulf of Mexico oil spill.
 Analysis of underlying RC profit before interest and tax
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
Underlying RC profit before interest and tax*
 
 
 
823
29
(224)
 
    Upstream
 
(942)
1,921
2,302
1,513
1,431
 
    Downstream
 
4,757
6,327
382
246
120
 
    Rosneft
 
432
1,075
(231)
(376)
(260)
 
    Other businesses and corporate
 
(814)
(922)
67
(121)
17
 
    Consolidation adjustment – UPII
 
(64)
(101)
3,343
1,291
1,084
 
Underlying RC profit before interest and tax
 
3,369
8,300
 
 
 
 
Finance costs and net finance expense relating to
 
 
 
(359)
(337)
(358)
 
  pensions and other post-retirement benefits
 
(1,012)
(1,064)
(1,155)
(205)
164
 
Taxation on an underlying RC basis
 
(161)
(1,428)
(10)
(29)
43
 
Non-controlling interests
 
(11)
(99)
1,819
720
933
 
Underlying RC profit attributable to BP shareholders
 
2,185
5,709
 
Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 4-9 for the segments.
 
 
Top of page 4
Upstream
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
716
(24)
1,183
 
Profit (loss) before interest and tax
 
(77)
1,331
27
(85)
13
 
Inventory holding (gains) losses*
 
(41)
12
743
(109)
1,196
 
RC profit (loss) before interest and tax
 
(118)
1,343
 
 
 
 
Net (favourable) unfavourable impact
 
 
 
 
 
 
 
  of non-operating items* and
 
 
 
80
138
(1,420)
 
  fair value accounting effects*
 
(824)
578
823
29
(224)
 
Underlying RC profit (loss) before interest and tax*(a)
 
(942)
1,921
 
  (a)
See page 5 for a reconciliation to segment RC profit before interest and tax by region.
 
 
Financial results
 
The replacement cost result before interest and tax for the third quarter and nine months was a profit of $1,196 million and a loss of $118 million respectively, compared with a profit of $743 million and $1,343 million for the same periods in 2015. The third quarter and nine months included a net non-operating gain of $1,465 million and $1,117 million respectively, compared with a net non-operating charge of $118 million and $596 million for the same periods a year ago. The net non-operating gain for the quarter arises mainly due to impairment reversals, predominantly relating to assets in Angola and the North Sea (see Notes 1 and 4 for further information). The net non-operating gain for the quarter and nine months also include other charges, gain on sale and restructuring costs. Fair value accounting effects in the third quarter and nine months had an unfavourable impact of $45 million and $293 million respectively, compared with a favourable impact of $38 million and $18 million in the same periods of 2015.
 
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost loss before interest and tax for the third quarter and nine months was $224 million and $942 million respectively, compared with a profit of $823 million and $1,921 million for the same periods in 2015. The result for the third quarter reflected lower liquids and gas realizations, lower gas marketing and trading results, higher rig cancellation costs and exploration write-offs partly offset by lower costs reflecting the benefits of simplification and efficiency activities. The result for the nine months reflected lower liquids and gas realizations and lower gas marketing and trading results partly offset by lower costs reflecting the benefits of simplification and efficiency activities, lower depreciation, depletion and amortization expense, lower exploration write-offs and lower rig cancellation costs.
 
Production
 
Production for the quarter was 2,110mboe/d, 5.9% lower than the third quarter of 2015. Underlying production* for the quarter decreased by 2.0%, mainly due to seasonal turnaround and maintenance activities, and the impact of weather and the Pascagoula plant outage in the Gulf of Mexico. For the nine months, production was 2,209mboe/d, broadly flat versus the same period in 2015. Underlying production for the nine months was broadly flat versus the same period in 2015.
 
Key events
 
On 29 July, BP and Atlantic LNG announced the sanction of the Trinidad onshore compression project. The project is 100% funded and owned by BP Trinidad and Tobago LLC and will be operated by Atlantic LNG.
 
On 1 September, BP announced the signing of a second production-sharing agreement* with China National Petroleum Corporation (CNPC, operator) for shale gas exploration, development and production at Rong Chang Bei in the Sichuan Basin covering an area of approximately 1,000 square kilometres.
 
On 27 September, BP announced it has signed concession amendments for the Temsah, Ras El Barr and Nile Delta Offshore concessions in Egypt, enabling the fast track development of the Nooros field.
 
On 30 September, BP and Det norske oljeselskap completed the creation of Aker BP ASA, an independent oil and gas company, into which BP contributed its Norwegian upstream business. Aker BP is owned by Det norske shareholder Aker (40%), other Det norske shareholders (30%) and BP (30%).
 
In September, BP completed and installed the first jacket for Shah Deniz Stage 2.
 
On 11 October, BP announced the decision not to progress its exploration drilling programme in the Great Australian Bight, offshore South Australia.
 
In October, BP and Rosneft completed the transaction to create a new joint venture, Yermak Neftegaz LLC (Rosneft 51% and BP 49%).
 
 
Top of page 5
Upstream
 
 
 
Outlook
 
Looking ahead, we expect fourth-quarter reported production to be slightly higher than the third quarter, mainly reflecting recovery from planned seasonal turnaround and maintenance activity.
 
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 32.
 
 
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
Underlying RC profit (loss) before interest and tax
 
 
 
(152)
(305)
(151)
 
US
 
(1,123)
(763)
975
334
(73)
 
Non-US
 
181
2,684
823
29
(224)
 
 
 
(942)
1,921
 
 
 
 
Non-operating items(a)
 
 
 
(139)
(57)
326
 
US
 
106
(342)
21
64
1,139
 
Non-US
 
1,011
(254)
(118)
7
1,465
 
 
 
1,117
(596)
 
 
 
 
Fair value accounting effects
 
 
 
26
(57)
(15)
 
US
 
(105)
(32)
12
(88)
(30)
 
Non-US
 
(188)
50
38
(145)
(45)
 
 
 
(293)
18
 
 
 
 
RC profit (loss) before interest and tax
 
 
 
(265)
(419)
160
 
US
 
(1,122)
(1,137)
1,008
310
1,036
 
Non-US
 
1,004
2,480
743
(109)
1,196
 
 
 
(118)
1,343
 
 
 
 
Exploration expense
 
 
 
61
48
22
 
US
 
182
333
295
302
781
 
Non-US(b)
 
1,225
1,097
356
350
803
 
 
 
1,407
1,430
234
260
687
 
Of which: Exploration expenditure written off(b)
 
1,108
1,132
 
 
 
 
Production (net of royalties)(c)
 
 
 
 
 
 
 
Liquids* (mb/d)
 
