BP LOSS $999 MLN
BP full year and 4Q 2016 results
BP's fourth-quarter replacement cost (RC) profit was $72 million, compared with a loss of $2,233 million for the same period in 2015. After adjusting for a net charge for non-operating items of $180 million and net unfavourable fair value accounting effects of $148 million (both on a post-tax basis), underlying RC profit for the fourth quarter was $400 million, compared with $196 million for the same period in 2015.
For the full year of 2016 the RC loss was $999 million, compared with a loss of $5,162 million for the full year 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 the remaining material liabilities was determined. After adjusting for a net charge for non-operating items of $2,828 million and net unfavourable fair value accounting effects of $756 million (both on a post-tax basis), underlying RC profit for the full year was $2,585 million, compared with $5,905 million for the same period in 2015, predominantly due to lower results in the Upstream and Downstream segments.
Non-operating items for the quarter and full year reflect additional provisions recorded in relation to the Gulf of Mexico oil spill. Non-operating items also include a restructuring charge of $195 million for the quarter and $763 million for the full year. Cumulative restructuring charges from the beginning of the fourth quarter 2014 totalled $2.3 billion by the end of the fourth quarter 2016.
ll amounts, including finance costs, relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a pre-tax charge of $799 million for the fourth quarter and $7,134 million for the full year.
Net cash provided by operating activities for the fourth quarter and full year was $2.4 billion and $10.7 billion respectively, compared with $5.8 billion and $19.1 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 fourth quarter and full year was $4.5 billion and $17.6 billion respectively, compared with $5.9 billion and $20.3 billion for the same periods in 2015.
Net debt at 31 December 2016 was $35.5 billion, compared with $27.2 billion a year ago. The net debt ratio at 31 December 2016 was 26.8%, compared with 21.6% a year ago. We continue to target a net debt ratio in the range of 20-30%. Net debt and the net debt ratio are non-GAAP measures.
BP today announced a quarterly dividend of 10.00 cents per ordinary share ($0.600 per ADS), which is expected to be paid on 31 March 2017. The corresponding amount in sterling will be announced on 20 March 2017.
Capital expenditure on an accruals basis* for the fourth quarter, excluding amounts relating to the renewal of a 10% interest in the Abu Dhabi onshore oil concession was $5.1 billion, compared with $6.1 billion for the same period in 2015. Of the $5.1 billion, $4.5 billion was organic capital expenditure*, compared with $5.5 billion in 2015. The renewal of a 10% interest in the Abu Dhabi onshore oil concession, for which new ordinary shares in BP were issued, is treated as organic capital expenditure. Capital expenditure on an accruals basis for the fourth quarter was $7.6 billion.
For the full year, excluding amounts relating to the renewal of an interest in the Abu Dhabi onshore oil concession, capital expenditure on an accruals basis was $17.0 billion, of which organic capital expenditure was $16.0 billion, compared with $19.5 billion for the same period in 2015, of which organic capital expenditure was $18.7 billion.
Capital expenditure on an accruals basis for the full year was $19.4 billion. See page 23 for further information. In 2017, we expect organic capital expenditure to be in the range of $16-17 billion.
Disposal proceeds, as per the cash flow statement, were $0.5 billion for the fourth quarter, compared with $0.2 billion for the same period in 2015. For the full year, disposal proceeds were $2.6 billion, as per the cash flow statement, along with $0.6 billion received in relation to the sale of 20% from our shareholding in Castrol India Limited, giving total proceeds of $3.2 billion for the year, compared with $2.8 billion in 2015. In 2017, divestments are expected to be in the range of $4.5-5.5 billion.
The effective tax rate (ETR) on RC profit or loss* for the fourth quarter and full year is significantly impacted by the effect of non-operating items, fair value accounting effects and the reduction in the rate of the UK North Sea supplementary charge in the third quarter (and the first quarter 2015), and therefore is not a meaningful measure.
The adjusted ETR, which eliminates the effect of these items, for the fourth quarter and full year was 10% and 23% respectively, compared with -20% and 31% for the same periods in 2015. The adjusted ETR for the fourth quarter 2016 was impacted by a high proportion of equity-accounted income (which is reported net of tax in the income statement) within RC profit, and reflects a benefit from the reassessment of the recognition of deferred tax assets and other items, partly offset by charges for foreign exchange impacts. The adjusted ETR for the fourth quarter 2015 reflected tax credits associated with losses in the Upstream segment offsetting tax charges arising elsewhere. The adjusted ETR for the full year is lower than last year predominantly due to changes in the geographical mix of profits and the absence of foreign exchange impacts. In the current environment, and reflecting the recent transaction to renew our interest in the Abu Dhabi onshore oil concession, the adjusted ETR in 2017 is expected to be in the region of 40%.
The reserves replacement ratio on a combined basis of subsidiaries and equity-accounted entities including the impact of the Abu Dhabi renewal was estimated at 109%(a) for the year.
Reported production for the fourth quarter, including BP's share of Rosneft's production, was 3,338 thousand barrels of oil equivalent per day (mboe/d), compared with 3,342mboe/d for the same period in 2015. For the full year, the reported production was 3,268mboe/d, compared with 3,239mboe/d in 2015. Comparative periods have been restated, see page 5 for further information.
The charge for depreciation, depletion and amortization was $14.5 billion in 2016, compared with $15.2 billion in 2015. In 2017, we expect the charge to be higher than 2016.
Bob Dudley, BP group chief executive, commented:
"2016 was the year we made significant strides in creating a stronger platform for growth. We launched six major project start-ups – from Algeria to the Gulf of Mexico - and made final investment decisions on a further five major projects. And we see exciting opportunities ahead.
"We have delivered solid results in tough conditions – and are well prepared for any volatility in oil pricing. We have adapted by cutting our controllable cash costs by $7 billion from 2014 – a full year earlier than planned. Continued tight discipline on costs remains essential. Everything we have done during the year has made us a more resilient and competitive company.
"With our Deepwater Horizon financial liabilities now substantially behind us, BP is fully focused on the future. You have seen that focus in the string of strategic portfolio additions during the last two months of the year. From increasing gas interests and renewing long-term low-cost oil to expanding our retail operations - these investments will generate significant long term value for our shareholders. We start this year with considerable momentum - and a sense of disciplined ambition. We have laid the foundations for BP to be back to growth."
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Libya’s oil production increased steeply to the current level of 850,000 b/d from a low point in August 2016 of below 300,000 b/d. Production surpassed 1 million b/d in July.
- Revenue of $7.9 billion increased 6% sequentially - Pretax operating income of $1.1 billion increased 11% sequentially - GAAP EPS, including Cameron integration-related charges of $0.03 per share, was $0.39 - EPS, excluding Cameron integration-related charges, was $0.42 - Cash flow from operations was $1.9 billion; free cash flow was $1.1 billion
“The combination of GE Oil & Gas and Baker Hughes closed on July 3, and we are pleased with our progress during our first operating quarter. Despite the continuing challenging environment, we delivered solid orders growth and secured important wins from customers, advanced existing projects and enhanced our technology offerings in the quarter. We also achieved key integration milestones and made significant progress working as a combined company. I am now more convinced than ever that we combined the right companies at the right time,” said Lorenzo Simonelli, BHGE chairman and chief executive officer.
U.S. Rig Count is up 360 rigs from last year's count of 553, with oil rigs up 293, gas rigs up 69, and miscellaneous rigs down 2 to 2. Canada Rig Count is up 59 rigs from last year's count of 143, with oil rigs up 38 and gas rigs up 21.