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 31 July2018
 
 
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|
--------------- --------------
 
 
 
 
 
 
Exhibit 1.1
2Q18 Part 1 of 1 and 31 July 2018
 
 
Exhibit 1.1
 
 
 
FOR IMMEDIATE RELEASE
 
Top of page 1
 
London
 
31 July 2018
 
 
 
BP p.l.c. Group results
 
Second quarter and half year 2018(a)
 
 
 
 
 
For a printer friendly copy of this announcement, please click on the link below to open a PDF version:
 
http://www.rns-pdf.londonstockexchange.com/rns/2324W_1-2018-7-30.pdf 
 
 
 
 
Highlights
 
Strong earnings, strategic momentum, increased dividend
 
 
 
Underlying replacement cost profit* for the second quarter of 2018 was $2.8 billion – four times that reported for the same period in 2017 – including significantly higher earnings from the Upstream and Rosneft.
 
Operating cash flow excluding Gulf of Mexico oil spill payments* was $7.0 billion in the second quarter – which included a $1.3 billion working capital* release (after adjusting for inventory holding gains*) – and $12.4 billion in the first half, including a $0.4 billion working capital build.
    
Dividend was increased 2.5% to 10.25 cents a share, the first rise since the third quarter of 2014.
 
Upstream reported the strongest quarter since the third quarter of 2014 on both a replacement cost and underlying basis.
 
Oil and gas production: reported production in the quarter was 3.6 million barrels of oil equivalent a day. Upstream production, excluding Rosneft, was 1.4% higher than a year earlier and up 9.6% when adjusted for portfolio changes and pricing effects, driven by rising output from new major projects* and strong plant reliability*.
 
Major projects: with start-ups in Azerbaijan, Russia and Egypt, three of the six new projects expected to start in 2018 are now online.
 
Strategic portfolio management: agreed to buy world-class US onshore oil and gas assets from BHP, a $10.5 billion acquisition that will transform BP’s US Lower 48 business. BP also agreed to increase its stake in the Clair oilfield in the UK while exiting the Greater Kuparuk Area in Alaska.
 
Downstream reported strong first half refining performance, with record levels of crude processed at Whiting refinery in US; further expansion in fuels marketing, with more than 1,200 convenience partnership sites now across our retail network.
 
Advancing the energy transition: acquisition of UK's largest electric vehicle charging company Chargemaster and investment in innovative battery technology firm StoreDot move forward BP’s approach to advanced mobility.
    
Gulf of Mexico oil spill payments in the quarter were $0.7 billion on a post-tax basis.
    
Net debt* reduced in the quarter by $0.7 billion to $39.3 billion.
    
BP's share buyback programme continued with 29 million ordinary shares bought back in the first half at a cost of $200 million. 
 
See chart on PDF
 
 
 
 
Bob Dudley - Group chief executive:
We continue to make steady progress against our strategy and plans, delivering another quarter of strong operational and financial performance. We brought two more major projects online, high-graded our portfolio through acquisitions such as BHP’s US onshore assets and invested in a low-carbon future with the creation of BP Chargemaster. Given this momentum and the strength of our financial frame, we are increasing our dividend for the first time in almost four years. This reflects not just our commitment to growing distributions to shareholders but our confidence in the future.
 
 
Financial summary
 
 
 
 
 
 
 
 
$ million
 
 
2Q18
 
1Q18
 
2Q17
 
 
1H18
 
1H17
 
Profit for the period(b)
 
 
2,799
 
 
2,469
 
 
144
 
 
 
5,268
 
 
1,593
 
 
Inventory holding (gains) losses, net of tax
 
 
(1,010
 
)
 
(80
 
)
 
409
 
 
 
(1,090
 
)
 
372
 
 
RC profit*
 
 
1,789
 
 
2,389
 
 
553
 
 
 
4,178
 
 
1,965
 
 
Net (favourable) adverse impact of non-operating items*and fair value accounting effects*, net of tax
 
 
1,033
 
 
197
 
 
131
 
 
 
1,230
 
 
229
 
 
Underlying RC profit
 
 
2,822
 
 
2,586
 
 
684
 
 
 
5,408
 
 
2,194
 
 
RC profit per ordinary share (cents)*
 
 
8.96
 
 
11.99
 
 
2.80
 
 
 
20.96
 
 
10.02
 
 
RC profit per ADS (dollars)
 
 
0.54
 
 
0.72
 
 
0.17
 
 
 
1.26
 
 
0.60
 
 
Underlying RC profit per ordinary share (cents)*
 
 
14.14
 
 
12.98
 
 
3.47
 
 
 
27.13
 
 
11.19
 
 
Underlying RC profit per ADS (dollars)
 
 
0.85
 
 
0.78
 
 
0.21
 
 
 
1.63
 
 
0.67
 
 
 
(a)
This results announcement also represents BP’s half-yearly financial report (see page 12).
(b)
Profit attributable to BP shareholders.
* See definitions in the Glossary on page 34. RC profit (loss), underlying RC profit, operating cash flow excluding Gulf of Mexico oil spill payments, working capital after adjusting for inventory holding gains, net debt and organic capital expenditure are non-GAAP measures.
 
The commentary above and following should be read in conjunction with the cautionary statement on page 38.
 
 
 
Top of page 2
Group headlines
 
Results
For the half year, underlying replacement cost (RC) profit* was $5,408 million, compared with $2,194 million in 2017. Underlying RC profit is after adjusting RC profit* for a net charge for non-operating items* of $970 million and net adverse fair value accounting effects* of $260 million (both on a post-tax basis). RC profit was $4,178 million for the half year, compared with $1,965 million a year ago.
 
For the second quarter, underlying RC profit was $2,822 million, compared with $684 million in 2017. Underlying RC profit is after adjusting RC profit for a net charge for non-operating items of $723 million and net adverse fair value accounting effects of $310 million (both on a post-tax basis). RC profit was $1,789 million for the second quarter, compared with $553 million in 2017.
 
BP’s profit for the second quarter and half year was $2,799 million and $5,268 million respectively, compared with $144 million and $1,593 million for the same periods in 2017.
See further information on pages 3, 29 and 30.
 
Non-operating items
Non-operating items amounted to a post-tax charge of $723 million for the quarter and $970 million for the half year. The charge for the quarter includes post-tax amounts relating to the Gulf of Mexico oil spill of $193 million for business economic loss claims and $126 million for other claims and litigation relating to the spill, as well as finance costs in respect of the unwinding of discounting effects relating to oil spill payables. See further information on page 29.
 
Effective tax rate
The effective tax rate (ETR) on RC profit or loss* for the second quarter and half year was 49% and 42% respectively, compared with 63% and 43% for the same periods in 2017. Adjusting for non-operating items and fair value accounting effects, the underlying ETR* for the second quarter and half year was 42% and 40% respectively, compared with 60% and 45% for the same periods in 2017. The lower underlying ETR for the second quarter and half year mainly reflected lower exploration write-offs partly offset by deferred tax charges due to foreign exchange impacts. ETR on RC profit or loss and underlying ETR are non-GAAP measures.
 
