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beyond petroleum®
Annual Report
and Accounts
2008
bp.com/annualreport
2 Chairman’s
letter
4 Group
chief
executive’s
review
6
Our
performance
9 Performance
review
10 Selected
nancial
and
operating
information
12 Risk
factors
14
Forward-looking
statements
14 Statements
regarding
competitive
position
15 Information
on
the
company
17
Exploration
and
Production
31 Rening
and
Marketing
37 Other
businesses
and
corporate
40 Research
and
technology
41 Regulation
of
the
group’s
business
41
Safety
43
Environment
48 Employees
49 Social
and
community
issues
49 Essential
contracts
49 Property,
plants
and
equipment
49 Organizational
structure
50 Financial
and
operating
performance
58 Liquidity
and
capital
resources
61 Critical
accounting
policies
65
Board
performance
and
biographies
66 Directors
and
senior
management
69 BP
board
performance
report
77 Directors’
remuneration
report
78 Part
1
Summary
80 Part
2
Executive
directors’
remuneration
86 Part
3
Non-executive
directors’
remuneration
What’s
inside?
89 A
dditional
information
for
shareholders
90 Share
ownership
91
Major
shareholders
and
related
party
transactions
92
Dividends
92 Legal
proceedings
93 The
offer
and
listing
95 Memorandum
and
Articles
of
Association
96 Exchange
controls
96
Taxation
98 Documents
on
display
99 Purchases
of
equity
securities
by
the
issuer
and
afliated
purchasers
100 Called-up
share
capital
100 Annual
general
meeting
100
Administration
101
Financial
statements
102 Consolidated
nancial
statements
of
the
BP
group
108 Notes
on
nancial
statements
180 Additional
information
for
US
reporting
182 Supplementary
information
on
oil
and
natural
gas
191 Parent
company
nancial
statements
of
BP
p.l.c.

Table of contents

  • Page 1
    ... the group's business Safety Environment Employees Social and community issues Essential contracts Property, plants and equipment Organizational structure Financial and operating performance Liquidity and capital resources Critical accounting policies Share ownership Major shareholders and related...

  • Page 2
    ...company and those of its subsidiaries. The term 'shareholder' in this Annual Report and Accounts means, unless the context otherwise requires, investors in the equity capital of BP p.l.c., both direct and/or indirect. As BP shares, in the form of ADSs, are listed on the New York Stock Exchange (NYSE...

  • Page 3
    ... level for more than four years. That has obviously affected our financial performance. The board understands the importance of the dividend to investors in these difficult times and, despite the weaker environment, we have held the quarterly dividend to be paid in March at 14 cents per share...

  • Page 4
    ... as chief executive of TNK-BP. During his five-year tenure he transformed TNK-BP and it now leads the Russian oil industry on the basis of production growth, reserves replacement and total shareholder return. I am delighted that Bob will join the BP board in April. As a managing director, he will...

  • Page 5
    ... Report and Accounts 2008 Group chief executive's review Driving forward Tony Hayward Group Chief Executive 24 February 2009 Highlights • Progress with safe and reliable operations. • Major projects delivered and revenues restored. • Complexity and costs being reduced. Our work on safety...

  • Page 6
    ...directed the majority of our $1.4 billion investment in the year to these areas. Is BP entering its centenary year in good shape? On the basis of our 2008 performance, I believe we can declare that 'BP is back'. Clearly, however, we must continue to adjust to market conditions. Oil and gas prices go...

  • Page 7
    BP Annual Report and Accounts 2008 Our performance Progress in 2008 Safety Personal safety - recordable injury frequency Process safety - oil spills Environment - greenhouse gas emissions (million tonnes of carbon dioxide equivalent) 335 340 417 08 07 06 61.4 63.5 64.4 08 07 06 Employees ...

  • Page 8
    ... The total dividend per share paid to ordinary shareholders in the year. Total shareholder return represents the change in value of a shareholding over a calendar year, assuming that dividends are re-invested to purchase additional shares at the closing price applicable on the ex-dividend date. 7

  • Page 9
    8

  • Page 10
    ...15 Information on the company 17 Exploration and Production 31 Refining and Marketing 37 Other businesses and corporate 40 Research and technology 41 Regulation of the group's business 41 Safety 43 Environment 48 Employees 49 Social and community issues Performance review 49 Essential contracts 49...

  • Page 11
    ...the economic effect of gross debt, related hedges and cash and cash equivalents in total. The net debt ratio enables investors to see how significant net debt is relative to equity from shareholders. Net debt has been redefined to include the fair value of associated derivative financial instruments...

  • Page 12
    ... located in the US (44%), Rest of Americas (17%), Asia Pacific (10%), Africa (11%) and the UK (8%). For equity-accounted entities, 646mmboe were added to proved reserves (excluding purchases and sales), production was 491mmboe and proved reserves were 5,585mmboe at 31 December 2008. *Natural gas...

  • Page 13
    ...-term investment programme with a consequent effect on our growth rate, and may impact shareholder returns, including dividends and share buybacks, or share price. Decreases in the funded levels of our pension plans may also increase our pension funding requirements. Our system of risk management...

  • Page 14
    ... of contract rights. We buy, sell and trade oil and gas products in certain regulated commodity markets. The oil industry is also subject to the payment of royalties and taxation, which tend to be high compared with those payable in respect of other commercial activities, and operates in certain tax...

  • Page 15
    ...statements; the timing of bringing new fields onstream; future levels of industry product supply, demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate...

  • Page 16
    ..., supply and trading, marketing and transportation of crude oil, petroleum and petrochemicals products and related services. The group provides high-quality technological support for all its businesses through its research and engineering activities. All these activities are supported by a number of...

  • Page 17
    ... oil and gas and reports under Other businesses and corporate. As a result, and with effect from 1 January 2008: • The former Gas, Power and Renewables segment ceased to report separately. • The NGLs, LNG and gas and power marketing and trading businesses were transferred from the Gas, Power and...

  • Page 18
    BP Annual Report and Accounts 2008 Performance review Exploration and Production Our Exploration and Production segment includes upstream and midstream activities in 29 countries, including Angola, Azerbaijan, Canada, Egypt, Russia, Trinidad & Tobago (Trinidad), the UK, the US and locations within ...

  • Page 19
    ... as well as changes in oil and gas prices, changes in operating and development costs and the continued availability of additional development capital. Total revenues are analysed in more detail below. $ million 2008 2007 2006 Sales and other operating revenues Earnings from equity-accounted...

  • Page 20
    ... calculated on the basis of operating activities that would be undertaken were year-end prices and costs to persist. 19 Performance review All the group's oil and gas reserves held in consolidated companies have been estimated by the group's petroleum engineers. Of the equityaccounted volumes in...

  • Page 21
    ..., including sales and purchases of reserves-in-place Proved developed reserves replacement ratio, for equity-accounted entities, including sales and purchases of reserves-in-place a 88 99 70 UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Group Equity-accounted entities...

