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BP FOURTH QUARTER RESULTS 1991

 BP FOURTH QUARTER RESULTS 1991
 CLEVELAND, Feb. 13 /PRNewswire/ -- Following are BP's fourth


quarter results:
 HIGHLIGHTS
 October-December January-December
 1991 1990 1991 1990
 Profit before extraordinary items
 Replacement cost
 net income
 Dollars million 127 861 1,832 2,155
 Pounds million 72 456 1,035 1,204
 Historical cost
 net income
 Dollars million 11 891 735 3,000
 Pounds million 6 457 415 1,676
 Replacement cost earnings
 per ADR
 Dollars 0.28 1.92 4.08 4.83
 Pence 15.6 102.0 230.4 270.0
 Historical cost earnings
 per ADR
 Dollars 0.07 1.99 1.68 6.72
 Pence 1.2 102.0 92.4 375.6
 o Replacement cost profit for the year down $323 million (169
 million pounds - 14 percent), depressed by the impact of
 recession on key markets.
 o Historical cost profit adversely affected by inventory holding
 losses of $1,097 million (620 million pounds) for the year
 compared with gains of $845 million (472 million pounds) in
 1990, reflecting the volatility of crude oil prices before and
 after the Gulf war.
 o Exploration and Production's result, excluding divestment
 profits, at a similar level to 1990.
 o Refining and Marketing's result the best since 1986 but
 signifin?tly weaker margins in the second half of the year.
 o Chemicals' 1991 loss due to cyclical recessionary trading
 conditions, particularly in the UK and Europe.
 o Fourth quarter result extremely disappointing. Hit not only
 by recession, now affecting all businesses, but also by asset
 write-downs and a very high tax charge.
 BP of London, England today reported fourth quarter 1991 replacement cost net income before extraordinary items of $127 million (72 million pounds). (Replacement cost net income excludes inventory holding gains and losses.) This compared with $861 million (456 million pounds) earned in the fourth quarter of 1990. Third quarter replacement cost net income in 1991 was $195 million (129 million pounds).
 Replacement cost net income per ADR for the fourth quarter was $0.28 (15.6 pence), compared with $1.92 (102.0 pence) for the same quarter a year ago, and $0.43 (28.8 pence) in the third quarter of 1991.
 Historical cost net income in 1991's fourth quarter was $11 million (6 million pounds), after inventory holding losses of $116 million (66 million pounds). The quarter's historical cost net income compares with $891 million (457 million pounds) for the same period in 1990, when there were minor inventory holding gains. Historical cost net income for the 1991 third quarter was $266 million (156 million pounds) which included inventory holding gains of $71 million (27 million pounds).
 Historical cost net income per ADR for the fourth quarter was $0.07 (1.2 pence), compared with $1.99 (102.0 pence) for the same quarter a year ago, and $0.59 (34.8 pence) in the third quarter of 1991.
 BP's Chairman and CEO, Robert Horton, said, "World oil prices appear likely to remain weak in the short term. This is because of concerns over continuing high OPEC production levels with the overhang of prospective production from Kuwait and Iraq, coupled with the milder than expected northern winter and anticipation of the usual seasonally weaker demand in the second quarter.
 "Trading conditions for the first half of 1992 are likely to be broadly similar to those for the previous six months. Improvements in refining and marketing margins and a rise in demand for chemicals will depend on economic revival which is difficult to predict. Faced with the unprecedented combination of low oil prices and economic downturn simultaneously affecting all the businesses, the group is taking resolute action. Every operation in the group is pursuing a demanding cost and profitability improvement program.
 "Chemicals' results are expected to remain poor through 1992. A return to profitability will depend on economic revival and improved trading conditions in our major markets. A program of cost savings, including staff reductions and divestment of non-strategic assets, will improve performance in the medium term.
 "Downstream, refining and marketing margins will continue to be sensitive to the demand for products and competitor pressures. They seem particularly likely to be depressed in the U.S., where lasting improvements will require rationalization within the refining industry. At the same time environmental legislation is calling for increased investment by that industry."
