BP 2013 Annual Report Download - page 61

Strategic report
BP Annual Report and Form 20-F 2013 57
The group also has access to significant sources of liquidity in the form of
committed bank facilities. We renegotiated our committed bank facilities
during 2013, putting in place borrowing facilities of $7.4 billion (2012
$6.8 billion) with 26 international banking counterparties, of which
$7.0 billion is available to draw and repay over a term of five years and
$0.4 billion is available to draw and repay over a term of three years. In
addition, the group continued to strengthen its access to commercial bank
letters of credit (LC) and at the end of 2013 had in place committed
LC facilities of $7.5 billion and secured LC arrangements of $2.4 billion, to
supplement its uncommitted and unsecured LC lines.
We believe that the group has sufficient working capital for foreseeable
requirements, taking into account the amounts of undrawn borrowing
facilities and increased levels of cash and cash equivalents, and the
ongoing ability to generate cash.
Uncertainty remains regarding the amount and timing of future
expenditures relating to the Gulf of Mexico oil spill and the implications
for future activities. See Risk factors on page 51 and Financial statements
– Note 2 for further information.
Off-balance sheet arrangements
At 31 December 2013, the group’s share of third-party finance debt of
equity-accounted entities was $17,008 million (2012 $6,884 million). These
amounts are not reflected in the group’s debt on the balance sheet. The
group has issued third-party guarantees under which amounts outstanding
at 31 December 2013 were $199 million (2012 $237 million) in respect of
liabilities of joint ventures and associates and $648 million (2012 $713
million) in respect of liabilities of other third parties. Of these amounts,
$115 million (2012 $166 million) of the joint ventures and associates
guarantees relate to borrowings and for other third-party guarantees, $487
million (2012 $543 million) relates to guarantees of borrowings. Details of
operating lease commitments, which are not recognized on the balance
sheet, are shown in the table on page 252 and provided in Financial
statements – Note 9.
Contractual obligations
The following table summarizes the group’s contractual obligations, capital
expenditure commitments for property, plant and equipment at
31 December 2013 and the proportion of that expenditure for which
contracts have been placed.
$ million
Expected payments by period
Contractual
obligationsa
Capital expenditure
Committed
of which is
contracted
2014 134,075 17,973 8,676
2015 40,471 9,010 2,581
2016 29,279 5,703 1,321
2017 23,186 4,021 685
2018 20,360 2,292 189
2019 and thereafter 105,377 3,443 253
Total 352,748 42,442 13,705
a Including $100,805 million for which a liability is recognized on the balance sheet.
The group’s principal contractual obligations and a description of the
nature of the group’s unconditional purchase obligations are provided on
page 252.
Capital expenditure is considered to be committed when the project has
received the appropriate level of internal management approval. For joint
operations, the net BP share is included in the amounts above.
In addition, at 31 December 2013, the group had committed to capital
expenditure relating to investments in equity-accounted entities amounting
to $1,458 million. Contracts were in place for $161 million of this total.
Cash flow
The following table summarizes the group’s cash flows.
$ million
2013 2012 2011
Net cash provided by operating
activities 21,100 20,479 22,218
Net cash used in investing activities (7,855) (13,075)(26,753)
Net cash provided by (used in)
financing activities (10,400)(2,010) 477
Currency translation differences
relating to cash and cash
equivalents 40 64 (493)
Increase (decrease) in cash and cash
equivalents 2,885 5,458 (4,551)
Cash and cash equivalents at
beginning of year 19,635 14,177 18,728
Cash and cash equivalents at end
of year 22,520 19,635 14,177
Net cash provided by operating activities for the year ended 31 December
2013 was $21,100 million compared with $20,479 million for 2012. The
cash outflow in respect of the Gulf of Mexico oil spill reduced from $2,382
million in 2012 to $73 million in 2013. Excluding the impacts of the Gulf of
Mexico oil spill, net cash provided by operating activities was $21,173
million for 2013, compared with $22,861 million for 2012, a decrease of
$1,688 million. Profit before taxation excluding the impact of the Gulf of
Mexico oil spill increased by $7,545 million, of which $9,163 million related
to the non-cash impacts of higher depreciation, impairments and gains and
losses on disposal offset by lower earnings from joint ventures and
associates. An increase in working capital requirements of $3,920 million
was largely offset by lower income taxes paid.
Net cash provided by operating activities for the year ended 31 December
2012 was $20,479 million compared with $22,218 million for 2011. The
cash outflow in respect of the Gulf of Mexico oil spill reduced from $6,813
million in 2011 to $2,382 million in 2012. Excluding the impacts of the Gulf
of Mexico oil spill, net cash provided by operating activities was $22,861
million for 2012, compared with $29,031 million for 2011, a decrease of
$6,170 million. Profit before taxation excluding the impacts of the Gulf of
Mexico oil spill decreased by $11,341 million, of which $4,730 million
related to the non-cash impacts of higher depreciation, impairments and
gains and losses on disposal and lower equity-accounted earnings of joint
ventures and associates. A reduction in working capital requirements of
$3,667 million was largely offset by lower dividends received from joint
ventures and associates, principally TNK-BP.
Net cash used in investing activities was $7,855 million in 2013 (2012
$13,075 million and 2011 $26,753 million). The decrease in cash used in
2013 reflected an increase in disposal proceeds of $10,401 million, partly
offset by an increase in our investments in equity-accounted entities,
mainly relating to the completion of the sale of our interest in TNK-BP and
subsequent investment in Rosneft. There was also an increase in our other
capital expenditure excluding acquisitions of $1,298 million. The decrease
in cash used in 2012 reflected an absence of significant expenditure on
business combinations compared with 2011 when we spent $10,909
million, mainly for the Reliance and Devon acquisitions, as well as an
increase in disposal proceeds of $8,757 million. This was partially offset by
an increase in capital expenditure excluding acquisitions of $5,914 million.
The group has had significant levels of capital investment for many years.
Cash flow in respect of capital investment, excluding acquisitions, was
$30 billion in 2013 (2012 $24.8 billion and 2011 $18.9 billion). Sources of
funding are fungible, but the majority of the group’s funding requirements
for new investment come from cash generated by existing operations.