 
 
390
401
353
 
US
 
386
372
94
117
112
 
Europe
 
119
118
747
584
664
 
Rest of World
 
708
710
1,231
1,102
1,128
 
 
 
1,213
1,200
 
 
 
 
Natural gas (mmcf/d)
 
 
 
1,569
1,666
1,679
 
US
 
1,649
1,521
232
238
262
 
Europe
 
263
259
4,062
3,829
3,753
 
Rest of World
 
3,867
4,138
5,864
5,733
5,695
 
 
 
5,779
5,918
 
 
 
 
Total hydrocarbons* (mboe/d)
 
 
 
661
688
643
 
US
 
670
634
135
158
157
 
Europe
 
164
163
1,447
1,244
1,311
 
Rest of World
 
1,375
1,424
2,242
2,090
2,110
 
 
 
2,209
2,220
 
 
 
 
Average realizations*(d)
 
 
 
44.01
44.99
41.23
 
Total liquids(e) ($/bbl)
 
36.71
48.87
3.49
2.66
2.77
 
Natural gas ($/mcf)
 
2.76
3.91
33.25
30.63
29.46
 
Total hydrocarbons ($/boe)
 
27.28
36.68
           (a)
See Notes 1 and 4 for more information on impairment of fixed assets in the third quarter and nine months 2016. See also footnote (b) below.
 
           (b)
 
Third quarter and nine months include $601 million relating to the BM-C-34 licence in Brazil, of which $334 million relates to the value ascribed to the licence as part of the accounting for the acquisition of upstream assets from Devon Energy in 2011. The $334 million write-off has been classified within the ‘other’ category of non-operating items. Nine months 2015 includes a $432-million write-off in Libya.
 
           (c)
 
Includes BP’s share of production of equity-accounted entities in the Upstream segment.
 
           (d)
 
Realizations are based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.
 
           (e)
 
Includes condensate, natural gas liquids and bitumen.
 
 
Because of rounding, some totals may not agree exactly with the sum of their component parts.
 
 
 
Top of page 6
Downstream
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
875
2,463
943
 
Profit before interest and tax
 
5,189
5,892
1,687
(1,058)
35
 
Inventory holding (gains) losses*
 
(926)
381
2,562
1,405
978
 
RC profit before interest and tax
 
4,263
6,273
 
 
 
 
Net (favourable) unfavourable
 
 
 
 
 
 
 
  impact of non- operating items*
 
 
 
(260)
108
453
 
  and fair value accounting effects*
 
494
54
2,302
1,513
1,431
 
Underlying RC profit before interest and tax*(a)
 
4,757
6,327
 
       (a)
 
See page 7 for a reconciliation to segment RC profit before interest and tax by region and by business.
 
 
Financial results
 
The replacement cost profit before interest and tax for the third quarter and nine months was $978 million and $4,263 million respectively, compared with $2,562 million and $6,273 million for the same periods in 2015.
 
The 2016 results include a net non-operating charge of $196 million for the third quarter and a net non-operating gain of $53 million for the nine months, compared with a net non-operating gain of $43 million and a net non-operating charge of $42 million for the same periods in 2015. Fair value accounting effects had unfavourable impacts of $257 million in the third quarter and $547 million in the nine months, compared with a favourable impact of $217 million and an unfavourable impact of $12 million in the same periods of 2015.
 
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the third quarter and nine months was $1,431 million and $4,757 million respectively, compared with $2,302 million and $6,327 million for the same periods in 2015.
 
Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 7.
 
Fuels business
 
The fuels business reported an underlying replacement cost profit before interest and tax of $983 million for the third quarter and $3,310 million for the nine months, compared with $1,917 million and $5,107 million for the same periods in 2015. The result for the quarter reflects a significantly weaker refining environment and a higher level of turnaround activity, partially offset by an increased retail performance and lower costs from simplification and efficiency programmes. The nine-months result reflects a significantly weaker refining environment and a lower contribution from supply and trading, partially offset by lower costs from simplification and efficiency programmes, an increased retail performance and stronger refining operations.
 
Lubricants business
 
The lubricants business reported an underlying replacement cost profit before interest and tax of $370 million for the third quarter and $1,166 million for the nine months, compared with $348 million and $1,090 million for the same periods in 2015. The results for the quarter and nine months reflect continued momentum in our growth markets and premium brands.
 
During the third quarter we sold an 8.5% shareholding in Castrol India Limited reducing our shareholding to 51%.
 
Petrochemicals business
 
The petrochemicals business reported an underlying replacement cost profit before interest and tax of $78 million for the third quarter and $281 million for the nine months, compared with $37 million and $130 million for the same periods in 2015. The result for the nine months reflects stronger operations and margin capture.
 
Outlook
 
In the fourth quarter we expect a higher level of turnaround activity compared with the third quarter, and that industry refining margins will continue to be under pressure.
 
 
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 32.
 
 
 
Top of page 7
Downstream
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
Underlying RC profit before interest and tax - 
 
 
 
 
 
 
 
  by region
 
 
 
885
386
298
 
US
 
1,224
2,122
1,417
1,127
1,133
 
Non-US
 
3,533
4,205
2,302
1,513
1,431
 
 
 
4,757
6,327
 
 
 
 
Non-operating items
 
 
 
51
17
(56)
 
US
 
74
110
(8)
(54)
(140)
 
Non-US
 
(21)
(152)
43
(37)
(196)
 
 
 
53
(42)
 
 
 
 
Fair value accounting effects
 
 
 
153
(78)
(178)
 
US
 
(343)
(22)
64
7
(79)
 
Non-US
 
(204)
10
217
(71)
(257)
 
 
 
(547)
(12)
 
 
 
 
RC profit before interest and tax
 
 
 
1,089
325
64
 
US
 
955
2,210
1,473
1,080
914
 
Non-US
 
3,308
4,063
2,562
1,405
978
 
 
 
4,263
6,273
 
 
 
 
Underlying RC profit before interest and tax - 
 
 
 
 
 
 
 
  by business(a)(b)
 
 
 
1,917
1,011
983
 
Fuels
 
3,310
5,107
348
412
370
 
Lubricants
 
1,166
1,090
37
90
78
 
Petrochemicals
 
281
130
2,302
1,513
1,431
 
 
 
4,757
6,327
 
 
 
 
Non-operating items and fair value
 
 
 
 
 
 
 
  accounting effects(c)
 
 
 
295
(93)
(455)
 
Fuels
 
(493)
83
(25)
(3)
1
 
Lubricants
 
(3)
(126)
(10)
(12)
1
 
Petrochemicals
 
2
(11)
260
(108)
(453)
 
