BP
(NYSE:BP)

BP p.l.c. engages in the energy business worldwide. It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power, and solar power generating facil...

Website: http://www.bp.com

Founded: 1909

Full Time Employees: 70,000 (Dec 2022)

Sector: Energy

Industry: Oil & Gas Integrated

Energy Oil

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At a glance:

Strategic Pivot Toward Transition Growth, With Disciplined Capital Allocation: BP continues to position itself across hydrocarbons and energy transition businesses, emphasizing capital discipline while funding selective growth in low-carbon areas.
Upstream Cash Generation Remains the Core Earnings Driver: The upstream segment remains central to BP’s near-term cash flows, with results and outlook highly sensitive to oil and gas price movements, production performance, and cost control.
Returns to Shareholders Supported by Cash Flow, but Cyclical Risk Persists: BP’s ability to sustain buybacks and dividends depends on operating cash flow and balance sheet capacity; shareholder returns can fluctuate with commodity cycles and major project timing.
Refining/Marketing and Trading Can Add Volatility to Results: Downstream margins and trading performance can materially swing quarter-to-quarter results, influencing overall profitability beyond the underlying commodity price environment.
Execution Risk Across Large-Scale Projects and Decarbonization Commitments: Delivering projects on time/on budget, meeting emissions targets, and navigating regulatory and carbon-cost changes remain key risks that can impact returns and valuation.

Bull Thesis:

Strategic Shift to Low Carbon & Renewables: BP is actively investing in and transitioning towards renewable energy sources (wind, solar, EV charging, hydrogen) and low-carbon solutions. This strategic pivot positions the company for long-term growth in a decarbonizing world, attracting ESG-focused investors and potentially unlocking new revenue streams.
Robust Cash Flow from Traditional Business: Despite the energy transition, BP's traditional oil and gas assets continue to generate significant free cash flow, especially in periods of elevated commodity prices. This strong cash generation funds the transition, supports shareholder returns, and provides financial stability.
Attractive Dividend Yield & Shareholder Returns: BP has historically offered a competitive dividend yield, making it appealing to income-focused investors. The company's commitment to shareholder returns, including potential share buybacks, can enhance investor confidence and total returns.
Operational Efficiency & Cost Discipline: BP has demonstrated a focus on operational efficiency, cost reduction, and portfolio optimization across its traditional and new energy segments. These efforts aim to improve profitability, enhance resilience to market fluctuations, and free up capital for strategic investments.

Bear Thesis:

Execution Risk in Energy Transition: The transition to renewables is capital-intensive, highly competitive, and involves significant execution risk. There's a concern that BP may not achieve the desired returns from its new energy ventures, or that the pace of transition could be slower or more costly than anticipated, impacting overall profitability.
Exposure to Volatile Commodity Prices: A substantial portion of BP's earnings and cash flow remains tied to the inherently volatile prices of oil and gas. A significant downturn in commodity markets could severely impact financial performance, reduce cash available for transition investments, and pressure shareholder returns.
Regulatory & Environmental Headwinds: Increasing global pressure for decarbonization, potential carbon taxes, stricter environmental regulations, and ongoing scrutiny of fossil fuel operations could lead to higher operating costs, increased compliance burdens, and limitations on traditional growth opportunities for BP.
High Capital Expenditure & Debt Concerns: The substantial capital expenditure required to build out new energy infrastructure and transition the business could strain free cash flow in the short to medium term. This could potentially impact debt levels, limit the ability to sustain shareholder returns, or divert funds from other strategic priorities.

Main Competitors:

Shell plc ($SHEL) (Integrated Energy (Oil, Gas, Renewables)), Shell is a direct peer to BP, competing across the entire energy value chain. This includes upstream oil and gas exploration and production, downstream refining, marketing, and chemicals. Both companies are aggressively pursuing energy transition strategies, investing heavily in renewables (wind, solar, biofuels), EV charging infrastructure, and hydrogen, creating direct competition for market share in emerging low-carbon sectors while maintaining their traditional fossil fuel businesses.
ExxonMobil Corporation ($XOM) (Integrated Oil & Gas), As one of the largest integrated oil and gas companies globally, ExxonMobil competes with BP primarily in the exploration and production of crude oil and natural gas (upstream) and in the refining and marketing of petroleum products (downstream). While historically slower to pivot to renewables, ExxonMobil is increasingly investing in carbon capture, hydrogen, and biofuels, creating competition in these emerging low-carbon solutions alongside their core fossil fuel operations.
Chevron Corporation ($CVX) (Integrated Oil & Gas), Chevron is another major integrated energy company that competes with BP in the global upstream sector for oil and gas reserves and production, as well as in the downstream refining and marketing of fuels and lubricants. Like BP, Chevron is also expanding its focus on lower-carbon solutions, including renewable fuels, hydrogen, and carbon capture, leading to direct competition for investment opportunities and market share in the evolving energy landscape.
TotalEnergies SE ($TTE) (Integrated Energy (Oil, Gas, Power)), TotalEnergies, a French multinational integrated energy and petroleum company, is a direct European peer to BP and Shell. It competes across the full spectrum of energy activities, from oil and gas exploration and production to power generation, refining, and marketing. TotalEnergies has a particularly ambitious strategy for renewable energy and electricity generation, directly competing with BP for market share in solar, wind, and other low-carbon energy projects, as well as in traditional fossil fuel markets.

Moat:

BP's competitive moat is built on its vast scale, integrated global operations spanning upstream exploration and production to downstream refining and marketing, and deep technical expertise in complex energy projects. Its extensive infrastructure, access to significant reserves, and established brand provide substantial advantages. However, BP operates in an intensely competitive global energy market, facing direct rivalry from other supermajors like Shell, ExxonMobil, Chevron, and TotalEnergies across traditional fossil fuel segments. The accelerating energy transition introduces new competition from pure-play renewable energy companies and requires significant capital investment to pivot towards low-carbon solutions like wind, solar, hydrogen, and EV charging, adding pressure on its traditional business model and demanding agility in a rapidly evolving landscape.

Income Statements:

Quarterly

Annual

Unit: USD

Balance Sheets:

Quarterly

Annual

Unit: USD	2019-02-05	2017-08-01	2015-09-30	2014-09-30	2014-04-29	2013-04-30	2013-02-05	2012-12-31	2012-05-01	2012-02-07	2011-10-25	2011-09-30	2011-04-27	2010-12-31	2010-11-02	2010-07-28	2010-07-27	2010-04-27	2010-03-31	2009-12-31	2009-10-29	2009-10-27

non-current assets
property, plant and equipment	135,261	130,715	130,124	134,726	133,199	126,848	120,448	120,448	119,991	119,214	114,809	114,809	111,476	110,163	107,396	106,494	106,494	108,232	108,232	108,275	106,692	106,692
goodwill	12,204	11,395	11,692	11,971	12,168	11,940	11,861	11,861	12,210	12,100	11,139	11,139	8,764	8,598	8,806	8,250	8,250	8,409	8,409	8,620	10,203	10,203
intangible assets	17,284	17,399	19,232	21,483	21,696	24,962	24,041	24,041	22,000	21,102	20,426	20,426	14,439	14,298	14,822	14,198	14,198	12,675	12,675	11,548	11,246	11,246
investments in joint ventures	8,647	8,550	9,129	9,091	9,136	8,701
investments in associates	17,673	15,408	9,804	15,460	16,245	16,077	2,998	2,998	13,824	13,291	13,896	13,896	14,727	13,335	13,442	13,474	13,474	13,396	13,396	12,963	13,673	13,673
other investments	1,341	1,048	1,019	1,169	1,357	1,407	2,702	2,702	2,066	2,117	2,036	2,036	1,462	1,191	1,170	1,071	1,071	1,459	1,459	1,567	1,408	1,408
fixed assets	192,410	184,515	181,000	193,900	193,801	189,935	177,774	177,774	185,953	183,342	174,754	174,754	163,472	159,871	160,572	158,743	158,743	159,655	159,655	158,269	158,668	158,668
loans	637	540	544	668	682	586	695	695	870	884	874	874	882	894	965	924	924	982	982	1,039	1,139	1,139
trade and other receivables	1,834	1,425	2,282	6,414	5,953	5,722	5,272	5,272	7,587	41,626	40,896	40,896	42,751	36,549	33,990	35,708	35,708	31,159	31,159	29,531	28,777	28,777
derivative financial instruments	5,145	4,446	4,559	3,536	3,395	4,340	4,294	4,294	5,274	5,038	4,735	4,735	4,309	4,210	4,889	4,404	4,404	4,770	4,770	3,965	3,941	3,941
prepayments	1,179	1,076	951	997	965	924	809	809	1,338	1,255	1,521	1,521	1,544	1,432	1,315	1,292	1,292	1,359	1,359	1,407	1,436	1,436
deferred tax assets	3,706	5,114	1,850	1,583	1,184	787	874	874	569	611	519	519	566	528	427	421	421	464	464	516	408	408
defined benefit pension plan surpluses	5,955	1,281	571	77	706	13	12	12	19	17	2,682	2,682	2,430	2,176	1,794	1,677	1,677	1,494	1,494	1,390	1,931	1,931
current assets
inventories	17,988	16,449	16,933	26,581	28,843	28,628	27,867	27,867	30,154	25,661	26,601	26,601	28,657	26,218	21,957	22,106	22,106	23,221	23,221	22,605	18,988	18,988
current tax receivable	1,019	864	607	930	523	548	456	456	222	235	222	222	234	693	155	139	139	238	238	209	827	827
cash and cash equivalents	22,468	23,270	31,702	30,729	27,358	27,679	19,548	19,548	14,092	14,067	17,997	17,997	18,726	18,556	12,803	7,310	7,310	6,841	6,841	8,339	9,883	9,883
total assets	282,176	263,115	273,299	309,692	310,274	310,810	300,987	300,987	303,544	290,927	290,731	290,731	286,592	272,262	257,113	248,615	248,615	240,637	240,637	235,968	235,145	235,145
current liabilities
trade and other payables	46,265	36,642	34,700	49,394	49,637	49,787	47,154	47,154	53,994	52,405	52,736	52,736	51,345	46,329	43,890	45,502	45,502	38,146	38,146	35,204	33,597	33,597
accruals	4,626	4,221	5,825	7,223	6,770	6,688	6,810	6,810	5,711	5,932	6,181	6,181	5,273	5,612	5,596	5,484	5,484	5,482	5,482	6,202	6,205	6,205
finance debt	9,373	7,385	8,982	6,453	8,663	8,901	10,030	10,030	7,897	9,044	11,516	11,516	14,255	14,626	14,022	8,321	8,321	8,356	8,356	9,109	9,487	9,487
current tax payable	2,101	1,716	1,318	2,413	2,194	3,083	2,501	2,501	2,824	1,941	3,180	3,180	3,490	2,920	1,735	2,614	2,614	2,624	2,624	2,464	2,825	2,825
provisions	2,564	2,583	4,494	4,122	4,352	6,908	7,863	7,863	7,479	9,338	9,351	9,351	9,258	9,489	12,921	13,439	13,439	1,646	1,646	1,660	1,360	1,360
non-current liabilities
other payables	13,830	12,556	2,908	3,668	3,655	4,888	2,102	2,102	2,909	3,437	8,611	8,611	12,672	14,285	15,125	16,272	16,272	3,206	3,206	3,198	3,158	3,158
deferred tax liabilities	9,812	7,435	9,845	18,366	17,907	16,044	15,064	15,064	16,169	15,078	14,582	14,582	12,419	10,908	10,339	11,049	11,049	20,156	20,156	18,662	17,796	17,796
defined benefit pension plan and other post-retirement benefit plan deficits	8,391	9,002	9,911	9,665	9,987	13,129	13,549	13,549	10,599	12,018	9,526	9,526	9,794	9,857	9,509	9,006	9,006	9,409	9,409	10,010	10,503
total liabilities	180,628	164,654	170,700	182,798	180,074	179,725	181,367	181,367	184,324	178,445	180,436	180,436	183,409	176,371	166,747	162,253	162,253	135,659	135,659	133,855	134,342	134,342
net assets	101,548	98,461	102,599	126,894	130,200	131,085	119,620	119,620	119,220	112,482	110,295	110,295	103,183	95,891	90,366	86,362	86,362	104,978	104,978	102,113	100,803	100,803
equity
bp shareholders' equity	99,444				129,080	129,851	118,414		118,126	111,465	109,276		102,208				85,490	104,079				100,225
non-controlling interests	2,104	1,658	1,216	1,076	1,120	1,234
total equity	101,548	98,461												95,891						102,113
bp shareholders’ equity		96,803	101,383	125,818				118,414				109,276		94,987	89,454	85,490			104,079	101,613	100,225
million
assets classified as held for sale				1,384	1,494	4,947	19,315	19,315	9,860	8,420	8,732	8,732	6,241	7,128	6,566	2,973	2,973
liabilities directly associated with assets classified as held for sale				431	374	722	846	846	1,404	538	738	738	1,013	1,047	1,262	363	363
current assets - sum						103,556	91,942	91,942	92,074	87,264	91,655	91,655	101,093	89,725	77,694	74,276	74,276	69,697	69,697	67,653	66,679	66,679
current liabilities - sum						77,870	77,016	77,016	81,450	81,880	86,487	86,487	87,930	82,832	82,362	79,943	79,943	61,784	61,784	59,320	58,302	58,302
non-current liabilities - sum						101,133	103,505	103,505	101,470	96,027	93,211	93,211	94,466	92,492	83,123	81,947	81,947	73,875	73,875	74,535	76,040
equity - sum						131,085	119,620	119,620	119,220	112,482	110,295	110,295	103,183		90,366	86,362	86,362	104,978	104,978		100,803	100,803
investments in jointly controlled entities							15,724	15,724	15,862	15,518	12,448	12,448	12,604	12,286	14,936	15,256	15,256	15,484	15,484	15,296	15,446	15,446
minority interest							1,206	1,206	1,094	1,017	1,019	1,019	975	904	912	872	872	899	899	500	578	578
other receivables										4,096	5,259	5,259	6,055	6,298	2,891	3,905	3,905	2,216	2,216	1,729	943	943
share capital														5,183						5,179
reserves														89,804						96,434
defined benefit pension plan and other
post-retirement benefit plan deficits																						10,503