 Commenting on upstream, Horton said, "The outlook for production will benefit from the new fields in the North Sea and elsewhere which are due on stream, adding some 50,000 barrels oil equivalent per day to 1992 production. All investment projects are robust at current prices. Exploration activity will be focused on areas of recent success, such as Colombia where some $200 million is to be invested in 1992 largely on appraisal drilling, and also on other newly accessed areas which are believed to be highly prospective. The process of trading non-strategic assets will continue where greater value can be realized than through retention." FULL YEAR RESULTS
 Financial performance in 1991 was affected by crude oil price patterns that were significantly different from those experienced in 1990. Moreover, demand in recession-hit western economies had an increasingly adverse effect on downstream oil and chemicals margins.
 North Sea spot prices averaged $19.97/bbl in 1991 compared with $23.73/bbl for the previous year. Fourth quarter 1991 spot prices averaged $20.52/bbl, compared with $19.91/bbl in the previous quarter and $32.63/bbl in the fourth quarter of 1990 during the Gulf conflict. However, prices were falling steadily through most of the fourth quarter reflecting concerns about oversupply. This volatile pattern of prices gave rise to considerable fluctuation in inventory holding gains and losses.
 The group's replacement cost profit for the year, which excludes inventory holding gains or losses, amounted to $1,832 million (1,035 million pounds). Within this result, net after-tax divestment income amounted to $260 million (147 million pounds). By comparison, the replacement cost result for 1990 was $2,155 million (1,204 million pounds) and included after-tax divestment net income of $557 million (311 million pounds). Underlying replacement cost results, excluding divestment net income, were therefore similar at around $1,580 million (890 million pounds) in each year.
 By contrast, the variation in historical cost profit was substantial. Historical cost profit for 1991, after inventory holding losses of $1,097 million (620 million pounds), amounted to $735 million (415 million pounds) whereas 1990's result of $3,000 million (1,676 million pounds) was boosted by inventory holding gains of $845 million (472 million pounds).
 Replacement cost net income per ADR for 1991 was $4.08 (230.4 pence), compared with $4.83 (270.0 pence) for 1990.
 Historical cost net income per ADR for 1991 was $1.68 (92.4 pence), compared with $6.72 (375.6 pence) for 1990.
 Interest expense for the year amounted to $1,280 million (723 million pounds) compared with $1,201 million (671 million pounds) in 1990. The increased charge reflected higher levels of debt, partially offset by lower interest rates.
 Taxation charged, other than production taxes, amounted to $1,451 million (820 million pounds) compared with $1,865 million (1,042 million pounds) in 1990. This reduction was proportionately far less than the reduction in pre-tax historical cost profit, and the effective rate of taxation consequently rose to 68 percent. This was primarily because inventory holding losses are not recognized for tax in certain jurisdictions, notably in the U.S. However, there were also unusual factors, predominantly in the fourth quarter. The most significant were those asset writedowns in Canada which were not tax relievable and the low tax value of the divested TEX/CON assets. Their impact was magnified given the unusually low level of pre-tax income. Consequently, the effective rate in the fourth quarter rose to 114 percent, with the tax charge actually exceeding pre-tax historical cost income before the deduction for minority interests.
 The new cash flow statement, which will be mandatory for 1992 UK reporting, replaces the source and application of funds statement. The net cash flow from operating activities was $7,505 million (4,240 million pounds), $1,184 million (614 million pounds) down on 1990 due to more difficult trading conditions. This provided a comfortable cover for financial costs including dividends. Investing activities required $5,774 million (3,262 million pounds) compared with $3,613 million (2,018 million pounds) in the previous year, the increase reflected the Petromed acquisition and a lower level of divestments. Financing for 1991, therefore, included a net increase in borrowing of $1,705 million (963 million pounds). 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
 October-December January-December
 1991 1990 1991 1990
 dollars million
 Replacement cost basis:
 - Net income per ADR $0.28 $1.92 $4.08 $4.83
 - Net income
 before extraordinary items 127 861 1,832 2,155
 Historical cost basis:
 - Net income per ADR $0.07 $1.99 $1.68 $6.72
 - Net income
 before extraordinary items 11 891 735 3,000
 Revenues (Turnover) 15,645 19,006 57,725 59,140
 Capital expenditure
 and acquisitions 2,508 2,337 7,981 6,823
 pounds million
 Replacement cost basis:
 - Net income per ADR (in pence) 15.6 102.0 230.4 270.0
 - Net income
 before extraordinary items 72 456 1,035 1,204
 Historical cost basis:
 - Net income per ADR (in pence) 1.2 102.0 92.4 375.6
 - Net income
 before extraordinary items 6 457 415 1,676
 Revenues (Turnover) 8,839 9,840 32,613 33,039
 Capital expenditure
 and acquisitions 1,417 1,219 4,509 3,812
 RESULTS OF BUSINESSES
 EXPLORATION AND PRODUCTION'S replacement cost operating profit for the fourth quarter was $696 million (393 million pounds) after excluding net income from major divestments. This compared with $632 million (377 million pounds) in the previous quarter and $1,245 million (661 million pounds) in the equivalent quarter last year, which benefited significantly from the Gulf crisis price rise.