Dividend
On 26 July 2018 BP announced a quarterly dividend of 10.25 cents per ordinary share ($0.615 per ADS), which is expected to be paid on 21 September 2018. The corresponding amount in sterling will be announced on 11 September 2018. See page 26 for further information.
 
 
 
Share buybacks
BP repurchased 11 million ordinary shares at a cost of $80 million, including fees and stamp duty, during the second quarter of 2018. For the half year, BP repurchased 29 million ordinary shares at a cost of $200 million, including fees and stamp duty.
 
Operating cash flow*
Excluding post-tax amounts related to the Gulf of Mexico oil spill, operating cash flow* for the second quarter was $7.0 billion, including a $1.3 billion working capital* release (after adjusting for inventory holding gains*) and $12.4 billion in the half year, including a $0.4 billion working capital build (after adjusting for inventory holding gains), compared with $6.9 billion and $11.3 billion for the same periods in 2017. Including amounts relating to the Gulf of Mexico oil spill, operating cash flow for the second quarter and half year was $6.3 billion and $10.0 billion respectively (after a negative working capital impact of $0.6 billion for the quarter and $4.0 billion for the half year), compared with $4.9 billion and $7.0 billion for the same periods in 2017. See also Glossary for further information on working capital.
 
Capital expenditure*
Organic capital expenditure* for the second quarter and half year was $3.5 billion and $7.0 billion respectively, compared with $4.3 billion and $7.9 billion for the same periods in 2017.
 
Inorganic capital expenditure* for the second quarter and half year was $0.4 billion and $0.8 billion respectively, compared with $0.1 billion and $0.7 billion for the same periods in 2017.
 
See page 28 for further information.
 
Divestment and other proceeds
Divestment proceeds* were $0.2 billion for the second quarter and $0.3 billion for the half year, compared with $0.5 billion and $0.7 billion for the same periods in 2017.
 
Gearing*
Net debt* at 30 June 2018 was $39.3 billion, compared with $39.8 billion a year ago. Gearing at 30 June 2018 was 27.8%, compared with 28.8% a year ago.
 
We expect gearing to remain within the target band, of 20-30%, during the second half of 2018.
 
Net debt and gearing are non-GAAP measures. See page 26 for more information.
 
 
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 38.
 
 
 
 
Top of page 3
Analysis of underlying RC profit* before interest and tax
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Underlying RC profit before interest and tax
 
 
 
 
 
 
 
 
Upstream
 
 
3,508
 
 
3,157
 
 
710
 
 
 
6,665
 
 
2,080
 
 
Downstream
 
 
1,455
 
 
1,826
 
 
1,413
 
 
 
3,281
 
 
3,155
 
 
Rosneft
 
 
766
 
 
247
 
 
279
 
 
 
1,013
 
 
378
 
 
Other businesses and corporate
 
 
(477
 
)
 
(392
 
)
 
(366
 
)
 
 
(869
 
)
 
(806
 
)
 
Consolidation adjustment – UPII*
 
 
151
 
 
(160
 
)
 
135
 
 
 
(9
 
)
 
67
 
 
Underlying RC profit before interest and tax
 
 
5,403
 
 
4,678
 
 
2,171
 
 
 
10,081
 
 
4,874
 
 
Finance costs and net finance expense relating to pensions and other post-retirement benefits
 
 
(448
 
)
 
(464
 
)
 
(420
 
)
 
 
(912
 
)
 
(807
 
)
 
Taxation on an underlying RC basis
 
 
(2,059
 
)
 
(1,566
 
)
 
(1,055
 
)
 
 
(3,625
 
)
 
(1,818
 
)
 
Non-controlling interests
 
 
(74
 
)
 
(62
 
)
 
(12
 
)
 
 
(136
 
)
 
(55
 
)
 
Underlying RC profit attributable to BP shareholders
 
 
2,822
 
 
2,586
 
 
684
 
 
 
5,408
 
 
2,194
 
 
 
 
Reconciliations of underlying RC profit or loss to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 6-11 for the segments.
 
 
 
Analysis of RC profit (loss)* before interest and tax and reconciliation to profit (loss) for the period
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
RC profit (loss) before interest and tax
 
 
 
 
 
 
 
 
Upstream
 
 
3,514
 
 
3,174
 
 
795
 
 
 
6,688
 
 
2,051
 
 
Downstream
 
 
840
 
 
1,713
 
 
1,567
 
 
 
2,553
 
 
3,273
 
 
Rosneft
 
 
766
 
 
247
 
 
279
 
 
 
1,013
 
 
378
 
 
Other businesses and corporate(a)
 
 
(1,025
 
)
 
(571
 
)
 
(721
 
)
 
 
(1,596
 
)
 
(1,152
 
)
 
Consolidation adjustment – UPII
 
 
151
 
 
(160
 
)
 
135
 
 
 
(9
 
)
 
67
 
 
RC profit (loss) before interest and tax
 
 
4,246
 
 
4,403
 
 
2,055
 
 
 
8,649
 
 
4,617
 
 
Finance costs and net finance expense relating to pensions and other post-retirement benefits
 
 
(566
 
)
 
(584
 
)
 
(541
 
)
 
 
(1,150
 
)
 
(1,054
 
)
 
Taxation on a RC basis
 
 
(1,817
 
)
 
(1,368
 
)
 
(949
 
)
 
 
(3,185
 
)
 
(1,543
 
)
 
Non-controlling interests
 
 
(74
 
)
 
(62
 
)
 
(12
 
)
 
 
(136
 
)
 
(55
 
)
 
RC profit (loss) attributable to BP shareholders
 
 
1,789
 
 
2,389
 
 
553
 
 
 
4,178
 
 
1,965
 
 
Inventory holding gains (losses)*
 
 
1,310
 
 
92
 
 
(586
 
)
 
 
1,402
 
 
(520
 
)
 
Taxation (charge) credit on inventory holding gains and losses
 
 
(300
 
)
 
(12
 
)
 
177
 
 
 
(312
 
)
 
148
 
 
Profit (loss) for the period attributable to BP shareholders
 
 
2,799
 
 
2,469
 
 
144
 
 
 
5,268
 
 
1,593
 
 
 
(a)
Includes costs related to the Gulf of Mexico oil spill. See page 11 and also Note 2 from page 21 for further information on the accounting for the Gulf of Mexico oil spill.
 
 
Top of page 4
Strategic progress
Upstream
Upstream production, excluding Rosneft, for the second quarter was 2,465mboe/d, 1.4% higher than a year earlier. Underlying production* – adjusted for PSA* impacts and portfolio changes, including termination of BP’s interest in the offshore concession in Abu Dhabi – was 9.6% higher than a year ago due to production from the ramp-up of major projects* and continued strong plant reliability*. Unit production costs* for the second quarter improved by 3% compared with the same period in 2017.
 
Three Upstream major projects have now started up in 2018: the Shah Deniz 2 gas project in Azerbaijan and the Taas-Yuryakh oil expansion in Russia in the second quarter, following the Atoll project in Egypt in the first quarter. These projects were started up under budget and on or ahead of schedule. Another three major projects are expected to begin production during 2018. In addition, during the first half of the year, final investment decisions have been made on five projects in Oman, India, the North Sea and Angola.
 