Cashflow Statements:

Quarterly

Annual

Unit: USD	2014-04-29

3.
4.
5.
6.
7.
group results second quarter and half year 2021
strong results, growing dividend, executing buybacks
financial summary
million
sales and other operating revenues
profit for the period attributable to bp shareholders
inventory holding (gains) losses*, before tax
taxation charge (credit) on inventory holding gains and losses
replacement cost (rc) profit*
net (favourable) adverse impact of adjusting items*(a), before tax
taxation charge (credit) on adjusting items
underlying rc profit*
operating cash flow*
capital expenditure*
divestment and other proceeds
net issue (repurchase) of shares	-1,726,000,000
finance debt
net debt*
announced dividend per ordinary share
profit
underlying rc profit
the commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 43.
rc profit before interest and tax
gas & low carbon energy
oil production & operations
customers & products
rosneft
other businesses & corporate
consolidation adjustment – upii*
finance costs and net finance expense relating to pensions and other post-retirement benefits
taxation on a rc basis
non-controlling interests
rc profit attributable to bp shareholders*
inventory holding gains*
taxation (charge) credit on inventory holding gains and losses
underlying rc profit before interest and tax
consolidation adjustment – upii
taxation on an underlying rc basis
underlying rc profit attributable to bp shareholders*
operating metrics
tier 1 and tier 2 process safety events*
reported recordable injury frequency*
group production
upstream* production
upstream unit production costs*
bp-operated hydrocarbon plant reliability*
bp-operated refining availability*
profit before interest and tax
inventory holding (gains) losses*
net (favourable) adverse impact of adjusting items
underlying rc profit before interest
depreciation, depletion and amortization
total depreciation, depletion and amortization
exploration write-offs
adjusted ebitda*
total adjusted ebitda
gas
low carbon energy
total capital expenditure
production
liquids*
natural gas
total hydrocarbons*
of which equity-accounted entities:
average realizations*
liquids
renewables
installed renewables capacity*
developed renewables to fid*
renewables pipeline
of which by geographical area:
renewables pipeline – americas
renewables pipeline – asia pacific
renewables pipeline – europe
renewables pipeline – other
of which by technology:
renewables pipeline – offshore wind
renewables pipeline – solar
total developed renewables to fid and renewables pipeline
total hydrocarbons
net (favourable) adverse impact of adjusting items*
underlying rc profit before interest and tax*
of which:
customers – convenience & mobility
castrol – included in customers
products – refining & trading
petrochemicals
retail
bp retail sites* – total
bp retail sites in growth markets*
strategic convenience sites*
marketing sales of refined products
us
europe
rest of world
trading/supply sales of refined products
total sales volume of refined products
refining marker margin*
bp average refining marker margin
refinery throughputs –operated refineries
total refinery throughputs
production: hydrocarbons
earnings from joint ventures – after interest and tax
earnings from associates – after interest and tax
interest and other income
gains on sale of businesses and fixed assets
total revenues and other income
purchases
production and manufacturing expenses
production and similar taxes
impairment and losses on sale of businesses and fixed assets
exploration expense
distribution and administration expenses
profit before interest and taxation
finance costs
net finance expense relating to pensions and other post-retirement benefits
profit before taxation	5,270,000,000
taxation
profit for the period
attributable to
bp shareholders
earnings per share
per ordinary share
basic
diluted
per ads
other comprehensive income
items that may be reclassified subsequently to profit or loss
currency translation differences
exchange (gains) losses on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets
cash flow hedges and costs of hedging
share of items relating to equity-accounted entities, net of tax
income tax relating to items that may be reclassified
items that will not be reclassified to profit or loss
remeasurements of the net pension and other post-retirement benefit liability or asset
cash flow hedges that will subsequently be transferred to the balance sheet
income tax relating to items that will not be reclassified
total comprehensive income
at 1 january 2021
dividends
cash flow hedges transferred to the balance sheet, net of tax
repurchase of ordinary share capital
share-based payments, net of tax
share of equity-accounted entities’ changes in equity, net of tax
payments on perpetual hybrid bonds
transactions involving non-controlling interests, net of tax
at 30 june 2021
at 1 january 2020
issue of perpetual hybrid bonds
at 30 june 2020
non-current assets
property, plant and equipment
goodwill
intangible assets
investments in joint ventures
investments in associates
other investments
fixed assets
loans
trade and other receivables
derivative financial instruments
prepayments
deferred tax assets
defined benefit pension plan surpluses
current assets
inventories
current tax receivable
cash and cash equivalents
assets classified as held for sale
total assets
current liabilities
trade and other payables
accruals
lease liabilities
current tax payable
provisions
liabilities directly associated with assets classified as held for sale
non-current liabilities
other payables
deferred tax liabilities
defined benefit pension plan and other post-retirement benefit plan deficits
total liabilities
net assets
equity
bp shareholders’ equity
total equity
operating activities
adjustments to reconcile profit before taxation to net cash from operating activities
depreciation, depletion and amortization and exploration expenditure written off
impairment and (gain) loss on sale of businesses and fixed assets
earnings from equity-accounted entities, less dividends received	-684,000,000
net charge for interest and other finance expense, less net interest paid	170,000,000
share-based payments	106,000,000
net operating charge for pensions and other post-retirement benefits, less contributions and benefit payments for unfunded plans
net charge for provisions, less payments	-193,000,000
movements in inventories and other current and non-current assets and liabilities
income taxes paid	-820,000,000
net cash from operating activities	8,231,000,000
investing activities
expenditure on property, plant and equipment, intangible and other assets
acquisitions, net of cash acquired	-10,000,000
investment in joint ventures	-33,000,000
investment in associates	-88,000,000
total cash capital expenditure
proceeds from disposal of fixed assets	978,000,000
proceeds from disposal of businesses, net of cash disposed	26,000,000
proceeds from loan repayments	17,000,000
cash provided from investing activities
net cash from investing activities	-5,001,000,000
financing activities
net issue
lease liability payments
proceeds from long-term financing	5,979,000,000
repayments of long-term financing	-1,237,000,000
net increase in short-term debt	77,000,000
payments relating to transactions involving non-controlling interests
receipts relating to transactions involving non-controlling interests
dividends paid - bp shareholders	-1,427,000,000
- non-controlling interests	-13,000,000
net cash from financing activities	1,653,000,000
currency translation differences relating to cash and cash equivalents	-45,000,000
increase in cash and cash equivalents	4,838,000,000
cash and cash equivalents at beginning of period	22,520,000,000
cash and cash equivalents at end of period	27,358,000,000
brent oil
henry hub gas
less: sales and other revenues between segments
external sales and other operating revenues
total sales and other operating revenues
sales and other operating revenues include the following in relation to revenues from contracts with customers:
crude oil
oil products
natural gas, lng and ngls
non-oil products and other revenues from contracts with customers
revenues from contracts with customers
other operating revenues
rc profit before interest and tax*
non-us
by segment
less: sales and other operating revenues between segments
by geographical area
less: sales and other operating revenues between areas
revenue from contracts with customers
total depreciation, depletion and amortization by segment
total depreciation, depletion and amortization by geographical area
results for the period
less: preference dividend
profit attributable to bp ordinary shareholders
number of shares
basic weighted-average number of shares outstanding
ads equivalent
weighted-average number of shares outstanding used to calculate diluted earnings per share
shares in issue at period-end
dividends paid per ordinary share
cents
pence
dividends paid per ads
fair value
less: cash and cash equivalents
net debt
gearing*
capital expenditure	-5,891,000,000
free cash flows	2,340,000,000
organic capital expenditure*
inorganic capital expenditure*
capital expenditure by segment
capital expenditure by geographical area
environmental and other provisions
restructuring, integration and rationalization costs
fair value accounting effects
other
gulf of mexico oil spill
total before interest and taxation
total before taxation
taxation credit (charge) on adjusting items
taxation – impact of foreign exchange
total taxation on adjusting items
total after taxation for period
net debt including leases*
net partner (receivable) payable for leases entered into on behalf of joint operations
net debt including leases
gearing including leases*
gulf of mexico oil spill payables and provisions
of which - current
deferred tax asset
sources:
uses:
dividends paid – bp shareholders
– non-controlling interests
net repurchase of shares relating to employee share schemes
rc profit before interest and tax for customers & products
less: adjusting items gains
underlying rc profit before interest and tax for customers & products
by business:
add back: depreciation, depletion and amortization
adjusted ebitda for customers & products
exploration write-offs, net of adjusting items
adjusted ebitda
net (favourable) adverse impact of adjusting items* , before tax
taxation (charge) credit
taxation on profit or loss
taxation on inventory holding gains and losses
taxation on a replacement cost (rc) profit or loss basis
taxation on underlying replacement cost profit or loss
effective tax rate
%
etr on profit or loss
adjusted for inventory holding gains or losses
etr on rc profit or loss*
excluding adjusting items
underlying etr*
average realizations
bp average
average oil marker prices
brent
west texas intermediate
western canadian select
alaska north slope
mars
urals
average natural gas marker prices
henry hub gas price
uk gas – national balancing point
/£ average rate for the period
/£ period-end rate
/€ average rate for the period
/€ period-end rate
/aud average rate for the period
/aud period-end rate
rouble/ average rate for the period
rouble/ period-end rate
share capital and reserves
capital shares
paid-in surplus
merger reserve
treasury shares
cash flow hedge reserve
costs of hedging reserve
foreign currency translation reserve
profit and loss account
bp shareholders' equity
hybrid bonds
other interest
equity attributable to non-controlling interests
finance debt and lease liabilities
lease liabilities due within one year
finance debt due within one year
lease liabilities due after more than one year
finance debt due after more than one year
total finance debt and lease liabilities
total
dated:
1.
2.
ii
2
bp annual report and form 20-f 2013
4
10-year dividend history uk (pence per ordinary share) us (cents per ads) one ads represents six 25 cent ordinary shares.
6
board performance for information about the board and its committees see page 71. remuneration for information about our approach to executive directors’ remuneration see page 20. € top: members of bp’s safety, ethics and environment assurance committee (seeac) visited canada to see the oil sands operations at the sunrise project site and meet local community leaders and staff. € bottom: members of seeac travelled to the gelsenkirchen refinery in germany to speak with apprentices and control room operators about risk management and processes.
95.3% 2013 refining availability. 129% reserves replacement ratio, excluding the impact of acquisitions and divestments. see footnote b on page 14.
8
our strategy for more on our strategic priorities and longer-term objectives see page 13. € top: bob dudley and iraq oil minister abdul karim al luaibi (right) being shown the first meter to be installed on one of the wells in kirkuk. in october bp signed an agreement with the government of iraq on providing technical assistance relating to the kirkuk oil field. € bottom: investors see how bp manages the risks of deepwater drilling at a field trip in houston. they tested our well simulator which gives rig operators a better understanding of both prevention and response techniques. a see footnote a on page 25. b excludes acquisitions and rosneft transaction. c see page 247 for further information. d see footnote c on page 56. e see footnote b on page 56.
we believe that a diverse mix of fuels and technologies will be essential to meet the growing demand for energy and the challenges facing our industry.
our third pta plant in zhuhai, china, is planned to begin production in late 2014. it is expected to bring total capacity at the site to more than 2.7 million tonnes per year. { thunder horse in the gulf of mexico is one of the largest integrated offshore drilling and production platforms in the world.
2013 pricing see upstream on page 26 and downstream on page 32.
10
bp energy outlook contains our projections of future energy trends and factors that could affect them, based on our views of likely economic and population growth and developments in policy and technology. available in pdf, excel and video format. see bp.com/energyoutlook. energy consumption by region (billion tonnes of oil equivalent) source: bp energy outlook 2035. energy consumption by fuel (billion tonnes of oil equivalent) * includes biofuels. source: bp energy outlook 2035.
we aim to create shareholder value across the hydrocarbon value chain.
toledo refinery in ohio has been in constant operation since 1919. the facility has the capacity to process up to 160,000 barrels of crude per day. { the redevelopment project at valhall was one of bp’s most complex field expansion developments and gives the field a further 40-year design life.
finding oil and gas
