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THE BRITISH PETROLEUM COMPANY p.l.c. THIRD QUARTER RESULTS 1993

 CLEVELAND, Nov. 4 /PRNewswire/ -- Following are The British Petroleum Company's (NYSE: BP) third quarter 1993 results.
 BP THIRD QUARTER RESULTS 1993
 HIGHLIGHTS
 Third Second Third
 Quarter Quarter Quarter Nine Months
 1992 1993 1993 1993 1992
 Replacement cost
 operating profit
 960 895 1,071 Dollars million 2,832 2,406
 507 581 722 Pounds million 1,888 1,315
 Replacement cost profit
 before exceptional items
 415 369 504 Dollars million 1,215 615
 224 240 339 Pounds million 810 336
 Profit (loss) after
 exceptional items
 Replacement cost
 327 401 493 Dollars million 1,263 (957)
 172 261 332 Pounds million 842 (545)
 Historical cost
 226 285 302 Dollars million 1,068 (1,047)
 117 182 205 Pounds million 712 (594)
 Earnings (loss) per ADR:
 Replacement cost profit
 before exceptional items
 0.92 0.81 1.12 Dollars 2.69 1.36
 49.2 52.8 74.4 Pence 178.8 74.4
 Historical cost profit (loss)
 after exceptional items
 0.50 0.62 0.67 Dollars 2.36 (2.33)
 26.4 39.6 45.6 Pence 157.2 (132.0)
 BP Group Chief Executive and Deputy Chairman, David Simon, commented:
 "BP's third quarter results are a significant improvement over the second quarter. Sustained benefits from cost reductions, improved downstream margins, and the impact of the U.K. Finance Act changes to PRT have more than compensated for the lower crude oil price. Debt was reduced in the third quarter by a further $1 billion."
 KEY FEATURES OF THE THIRD QUARTER
 -- Replacement cost operating profit, before interest, tax and
 exceptional items, was $1,071 million (722 million pounds):
 -- Exploration and Production's operating profit was at the
 same level as the previous quarter despite significantly
 weaker oil prices. This reflected continued operating
 efficiencies, and included the effect of the Petroleum
 Revenue Tax ("PRT") changes enacted in the 1993 UK Finance
 Act.
 -- Refining and Marketing's result maintained the strong
 improvement of recent quarters reflecting sustained gains
 from cost savings and higher marketing margins.
 -- Chemicals' third quarter loss, though an improvement on the
 previous quarter, reflected continued weakness in European
 markets for ethylene and certain of its derivatives.
 -- Replacement cost profit, after tax and interest, but before the
 effect of exceptional items, was $504 million (339 million
 pounds), 37 percent higher (41 percent in pounds) than the
 second quarter and 21 per cent (51 percent in pounds) above the
 third quarter of last year. The greater improvement in
 the sterling result reflected the translation effect of the
 stronger dollar.
 -- After exceptional items, and inventory holding losses of
 $191 million (127 million pounds), historical cost profit was
 $302 million (205 million pounds).
 -- Borrowings were reduced in the quarter by $1.0 billion to
 $13.1 billion. This was the result of strong cash flow from
 operations and a high level of divestment proceeds.
 RESULTS FOR THE NINE MONTHS
 -- Replacement cost operating profit of $2,832 million
 (1,888 million pounds), was 18 percent higher than the
 corresponding period last year (44 percent in pounds).
 The improvement versus 1992, when oil prices were
 higher, was primarily the result of cost reduction measures
 and improved oil marketing margins.
 -- Replacement cost profit, after tax and interest, but before
 the effect of exceptional items, was $1,215 million
 (810 million pounds), well above the $615 million
 (336 million pounds) reported for the first nine months of
 1992.
 -- After exceptional items, replacement cost profit was
 $1,263 million (842 million pounds) and historical cost
 profit $1,068 million (712 million pounds). These compared
 with a replacement cost loss of $957 million (545 million
 pounds) and an historical cost loss of $1,047 million
 (594 million pounds) for the same period last year, which
 had included exceptional charges of $1,572 million
 (881 million pounds) after tax.