  • Page 22
    BP Annual Report and Accounts 2008 Performance review The following tables show BP's production by major field for 2008, 2007 and 2006. Liquids % Field or Area Interest 2008 thousand barrels per day BP net share of productiona 2007 2006 Alaska Prudhoe Bayb Kuparuk Northstarb Milne Pointb Other ...

  • Page 23
    ... Total Gulf of Mexico Alaska Total US UK offshoreb Total UK Netherlandsb Norway Total Rest of Europe Australia Canadab China Egypt Indonesia Sharjah Azerbaijan Trinidad & Tobago Otherb Total Rest of World Total groupd Equity-accounted entities (BP share) Argentina - Pan American Energy Russia...

  • Page 24
    ... Horse (BP 75% and operator). Thunder Horse is the world's largest semi-submersible production facility, and is located 150 miles south-east of New Orleans. It is designed to process 250,000 barrels of oil per day and 200 million cubic feet per day of natural gas. In 2008 four wells started up with...

  • Page 25
    BP Annual Report and Accounts 2008 Performance review • • the project at the BP-operated Endicott oilfield. BP drilled the Liberty discovery well in 1997, and is the operator and sole owner of the field. In August 2008, BP successfully tested Cold Heavy Oil Production with Sand (CHOPS) ...

  • Page 26
    ... all private owners of shares in Bolivian oil and gas companies to transfer back a majority shareholding to the Bolivian national oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), the Bolivian government issued a second decree requiring this transfer to be made with immediate effect...

  • Page 27
    ... Gulf of Suez Petroleum Company (GUPCO), a joint venture operating company between BP and the Eygptian General Petroleum Corporation (EGPC), is located 13 kilometres offshore in the central Gulf of Suez. Natural gas production commenced on 26 July 2008. The Saqqara development includes a jacket and...

  • Page 28
    ... 2008, TNK-BP purchased additional retail and other downstream assets in Russia and the Ukraine from a number of small companies. TNK-BP supplies approximately 1,400 branded filling stations in Russia and the Ukraine and, with the additional sites, is expected to have more than 20% market share...

  • Page 29
    ... under the New Exploration Licensing Policy Seventh round. BP is the designated operator with a 30% working interest in the block. Reliance Industries Limited holds the remaining 70% working interest. • Midstream activities Oil and natural gas transportation The group has direct or indirect...

  • Page 30
    ...associated gas per day from offshore producing blocks and to produce 5.2 million tonnes gross per year of LNG, as well as related gas liquids products. With the completion of the necessary agreements and the approval of the Angolan government, the project investors have authorized Angola LNG Limited...

  • Page 31
    ... losses on OTC contracts are included in total revenues for accounting purposes. Highly developed markets exist in North America and the UK where gas and power can be bought and sold for delivery in future periods. These contracts are negotiated between two parties to purchase and sell gas and power...

  • Page 32
    BP Annual Report and Accounts 2008 Performance review Refining and Marketing Our Refining and Marketing business is responsible for the supply and trading, refining, manufacturing, marketing and transportation of crude oil, petroleum, chemicals products and related services to wholesale and retail ...

  • Page 33
    ... number of service stations and small resellers). d Trading/supply sales are sales to large unbranded resellers and other oil companies. b The following table sets out marketing sales by major product group. thousand barrels per day Marketing sales by refined product 2008 2007 2006 Total revenuesa...

  • Page 34
    ... per day Crude distillation capacitiesa Refinery Fuels value chain Group interest b % Total BP share Rest of Europe Germany New Zealand Kenya South Africa Total Rest of World Total *Indicates refineries operated by BP . aCrude distillation capacity is gross rated capacity, which is defined as...

  • Page 35
    ... the end of 2009. At the end of 2008, sales of 293 of sites had been successfully completed. The sites will continue to market BPbranded fuels in the eastern US and ARCO-branded fuels in the western US. The franchise agreement has a term of 20 years and requires sites to be supplied with BP- or ARCO...

  • Page 36
    ... for delivering value across the overall crude and oil products supply chain. This structure enables BP to maintain a single face to the oil trading markets and to operate with a single set of trading compliance processes, systems and controls. Operating through trading offices located in Europe...

  • Page 37
    ... during 2011, is under review due to the market conditions. When complete, total production at the YARACO site is expected to be well over one million tonnes per annum, making this one of the largest acetic acid production locations in the world. Aviation and marine fuels Air BP is one of the world...

  • Page 38
    ...). We have also developed a fifth area - gas-fired power - that offers synergies with other BP operations. We have concentrated our 2008 investment in these areas. 2008 2007 2006 Total revenuesa Profit (loss) before interest and tax from continuing operationsb Total assets Capital expenditure and...

  • Page 39
    ...this year increased the total power they are capable of producing from 5GW to 6GW and, where possible, we integrate plants with other BP production facilities. The Whiting Clean Energy facility, acquired in July 2008, now provides a reliable source of steam for our Whiting refinery and we are adding...

  • Page 40
    BP Annual Report and Accounts 2008 Performance review Shipping We transport our products across oceans, around coastlines and along waterways, using a combination of BP-operated, time-chartered and spot-chartered vessels. All vessels conducting BP activities are subject to our health, safety, ...

  • Page 41
    ...cut-cell high voltage module, giving a 5% increase in power over conventional modules. Working as part of the UK's Energy Technologies Institute - a public/private partnership to accelerate low-carbon technology development - BP is proceeding with investments in projects to develop new offshore wind...

  • Page 42
    ..., the UK, Russia, South America and Trinidad & Tobago. For a discussion of environmental and certain health and safety regulations and environmental proceedings, see Environment on page 43. See also Legal proceedings on page 92. Safety This section reviews BP's safety performance in 2008. There...

  • Page 43
    ... high-risk zones within onshore process plant areas and to remove all blow-down stacks in heavier-than-air, light hydrocarbon service. All major sites and our fuels value chains have completed major accident risk assessments, which identify major accident risks and develop mitigation plans to manage...

  • Page 44
    ...-developed systems, processes and metrics for reporting personal safety and environmental metrics that support internal performance management as well as public reporting. We introduced several new metrics in 2008 that aim to enhance our monitoring of process safety performance within BP's operating...

  • Page 45
    BP Annual Report and Accounts 2008 Performance review by certification to the ISO 14001 international environmental management system standard. The Texas City refinery, after completing planned work to strengthen its environmental management systems, is planning to seek recertification in 2009. Our...

  • Page 46
    ... research into the conversion of heavy hydrocarbons to clean fuels, improved recovery from existing oil and gas reservoirs and carbon sequestration. In the UK, the ETI has been established as a 50:50 public private partnership, funded equally by member companies, including BP , and the government...