first, we acquire the rights to explore for oil and gas. through our exploration activities we are able to renew our portfolio, discover new resources and replenish our development options.
12
our goal is to be a focused oil and gas company that delivers value over volume.
a see footnote a on page 56. b equivalent to net cash from investing activities. c see footnote c on page 56. d see footnote h on page 24. e excludes acquisitions and asset exchanges. f unit cash margin is net cash from operating activities by the relevant projects in our upstream segment, divided by the total number of barrels of oil equivalent produced for the relevant projects. g assuming a constant oil price of 100 per barrel. h see footnote b on page 56. i see footnote d on page 56.
14
we prioritize the safety and reliability of our operations to protect the welfare of our workforce and the environment. this also helps preserve value and secure our right to operate around the world.
we rigorously screen our investments and we work to keep our annual capital expenditure within a set range. ongoing management of our portfolio helps ensure focus on more value-driven propositions. we balance funds between shareholder distributions and investment for the future.
we seek efficient ways to deliver projects on time and on budget, from planning through to day-to-day operations. our wide-ranging project experience makes us a valued partner and enhances our ability to compete.
we target basins and prospects with the greatest potential to create value, using our leading subsurface capabilities. this allows us to build a strong pipeline of future growth opportunities.
we are strengthening our portfolio of high return and longer life assets – across deep water, giant fields and gas value chains – to provide bp with momentum for decades to come.
we benefit from our high-performing fuels, lubricants, petrochemicals and biofuels businesses. through premium products, powerful brands and supply and trading, downstream provides strong cash generation for the group.
creating shareholder value by generating sustainable free cash flow
advanced technology
we develop and deploy technologies we expect to make the greatest impact on our businesses – from enhancing the safety and reliability of our operations to creating competitive advantage in energy discovery, recovery, efficiency and products.
we use technology to find and produce more hydrocarbons, improve our processes for converting raw materials and develop lower-carbon products. the development of technology from research and development through to wide-scale deployment can take several years. for example, to reach the next generation of deepwater oil reserves, where rock pressures can reach 20,000 pounds per square inch, we are developing new subsea technologies through our project 20k. technology programmes in our upstream business include advanced seismic imaging to help us find more oil and gas and enhanced oil recovery to get more from existing fields. new techniques are making recovery of unconventional oil and gas, like shale, economically viable. see bp.com/technology. the pangbourne technology centre is home to chemists and liquid engineers dedicated to providing products and services for castrol’s customers.
our employees enable bp to deliver our strategy and meet our commitments to investors, partners and the wider world. our people are talented in a wide range of disciplines, from geoscience, mechanical engineering and research technology to government affairs, trading, marketing, legal and others. and our approach to professional development programmes and training helps build individual capabilities, reducing a potential skills gap. this is vital in a world where oil and gas companies face an increasing challenge to find and retain skilled and experienced people. we aim to achieve a balance between building internal expertise and recruiting external professionals and graduates. we have a strong, experienced leadership team and a pipeline of talent for the future.
16
improved conversion our veba combi-cracking technology converts a wide variety of raw materials, ranging from crude oil residue to mixtures of coal and oil, into fuels. using this technology we can convert 95% or more of our hydrocarbon resources to marketable products.
corrosion prevention wireless permasense® systems, developed in collaboration with imperial college, london, are used across all our refineries to monitor the integrity of critical oil and gas assets.
our relationships are crucial to the success of our business. we work closely with governments, national oil companies and other resource holders. by acting responsibly and meeting our obligations we build long-lasting relationships. from experience we know that trust can be lost, so we place enormous importance on meeting people’s expectations. we work in partnership on big and complex projects with everyone from other oil companies through to suppliers and
we assess the group’s performance according to a wide range of measures and indicators. our key performance indicators (kpis) help the board and executive management measure performance against our strategic priorities and business plans. we keep these metrics under periodic review and test their relevance to our strategy regularly. we believe non-financial measures – such as safety and an engaged and diverse workforce – have a useful role to play as leading indicators of future performance. changes to kpis this year, we introduced two new kpis: tier 1 process safety events and major project delivery. these demonstrate two of our strategic objectives and are used as measures for executive remuneration. we have removed the number of oil spills as a group kpi as this is reflected within the loss of primary containment and tier 1 process safety events kpis. we continue to report on oil spills, see safety on page 41. remuneration to help align the focus of our board and executive management with the interests of our shareholders, certain measures are reflected in the variable elements of executive remuneration. overall annual bonuses, deferred bonuses and performance shares are all based on performance against measures and targets linked directly to strategy and kpis. for details of our remuneration policy see page 96. kpis used to measure progress against our strategy. kpis used to determine 2013 and 2014 remuneration.
18
total shareholder return (%) total shareholder return (tsr) represents the change in value of a bp shareholding over a calendar year. it assumes that dividends are re-invested to purchase additional shares at the closing price on the ex-dividend date. we are committed to maintaining a progressive and sustainable dividend policy. 2013 performance tsr grew as a result of increases in both the bp share price and in the dividend, with the improvement for ordinary shares slightly offset by exchange rate effects.
tier 1 process safety eventsa we report tier 1 process safety events (pse), which are the losses of primary containment of greatest consequence – causing harm to a member of the workforce, costly damage to equipment or exceeding defined quantities. 2013 performance our reduction in reported tier 1 pses is supported by our efforts to drive improvement in process safety. divestments also account for part of the reduction. we are aware there is always more to do to improve. a this represents reported incidents occurring within bp’s operational hsse reporting boundary. that boundary includes bp’s own operated facilities and certain other locations or situations.
a simple approach
total remuneration is determined by a relatively simple approach to attract and retain high calibre executives. the largest components are share based and vest over a number of years – further aligning executives’ interests with those of our shareholders.
1 linked to strategy
2 performance related
20
3 long-term based
4 informed judgement
5 shareholder engagement
6 fair treatment
~ in may we completed the successful commissioning of a state-of-the-art diesel hydrotreater and hydrogen plant at the cherry point refinery in washington state. { the mad dog field in the gulf of mexico was discovered in 1998 and is one of bp’s largest discoveries in the gulf of mexico to date.
segment performance for upstream and downstream performance see pages 25 and 31 respectively.
a organic capital expenditure excludes acquisitions, asset exchanges, and other inorganic capital expenditure. b see footnote a on page 25. c see footnote f on page 13. d see footnote g on page 13. e see footnote a on page 56. f see footnote b on page 56.
22
profit for the yeara
inventory holding (gains) losses, net of taxb
replacement cost profitc
net charge (credit) for non-operating itemsd, net of tax
net (favourable) unfavourable impact of fair value accounting effectsd, net of tax
underlying replacement cost profitc
capital expenditure and acquisitions
a
b
c
d
estimated net proved reserves (net of royalties)a
liquidsb
subsidiaries
equity-accounted entitiesc
total hydrocarbonsd
production (net of royalties)e
liquidsf
equity-accounted entitiesg
e
f
g
h
24
•
average oil marker pricesa
average henry hub gas priceb
average uk national balancing point gas pricea
26
sales and other operating revenuese
net (favourable) unfavourable impact of non-operating items and fair value accounting effectsf
underlying rc profit before interest and taxg
bp average realizationsh
natural gas liquids
liquidsi
us natural gas
total hydrocarbonsj
i
j
estimated net proved reserves
liquidsa
subsidiariesb
subsidiariesd
28
production (net of royalties)a
equity-accounted entities
total hydrocarbonsc
30
refining marker margin
us north west
us midwest
northwest europe
mediterranean
australia
bp average rmm
sale of crude oil through spot and term contracts
marketing, spot and term sales of refined products
other sales and operating revenues
sales and other operating revenuesa
rc profit before interest and taxb
fuels
lubricants
net (favourable) unfavourable impact of non-operating items and fair value accounting effectsc
underlying rc profit before interest and taxb d
32
refinery throughputsa
refining availabilityb
sales volumes
marketing salesc
trading/supply salesd
total refined product sales
crude oile
number of retail sites operated under a bp brand
retail sitesf
34
profit before interest and taxb c
inventory holding (gains) losses
replacement cost profit before interest and taxc
net charge (credit) for non-operating items
underlying replacement cost profit before interest and taxc d
income statement
net income
inventory holding (gains) losses, net of tax
net income on a replacement cost basis
net charge (credit) for non-operating items, net of tax
net income on an underlying replacement cost basis
balance sheet
production and reserves
production (net of royalties) (bp share)e f
liquids (mb/d)g
total hydrocarbons (mboe/d)h
liquids (million barrels)g
russian domestic oil
36
replacement cost profit before interest and tax
net (favourable) unfavourable impact of non-operating items
underlying replacement cost profit before interest and taxb
38
40
recordable injury frequency (group) –incidents per 200,000 hours worked
day away from work case frequencyb (group) – incidents per 200,000 hours worked
tier 1 process safety events
loss of primary containment – number of all incidentsc
loss of primary containment – number of oil spillsd
number of oil spills to land and water
volume of oil spilled
volume of oil unrecovered
42
44
direct ghg emissions
indirect ghg emissions
46
number of employees at 31 decembera
2013
upstream
downstream
other businesses and corporate
gulf coast restoration organization
2012
2011
numbers as at 31 december
board directors
group leaders
subsidiary directors
all employees
48
executive committees
g executive team meeting – for strategic and commercial risks. g group operations risk committee – for health, safety, security, environment and operations integrity risks. g group financial risk committee – for finance, treasury, trading and cyber risks. g group disclosure committee – for financial reporting risks. g group people committee – for employee risks. g resource commitment meeting – for risks related to investment decisions. g group ethics and compliance committee – for risks associated with legal and regulatory compliance and ethics.
board and its committees
g bp board. g audit committee. g safety, ethics and environment assurance committee. g gulf of mexico committee.
strategic and commercial risks
compliance and control risks
safety and operational risks
50
52
54
56
expected payments by period
2014
2015
2016
2017
2018
2019 and thereafter
cash and cash equivalents at beginning of year
cash and cash equivalents at end of year
sources of cash:
disposals
uses of cash:
acquisitions
net repurchase of shares
dividends paid to bp shareholders
dividends paid to non-controlling interests
net use of cash
increase in finance debt
58
key to portraits
1 carl-henric svanberg
5 antony burgmans
9 ian davis
13 phuthuma nhleko
60
62
64
executive teama as at 6 march 2014
1 rupert bondy
5 bernard looney
66
68
non-executive directors
carl-henric svanberg
paul anderson1
frank bowman
antony burgmans
cynthia carroll2
george david3
ian davis4
ann dowling
brendan nelson5
phuthuma nhleko6
andrew shilston7
executive directors
bob dudley
iain conn
brian gilvary
byron grote
*
1
3
5
7
70
the primary tasks of the board include:
g active consideration and direction of long-term strategy, and approval of the annual plan. g monitoring of bp’s performance against the strategy and plan. g obtaining assurance that the material risks to bp are identified and that systems of risk management and control are in place to mitigate such risk. g board and executive management succession.
72
b.3.2
d.2.2
e.2.4
name
brendan nelson
george david
phuthuma nhleko
andrew shilston
74
permitted and non-permitted audit services
permitted services
audit related
tax services
other services
prohibited services
sec principles of auditor independence
pcaob ethics and independence rules
76
paul anderson
cynthia carroll
78
ian davis
80
82
remuneration – the big picture
84
86
90
91
92
93
95
remuneration is reported in the currency received by the individual
annual remuneration 2013
salary
annual cash bonusa
benefits
vested equity
deferred bonus and matchb
performance shares
total remuneration
pension
pension value increased
cash in lieu of future accrualf
total including pension
deferred bonus in respect of bonus year
total deferred bonus
total deferred converted to shares
total matched shares
vesting date
performance share element
potential maximum shares
salary and benefits
annual bonus
dr brian gilvary
dr byron grote
deferred bonus
88
members
professor dame ann dowling
carl-henric svanberg normally attends the meetings
year
former executive director
