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Businessreview
Business review
Ourstrategy
Deliveringstability,restoringtrustandvalue.
2010hasbeenaverychallengingyearforBPandthereremainsmuchto
bedonetoaddresstherepercussionsofthetragicGulfofMexicooilspill.
BPiscommittedtotherestorationoftheGulfofMexicocoastlineandits
communities.BPwillmanageitsliabilitiesarisingfromthisdeeply
regrettedaccidentandiscommittedtolearnandsharethelessonsfrom
theincident.Aboveall,wewillworkwithregulatorsandindustrygloballyto
reducetheriskofthishappeningagain.
BP’simmediateprioritybeyondtheGulfistoregainthetrustofour
stakeholdersbydemonstratingthatweunderstandandcanmanagethe
inherentrisksacrossourwholeportfolio.Fromthere,weseektorebuild
valueforourshareholdersbyre-establishingourcompetitivepositionwithin
thesector.
BPbelievesthatwecanemergefromtheshadowoftheGulfof
Mexicoincidentasafer,morerisk-awarebusiness.Ourstrategy,whichwill
continuetoevolveover2011,willremainfocusedoncreatingvaluefor
shareholdersthroughsafe,responsibleexploration,developmentand
productionoffossilfuelresourcesbecausetheworldneedsthem;the
manufacture,processinganddeliveryofbetterandmoreadvanced
products;andparticipationinthetransitiontoalowercarbonfuture.
Ourintentionistore-establishallnecessarypermissionsto
operateinthedeepwaterGulfofMexicoandsustainbusinessmomentum
outsideoftheGulf;torestorevalueandgrowththrougharigorousfocus
onourportfolioofhigh-qualityassets;todevelopourpeopletoensure
wehavetherightcompetenciesandbehaviourswheretheyareneeded;
tolearnandimplementthelessonsfromtheGulfofMexicoandrigorously
focusontheprocessesthatwilldeliversafeandreliableoperations
andcontinuousimprovement;anddosowithinaclear,conservative
nancialframework.
A safer, more risk-aware business
Ouremployees,investors,regulatorsandgovernmentpartnersexpectus
toputsafetyandoperationalintegrityaboveallotherconcerns.Weintend
tobuildonourexistingstrengthstosystematicallymanageoperatingrisk
byimprovingourunderstandingofriskexposureandtakingtheappropriate
actiontomitigaterisk.Whereverweoperate,wemustembedthe
disciplinedapplicationofstandardswithinBP’soperatingmanagement
system(OMS),asasingleframeworkforallBPoperations.(See Safety on
page 68 for further information on our OMS.)Wewilldemandindependent
checksandbalancesatmultiplelevelstoprovidebetterdecisionmaking
andtransparentgovernanceofstandards,capability,complianceandrisk
management.Toeffectthiswehavecreatedamorepowerfulsafetyand
operationalriskfunction,independentofthebusinesslineanddeployed
intoeachoperatingentityacrosstheBPportfolio.Forfurtherinformation
onoursafetyprioritiesandperformance,seeCorporateresponsibility–
Safetyonpages68-71.
Fullling our commitments and earning back trust following the
Gulf of Mexico incident
BPhascommittedtopayalllegitimateclaimsbyindividuals,businesses
andgovernmentsandhasestablisheda$20-billiontrustfund,following
consultationwiththeUSgovernment,toprovidefundsforthatpurpose.In
addition,BPisworkingwithfederalandstateagenciestoassessthe
natureandextentoftheimpactonnaturalresourcesresultingfromthe
GulfofMexicoincident.Basedontheassessment,federalandstate
trusteeswillprepareplanstorestore,rehabilitate,replaceoracquirethe
equivalentofinjuredresourcesundertheirtrusteeship.TheOilPollutionAct
1990(OPA90)providesforrestorationtoabaselinecondition,whichisthe
conditiontheresourceswouldhavebeeniniftheincidenthadnot
occurred.Theassessmentwillalsobeusedtoidentifyanycompensation
thatmayberequiredforthelossoftheresources,priortorestoration.
Reinstating a dividend in line with the circumstances of the
company, as part of a conservative nancial framework
BPwillcontinuetoinvestwiththeaimofgrowingthecompanyand
shareholdervalue,sustainablyandthroughthebusinesscycle.Weintend
tounderpinthiswithaconservativecapitalstructure,whichallowsthe
exibilitytoexecutestrategywhileremainingresilienttotheinherent
volatilityofthebusiness.Wewillendeavourtoactivelymanageday-to-day
liquidityinordertomeetthecashneedsofthebusiness,whilemaintaining
thenetdebtratiowithinalowerrangeof10%to20%.On1February
2011,weannouncedthatquarterlydividendpaymentswouldresume.The
quarterlydividendtobepaidinMarch2011is7centspershare.Theboard
believesthisisanaffordableandsustainablelevelwhichwillallowthe
companytomeetitscommitmentswhilecontinuingtoinvestinthe
businessforgrowthandvalue.
Delivering the right high-quality portfolio
AspartoftheresponsetotheGulfofMexicoincident,weannouncedand
areprogressingdisposalsthatareexpectedtodeliveraround$30billionin
proceedsover2010and2011.During2010,BPhassuccessfullyrealized
premiumvaluesforupstreamanddownstreamassetsaspartofthe
programme.SeeAcquisitionsanddisposalsonpage24.Thedisposal
programmehasbeenanopportunitytofurtherupgradeandfocusour
portfolioandweintendtoretainacapacitytoreinvest,toacquireassets
thatenhancestrategyandourportfolioonbothaplannedandan
opportunisticbasisthrough2011.
BPAnnualReportandForm20-F2010 19