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BP FIRST QUARTER RESULTS 1992

 BP FIRST QUARTER RESULTS 1992
 CLEVELAND, May 7 /PRNewswire/ -- Following are BP first quarter


results 1992:
 HIGHLIGHTS January-March October-December
 1992 1991 1991
 Net income (loss) for the period
 Replacement cost;
 -- net income
 Dollars million 168 995 127
 Pounds million 95 521 72
 Historical cost;
 -- net income (loss)
 Dollars million (108) 19 11
 Pounds million (61) 10 6
 Replacement cost earnings
 per ADR
 Dollars 0.36 2.22 0.28
 Pence 21.6 116.4 15.6
 Historical cost earnings (loss)
 per ADR
 Dollars (0.24) 0.05 0.07
 Pence (13.2) 2.4 1.2
 -- Replacement cost net income reflected both the continued recession in key markets and lower oil prices. It was significantly down on last year's first quarter, which the Gulf crisis had made exceptional.
 -- Falling crude oil prices again resulted in inventory holding losses which led to an historical cost loss for the quarter.
 -- Exploration and Production's result outside the U.S. was better than the first quarter of 1991, despite lower oil prices. However, the overall result was down due to particularly severe price falls for Alaskan crude.
 -- Refining and Marketing experienced continued recessionary weakness, particularly in the U.S. Product sales increased (9 percent) but margins reflected very competitive market conditions.
 -- Chemicals' loss reflected substantial overcapacity in some key sectors of the petrochemicals industry.
 BP of London, England, today reported first quarter 1992 replacement cost net income of $168 million (95 million pounds). Replacement cost net income excludes inventory holding gains and losses. This compared with $995 million (521 million pounds) in the first quarter a year ago. Fourth quarter 1991 replacement cost net income was $127 million (72 million pounds).
 Financial performance in the first quarter of 1992, relative to earlier periods, was adversely affected by the continuing impact of recession on downstream oil and chemicals margins and also by lower oil prices.
 North Sea spot prices averaged $17.96/bbl in the first quarter of 1992 compared with $20.52/bbl in the previous quarter and $20.64/bbl in the first quarter of 1991. The reduction in average Alaskan sales prices was more severe, falling by almost $4.50/bbl from a year ago, to average $15.54/bbl in the first quarter of 1992. Oil prices, although weak, remained relatively stable in the first quarter of 1992 - in contrast to the extreme volatility and steep fall experienced in the first quarter of 1991 during the Gulf conflict.
 Replacement cost net income per ADR for the quarter was $0.36 (21.6 pence), compared with $2.22 (116.4 pence) for the same quarter a year ago and $0.28 (15.6 pence) in the fourth quarter of 1991.
 Historical cost loss for the 1992 first quarter was $108 million (61 million pounds), after inventory holding losses of $276 million (156 million pounds). This compared with a net income of $19 million (10 million pounds) for the first quarter of 1991, after inventory holding losses of $976 million (511 million pounds). Historical cost net income for 1991's fourth quarter was $11 million (6 million pounds), after inventory holding losses of $116 million (66 million pounds).
 Historical cost loss per ADR for the 1992 first quarter was $0.24 (13.2 pence), compared with net income of $0.05 (2.4 pence) for the same quarter in 1991 and $0.07 (1.2 pence) in the fourth quarter of 1991.
 Interest expense amounted to $337 million (190 million pounds), compared with $302 million (158 million pounds) in the same quarter a year ago, and $322 million (182 million pounds) in the fourth quarter of 1991. The increased charge reflected higher levels of debt combined with a stronger U.S. dollar, offset by lower interest rates. Taxation charged, other than production taxes, amounted to $276 million (156 million pounds), compared with $459 million (240 million pounds) in the first quarter of 1991. The tax charge exceeded pre-tax historical cost profit mainly because of inventory holding losses in the U.S., which are not recognized for tax purposes, and ring-fencing in the U.K., which prevented losses outside the North Sea ring fence being offset against higher North Sea taxable profits.
 The net cash flow from operating activities was $1,158 million (654 million pounds) compared with $1,930 million (1,011 million pounds) in the same period last year. This was primarily due to lower business results. Capital expenditure was at a broadly similar level to last year and, when combined with the servicing of finance and tax payments, resulted in a net cash outflow of $963 million (544 million pounds). This was largely financed by increased short term borrowing.
 BP Deputy Chairman and Chief Operating Officer David Simon said, "Outlook for the next few months suggests trading conditions will be just as difficult as in the recent past. In particular, while current OPEC production levels are contributing to a fairly balanced market, there is still concern about the potential production availability from Kuwait and Iraq. On the demand side, the strength of the emergence of key economies from recession is not clear.