 
 
(494)
(54)
 
 
 
 
RC profit before interest and tax(a)(b)
 
 
 
2,212
918
528
 
Fuels
 
2,817
5,190
323
409
371
 
Lubricants
 
1,163
964
27
78
79
 
Petrochemicals
 
283
119
2,562
1,405
978
 
 
 
4,263
6,273
 
 
 
 
 
 
 
 
20.0
13.8
11.6
 
BP average refining marker margin (RMM)* ($/bbl)
 
12.0
18.2
 
 
 
 
Refinery throughputs (mb/d)
 
 
 
681
668
613
 
US
 
660
642
785
805
795
 
Europe
 
802
800
230
231
242
 
Rest of World
 
237
259
1,696
1,704
1,650
 
 
 
1,699
1,701
94.9
95.7
95.4
 
Refining availability* (%)
 
95.4
94.4
 
 
 
 
Marketing sales of refined products (mb/d)
 
 
 
1,121
1,115
1,205
 
US
 
1,130
1,122
1,272
1,170
1,236
 
Europe
 
1,184
1,202
479
515
503
 
Rest of World
 
502
479
2,872
2,800
2,944
 
 
 
2,816
2,803
2,781
2,875
2,581
 
Trading/supply sales of refined products
 
2,755
2,731
5,653
5,675
5,525
 
Total sales volumes of refined products
 
5,571
5,534
 
 
 
 
Petrochemicals production (kte)
 
 
 
877
558
564
 
US
 
2,018
2,728
976
909
898
 
Europe
 
2,799
2,800
2,004
1,967
1,987
 
Rest of World
 
5,863
5,565
3,857
3,434
3,449
 
 
 
10,680
11,093
 
       (a)
Segment-level overhead expenses are included in the fuels business result.
       (b)
BP’s share of income from petrochemicals at our Gelsenkirchen and Mülheim sites in Germany is reported in the fuels business.
       (c)
For Downstream, fair value accounting effects arise solely in the fuels business.
 
 
Top of page 8
Rosneft
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016(a)
 
$ million
 
2016(a)
2015
370
291
108
 
Profit before interest and tax(b)
 
461
1,125
12
(45)
12
 
Inventory holding (gains) losses*
 
(29)
(50)
382
246
120
 
RC profit before interest and tax
 
432
1,075
 
Net charge (credit) for non-operating items*
 
382
246
120
 
Underlying RC profit before interest and tax*
 
432
1,075
 
Financial results
 
Replacement cost profit before interest and tax and underlying replacement cost profit before interest and tax for the third quarter and nine months was $120 million and $432 million respectively, compared with $382 million and $1,075 million for the same periods in 2015. There were no non-operating items in the third quarter and nine months of either year.
 
Compared with the same period last year, the result for the third quarter was primarily affected by adverse foreign exchange, lower oil prices and increased government take, partially offset by favourable duty lag effects. For the nine months, the result was primarily affected by lower oil prices and increased government take, partially offset by favourable duty lag effects.
 
In June 2016 Rosneft’s annual general meeting adopted a resolution to pay a dividend of 11.75 Russian roubles per ordinary share in relation to the 2015 annual results. BP received a dividend of $332 million, after the deduction of withholding tax, in July 2016.
 
Key events
 
On 12 October Rosneft acquired from the Russian government a 50.0755% stake in Bashneft, a Russian oil company, for 329.69 billion Russian roubles (approximately $5.3 billion). This acquisition is expected to provide Rosneft with significant synergies, additional refining throughput and additional liquid hydrocarbon production, which will be reflected in BP’s production and reserves through BP equity accounting for its 19.75% share in Rosneft.
 
On 15 October Rosneft announced the signing of an agreement for the purchase, subject to regulatory approval, of a 49% stake in Essar Oil Limited, an Indian downstream business, from the Essar group.
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016(a)
 
 
 
2016(a)
2015
 
 
 
 
Production (net of royalties) (BP share)
 
 
 
810
812
820
 
Liquids* (mb/d)
 
813
813
1,125
1,266
1,221
 
Natural gas (mmcf/d)
 
1,256
1,173
1,003
1,030
1,030
 
Total hydrocarbons* (mboe/d)
 
1,030
1,016
 
 (a)
The operational and financial information of the Rosneft segment for the third quarter and nine months of the year is based on preliminary operational and financial results of Rosneft for the nine months ended 30 September 2016. Actual results may differ from these amounts.
            (b)
The Rosneft segment result includes equity-accounted earnings arising from BP’s 19.75% shareholding in Rosneft as adjusted for the accounting required under IFRS relating to BP’s purchase of its interest in Rosneft and the amortization of the deferred gain relating to the disposal of BP’s interest in TNK-BP. These adjustments have increased the reported profit before interest and tax for the third quarter and nine months of 2016, as shown in the table above, compared with the equivalent amount in Russian roubles that we expect Rosneft to report in its own financial statements under IFRS. BP’s share of Rosneft’s profit before interest and tax for each year-to-date period is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date. BP's share of Rosneft’s earnings after finance costs, taxation and non-controlling interests, as adjusted, is included in the BP group income statement within profit before interest and taxation.
 
 
Top of page 9
Other businesses and corporate
 
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
Profit (loss) before interest and tax
 
 
 
(311)
(5,106)
(66)
 
Gulf of Mexico oil spill
 
(5,966)
(11,381)
(378)
(419)
(375)
 
Other
 
(1,074)
(1,141)
(689)
(5,525)
(441)
 
Profit (loss) before interest and tax
 
(7,040)
(12,522)
 
Inventory holding (gains) losses*
 
(689)
(5,525)
(441)
 
RC profit (loss) before interest and tax
 
(7,040)
(12,522)
 
 
 
 
Net charge (credit) for non-operating items*
 
 
 
311
5,106
66
 
Gulf of Mexico oil spill
 
5,966
11,381
147
43
115
 
Other
 
260
219
458
5,149
181
 
Net charge (credit) for non-operating items
 
6,226
11,600
(231)
(376)
(260)
 
Underlying RC profit (loss) before interest and tax*
 
(814)
(922)
 
 
 
 
Underlying RC profit (loss) before interest and tax
 
 
 
(126)
(109)
(107)
 
US
 
(326)
(332)
(105)
(267)
(153)
 
Non-US
 
(488)
(590)
(231)
(376)
(260)
 
 
 
(814)
(922)
 
 
 
 
Non-operating items
 
 
 
(438)
(5,136)
(168)
 
US
 
(6,152)
(11,519)
(20)
(13)
(13)
 
Non-US
 
(74)
(81)
(458)
(5,149)
(181)
 
 
 
(6,226)
(11,600)
 
 
 
 
RC profit (loss) before interest and tax
 
 
 
(564)
(5,245)
(275)
 
US
 
(6,478)
(11,851)
(125)
(280)
(166)
 
Non-US
 
(562)
(671)
(689)
(5,525)
(441)
 
 
 
(7,040)
(12,522)
 
Other businesses and corporate comprises biofuels and wind businesses, shipping, treasury (which includes interest income on the group's cash and cash equivalents), corporate activities including centralized functions, and the costs of the Gulf of Mexico oil spill.
 
