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BP THIRD QUARTER RESULTS 1991

 BP THIRD QUARTER RESULTS 1991
 CLEVELAND, Nov. 7 /PRNewswire/ -- The following are BP's third


quarter results.
 HIGHLIGHTS
 July-September January-September
 1991 1990 1991 1990
 Profit before extraordinary items
 Replacement cost
 net income
 Dollars million 195 217 1,705 1,294
 Pounds million 129 103 963 748
 Historical cost
 net income
 Dollars million 266 1,446 724 2,109
 Pounds million 156 822 409 1,219
 Replacement cost earnings
 per ADR
 Dollars 0.43 0.49 3.80 2.91
 Pence 28.8 22.8 214.8 168.0
 Historical cost earnings
 per ADR
 Dollars 0.59 3.25 1.61 4.73
 Pence 34.8 184.8 91.2 273.6
 o Replacement cost profit for the first nine months up $411
 million (215 million pounds - 29 percent) on last year.
 o Historical cost profit remains adversely affected by stock
 holding losses of $981 million (554 million pounds) in the nine
 month period (compared with gains of $815 million |471 million
 pounds~ last year).
 o Exploration and Production's result, excluding divestment
 profits, up $452 million (232 million pounds - 23 percent) on a
 year ago.
 o Refining and Marketing's result up on 1990 despite weakening
 margins in the second and third quarters.
 o Chemicals' third quarter loss reflects the Group's substantial


involvement in depressed petrochemicals markets in Europe,
 particularly the U.K.
 BP of London, England today reported $195 million (129 million pounds) in replacement cost net income for the third quarter of 1991. Replacement cost net income excludes inventory holding gains and losses. This compared with $217 million (103 million pounds) of replacement cost net income earned in the third quarter of 1990. Second quarter replacement cost net income was $515 million (313 million pounds), which included after-tax divestment profits of $150 million (83 million pounds).
 Replacement cost net income per ADR for the 1991 third quarter was $0.43 (28.8 pence), compared with $0.49 (22.8 pence) for the same quarter of 1990 and $1.15 (69.6 pence) in the second quarter of this year.
 Historical cost net income in the 1991 third quarter was $266 million (156 million pounds), after inventory holding gains of $71 million (27 million pounds). This compared with historical cost net income of $1,446 million (822 million pounds) for the same period a year ago, when inventory holding gains were $1,229 million (719 million pounds). Historical cost net income for the second quarter of 1991 was $439 million (243 million pounds), after inventory holding losses of $76 million (70 million pounds).
 Historical cost net income per ADR for the 1991 third quarter was $0.59 (34.8 pence), compared with $3.25 (184.8 pence) in the 1990 third quarter and $0.97 (54.0 pence) in the second quarter of 1991.
 Average per barrel North Sea Brent crude oil spot prices were $19.91 for the third quarter of 1991, compared with $26.37 for the same period a year ago and $18.80 for the second quarter of 1991. BP's average per barrel Alaskan North Slope sales prices were $17.40 in the third quarter, compared with $18.13 in last year's third quarter and $17.30 in the second quarter of 1991.
 BP Deputy Chairman and Chief Operating Officer David Simon said: "Seasonal demand pressures, at a time when OPEC production is near capacity, have already pushed oil prices higher in the fourth quarter; however, there is continuing uncertainty for the first half of 1992. This relates particularly to availability from Iraq, Kuwait and the USSR.
 "Our oil and gas production in 1991 is expected to match 1990's level, despite the effect of divestments. In 1992, the underlying decline in production from mature fields and the impact of divestments will be considerably offset by production from new fields as a result of the recent high levels of development expenditure. 1992 will see the Mississippi Canyon 109 in the Gulf of Mexico, Miller in the U.K. North Sea, and Hides and Kutubu in Papua New Guinea fields on stream.
 "Refining and marketing margins will continue to be sensitive to the demand for products and to the timing of recovery in world economies. The increase in oil prices in the fourth quarter will result in pressure on refining margins in the short term, particularly in the U.S. Chemicals' trading environment is expected to remain bleak until sustainable economic growth is reflected in increased demand."
