BP 2014 Annual Report Download - page 196

Standardized measure of discounted future net cash flows and changes therein relating to proved oil and gas reserves
The following tables set out the standardized measure of discounted future net cash flows, and changes therein, relating to crude oil and natural gas
production from the group’s estimated proved reserves. This information is prepared in compliance with FASB Oil and Gas Disclosures requirements.
Future net cash flows have been prepared on the basis of certain assumptions which may or may not be realized. These include the timing of future
production, the estimation of crude oil and natural gas reserves and the application of average crude oil and natural gas prices and exchange rates from
the previous 12 months. Furthermore, both proved reserves estimates and production forecasts are subject to revision as further technical information
becomes available and economic conditions change. BP cautions against relying on the information presented because of the highly arbitrary nature of
the assumptions on which it is based and its lack of comparability with the historical cost information presented in the financial statements.
$ million
2014
Europe North
America
South
America
Africa Asia Australasia Total
UK
Rest of
Europe US
Rest of
North
America Russia
Rest of
Asia
At 31 December
Subsidiaries
Future cash inflowsa54,400 14,900 216,600 11,000 35,300 55,800 – 90,300 54,800 533,100
Future production costb21,400 8,100 90,500 4,800 11,300 15,600 – 41,500 17,600 210,800
Future development costb7,300 1,400 24,500 1,600 8,000 9,600 – 23,000 5,700 81,100
Future taxationc16,400 3,000 32,900 700 8,400 10,100 – 5,100 9,400 86,000
Future net cash flows 9,300 2,400 68,700 3,900 7,600 20,500 – 20,700 22,100 155,200
10% annual discountd4,700 700 33,100 2,500 3,100 7,800 – 11,000 11,800 74,700
Standardized measure of discounted
future net cash flowse4,600 1,700 35,600 1,400 4,500 12,700 – 9,700 10,300 80,500
Equity-accounted entities (BP share)f
Future cash inflowsa– – – – 47,300 – 349,200 10,200 – 406,700
Future production costb– – – – 22,300 – 200,000 7,800 – 230,100
Future development costb– – – – 5,700 – 17,400 2,100 – 25,200
Future taxationc– – – – 6,700 – 24,200 100 – 31,000
Future net cash flows – – – – 12,600 – 107,600 200 – 120,400
10% annual discountd– – – – 8,000 – 65,500 – – 73,500
Standardized measure of discounted
future net cash flowsgh – – – – 4,600 – 42,100 200 – 46,900
Total subsidiaries and equity-accounted entities
Standardized measure of
discounted future net cash flows 4,600 1,700 35,600 1,400 9,100 12,700 42,100 9,900 10,300 127,400
The following are the principal sources of change in the standardized measure of discounted future net cash flows:
$ million
Subsidiaries
Equity-accounted
entities (BP share)
Total subsidiaries and
equity-accounted
entities
Sales and transfers of oil and gas produced, net of production costs (30,500) (6,900) (37,400)
Development costs for the current year as estimated in previous year 15,700 3,600 19,300
Extensions, discoveries and improved recovery, less related costs 1,900 1,500 3,400
Net changes in prices and production cost (17,000) 10,500 (6,500)
Revisions of previous reserves estimates 1,200 2,000 3,200
Net change in taxation 17,300 (4,900) 12,400
Future development costs (4,500) (400) (4,900)
Net change in purchase and sales of reserves-in-place (700) – (700)
Addition of 10% annual discount 8,800 3,800 12,600
Total change in the standardized measure during the yeari(7,800) 9,200 1,400
aThe marker prices used were Brent $101.27/bbl, Henry Hub $4.31/mmBtu.
bProduction costs, which include production taxes, and development costs relating to future production of proved reserves are based on the continuation of existing economic conditions. Future
decommissioning costs are included.
cTaxation is computed using appropriate year-end statutory corporate income tax rates.
dFuture net cash flows from oil and natural gas production are discounted at 10% regardless of the group assessment of the risk associated with its producing activities.
eNon-controlling interests in BP Trinidad and Tobago LLC amounted to $1,400 million.
fThe standardized measure of discounted future net cash flows of equity-accounted entities includes standardized measure of discounted future net cash flows of equity-accounted investments of
those entities.
gNon-controlling interests in Rosneft amounted to $100 million in Russia.
hNo equity-accounted future cash flows in Africa because proved reserves are received as a result of contractual arrangements, with no associated costs.
iTotal change in the standardized measure during the year includes the effect of exchange rate movements. Exchange rate effects arising from the translation of our share of Rosneft changes to
US dollars are included within ‘Net changes in prices and production cost’.
192 BP Annual Report and Form 20-F 2014