Financial results
 
The replacement cost loss before interest and tax for the third quarter and nine months was $441 million and $7,040 million respectively, compared with $689 million and $12,522 million for the same periods in 2015.
 
The third-quarter result included a net non-operating charge of $181 million, primarily relating to environmental provisions and costs for the Gulf of Mexico oil spill, compared with a net non-operating charge of $458 million a year ago. For the nine months, the net non-operating charge was $6,226 million, compared with a net non-operating charge of $11,600 million a year ago, both primarily relating to costs for the Gulf of Mexico oil spill. For further information see Note 2 on page 16.
 
After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the third quarter and nine months was $260 million and $814 million respectively, compared with $231 million and $922 million for the same periods in 2015. The nine-months result reflects lower corporate costs and favourable foreign exchange impacts.
 
Biofuels
 
The net ethanol-equivalent production (which includes ethanol and sugar) for the third quarter and nine months was 352 million litres and 635 million litres, compared with 359 million litres and 606 million litres for the same periods in 2015.
 
Wind
 
Net wind generation capacity*(a) was 1,474MW at 30 September 2016 compared with 1,588MW at 30 September 2015. BP’s net share of wind generation for the third quarter and nine months was 828GWh and 3,235GWh respectively, compared with 894GWh and 3,171GWh for the same periods in 2015.
 
(a)
Capacity figures include 22.5MW in the Netherlands managed by our Downstream segment at 30 September 2016, and 32MW at 30 September 2015.
 
 
 
Top of page 10
Financial statements
 
 
Group income statement
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
 
 
 
56,152
46,442
47,047
 
Sales and other operating revenues (Note 6)
 
132,001
173,722
327
274
174
 
Earnings from joint ventures – after interest and tax
 
477
587
504
380
209
 
Earnings from associates – after interest and tax
 
731
1,536
151
101
146
 
Interest and other income
 
392
466
167
79
467
 
Gains on sale of businesses and fixed assets
 
884
438
57,301
47,276
48,043
 
Total revenues and other income
 
134,485
176,749
42,485
32,752
34,981
 
Purchases
 
94,336
127,897
6,407
10,446
5,517
 
Production and manufacturing expenses(a)
 
22,482
30,592
238
258
212
 
Production and similar taxes (Note 7)
 
484
773
3,737
3,637
3,496
 
Depreciation, depletion and amortization
 
10,863
11,338
 
 
 
 
Impairment and losses on sale of businesses and
 
 
 
40
52
(1,424)
 
  fixed assets
 
(1,359)
523
356
350
803
 
Exploration expense
 
1,407
1,430
2,699
2,697
2,648
 
Distribution and administration expenses
 
7,803
8,471
1,339
(2,916)
1,810
 
Profit (loss) before interest and taxation
 
(1,531)
(4,275)
398
414
433
 
Finance costs(a)
 
1,241
968
 
 
 
 
Net finance expense relating to pensions and other
 
 
 
76
46
48
 
  post-retirement benefits
 
140
228
865
(3,376)
1,329
 
Profit (loss) before taxation
 
(2,912)
(5,471)
809
(1,986)
(248)
 
Taxation(a)
 
(2,541)
(2,395)
56
(1,390)
1,577
 
Profit (loss) for the period
 
(371)
(3,076)
 
 
 
 
Attributable to
 
 
 
46
(1,419)
1,620
 
  BP shareholders
 
(382)
(3,175)
10
29
(43)
 
  Non-controlling interests
 
11
99
56
(1,390)
1,577
 
 
 
(371)
(3,076)
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share (Note 8)
 
 
 
 
 
 
 
Profit (loss) for the period attributable to
 
 
 
 
 
 
 
  BP shareholders
 
 
 
 
 
 
 
  Per ordinary share (cents)
 
 
 
0.25
(7.60)
8.61
 
    Basic
 
(2.05)
(17.35)
0.25
(7.60)
8.56
 
    Diluted
 
(2.05)
(17.35)
 
 
 
 
  Per ADS (dollars)
 
 
 
0.02
(0.46)
0.52
 
    Basic
 
(0.12)
(1.04)
0.02
(0.46)
0.51
 
    Diluted
 
(0.12)
(1.04)
 
(a)
 
See Note 2 for information on the impact of the Gulf of Mexico oil spill on these income statement line items.
 
 
Top of page 11
Financial statements (continued)
 
 
Group statement of comprehensive income
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
 
 
 
56
(1,390)
1,577
 
Profit (loss) for the period
 
(371)
(3,076)
 
 
 
 
Other comprehensive income
 
 
 
 
 
 
 
Items that may be reclassified subsequently to
 
 
 
 
 
 
 
  profit or loss
 
 
 
(2,247)
(35)
192
 
  Currency translation differences
 
1,031
(3,161)
 
 
 
 
  Exchange gains (losses) on translation of foreign
 
 
 
 
 
 
 
    operations reclassified to gain or loss on sale of
 
 
 
7
 
    businesses and fixed assets
 
6
23
1
 
  Available-for-sale investments
 
1
1
(70)
(289)
(84)
 
  Cash flow hedges marked to market
 
(435)
(154)
 
 
 
 
  Cash flow hedges reclassified to the income
 
 
 
65
16
71
 
    statement
 
110
220
7
6
30
 
  Cash flow hedges reclassified to the balance sheet
 
49
16
 
 
 
 
  Share of items relating to equity-accounted
 
 
 
(830)
197
174
 
    entities, net of tax
 
661
(581)
268
80
(78)
 
  Income tax relating to items that may be reclassified
 
(84)
300
(2,800)
(25)
306
 
 
 
1,339
(3,336)
 
 
 
 
Items that will not be reclassified to profit or loss
 
 
 
 
 
 
 
  Remeasurements of the net pension and other
 
 
 
(551)
(1,763)
(2,995)
 
    post-retirement benefit liability or asset
 
(5,980)
1,569
 
 
 
 
  Share of items relating to equity-accounted
 
 
 
(1)
 
    entities, net of tax
 
(1)
 