BP has accessed new acreage in the Campos basin, offshore Brazil, as a result of the fourth Pre-Salt Production Sharing Contract Bid Round.
 
BP has agreed to buy a portfolio of US unconventional oil and gas assets from BHP. This major acquisition will upgrade and materially reposition BP’s US onshore oil and gas business. BP also agreed to increase its interest in the UK's Clair field, an advantaged oil asset with growth potential, while divesting its non-operating interest in the Greater Kuparuk Area in Alaska.
 
Downstream
In marketing, BP’s convenience partnership model is now rolled out to more than 1,200 sites across our network, more than 300 BP-branded retail sites are now open in Mexico and lubricants continues to deliver premium brand growth.
 
In manufacturing, BP’s Whiting refinery processed record levels of crude and our petrochemicals business announced two new PTA licensing agreements, demonstrating the strength of BP’s industry-leading technology.
 
 
 
Advancing the energy transition
BP has continued to progress its lower-carbon strategy as detailed in the Advancing the energy transition report published in April.
 
Two Upstream major projects that have started operation in 2018 so far – Shah Deniz 2 and Atoll – produce natural gas.
 
BP also significantly progressed its advanced mobility strategy with the purchase of Chargemaster, the UK’s largest electric vehicle charging network operator. Together with investments in StoreDot, a developer of ultra-fast charging battery technology, and mobile-charging company FreeWire, this supports BP’s aim to become the leading fuel provider for electric as well as conventional vehicles.
 
Financial framework
Operating cash flow excluding Gulf of Mexico oil spill payments* was $7.0 billion in the quarter and $12.4 billion in the first half. These compare with $6.9 billion for the second quarter of 2017 and $11.3 billion for the first half of 2017.
 
Organic capital expenditure* of $3.5 billion in the quarter brought the total for the first half of 2018 to $7.0 billion. BP expects 2018 organic capital expenditure to be around $15 billion.
 
Divestments and other proceeds totalled $0.3 billion for the half year. 2018 total proceeds are expected to be over $3 billion including proceeds from the sale of BP’s interests in the Greater Kuparuk Area in Alaska.
Gulf of Mexico oil spill payments on a post-tax basis totalled $2.4 billion in the first half of 2018. Payments for the full year are expected to be just over $3 billion on a post-tax basis.
 
Gearing* at the end of the quarter was 27.8%, within BP’s target band of 20-30%. We expect gearing to remain within the target band during the second half of 2018.
 
 
 
Operating metrics
 
 
First half 2018
 
 
Financial metrics
 
 
First half 2018
 
 
(vs. First half 2017)
 
 
 
(vs. First half 2017)
 
Tier 1 process safety events*
 
 
8
 
 
Underlying RC profit*
 
 
$5.4bn
 
 
(-3)
 
 
 
(+$3.2bn)
 
Reported recordable injury frequency*
 
 
0.22
 
 
Operating cash flow excluding Gulf of Mexico oil spill payments (post-tax)
 
 
$12.4bn
 
 
(—)
 
 
 
(+$1.1bn)
 
Group production
 
 
3,662mboe/d
 
 
Organic capital expenditure
 
 
$7.0bn
 
 
(+3.3%)
 
 
 
(-$0.9bn)
 
Upstream production (excludes Rosneft segment)
 
 
2,535mboe/d
 
 
Gulf of Mexico oil spill payments (post-tax)(b)
 
 
$2.4bn
 
 
(+5.2%)
 
 
 
(-$1.9bn)
 
Upstream unit production costs
 
 
$7.32/boe
 
 
Divestment proceeds*
 
 
$0.3bn
 
 
(+1.6%)
 
 
 
(-$0.4bn)
 
BP-operated Upstream plant reliability(a)
 
 
95.8%
 
 
Net debt ratio* (gearing)
 
 
27.8%
 
 
(+0.7)
 
 
 
(-1.0)
 
Refining availability*
 
 
94.1%
 
 
Dividend per ordinary share(c)
 
 
10.25 cents
 
 
(-0.7)
 
 
 
(+2.5%)
 
 
(a)
BP-operated Upstream operating efficiency* has been replaced with Upstream plant reliability as a group operating metric in the first quarter 2018. It is more comparable with the equivalent metric disclosed for the Downstream, which is ‘Refining availability’.
(b)
Amounts shown are post-tax, first quarter 2018 amounts disclosed were pre-tax. Post-tax amounts are consistent with operating cash flow excluding Gulf of Mexico oil spill payments in the table above and the financial framework. The equivalent amount on a pre-tax basis was $2.7 billion, a reduction of $1.6 billion on the prior year.
(c)
Represents dividend announced in the quarter (vs. prior year quarter).
 
 
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 38.
 
 
 
 
 
Top of page 5
 
 
 
This page is intentionally left blank
 
 
 
 
 
Top of page 6
 
 
Upstream
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Profit before interest and tax
 
 
3,518
 
 
3,175
 
 
796
 
 
 
6,693
 
 
2,046
 
 
Inventory holding (gains) losses*
 
 
(4
 
)
 
(1
 
)
 
(1
 
)
 
 
(5
 
)
 
5
 
 
RC profit before interest and tax
 
 
3,514
 
 
3,174
 
 
795
 
 
 
6,688
 
 
2,051
 
 
Net (favourable) adverse impact of non-operating items* and fair value accounting effects*
 
 
(6
 
)
 
(17
 
)
 
(85
 
)
 
 
(23
 
)
 
29
 
 
Underlying RC profit before interest and tax*(a)
 
 
3,508
 
 
3,157
 
 
710
 
 
 
6,665
 
 
2,080
 
 
 
(a)
See page 7 for a reconciliation to segment RC profit before interest and tax by region.
 
Financial results
The replacement cost profit before interest and tax for the second quarter and half year was $3,514 million and $6,688 million respectively, compared with $795 million and $2,051 million for the same periods in 2017. The second quarter and half year included a net non-operating gain of $27 million and a charge of $77 million respectively, compared with a net charge of $21 million and $381 million for the same periods in 2017. Fair value accounting effects in the second quarter and half year had an adverse impact of $21 million and a favourable impact of $100 million respectively, compared with a favourable impact of $106 million and $352 million in the same periods of 2017.
 
 
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the second quarter and half year was $3,508 million and $6,665 million respectively, compared with $710 million and $2,080 million for the same periods in 2017. The result for the second quarter and half year mainly reflected higher liquids and gas realizations, lower exploration write-offs, and higher production from the ramp-up of major projects*.
 
 
Production
Production for the quarter was 2,465mboe/d, 1.4% higher than the second quarter of 2017. Underlying production* for the quarter increased by 9.6%, due to the ramp-up of major projects.
 
For the half year, production was 2,535mboe/d, 5.2% higher than 2017. Underlying production for the half year was 11.7% higher than 2017 due to the ramp-up of major projects.
 