 Average North Sea Brent and Alaskan North Slope (ANS) crude oil prices were:
 1990 1991
 Fourth Year Third Fourth Year
 Quarter Quarter Quarter
 BRENT $/bbl 32.63 23.73 19.91 20.52 19.97
 ANS $/bbl 30.97 21.09 17.40 18.20 18.24
 Average price realizations for the fourth quarter were slightly up compared with the third quarter; higher prices in the early part of the quarter being offset by a steady fall towards the year end. The quarter also reflects the impact of a weaker dollar and higher exploration and other write-offs, including a provision against the Wolf Lake oil sands development in Canada. At the end of the quarter BP reached agreement on the settlement of its long outstanding royalty lawsuit with the State of Alaska; the settlement has had no material effect on 1991's earnings.
 Two fields came on stream in the fourth quarter: the Hides gas field in Papua New Guinea, which is producing that country's first commercial hydrocarbons, and Mississippi Canyon 109 which, in over 1,000 feet of water in the Gulf of Mexico, is BP's deepest offshore development.
 During the quarter, the sale of the onshore exploration and production interests of TEX/CON Inc. in the US Lower 48 was successfully completed for approximately $390 million (220 million pounds). This made a total of $640 million (361 million pounds) received for all the TEX/CON interests; the sale of the gas transmission and marketing assets having been completed in the third quarter.
 For the full year, Exploration and Production replacement cost operating profit, excluding net income from major divestments, was $2,926 million (1,653 million pounds). This compared with $3,023 million (1,689 million pounds)in 1990.
 Capital expenditure for the year totalled $4,052 million (2,289 million pounds). $979 million (553 million pounds) was spent on exploration and $3,073 million (1,736 million pounds) on development.
 REFINING AND MARKETING'S replacement cost operating profit for the quarter was $184 million (104 million pounds). This compared with $250 million (115 million pounds) in the fourth quarter of 1990 and $311 million (190 million pounds) in the third quarter of 1991. Refining margins continued to fall in the fourth quarter, reflecting weak underlying demand for products, particularly in the USA. Marketing achieved a result comparable with the third quarter of 1991, but was lower than the fourth quarter of 1990 which showed a recovery from the very depressed market conditions at the onset of the Gulf crisis.
 For the year, replacement cost operating profit was $1,673 million (945 million pounds), compared with $1,527 million (853 million pounds) in 1990. The results benefited from high refining margins in the first quarter, when cold weather increased pressure on product supplies and from divestment net income in the second quarter.
 During the year, major progress was achieved on regional concentration in Europe through the acquisition of the Petromed operation in Spain and the sale of BP's interest in the Gothenburg refinery. The successful program to re-image, modernize and restyle BP Oil's worldwide retail network was substantially completed in 1991, ahead of schedule.
 CHEMICALS' replacement cost operating result for the fourth quarter was a loss of $86 million (49 million pounds). The result for the previous quarter was a loss of $38 million (20 million pounds) compared with a profit of $20 million (7 million pounds) in the corresponding period last year. Included in the fourth quarter and year 1991 figures are restructuring and other provisions of $30 million (17 million pounds) and $73 million (41 million pounds) respectively.
 Sales volumes in the final two quarters of 1991 were similar, but down from the fourth quarter of last year, reflecting weaker demand. Margins continued to slide in the fourth quarter as prices weakened against a background of largely unchanged feedstock costs.
 Despite the economic difficulties faced in 1991, there was a sustained improvement in the operating performance of BP Chemicals' production plants.
 The full year replacement cost operating result was a loss of $12 million (7 million pounds) against a profit of $231 million (129 million pounds) in 1990.
 NUTRITION'S replacement cost operating profit for fourth quarter 1991 was $19 million (10 million pounds), compared with $25 million (15 million pounds) in the previous quarter and $36 million (19 million pounds) in the fourth quarter of 1990.
