BP 2012 Annual Report Download - page 201

The provisional fair values of the identifiable assets and liabilities acquired, as reported at 31 December 2011, are shown in the table below, together
with the subsequent measurement period adjustments recognized during 2012.
$ million
Final amounts
recognized
2012
Measurement
period
adjustments
2012
Provisional
amounts
recognized
2011
Assets
Property, plant and equipment 1,860 – 1,860
Intangible assets 2,901 (69) 2,970
Inventories 55 – 55
Prepayments 5–5
Liabilities
Trade and other payables (167) (22) (145)
Provisions (266) (24) (242)
4,388 (115) 4,503
Goodwill arising on acquisition 2,569 46 2,523
Total consideration 6,957 (69) 7,026
The consideration for the transaction included $6,957 million in cash, paid in 2011. In addition, contingent consideration of up to $1,800 million,
dependent upon exploration success in certain of the interests resulting in the development of commercial discoveries, was agreed.
Transaction costs of $13 million were paid in 2011 and charged within production and manufacturing expenses in the group income statement.
In addition to the Reliance transaction described above, BP undertook a number of other business combinations in 2011. These included the completion
of the final part of the transaction with Devon Energy (Devon), the acquisition of Devon’s equity stake in a number of assets in Brazil for considerationof
$3.6 billion (see below). Additionally, BP’s Alternative Energy business acquired Companhia Nacional de Açúcar e Álcool (CNAA) in Brazil for
consideration of $0.7 billion and increased its share in the Brazilian biofuels company, Tropical BioEnergia S.A., to 100% by acquiring the remaining 50%
for consideration of $71 million. There were a number of other individually insignificant business combinations.
Business combinations in 2010
BP undertook a number of business combinations in 2010 for a total consideration of $3.6 billion, of which $3 billion comprised cash consideration. The
most significant acquisition was a transaction in the Upstream segment with Devon, undertaken in a number of stages during 2010 and 2011. This
transaction strengthened BP’s position in the Gulf of Mexico, enhanced interests in Azerbaijan and facilitated the development of Canadian assets.
On 27 April 2010, BP acquired 100% of Devon’s Gulf of Mexico deepwater properties for $1.8 billion. This included a number of exploration properties,
Devon’s interest in the major Paleogene discovery Kaskida (giving BP a 100% interest in the project), four producing assets and one non-producing
asset. As part of the transaction, BP sold to Devon a 50% stake in its Kirby oil sands interests in Alberta, Canada for $500 million and Devon committed
to fund an additional $150 million of capital costs on BP’s behalf by issuing a promissory note to BP. In addition, the companies formed a 50:50 joint
venture, operated by Devon, to pursue the development of the interest. On 16 August 2010, the group acquired Devon’s 3.29% (after pre-emption
exercised by some of the partners) interest in the BP-operated Azeri-Chirag-Gunashli (ACG) development in the Azerbaijan sector of the Caspian Sea for
$1.1 billion, increasing BP’s interest to 37.43%.
The business combination was accounted for using the acquisition method. Goodwill of $332 million was recognized on the 2010 part of the Devon
transaction. As part of the Devon transaction, the gain on the disposal of the group’s 50% interest in the Kirby oil sands in Alberta, Canada amounted to
$633 million.
The final part of the Devon transaction, the acquisition of 100% of Devon’s equity stake in a number of entities holding all Devon’s assets in Brazil for
consideration of $3.6 billion, completed in May 2011. Goodwill of $966 million was recognized in 2011 for this part of the transaction.
In addition to the Devon transaction, BP undertook a number of other minor business combinations in 2010, the most significant of which was the
acquisition by BP’s Alternative Energy business of Verenium Corporation’s lignocellulosic biofuels business, for consideration of $98 million.
4. Non-current assets held for sale
As a result of the group’s disposal programme, various assets, and associated liabilities, have been presented as held for sale in the group balance sheet
at 31 December 2012. The carrying amount of the assets held for sale is $19,315 million, with associated liabilities of $846 million.
The majority of the transactions noted below are subject to post-closing adjustments, which may include adjustments for working capital and
adjustments for profits attributable to the purchaser between the agreed effective date and the closing date of the transaction. Such post-closing
adjustments may result in the final amounts received by BP from the purchasers differing from the disposal proceeds noted below. Non-current assets
held for sale at 31 December 2012 included the following items:
Upstream
On 28 November 2012, BP announced that it had agreed to sell its interests in a number of central North Sea oil and gas fields to TAQA for
$1,058 million plus future payments which, dependent on oil price and production, are currently expected to exceed $250 million after tax. The assets
included in the sale are BP’s interests in the BP-operated Maclure, Harding and Devenick fields and non-operated interests in the Brae complex of fields
and the Braemar field. The sale is subject to third-party and regulatory approvals and is expected to complete in the second quarter of 2013.
Downstream
On 13 August 2012, BP announced that it had reached agreement to sell its Carson refinery in California and related assets in the region, including
marketing and logistics assets, to Tesoro Corporation for $2.5 billion. The assets, and associated liabilities, of the refinery and related assets are
classified as held for sale in the group balance sheet at 31 December 2012. Completion is subject to regulatory and other approvals, and the transaction
is expected to close by the middle of 2013.
Financial statements 199
BP Annual Report and Form 20-F 2012
Financial statements
3. Business combinations continued