  • Page 47
    BP Annual Report and Accounts 2008 Performance review US The following is a summary of significant US environmental issues and environment and health and safety legislation or regulations affecting BP . The CAA and its regulations, administered by the United States Environmental Protection Agency (...

  • Page 48
    BP Annual Report and Accounts 2008 Performance review BP's MTSA-regulated facilities will be impacted and will be required to comply by the end of 2008 or beginning of 2009 in a phased approach. The BP Americas Response Team consists of approximately 210 trained emergency responders at BP locations...

  • Page 49
    BP Annual Report and Accounts 2008 Performance review Employees Number of employees at 31 December UK Rest of Europe US Rest of World Total 2008 Exploration and Production Refining and Marketing Other businesses and corporate 2007 Exploration and Production Refining and Marketing Other businesses ...

  • Page 50
    BP Annual Report and Accounts 2008 Performance review Communications with employees include magazines, intranet sites, DVDs, targeted emails and face-to-face communication. Team meetings are the core of our employee consultation, complemented by formal processes through works councils in parts of ...

  • Page 51
    ... with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' in 2004, 2005 and 2006. Business environment Crude oil prices reached new record highs in 2008, in nominal terms. The average dated Brent price for the year rose to $97.26 per barrel, an increase of 34% over the $72...

  • Page 52
    ... as capital construction projects concluded. Net finance income relating to pensions and other post-retirement benefits in 2008 was $591 million compared with $652 million in 2007 and $470 million in 2006. The expected return on assets has increased year on year as the pension asset base applicable...

  • Page 53
    ...14 $ per million British thermal units Average Henry Hub gas pricee 9.04 6.86 7.24 pence per therm Average UK National Balancing Point gas price 58.12 29.95 42.19 thousand barrels per day Total liquids production for subsidiariesd f Total liquids production for equity-accounted entitiesd...

  • Page 54
    ... Shenzi discovery in the Gulf of Mexico in the US and interests in the North Sea partly offset by a loss on the sale of properties in the Gulf of Mexico Shelf) and net fair value gains on embedded derivatives, partly offset by a charge for legal provisions. In addition, fair value accounting effects...

  • Page 55
    ... planned mechanical, process and regulatory maintenance downtime. Total revenues are explained in more detail below. $ million 2008 2007 2006 Sale of crude oil through spot and term contracts Marketing, spot and term sales of refined products Other sales and operating revenues Earnings from equity...

  • Page 56
    ...information on fair value accounting effects BP uses derivative instruments to manage the economic exposure relating to inventories above normal operating requirements of crude oil, natural gas and petroleum products as well as certain contracts to supply physical volumes at future dates. Under IFRS...

  • Page 57
    BP Annual Report and Accounts 2008 Performance review Non-operating items $ million 2008 2007 2006 Exploration and Production Impairment and gain (loss) on sale of businesses and fixed assets Environmental and other provisions Restructuring, integration and rationalization costs Fair value gain (...

  • Page 58
    ...code of conduct. We engage with suppliers in a variety of ways, including performance review meetings to identify mutually advantageous ways to improve performance. Creditor payment policy and practice Statutory regulations issued under the UK Companies Act 1985 require companies to make a statement...

  • Page 59
    ...year. Dividends to BP shareholders, which grew on average by 16.8% per year in dollar terms, used $26 billion. Net repurchase of shares was $25 billion, which includes $26 billion in respect of our share buyback programme less net proceeds from shares issued in connection with employee share schemes...

  • Page 60
    ...we realize the benefits of our operational momentum and our action on costs. Dividends and other distributions to shareholders The total dividend paid to BP shareholders in 2008 was $10,342 million, compared with $8,106 million for 2007. The dividend paid per share was 55.05 cents, an increase of 30...

  • Page 61
    ...cost may be capitalized as part of the capital cost of the project. c Represents the expected future contributions to funded pension plans and payments by the group for unfunded pension plans and the expected future payments for other post- retirement benefits. d Represents any agreement to purchase...

  • Page 62
    ...in the application of many of the accounting policies used in preparing the financial statements is the need for BP management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and...

  • Page 63
    ...50/mmBtu). These long-term planning assumptions are subject to periodic review and modification. The estimated future level of production is based on assumptions about future commodity prices, lifting and development costs, field decline rates, market demand and supply, economic regulatory climates...

  • Page 64
    ... year. The pension and other post-retirement benefit assumptions at 31 December 2008, 2007 and 2006 are provided in Financial statements - Note 38 on page 159. The assumed rate of investment return, discount rate and the US healthcare cost trend rate have a significant effect on the amounts reported...

  • Page 65
    64

  • Page 66
    Board performance and biographies 66 Directors and senior management 69 BP board performance report Board performance and biographies

  • Page 67
    ...) Group General Counsel Executive Vice President, Human Resources Executive Vice President, Alternative Energy Executive Vice President (Chairman and President of BP America Inc.) Executive Vice President (Chief Operating Officer, Refining and US Fuels Value Chains) Executive Vice President (Group...

  • Page 68
    ... Member of the chairman's and safety, ethics and environment assurance committees Cynthia Carroll (52) joined BP's board in June 2007. She started her career at Amoco and in 1989 she joined Alcan, where in 2002 she was appointed president and chief executive officer of Alcan's primary metals group...

  • Page 69
    ...appointed chairman and president of BP America, Inc. from 1 February 2009. He joined Amoco Production Company as a petroleum engineer in 1980 and later served in a variety of operating, commercial and M&A roles. In 1993, he became general manager of Arkoma Basin and in 1997, the business unit leader...

  • Page 70
    ... of business takes specific issues into consideration, including health, safety and the environment, any reputational impact on BP , risk and the framework for internal control. Operating the principles The group chief executive through the annual plan describes to the board how the strategy is...

  • Page 71
    ... deep operational, engineering, safety and financial expertise, experience of leading industrial, capital intensive or 'long lead time' businesses and insight into key emerging markets and technology development. The board: terms of appointment The chairman and non-executive directors of BP serve...

  • Page 72
    ... senior management, company secretary's office, investor relations and other teams within BP also engage with a range of shareholders on wider issues relating to the group, including in particular its safety, operational and financial performance. Presentations given by the group to the investment...

  • Page 73
    ... reviewed all financial reports, including the Annual Report and Accounts and Annual Report on Form 20-F , before recommending their publication to the board. Monitoring risk in the business In 2008, the audit committee reviewed reports on risks, controls and assurance for the BP business segments...

  • Page 74
    ... where safety, operational and environmental management on an offshore production facility were reviewed. Committee activities in 2008 The chart at the end of this section shows how SEEAC allocated its agenda time in 2008. 26% 36% Financial reporting Monitoring business risk Internal controls and...

  • Page 75
    ... of safety in the US refineries. The committee also reviewed its forward agenda for 2009. SEEAC plans to meet seven times during 2009. Remuneration committee report Membership The committee consists solely of non-executive directors who are considered by the board to be independent. Members of...

