BP 2009 Annual Report Download - page 58

BP Annual Report and Accounts 2009
Business review
Sales and other operating revenues for 2009 were $58 billion, compared
with $86 billion in 2008 and $66 billion in 2007. The decrease in 2009
primarily reflected lower oil and gas realizations. The increase in 2008
compared with 2007 primarily reflected higher oil and gas realizations;
gas marketing sales also increased primarily as a result of higher prices.
The replacement cost profit before interest and tax for the year
ended 31 December 2009 was $24,800 million. This included a net credit
for non-operating items of $2,265 million (see page 58), with the most
significant items being gains on the sale of operations (primarily from the
disposal of our 46% stake in LukArco, the sale of our 49.9% interest in
Kazakhstan Pipeline Ventures LLC and the sale of BP West Java Limited
in Indonesia) and fair value gains on embedded derivatives. In addition,
fair value accounting effects had a favourable impact of $919 million
relative to management’s measure of performance (see page 59).
The replacement cost profit before interest and tax for the year
ended 31 December 2008 was $38,308 million. This included a net
charge for non-operating items of $990 million (see page 58), with the
most significant items being net impairment charges and net fair value
losses on embedded derivatives, partly offset by the reversal of certain
provisions. The impairment charge included a $517 million write-down of
our investment in Rosneft based on its quoted market price at the end of
the year. In addition, fair value accounting effects had an unfavourable
impact of $282 million relative to management’s measure of
performance (see page 59).
The replacement cost profit before interest and tax for the year
ended 31 December 2007 was $27,602 million. This included a net credit
from non-operating items of $491 million (see page 58), with the most
significant items being net gains from the sale of assets (primarily from
the disposal of our production and gas infrastructure in the Netherlands,
our interests in non-core Permian assets in the US and our interests in
the Entrada field in the Gulf of Mexico), partly offset by a restructuring
charge and a charge in respect of the reassessment of certain provisions.
In addition, fair value accounting effects had a favourable impact
of $48 million relative to management’s measure of performance
(see page 59).
The primary additional factor contributing to the 35% decrease in the
replacement cost profit before interest and tax for the year ended
31 December 2009 compared with the year ended 31 December 2008
was lower realizations. In addition, the result was impacted by lower
income from equity-accounted entities and higher depreciation but the
result benefited from higher production and lower costs, as a result of
our continued focus on cost management.
The primary additional factor contributing to the 39% increase in
the replacement cost profit before interest and tax for the year ended
31 December 2008 compared with the year ended 31 December 2007
was higher realizations. In addition, the result reflected a higher
contribution from the gas marketing and trading business but was
impacted by higher production taxes and higher depreciation. The impact
of inflation within other costs was mitigated by rigorous cost control and
a focus on simplification and efficiency.
Reported production for 2009 was 3,998mboe/d (2,684mboe/d for
subsidiaries and 1,314mboe/d for equity-accounted entities) compared
with 3,838mboe/d in 2008 (2,517mboe/d for subsidiaries and
1,321mboe/d for equity-accounted entities), an increase of 4%. After
adjusting for entitlement impacts in our PSAs and the effect of OPEC
quota restrictions, the increase was 5%. This reflected continued strong
operational performance and the start-up of seven major projects in
2009.
Reported production for 2008 was 3,838mboe/d (2,517mboe/d
for subsidiaries and 1,321mboe/d for equity-accounted entities),
compared with 3,818mboe/d in 2007 (2,549mboe/d for subsidiaries and
1,269mboe/d for equity-accounted entities). In aggregate, after adjusting
for the effect of lower entitlement in our PSAs, 2008 production was 5%
higher than 2007. This reflected strong performance from our existing
assets, the continued ramp-up of production following the start-up of
major projects in late 2007 and the start-up of nine major projects
in 2008.
Refining and Marketing
56
$ million
2009 2008 2007
Sales and other operating revenuesa213,050 320,039 250,221
Replacement cost profit before interest and taxb743 4,176 2,621
$ per barrel
Global indicator refining margin (GIM)c
Northwest Europe 3.26 6.72 4.99
US Gulf Coast 4.63 6.78 13.48
Midwest 5.43 5.17 12.81
US West Coast 5.88 7.42 15.05
Singapore 0.21 6.30 5.29
BP average 4.00 6.50 9.94
%
Refining availabilityd93.6 88.8 82.9
thousand barrels per day
Refinery throughputs 2,287 2,155 2,127
aIncludes sales between businesses.
bIncludes profit after interest and tax of equity-accounted entities.
cThe global indicator refining margin (GIM) is the average of regional indicator margins weighted for BP’s crude refining capacity in each region. Each regional indicator margin is based on a single
representative crude with product yields characteristic of the typical level of upgrading complexity. The regional indicator margins may not be representative of the margins achieved by BP in any period
because of BP’s particular refinery configurations and crude and product slate.
dRefining availability represents Solomon Associates’ operational availability, which is defined as the percentage of the year that a unit is available for processing after subtracting the annualized time lost
due to turnaround activity and all planned mechanical, process and regulatory maintenance downtime.