 NINE-MONTH RESULTS
 Replacement cost net income for the nine months of 1991 was $1,705 million (963 million pounds). This included net after tax divestment profits of $163 million (92 million pounds). The divestment profits included the sale of BP's interest in the Gothenburg refinery in Sweden in the second quarter, and upstream exploration assets in the U.K. and the TEX/CON gas transmission and marketing assets in the U.S. in the third quarter. By comparison, the replacement cost result a year ago was $1,294 million (748 million pounds) and included after tax divestment profits of $244 million (141 million pounds).
 Replacement cost net income per ADR for 1991 was $3.80 (214.8 pence), compared with $2.91 (168.0 pence) for 1990.
 Nine months 1991 historical cost net income was $724 million (409 million pounds), with inventory holding losses of $981 million (554 million pounds), of which $976 million (511 million pounds) was recorded in the first quarter. This compares with $2,109 million (1,219 million pounds) last year, when the result included inventory holding gains of $815 million (471 million pounds). The inventory holding gains and losses reflect the significant oil price changes experienced since August last year as a result of the Gulf war.
 Historical cost net income per ADR for 1991 was $1.61 (91.2 pence), compared with $4.73 (273.6 pence) for the same nine month period of 1990.
 Interest expense for 1991 was $958 million (541 million pounds), compared with $858 million (496 million pounds) for 1990. The increased charge reflects higher overall levels of debt, partially offset by lower average interest rates.
 Taxation charged, other than production taxes, for the nine month period amounted to $1,110 million (627 million pounds), compared with $1,263 million (730 million pounds) last year. In 1991, charges outside the U.S. have been reduced by the tax effect of inventory holding losses, whereas in 1990 tax was incurred on inventory holding gains. In the U.K., the charge in 1991 included $25 million (14 million pounds) of tax on divestment profits compared with $137 million (79 million pounds) in 1990.
 Funds generated from operations during the nine months of 1991 were $4,528 million (2,558 million pounds), compared with $5,851 million (3,382 million pounds) last year. However, the figure for 1990 included proceeds of $1,870 million (1,081 million pounds) from divestments compared with $660 million (373 million pounds) this year. After capital expenditure and acquisitions of $5,473 million (3,092 million pounds), which included $848 million (479 million pounds) for the Petromed acquisition in Spain, and dividend payments, there was a funds requirement of $2,129 million (1,203 million pounds) for the first nine months of 1991. This was met largely by additional borrowing.
 NOTES:
 Replacement cost net income is calculated after tax and interest expense, and before extraordinary items, but it excludes inventory holding gains and losses. It uses a current cost method of inventory valuation.
 Historical cost net income is calculated after tax and interest expense, and before extraordinary items, using the "first-in first-out" method of inventory valuation.
 SUMMARY OF BP GROUP RESULTS
 July-September January-September
 1991 1990 1991 1990
 dollars million
 Replacement cost basis:
 - Net income per ADR $0.43 $0.49 $3.80 $2.91
 - Net income
 before extraordinary items 195 217 1,705 1,294
 Historical cost basis:
 - Net income per ADR $0.59 $3.25 $1.61 $4.73
 - Net income
 before extraordinary items 266 1,446 724 2,109
 Revenues (Turnover) 13,352 14,596 42,080 40,134
 Capital expenditure
 and acquisitions 2,264 1,709 5,473 4,486
 pounds million
 Replacement cost basis:
 - Net income per ADR (in pence) 28.8 22.8 214.8 168.0
 - Net income
 before extraordinary items 129 103 963 748
 Historical cost basis:
 - Net income per ADR (in pence) 34.8 184.8 91.2 273.6
 - Net income
 before extraordinary items 156 822 409 1,219
 Revenues (Turnover) 7,902 7,907 23,774 23,199
 Capital expenditure
 and acquisitions 1,319 930 3,092 2,593
 RESULTS OF BUSINESSES
 EXPLORATION AND PRODUCTION replacement cost operating profit for the quarter, excluding divestment profits, was $632 million (377 million pounds), a similar level to the $675 million (400 million pounds) in the second quarter and significantly up on $547 million (291 million pounds) in the corresponding quarter of last year when the U.S. dollar was comparatively weak. Realizations were at similar levels to the second quarter and U.K. production was higher due to less shutdown time. Compared with the third quarter of 1990, production also improved in the U.S. where the installation of part of the Prudhoe Bay Gas Handling Expansion in 1990 reduced production. Average realizations are below the third quarter of 1990, when market prices rose during the Gulf crisis.