  • Page 76
    ... the group chief executive to operate with a comprehensive system of controls and internal audit to identify and manage the risks that are material to BP . The governance principles were reviewed and confirmed by the board this year and are consistent with the requirements of the Combined Code...

  • Page 77
    BP Annual Report and Accounts 2008 BP board performance report A joint meeting of the audit and safety, ethics and environment assurance committees in January 2009 reviewed reports from the general auditor as part of the board's annual review of the system of internal control. The reports described...

  • Page 78
    Directors' remuneration report 78 Part 1 Summary 80 Part 2 Executive directors' remuneration 86 Part 3 Non-executive directors' remuneration Directors' remuneration report

  • Page 79
    ... under the executive directors' incentive plan (EDIP). This review included financial measures such as earnings per share, returns on average capital employed, free cash flow, operating measures for both Exploration and Production and Refining and Marketing, and non-financial measures for safety and...

  • Page 80
    ...report Summary of remuneration of executive directors in 2008a Annual remuneration Long-term remuneration Share element of EDIPb 2005-2007 plan (vested in Feb 2008) Salary (thousand) 2008 Annual performance bonus (thousand) 2007 2008 Non-cash benefits and other emoluments (thousand) 2007 2008 Total...

  • Page 81
    ... comparator companies over the full three-year period. This review included financial measures (earning per share growth, ROACE, free cash flow, net income), operating measures (production, reserves replacement and Refining and Marketing profitability), and nonfinancial measures (health, safety and...

  • Page 82
    ...Marketing, they include refining availability, earnings and cash costs, as well as safety and work simplification. The remuneration committee will also review carefully the underlying performance of the group in light of company business plans and will look at competitors' results, analysts' reports...

  • Page 83
    ...paid from corporate assets. Dr Grote is eligible to participate under the supplemental plan. His pension accrual for 2008, shown in the table below, includes the total amount that could become payable under all plans. Other benefits Executive directors are eligible to participate in regular employee...

  • Page 84
    BP Annual Report and Accounts 2008 Directors' remuneration report Share element of EDIPa Share element interests Market price of each share at date of award of performance shares £ Potential maximum performance sharesb Number of ordinary shares vestedc Market price of each share at vesting £ ...

  • Page 85
    ... conditions. SAYE = Save As You Earn employee share scheme. This information has been subject to audit. Closing market price for information. Shares were retained when exercised. Numbers shown are ADSs under option. One ADS is equivalent to six ordinary shares. d Options exercised on 21 January 2009...

  • Page 86
    BP Annual Report and Accounts 2008 Directors' remuneration report Service contracts Director Contract date Salary as at 31 Dec 2008 During the year, the fees received by executive directors for external appointments were as follows: Executive director Appointee company Additional postion held at ...

  • Page 87
    ... to annual review. In 2008, the committee continued to engage Towers Perrin as its principal external adviser. Towers Perrin also provided limited ad hoc remuneration and benefits advice to parts of the group, principally changes in employee share plans and some market information on pay structures...

  • Page 88
    ... date (when the BP ADS market price was $74.57) without payment by him. a Past directors Mr Miles (who was a non-executive director of BP until April 2006) was appointed as a director and non-executive chairman of BP Pension Trustees Limited in October 2006 for a term of three years. During 2008...

  • Page 89
    88

  • Page 90
    ... 92 Dividends 92 Legal proceedings 93 The offer and listing 95 Memorandum and Articles of Association 96 Exchange controls 96 Taxation 98 Documents on display 99 Purchases of equity securities by the issuer and affiliated purchasers 100 Called-up share capital 100 Annual general meeting 100...

  • Page 91
    ... a shareholding in the company through savings-related and/or matching share plan arrangements. BP also uses long-term performance plans (see Financial statements - Note 41 on page 168) and the granting of share options as elements of remuneration for executive directors and senior employees. Shares...

  • Page 92
    ...) Expiry dates of options Exercise price per share Major shareholders and related party transactions Register of members holding BP ordinary shares as at 31 December 2008 Number of ordinary shareholders Percentage of total ordinary shareholders Percentage of total ordinary share capital Range of...

  • Page 93
    ...sterling dividend. Dividends on BP ordinary shares will be paid in pounds sterling and on BP ADSs in US dollars. The rate of exchange used to determine the sterling amount equivalent is the average of the forward exchange rate in London over the five business days prior to the announcement date. The...

  • Page 94
    ... middle market quotations for BP's ordinary shares for the periods shown. These are derived from the Daily Official List of the LSE and the highest and lowest sales prices of ADSs as reported on the New York Stock Exchange (NYSE) composite tape. 93 Additional information for shareholders paint...

  • Page 95
    ... related due to arbitrage among the various markets, although differences may exist from time to time due to various factors, including UK stamp duty reserve tax. On 18 February 2009, 864,042,084 ADSs (equivalent to 5,184,252,501 ordinary shares or some 27.51% of the total issued share capital...

  • Page 96
    ... shareholder approval. No dividend may be paid other than out of profits available for distribution, as determined under IFRS and the UK Companies Act. Dividends on ordinary shares are payable only after payment of dividends on BP preference shares. Any dividend unclaimed after a period of 12 years...

  • Page 97
    ... apply to all of the shareholders. Disclosure of interests in shares The UK Companies Act permits a public company, on written notice, to require any person whom the company believes to be or, at any time during the previous three years prior to the issue of the notice, to have been interested in...

  • Page 98
    ... in the ordinary shares or ADSs of more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. Dividends paid by the company with respect to the shares or ADSs will generally be qualified dividend income. As noted above in UK...

  • Page 99
    ... of the cash dividend authorize the Depositary to sell sufficient shares to cover this liability. Documents on display BP's Annual Report and Accounts is also available online at www.bp.com/annualreport. Shareholders may obtain a hard copy of BP's complete audited financial statements, free of...

  • Page 100
    BP Annual Report and Accounts 2008 Additional information for shareholders Purchases of equity securities by the issuer and affiliated purchasers The following table provides details of ordinary shares repurchased. $ Average price paid per share Total number of shares purchased as part of publicly ...

  • Page 101
    ..., dividend payments, the dividend reinvestment plan or the ADS direct access plan, or to change the way you receive your company documents (such as the Annual Report and Accounts, Annual Review and Notice of Meeting) please contact the BP Registrar or ADS Depositary. UK - Registrar's Office The BP...

  • Page 102
    ...report to the members of BP p.l.c. Company balance sheet Company cash flow statement Statement of total recognized gains and losses Notes on financial statements 1. Accounting policies 2. Taxation 3. Fixed assets - investments 4. Debtors 5. Creditors 6. Pensions 7. Called-up share capital 8. Capital...

  • Page 103
    ... applicable United Kingdom law, International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as adopted by the European Union. The directors are required to prepare financial statements for each financial year that present fairly the financial...