 "Upstream, the 1992 exploration program will be concentrated in Colombia, the U.K., Yemen, the Gulf of Mexico and Vietnam. In the U.K., the Miller field (BP 40 percent) is due on stream in the second quarter. Later in the year, Papua New Guinea's first oil development, Kutubu (BP 19.4 percent) will also come on stream. The combined effect of all the new fields in 1992 should more than replace production lost as a result of 1991 divestments and partially offset the natural decline of the mature fields.
 "Downstream, industry refining and marketing margins will continue to be sensitive to the demand for products and environmental and competitor pressures. U.S. margins, which have been hit hardest, may strengthen with the seasonal onset of improved gasoline demand.
 "Chemicals' business climate remains unfavorable. A squeeze on margins is expected to continue until economic recovery in Western economies stimulates higher demand to absorb excess industry capacity. Against that prospective improvement in outlook, strategic investments in Scotland and Indonesia are proceeding and are within time and cost budgets."
 Simon added, "Within BP, every business operation is continuing to pursue demanding cost and productivity improvements. Further reductions in corporate head office staffing levels were announced recently. Investment programs are also being reviewed rigorously with capital expenditure and acquisitions in 1992 likely to be around 15 percent lower than last year."
 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 and gives a result similar to that which would occur under "last-in first-out" accounting.
 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. It is the normal basis of publication under U.K. Accounting Standards.
 SUMMARY OF BP GROUP RESULTS
 January-March October-December
 1992 1991 1991
 dollars million
 Replacement cost basis:
 - Net income per ADR $0.36 $2.22 $0.28
 - Net income for the period
 after taxation 168 995 127
 Historical cost basis:
 - Net income (loss) per ADR $(0.24) $0.05 $0.07
 - Net income (loss) for the
 period after taxation (108) 19 11
 Revenues (Turnover) 13,779 15,542 15,645
 Capital expenditure
 and acquisitions 1,474 1,438 2,508
 pounds million
 Replacement cost basis:
 - Net income per ADR (in
 pence) 21.6 116.4 15.6
 - Net income for the period
 after taxation 95 521 72
 Historical cost basis:
 - Net income (loss) per ADR
 (in pence) (13.2) 2.4 1.2
 - Net income (loss) for the
 period after taxation (61) 10 6
 Revenues (Turnover) 7,785 8,137 8,839
 Capital expenditure
 and acquisitions 833 753 1,417
 RESULTS OF BUSINESSES
 EXPLORATION AND PRODUCTION's replacement cost operating profit was $754 million (426 million pounds). When divestment profits are excluded, the profit was $712 million (402 million pounds), compared with $696 million (393 million pounds) in the fourth quarter of 1991 and $923 million (483 million pounds) in the equivalent quarter last year.
 Average North Sea Brent spot prices and BP's average Alaskan North Slope (ANS) sales prices were as set out below. Weaker demand in U.S. markets resulted in a widening of the ANS/Brent oil price differential compared with the first quarter of 1991.
 1991 1992
 First Fourth First
 Quarter Quarter Quarter
 BRENT $/bbl 20.64 20.52 17.96
 /bbl 10.81 11.53 10.15
 ANS $/bbl 19.97 18.20 15.54
 /bbl 10.46 10.22 8.78
 Crude oil production averaged 1,313 thousand barrels per day (b/d), compared with 1,360 thousand b/d in the previous quarter and 1,428 thousand b/d in the first quarter of 1991. Compared with the previous quarter, Alaskan production was at a similar level and the North Sea marginally lower. Production in the rest of the world was down reflecting the Egyptian disposal and reduced production in Abu Dhabi. Compared with a year ago, lower production mainly reflected divestments and a reduction in Alaska of 59,000 b/d.
 Natural gas production averaged 1,470 million cubic feet per day (mmcf/d). This showed an increase over 1,287 mmcf/d in the fourth quarter of 1991 and, after excluding the effects of divestments, was at a similar level to the first quarter last year.
 During the quarter, the sale of BP's producing assets in Egypt was completed for some $125 million. In addition, BP sold its stake in the Canadian Hunter Joint Venture in British Columbia and BP Canada announced that it had signed a letter of intent to sell its Wolf Lake oil sands assets in northern Alberta. Neither of these Canadian assets are regarded as core to the BP Exploration business and their disposals will have no material effect on 1992's earnings.
 In Colombia, the first appraisal well of the Cusiana discovery, Buenos Aires -1, tested good quality oil, condensate and gas from a total of five intervals. BP Exploration now has several wells being drilled as part of its extensive work program to evaluate the field and other acreage in the region. Exploration drilling has also commenced recently in Yemen.
 In the UK, BP Exploration has announced it will develop the Hyde gas field in the southern sector of the North Sea. Reserves are estimated at 135 billion cubic feet of natural gas. The company has agreed in principle for Statoil to acquire 45 percent of BP's equity in the field. In addition, since the end of the quarter, the Donan field has come on stream and should reach a maximum level of production in excess of 15,000 b/d.