 -- Net cash inflow before financing was $2,205 million
 (1,470 million pounds) for the nine months compared with net
 cash outflow of $1,358 million (742 million pounds) for the
 same period of 1992. The principal elements of the
 $3.6 billion (2.2 billion pounds) turnaround were a
 significant improvement in cash from operating activities,
 higher disposal proceeds and a reduction in capital
 expenditure.
 -- Disposal proceeds of $2.4 billion (1.6 billion pounds) were
 realized in the first nine months of 1993, exceeding the
 target for the year. This has enabled a $2.1 billion
 reduction in borrowings.
 OUTLOOK
 Crude oil prices declined steadily until the end of the third quarter. The end-September OPEC agreement temporarily halted the decline, but the outlook remains uncertain.
 Upstream, it is anticipated that fourth quarter production will increase over the third quarter as a result both of new fields coming on stream and the seasonal upturn in natural gas sales, leading to a 1993 annual production level close to that achieved for 1992. With the benefit of new fields, 1994 production is expected to show some increase over 1993.
 Downstream, performance will continue to benefit from the lower cost base. However, the outlook for refining margins in the U.S. remains depressed because of industry over capacity and the seasonal downturn in gasoline demand. In Europe, trading conditions continue to be exposed to the economic slow-down, though winter demand for heating oil should help to sustain refining margins. On both sides of the Atlantic, the seasonal fall-off in demand for gasoline is likely to weaken marketing margins.
 Chemicals' trading environment is likely to remain difficult in most business segments. Within the ethylene and derivatives businesses in particular, a combination of industry over capacity and economic recession in Europe continues to dampen sales volumes, margins and profitability.
 Cash flow in the final quarter of 1993 will be held back by seasonally higher tax payments and capital expenditure. Disposals in the course of completion are, however, likely to generate further divestment proceeds.
 DETAILED REVIEW OF BUSINESSES (EXCLUDING EXCEPTIONAL ITEMS)
 Exploration and Production
 3Q 2Q 3Q Nine Months
 1992 1993 1993 1993 1992
 Replacement cost
 754 731 730 operating profit - $m 2,225 2,133
 Results included:
 111 122 363 Exploration write-offs - $m 608 408
 Key statistics:
 Average realizations
 20.16 18.24 16.74 : North Sea - $/bbl 17.68 19.16
 10.55 11.92 11.16 : North Sea - pounds/
 bbl 11.76 10.47
 19.22 17.57 15.52 : Alaskan North Slope - $/bbl 16.62 17.30
 1,313 1,225 1,223 Oil production - mb/d 1,230 1,291
 582 858 894 Natural gas production - mmcf/d 1,037 955
 1,413 1,372 1,377 Total production - mboe/d 1,409 1,456
 Profit for the third quarter, stated in US dollars, was at the same level as the second quarter but marginally below the equivalent quarter last year. Compared with the second quarter, the positive impacts of the continued improvement in efficiency and the 1993 UK Finance Act changes (see below) have offset the effect of weaker prices and seasonal maintenance costs in Alaska. Compared with the third quarter last year, the significant reduction in oil prices has been largely offset by continuing operating efficiencies and the UK Finance Act benefits. In the UK, a write-down of certain producing asset values was offset by a write-back of abandonment provisions following further engineering studies.
 Third quarter total production was at the level of the previous quarter. In the UK North Sea there was a full quarter of oil production from Bruce, with natural gas production commencing in August. The Hyde field in the Southern North Sea produced first natural gas on September 1. Alaska production was down mainly as a result of seasonal maintenance work together with the successful tie-in of the second phase of the Natural Gas Handling Expansion project. Compared with a year ago overall production was slightly down with lower Alaskan production being largely offset by new fields and increased British Gas off takes in the UK.
 During the quarter, BP was successful in gaining interests in four license blocks in the fourteenth licensing round in Norway. In the United States, plans were announced to develop the Mars field in the Gulf of Mexico. BP has a 28.5 percent share in the field with first phase production scheduled to begin in late 1996. In addition, BP commenced development of the 100 percent owned Niakuk field in Alaska with first production planned for April 1994.