 
Key events
In the second quarter, the Rosneft-operated Taas-Yuryakh expansion project (BP 20%) completed commissioning of the main project facilities for the Srednebotuobinskoye oil and gas condensate field in Eastern Siberia, Russia. This is the second of six major projects expected to come onstream for BP this year. The project was delivered under budget and on schedule.
 
On 7 June, BP won the licence for the Dois Irmãos block located in the Campos basin, offshore Brazil, as a result of the fourth Pre-Salt Production Sharing Contract Bid Round (Petrobras operator 45%, BP 30%, and Equinor 25%).
 
On 2 July, BP and its partners in the Shah Deniz consortium (BP operator 28.8%) announced the start-up of the Shah Deniz 2 gas project in Azerbaijan, including its first commercial gas delivery to Turkey. Shah Deniz 2 is the starting point for the Southern Gas Corridor series of pipelines that will deliver gas from the Caspian Sea direct to European markets and the third of six major projects expected to come onstream for BP this year. The project started up under budget and on schedule.
 
On 3 July, BP announced that it has entered into an agreement to purchase from ConocoPhillips a 16.5% interest in the BP-operated Clair field, west of Shetland in the UK. As a result, BP’s interest in Clair will increase to 45.1%. Simultaneously BP has entered into agreements to sell to ConocoPhillips BP’s entire 39.2% interest in the Greater Kuparuk Area on the North Slope of Alaska as well as BP’s holding in the Kuparuk Transportation Company. The two transactions together are expected to be cash neutral. The transactions remain subject to regulatory approvals.
 
On 26 July, BP announced that BP America Production Company will acquire from BHP Billiton Petroleum (North America) Inc. 100% of the issued share capital of Petrohawk Energy Corporation for a total consideration of $10.5 billion subject to customary adjustments. These unconventional oil and gas assets comprise 470,000 net acres of licences, including a new position for BP in the liquids-rich Permian-Delaware basin, and two premium positions in the Eagle Ford and Haynesville basins. The assets have combined current production of 190,000 barrels of oil equivalent per day, about 45% of which is liquid hydrocarbons, and 4.6 billion barrels of oil equivalent resources. The transaction is anticipated to complete by the end of October subject to regulatory approvals.
 
This builds on the progress announced in our first-quarter results, which comprised the following: BP announced the start of gas production from the Atoll Phase One project in Egypt; BP confirmed that the governments of Mauritania and Senegal signed an Inter-Government Cooperation Agreement (ICA) which will enable the development of the BP-operated Tortue/Ahmeyim gas project; BP took final investment decisions on the two new North Sea developments, Alligin and Vorlich satellite fields; BP’s equity interest (14.67%) in the ADNOC Offshore concession in Abu Dhabi expired; BP announced that, together with its partner, the Oman Oil Company Exploration & Production, it has approved the development of Ghazeer, the second phase of the Khazzan gas field in Oman; BP and state-owned Brazilian oil company Petrobras announced the signing of a memorandum of understanding to form a strategic alliance to jointly explore potential business opportunities both in Brazil and beyond; BP together with its partner Reliance Industries Limited, announced the sanction of the Satellite Cluster project off the east coast of India; BP and the State Oil Company of the Azerbaijan Republic (SOCAR) signed a new production-sharing agreement* for the joint exploration and development of Block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea.
 
 
 
Top of page 7
Upstream (continued)
Outlook
Looking ahead, we expect third-quarter reported production to be broadly flat with the second quarter with continued seasonal turnaround and maintenance activities.
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 38.
 
 
 
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Underlying RC profit before interest and tax
 
 
 
 
 
 
 
 
US
 
 
742
 
 
526
 
 
179
 
 
 
1,268
 
 
345
 
 
Non-US
 
 
2,766
 
 
2,631
 
 
531
 
 
 
5,397
 
 
1,735
 
 
 
 
3,508
 
 
3,157
 
 
710
 
 
 
6,665
 
 
2,080
 
 
Non-operating items
 
 
 
 
 
 
 
 
US
 
 
(29
 
)
 
(145
 
)
 
(34
 
)
 
 
(174
 
)
 
(46
 
)
 
Non-US(a)
 
 
56
 
 
41
 
 
13
 
 
 
97
 
 
(335
 
)
 
 
 
27
 
 
(104
 
)
 
(21
 
)
 
 
(77
 
)
 
(381
 
)
 
Fair value accounting effects
 
 
 
 
 
 
 
 
US
 
 
(143
 
)
 
(9
 
)
 
92
 
 
 
(152
 
)
 
284
 
 
Non-US
 
 
122
 
 
130
 
 
14
 
 
 
252
 
 
68
 
 
 
 
(21
 
)
 
121
 
 
106
 
 
 
100
 
 
352
 
 
RC profit before interest and tax
 
 
 
 
 
 
 
 
US
 
 
570
 
 
372
 
 
237
 
 
 
942
 
 
583
 
 
Non-US
 
 
2,944
 
 
2,802
 
 
558
 
 
 
5,746
 
 
1,468
 
 
 
 
3,514
 
 
3,174
 
 
795
 
 
 
6,688
 
 
2,051
 
 
Exploration expense
 
 
 
 
 
 
 
 
US
 
 
77
 
 
309
 
 
25
 
 
 
386
 
 
65
 
 
Non-US(b)
 
 
87
 
 
205
 
 
825
 
 
 
292
 
 
1,197
 
 
 
 
164
 
 
514
 
 
850
 
 
 
678
 
 
1,262
 
 
Of which: Exploration expenditure written off(b)
 
 
81
 
 
426
 
 
753
 
 
 
507
 
 
1,014
 
 
Production (net of royalties)(c)
 
 
 
 
 
 
 
 
Liquids* (mb/d)
 
 
 
 
 
 
 
 
US
 
 
411
 
 
448
 
 
418
 
 
 
429
 
 
433
 
 
Europe
 
 
147
 
 
139
 
 
122
 
 
 
143
 
 
118
 
 
Rest of World
 
 
659
 
 
731
 
 
812
 
 
 
695
 
 
819
 
 
 
 
1,217
 
 
1,319
 
 
1,352
 
 
 
1,267
 
 
1,371
 
 
Natural gas (mmcf/d)
 
 
 
 
 
 
 
 
US
 
 
1,744
 
 
1,790
 
 
1,576
 
 
 
1,767
 
 
1,585
 
 
Europe
 
 
202
 
 
217
 
 
274
 
 
 
209
 
 
269
 
 
Rest of World
 
 
5,297
 
 
5,456
 
 
4,410
 
 
 
5,376
 
 
4,173
 
 
 
 
7,242
 
 
7,463
 
 
6,260
 
 
 
7,352
 
 
6,026
 
 
Total hydrocarbons* (mboe/d)
 
 
 
 
 
 
 
 
US
 
 
711
 
 
757
 
 
689
 
 
 
734
 
 
706
 
 
Europe
 
 
182
 
 
177
 
 
169
 
 
 
180
 
 
165
 
 
Rest of World
 
 
1,572
 
 
1,672
 
 
1,572
 
 
 
1,622
 
 
1,539
 
 
 