bob dudleya
dr brian gilvaryb
dr byron grotea
2009
2010c
key expenditure areas
remuneration paid to all employeesa
distributions to shareholders
dividendsb
buybacksc
capital investmentd
comparing 2013 to 2012
% change in ceo remuneration
% change in comparator group remunerationa
bob dudleyb
dr byron groteb
former executive directors
dr anthony hayward
andrew inglis
94
chairmana
senior independent directorb
board member
audit, gulf of mexico, remuneration and seea chairmanship feesc
committee membership feed
intercontinental travel allowance
all fees in £ thousand
admiral frank bowman
george davidb
professor dame ann dowlingc
current non-executive directors
a held as adss.
96
98
100
104
105
106
107
highlights
150% of salary on target, 225% maximum.
metrics focused on safety and operational risk, and on value creation.
details on performance measures will be explained each year in annual report on remuneration.
a third mandatory and up to a third voluntary deferral.
converted to shares, matched one-for-one and deferred for three years.
vesting of all conditional on safety and environmental sustainability hurdle.
matched shares subject to additional three-year retention period post vesting.
shares awarded to five and a half times salary for the group chief executive and four times for other executive directors.
three-year performance period.
performance measures reflect strategy and kpis.
three-year retention period for those shares that vest.
102
defined benefit core schemes.
annual accrual of 1.3% of average annual earnings generally provides overall benefit.
average earnings include salary and bonus.
one sixtieth annual accrual to a maximum of two-thirds final salary.
35% cash supplement in lieu of future service accrual for those in excess of uk government limits.
–
director
the maximum remuneration for non-executive directors is set in accordance with the articles of association.
108
110
112
114
120
126
200
116
118
for the year ended 31 december
production and manufacturing expensesb
fair value gain on embedded derivatives
finance costsb
taxationb
profit for the year
earnings per share – cents
profit for the year attributable to bp shareholders
122
exchange gains on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets
available-for-sale investments marked to market
available-for-sale investments reclassified to the income statement
cash flow hedges marked to market
cash flow hedges reclassified to the income statement
cash flow hedges reclassified to the balance sheet
at 1 january 2013
repurchases of ordinary share capital
transactions involving non-controlling interests
at 31 december 2013
at 1 january 2012
at 31 december 2012
at 1 january 2011
at 31 december 2011
124
profit before taxationb
exploration expenditure written off
earnings from joint ventures and associates
dividends received from joint ventures and associates
interest receivable
interest received
interest paid
increase in inventories
increase in other current and non-current assets
increase in other current and non-current liabilities
proceeds from disposals of fixed assets
proceeds from disposals of businesses, net of cash disposedc
net increase in non-controlling interests
dividends paid
128
land improvements
buildings
refineries
petrochemicals plants
pipelines
service stations
office equipment
fixtures and fittings
130
132
134
136
selected lines only
net finance income relating to pensions and other post-retirement benefits
cash flow statement
138
less: taxation
net current assets
other receivables
deferred tax
net non-current assets
pre-tax cash flows
at 1 january
increase in benefit from items covered by the trust fund
derecognition of benefit from items that cannot be reliably estimated
amounts paid directly by the trust fund
at 31 december
of which – current
– non-current
increase in provision – items not covered by the trust fund
– items covered by the trust fund
derecognition of benefit from items that cannot be reliably estimateda
reclassification of amounts between categories of provision
unwinding of discount
change in discount rate
reclassified to other payables – items covered by the trust fund
– items not covered by the trust fund
utilization – paid by bp
– paid by the trust fund
of which – payable from the trust fund
140
142
net increase in provision
change in discount rate relating to provisions
costs charged directly to the income statement
trust fund liability – discounted
change in discounting relating to trust fund liability
recognition of reimbursement asset
settlements credited to the income statement
(profit) income before interest and taxation
(profit) income before taxation
total (credit) charge relating to the trust fund
environmental – amount provided
– change in discount rate relating to provisions
– costs charged directly to the income statement
total (credit) charge relating to environmental
spill response – amount provided
total (credit) charge relating to spill response
litigation and claims – amount provided, net of provision derecognized
total charge relating to litigation and claims
clean water act penalties – amount provided
other costs charged directly to the income statement
144
tnk-bp
losses on sale of businesses and fixed assets
impairment losses
impairment reversals
proceeds from disposals of businesses, net of cash disposed
146
total carrying amount of net assets disposed
recycling of foreign exchange on disposal
costs on disposala
profit on sale of businessesb
total consideration
consideration received (receivable)c
proceeds from the sale of businesses related to completed transactions
deposits received (repaid) related to assets classified as held for saled
disposals completed in relation to which deposits had been received in prior year
proceeds from the sale of businessese
agreed cash disposal proceeds
amount settled net in rosneft shares
tnk-bp dividend received by bp in december 2012
interest on cash proceeds
disposal proceeds received in cash
shares in rosneft received
consideration received
less: carrying value of investment in tnk-bp
deferral of gain
gain on existing 1.25% investment in rosneft
gain on disposal of investment in tnk-bp
shares purchased from rosneftegaz
value of agreements to purchase rosneft shares accounted for as derivatives
deferred gain
amount included in capital expenditure
value of existing 1.25% investment in rosneft
investment in rosneft on completion
148
segment revenues
third party sales and other operating revenues
equity-accounted earnings
interest income
segment results
replacement cost profit before interest and taxation
inventory holding gainsa
other income statement items
fair value (gain) loss on embedded derivatives
charges for provisions, net of write-back of unused provisions, including change in discount rate
segment assets
equity-accounted investments
additions to non-current assets
additions to other investments
element of acquisitions not related to non-current assets
additions to decommissioning asset
150
152
revenues
third party sales and other operating revenuesa
results
other non-current assetsb c
total non-current assets
other incomea
currency exchange losses (gains) charged (credited) to the income statementb
expenditure on research and development
interest payable
capitalized at 2% (2012 2.25% and 2011 2.63%)c
unwinding of discount on provisionsd
unwinding of discount on other payablesd
minimum lease payments
contingent rentals
sub-lease rentals
154
future minimum lease payments
payable within
1 year
2 to 5 years
thereafter
ships
plant and machinery
commercial vehicles
land and buildings
exploration and evaluation costs
exploration expenditure written offa
other exploration costs
exploration expense for the year
intangible assets – exploration and appraisal expenditure
liabilities
carrying amount
1-2 billion
2-3 billion
3-4 billion
4-5 billion
current tax
charge for the year
adjustment in respect of prior years
origination and reversal of temporary differences in the current year
tax charge on profit
uk statutory corporation tax rate
increase resulting from
uk supplementary and overseas taxes at higher or lower ratesa
tax reported in equity-accounted entities
adjustments in respect of prior years
movement in deferred tax not recognized
tax incentives for investment
gulf of mexico oil spill non-deductible costs
permanent differences relating to disposalsb
foreign exchange
156
deferred tax liability
depreciation
pension plan surpluses
other taxable temporary differences
pension plan and other post-retirement benefit plan deficits
decommissioning, environmental and other provisions
tax credits
loss carry forward
other deductible temporary differences
net deferred tax charge (credit) and net deferred tax liability
of which – deferred tax liabilities
– deferred tax assets
analysis of movements during the year in the net deferred tax liability
exchange adjustments
charge (credit) for the year on profit
charge (credit) for the year in other comprehensive income
charge (credit) for the year in equity
reclassified as assets/liabilities held for sale
deletions
unused tax lossesa
unused tax credits
of which – arising in the ukb
– arising in the usc
other deductible temporary differencesd
other taxable temporary differences associated with investments in subsidiaries and equity-accounted entities
benefit of previously unrecognized deferred tax on current year tax charge
current tax benefit relating to the utilization of previously unrecognized tax losses
current tax benefit relating to the utilization of previously unrecognized tax credits
deferred tax benefit relating to the recognition of previously unrecognized tax credits
dividends announced and paid in cash
preference shares
ordinary shares
march
june
september
december
dividend announced, payable in march 2014
number of shares issued
value of shares issued
basic earnings per share
diluted earnings per share
profit attributable to bp shareholders
less: dividend requirements on preference shares
profit for the year attributable to bp ordinary shareholders
basic weighted-average number of ordinary shares
potential dilutive effect of ordinary shares issuable under employee share-based payment plans
158
share options
outstanding
exercisable
dilutive effect
shares
vesting
within one year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
cost
additions
transfers
net book amount at 31 december 2013
reclassified as assets held for sale
net book amount at 31 december 2012
net book amount at 1 january 2012
assets held under finance leases at net book amount included above
assets under construction included above
160
impairment losses for the year
net book amount at 31 december
net book amount at 1 january
goodwill at 31 december
excess of recoverable amount over carrying amount
brent oil price
henry hub natural gas price
162
amortization
group investment in joint ventures
group share of net assets
loans made by group companies to joint ventures
sales to joint ventures
product
lng, crude oil and oil products, natural gas, employee services
purchases from joint ventures
lng, crude oil and oil products, natural gas, refinery operating costs, plant processing fees
other associates
164
group investment in associates
loans made by group companies to associates
sales to associates
purchases from associates
crude oil and oil products, natural gas, transportation tariff
financial assets
other investments – equity shares
– other
financial liabilities
166
trade and other receivables at 31 december
neither impaired nor past due
impaired
not impaired and past due in the following periods
within 30 days
31 to 60 days
61 to 90 days
over 90 days
168
derivative assets
derivative liabilities
trade receivables
trade payables
5 to 10 years
over 10 years
equity investments – listed
– unlisted
repurchased gas pre-paid bonds
contingent consideration
refined petroleum and petrochemical products
supplies
trading inventories
cost of inventories expensed in the income statement
170
amounts receivable from joint ventures and associates
non-financial assets
gulf of mexico oil spill trust fund reimbursement asseta
cash at bank and in hand
term bank deposits
cash equivalents
charged to costs and expenses
charged to other accountsa
deductions
amounts payable to joint ventures and associates
non-financial liabilities
derivatives held for trading
currency derivatives
oil price derivatives
natural gas price derivatives
power price derivatives
other derivatives
embedded derivatives
commodity price contracts
cash flow hedges
equity price derivatives
currency forwards, futures and cylinders
cross-currency interest rate swaps
fair value hedges
currency forwards, futures and swaps
interest rate swaps
172
fair value of derivative assets
level 1
level 2
level 3
less: netting by counterparty
fair value of derivative liabilities
net fair value
net fair value of contracts at 1 january 2013
gains recognized in the income statement
new contracts
settlements
transfers out of level 3
net fair value of contracts at 31 december 2013
174
net fair value of contracts at 1 january 2012
transfers into level 3
net fair value of contracts at 31 december 2012
natural gas price contracts
remaining contract terms
contractual/notional amount
net fair value of contracts at 1 january
net fair value of contracts at 31 december
commodity price embedded derivatives
other embedded derivatives
fair value gain
borrowings
net obligations under finance leases
disposal deposits
176
us dollar
euro
other currencies
short-term borrowings
long-term borrowings
total finance debt
gross debt
fair value (asset) liability of hedges related to finance debt
net debt ratio
movement in net debt
net cash flow
movement in finance debt relating to investing activitiesb
other movements
new or increased provisions
derecognition of provisions for items that cannot be reliably estimated
write-back of unused provisions
transfer between categories of provision
utilization
reclassified to other payables
of which – gulf of mexico oil spill
178
financial assumptions used to determine benefit obligation
discount rate for pension plan liabilities
discount rate for other post-retirement benefit plan liabilities
rate of increase in salaries
rate of increase for pensions in payment
rate of increase in deferred pensions
inflation for pension plan liabilities
financial assumptions used to determine benefit expense
discount rate for pension plan service cost
discount rate for pension plan other finance expense
discount rate for other post-retirement benefit plan service cost
inflation for pension plan service cost
mortality assumptions
life expectancy at age 60 for a male currently aged 60
life expectancy at age 60 for a male currently aged 40
life expectancy at age 60 for a female currently aged 60
life expectancy at age 60 for a female currently aged 40