 The first nine months operating result was some 4 percent (27 percent in pounds) ahead of the result achieved in the first nine months of 1992. Despite the impact of weaker oil prices and lower volumes, the higher result reflected continued improved operating efficiencies and the UK Finance Act benefit, while the sterling result also reflected the translation effects of a stronger dollar.
 Effect of 1993 UK Finance Act:
 The Finance Act, with effect from 1 July 1993, reduced the rate of PRT on existing fields from 75 percent to 50 percent, eliminated relief for exploration expenditure, and removed the PRT liability for new fields. The benefit to third quarter after-tax income was approximately $45 million (30 million pounds) from the reduced rate of PRT on current production.
 The changes also reduced the need for provision for deferred PRT. Part of the resultant surplus provision has been released immediately. This was to counterbalance the abnormal exploration write-off of $248 million (165 million pounds) taken in this quarter. The write-off followed a review of the carrying values of intangible exploration assets, which had been previously shielded by related deferred PRT provisions. The release of the remainder of the surplus provision is being accounted for prospectively on a unit-of-production basis in accordance with the Group's accounting policy. The benefit to third quarter after-tax income from this release was approximately $30 million (20 million pounds).
 REFINING AND MARKETING
 3Q 2Q 3Q Nine Months
 1992 1993 1993 1993 1992
 Replacement cost
 172 301 400 operating profit - $m 885 342
 Key statistics:
 Indicative industry refining margins
 2.75 3.24 3.33 Europe - $/bbl 3.11 2.74
 1.67 2.14 1.61 U.S. - $/bbl 1.63 1.84
 Third quarter operating profit of $400 million (269 million pounds) was up $99 million (72 million pounds) on the second quarter primarily because of improved marketing margins, cost reductions and the Grangemouth refinery returning to full capacity after a recent upgrade. Marketing margins in the U.S. and Europe improved as demand kept prices firm relative to the weakening of crude. Industry refining margins, boosted in the second quarter by plant turnarounds in the major refining regions, fell back outside Europe as capacity came back on stream. The Rest of World continues to perform strongly.
 Against the equivalent periods last year, the third quarter profit was higher by $228 million (177 million pounds) with the first nine months improving by $543 million (403 million pounds). This was due to substantial cost reductions and a partial recovery in margins, except U.S. refining margins.
 During the quarter the agreement to sell BP's refining and retail assets on the Pacific North West Coast of the U.S. was announced. The deal comprised the Ferndale refinery and associated retail sites. The disposal of BP's retail assets in Sweden to Statoil was also concluded.
 CHEMICALS
 3Q 2Q 3Q Nine Months
 1992 1993 1993 1993 1992
 Replacement cost
 (2) (35) (24) operating loss - $m (80) (4)
 Chemicals' third quarter operating loss of $24 million (16 million pounds) was an improvement of $11 million (7 million pounds) on the second quarter. The combined effects of higher licensing income, a slight improvement in margins and lower operating costs more than offset the effect of seasonal volume declines in various business units.
 Compared with the third quarter of 1992, results were lower due to weaker margins in European commodity businesses, partially offset by continued cost savings and favorable exchange rate movements.
 Operating losses for the first nine months were worse than last year primarily because of lower margins in European businesses, and restructuring costs of $51 million (34 million pounds) not treated as fundamental under FRS3 and included within the business result. These were mitigated by lower fixed costs and exchange benefits.
 NUTRITION
 Replacement cost operating profit for the third quarter of 1993 was $25 million (17 million pounds) compared with $16 million (10 million pounds) in the preceding quarter and $43 million (23 million pounds) in the corresponding quarter last year which included $24 million (13 million pounds) profit from now divested businesses. The underlying improvement largely reflected seasonal demand and performance improvement measures. Profit for the first nine months of 1993 was $63 million (42 million pounds), compared with $96 million (53 million pounds) last year which included $31 million (17 million pounds) from now divested businesses.