 
2,465
 
 
2,605
 
 
2,431
 
 
 
2,535
 
 
2,410
 
 
Average realizations*(d)
 
 
 
 
 
 
 
 
Total liquids(e) ($/bbl)
 
 
67.24
 
 
61.40
 
 
46.27
 
 
 
64.21
 
 
48.09
 
 
Natural gas ($/mcf)
 
 
3.65
 
 
3.78
 
 
3.19
 
 
 
3.72
 
 
3.34
 
 
Total hydrocarbons ($/boe)
 
 
43.37
 
 
41.39
 
 
33.59
 
 
 
42.36
 
 
35.37
 
 
 
(a)
First half 2017 relates primarily to an impairment charge related to the sale of the Forties Pipeline System business to INEOS.
(b)
Second quarter and first half 2017 predominantly relates to the write-off of exploration well and lease costs in Angola. First half 2017 also includes write-off of exploration wells in Egypt.
(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 8
Downstream
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Profit before interest and tax
 
 
2,036
 
 
1,782
 
 
988
 
 
 
3,818
 
 
2,792
 
 
Inventory holding (gains) losses*
 
 
(1,196
 
)
 
(69
 
)
 
579
 
 
 
(1,265
 
)
 
481
 
 
RC profit before interest and tax
 
 
840
 
 
1,713
 
 
1,567
 
 
 
2,553
 
 
3,273
 
 
Net (favourable) adverse impact of non-operating items* and fair value accounting effects*
 
 
615
 
 
113
 
 
(154
 
)
 
 
728
 
 
(118
 
)
 
Underlying RC profit before interest and tax*(a)
 
 
1,455
 
 
1,826
 
 
1,413
 
 
 
3,281
 
 
3,155
 
 
 
(a)
See page 9 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 second quarter and half year was $840 million and $2,553 million respectively, compared with $1,567 million and $3,273 million for the same periods in 2017.
 
The second quarter and half year include a net non-operating charge of $225 million and $278 million respectively, compared with a gain of $138 million and $62 million for the same periods in 2017. Fair value accounting effects had an adverse impact of $390 million in the second quarter and $450 million for the half year, compared with a favourable impact of $16 million and $56 million for the same periods in 2017.
 
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the second quarter and half year was $1,455 million and $3,281 million respectively, compared with $1,413 million and $3,155 million for the same periods in 2017.
 
Replacement cost profit before interest and tax for the fuels, lubricants and petrochemicals businesses is set out on page 9.
 
Fuels
The fuels business reported an underlying replacement cost profit before interest and tax of $1,054 million for the second quarter and $2,452 million for the half year, compared with $908 million and $2,108 million for the same periods in 2017. The result for the quarter and half year reflects a higher refining performance but a weak supply and trading contribution with a small loss in the second quarter. The result also reflects continued strong fuels marketing performance despite the adverse lag impact of increasing crude oil prices.
 
The refining performance for the quarter and half year reflects the benefits from increased commercial optimization with record levels of crude processed at our Whiting refinery, stronger industry refining margins and higher North American heavy crude oil discounts which was partly offset by pipeline capacity apportionment impacts.
 
In fuels marketing our convenience partnership model is now in more than 1,200 sites across our network and in Mexico we now have more than 300 BP-branded retail sites operational.
 
This quarter, we continued to progress our advanced mobility agenda. In May, we invested $20 million in StoreDot, a leading developer of ultra-fast charging battery technology and in July, we completed the acquisition of Chargemaster, the operator of the UK’s largest electric vehicle charging network, for £130 million.
 
In the quarter we signed a memorandum of understanding with state-owned Brazilian oil company Petrobras to explore potential joint commercial agreements in Brazil. We also announced that we will not be continuing with the proposed acquisition of Woolworths’ retail fuel and convenience business in Australia.
 
Lubricants
The lubricants business reported an underlying replacement cost profit before interest and tax of $326 million for the second quarter and $657 million for the half year, compared with $355 million and $748 million for the same periods in 2017. The result for the quarter and half year reflects continued premium brand growth, more than offset by the adverse lag impact of increasing base oil prices.
 
During the first quarter we significantly strengthened our relationship with Renault through the continuation of our Renault Formula 1 sponsorship with Renault Sport Racing, and we are exploring new opportunities to work globally with the Renault-Nissan-Mitsubishi Alliance.
 
Petrochemicals
The petrochemicals business reported an underlying replacement cost profit before interest and tax of $75 million for the second quarter and $172 million for the half year, compared with $150 million and $299 million for the same periods in 2017. The result for the quarter and half year reflects an improved margin environment, increased margin optimization and lower costs. This was more than offset by a significantly higher level of turnaround activity and the impact from the divestment of our interest in the SECCO joint venture, which completed in the fourth quarter of last year.
 
Outlook
Looking to the third quarter, we expect lower industry refining margins. We also expect significantly higher levels of turnaround activity in the second half of the year, particularly at our Whiting refinery in the US.
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 38.
 
 
 
Top of page 9
Downstream (continued)
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Underlying RC profit before interest and tax - by region
 
 
 
 
 
 
 
 
US
 
 
399
 
 
589
 
 
283
 
 
 
988
 
 
837
 
 
Non-US
 
 
1,056
 
 
1,237
 
 
1,130
 
 
 
2,293
 
 
2,318
 
 
 
 
1,455
 
 
1,826
 
 
1,413
 
 
 
3,281
 
 
3,155
 
 
Non-operating items
 
 
 
 
 
 
 
 
US
 
 
(155
 
)
 
(17
 
)
 
28
 
 
 
(172
 
)
 
16
 
 
Non-US
 
 
(70
 
)
 
(36
 
)
 
110
 
 
 
(106
 
)
 
46
 
 
 
 
(225
 
)
 
(53
 
)
 
138
 
 
 
(278
 
)
 
62
 
 
Fair value accounting effects(a)
 
 
 
 
 
 
 
 
US
 
 
(299
 
)
 
(121
 
)
 
10
 
 
 
(420
 
)
 
(52
 
)
 
Non-US
 
 
(91
 
)
 
61
 
 
6
 
 
 
(30
 
)
 
108
 
 
 
 
(390
 
)
 
(60
 
)
 
16
 
 
 
(450
 
)
 
56
 
 
RC profit before interest and tax
 
 
 
 
 
 
 
 
US
 
 
(55
 
)
 
451
 
 
321
 
 
 
396
 
 
801
 
 
Non-US
 
 
895
 
 
1,262
 
 
1,246
 
 
 
2,157
 
 
2,472
 
 
 
 
840
 
 
1,713
 
 
1,567
 
 
 
2,553
 
 
3,273
 
 
Underlying RC profit before interest and tax - by business(b)(c)
 
 
 
 
 
 
 
 
Fuels
 
 
1,054
 
 
1,398
 
 
908
 
 
 
2,452
 
 
2,108
 
 
Lubricants
 
 
326
 
 
331
 
 
355
 
 
 
657
 
 
748
 
 
Petrochemicals
 
 
75
 
 
97
 
 
150
 
 
 
