BP 2012 Annual Report Download - page 94

Business review: BP in more depth
BP Annual Report and Form 20-F 2012
92
The following table summarizes the nature of the group’s unconditional purchase obligations.
$ million
Payments due by period
Unconditional purchase obligations Total 2013 2014 2015 2016 2017
2018 and
thereafter
Crude oil and oil products 117,858 80,381 7,269 5,437 3,699 3,736 17,336
Natural gas 40,614 21,708 5,800 3,311 2,394 1,714 5,687
Chemicals and other refinery feedstocks 9,054 2,196 1,470 1,235 1,013 978 2,162
Power 2,769 1,830 549 194 91 86 19
Utilities 889 183 172 114 95 74 251
Transportation 13,450 1,523 1,196 1,014 910 991 7,816
Use of facilities and services 6,137 1,423 899 689 511 408 2,207
Total 190,771 109,244 17,355 11,994 8,713 7,987 35,478
The group expects its total capital expenditure, excluding acquisitions and asset exchanges, to be around $25 billion in 2013. The following table
summarizes the group’s capital expenditure commitments for property, plant and equipment at 31 December 2012 and the proportion of that
expenditure for which contracts have been placed. Capital expenditure is considered to be committed when the project has received the appropriate
level of internal management approval. For jointly controlled assets, the net BP share is included in the amounts shown. Where operating lease costs
are incurred in connection with a capital project, some or all of the cost may be capitalized as part of the capital cost of the project. Such costs are
included in the amounts shown.
$ million
Capital expenditure commitments Total 2013 2014 2015 2016 2017
2018 and
thereafter
Committed on major projects 33,775 16,973 6,273 4,578 2,840 1,443 1,668
Amounts for which contracts have been placed 14,068 8,552 2,479 1,666 812 385 174
In addition, at 31 December 2012, the group had committed to capital expenditure relating to investments in equity-accounted entities amounting to
$465 million. Contracts were in place for $275 million of this total. The group has also signed definitive and binding sale and purchase agreements for
the sale of BP’s 50% interest in TNK-BP and for BP’s further investment in Rosneft as described on page 80.
Cash flow
The following table summarizes the group’s cash flows.
$ million
2012 2011 2010
Net cash provided by operating activities 20,397 22,154 13,616
Net cash (used in) investing activities (12,962) (26,633) (3,960)
Net cash provided by (used in) financing
activities (2,018) 482 840
Currency translation differences relating
to cash and cash equivalents 64 (492) (279)
Increase (decrease) in cash and cash
equivalents 5,481 (4,489) 10,217
Cash and cash equivalents at beginning
of year 14,067 18,556 8,339
Cash and cash equivalents at end of year 19,548 14,067 18,556
Net cash provided by operating activities for the year ended 31 December
2012 was $20,397 million compared with $22,154 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
$22,779 million for 2012, compared with $28,967 million for 2011, a
decrease of $6,188 million. Profit before taxation decreased by
$11,269 million, of which $4,798 million related to the non-cash impacts
of higher depreciation, impairments and gains and losses on disposal and
lower equity-accounted earnings of jointly controlled entities and
associates. A reduction in working capital requirements of $3,500 million
was largely offset by lower dividends received from jointly controlled
entities and associates, principally TNK-BP.
Net cash provided by operating activities for the year ended 31 December
2011 was $22,154 million compared with $13,616 million for 2010, the
increase primarily reflecting a reduction in the cash outflow in respect of
the Gulf of Mexico oil spill from $16,019 million in 2010 to $6,813 million in
2011. Excluding the impacts of the Gulf of Mexico oil spill, net cash
provided by operating activities was $28,967 million for 2011, compared
with $29,635 million for 2010, a decrease of $668 million. Profit before
taxation decreased by $1,018 million, working capital requirements
increased by $1,509 million and income taxes paid increased by
$1,879 million. These impacts were partially offset by a decrease of
$2,622 million in the net impairment, gains and losses on sale of
businesses and fixed assets, and an increase in dividends received from
jointly controlled entities and associates of $2,104 million.
Net cash used in investing activities was $12,962 million in 2012,
compared with $26,633 million and $3,960 million in 2011 and 2010
respectively. 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 $8,714 million.
This was partially offset by an increase in capital expenditure excluding
acquisitions of $5,905 million. The increase in cash used in 2011 reflected
a decrease of $14,222 million in disposal proceeds, including the impact
of the repayment in 2011 of a $3,530-million disposal deposit received in
2010, following the termination of the Pan American Energy LLC sale
agreement, and an increase of $8,441 million in acquisitions, net of cash
acquired, of which $7.0 billion was for the Reliance transaction.
Net cash used in financing activities was $2,018 million in 2012 compared
with net cash provided by financing activities in 2011 and 2010 of
$482 million and $840 million respectively. The increase in net cash used
in 2012 primarily reflected a net decrease in short-term debt of
$2,901 million and an increase in dividends paid of $1,222 million, partly
offset by an increase in net proceeds from long-term financing of
$1,412 million. The decrease in net cash provided in 2011 primarily
reflected a decrease in net proceeds from long-term financing of
$4,734 million, and an increase in dividends paid of $1,445 million partly
offset by a net increase in short-term debt of $5,846 million.
The group has had significant levels of capital investment for many years.
Cash flow in respect of capital investment, excluding acquisitions, was
$24.7 billion in 2012, $18.8 billion in 2011 and $18.9 billion in 2010.
Sources of funding are completely fungible, but the majority of the group’s
funding requirements for new investment come from cash generated by
existing operations. The group’s level of net debt, that is debt less cash
and cash equivalents, was $27.5 billion at the end of 2012, $29.0 billion at
the end of 2011 and $25.9 billion at the end of 2010.
During the period 2010 to 2012, our total sources of cash amounted to
$88 billion, and our total uses of cash amounted to $88 billion. The
increase in cash and cash equivalents held of $12 billion was financed by