 Divestment proceeds for the quarter were $467 million, being $415 million received for the sale of Purina Mills in the U.S., and further proceeds from the disposal of the Consumer Products' business which was sold earlier in the year. Disposal proceeds for the nine months to September totaled $900 million.
 OTHER BUSINESSES AND CORPORATE
 Other Businesses and Corporate comprises BP Finance, BP Solar, Kaldair, the group's remaining coal assets, interest income and costs relating to corporate activities worldwide. The overall net cost of these activities was $60 million (41 million pounds) compared with $118 million (77 million pounds) in the second quarter of 1993 and $7 million (3 million pounds) in the third quarter of 1992. The second quarter result included a $36 million (24 million pounds) provision in respect of all outstanding claims, lawsuits and class actions against Alyeska Pipeline Service Company and its owner companies relating to the Exxon Valdez oil spill. The third quarter of 1992 results benefited from currency effects totaling $92 million (50 million pounds).
 EXCEPTIONAL ITEMS
 3Q 2Q 3Q Nine Months
 1992 1993 1993 1993 1992
 (99) 47 (39) Profit on sale of operations - $m 66 143
 (2) - - Restructuring costs - $m - (1,907)
 Exceptional items
 (101) 47 (39) before taxation - $m 66 (1,764)
 13 (15) 28 Taxation credit (charge) - $m (18) 192
 Exceptional items
 (88) 32 (11) after taxation - $m 48 (1,572)
 The loss on sale of operations in the third quarter of 1993 was $39 million (26 million pounds), $11 million (7 million pounds) post-tax. Profits from the sale of Exploration assets in Egypt, oil retail assets in Sweden and Purina Mills were more than offset by expected losses on the sale of the Group's refining and retail assets on the Pacific North West Coast of the U.S. and provisions associated with a previously divested minor business.
 GROUP FINANCE AND TAXATION
 Interest expense in the third quarter was $253 million (171 million pounds), marginally below the previous quarter. Due to the substantial reduction in the Group's debt and lower interest rates, interest expense for the first nine months of the year was $768 million (512 million pounds), $106 million lower than in the same period last year, despite lower capitalized interest.
 Taxation charged, other than production taxes, was $277 million (187 million pounds) compared with $272 million (176 million pounds) in the second quarter. The resulting replacement cost effective tax rate was 36 percent compared with 40 percent in the second quarter. In both periods the effect of relief on inventory holding losses in certain jurisdictions reduced the effective rate. The tax charge for the first nine months of 1993 was $852 million (568 million pounds) compared with $723 million (395 million pounds) for the corresponding period last year which had included some $180 million (100 million pounds) of relief in respect of restructuring charges.
 The net cash inflow before financing in the third quarter was $1,092 million (733 million pounds) compared with $226 million (138 million pounds) in the previous quarter which had included the $630 million Alaskan unitary tax settlement. The high cash inflow was a result of disposal proceeds of $774 million (522 million pounds) and low taxation payments. The principal components of disposal proceeds were BP Nutrition's Purina Mills, the oil retail assets in Sweden and Exploration's Egyptian assets.
 The net cash inflow before financing for the first nine months of 1993 was $2,205 million (1,470 million pounds) compared with the net cash outflow of $1,358 million (742 million pounds) for the same period last year. An increase in cash from operating activities, higher disposal proceeds and reduced expenditure on capital and acquisitions were the main components of the cash flow turnaround.
 Borrowings, of which over 90 percent are in US dollars, were reduced by $2.1 billion (1.4 billion pounds) in the first nine months of 1993 with debt standing at $13.1 billion (8.7 billion pounds) at the end of the period.
 -0- 11/4/93
 /CONTACT: Terry LaMore, investors, 216-586-6220, or Ian Fowler, media, 216-586-4976, both of BP/
 /FIRST AND FINAL ADD -- TABULAR MATERIAL -- TO FOLLOW/
 (BP)


CO: The British Petroleum Company p.l.c. ST: Ohio IN: OIL SU: ERN

BM -- CL004 -- 0457 11/04/93 06:36 EST
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