 
 
 
  Income tax relating to items that will not be
 
 
 
80
592
510
 
    reclassified
 
1,504
(516)
(472)
(1,171)
(2,485)
 
 
 
(4,476)
1,052
(3,272)
(1,196)
(2,179)
 
Other comprehensive income
 
(3,137)
(2,284)
(3,216)
(2,586)
(602)
 
Total comprehensive income
 
(3,508)
(5,360)
 
 
 
 
Attributable to
 
 
 
(3,204)
(2,604)
(558)
 
  BP shareholders
 
(3,513)
(5,423)
(12)
18
(44)
 
  Non-controlling interests
 
5
63
(3,216)
(2,586)
(602)
 
 
 
(3,508)
(5,360)
 
 
Top of page 12
Financial statements (continued)
 
 
Group statement of changes in equity
 
 
 
BP
 
 
 
 
shareholders’
Non-controlling
Total
$ million
 
equity
interests
equity
 
 
 
 
 
At 1 January 2016
 
97,216
1,171
98,387
 
 
 
 
 
Total comprehensive income
 
(3,513)
5
(3,508)
Dividends
 
(3,429)
(83)
(3,512)
Share-based payments, net of tax
 
622
622
Share of equity-accounted entities’ change in equity, net of tax
 
49
49
Transactions involving non-controlling interests
 
431
328
759
At 30 September 2016
 
91,376
1,421
92,797
 
 
 
 
 
 
 
BP
 
 
 
 
shareholders’
Non-controlling
Total
$ million
 
equity
interests
equity
 
 
 
 
 
At 1 January 2015
 
111,441
1,201
112,642
 
 
 
 
 
Total comprehensive income
 
(5,423)
63
(5,360)
Dividends
 
(5,118)
(71)
(5,189)
Share-based payments, net of tax
 
486
486
Share of equity-accounted entities’ change in equity, net of tax
 
(3)
(3)
Transactions involving non-controlling interests
 
23
23
At 30 September 2015
 
101,383
1,216
102,599
 
 
Top of page 13
Financial statements (continued)
 
 
Group balance sheet
 
 
 
30 September
31 December
$ million
 
2016
2015
Non-current assets
 
 
 
Property, plant and equipment
 
128,262
129,758
Goodwill
 
11,204
11,627
Intangible assets
 
17,163
18,660
Investments in joint ventures
 
8,240
8,412
Investments in associates
 
13,326
9,422
Other investments
 
1,005
1,002
Fixed assets
 
179,200
178,881
Loans
 
497
529
Trade and other receivables
 
2,146
2,216
Derivative financial instruments
 
5,437
4,409
Prepayments
 
1,036
1,003
Deferred tax assets
 
4,797
1,545
Defined benefit pension plan surpluses
 
96
2,647
 
 
193,209
191,230
Current assets
 
 
 
Loans
 
261
272
Inventories
 
15,897
14,142
Trade and other receivables
 
21,230
22,323
Derivative financial instruments
 
3,012
4,242
Prepayments
 
1,841
1,838
Current tax receivable
 
568
599
Other investments
 
46
219
Cash and cash equivalents
 
25,520
26,389
 
 
68,375
70,024
Assets classified as held for sale (Note 3)
 
632
578
 
 
69,007
70,602
Total assets
 
262,216
261,832
Current liabilities
 
 
 
Trade and other payables
 
34,662
31,949
Derivative financial instruments
 
2,325
3,239
Accruals
 
5,220
6,261
Finance debt
 
5,689
6,944
Current tax payable
 
1,411
1,080
Provisions
 
5,586
5,154
 
 
54,893
54,627
Liabilities directly associated with assets classified as held for sale (Note 3)
 
148
97
 
 
55,041
54,724
Non-current liabilities
 
 
 
Other payables
 
14,025
2,910
Derivative financial instruments
 
4,322
4,283
Accruals
 
483
890
Finance debt
 
53,308
46,224
Deferred tax liabilities
 
6,926
9,599
Provisions
 
23,039
35,960
Defined benefit pension plan and other post-retirement benefit plan deficits
 
12,275
8,855
 
 
114,378
108,721
Total liabilities
 
169,419
163,445
Net assets
 
92,797
98,387
Equity
 
 
 
BP shareholders’ equity
 
91,376
97,216
Non-controlling interests
 
1,421
1,171
Total equity
 
92,797
98,387
 
 
Top of page 14
Financial statements (continued)
 
 
Condensed group cash flow statement
 
Third
Second
Third
 
 
 
Nine
Nine
quarter
quarter
quarter
 
 
 
months
months
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
Operating activities
 
 
 
865
(3,376)
1,329
 
Profit (loss) before taxation
 
(2,912)
(5,471)
 
 
 
 
Adjustments to reconcile profit (loss) before taxation
 
 
 
 
 
 
 
  to net cash provided by operating activities
 
 
 
 
 
 
 
  Depreciation, depletion and amortization and
 
 
 
3,971
3,897
4,183
 
    exploration expenditure written off
 
11,971
12,470
 
 
 
 
  Impairment and (gain) loss on sale of businesses
 
 
 
(127)
(27)
(1,891)
 
    and fixed assets
 
(2,243)
85
 
 
 
 
  Earnings from equity-accounted entities,
 
 
 
(295)
(485)
259
 
    less dividends received
 
(250)
(1,225)
 
 
 
 
  Net charge for interest and other finance
 
 
 
196
113
204
 
    expense less net interest paid
 
485
338
137
204
166
 
  Share-based payments
 
629
154
 
 
 
 
  Net operating charge for pensions and other post-
 
 
 
 
 
 
 
    retirement benefits, less contributions and
 
 
 
(41)
(56)
(96)
 
    benefit payments for unfunded plans
 
(120)
(128)
113
4,565
(184)
 
  Net charge for provisions, less payments
 
5,116
11,201
 
 
 
 
  Movements in inventories and other current and
 
 
 
1,231
(863)
(1,001)
 
    non-current assets and liabilities
 
(3,591)
(2,135)
(867)
(89)
(461)
 
  Income taxes paid
 
(822)
(1,962)
5,183
3,883
2,508
 
Net cash provided by operating activities
 
8,263
13,327
 
 
 
 
Investing activities
 
 
 
(4,357)
(4,283)
(3,379)
 
Capital expenditure
 
(12,043)
(13,522)
33
 
Acquisitions, net of cash acquired
 
33
(55)
(8)
(1)
 
Investment in joint ventures
 
(13)
(178)
(119)
(196)
(185)
 
Investment in associates
 
(474)
(424)
88
153
590
 
Proceeds from disposal of fixed assets
 
981
1,049
 
 
 
