This summary is based on the third quarter fiscal 2007 earnings call conducted by BP Plc. (BP) on October 23, 2007.
Management:
Chief Finance Officer: Byron Grote
Head of IR: Fergus Macleod
Key Investors Issues
- Total revenue fell marginally to $72.8 billion.
- Net profit was down 29% to $4.5 billion or $23.07 a share.
- A dividend of 10.83 cents per ordinary share was announced.
Year-to-Date Results
- Revenues decreased by $1.54 billion to $209.9 billion.
- Net Income was down 13.8% from $19.3 billion in 2006 to $16.7 billion.
- EPS fell by $9.05 to $85.19.
Third Quarter Highlights
Total revenue declined by $200 million from $73 billion in 2006 to $72.8 billion on due to growth in revenue from refining and marketing as growth in the other segments slowed.
- The firm realised $228 million from the disposal of businesses and fixed assets, down from $2.3 billion in 2006.
- Sales from refining and marketing increased from $61.2 billion in the prior year to $63.8 billion despite declines in refining throughput.
- Net profit declined by 28.8% from $6.3 billion or $31.40 in 2006 to $4.5 billion or $23.07 as purchases and administration expenses increased by $3.4 billion and $507 million, respectively.
Replacement cost profit was $3.87 billion, compared with $6.98 billion a year ago, a decrease of 45% as a result of the continued impact of operational issues, as well as the absence of favorable ones off items realized last year.
- Capital expenditure, excluding acquisitions and asset exchanges, was $4.3 billion, up from $3.9 billion in the prior year.
- Operating cash flow of $20 billion and disposals of $3.9 billion funded $12.5 billion of organic capital spending, $1.2 billion of acquisitions, and $12 billion of shareholders distributions.
- The net debt ratio remained flat and at the bottom end of the internal target of 20% to 30%.
Dividends Payable:
- The firm announced a dividend of 10.83 cents per ordinary share to be paid in December. Holders of ordinary shares will receive 5.31 pence per share and holders of American Depository Receipts (ADRs) 64.95 cents per ADS.
- Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in the US Direct Access Plan will receive the dividend in the form of shares, also on 3 December.
- Dividend payments to date have exceeded $6 billion and the firm bought back $6 billion worth of shares.
Exploration & Production:
The firm realised pre-tax profit of $6.3 billion, a 36% decrease from the prior year, Benefiting from higher liquids realizations, but impacted by lower gas realizations, lower reported volumes and higher costs.
The result was also lower due to the absence of significant gains from non-operating items in 2006 and the absence of disposal gains in equity-accounted entities, primarily the $892 million gain on TNK-BP’s disposal of the Urdmurtneft assets.
The net non-operating gain was $22 million against $2.5 billion in 2006, which included gains on the sale of assets and fair value gains on embedded derivatives relating to North Sea gas contracts, partially offset by an impairment charge relating to a gas plant in the US.
Reported production was 3.65 million barrels of oil equivalent per day, a decline of 4% compared with a year earlier
Full year production is expected to be in the range of 3.8 million to 3.9 million barrels of oil equivalent per day.
The firm was the highest bidder for 91 blocks in the Western Gulf of Mexico lease sale and was awarded two new exploration licences in Colombia. Additionally, in early October, the company participated in the Central Gulf of Mexico lease sale, where it was the highest bidder for 83 blocks.
Major projects are progressing well, and the first oil was struck from Greater Plutonio in Angola, where BP holds a 50% working interest. In the Gulf of Mexico the firm has started commissioning the Atlantis field.
Refining and Marketing:
Net profit was $376 million, which included a charge of $340 million for non-operating items, down from $1.5 billion in the prior year reflecting weaker refinery margins and the continued impact of operational issues, particularly at the Whiting refinery.