first year’s us healthcare cost trend rate
ultimate us healthcare cost trend rate
year in which ultimate trend rate is reached
asset category
bonds/cash
property/real estate
180
fair value of pension plan assets
listed equities – developed markets
– emerging markets
private equity
government issued nominal bonds
index-linked bonds
corporate bonds
property
cash
analysis of the amount charged to profit before interest and taxation
current service costa
past service costb
settlement
operating charge relating to defined benefit plans
payments to defined contribution plans
total operating charge
interest income on plan assets
interest on plan liabilities
other finance expense
analysis of the amount recognized in other comprehensive income
actual asset return less interest income on plan assetsa
change in financial assumptions underlying the present value of the plan liabilities
change in demographic assumptions underlying the present value of the plan liabilities
experience gains and losses arising on the plan liabilities
remeasurements recognized in other comprehensive income
movements in benefit obligation during the year
benefit obligation at 1 january
interest cost
contributions by plan participantsc
benefit payments (funded plans)d
benefit payments (unfunded plans)d
remeasurements
benefit obligation at 31 decembera e
movements in fair value of plan assets during the year
fair value of plan assets at 1 january
interest income on plan assetsa
contributions by employers
remeasurementsf
fair value of plan assets at 31 december
surplus (deficit) at 31 december
represented by
asset recognized
liability recognized
the surplus (deficit) may be analysed between funded and unfunded plans as follows
funded
unfunded
the defined benefit obligation may be analysed between funded and unfunded plans as follows
182
deficit at 31 december
past service cost
analysis of the amount credited (charged) to other finance expense
other finance income
discount ratea
effect on pension and other post-retirement benefit expense in 2014
effect on pension and other post-retirement benefit obligation at 31 december 2013
inflation rate
salary growth
us healthcare cost trend rate
effect on us other post-retirement benefit expense in 2014
effect on us other post-retirement obligation at 31 december 2013
one additional year’s longevity
184
estimated future benefit payments
2019-2023
weighted-average duration
issued
8% cumulative first preference shares of £1 eacha
9% cumulative second preference shares of £1 eacha
ordinary shares of 25 cents each
issue of new shares for the scrip dividend programme
issue of new shares for employee share-based payment plansb
repurchase of ordinary share capitalc
shares re-issued for employee share-based payment plans
available-for-sale investments
share-based payments, net of taxa
186
188
employee costs
wages and salariesa b
social security costs
share-based paymentsc
pension and other post-retirement benefit costs
number of employees at 31 decemberd
downstreame
other businesses and corporatef
non-use
average number of employeesd
total for all directors
emoluments
gains made on exercise of share options
amounts awarded under incentive schemes
total for all senior management
short-term employee benefits
pensions and other post-retirement benefits
190
fees – ey
the audit of the company annual accountsa
the audit of accounts of any subsidiaries of the company
total audit
audit-related assurance servicesb
total audit and audit-related assurance services
taxation compliance services
taxation advisory services
services relating to corporate finance transactions
other assurance services
total non-audit or non-audit-related assurance services
services relating to bp pension plansc
192
international
*bp corporate holdings
bp exploration operating company
*bp global investments
*bp international
bp oil international
*burmah castrol
algeria
bp amoco exploration
angola
bp exploration
bp australia capital markets
bp finance australia
azerbaijan
brazil
bp energy do brazil
india
new zealand
bp oil new zealand
norway
bp norge
uk
bp capital markets
*bp holdings north america
atlantic richfield company
bp america
bp america production company
bp company north america
bp corporation north america
bp exploration & production
bp products north america
standard oil company
bp capital markets america
associates
russia
equity-accounted income of subsidiaries – after interest and tax
194
196
subsidiaries – equity-accounted basis
198
decrease in cash and cash equivalents
subsidiariesa
capitalized costs at 31 decemberb
gross capitalized costs
proved properties
unproved properties
accumulated depreciation
net capitalized costs
costs incurred for the year ended 31 decemberb
acquisition of properties
proved
unproved
exploration and appraisal costsc
development
total costs
results of operations for the year ended 31 december
sales and other operating revenuesd
third parties
sales between businesses
exploration expenditure
production costs
production taxes
other costs (income)e
impairments and (gains) losses on sale of businesses and fixed assets
profit before taxationf
allocable taxes
results of operations
upstream, rosneft and tnk-bp segments replacement cost profit before interest and tax
exploration and production activities – subsidiaries
midstream activities – subsidiariesg
tnk-bp – gain on sale
equity-accounted entitiesh
total replacement cost profit before interest and tax
equity-accounted entities (bp share)b
capitalized costs at 31 decemberc
costs incurred for the year ended 31 decemberd
exploration and appraisal costse
sales and other operating revenuesf
other costs
impairments and losses on sale of
businesses and fixed assets
exploration and production activities – equity-accounted entities after tax
midstream and other activities after taxg
total replacement cost profit after interest and tax
202
capitalized costs at 31 decemberb j
acquisition of propertiesc k
exploration and appraisal costsd
other costs (income)f
profit before taxationg
upstream segment and tnk-bp segment replacement cost profit before interest and tax
midstream activities – subsidiariesh
equity-accounted entitiesi
k
costs incurred for the year ended 31 decemberc
acquisition of propertiesd
impairments and losses on sale of businesses and fixed assets
204
costs incurred for the year ended 31 decemberb j
equity-accounted entities (bp share)a
acquisition of propertiesc
midstream and other activities after taxf
206
crude oila
developed
undeveloped
changes attributable to
revisions of previous estimates
improved recovery
purchases of reserves-in-place
discoveries and extensions
productionc
sales of reserves-in-place
at 31 december 2013d
equity-accounted entities (bp share)e
at 31 december 2013f g
total subsidiaries and equity-accounted entities
natural gasa
productionb
at 31 december 2013c
equity-accounted entities (bp share)d
at 31 december 2013e f
208
bitumena
total hydrocarbonsa
productiond e
at 31 december 2013f
equity-accounted entities (bp share)g
productione
at 31 december 2013h i
210
at 31 december 2012d h
at 31 december 2012f g i
at 31 december 2012c g
at 31 december 2012e f h
212
at 31 december 2012f j
at 31 december 2012h i k
214
at 31 december 2011d
at 31 december 2011f g
at 31 december 2011c
at 31 december 2011e f
216
at 31 december 2011f
at 31 december 2011h i
218
future cash inflowsa
future production costb
future development costb
future taxationc
future net cash flows
10% annual discountd
standardized measure of discounted future net cash flowse
equity-accounted entities (bp share)f
standardized measure of discounted future net cash flowsg h
standardized measure of discounted future net cash flows
sales and transfers of oil and gas produced, net of production costs
development costs for the current year as estimated in previous year
extensions, discoveries and improved recovery, less related costs
net changes in prices and production cost
revisions of previous reserves estimates
net change in taxation
future development costs
net change in purchase and sales of reserves-in-place
addition of 10% annual discount
total change in the standardized measure during the yeari
standardized measure of discounted future net cash flowsi
total change in the standardized measure during the yearj
220
crude oilb
natural gasc
number of productive wells at 31 december 2013
oil wellsa
gas wellsb
oil and natural gas acreage at 31 december 2013
undevelopedc
222
exploratory
productive
dry
e information for 2011 and 2012 includes bp’s share of tnk-bp which was sold to rosneft on 21 march 2013.
drilling and production activities in progress the following table shows the number of exploratory and development oil and natural gas wells in the process of being drilled by the group and its equity-accounted entities as of 31 december 2013. suspended development wells and long-term suspended exploratory wells are also included in the table.
gross
net
224
236
239
242
245
252
253
257
267
268
269
271
income statement data
underlying replacement cost profit before interest and taxationa
net favourable (unfavourable) impact of non-operating items and fair value accounting effectsa
replacement cost profit before interest and taxationa
inventory holding gainsb
inventory holding (gains) lossesb, net of taxation
replacement cost profit for the year attributable to bp shareholdersa
non-operating items and fair value accounting effectsa, net of taxation
underlying replacement cost profit for the year attributable to bp shareholdersa
per ordinary share – cents
replacement cost profit for the year attributable to bp shareholders
underlying replacement cost profit for the year attributable to bp shareholders
dividends paid per share – cents
– pence
capital expenditure and acquisitionsc
acquisitions and asset exchanges
organic capital expenditured
balance sheet data
share capital
net debt to net debt plus equitye
ordinary share dataf
basic weighted-average number of shares
diluted weighted-average number of shares
impairment and gain on sale of businesses and fixed assets
othera
otherb
fair value gain on embedded derivativesc
otherd
gulf of mexico oil spill response
finance costse
taxation credit (charge)f
total after taxation
unrecognized gains brought forward from previous period
unrecognized (gains) losses carried forward
favourable (unfavourable) impact relative to management’s measure of performance
downstreama
taxation credit (charge)b
by region
replacement cost profit before interest and tax adjusted for fair value accounting effects
impact of fair value accounting effects
total group
profit before interest and tax adjusted for fair value accounting effects
238
240
geographical area
washington
indiana
ohio
germany
netherlands
spain
south africa
total bp share of capacity at 31 december 2013
belgium
china
indonesia
south korea
malaysia
taiwan
244
subsidiaries and equity-accounted assets
proved undeveloped reserves at 1 january 2013
sales
total in year proved undeveloped reserves changes
progressed to proved developed reserves
proved undeveloped reserves at 31 december 2013
subsidiaries only
rest of europe
rest of north america
south america
africa
rest of asia
australasia
net proved reserves on an oil equivalent basis
246
subsidiaries ukb
total uk
norwayb
total rest of europe
total europe
alaskab
total alaska
lower 48 onshoreb
gulf of mexico deepwaterb
total gulf of mexico deepwater
total us
canadab
total rest of north america
total north america
subsidiaries colombiab
trinidad & tobago
brazilb
total south america
total angola
egypt
total egypt
algeriab
total africa
azerbaijanb
total azerbaijan
western indonesia
iraq
total rest of asiab
total asia
total australasia
total subsidiariesd
tnk-bp (russia, venezuela, vietnam)b e
rosneft (russia, canada, venezuela, vietnam)b f
abu dhabig
argentina
bolivia
venezuelab
total equity-accounted entities
248
total lower 48 onshore
alaska
total trinidad
colombiab
pakistanb
indiab
total india
vietnamb
chinab
oman
sharjah
total rest of asia
subsidiaries australia
total australia
eastern indonesia
total subsidiariesc
tnk-bp (russia, venezuela, vietnam)b d
rosneft (russia, canada, venezuela, vietnam)b e
total equity-accounted entitiesc
250
liquidsc
equity-accounted entitiesd
environmental expenditure relating to the gulf of mexico oil spill
operating expenditure
clean-ups
additions to environmental remediation provision
additions to decommissioning provision
expected payments by period under contractual obligations
balance sheet obligations
borrowingsa
finance lease future minimum lease paymentsb
decommissioning liabilitiesc
environmental liabilitiesc
pensions and other post-retirement benefitsd
off-balance sheet obligations
operating lease future minimum lease paymentse
unconditional purchase obligationsf
unconditional purchase obligations
crude oil and oil products
chemicals and other refinery feedstocks
power
utilities
transportation
use of facilities and services
254
256
258
260
262
264
266
exhibit 1
exhibit 4.1
exhibit 4.2
exhibit 4.3
exhibit 4.4
exhibit 4.6
exhibit 4.7
exhibit 7
exhibit 8
exhibit 10.1
exhibit 11
exhibit 12
exhibit 13
exhibit 15.1
exhibit 15.2
**
***
****
*****
#
†
270
272
274
275
277
278
279
280
year ended 31 december
2010
2012: first quarter
second quarter
third quarter
fourth quarter
2013: first quarter
2014: first quarter
month of
september 2013
october 2013
november 2013
december 2013
january 2014
february 2014
source:
dividends per adsa
276
range of holdings
1-200
201-1,000
1,001-10,000
10,001-100,000
100,001-1,000,000
over 1,000,000a
totals
over 1,000,000b
holder
jpmorgan chase bank n.a., depositary for adss, through its nominee guaranty nominees limited
blackrock, inc.
the national farmers union mutual insurance society
m & g investment management ltd.
smith & williamson investment management ltd.
duncan lawrie ltd.
royal london asset management ltd.
january
february
march 22 – march 28
april 2 – april 30
may 1 – may 31
june 3 – june 28
july 1 – july 31
august 1 – august 31
september 2 – september 30
october 1 – october 31
november 1 – november 29
december 2 – december 31
january 2 – january 31
february 3 to february 18
type of service
depositing or substituting the underlying shares
selling or exercising rights
withdrawing an underlying share
expenses of the depositary
category of expense reimbursed, waived or paid directly to third parties
nyse listing fees reimbursed
service fees and out of pocket expenses waiveda
broker fees reimbursedb
other third-party mailing costs reimbursedc
item 1.
item 2.
item 3.
item 4.
item 4a.
item 5.
item 6.
item 7.
item 8.
item 9.
item 10.
item 11.
item 12.
item 13.
item 14.
item 15.
item 16a.
item 16b.
item 16c.
item 16d.
item 16e.
item 16f.
item 16g.
item 17.
item 18.
item 19.
282