 
Proceeds from disposal of businesses, net of
 
 
 
200
291
(21)
 
  cash disposed
 
1,181
1,511
61
6
9
 
Proceeds from loan repayments
 
61
109
(4,149)
(4,037)
(2,987)
 
Net cash used in investing activities
 
(10,307)
(11,422)
 
 
 
 
Financing activities
 
 
 
117
2,710
3,925
 
Proceeds from long-term financing
 
9,373
7,988
(18)
(1,318)
(75)
 
Repayments of long-term financing
 
(4,952)
(2,867)
(115)
300
(512)
 
Net increase (decrease) in short-term debt
 
(324)
597
368
323
 
Net increase (decrease) in non-controlling interests
 
761
(1,718)
(1,169)
(1,161)
 
Dividends paid
– BP shareholders
 
(3,429)
(5,118)
(29)
(43)
(31)
 
 
– non-controlling interests
 
(83)
(71)
(1,763)
848
2,469
 
Net cash provided by (used in) financing activities
 
1,346
529
 
 
 
 
Currency translation differences relating to cash
 
 
 
(158)
(226)
13
 
  and cash equivalents
 
(171)
(495)
(887)
468
2,003
 
Increase (decrease) in cash and cash equivalents
 
(869)
1,939
32,589
23,049
23,517
 
Cash and cash equivalents at beginning of period
 
26,389
29,763
31,702
23,517
25,520
 
Cash and cash equivalents at end of period
 
25,520
31,702
 
 
Top of page 15
Financial statements (continued)
 
 
Notes
 
1.        Basis of preparation
 
The interim financial information included in this report has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’.
 
The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December 2015 included in BP Annual Report and Form 20-F 2015.
 
BP prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the periods presented.
 
The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP Annual Report and Form 20-F 2016, which do not differ significantly from those used in BP Annual Report and Form 20-F 2015.
 
In BP Annual Report and Form 20-F 2015 we disclosed a significant estimate or judgement relating to provisions arising from the Gulf of Mexico oil spill in 2010. At that time, no reliable estimate could be made of any business economic loss (BEL) claims under the Plaintiffs’ Steering Committee (PSC) settlement that were not yet processed or processed but not yet paid, except where an eligibility notice had been issued and was not subject to appeal by BP within the Deepwater Horizon Court Supervised Settlement Program claims facility (DHCSSP). A reliable estimate could also not be made in relation to securities-related litigation and other litigation, including economic loss and property damage claims from parties excluded from and/or who opted out of the PSC settlement. No amounts were provided for these items and they were disclosed as contingent liabilities.
 
As a result of developments during the second quarter of 2016 sufficient information now exists in order to make a reliable estimate of the amounts that BP will pay relating to all outstanding BEL claims under the DHCSSP, securities class actions and economic loss and property damage claims from parties who were excluded from and/or opted out of the PSC settlement. Liabilities for these items were therefore recognized in the financial statements in the second quarter of 2016. See Note 2 for further information.
 
In BP Annual Report and Form 20-F 2015 – Financial statements – Note 1 we disclosed a significant estimate or judgement relating to the recoverability of asset values, including oil and natural gas price assumptions used to estimate future cash flows and the discount rates applied to determine the recoverable amounts of assets when performing impairment tests. During the third quarter of 2016, the price assumptions and discount rates used in impairment tests were revised.
 
In the third quarter, the long-term price assumptions used to determine recoverable amount based on fair value less costs of disposal from 2022 onwards were derived from $75 per barrel for Brent and $4/mmBtu for Henry Hub (both in 2015 prices) inflated for the remaining life of the asset. To determine the recoverable amount based on value in use, the price assumption was inflated to 2022 but from 2022 onwards was not inflated.
 
For both value-in-use and fair value less costs of disposal impairment tests performed during the third quarter, the price assumptions used have been set such that there is a gradual transition over a five-year period from current market prices to the long-term price assumptions for 2022, as noted above.
 
The post-tax discount rate applied to Upstream asset cash flows used to calculate fair value less costs of disposal in the third quarter was 6%. For value-in-use calculations the pre-tax discount rate applied in the third quarter was 9%. For both calculations a premium of 2% continues to be added for assets located in higher-risk countries.
 
See Note 4 for further information on impairment charges and reversals in the third quarter.
 
 
Top of page 16
Financial statements (continued)
 
 
Notes
 
2.       Gulf of Mexico oil spill
 
(a) Overview
 
The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2015 – Financial statements – Note 2 and Legal proceedings on page 237 and on page 31 of this report.
 
During the second quarter, significant progress was made in resolving outstanding claims arising from the 2010 Deepwater Horizon accident and oil spill and a reliable estimate was determined for all remaining material liabilities arising from the incident.
 
The group income statement includes a pre-tax charge of $189 million for the third quarter and $6,335 million for the nine months in relation to the Gulf of Mexico oil spill. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $61,786 million. The charge for the third quarter comprises finance costs relating to unwinding of discounting effects, functional costs and other items. As previously described in BP p.l.c. Group resultsSecond quarter and half year 2016, it is now possible to reliably estimate the cost of resolving all outstanding business economic loss claims under the Plaintiffs’ Steering Committee (PSC) settlement and the cost of resolving economic loss and property damage claims from individuals and businesses that either opted out of the PSC settlement and/or were excluded from that settlement. The charge for the nine months is primarily attributable to the recognition of additional provisions for these claims, as well as the cost of the securities claims settlement with the certified class of post-explosion ADS purchasers which was agreed in June 2016.
 
The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items in those statements as set out below.
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
Income statement
 
 
 
 
311
5,106
66
 
Production and manufacturing expenses
 
5,966
11,381
 
(311)
(5,106)
(66)
 
Profit (loss) before interest and taxation
 
(5,966)
(11,381)
 
115
123
123
 
Finance costs
 
369
132
 
(426)
(5,229)
(189)
 
Profit (loss) before taxation
 
(6,335)
(11,513)
 
(87)
2,533
53
 
Taxation
 
2,837
3,626
 
(513)
(2,696)
(136)
 
Profit (loss) for the period
 
(3,498)
(7,887)
 
 
 
 
 
30 September
31 December
 
$ million
 
2016
2015
 
Balance sheet
 
 
 
 
Current assets
 
 
 
 
  Trade and other receivables
 
330
686
 
  Prepayments
 
4
 
Current liabilities
 
 
 
 
  Trade and other payables
 
(1,979)
(693)
 
  Accruals
 
(40)
 
  Provisions
 
(3,348)
(3,076)
 
Net current assets (liabilities)
 