  • Page 104
    ..., the group cash flow statement, the group statement of recognized income and expense and the related notes 1 to 47. These consolidated financial statements have been prepared under the accounting policies set out therein. We have reported separately on the parent company financial statements of BP...

  • Page 105
    ...Finance costs Net finance income relating to pensions and other post-retirement benefits Profit before taxation from continuing operations Taxation Profit from continuing operations Loss from Innovene operations Profit for the year Attributable to BP shareholders Minority interest Earnings per share...

  • Page 106
    ...Finance debt Deferred tax liabilities Provisions Defined benefit pension plan and other post-retirement benefit plan deficits Total liabilities Net assets Equity Share capital Reserves BP shareholders' equity Minority interest Total equity P D Sutherland Chairman Dr A B Hayward Group Chief Executive...

  • Page 107
    ... businesses and fixed assets Earnings from jointly controlled entities and associates Dividends received from jointly controlled entities and associates Interest receivable Interest received Finance costs Interest paid Net finance income relating to pensions and other post-retirement benefits Share...

  • Page 108
    ... relating to pensions and other post-retirement benefits Tax on available-for-sale investments Tax on cash flow hedges Tax on share-based payments Net (expense) income recognized directly in equity Profit for the year Total recognized income and expense for the year Attributable to BP shareholders...

  • Page 109
    ... acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intercompany...

  • Page 110
    ... Business combinations are accounted for using the purchase method of accounting. The cost of an acquisition is measured as the cash paid and the fair value of other assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable...

  • Page 111
    ... producing wells is amortized over proved developed reserves. Licence acquisition, field development and future decommissioning costs are amortized over total proved reserves. The unit-of-production rate for the amortization of field development costs takes into account expenditures incurred to date...

  • Page 112
    ...by reference to prices existing at the balance sheet date. Inventories held for trading purposes are stated at fair value less costs to sell and any changes in net realizable value are recognized in the income statement. Supplies are valued at cost to the group mainly using the average method or net...

  • Page 113
    BP Annual Report and Accounts 2008 Notes on financial statements 1. Significant accounting policies continued Financial liabilities Financial liabilities are classified as financial liabilities at fair value through profit or loss; derivatives designated as hedging instruments in an effective hedge...

  • Page 114
    ... the projected unit credit method and amortized on a straight-line basis over the service period until the award vests. The accounting policy for pensions and other post-retirement benefits is described below. Share-based payments Equity-settled transactions The cost of equity-settled transactions...

  • Page 115
    ... comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information and...

  • Page 116
    ... gas or power have been determined to be for trading purposes, the associated sales and purchases are reported net within sales and other operating revenues whether or not physical delivery has occurred. Generally, revenues from the production of oil and natural gas properties in which the group...

  • Page 117
    ...Marketing Gas, Power and Renewables Other businesses and corporate Consolidation adjustment and eliminations By business - as reported Total group Revenues Total revenues Less: sales between businesses Total third party revenues Segment results Profit (loss) before interest and tax Segment assets...

  • Page 118
    BP Annual Report and Accounts 2008 Notes on financial statements 3. Acquisitions Acquisitions in 2008 BP made a number of acquisitions in 2008 for a total consideration of $403 million. These business combinations were in the Exploration and Production segment and Other businesses and corporate and...

  • Page 119
    ...any particular year, the group may sell interests in exploration and production properties, service stations and pipeline interests as well as non-core businesses. The group may also dispose of other assets, such as refineries, when this meets strategic objectives. Cash received during the year from...

  • Page 120
    BP Annual Report and Accounts 2008 Notes on financial statements 5. Disposals continued Other businesses and corporate In 2008, the group disposed of miscellaneous non-core assets. There were no significant disposals in 2007. During 2006, the group disposed of miscellaneous non-core businesses and ...

  • Page 121
    ... sales Equity-accounted earnings Interest and other revenues Total revenues Segment results Profit (loss) before interest and taxation Finance costs and net finance income relating to pensions and other post-retirement benefits Profit (loss) before taxation Taxation Profit (loss) for the year Assets...

  • Page 122
    ... sales Equity-accounted earnings Interest and other revenues Total revenues Segment results Profit (loss) before interest and taxation Finance costs and net finance income relating to pensions and other post-retirement benefits Profit (loss) before taxation Taxation Profit (loss) for the year Assets...

  • Page 123
    ...Equity-accounted earnings Interest and other revenues Total revenues Segment results Profit (loss) before interest and taxation Finance costs and net finance income relating to pensions and other post-retirement benefits Profit (loss) before taxation Taxation Profit (loss) for the year Other segment...

  • Page 124
    ...areas Third party sales Equity-accounted earnings Interest and other revenues Total revenues Segment results Profit before interest and taxation Finance costs and net finance income relating to pensions and other post-retirement benefits Profit before taxation Taxation Profit for the year Assets and...

  • Page 125
    ...areas Third party sales Equity-accounted earnings Interest and other revenues Total revenues Segment results Profit before interest and taxation Finance costs and net finance income relating to pensions and other post-retirement benefits Profit before taxation Taxation Profit for the year Assets and...

  • Page 126
    BP Annual Report and Accounts 2008 Notes on financial statements 6. Segmental analysis continued $ million 2006 By geographical area UK Rest of Europe US Rest of World Total Sales and other operating revenues Segment sales and other operating revenues Less: sales between areas Third party ...

  • Page 127
    BP Annual Report and Accounts 2008 Notes on financial statements 7. Interest and other revenues $ million 2008 2007 2006 Related to financial instruments Interest income from available-for-sale financial assets Dividend income from available-for-sale financial assets Interest income from loans and...

  • Page 128
    BP Annual Report and Accounts 2008 Notes on financial statements 9. Production and similar taxes $ million 2008 2007 2006 UK Overseas 370 6,156 6,526 197 3,816 4,013 260 3,361 3,621 10. Depreciation, depletion and amortization $ million By business 2008 2007 2006 Exploration and Productiona ...

  • Page 129
    BP Annual Report and Accounts 2008 Notes on financial statements 11. Impairment and losses on sale of businesses and fixed assets $ million 2008 2007 2006 Impairment losses Exploration and Production Refining and Marketing Other businesses and corporate Impairment reversals Exploration and ...

  • Page 130
    BP Annual Report and Accounts 2008 Notes on financial statements 11. Impairment and losses on sale of businesses and fixed assets continued Refining and Marketing During 2008, the Refining and Marketing segment recognized impairment losses on a number of assets which in total amounted to $159 ...

  • Page 131
    BP Annual Report and Accounts 2008 Notes on financial statements 12. Impairment review of goodwill continued group's assumption for Henry Hub natural gas prices is an average of $6.16/mmBtu in 2009, $7.15/mmBtu in 2010, $7.34/mmBtu in 2011, $7.62/mmBtu in 2012, $7.60/mmBtu in 2013 and $7.50/mmBtu ...

