BP 2011 Annual Report Download - page 50

48 BP Annual Report and Form 20-F 2011
Our upstream business is now reorganized into three divisions – exploration,
developments and production. We have also reorganized our drilling operations
into a single global wells organization (GWO), which forms part of the
developments division and takes a consistent, global approach to managing risk.
GWO has implemented a number of standard processes since its formation,
covering activities such as rig start-up and well cementing.
Trust
Released in January 2011, the report of the National Commission on the BP
Deepwater Horizon Oil Spill and Offshore Drilling identified certain failures of
management and decision-making within BP and its contractors, as well as
regulatory failures, to be contributing factors to the accident. See Safety on
page 65 and Legal proceedings on pages 160-166 for information on other
investigations and reports. We are committed to working with government
officials and other operators and contractors to identify and implement operational
and regulatory changes that will enhance safety practices throughout the oil and
gas industry. BP teams have travelled to 25 countries to share the lessons learned
from events in the Gulf of Mexico with our industry, regulators and governments.
We also shared equipment and technology developed during the response with
the Marine Well Containment Company in the US.
On the ground, the focus of our work in the Gulf of Mexico shifted from
response to recovery. The majority of the clean-up work required along the
shoreline has now been completed. We are encouraged by local and state reports
that indicate tourism in many areas of the region is rebounding. And all federal
commercial fishing areas had been reopened by April 2011. We are still at work on
the recovery and remain committed to meeting our responsibilities in the region.
By the end of 2011, we had paid $15.1 billion into the $20-billion Deepwater
Horizon Oil Spill Trust fund (Trust) set up to meet the costs of the spill. In total, the
Trust and BP had paid a total of $7.8 billion in claims, advances and other payments
by the end of 2011.
Value
Our profit in 2011 was $25.7 billion compared with a loss of $3.7 billion in 2010.
After adjusting for inventory holding gains, our replacement cost profita in 2011
was $23.9 billion compared with a loss of $4.9 billion in 2010. Cash and cash
equivalents at the end of 2011 totalled $14.1 billion and our net debt ratiob was
20.5%. See Financial review on pages 56-58 for further information on the group’s
financial results.
During 2010 and 2011 combined, we strengthened the group’s financial
position by completing asset sales totalling almost $20 billion and we have
announced our intention to make further disposals that would bring the total to
$38 billion by the end of 2013. Previously this disposal target had been set at
$45 billion, however it was reduced in November 2011 when we received notice
of termination from Bridas Corporation of the agreement for their purchase of
BP’s 60% interest in Pan American Energy LLC. We intend to reduce our net
debt ratio to the lower half of the 10-20% range over time. During 2011 we
reached settlements with MOEX USA Corporation (MOEX), Weatherford U.S.,
L.P. (Weatherford), Anadarko Petroleum Corporation (Anadarko) and Cameron
International Corporation (Cameron) totalling $5.5 billion related to the Deepwater
Horizon oil spill. All cash received has been paid to the Trust.
Our performance
a Replacement cost profit or loss for the group is not a recognized GAAP measure. The equivalent measure
on an IFRS basis is ‘Profit (loss) for the year attributable to BP shareholders’. See footnote b on page 56 and
page 110 for further information.
b
Net debt ratio is a non-GAAP measure. See Note 35 on page 230 for the equivalent measure on an
IFRS basis.
In detail
For more information
on the Gulf of Mexico
oil spill, see BP in
more depth.
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