 Replacement cost operating profit for the nine months was $2,316 million (1,308 million pounds). When divestment profits are excluded, the profit of $2,230 million (1,260 million pounds) compares with $1,778 million (1,028 million pounds) last year.
 Total crude oil production averaged 1,329 thousand barrels per day (b/d), compared with 1,307 thousand b/d in the previous quarter and 1,227 thousand b/d in the third quarter of 1990. Average U.K. production levels have been maintained and improvements achieved in the U.S., as a result of fewer shutdowns for maintenance, installation of new facilities and safety related work. Crude oil production in the U.S. averaged 720 thousand b/d compared with 718 thousand b/d in the second quarter of this year and 696 thousand b/d in the third quarter of 1990.
 Natural gas sales averaged 943 million cubic feet per day (mmcf/d) - lower than the previous quarter's 1,388 mmcf/d, partly reflecting seasonal factors in the U.K., and the sale of the TEX/CON gas transmission and marketing assets in the U.S. which was effective July 1, 1991. Sales in the corresponding quarter of 1990 were 1,270 mmcf/d.
 The sale of the company's U.S. gas transmission and marketing interests has been completed for $250 million. The sale of the remaining lower 48 onshore exploration and production interests has been agreed in principle. BP has also sold certain of its small U.K. North Sea interests, notably its stake in the Victor gas field for $133 million (75 million pounds).
 The BP/Statoil alliance, together with Ramco Oil Services, has reached agreement to take 20 percent of the western interest in the evaluation of the Caspian Sea's Azeri field in Azerbaijan.
 REFINING AND MARKETING replacement cost operating profit for the quarter was $311 million (190 million pounds), compared with $443 million (266 million pounds) in the second quarter and $459 million (248 million pounds) in the third quarter of 1990. Refining and marketing margins continued to reflect weak underlying demand for products, particularly in the U.S. The second quarter result benefited from the sale of BP's interest in the Gothenburg refinery, while comparison with the third quarter of last year is distorted by the initial impact of the Gulf Crisis.
 During the third quarter the group's interest in the Petromed operation in Spain increased to 92.9 percent, representing a total investment of $848 million (479 million pounds). Petromed results have been consolidated from August 1, 1991. During September the Campsa marketing assets were allocated amongst its shareholders. Within this process BP was successful in the allocation of retail assets, receiving 190 outlets.
 Replacement cost operating profit for the nine months was $1,489 million (841 million pounds) compared with $1,277 million (738 million pounds) in the corresponding period last year.
 CHEMICALS' recorded a replacement cost operating loss of $38 million (20 million pounds) compared with a profit of $9 million (8 million pounds) in the previous quarter and $41 million (20 million pounds) in the third quarter of 1990.
 Sales volumes were below the previous quarter but consistent with normal seasonal patterns. With naphtha feedstock costs drifting upwards and derivative prices remaining constant or deteriorating, margins continued to be squeezed. Additionally, new plants, conceived on the basis of more robust economic growth, are being commissioned at a time when margins are at their weakest.
 Chemicals' disproportionate UK manufacturing base has been affected particularly adversely by the strength of sterling and the severity of the U.K. economic recession.
 Chemicals' replacement cost operating profit for the nine months was $74 million (42 million pounds) against $211 million (122 million pounds) last year.
 NUTRITION's replacement cost operating profit for the third quarter was $25 million (15 million pounds), compared with $11 million (6 million pounds) in the second quarter of 1991, and $25 million (14 million pounds) in the same quarter a year ago.