172
 
 
299
 
 
 
 
1,455
 
 
1,826
 
 
1,413
 
 
 
3,281
 
 
3,155
 
 
Non-operating items and fair value accounting effects(a)
 
 
 
 
 
 
 
 
Fuels
 
 
(584
 
)
 
(110
 
)
 
159
 
 
 
(694
 
)
 
163
 
 
Lubricants
 
 
(26
 
)
 
(3
 
)
 
(2
 
)
 
 
(29
 
)
 
(5
 
)
 
Petrochemicals
 
 
(5
 
)
 
 
 
(3
 
)
 
 
(5
 
)
 
(40
 
)
 
 
 
(615
 
)
 
(113
 
)
 
154
 
 
 
(728
 
)
 
118
 
 
RC profit before interest and tax(b)(c)
 
 
 
 
 
 
 
 
Fuels
 
 
470
 
 
1,288
 
 
1,067
 
 
 
1,758
 
 
2,271
 
 
Lubricants
 
 
300
 
 
328
 
 
353
 
 
 
628
 
 
743
 
 
Petrochemicals
 
 
70
 
 
97
 
 
147
 
 
 
167
 
 
259
 
 
 
 
840
 
 
1,713
 
 
1,567
 
 
 
2,553
 
 
3,273
 
 
 
 
 
 
 
 
 
 
BP average refining marker margin (RMM)* ($/bbl)
 
 
14.9
 
 
11.7
 
 
13.8
 
 
 
13.3
 
 
12.8
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mb/d)
 
 
 
 
 
 
 
 
US
 
 
666
 
 
715
 
 
708
 
 
 
690
 
 
702
 
 
Europe
 
 
786
 
 
797
 
 
782
 
 
 
792
 
 
791
 
 
Rest of World
 
 
228
 
 
249
 
 
198
 
 
 
238
 
 
189
 
 
 
 
1,680
 
 
1,761
 
 
1,688
 
 
 
1,720
 
 
1,682
 
 
Refining availability* (%)
 
 
93.3
 
 
94.8
 
 
94.5
 
 
 
94.1
 
 
94.8
 
 
 
 
 
 
 
 
 
 
Marketing sales of refined products (mb/d)
 
 
 
 
 
 
 
 
US
 
 
1,161
 
 
1,096
 
 
1,177
 
 
 
1,129
 
 
1,146
 
 
Europe
 
 
1,135
 
 
1,045
 
 
1,153
 
 
 
1,090
 
 
1,111
 
 
Rest of World
 
 
477
 
 
481
 
 
497
 
 
 
479
 
 
505
 
 
 
 
2,773
 
 
2,622
 
 
2,827
 
 
 
2,698
 
 
2,762
 
 
Trading/supply sales of refined products
 
 
3,247
 
 
3,181
 
 
2,996
 
 
 
3,215
 
 
2,978
 
 
Total sales volumes of refined products
 
 
6,020
 
 
5,803
 
 
5,823
 
 
 
5,913
 
 
5,740
 
 
 
 
 
 
 
 
 
 
Petrochemicals production (kte)
 
 
 
 
 
 
 
 
US
 
 
404
 
 
499
 
 
672
 
 
 
903
 
 
1,170
 
 
Europe
 
 
1,094
 
 
1,128
 
 
1,365
 
 
 
2,222
 
 
2,618
 
 
Rest of World
 
 
1,358
 
 
1,391
 
 
2,001
 
 
 
2,749
 
 
4,074
 
 
 
 
2,856
 
 
3,018
 
 
4,038
 
 
 
5,874
 
 
7,862
 
 
 
(a)
For Downstream, fair value accounting effects arise solely in the fuels business. See page 30 for further information.
(b)
Segment-level overhead expenses are included in the fuels business result.
(c)
Results from petrochemicals at our Gelsenkirchen and Mülheim sites in Germany are reported in the fuels business.
 
 
Top of page 10
Rosneft
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018(a)
 
2018
 
2017
 
 
2018(a)
 
2017
 
Profit before interest and tax(b)
 
 
876
 
 
269
 
 
271
 
 
 
1,145
 
 
344
 
 
Inventory holding (gains) losses*
 
 
(110
 
)
 
(22
 
)
 
8
 
 
 
(132
 
)
 
34
 
 
RC profit before interest and tax
 
 
766
 
 
247
 
 
279
 
 
 
1,013
 
 
378
 
 
Net charge (credit) for non-operating items*
 
 
 
 
 
 
 
 
 
 
 
 
 
Underlying RC profit before interest and tax*
 
 
766
 
 
247
 
 
279
 
 
 
1,013
 
 
378
 
 
 
 
Financial results
Replacement cost (RC) profit before interest and tax and underlying RC profit before interest and tax for the second quarter and half year was $766 million and $1,013 million respectively, compared with $279 million and $378 million for the same periods in 2017. There were no non-operating items in the second quarter and half year of either year.
 
Compared with the same periods in 2017, the results for the second quarter and half year were primarily affected by higher oil prices, favourable foreign exchange and duty lag effects, and certain one-off items.
 
BP’s two nominees, Bob Dudley and Guillermo Quintero, were re-elected to Rosneft’s board at the annual general meeting (AGM) on 21 June. At the AGM, shareholders also approved a resolution to pay a dividend of 6.65 roubles per ordinary share, which brings the total dividend for 2017 to 10.48 roubles per ordinary share, constituting 50% of the company’s IFRS net profit. BP expects to receive a dividend of 12.5 billion roubles, after the deduction of withholding tax, on 31 July 2018.
 
 
Key events
In December 2017 Rosneft and BP announced an agreement to develop subsoil resources within the Kharampurskoe and Festivalnoye licence areas in Yamalo-Nenets Autonomous Okrug in northern Russia. In the second quarter of 2018 BP acquired a 49% stake in LLC Kharampurneftegaz and it is expected that Rosneft will transfer the relevant subsoil use licences to LLC Kharampurneftegaz, subject to regulatory approvals, later in 2018. BP's interest is reported through the Upstream segment.
 
 
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
 
 
2018(a)
 
2018
 
2017
 
 
2018(a)
 
2017
 
Production (net of royalties) (BP share)
 
 
 
 
 
 
 
 
Liquids* (mb/d)
 
 
909
 
 
902
 
 
902
 
 
 
906
 
 
907
 
 
Natural gas (mmcf/d)
 
 
1,262
 
 
1,307
 
 
1,302
 
 
 
1,285
 
 
1,318
 
 
Total hydrocarbons* (mboe/d)
 
 
1,127
 
 
1,127
 
 
1,126
 
 
 
1,127
 
 
1,134
 
 
 
(a)
The operational and financial information of the Rosneft segment for the second quarter and half year is based on preliminary operational and financial results of Rosneft for the half year ended 30 June 2018. 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 divestment of BP’s interest in TNK-BP. These adjustments increase the reported profit before interest and tax, as shown in the table above, compared with the equivalent amount in Russian roubles in Rosneft’s IFRS financial statements. 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 11
Other businesses and corporate
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
Profit (loss) before interest and tax
 
 
 