 Replacement cost operating profit for the full year was $66 million (37 million pounds), compared with $86 million (48 million pounds) last year.
 In early 1992, the BP board decided that BP Nutrition should be managed on an arm's-length basis, with the aim of increasing early cash generation to the group.
 OTHER BUSINESS 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 increase in costs of $119 million (68 million pounds) over 1990 reflected a loss of $35 million (20 million pounds) on minerals activities compared with a profit of $75 million (42 million pounds) in the previous year. In the fourth quarter of 1991 costs were particularly high, due to Canadian minerals provisions, the reversal of exchange translation income arising in earlier quarters and a lower 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:
 1991 1990
 Average:
 January-December pound - $1.77 pound - $1.79
 January-September pound - $1.77 pound - $1.73
 Closing:
 31 December pound - $1.87 pound - $1.93
 ANALYSIS OF REPLACEMENT COST OPERATING PROFIT
 October-December January-December
 1991 1990 1991 1990
 dollars million
 By business
 Exploration and Production 874 1,566 3,190 3,734
 Refining and Marketing 184 250 1,673 1,527
 Chemicals (86) 20 (12) 231
 Nutrition 19 36 66 86
 Other businesses and corporate (250) (68) (395) (276)
 _______________________________
 Replacement cost operating profit 741 1,804 4,522 5,302
 _______________________________
 _______________________________
 By geographical area
 UK
 Exploration and Production 414 178 1,051 675
 Refining and Marketing (20) 82 138 267
 Chemicals (85) (20) (129) 34
 Nutrition 4 6 18 9
 Other businesses and corporate (118) (24) (189) (258)
 _____________________________
 Total 195 222 889 727
 Rest of Europe _____________________________
 Exploration and Production 99 312 430 639
 Refining and Marketing 143 14 743 147
 Chemicals 11 52 122 199
 Nutrition 9 27 27 70
 Other businesses and corporate (23) 12 (58) (33)
 _____________________________
 Total 239 417 1,264 1,022
 USA _____________________________
 Exploration and Production 453 880 1,749 2,103
 Refining and Marketing 6 (17) 218 639
 Chemicals (16) (15) (21) (27)
 Nutrition (1) 3 9 5
 Other businesses and corporate (35) (51) (109) (89)
 _____________________________
 Total 407 800 1,846 2,631
 Rest of World _____________________________

 Exploration and Production (93) 196 (41) 317
 Refining and Marketing 54 171 573 474
 Chemicals 4 3 16 25
 Nutrition 7 - 12 2
 Other businesses and corporate (72) (5) (37) 104
 _____________________________
 Total (100) 365 523 922
 _______________________________
 _______________________________
 Replacement cost operating profit 741 1,804 4,522 5,302
 _______________________________
 _______________________________
 GROUP OIL AND GAS SALES VOLUMES
 October-December January-December
 1991 1990 1991 1990
 thousand barrels per day
 Refined products
 UK 530 407 468 441
 Rest of Europe 1,068 903 958 892
 USA 927 903 891 925
 Rest of World 444 388 419 385
 _______________________________
 Total Refined products 2,969 2,601 2,736 2,643
 _______________________________
 _______________________________
 Crude Oil
 UK 1,388 1,004 1,167 938
 Rest of Europe 104 41 40 50
 USA 410 453 391 452
 Rest of World 18 34 27 35
 _______________________________
 Total Crude oil 1,920 1,532 1,625 1,475
 _______________________________
 _______________________________
 million cubic feet per day
 Natural gas
 UK 874 865 686 625
 Rest of Europe 41 47 30 39
 USA 92 621 371 628
 Rest of World 300 321 314 362
 _______________________________
 Total Natural gas 1,307 1,854 1,401 1,654
 _______________________________
 _______________________________
 GROUP CRUDE OIL PRODUCTION 370
 Rest of Europe 92 78 81 63
 USA 725 764 738 737
 Rest of World 179 170 178 152
 _______________________________
 Total Production
 (Net of Royalties) 1,360 1,395 1,356 1,322
 _______________________________
 _______________________________
 -0- 2/13/92
 /CONTACT: Ian W. Fowler of BP, 216-586-4976/ CO: BP ST: Ohio IN: OIL SU: ERN


KK -- CL001 -- 9546 02/13/92 08:12 EST
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