 For the nine months, Nutrition's replacement cost operating profit was $47 million (27 million pounds) compared with $50 million (29 million pounds) a year ago.
 OTHER BUSINESSES AND CORPORATE comprises BP Finance, BP Solar, Kaldair, the group's remaining minerals and coal assets, interest income and costs relating to corporate activities worldwide.
 NOTES TO EDITORS:
 Replacement cost operating profit, which excludes inventory holding gains and losses, is used in discussing business results, and is before interest expense, taxation and minority interest.
 Quarterly translation of income items to dollars is achieved by translating the sterling results for the cumulative period of the year at the average rate for that period and deducting therefrom the amount calculated for the previous cumulative period.
 The exchange rates used by BP for consolidation and translation purposes are:
 1991 1990
 Average:
 January-September pound - $1.77 pound - $1.73
 January-June pound - $1.81 pound - $1.67
 Closing:
 30 September pound - $1.75 pound - $1.87
 31 December pound - $1.93
 ANALYSIS OF REPLACEMENT COST OPERATING PROFIT
 July-September January-September
 1991 1990 1991 1990
 dollars million
 By business
 Exploration and Production 718 645 2,316 2,168
 Refining and Marketing 311 459 1,489 1,277
 Chemicals (38) 41 74 211
 Nutrition 25 25 47 50
 Other businesses and corporate (105) (120) (145) (208)
 Replacement cost operating profit 911 1,050 3,781 3,498
 By geographical area
 UK
 Exploration and Production 304 163 637 497
 Refining and Marketing 11 80 158 185
 Chemicals (71) 9 (44) 54
 Nutrition 9 1 14 3
 Other businesses and corporate (69) (122) (71) (234)
 Total 184 131 694 505
 Rest of Europe
 Exploration and Production 85 170 331 327
 Refining and Marketing 98 23 600 133
 Chemicals 33 30 111 147
 Nutrition 12 25 18 43
 Other businesses and corporate (1) (15) (35) (45)
 Total 227 233 1,025 605
 USA
 Exploration and Production 328 306 1,296 1,223
 Refining and Marketing 67 289 212 656
 Chemicals (5) (4) (5) (12)
 Nutrition 1 (5) 10 2
 Other businesses and corporate (29) (46) (74) (38)
 Total 362 540 1,439 1,831
 Rest of World
 Exploration and Production 1 6 52 121
 Refining and Marketing 135 67 519 303
 Chemicals 5 6 12 22
 Nutrition 3 4 5 2
 Other businesses and corporate (6) 63 35 109
 Total 138 146 623 557
 Replacement cost operating profit 911 1,050 3,781 3,498
 GROUP OIL AND GAS SALES VOLUMES
 July-September January-September
 1991 1990 1991 1990
 thousand barrels per day
 Refined products
 UK 497 444 447 453
 Rest of Europe 847 908 920 889
 USA 935 985 879 933
 Rest of World 393 384 397 384
 Total Refined products 2,672 2,721 2,643 2,659
 Crude Oil
 UK 1,215 979 1,093 916
 Rest of Europe 12 18 18 53
 USA 312 385 385 452
 Rest of World 29 24 30 35
 Total Crude oil 1,568 1,406 1,526 1,456
 million cubic feet per day
 Natural gas
 UK 349 335 623 544
 Rest of Europe 22 30 26 36
 USA 251 556 465 631
 Rest of World 321 349 319 377
 Total Natural gas 943 1,270 1,433 1,588
 GROUP CRUDE OIL PRODUCTION
 thousand barrels per day
 UK 381 330 357 365
 Rest of Europe 68 63 77 58
 USA 720 696 742 728
 Rest of World 160 138 178 146
 Total Production
 (Net of Royalties) 1,329 1,227 1,354 1,297
 -0- 11/7/91
 /CONTACT: Tom Koch of BP, 216-586-6511/ CO: British Petroleum ST: Ohio IN: OIL SU: ERN DA -- CL004 -- 2048 11/07/91 08:57 EST
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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Date:Nov 7, 1991
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