 
 
 
 
 
Gulf of Mexico oil spill - business economic loss claims
 
 
(249
 
)
 
 
 
(260
 
)
 
 
(249
 
)
 
(260
 
)
 
Gulf of Mexico oil spill - other
 
 
(184
 
)
 
(86
 
)
 
(87
 
)
 
 
(270
 
)
 
(122
 
)
 
Other
 
 
(592
 
)
 
(485
 
)
 
(374
 
)
 
 
(1,077
 
)
 
(770
 
)
 
Profit (loss) before interest and tax
 
 
(1,025
 
)
 
(571
 
)
 
(721
 
)
 
 
(1,596
 
)
 
(1,152
 
)
 
Inventory holding (gains) losses*
 
 
 
 
 
 
 
 
 
 
 
 
 
RC profit (loss) before interest and tax
 
 
(1,025
 
)
 
(571
 
)
 
(721
 
)
 
 
(1,596
 
)
 
(1,152
 
)
 
Net charge (credit) for non-operating items*
 
 
 
 
 
 
 
 
Gulf of Mexico oil spill - business economic loss claims
 
 
249
 
 
 
 
260
 
 
 
249
 
 
260
 
 
Gulf of Mexico oil spill - other
 
 
184
 
 
86
 
 
87
 
 
 
270
 
 
122
 
 
Other
 
 
115
 
 
93
 
 
8
 
 
 
208
 
 
(36
 
)
 
Net charge (credit) for non-operating items
 
 
548
 
 
179
 
 
355
 
 
 
727
 
 
346
 
 
Underlying RC profit (loss) before interest and tax*
 
 
(477
 
)
 
(392
 
)
 
(366
 
)
 
 
(869
 
)
 
(806
 
)
 
Underlying RC profit (loss) before interest and tax
 
 
 
 
 
 
 
 
US
 
 
(123
 
)
 
(147
 
)
 
(104
 
)
 
 
(270
 
)
 
(301
 
)
 
Non-US
 
 
(354
 
)
 
(245
 
)
 
(262
 
)
 
 
(599
 
)
 
(505
 
)
 
 
 
(477
 
)
 
(392
 
)
 
(366
 
)
 
 
(869
 
)
 
(806
 
)
 
Non-operating items
 
 
 
 
 
 
 
 
US
 
 
(498
 
)
 
(148
 
)
 
(350
 
)
 
 
(646
 
)
 
(388
 
)
 
Non-US
 
 
(50
 
)
 
(31
 
)
 
(5
 
)
 
 
(81
 
)
 
42
 
 
 
 
(548
 
)
 
(179
 
)
 
(355
 
)
 
 
(727
 
)
 
(346
 
)
 
RC profit (loss) before interest and tax
 
 
 
 
 
 
 
 
US
 
 
(621
 
)
 
(295
 
)
 
(454
 
)
 
 
(916
 
)
 
(689
 
)
 
Non-US
 
 
(404
 
)
 
(276
 
)
 
(267
 
)
 
 
(680
 
)
 
(463
 
)
 
 
 
(1,025
 
)
 
(571
 
)
 
(721
 
)
 
 
(1,596
 
)
 
(1,152
 
)
 
 
Other businesses and corporate comprises our alternative energy business, shipping, treasury, 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 second quarter and half year was $1,025 million and $1,596 million respectively, compared with $721 million and $1,152 million for the same periods in 2017.
 
The results included a net non-operating charge of $548 million for the second quarter and $727 million for the half year, compared with a charge of $355 million and $346 million for the same periods in 2017. See Note 2 on page 21 for more information on the Gulf of Mexico oil spill.
 
After adjusting for non-operating items, the underlying replacement cost loss before interest and tax for the second quarter and half year was $477 million and $869 million respectively, compared with $366 million and $806 million for the same periods in 2017. The underlying charge for the second quarter was impacted by adverse foreign exchange effects.
 
Alternative Energy
The net ethanol-equivalent production (which includes ethanol and sugar) for the second quarter and half year was 259 million litres and 267 million litres respectively, compared with 227 million litres for the same periods in 2017 (there was no production for the first quarter in 2017 due to the inter-harvest period).
 
Net wind generation capacity* was 1,432MW at 30 June 2018, compared with 1,432MW at 30 June 2017. BP’s net share of wind generation for the second quarter and half year was 984GWh and 2,201GWh respectively, compared with 1,053GWh and 2,212GWh for the same periods in 2017.
 
Lightsource BP, the solar development company 43% owned by BP, made progress on a number of solar development projects during the quarter, including completing a 60MW solar farm in India, being awarded mandates for projects in mid-Kansas in the US, and also completing the acquisition of a portfolio of development projects in Pennsylvania and Maryland, in the US. Lightsource BP, in partnership with Everstone Capital, was also awarded the mandate to manage the Global Growth Energy Fund in India, established and partly funded by the UK and Indian governments.
 
 
 
Top of page 12
Half-yearly financial report
 
This results announcement also represents BP’s half-yearly financial report for the purposes of the Disclosure Guidance and Transparency Rules made by the UK Financial Conduct Authority. In this context: (i) the condensed set of financial statements can be found on pages 14-27; (ii) pages 1-11, and 28-38 comprise the interim management report; and (iii) the directors’ responsibility statement and auditors’ independent review report can be found on pages 12-13.
 
 
 
 
 
Statement of directors’ responsibilities
 
The directors confirm that, to the best of their knowledge, the condensed set of financial statements on pages 14-27 has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, and that the interim management report on pages 1-11 and 28-38 includes a fair review of the information required by the Disclosure Guidance and Transparency Rules.
 
The directors of BP p.l.c. are listed on pages 60-65 of BP Annual Report and Form 20-F 2017, with the following exceptions. Paul Anderson retired at the 2018 Annual General Meeting on 21 May 2018, and Dame Alison Carnwath was elected at the 2018 Annual General Meeting. On 26 July Helge Lund and Pamela Daley were appointed to the board.
 
 
 
By order of the board
 
 
 
Bob Dudley
 
Brian Gilvary
 
Group Chief Executive
 
Chief Financial Officer
 
30 July 2018
 
30 July 2018
 
 
 
 
Top of page 13
Independent review report to BP p.l.c.
 
 
 
Introduction
 
 
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the group income statement, condensed group statement of comprehensive income, condensed group statement of changes in equity, group balance sheet, condensed group cash flow statement and related notes 1 to 12. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
 
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
 
 
 
Directors’ responsibilities
 
 
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
 
As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as issued by the IASB and as adopted by the European Union.
 
 
 
Our responsibility
 
 
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
 
 
 
Scope of review
 
 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
 
 
 
Conclusion
 
 
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
 
 
 
Deloitte LLP
Statutory Auditor
London
United Kingdom
30 July 2018
 
 
 
The maintenance and integrity of the BP p.l.c. website are the responsibility of the directors; the review work carried out by the statutory auditors does not involve consideration of these matters and, accordingly, the statutory auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the website.
 