  • Page 132
    BP Annual Report and Accounts 2008 Notes on financial statements 12. Impairment review of goodwill continued Refining and Marketing In previous years, Refining and Marketing goodwill has been allocated to the following cash-generating units: Refining, Retail, Lubricants, and Other. In 2008, the ...

  • Page 133
    BP Annual Report and Accounts 2008 Notes on financial statements 13. Distribution and administration expenses $ million 2008 2007 2006 Distribution Administration 14,075 1,337 15,412 14,028 1,343 15,371 13,174 1,273 14,447 14. Currency exchange gains and losses $ million 2008 2007 2006 ...

  • Page 134
    .... Retail service station sites and office accommodation are the main items in the land and buildings category. The terms and conditions of these operating leases do not impose any significant financial restrictions on the group. Some of the leases of ships and buildings allow for renewals at BP...

  • Page 135
    BP Annual Report and Accounts 2008 Notes on financial statements 18. Auditor's remuneration $ million Fees - Ernst & Young 2008 2007 2006 Fees payable to the company's auditors for the audit of the company's accountsa Fees payable to the company's auditors and its associates for other services ...

  • Page 136
    ...771 (1,240) 531 12,331 $ million 2008 2007 2006 Current tax Deferred tax This comprises: Currency translation differences Actuarial gain (loss) relating to pensions and other post-retirement benefits Share-based payments Cash flow hedges Available-for-sale investments (264) (2,492) (2,756) (100...

  • Page 137
    ... Other taxable temporary differences Deferred tax asset Petroleum revenue tax Pension plan and other post-retirement benefit plan deficits Decommissioning, environmental and other provisions Derivative financial instruments Tax credit and loss carry forward Other deductible temporary differences...

  • Page 138
    ... 2008 and 18 February 2009, the latest practicable date before the completion of these financial statements, there has been an increase of 4,867,626 in the number of ordinary shares outstanding as a result of share issues related to employee share plans. The number of potential ordinary shares...

  • Page 139
    BP Annual Report and Accounts 2008 Notes on financial statements 23. Property, plant and equipment $ million Land and land improvements Plant, machinery and equipment Fixtures, fittings and office equipment Oil depots, storage tanks and service stations Oil and gas properties Buildings ...

  • Page 140
    BP Annual Report and Accounts 2008 Notes on financial statements 24. Goodwill $ million 2008 2007 Cost and net book amount At 1 January Exchange adjustments Acquisitions Additions Reclassified as assets held for sale Deletions At 31 December 11,006 (1,112) 1 39 - (56) 9,878 10,780 126 270 - (90)...

  • Page 141
    ...830 $ million Purchases from jointly controlled entities 2008 Amount payable at 31 December a 2007 Amount payable at 31 December 2006 Amount payable at 31 December Product Purchases Purchases Purchases Crude oil and oil products, natural gas, refinery operating costs, plant processing fees...

  • Page 142
    ... financial information for the group's share of associates is set out below. $ million 2008 2007 2006 Sales and other operating revenues Profit before interest and taxation Finance costs Profit before taxation Taxation Profit for the year Non-current assets Current assets Total assets Current...

  • Page 143
    ... fair value. Financial risk factors The group is exposed to a number of different financial risks arising from natural business exposures as well as its use of financial instruments including market risks relating to commodity prices, foreign currency exchange rates, interest rates and equity prices...

  • Page 144
    ... were left unchanged. $ million Value at risk for 1 day at 95% confidence interval High Low Average 2008 Year end High Low Average 2007 Year end Group trading Oil price trading Natural gas price trading Power price trading Currency trading Interest rate trading Other trading 76 69 50 14 4 7 5 20...

  • Page 145
    ...accounted for on specific transactions. For this reason, the total effect of exchange rate fluctuations is not identifiable separately in the group's reported results. The main underlying economic currency of the group's cash flows is the US dollar. This is because BP's major product, oil, is priced...

  • Page 146
    ... table above. BP is also exposed to interest rate risk from the possibility that changes in interest rates will affect future cash flows or the fair values of its financial instruments, principally finance debt. While the group issues debt in a variety of currencies based on market opportunities, it...

  • Page 147
    ...by changes in economic, political or other conditions. The group's principal customers, suppliers and financial institutions with which it conducts business are located throughout the world. In addition, these risks are managed by maintaining a group watchlist and aggregating multi-segment exposures...

  • Page 148
    ... with long-term gas supply contracts totalling $1,806 million (2007 $1,899 million) that mature within nine years. The table also shows the timing of cash outflows relating to trade and other payables and accruals. $ million At 31 December Trade and other payables 2008 Finance debt Trade and...

  • Page 149
    ... or loss arising as a result of changes in fair value recorded directly in equity. Accumulated fair value changes are recycled to the income statement on disposal, or when the investment is impaired. The fair value of listed investments has been determined by reference to quoted market bid prices...

  • Page 150
    BP Annual Report and Accounts 2008 Notes on financial statements 32. Cash and cash equivalents $ million 2008 2007 Cash at bank and in hand Cash equivalents Listed Unlisted 4,001 4,060 136 8,197 2,996 3 563 3,562 Cash and cash equivalents comprise cash in hand; current balances with banks and ...

  • Page 151
    ... relation to commodity prices, foreign currency exchange rates and interest rates, including management of the balance between floating rate and fixed rate debt, consistent with risk management policies and objectives. Additionally, the group has a well-established entrepreneurial trading operation...

  • Page 152
    BP Annual Report and Accounts 2008 Notes on financial statements 34. Derivative financial instruments continued $ million Currency Oil price Natural gas price Power price Other Total Fair value of contracts at 1 January 2007 Contracts realized or settled in the year Fair value of options at ...

  • Page 153
    BP Annual Report and Accounts 2008 Notes on financial statements 34. Derivative financial instruments continued $ million 2007 Less than 1 year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years Total Currency derivatives Oil price derivatives Natural gas price derivatives Power price ...

  • Page 154
    BP Annual Report and Accounts 2008 Notes on financial statements 34. Derivative financial instruments continued Embedded derivatives Prior to the development of an active gas trading market, UK gas contracts were priced using a basket of available price indices, primarily relating to oil products, ...

  • Page 155
    BP Annual Report and Accounts 2008 Notes on financial statements 34. Derivative financial instruments continued Embedded derivative assets have the following fair values when analysed by maturity period and by methodology of fair value estimation. $ million 2008 Less than 1 year 1-2 years 2-3 years...

  • Page 156
    ...-US dollar debt issuance. Note 28 outlines the management of risk aspects for currency and interest rate risk. For cash flow hedges the group only claims for the intrinsic value on the currency with any fair value attributable to time value taken immediately to profit or loss. There were no highly...