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acknowledgements
design typesetting printing
photography
x
« glossary words with this symbol« are defined in the glossary on page 252.
bp annual report and form 20-f 2014
« defined on page 252.
board performance for information about the board and its committees see page 51. remuneration for information about our directors’ remuneration see page 72.
q top: members of bp’s safety, ethics and environmental assurance committee (seeac) in azerbaijan. q bottom: cynthia carroll attends a briefing during a visit to brazil with seeac.
94.9% 2014 refining availability. 90% upstream bp-operated plant efficiency«.
delivery of our 10-point plan for details of our performance against the plan see page 21. our strategy for more on our strategic priorities and longer-term objectives see page 13. our key performance indicators find out how we measure our performance on page 18. q top: bob dudley at the world petroleum congress in moscow. q bottom: bob dudley congratulates winners at the helios awards – where teams from across the world are recognized for their contributions to building a safer, stronger bp in line with our values.
our markets in 2014 see page 20 for information on oil and gas prices in 2014.
how bp is preparing for the near-term outlook • we exercise capital discipline by constraining the total level of capital spend and the number of projects sanctioned each year. • we sanction upstream projects at 80a per barrel, while testing projects for resilience at 60a per barrel. • our balance sheet gives us resilience to withstand a period of low prices. • with a third of our production from production-sharing agreements and an increasing portfolio of high-quality gas projects, we are reducing our vulnerability to global oil price movements. • we continue to right-size the group’s cost base to align with bp’s smaller footprint.
a in real terms based to 2012.
for further detail on the projections of future energy trends contained in this section, please refer to bp energy outlook 2035.
energy consumption by region (billion tonnes of oil equivalent) source: bp energy outlook 2035. energy consumption by fuel (billion tonnes of oil equivalent) *includes biofuels. source: bp energy outlook 2035.
we aim to create value for our investors and benefits for the communities and societies where we operate.
a process engineer monitors instrument readings at our castellón refinery in spain. the refinery has the flexibility to run sour, heavy and highly acidic crudes. { in trinidad & tobago we are the largest hydrocarbon producer, accounting for about 50% of the nation’s oil and gas.
an operator commissions a steam system at the whiting refinery in the us. { technical operations onboard our floating production, storage and offloading vessel in angola.
how we deliver
we are strengthening our portfolio of high-return and longer-life assets – across deep water, giant fields and gas value chains – to provide bp with momentum for years to come.
we use technology to find and produce more oil and gas, improve our processes for conversion into valuable products and develop lower-carbon energy solutions. we aim to build strategic relationships with universities for research, recruitment, policy insights and education. our long-term research programmes around the world are exploring areas from reservoir fluid flow to novel lubricant additives. for example through the bp international centre for advanced materials almost 70 researchers are working on around 20 projects to advance the understanding and use of materials across a variety of energy and industrial applications. the first priority for all our technology teams is improving the safety and integrity of our operations.
at our wayne technology center in new jersey chemists research new formulations to improve lubricant performance.
we aim to maintain a skilled workforce to deliver our strategy and meet our commitments to investors, partners and the wider world. we compete for the best people within the energy sector and other industries. our people are talented in a wide range of disciplines – from geoscience, mechanical engineering and research technology to government affairs, trading, marketing, legal and others. we have a bias towards building capability within the organization, complemented by selective external recruitment where necessary, and invest in all our employees’ development to build a sustainable talent pipeline. our approach to professional development and training helps build individual capabilities, reducing a potential skills gap. we believe our shared values help everyone at bp to contribute to their full potential.
corrosion prevention wireless permasense® systems provide frequent and on-demand corrosion monitoring by detecting unexpected changes in the wall thickness of pipes. developed in collaboration with imperial college, london, they are used across all our refineries to monitor the integrity of critical assets.
lubricants we focus on providing energy-efficient and high-performance products to customers. in 2014 we launched castrol edge with titanium fluid strength technology, which changes the way engine oil behaves under extreme pressure, reducing friction by up to 15%.
we work closely with governments, national oil companies and other resource holders to build long-lasting relationships that are crucial to the success of our business. we place enormous importance on acting responsibly and meeting our obligations as we know from experience that trust can be lost. we work on big and complex projects with partners ranging from other oil companies to suppliers and contractors. our activity creates value that benefits governments, customers, local communities and other partners.
we assess the group’s performance according to a wide range of measures and indicators. our key performance indicators (kpis) help the board and executive management measure performance against our strategic priorities and business plans. we periodically review our metrics and test their relevance to our strategy. we believe non-financial measures – such as safety and an engaged and diverse workforce – have a useful role to play as leading indicators of future performance. changes to kpis we have replaced the rc profit per ordinary share kpi to underlying rc profit per ordinary share. this is one of the measures used by management to evaluate bp’s operational performance and is also used as a performance measure for executive directors’ remuneration. all other kpis remain the same. remuneration to help align the focus of our board and executive management with the interests of our shareholders, certain measures are reflected in the variable elements of executive remuneration. overall annual bonuses, deferred bonuses and performance shares are all based on performance against measures and targets linked directly to strategy and kpis. directors’ remuneration see how our performance impacted 2014 pay on page 72. key kpis used to measure progress against our strategy. kpis used to determine 2014 and 2015 remuneration.
total shareholder return (%) total shareholder return (tsr) represents the change in value of a bp shareholding over a calendar year. it assumes that dividends are reinvested to purchase additional shares at the closing price on the ex-dividend date. we are committed to maintaining a progressive and sustainable dividend policy. 2014 performance tsr decreased during the year, primarily as a result of a fall in the bp share price, partly offset by two dividend per share increases in 2014.
tier 1 process safety events«a
we report tier 1 process safety events, which are the losses of primary containment of greatest consequence – causing harm to a member of the workforce, costly damage to equipment or exceeding defined quantities. 2014 performance the number of tier 1 process safety events has decreased substantially since 2010. we take a long-term view on process safety indicators because the full benefit of the decisions and actions in this area is not always immediate. a this represents reported incidents occurring within bp’s operational hsse reporting boundary. that boundary includes bp’s own operated facilities and certain other locations or situations.
~ a mechanical technician works on the floating, production, storage and offloading vessel in angola’s ultra-deep water. { ‘pipe alley’ at cooper river petrochemicals plant. the site is one of the world’s largest producers of pta, a raw material primarily used to manufacture polyester and plastic bottles. crude oil prices (quarterly average) oil and gas pricing for more on upstream markets in 2014 see page 25. refining margins for more on downstream markets in 2014 see page 30.
inventory holding (gains) losses«, net of tax
replacement cost profit«
net charge (credit) for non-operating items«, net of tax
net (favourable) unfavourable impact of fair value accounting effects«, net of tax
underlying replacement cost profit«
capital expenditure and acquisitions, on accrual basis
net debt«
gross debt to gross debt-plus-equity
net debt to net debt-plus-equity«
estimated net proved reservesa
liquids«
subsidiaries«
total liquids
total hydrocarbons«
productiona
crude oild
equity-accounted entitiese
total liquidsf
total hydrocarbonsf
net (favourable) unfavourable impact of non-operating items« and fair value accounting effects«
bp average realizationsb
average oil marker pricesc
average henry hub gas priced
average uk national balancing point gas pricec
subsidiariese
total liquidsb
total hydrocarbonsb
our business model and strategy our downstream segment has significant operations in europe, north america and asia, and also manufactures and markets products in australasia, africa and central and south america. downstream is the product and service-led arm of bp, made up of three businesses: • fuels – includes refineries, fuels marketing and convenience retail businesses, together with global oil supply and trading activities that make up fuels value chains (fvcs). we sell refined petroleum products including gasoline, diesel and aviation fuel. • lubricants – manufactures and markets lubricants and related products and services globally, adding value through brand, technology and relationships, such as collaboration with original equipment manufacturing partners. • petrochemicals – manufactures products at locations around the world, mainly using proprietary bp technology. these products are then used by others to make essential consumer products such as paint, plastic bottles and textiles. we aim to run safe and reliable operations across all our businesses, supported by leading brands and technologies, to deliver high-quality products and services to meet our customers’ needs.
underlying rc profit before interest and taxb
region
bp rmm
usb
refining availability«
profit before interest and taxc d
inventory holding (gains) losses«
net charge (credit) for non-operating items«
underlying rc profit before interest and tax«
investments in associates«a
production (net of royalties) (bp share)c
net (favourable) unfavourable impact of non-operating items«
recordable injury frequency (group)b
day away from work case frequencyc (group)b
severe vehicle accident rated
tier 1 process safety events«
tier 2 process safety events
loss of primary containment – number of all incidentse
loss of primary containment – number of oil spillsf
recordable injury frequency
day away from work case frequency
loss of primary containment incidents – number
severe vehicle accident rate
operational controla
direct emissions
indirect emissions
bp equity shareb
retail staff
agricultural, operational and seasonal workers in brazil
subsidiary« directors
g executive team meeting – for strategic and commercial risks. g group operations risk committee – for health, safety, security, environment and operations integrity risks. g group financial risk committee – for finance, treasury, trading and cyber risks. g group disclosure committee – for financial reporting risks. g group people committee – for employee risks. g resource commitment meeting – for investment decision risks. g group ethics and compliance committee – for legal and regulatory compliance and ethics risks.
carl-henric svanberg chairman chair of nomination and chairman’s committees; attends gulf of mexico, seeaca and remuneration committees
admiral frank bowman independent non-executive director member of the chairman’s, seeac and gulf of mexico committees
ian davis independent non-executive director chair of the gulf of mexico committee; member of the chairman’s, nomination and remuneration committees
phuthuma nhleko independent non-executive director member of the chairman’s and audit committees
carl-henric svanberg chairman tenure appointed 1 september 2009 outside interests chairman of ab volvo age 62 nationality swedish career carl-henric svanberg became chairman of the bp board on 1 january 2010. carl-henric spent his early career at asea brown boveri and the securitas group, before moving to the assa abloy group as president and chief executive officer. from 2003 until 31 december 2009, he was president and chief executive officer of ericsson, also serving as the chairman of sony ericsson mobile communications ab. he was a non-executive director of ericsson between 2009 and 2012. he was appointed chairman and a member of the board of ab volvo on 4 april 2012. he is a member of the external advisory board of the earth institute at columbia university and a member of the advisory board of harvard kennedy school. he is also the recipient of the king of sweden’s medal for his contribution to swedish industry. relevant skills and experience carl-henric svanberg has, throughout his career, been involved with businesses with a global reach. he has done this as both a chairman and a chief executive officer. his experience is very broad which has assisted him in leading the board in the development of the group’s strategy. he is focused on the development of the board as the long-term stewards of the company and ensuring the right combination of skills and diversity on the board to deliver that task. carl-henric svanberg’s performance has been evaluated by the chairman’s committee, led by andrew shilston. bob dudley group chief executive tenure appointed to the board 6 april 2009 outside interests non-executive director of rosneft member of tsinghua management university advisory board, beijing, china member of britishamerican business international advisory board member of uae/uk ceo forum member of the emirates foundation board of trustees age 59 nationality american career bob dudley became group chief executive on 1 october 2010.
