BP 2008 Annual Report Download - page 189

BP Annual Report and Accounts 2008
Supplementary information on oil and natural gas
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 measures 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 the requirements of FASB Statement of
Financial Accounting Standards No. 69 – ’Disclosures about Oil and Gas Producing Activities’.
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 year-end crude oil and natural gas prices and exchange
rates. Furthermore, both 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 assumptions on which
it is based and its lack of comparability with the historical cost information presented in the financial statements.
$ million
Rest of Rest of Asia
UK Europe US Americas Pacific Africa Other Total
At 31 December 2008
Future cash inflowsa36,400 13,800 165,800 32,700 28,400 40,400 27,200 344,700
Future production costb18,100 6,300 80,400 9,900 12,100 11,600 10,400 148,800
Future development costb3,300 2,900 25,600 8,500 3,800 10,900 6,900 61,900
Future taxationc7,300 2,300 17,500 6,000 3,200 6,600 2,000 44,900
Future net cash flows 7,700 2,300 42,300 8,300 9,300 11,300 7,900 89,100
10% annual discountd2,200 1,200 21,000 3,900 4,600 5,500 3,500 41,900
Standardized measure of discounted
future net cash flowse5,500 1,100 21,300 4,400 4,700 5,800 4,400 47,200
At 31 December 2007
Future cash inflowsa72,100 29,500 350,100 67,700 47,600 63,300 49,400 679,700
Future production costb27,500 7,500 109,800 17,900 12,800 9,900 8,500 193,900
Future development costb4,000 3,300 21,900 6,500 4,100 8,300 3,500 51,600
Future taxationc20,200 13,000 71,600 21,700 9,700 17,100 8,700 162,000
Future net cash flows 20,400 5,700 146,800 21,600 21,000 28,000 28,700 272,200
10% annual discountd6,500 2,800 76,000 9,500 10,300 9,400 11,500 126,000
Standardized measure of discounted
future net cash flowse13,900 2,900 70,800 12,100 10,700 18,600 17,200 146,200
At 31 December 2006
Future cash inflowsa45,300 18,200 218,900 46,800 36,800 47,700 36,200 449,900
Future production costb20,700 4,700 71,300 14,900 9,400 8,700 7,200 136,900
Future development costb3,300 1,500 18,600 4,900 3,800 6,600 3,900 42,600
Future taxationc10,300 9,400 43,100 12,900 7,000 10,600 5,800 99,100
Future net cash flows 11,000 2,600 85,900 14,100 16,600 21,800 19,300 171,300
10% annual discountd3,200 1,000 45,600 6,200 9,000 8,400 7,300 80,700
Standardized measure of discounted
future net cash flowse7,800 1,600 40,300 7,900 7,600 13,400 12,000 90,600
The following are the principal sources of change in the standardized measure of discounted future net cash flows:
$ million
2008 2007 2006
Sales and transfers of oil and gas produced, net of production costs (43,600) (28,300) (35,800)
Previously estimated development costs incurred during the year 9,400 9,400 8,200
Extensions, discoveries and improved recovery, less related costs 4,400 12,300 7,900
Net changes in prices and production cost (146,800) 102,100 (43,900)
Revisions of previous reserves estimates 1,200 (12,200) (9,500)
Net change in taxation 69,400 (28,300) 32,200
Future development costs (7,400) (7,800) (7,000)
Net change in purchase and sales of reserves-in-place (200) (700) (2,500)
Addition of 10% annual discount 14,600 9,100 12,800
Total change in the standardized measure during the yearf(99,000) 55,600 (37,600)
aThe year-end marker prices used were Brent $36.55/bbl, Henry Hub $5.63/mmBtu (2007 Brent $96.02/bbl, Henry Hub $7.10/mmBtu and 2006 Brent $58.93/bbl, Henry Hub $5.52/mmBtu).
bProduction costs, which include production taxes and development costs relating to future production of proved reserves, are based on year-end cost levels and assume 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.
eMinority interest in BP Trinidad and Tobago LLC amounted to $900 million at 31 December 2008 ($2,300 million at 31 December 2007 and $1,300 million at 31 December 2006).
fTotal change in the standardized measure during the year includes the effect of exchange rate movements.
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