  • Page 157
    BP Annual Report and Accounts 2008 Notes on financial statements 35. Finance debt continued The following table shows, by major currency, the group's finance debt at 31 December and the weighted average interest rates achieved at those dates through a combination of borrowings and derivative ...

  • Page 158
    ...Annual Report and Accounts 2008 Notes on financial statements 36. Capital disclosures and analysis of changes in net debt The group defines capital as the total equity of the group. The group's objective for managing capital is to deliver competitive, secure and sustainable returns to maximize long...

  • Page 159
    BP Annual Report and Accounts 2008 Notes on financial statements 37. Provisions $ million Decommissioning Environmental Litigation and other Total At 1 January 2008 Exchange adjustments New or increased provisions Write-back of unused provisions Unwinding of discount Utilization Deletions At 31 ...

  • Page 160
    ... of service. The plans are funded to a limited extent. The obligation and cost of providing pensions and other post-retirement benefits is assessed annually using the projected unit credit method. The date of the most recent actuarial review was 31 December 2008. The material financial assumptions...

  • Page 161
    .... The long-term asset allocation policy for the major plans is as follows: Policy range % Asset category Total equity Bonds/cash Property/real estate 45-75 17.5-50 0-10 Some of the group's pension plans use derivative financial instruments as part of their asset mix and to manage the level of...

  • Page 162
    BP Annual Report and Accounts 2008 Notes on financial statements 38. Pensions and other post-retirement benefits continued The expected long-term rates of return and market values of the various categories of asset held by the defined benefit plans at 31 December are set out below. The market ...

  • Page 163
    BP Annual Report and Accounts 2008 Notes on financial statements 38. Pensions and other post-retirement benefits continued $ million 2008 UK pension plans US other postUS retirement pension benefit plans plans Other plans Total Analysis of the amount charged to profit before interest and ...

  • Page 164
    BP Annual Report and Accounts 2008 Notes on financial statements 38. Pensions and other post-retirement benefits continued $ million 2007 UK pension plans US other postUS retirement pension benefit plans plans Other plans Total Analysis of the amount charged to profit before interest and ...

  • Page 165
    BP Annual Report and Accounts 2008 Notes on financial statements 38. Pensions and other post-retirement benefits continued $ million 2006 US other postretirement benefit plans UK pension plans US pension plans Other plans Total Analysis of the amount charged to profit before interest and ...

  • Page 166
    ...dividends and a premium equal to the higher of (i) 10% of the capital paid up on the preference shares and (ii) the excess of the average market price of such shares on the London Stock Exchange during the previous six months over par value. Repurchase of ordinary share capital The company purchased...

  • Page 167
    ...-for-sale investments recycling (net of tax) Cash flow hedges marked to market (net of tax) Cash flow hedges recycling (net of tax) Tax on share-based payments Profit for the year Total recognized income and expense for the year Dividends Repurchase of ordinary share capital Issue of ordinary share...

  • Page 168
    BP Annual Report and Accounts 2008 Notes on financial statements $ million Foreign currency translation reserve Availablefor-sale investments Sharebased payment reserve Profit and loss account BP shareholders' equity Merger reserve Other reserve Own shares Treasury shares Cash flow hedges ...

  • Page 169
    BP Annual Report and Accounts 2008 Notes on financial statements 40. Capital and reserves continued Share capital The balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue, including treasury shares. Share premium account The ...

  • Page 170
    ...Senior Employees Deferred Annual Bonus Plan (DAB) An equity-settled restricted share unit plan for senior employees. In 2008 the grant value is equal to 50% (2007 and 2006 50%) of the annual cash bonus awarded for the preceding performance year (the 'performance period'). For 2009 this will increase...

  • Page 171
    ... Annual Report and Accounts 2008 Notes on financial statements 41. Share-based payments continued BP Share Option Plan (BPSOP) An equity-settled share option plan that applies to certain categories of employees. Participants are granted share options with an exercise price no lower than the market...

  • Page 172
    BP Annual Report and Accounts 2008 Notes on financial statements 41. Share-based payments continued As share options are exercised continuously throughout the year, the weighted average share price during the year of $10.87 (2007 $11.72 and 2006 $11.85) is representative of the weighted average ...

  • Page 173
    BP Annual Report and Accounts 2008 Notes on financial statements 41. Share-based payments continued Shares granted in 2007 MTPPTSR MTPPFCF EDIPTSR EDIPLTL RSP DAB PSP Number of equity instruments granted (million) Weighted average fair value Fair value measurement basis 9.4 $4.73 Monte Carlo 8.5...

  • Page 174
    BP Annual Report and Accounts 2008 Notes on financial statements 42. Employee costs and numbers continued 2006 Average number of employees UK Rest of Europe US Rest of World Total Exploration and Production Refining and Marketing Other businesses and corporate 3,500 11,100 2,200 16,800 800 19,...

  • Page 175
    ... for various sites including refineries, chemical plants, oil fields, service stations, terminals and waste disposal sites. In addition, the group may have obligations relating to prior asset sales or closed facilities. The ultimate requirement for remediation and its cost are inherently difficult...

  • Page 176
    BP Annual Report and Accounts 2008 Notes on financial statements 46. Subsidiaries, jointly controlled entities and associates The more important subsidiaries, jointly controlled entities and associates of the group at 31 December 2008 and the group percentage of ordinary share capital or joint ...

  • Page 177
    ... Annual Report and Accounts 2008 Notes on financial statements 46. Subsidiaries, jointly controlled entities and associates continued Jointly controlled entities % Country of incorporation or registration Principal activities Angola LNG Supply Services Atlantic 4 Holdings Atlantic LNG 2/3 Company...

  • Page 178
    BP Annual Report and Accounts 2008 Notes on financial statements 47. Oil and natural gas exploration and production activitiesa $ million 2008 UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Total Capitalized costs at 31 December Gross capitalized costs Proved properties ...

  • Page 179
    BP Annual Report and Accounts 2008 Notes on financial statements 47. Oil and natural gas exploration and production activitiesa continued $ million 2007 UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Total Capitalized costs at 31 December Gross capitalized costs Proved ...

  • Page 180
    BP Annual Report and Accounts 2008 Notes on financial statements 47. Oil and natural gas exploration and production activitiesa continued $ million 2006 UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Total Capitalized costs at 31 December Gross capitalized costs Proved ...

  • Page 181
    ... 2006 nil) in respect of project assurance and advice on business and accounting process improvement. The tax services relate to income tax and indirect tax compliance, employee tax services and tax advisory services. The audit committee has established pre-approval policies and procedures for the...

  • Page 182
    ... sheet from the assets to which they apply. 50. Computation of ratio of earnings to fixed charges $ million, except ratios For the year ended 31 December 2008 2007 2006 Profit before taxation Group's share of income in excess of dividends from equity-accounted entities Capitalized interest, net of...

  • Page 183
    ...year-end prices and costs to persist. 2008 Crude oila UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other million barrels Total Subsidiaries At 1 January 2008 Developed Undeveloped Changes attributable to Revisions of previous estimates Purchases of reserves-in-place Discoveries...