antony burgmans independent non-executive director tenure appointed 5 february 2004 outside interests member of the supervisory board of shv holdings n.v. chairman of the supervisory board of tnt express chairman of akzo nobel n.v. age 68 nationality dutch career antony burgmans joined unilever in 1972, holding a succession of marketing and sales posts including the chairmanship of pt unilever indonesia from 1988 until 1991. in 1991, he joined the board of unilever, becoming business group president, ice cream and frozen foods europe in 1994, and chairman of unilever’s europe committee co-ordinating its european activities. in 1998, he became vice chairman of unilever nv and in 1999, chairman of unilever nv and vice chairman of unilever plc. in 2005, he became non-executive chairman of unilever nv and unilever plc until his retirement in 2007. during his career he has lived and worked in london, hamburg, jakarta, stockholm and rotterdam. relevant skills and experience antony burgmans is an experienced chairman and chief executive who has served on the bp board for over 11 years. he spent his executive career at unilever where he developed skills in production, distribution and marketing. his experience of consumer facing business has meant that he has been able to provide the board with deep insight in the fields of reputation, brand, culture and values. he was asked to remain on the board until 2016 in the light of rapid board turnover in 2010 and 2011. antony remains fully independent. antony has now led the remuneration committee for five years and has detailed and regular dialogue with shareholders on remuneration matters. he will hand the chair of the remuneration committee to professor dame ann dowling in 2015, and, having previously led the evaluation of the chairman, he handed this task to andrew shilston this year in anticipation of standing down at the 2016 agm. cynthia carroll independent non-executive director tenure appointed 6 june 2007 outside interests non-executive director of hitachi ltd. age 58 nationality american career cynthia carroll has led multiple large complex global businesses in the
he was a director of tnk-bp over two periods, from 2003 to 2005 and from 2010 until the sale of the business and acquisition of rosneft equity in 2013. relevant skills and experience dr brian gilvary has spent his entire career at bp. he has a strong knowledge of finance and trading and a deep understanding of bp’s assets and businesses. having worked in both upstream and downstream, he also has very broad experience of the business as a whole. brian has consistently worked to further strengthen the finance function and has continued to develop the company’s engagement with shareholders. brian gilvary’s performance has been evaluated by the group chief executive and considered by the chairman’s committee. brendan nelson independent non-executive director tenure appointed 8 november 2010 outside interests non-executive director and chairman of the group audit committee of the royal bank of scotland group plc member of the financial reporting council monitoring committee age 65 nationality british career brendan nelson is a chartered accountant. he was made a partner of kpmg in 1984 and served as a member of the uk board of kpmg from 2000 to 2006, subsequently being appointed vice chairman until his retirement in 2010. at kpmg international he held a number of senior positions including global chairman, banking and global chairman, financial services. he served for six years as a member of the financial services practitioner panel and in 2013 was the president of the institute of chartered accountants of scotland. relevant skills and experience brendan nelson has had a long career in finance and auditing, particularly in the areas of financial services and trading. during his career he has also had management experience at a very senior level. he is well qualified to chair the audit committee and to act as its financial expert. as chair of the audit committee he has focused particularly on the oversight of the group’s trading operations. all of this is complemented by his broader business experience and his role as the chair of the audit committee of a major bank.
executive team as at 3 march 2015 rupert bondy current position group general counsel executive team tenure appointed 1 may 2008 outside interests non-executive director, indivior plc age 53 nationality british career rupert bondy is responsible for legal and compliance matters across the bp group. rupert began his career as a lawyer in private practice. in 1989 he joined us law firm morrison & foerster, working in san francisco and london, and from 1994 he worked for uk law firm lovells in london. in 1995 he joined smithkline beecham as senior counsel for mergers and acquisitions and other corporate matters. he subsequently held positions of increasing responsibility and, following the merger of smithkline beecham and glaxowellcome to form glaxosmithkline, was appointed senior vice president and general counsel of glaxosmithkline in 2001. in april 2008 he joined the bp group, and he became the group general counsel in may 2008. tufan erginbilgic current position chief executive, downstream executive team tenure appointed 1 october 2014 outside interests independent non-executive director of gkn plc. age 55 nationality british and turkish
alan boeckmann
antony burgmans2
cynthia carroll3
george david4
phuthuma nhleko5
andrew shilston6
april
july
august
october
accounting judgements and estimates
areas of significant judgement considered by the committee during the year and how these were addressed included:
accounting for interests in other entities
oil and natural gas accounting
recoverability of asset carrying values
provisions and contingencies
non-audit services audit objectivity and independence is safeguarded through the limitation of non-audit services to tax and audit-related work which falls within defined categories. bp’s policy on non-audit services states that the auditors may not perform non-audit services that are prohibited by the sec, public company accounting oversight board (pcaob) and uk auditing practices board (apb). the categories of approved and prohibited services are outlined below. the audit committee approves the terms of all audit services as well as permitted audit-related and non-audit services in advance. the external auditor is only considered for permitted non-audit services when its expertise and experience of the company is important. a two-tier system operates for approval of audit-related and non-audit work. for services relating to accounting, auditing and financial reporting matters, internal accounting and risk management control reviews or non-statutory audit, the committee has agreed to pre-approve these services up to an annual aggregate level. for all other services which fall under the ‘permitted
g advice on accounting, auditing and financial reporting.
g internal accounting and risk management control reviews.
g non-statutory audit.
g project assurance/advice on business and accounting process improvement.
g due diligence (acquisition, disposals, joint arrangements).
g tax compliance.
g direct and indirect tax advisory services.
g transaction tax advisory services.
g assistance with tax audits and appeals.
g tax compliance/advisory relating to human capital and performance/reward.
g transfer pricing advisory services. g tax legislative monitoring. g tax performance advisory.
g workshops, seminars and training on an arm’s length basis. g assistance on non-financial regulatory requirements. g provision of independent third-party audit on bp’s conflict minerals report.
non-permitted services
g bookkeeping/other services related to financial records.
g financial information systems design and implementation.
g appraisal, valuation, fairness opinions, contribution in-kind.
g actuarial services. g internal audit outsourcing.
g management functions.
g hr functions.
g broker-dealer, investment advisor, banking services.
g legal services.
g expert services unrelated to audit.
public company accounting oversight board (pcaob) ethics and independence rules
g contingent fees. g confidential or aggressive tax position transactions. g tax services for persons in financial reporting oversight roles.
antony
burgmans
performance shares the 2012-2014 performance share plan was, as in the previous year, based on three sets of measures equally weighted; relative total shareholder return (tsr), operating cash flow and finally strategic imperatives, which include relative reserves replacement ratio (rrr), safety and operational risk and rebuilding trust. the committee made its assessment of performance over the three-year period against the agreed targets and its view of the achievements over that time. there were no shares awarded for tsr as the minimum threshold was not reached. as i have mentioned above, there was strong performance against the safety measures and the committee exercised its judgement based on qualitative data in respect of the need to rebuild trust. as for 2013, the assessment was preliminary as the final results from the comparator group for rrr were not available. on the basis of information available, second place was recorded. based on this preliminary assessment, 60.5% of the shares are expected to vest. the committee believes that this represents a fair outcome for a continually improving performance over the period. again, there is retrospective disclosure of many of the targets used for the 2012-2014 performance share plan in this report. 2015 and the future during 2014, bp set out a clear proposition to shareholders aimed at delivering value rather than volume through active portfolio management, growing sustainable free cash flow through capital discipline and growing distributions for shareholders. the company’s key performance indicators (kpis) are designed to measure performance against this proposition. the committee is determined that the remuneration of the directors remains clearly linked to the company’s strategy. there has been a refocus of some of the measures for the 2015 annual bonus to reflect this and the current short-term imperatives facing bp. the graphic below sets out bp’s strategic priorities and links them to the measures used for short and long term remuneration with further detail in this report. previously, the committee reviewed the executive directors’ salaries in may each year. in future, it will do so in january for implementation in april, at the same time as the rest of the organization. given the general company pay freeze, no salary increases were awarded to directors for 2015.
antony burgmans (chairman) george david ian davis professor dame ann dowling in addition, carl-henric svanberg and bob dudley normally attend the meetings except for matters relating to their own remuneration.
annual remuneration 2014
pension value increasee
cash in lieu of future accrual
release datea
release date
provides base-level fixed remuneration to reflect the scale and dynamics of the business, and to be competitive with the external market.
policy summary
operation and opportunity
• salaries are normally set in the home currency of the executive director and reviewed annually. • salary levels and total remuneration of oil and other top european multinationals, and related us corporations, are considered by the committee. internally, increases for the group leaders as well as employees in relevant countries are considered. • salary increases will be in line with all employee increases in the uk and us and limited to within 2% of average increase for the group leaders. • benefits reflect home country norms. the current package of benefits will be maintained, although the taxable value may fluctuate.
performance framework
• salary increases are not directly linked to performance. however a base-line level of personal contribution is needed in order to be considered for a salary increase and exceptional sustained contribution may be grounds for accelerated salary increases.
provides a variable level of remuneration dependent on short-term performance against the annual plan.
• total overall bonus (before any deferral) is based on performance relative to measures and targets reflected in the annual plan, which in turn reflects bp’s strategy. • on-target bonus is 150% of salary with 225% as maximum. • achieving annual plan objectives equates to on-target bonus. the level of threshold payout for minimum performance varies according to the nature of the measure in question.
• specific measures and targets are determined each year by the remuneration committee. • a proportion will be based on safety and operational risk management and is likely to include measures such as loss of primary containment, recordable injury frequency and tier 1 process safety events. • the principal measures of annual bonus will be based on value creation and may include financial measures such as operating cash flow, replacement cost operating profit and cost management, as well as operating measures such as major project delivery, downstream net income per barrel and upstream unplanned deferrals. the specific metrics chosen each year will be set out and explained in the annual report on remuneration.
reinforces the long-term nature of the business and the importance of sustainability, linking a further part of remuneration to equity.
• a third of the annual bonus is required to be deferred and up to a further third can be deferred voluntarily. this deferred bonus is awarded in shares. • deferred shares are matched on a one-for-one basis, and both deferred and matched shares vest after three years depending on an assessment by the committee of safety and environmental sustainability over the three-year period. • where shares vest, additional shares representing the value of reinvested dividends are added. • before being released, all matched shares that vest after the three-year performance period are subject (after tax) to an additional three-year retention period.
• both deferred and matched shares must pass an additional hurdle related to safety and environmental sustainability performance in order to vest. • if there has been a material deterioration in safety and environmental metrics, or there have been major incidents revealing underlying weaknesses in safety and environmental management then the committee, with advice from the safety, ethics and environmental assurance committee, may conclude that shares vest in part, or not at all. • all deferred shares are subject to clawback provisions if they are found to have been granted on the basis of materially misstated financial or other data.
ties the largest part of remuneration to long-term performance. the level varies according to performance relative to measures linked directly to strategic priorities.