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
 
 
 
Top of page 14
Financial statements
 
Group income statement
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Sales and other operating revenues (Note 6)
 
 
75,439
 
 
68,172
 
 
56,511
 
 
 
143,611
 
 
112,374
 
 
Earnings from joint ventures – after interest and tax
 
 
220
 
 
293
 
 
160
 
 
 
513
 
 
365
 
 
Earnings from associates – after interest and tax
 
 
1,027
 
 
414
 
 
371
 
 
 
1,441
 
 
522
 
 
Interest and other income
 
 
165
 
 
159
 
 
127
 
 
 
324
 
 
249
 
 
Gains on sale of businesses and fixed assets
 
 
56
 
 
105
 
 
197
 
 
 
161
 
 
242
 
 
Total revenues and other income
 
 
76,907
 
 
69,143
 
 
57,366
 
 
 
146,050
 
 
113,752
 
 
Purchases
 
 
58,424
 
 
51,512
 
 
42,555
 
 
 
109,936
 
 
83,530
 
 
Production and manufacturing expenses(a)
 
 
5,515
 
 
5,438
 
 
5,761
 
 
 
10,953
 
 
11,016
 
 
Production and similar taxes (Note 8)
 
 
531
 
 
368
 
 
347
 
 
 
899
 
 
815
 
 
Depreciation, depletion and amortization (Note 7)
 
 
3,811
 
 
3,931
 
 
3,793
 
 
 
7,742
 
 
7,635
 
 
Impairment and losses on sale of businesses and fixed assets
 
 
(23
 
)
 
91
 
 
51
 
 
 
68
 
 
504
 
 
Exploration expense
 
 
164
 
 
514
 
 
850
 
 
 
678
 
 
1,262
 
 
Distribution and administration expenses
 
 
2,929
 
 
2,794
 
 
2,540
 
 
 
5,723
 
 
4,893
 
 
Profit (loss) before interest and taxation
 
 
5,556
 
 
4,495
 
 
1,469
 
 
 
10,051
 
 
4,097
 
 
Finance costs(a)
 
 
535
 
 
553
 
 
487
 
 
 
1,088
 
 
947
 
 
Net finance expense relating to pensions and other post-retirement benefits
 
 
31
 
 
31
 
 
54
 
 
 
62
 
 
107
 
 
Profit (loss) before taxation
 
 
4,990
 
 
3,911
 
 
928
 
 
 
8,901
 
 
3,043
 
 
Taxation(a)
 
 
2,117
 
 
1,380
 
 
772
 
 
 
3,497
 
 
1,395
 
 
Profit (loss) for the period
 
 
2,873
 
 
2,531
 
 
156
 
 
 
5,404
 
 
1,648
 
 
Attributable to
 
 
 
 
 
 
 
 
BP shareholders
 
 
2,799
 
 
2,469
 
 
144
 
 
 
5,268
 
 
1,593
 
 
Non-controlling interests
 
 
74
 
 
62
 
 
12
 
 
 
136
 
 
55
 
 
 
 
2,873
 
 
2,531
 
 
156
 
 
 
5,404
 
 
1,648
 
 
 
 
 
 
 
 
 
 
Earnings per share (Note 9)
 
 
 
 
 
 
 
 
Profit (loss) for the period attributable to BP shareholders
 
 
 
 
 
 
 
 
Per ordinary share (cents)
 
 
 
 
 
 
 
 
Basic
 
 
14.03
 
 
12.40
 
 
0.73
 
 
 
26.42
 
 
8.12
 
 
Diluted
 
 
13.96
 
 
12.33
 
 
0.72
 
 
 
26.27
 
 
8.08
 
 
Per ADS (dollars)
 
 
 
 
 
 
 
 
Basic
 
 
0.84
 
 
0.74
 
 
0.04
 
 
 
1.59
 
 
0.49
 
 
Diluted
 
 
0.84
 
 
0.74
 
 
0.04
 
 
 
1.58
 
 
0.48
 
 
 
(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 15
 
Condensed group statement of comprehensive income
 
 
 
Second
 
First
 
Second
 
 
First
 
First
 
 
 
quarter
 
quarter
 
quarter
 
 
half
 
half
 
$ million
 
 
2018
 
2018
 
2017
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Profit (loss) for the period
 
 
2,873
 
 
2,531
 
 
156
 
 
 
5,404
 
 
1,648
 
 
Other comprehensive income
 
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss
 
 
 
 
 
 
 
 
Currency translation differences
 
 
(2,612
 
)
 
531
 
 
(103
 
)
 
 
(2,081
 
)
 
1,111
 
 
Exchange (gains) losses on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets
 
 
 
 
 
 
4
 
 
 
 
 
5
 
 
Available-for-sale investments
 
 
 
 
 
 
1
 
 
 
 
 
3
 
 
Cash flow hedges and costs of hedging
 
 
(107
 
)
 
(82
 
)
 
148
 
 
 
(189
 
)
 
277
 
 
Share of items relating to equity-accounted entities, net of tax
 
 
(33
 
)
 
155
 
 
72
 
 
 
122
 
 
303
 
 
Income tax relating to items that may be reclassified
 
 
52
 
 
(90
 
)
 
4
 
 
 
(38
 
)
 
(121
 
)
 
 
 
(2,700
 
)
 
514
 
 
126
 
 
 
(2,186
 
)
 
1,578
 
 
Items that will not be reclassified to profit or loss
 
 
 
 
 
 
 
 
Remeasurements of the net pension and other post-retirement benefit liability or asset
 
 
1,714
 
 
865
 
 
318
 
 
 
2,579
 
 
1,045
 
 
Cash flow hedges that will subsequently be transferred to the balance sheet
 
 
(35
 
)
 
13
 
 
 
 
 
(22
 
)
 
 
 
Income tax relating to items that will not be reclassified
 
 
(557
 
)
 
(265
 
)
 
(102
 
)
 
 
(822
 
)
 
(348
 
)
 
 
 
1,122
 
 
613
 
 
216
 
 
 
1,735
 
 
697
 
 
Other comprehensive income
 
 
(1,578
 
)
 
1,127
 
 
342
 
 
 
(451
 
)
 
2,275
 
 
Total comprehensive income
 
 
1,295
 
 
3,658
 
 
498
 
 
 
4,953
 
 
3,923
 
 
Attributable to
 
 
 
 
 
 
 
 
BP shareholders
 
 
1,268
 
 
3,580
 
 
472
 
 
 
4,848
 
 
3,835
 
 
Non-controlling interests
 
 
27
 
 
78
 
 
26
 
 
 
105
 
 
88
 
 
 
 
1,295
 
 
3,658
 
 
498
 
 
 
4,953
 
 
3,923
 
 
 
 
Top of page 16
Condensed group statement of changes in equity
 
 
 
BP shareholders’
 
Non-controlling
 
Total
 
$ million
 
 
equity
 
interests
 
equity
 
At 31 December 2017
 
 
98,491
 
 
1,913
 
 
100,404
 
 
Adjustment on adoption of IFRS 9, net of tax(a)
 
 
(180
 
)
 
 
 
(180
 
)
 
At 1 January 2018
 
 
98,311
 
 
1,913