  • Page 184
    BP Annual Report and Accounts 2008 Supplementary information on oil and natural gas Movements in estimated net proved reserves continued 2008 Natural gasa UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia billion cubic feet Other Total Subsidiaries At 1 January 2008 Developed ...

  • Page 185
    BP Annual Report and Accounts 2008 Supplementary information on oil and natural gas Movements in estimated net proved reserves continued 2007 Crude oila UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other million barrels Total Subsidiaries At 1 January 2007 Developed Undeveloped...

  • Page 186
    BP Annual Report and Accounts 2008 Supplementary information on oil and natural gas Movements in estimated net proved reserves continued 2007 Natural gasa UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other billion cubic feet Total Subsidiaries At 1 January 2007 Developed ...

  • Page 187
    BP Annual Report and Accounts 2008 Supplementary information on oil and natural gas Movements in estimated net proved reserves continued 2006 Crude oila UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other million barrels Total Subsidiaries At 1 January 2006 Developed Undeveloped...

  • Page 188
    BP Annual Report and Accounts 2008 Supplementary information on oil and natural gas Movements in estimated net proved reserves continued 2006 Natural gasa UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other billion cubic feet Total Subsidiaries At 1 January 2006 Developed ...

  • Page 189
    ... historical cost information presented in the financial statements. $ million UK Rest of Europe US Rest of Americas Asia Pacific Africa Other Total At 31 December 2008 Future cash inflowsa Future production costb Future development costb Future taxationc Future net cash flows 10% annual discountd...

  • Page 190
    ... and natural gas production for the years ended 31 December 2008, 2007 and 2006. Production for the yeara UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Total Subsidiaries Crude oilb 2008 2007 2006 Natural gasc 2008 2007 2006 Equity-accounted entities (BP share) Crude oilb...

  • Page 191
    ... natural gas wells in the process of being drilled by the group and its equity-accounted entities as at 31 December 2008. Suspended development wells and long-term suspended exploratory wells are also included in the table. UK Rest of Europe US Rest of Americas Asia Pacific Africa Russia Other Total...

  • Page 192
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. Statement of directors' responsibilities in respect of the parent company financial statements The directors are responsible for preparing the financial statements in accordance with applicable United Kingdom law ...

  • Page 193
    ... of directors and auditors The directors' responsibilities for preparing the Annual Report, the Directors' Remuneration Report and the parent company financial statements in accordance with applicable United Kingdom law and accounting standards (United Kingdom generally accepted accounting practice...

  • Page 194
    ... Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. Company balance sheet At 31 December Note 2008 $ million 2007 Fixed assets Investments Subsidiary undertakings Associated undertakings Total fixed assets Current assets Debtors - amounts falling due: Within one year...

  • Page 195
    ... and Accounts 2008 Parent company financial statements of BP p.l.c. Company cash flow statement For the year ended 31 December Note 2008 2007 $ million 2006 Net cash (outflow) inflow from operating activities Servicing of finance and returns on investments Interest received Interest paid Dividends...

  • Page 196
    ...-retirement benefits For defined benefit pension and other post-retirement benefit plans, plan assets are measured at fair value and plan liabilities are measured on an actuarial basis using the projected unit credit method and discounted at an interest rate equivalent to the current rate of return...

  • Page 197
    ...Parent company financial statements of BP p.l.c. 1. Accounting policies continued A credit representing the expected return on the plan assets during the year is included within other finance income. This credit is based on an assessment made at the beginning of the year of long-term market returns...

  • Page 198
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 3. Fixed assets - investments $ million Subsidiary undertakings Shares Associated undertakings Shares Loans Total Cost At 1 January 2008 Additions At 31 December 2008 Amounts provided At 1 January 2008 At 31 ...

  • Page 199
    ... the pension liabilities at that date and the pension expense for 2009. Financial assumptions 2008 2007 % 2006 Expected long-term rate of return Discount rate for plan liabilities Rate of increase in salaries Rate of increase for pensions in payment Rate of increase in deferred pensions Inflation...

  • Page 200
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 6. Pensions continued $ million 2008 Expected long-term rate of return % Market value $ million Expected long-term rate of return % 2007 Market value $ million Expected long-term rate of return % 2006 Market value $...

  • Page 201
    ... Parent company financial statements of BP p.l.c. 6. Pensions continued $ million 2008 2007 Surplus (deficit) at 31 December Represented by Asset recognized Liability recognized The surplus (deficit) may be analysed between funded and unfunded plans as follows Funded Unfunded The defined benefit...

  • Page 202
    ...dividends and a premium equal to the higher of (i) 10% of the capital paid up on the preference shares and (ii) the excess of the average market price of such shares on the London Stock Exchange during the previous six months over par value. Repurchase of ordinary share capital The company purchased...

  • Page 203
    ... Report and Accounts 2008 Parent company financial statements of BP p.l.c. 8. Capital and reserves continued $ million Share capital Share premium account Capital redemption reserve Merger reserve Other reserves Own shares Treasury shares Share-based payment reserve Profit and loss account Total...

  • Page 204
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 11. Share-based payments Effect of share-based payment transactions on the company's result and financial position $ million 2008 2007 2006 Total expense recognized for equity-settled share-based payment ...

  • Page 205
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 11. Share-based payments continued Performance Share Plan (PSP) An equity-settled restricted share unit plan for senior professionals and team leaders. The grant takes into account the recipient's performance in the...

  • Page 206
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 11. Share-based payments continued At 31 December 2008 the ESOPs held 29,051,082 shares (2007 6,448,838 shares and 2006 12,795,887 shares) for potential future awards, which had a market value of $220 million (2007 ...

  • Page 207
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 11. Share-based payments continued Options granted in 2006 BPSOP ShareSave 3 year ShareSave 5 year Option pricing model used Weighted average fair value Weighted average share price Weighted average exercise price ...

  • Page 208
    BP Annual Report and Accounts 2008 Parent company financial statements of BP p.l.c. 13. Directors' remuneration Remuneration of directors 2008 2007 $ million 2006 Total for all directors Emoluments Gains made on the exercise of share options Amounts awarded under incentive schemes 19 1 - 26 2 10...

  • Page 209
    ...Production-sharing agreement. SEC The United States Securities and Exchange Commission. Subsidiary An entity that is controlled by the BP group. Control is the power to govern the financial and operating policies of an entity so as to obtain the benefits from its activities. Tonne 2,204.6 pounds. UK...

  • Page 210
    ... operating performance in BP Annual Review 2008 in print or online. www.bp.com/annualreview Sustainability Review Read the summary BP Sustainability Review 2008 in print or read more online from April 2009. www.bp.com/sustainability Acknowledgements Design sasdesign.co.uk Typesetting Bowne, London...

  • Page 211
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