• shares up to a maximum value of five and a half times salary for the group chief executive and four times salary for the other executive directors can be awarded annually. • vesting of shares after three years is dependent on performance relative to measures and targets reflecting bp’s strategy. • where shares vest, additional shares representing the value of reinvested dividends are added. • before being released, those shares that vest after the three-year performance period are subject (after tax) to an additional three-year retention period.
• performance shares will vest on the following three performance measures: • total shareholder return relative to other oil majors. • operating cash flow. • strategic imperatives. • measures based on relative performance to oil majors will vest 100%, 80%, 25% for first, second and third place finish respectively and 0% for fourth or fifth position. • the committee identifies the specific strategic imperatives to be included every year and may also alter the other measures if others are deemed to be more aligned to strategic priorities. these are explained in the annual report on remuneration. • the committee may exercise judgement to adjust vesting outcomes if it concludes that the formulaic approach does not reflect the true underlying performance of the company’s business or is inconsistent with shareholder benefits. • all performance shares are subject to clawback provisions if they are found to have been granted on the basis of materially misstated financial or other data.
relative performance ranking
bp’s ranking place versus oil majors
first
second
third
fourth or fifth
recognizes competitive practice in home country.
• executive directors participate in the company pension schemes that apply in their home country.
• current uk executive directors remain on a defined benefit pension plan and receive a cash supplement of 35% of salary in lieu of future service accrual when they exceed the annual allowance set by legislation.
• current us executive directors participate in transition arrangements related to heritage plans of amoco and arco and normal defined benefit plans that apply to executives with an accrual rate of 1.3% of final earnings (salary plus bonus) for each year of service.
• pension in the uk is not directly linked to performance.
• pension in the us includes bonus in determining benefit level.
2014 agm directors’ remuneration report vote results
history of ceo remuneration
comparing 2014 to 2013
% change in comparator group remuneration
current directors
iain connb
current director
deferred shares (audited)a
comp
vol
mat
dab
chairman
basic fee
• remuneration is in the form of cash fees, payable monthly. remuneration practice is consistent with recognized best practice standards for a chairman’s remuneration and as a uk-listed company, the quantum and structure of the chairman’s remuneration will primarily be compared against best uk practice.
• the quantum and structure of chairman’s remuneration is reviewed annually by the remuneration committee, which makes a recommendation to the board.
benefits and expenses
• the chairman is provided with support and reasonable travelling expenses.
• the chairman is provided with an office and full time secretarial and administrative support in london and a contribution to an office and secretarial support in sweden. a chauffeured car is provided in london, together with security assistance. all reasonable travelling and other incomes (including any relevant tax) incurred in carrying out his duties is reimbursed.
2014 remuneration
£ thousand
• remuneration is in the form of cash fees, payable monthly. remuneration practice is consistent with recognized best practice standards for non- executive directors’ remuneration and as a uk-listed company, the quantum and structure of ned director remuneration will primarily be compared against best uk practice.
operation
• the quantum and structure of neds’ remuneration is reviewed by the chairman, the group chief executive and the company secretary who make a recommendation to the board; the neds do not vote on their own remuneration.
• remuneration for non-executive directors is reviewed annually.
committee fees and allowances
intercontinental allowance
• the neds receive an allowance to reflect the global nature of the company’s business. the allowance is payable for transatlantic or equivalent intercontinental travel for the purpose of attending a board or committee meeting or site visits.
• the allowance will be paid in cash following each event of intercontinental travel.
committee chairmanship fee
• those neds who chair a committee receive an additional fee. the committee chairmanship fee reflects the additional time and responsibility in chairing a committee of the board, including the time spent in preparation and liaising with management.
committee membership fee
• neds receive a fee for each committee on which they sit other than as a chairman. the committee membership fee reflects the time spent in attending and preparation for a committee of the board.
• fees for committee chairmanship and membership are determined annually and paid in cash.
the senior independent director
• in the light of the sid’s broader role and responsibilities, the sid is paid a single fee and is entitled to other fees relating to committees whether as chair or member.
• the fee for the sid will be determined from time to time, and is paid in cash monthly.
• the neds are provided with support and reasonable travelling expenses.
• neds are reimbursed for all reasonable travelling and subsistence expenses (including any relevant tax) incurred in carrying out their duties.
professional fees
• fees will be reimbursed in the form of cash, payable following assistance.
• the reimbursement of professional fees incurred by non-executive directors based outside the uk in connection with advice and assistance on uk tax compliance matters.
senior independent directora
audit, gulf of mexico, remuneration and
seea committees chairmanship feesb
committee membership feec
alan boeckmannb
george davidc
professor dame ann dowlingd
167
production and manufacturing expensesa
finance costsa
taxationa
at 1 january 2014
at 31 december 2014
net increase in benefit from items covered by the trust fund
increase in provision
by business
gains on sale of businesses
consideration received (receivable)b
deposits received related to assets classified as held for sale
proceeds from the sale of businessesc
depreciation, depletion and amortizationb
additions to non-current assetsc
non-current assetsb c
currency exchange losses charged to the income statementa
capitalized at 1.94% (2013 2% and 2012 2.25%)b
unwinding of discount on provisions and other payables
tax charge (credit) on profit or loss
items not deductible for tax purposes
deductible temporary differencesd
taxable temporary differences associated with investments in subsidiaries and equity-accounted entitiese
impact of previously unrecognized deferred tax or write-down of deferred tax assets on current year charge
deferred tax expense arising from the write-down of a previously recognized deferred tax asset
dividend announced, payable in march 2015
share plans
net book amount at 31 december 2014
lng, crude oil and oil products, natural gas
less: non-controlling interests
equity investmentsa
of which – gulf of mexico oil spillb
discount rate for plan liabilities
inflation for plan liabilities
discount rate for plan service cost
discount rate for plan other finance expense
inflation for plan service cost
settlementc
actual asset return less interest income on plan assets
contributions by plan participantsd
benefit payments (funded plans)e
benefit payments (unfunded plans)e
benefit obligation at 31 decembera f
interest income on plan assetsa g
remeasurementsg
remeasurementse
effect on pension and other post-retirement benefit expense in 2015
effect on pension and other post-retirement benefit obligation at 31 december 2014
2019
2020-2024
less: fair value asset of hedges related to finance debt
movement in finance debt relating to investing activities
net fair value of contracts at 1 january 2014
net fair value of contracts at 31 december 2014
currency translation differences (including recycling)a
share of items relating to equity-accounted entities, net of taxa
share-based payments, net of taxb
(20,971
(20,719
(21,054
83
(21,323
total for senior management and non-executive directors
wages and salariesa
share-based paymentsb
average number of employeesc
downstreamd
other businesses and corporatee f
fees – ernst & young
bp europa se
equity-accounted other comprehensive income of subsidiaries
upstream and rosneft segments replacement cost profit before interest and tax
tnk-bp gain on sale
capitalized costs at 31 decemberb c
acquisition of propertiesd e
exploration and appraisal costsf
sales and other operating revenuesg
other costs (income)h
profit before taxationi
upstream and tnk-bp segments replacement cost profit before interest and tax
midstream activities – subsidiariesj
equity-accounted entitiesk
crude oila b
productiond
at 31 decembere
at 31 decemberg
natural gas liquidsa b
at 31 decemberd
at 31 decemberf
bitumena b
total liquidsa b
at 31 decemberg h
natural gasa b
at 31 decemberf g
total hydrocarbonsa b
productione f
equity-accounted entities (bp share)h
productionf
at 31 decemberi j
equity-accounted entities (bp share)e f
at 31 decemberd e
at 31 decemberg h i
at 31 decembere f
at 31 decemberh i j
equity-accounted entities (bp share)i
at 31 decemberj k l
l
natural gase
number of productive wells at 31 december 2014
oil wellsb
gas wellsc
oil and natural gas acreage at 31 december 2014
undevelopedd
211
213
217
219
225
228
241
underlying replacement cost (rc) profit before interest and taxation*
net favourable (unfavourable) impact of non-operating items* and fair value accounting effects*
rc profit before interest and taxation*
inventory holding (gains) losses, net of taxation
rc profit for the year attributable to bp shareholders
non-operating items and fair value accounting effects, net of taxation
underlying rc profit for the year attributable to bp shareholders
capital expenditure and acquisitions, on an accruals basis
acquisitions and asset exchanges, on an accruals basis
organic capital expenditure*a, on an accruals basis
net debt to net debt plus equity*
ordinary share datab
impairment and gain on sale of businesses and fixed assetsa
otherc
* defined on page 252.
rc profit before interest and tax adjusted for fair value accounting effects
consolidation adjustment - upii*
total operating capital employed
liabilities for current and deferred taxation
*defined on page 252.
committed
of which is contracted
* defined on page 252. bp annual report and form 20-f 2014
fuels value chain
us east of rockies
rhine
iberia
australia new zealand
southern africa
total bp share of capacity at 31 december 2014
subsidiaries and equity-accounted entities
proved undeveloped reserves at 1 january 2014
proved undeveloped reserves at 31 december 2014
subsidiaries*
estimated net proved reserves of liquids*
estimated net proved reserves on an oil equivalent basis
subsidiaries ukc d
norwayc
alaskac
lower 48 onshorec
gulf of mexico deepwaterc
canadac
brazilc
azerbaijanc
total subsidiariese
tnk-bp (russia, venezuela, vietnam)c f
rosneft (russia, canada, venezuela, vietnam)c g
abu dhabih
canada
crude oilc
*defined on page 252. bp annual report and form 20-f 2014
226
similar rules targeting other sectors and potential impacts on combined heat and power installations.
230
232
234
information required
amount of interest capitalized
247
251
2015: first quarter
september 2014
october 2014
november 2014
december 2014
january 2015
february 2015
bank julius baer
barclays bank plc.
february 3 – february 28
march 3 – march 31
april 1 – april 30
may 1 – may 30
june 2 – june 30
august 1 – august 29
september 1 – september 30
november 3 – november 7
december 2 – december 22
january 9 – january 30
february 2 to february 5
******
trade marks of the bp group appear throughout this annual report and form 20-f in italics.
they include:
aral arco bp castrol edge field of the future fluid strength technology
you can order bp’s
printed publications free
of charge from:
design
typesetting
printing
group results second quarter and first half 2023
performing while transforming
net (favourable) adverse impact of adjusting items*, before tax
net cash issue (repurchase) of shares
underlying rc profit per ordinary share*
underlying rc profit per ads*
the commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 42.
other businesses & corporate excluding rosneft
bp-operated upstream plant reliability*
renewables pipeline – onshore wind
refinery throughputs
net impairment and losses on sale of businesses and fixed assets
exchange
at 1 january 2023
at 30 june 2023
at 1 january 2022
issue of ordinary share capital
at 30 june 2022
net impairment and (gain) loss on sale of businesses and fixed assets
payments relating to perpetual hybrid bonds
net finance expense/(income) relating to pensions and other post-retirement benefits
taxation on adjusting items
taxation – tax rate change effect of uk energy profits levy
total capital expenditure*
net (favourable) adverse impact of adjusting items*, before interest and tax
add back:
less: adjusting items* gains
less: net favourable (adverse) impact of adjusting items*
less: net favourable (adverse) impact of adjusting items
inventory holding (gains) losses, before tax
net (favourable) adverse impact of adjusting items, before tax
taxation on profit or income before taxation
etr on profit or income before taxation
etr on rc profit or loss
underlying etr
8.
group results second quarter and first half 2024
strong cash generation, growing distributions
the commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 41.
remeasurements of equity investments
at 1 january 2024
redemption of perpetual hybrid bonds, net of tax
at 30 june 2024
redemption of perpetual hybrid bonds
less:
taxation charge
investments in equity instruments
group results second quarter and first half 2022
net cash issue
total taxation
other proceeds
net (favourable) adverse impact of adjusting items , before tax
adjustments to reconcile profit before taxation to net cash
provided by operating activities
depreciation, depletion and amortization and exploration
expenditure written off	4,422,000,000
impairment and loss on sale of businesses and fixed assets	377,000,000
net operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded plans	-102,000,000
movements in inventories and other current and non-current
assets and liabilities	-315,000,000

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