(4,993)
(3,123)
 
Non-current assets
 
 
 
 
  Deferred tax assets
 
7,824
 
Non-current liabilities
 
 
 
 
  Other payables
 
(13,293)
(2,057)
 
  Accruals
 
(186)
 
  Provisions
 
(1,784)
(13,431)
 
  Deferred tax liabilities
 
5,200
 
Net non-current assets (liabilities)
 
(7,253)
(10,474)
 
Net assets (liabilities)
 
(12,246)
(13,597)
 
 
Top of page 17
Financial statements (continued)
 
 
Notes
 
2.       Gulf of Mexico oil spill (continued)
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
 months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
Cash flow statement - Operating activities
 
 
 
 
(426)
(5,229)
(189)
 
Profit (loss) before taxation
 
(6,335)
(11,513)
 
 
 
 
 
Adjustments to reconcile profit (loss)
 
 
 
 
 
 
 
 
  before taxation to net cash provided
 
 
 
 
 
 
 
 
  by operating activities
 
 
 
 
 
 
 
 
Net charge for interest and other finance
 
 
 
 
115
123
123
 
  expense, less net interest paid
 
369
132
 
235
4,466
(494)
 
Net charge for provisions, less payments
 
4,729
11,069
 
 
 
 
 
Movements in inventories and other current
 
 
 
 
(135)
(971)
(1,766)
 
  and non-current assets and liabilities
 
(3,825)
(696)
 
(211)
(1,611)
(2,326)
 
Pre-tax cash flows
 
(5,062)
(1,008)
 
Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $2,326 million and an outflow of $4,849 million in the third quarter and nine months of 2016 respectively. For the same periods in 2015, the amounts were an outflow of $196 million and an outflow of $993 million respectively.
 
Trust fund
 
During the first half of 2016, the remaining cash in the Deepwater Horizon Oil Spill Trust (the Trust) was exhausted and BP commenced paying claims and other costs previously funded from the Trust. For certain costs, these payments are made by BP into a qualified settlement fund, the fund then distributes the amounts to claimants; $835 million was paid into a qualified settlement fund during the third quarter ($2,234 million during the nine months).
 
(b) Provisions and contingent liabilities
 
Provisions
 
BP had recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, litigation and claims, and Clean Water Act penalties. Movements in the third quarter, all of which relate to litigation and claims provisions, are presented in the table below.
 
 
 
 
 
 
 
 
 
 
 
 
$ million 
 
Total
 
At 1 July 2016
 
6,490
 
Net increase (decrease) in provision
 
50
 
Utilization
– paid by BP
 
(544)
 
 
– paid by settlement fund or Trust
 
(864)
 
At 30 September 2016
 
5,132
 
Of which
– current
 
3,348
 
 
– non-current
 
1,784
 
Movements in each class of provision during the nine months are presented in the table below.
 
 
 
 
 
 
Litigation
Clean
 
 
 
 
 
 
and
Water Act
 
 
 
 
 
Environmental
claims
penalties
Total
 
$ million 
 
 
 
 
 
 
At 1 January 2016
 
5,919
6,459
4,129
16,507
 
Net increase (decrease) in provision
 
5,765
5,765
 
Unwinding of discount
 
52
25
38
115
 
Reclassified to Other payables
 
(5,970)
(3,741)
(4,167)
(13,878)
 
Utilization
– paid by BP
 
(1)
(1,035)
(1,036)
 
 
– paid by settlement fund or
 
 
 
 
 
 
 
    Trust
 
(2,341)
(2,341)
 
At 30 September 2016
 
5,132
5,132
 
 
Top of page 18
Financial statements (continued)
 
 
Notes
 
2.       Gulf of Mexico oil spill (continued)
 
Environmental
The environmental provisions relating to natural resource damage costs and the early restoration framework agreement were reclassified to Other payables during the first quarter following approval by the Court in April 2016 of the Consent Decree between the United States, the Gulf states and BP. Remaining amounts related to early restoration were paid during the second quarter.
 
Litigation and claims
The litigation and claims provision includes amounts for the future cost of resolving claims by individuals and businesses for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of natural resources. Claims administration costs and legal costs have also been provided for.
 
At 31 December 2015, the litigation and claims provision included amounts provided under the state claims settlement agreement with the Gulf states in relation to state claims that had not yet been paid. These amounts were reclassified to Other payables during the first quarter and are payable over 18 years; $0.9 billion was paid during the third quarter.
 
Litigation and claims – PSC settlement
BP has provided for its best estimate of the cost associated with the 2012 PSC settlement. The provision has been determined based upon an expected value of the remaining claims, including business economic loss claims. Claims are determined by the DHCSSP in accordance with the PSC settlement agreement. Amounts to settle these claims are expected to be paid by 2019. The amounts ultimately payable may differ from the amount provided.
 
Litigation and claims – Other claims
An estimate of the cost of the economic loss and property damage claims from individuals and businesses that either opted out of the PSC settlement and/or were excluded from that settlement, most of which is expected to be paid by the end of 2016, is also recognized in provisions.
 
Clean Water Act penalties
The provision previously recognized for penalties under Section 311 of the Clean Water Act, as determined by the civil settlement with the United States, was reclassified to Other payables during the first quarter following approval by the Court of the Consent Decree. The amount is payable in instalments over 15 years, commencing April 2017. The unpaid balance of this penalty accrues interest at a fixed rate.
 
Further information on provisions is provided in BP Annual Report and Form 20-F 2015 – Financial statements –Note 2.
 
Contingent liabilities
 
Any further outstanding Deepwater Horizon related claims are not expected to have a material impact on the group’s financial performance.
 
 
3.       Non-current assets held for sale
 
On 15 January 2016 BP and Rosneft announced that they had signed definitive agreements to dissolve the German refining joint operation Ruhr Oel GmbH (ROG). The restructuring will result in Rosneft taking ownership of ROG’s interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries. In exchange, BP will take sole ownership of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie. Assets and associated liabilities relating to BP’s share of ROG’s interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries are classified as held for sale in the group balance sheet.
 
 
Top of page 19
Financial statements (continued)
 
 
Notes
 
4.       Impairment of fixed assets
 
Included within the line item in the income statement for Impairment and losses on sale of businesses and fixed assets is a net impairment reversal for the third quarter and nine months of $1,456 million and $1,550 million respectively.
 
The net impairment reversal in Upstream was $1,465 million for the third quarter and $1,561 million for the nine months. For the third quarter, impairment reversals were $2,038 million offset by impairment charges of $573 million. The impairment reversals relate predominantly to assets in Angola and the North Sea, the recoverable amounts for which were calculated on a value-in-use basis.
 
