BP 2006 Annual Report Download - page 50

planned maintenance shutdowns and anticipated decline in our existing
profit centres. Hydrocarbon production for equity-accounted entities
increased by 7.8%, reflecting an increase of 8.4% for liquids and an
increase of 3.8% for natural gas. This increase primarily reflects increased
production from TNK-BP.
Sales and other operating revenues
The increase in sales and other operating revenues (before the elimination
of sales between businesses) for 2006 included approximately $39 billion
from higher prices related to marketing and other sales (spot and term
contracts, oil and gas realizations and other sales), partially offset by a net
decrease of approximately $15 billion from lower volumes of marketing
and other sales and a decrease of around $1 billion related to lower
production volumes of subsidiaries.
The increase in sales and other operating revenues (before the
elimination of sales between businesses) for 2005 included approximately
$67 billion from higher prices related to marketing and other sales (spot
and term contracts, oil and gas realizations and other sales) and $1 billion
from foreign exchange movements due to sales in local currencies being
translated into the US dollar. This was partially offset by a net decrease
of approximately $11 billion from lower volumes of marketing and other
sales and a decrease of around $1 billion related to lower production
volumes of subsidiaries.
Profit attributable to BP shareholders
Profit attributable to BP shareholders for the year ended 31 December
2006 was $22,000 million, after inventory holding losses of $253 million.
Inventory holding gains or losses represent the difference between
the cost of sales calculated using the average cost of supplies incurred
during the year and the cost of sales calculated using the first-in first-out
method. Profit attributable to BP shareholders for the year ended
31 December 2005 was $22,341 million, including inventory holding gains
of $3,027 million, and profit attributable to BP shareholders for the year
ended 31 December 2004 was $17,075 million, including inventory
holdings gains of $1,643 million.
The profit attributable to BP shareholders for the year ended
31 December 2006 included losses from Innovene operations of
$25 million, compared with a profit of $184 million and a loss of
$622 million in the years ended 31 December 2005 and 31 December 2004
respectively. The loss/profit from Innovene for the years 2006 and 2005
included losses on remeasurement to fair value of $184 million and
$591 million respectively. Financial statements – Note 5 on page 111
provides further financial information for Innovene.
Profit attributable to BP shareholders for the year ended
31 December 2006:
– Included net gains of $2,114 million on the sales of assets, net fair
value gains of $515 million on embedded derivatives (these embedded
derivatives are fair valued at each period end with the resulting gains or
losses taken to the income statement) and a net impairment credit of
$203 million and was after charges for legal provisions of $335 million
in Exploration and Production;
– Included net disposal gains of $884 million and was after a charge of
$925 million as a result of the ongoing review of fatality and personal
injury compensation claims associated with the March 2005 incident at
the Texas City refinery, an impairment charge of $155 million, a charge
of $155 million in respect of a donation to the BP Foundation and a
charge of $33 million relating to new, and revisions to existing,
environmental and other provisions in Refining and Marketing;
– Included net disposal gains of $193 million and net fair value gains of
$88 million on embedded derivatives and was after a charge
$100 million for the impairment of a North American NGLs asset in the
Gas, Power and Renewables segment; and
– Included a credit of $94 million in relation to new, and revisions to
existing, environmental and other provisions, a net gain on disposal
of $95 million and net fair value gains of $5 million on embedded
derivatives, and was after a charge of $200 million relating to the
reassessment of certain provisions and an impairment charge of
$69 million in Other businesses and corporate.
Profit attributable to BP shareholders for the year ended
31 December 2005:
– Included net gains of $1,159 million on the sales of assets, primarily
from our interest in the Ormen Lange field, and was after net fair value
losses of $1,688 million on embedded derivatives, an impairment
charge of $226 million in respect of fields in the Gulf of Mexico and a
charge for impairment of $40 million relating to fields in the UK North
Sea in Exploration and Production;
– Included net gains of $177 million, principally on the divestment of a
number of regional retail networks in the US and was after a charge of
$700 million in respect of fatality and personal injury compensation
claims associated with the March 2005 incident at the Texas City
refinery a charge of $140 million relating to new, and revisions to
existing, environmental and other provisions, an impairment charge of
$93 million and a charge of $33 million for the impairment of an equity-
accounted entity in Refining and Marketing;
– Included net gains of $55 million primarily on the disposal of BP’s
interest in the Interconnector pipeline and a power plant in the UK and
was after net fair value losses of $346 million on embedded derivatives
and a credit of $6 million related to new, and revisions to existing,
environmental and other provisions in the Gas, Power and Renewables
segment; and
– Included net gains on disposal of $38 million, and was after a net
charge of $278 million related to new, and revisions to existing,
environmental and other provisions and the reversal of environmental
provisions no longer required, a charge of $134 million relating to the
separation of the Olefins and Derivatives business and net fair value
losses of $13 million on embedded derivatives in Other businesses
and corporate.
Profit attributable to BP shareholders for the year ended
31 December 2004:
– Was after an impairment charge of $267 million in respect of fields in
the deepwater Gulf of Mexico and US onshore, an impairment charge
of $108 million in respect of a gas processing plant in the US and a
field in the Gulf of Mexico Shelf, an impairment charge of $60 million in
respect of the partner-operated Temsah platform in Egypt following a
blow-out, a net loss on disposal of $65 million, a charge of $35 million
in respect of Alaskan tankers that were no longer required and, in
addition, following the lapse of the sale agreement for oil and gas
properties in Venezuela, $31 million of the previously booked
impairment was reversed in Exploration and Production;
– Was after net losses on disposal of $267 million, a charge of $206
million related to new, and revisions to existing, environmental and
other provisions, a charge of $195 million for the impairment of the
petrochemicals facilities at Hull, UK, and a charge of $32 million for
restructuring, integration and rationalization in Refining and Marketing;
– Included net gains on disposal of $56 million in the Gas, Power and
Renewables segment; and
– Included net gains on disposal of $949 million primarily related to
the sale of our interests in PetroChina and Sinopec and a credit of
$66 million primarily resulting from the reversal of vacant space
provisions in the UK and the US, and was after a charge of $283 million
related to new, and revisions to existing, environmental and other
provisions and a charge of $102 million relating to the separation of the
Olefins and Derivatives business in Other businesses and corporate.
(See Environmental expenditure on page 54 for more information on
environmental charges.)
The primary additional factors reflected in profit attributable to BP
shareholders for the year ended 31 December 2006 compared with a
year ago were higher oil realizations, higher retail margins (although this
was partially offset by a deterioration in other marketing margins), higher
refining margins, including the benefit of supply optimization, and higher
contributions from the operating businesses in the Gas, Power and
Renewables segment, offset by the ongoing impact following the Texas
City refinery shutdown, lower gas realizations, lower production volumes,
higher costs and volatility arising under IFRS fair value accounting.
The primary additional factors reflected in profit attributable to BP
shareholders for the year ended 31 December 2005 compared with 2004
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