 REFINING AND MARKETING's replacement cost operating profit was $140 million (79 million pounds) and included divestment profits relating to the disposal of downstream interests in West Africa and Ireland. By comparison, the replacement cost operating profit was $184 million (104 million pounds) in the previous quarter and $735 million (385 million pounds) in the first quarter of 1991.
 The first quarter result was substantially lower than the first quarter of 1991 because of strong refining margins in Europe and the Far East in 1991 ($5/bbl higher in Rotterdam and $8/bbl in Singapore) which resulted from the combination of high product demand and the disruptions in the Middle East. Margins in the first quarter of 1992 were adversely affected by the recessionary impact on demand and, in particular, very poor trading conditions in the U.S. Refinery shutdowns and higher environmental costs also contributed to an overall loss in the U.S. in this quarter.
 Compared with the fourth quarter of 1991, the underlying downturn reflected lower refining margins, particularly in Europe. Demand for heating oil was weak due to warmer weather and little upturn in economic growth.
 CHEMICALS' replacement cost operating result was a loss of $44 million (25 million pounds), compared with $103 million (54 million pounds) profit in the corresponding quarter last year when there was a temporary benefit from lower feedstock costs linked with the fall in oil prices. However, underlying business performance has improved from the fourth quarter of 1991 when there was a loss of $86 million (49 million pounds).
 Overall, sales volumes were similar to the previous quarter. The profit improvement was driven by slightly improved margins in the olefins and specialities businesses and sales volume increases in acetyls, where prior quarter volumes were reduced as a result of a scheduled plant shutdown.
 NUTRITION'S replacement cost operating profit for the first quarter of 1992 was $22 million (12 million pounds) compared with $19 million (10 million pounds) in the preceding quarter and $11 million (6 million pounds) in the corresponding period last year.
 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. The overall net cost of these activities was $93 million (52 million pounds) in the first quarter of 1992 compared with $7 million (4 million pounds) in the first quarter of 1991; last year benefited from a higher level of interest income.
 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:
 1992 1991
 Average:
 January-March pound - $1.77 pound - $1.91
 January-December pound - $1.77
 Closing:
 31 March pound - $1.74 pound - $1.74
 31 December pound - $1.87
 ANALYSIS OF REPLACEMENT COST OPERATING PROFIT
 January-March October-December
 1992 1991 1991
 dollars million
 By business
 Exploration and Production 754 923 874
 Refining and Marketing 140 735 184
 Chemicals (44) 103 (86)
 Nutrition 22 11 19
 Other businesses & corporate (93) (7) (250)
 Replacement cost operating
 profit 779 1,765 741
 By geographical area
 UK
 Exploration and Production 223 182 414
 Refining and Marketing 25 138 (20)
 Chemicals (74) 40 (85)
 Nutrition (2) (2) 4
 Other businesses
 & corporate (29) 5 (118)
 Total 143 363 195
 Rest of Europe
 Exploration and Production 124 149 99
 Refining and Marketing 51 256 143
 Chemicals 32 69 11
 Nutrition 13 6 9
 Other businesses
 & corporate (31) (10) (23)
 Total 189 470 239
 USA
 Exploration and Production 352 594 453
 Refining and Marketing (65) 76 6
 Chemicals 2 (8) (16)
 Nutrition 7 7 (1)
 Other businesses
 & corporate (22) (18) (35)
 Total 274 651 407
 Rest of World
 Exploration and Production 55 (2) (92)
 Refining and Marketing 129 265 55
 Chemicals (4) 2 4
 Nutrition 4 - 7
 Other businesses
 & corporate (11) 16 (74)
 Total 173 281 (100)
 Replacement cost operating
 profit 779 1,765 741
 GROUP OIL AND GAS SALES VOLUMES
 January-March October-December
 1992 1991 1991
 thousand barrels per day
 Refined products
 UK 541 446 530
 Rest of Europe 1,050 1,038 1,068
 USA 933 859 927
 Rest of World 450 388 444
 Total Refined products 2,974 2,731 2,969
 Crude Oil
 UK 1,221 1,013 1,388
 Rest of Europe 125 35 104
 USA 536 448 410
 Rest of World 26 26 18
 Total Crude oil 1,908 1,522 1,920
 million cubic feet per day
 Natural gas
 UK 958 984 874
 Rest of Europe 40 28 41
 USA 94 661 92
 Rest of World 365 308 300
 Total Natural gas 1,457 1,981 1,307
 GROUP CRUDE OIL PRODUCTION
 thousand barrels per day
 UK 346 363 364
 Rest of Europe 90 81 92
 USA 718 790 725
 Rest of World 159 194 179
 Total Production
 (Net of Royalties) 1,313 1,428 1,360
 -0- 5/7/92
 /CONTACT: Ian W. Fowler (media), 216-586-4976; or Terry LaMore (investor), 216-586-4101, both of BP/ CO: BP ST: Ohio IN: Oil SU: ERN


KK -- CL005 -- 7477 05/07/92 09:39 EDT
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