The impairment reversals arose following a reduction in the discount rate applied and changes to future price assumptions as explained in Note 1.
 
 
5.       Analysis of replacement cost profit (loss) before interest and tax and
          reconciliation to profit (loss) before taxation
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
743
(109)
1,196
 
Upstream
 
(118)
1,343
 
2,562
1,405
978
 
Downstream
 
4,263
6,273
 
382
246
120
 
Rosneft
 
432
1,075
 
(689)
(5,525)
(441)
 
Other businesses and corporate(a)
 
(7,040)
(12,522)
 
2,998
(3,983)
1,853
 
 
 
(2,463)
(3,831)
 
67
(121)
17
 
Consolidation adjustment – UPII*
 
(64)
(101)
 
3,065
(4,104)
1,870
 
RC profit (loss) before interest and tax*
 
(2,527)
(3,932)
 
 
 
 
 
Inventory holding gains (losses)*
 
 
 
 
(27)
85
(13)
 
  Upstream
 
41
(12)
 
(1,687)
1,058
(35)
 
  Downstream
 
926
(381)
 
(12)
45
(12)
 
  Rosneft (net of tax)
 
29
50
 
1,339
(2,916)
1,810
 
Profit (loss) before interest and tax
 
(1,531)
(4,275)
 
398
414
433
 
Finance costs
 
1,241
968
 
 
 
 
 
Net finance expense relating to pensions
 
 
 
 
76
46
48
 
  and other post-retirement benefits
 
140
228
 
865
(3,376)
1,329
 
Profit (loss) before taxation
 
(2,912)
(5,471)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RC profit (loss) before interest and tax
 
 
 
 
324
(5,394)
(15)
 
US
 
(6,665)
(10,814)
 
2,741
1,290
1,885
 
Non-US
 
4,138
6,882
 
3,065
(4,104)
1,870
 
 
 
(2,527)
(3,932)
 
(a)
 
  Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information.
 
 
 
Top of page 20
Financial statements (continued)
 
 
Notes
 
6.       Sales and other operating revenues
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
By segment
 
 
 
 
10,357
8,176
8,452
 
Upstream
 
24,059
33,023
 
50,921
42,809
43,488
 
Downstream
 
120,849
157,106
 
552
422
425
 
Other businesses and corporate
 
1,243
1,492
 
61,830
51,407
52,365
 
 
 
146,151
191,621
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: sales and other operating revenues
 
 
 
 
 
 
 
 
  between segments
 
 
 
 
5,809
4,301
4,952
 
Upstream
 
12,886
16,962
 
(377)
475
175
 
Downstream
 
768
201
 
246
189
191
 
Other businesses and corporate
 
496
736
 
5,678
4,965
5,318
 
 
 
14,150
17,899
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third party sales and other operating revenues
 
 
 
 
4,548
3,875
3,500
 
Upstream
 
11,173
16,061
 
51,298
42,334
43,313
 
Downstream
 
120,081
156,905
 
306
233
234
 
Other businesses and corporate
 
747
756
 
56,152
46,442
47,047
 
Total sales and other operating revenues
 
132,001
173,722
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By geographical area
 
 
 
 
20,680
17,701
18,853
 
US
 
50,130
61,345
 
39,200
32,482
31,762
 
Non-US
 
91,390
123,746
 
59,880
50,183
50,615
 
 
 
141,520
185,091
 
 
 
 
 
Less: sales and other operating revenues
 
 
 
 
3,728
3,741
3,568
 
  between areas
 
9,519
11,369
 
56,152
46,442
47,047
 
 
 
132,001
173,722
 
 
7.       Production and similar taxes
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
30
67
32
 
US
 
117
97
 
208
191
180
 
Non-US
 
367
676
 
238
258
212
 
 
 
484
773
 
 
Top of page 21
Financial statements (continued)
 
 
Notes
 
8.       Earnings per share and shares in issue
 
Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
 
The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.
 
For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
$ million
 
2016
2015
 
 
 
 
 
Results for the period
 
 
 
 
 
 
 
 
Profit (loss) for the period
 
 
 
 
46
(1,419)
1,620
 
  attributable to BP shareholders
 
(382)
(3,175)
 
1
 
Less: preference dividend
 
1
1
 
 
 
 
 
Profit (loss) attributable to BP
 
 
 
 
46
(1,420)
1,620
 
  ordinary shareholders
 
(383)
(3,176)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares (thousand)(a)(b)
 
 
 
 
 
 
 
 
Basic weighted average number of
 
 
 
 
18,329,701
18,685,199
18,824,739
 
  shares outstanding
 
18,660,397
18,304,504
 
3,054,950
3,114,200
3,137,456
 
ADS equivalent
 
3,110,066
3,050,750
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares
 
 
 
 
 
 
 
 
  outstanding used to calculate
 
 
 
 
18,371,656
18,685,199
18,920,920
 
  diluted earnings per share
 
18,660,397
18,304,504
 
3,061,942
3,114,200
3,153,486
 
ADS equivalent
 
3,110,066
3,050,750
 
 
 
 
 
 
 
 
 
 
18,349,963
18,777,156
18,912,989
 
Shares in issue at period-end
 
18,912,989
18,349,963
 
3,058,327
3,129,526
3,152,164
 
ADS equivalent
 
3,152,164
3,058,327
 
(a)
 
  Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.
 
(b)
 
  If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.
 
 
 
9.       Dividends
 
Dividends payable
 
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 16 December 2016 to shareholders and American Depositary Share (ADS) holders on the register on 11 November 2016. The corresponding amount in sterling is due to be announced on 6 December 2016, calculated based on the average of the market exchange rates for the four dealing days commencing on 30 November 2016. Holders of ADSs are expected to receive $0.600 per ADS (less applicable fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the third-quarter dividend and timetable are available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
 
 
Top of page 22
Financial statements (continued)
 
 
Notes
 
9.       Dividends (continued)
 
 
Third
Second
Third
 
 
 
Nine
Nine
 
quarter
quarter
quarter
 
 
 
months
months
 
2015
2016
2016
 
 
 
2016
2015
 
 
 
 
 
Dividends paid per ordinary share
 
 
 
 
10.000
10.000
10.000
 
  cents
 
30.000
30.000
 
6.549
6.917
7.558
 
  pence
 
21.487
19.749
 
60.00
60.00
60.00
 
Dividends paid per ADS (cents)
 
180.00
180.00
 
 
 
 
 
Scrip dividends
 
 
 
 
18.5
134.4
130.0
 
Number of shares issued (millions)
 
418.8
53.1
 
110