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Annual Report
and Form 20-F
2011
bp.com/annualreport
Building a
stronger, safer BP

Table of contents

  • Page 1
    Annual Report and Form 20-F 201 1 bp.com/annualreport Building a stronger, safer BP

  • Page 2
    Cover image Photograph of Deepsea Stavanger drilling rig, Angola taken as part of the We are BP programme.

  • Page 3
    ... GAAP ☐ International Accounting Standards Board â˜' Other ☐ If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐ If this is an annual report, indicate by check mark...

  • Page 4
    ... Plan of distribution n/a Markets 167-168 Selling shareholders n/a Dilution n/a Expenses of the issue n/a Additional Information Share capital n/a Memorandum and articles of association 136-138 Material contracts 168 Exchange controls 168 Taxation 168-170 Dividends and paying agents n/a Statements...

  • Page 5
    ...106 110 Financial review Risk factors Safety Environmental and social responsibility Employees Technology Gulf of Mexico oil spill Exploration and Production Refining and Marketing Other businesses and corporate Liquidity and capital resources Regulation of the group's business Certain definitions...

  • Page 6
    ... million British thermal units. UK United Kingdom of Great Britain and Northern Ireland. Hydrocarbons Crude oil and natural gas. mmboe million barrels of oil equivalent. US United States of America. IFRS International Financial Reporting Standards. mmcf million cubic feet. 4 BP Annual Report...

  • Page 7
    ... company and those of its subsidiaries. The term 'shareholder' in this report means, unless the context otherwise requires, investors in the equity capital of BP p.l.c., both direct and indirect. As BP shares, in the form of ADSs, are listed on the New York Stock Exchange (NYSE), an Annual Report...

  • Page 8
    6 BP Annual Report and Form 20-F 2011

  • Page 9
    ... safety, earning back trust and growing value. 42 Our management of risk The strengthened processes and systems we are putting in place to make BP a safer, more risk-aware company. 18 Our market From oil prices, natural gas prices and refining margins during the year to the long-term outlook...

  • Page 10
    ...board initiated a review of the way BP manages, reports and acts on risk, including board oversight. On trust, we ensured that BP continued to meet its commitments in the Gulf of Mexico. We co-operated with every official investigation and prepared for litigation. We worked closely with governments...

  • Page 11
    Business review: Group overview countries, and our Refining and Marketing segment delivered very strong earnings. Our $38-billion divestment programme is strengthening the group's financial position and focusing our portfolio. In 2011 we restored your dividend, and I am pleased to report that we ...

  • Page 12
    ... foreign investor in the country. Right In 2011, the chairman visited the Alberta oil sands in Canada including the Sunrise Energy Project - BP's joint venture with Husky Energy. In detail For more information on the board and its committees, see Corporate governance report. Page 126 Bill Castell...

  • Page 13
    ...a working group of non-executive directors reviewed board tasks, roles and processes. This work, coupled with our board evaluation, has led to a number of changes in the way in which the board operates. These are set out in the board performance section of this annual report. 2011 was a testing year...

  • Page 14
    ... to right, seated Carl-Henric Svanberg Chairman Bob Dudley Group Chief Executive Ian Davis Non-Executive Director Antony Burgmans Non-Executive Director Cynthia Carroll Non-Executive Director Cynthia Carroll was unable to attend on the day the board photograph was taken. 12 BP Annual Report and...

  • Page 15
    Business review: Group overview BP Annual Report and Form 20-F 2011 13

  • Page 16
    ...the group's financial position by progressing our divestment programme. We worked to earn back trust through co-operation with the official investigations and actively sharing the lessons learned. We set a clear strategic direction through a 10-point plan focused on building value for shareholders...

  • Page 17
    ...financial terms, during 2010 and 2011 combined we made a pre-tax cash outlay of more than $26 billion to cover oil spill response costs, meet claims and litigation expenses, support research, promote tourism and help restore the environment. The test of corporate responsibility is whether a company...

  • Page 18
    ... to design, engineer and operate large installations safely. 2012 will be a busy year for us in the deepwater regions of Angola, Brazil and the Gulf of Mexico. In detail For more on the strategic priorities set out in the 10-point plan, see Our strategy. Pages 37-41 Left New investment announced...

  • Page 19
    ... TNK-BP investment in Russia, which continues to be successful. A well-balanced business As the BP Energy Outlook 2030 shows, the world is now in a long wavelength transition to a lower-carbon energy mix. For BP, that means helping to meet current demand through the supply of oil and gas - including...

  • Page 20
    ...rst time (in nominal terms). Natural gas prices diverged globally in 2011. Globally, refining margins improved on average as oil product demand continued to grow. Economic context After a very strong 2010, world economic growth slowed in 2011 and we expect subdued global growth to continue in 2012...

  • Page 21
    Business review: Group overview Crude oil and gas prices, and refining margins ($ per barrel of oil equivalent) Dated Brent oil price Henry Hub gas price (First of Month Index) Average refining marker margin (RMM)* 210 175 140 105 70 35 2007 2008 2009 2010 2011 Source: Platts/BP. *See ...

  • Page 22
    ... therm in 2010 - 38% above the depressed prices in 2009. In 2012, we expect gas markets to continue to be driven by the economy, weather, domestic production, LNG supply and reductions in nuclear power generation following the Fukushima disaster in Japan in March 2011. 20 BP Annual Report and Form...

  • Page 23
    ... oil supply in the first quarter of 2011 and production problems in the North Sea during the summer resulted in record high prices for low-sulphur grades of crude oil. This adversely impacted the margin for refiners configured to process these grades, particularly in Europe, the US East Coast...

  • Page 24
    ... efficiency of energy provision and use, and demand management. We actively monitor developments and continually assess a range of potential outcomes and their implications for our long-term strategy. a From World Energy Outlook 2011©, OECD/IEA 2011, page 545. 22 BP Annual Report and Form 20...

  • Page 25
    Business review: Group overview Above An engineer on board the BP oil tanker British Gannet. At the end of 2011, we had 53 international vessels. Below The control room at BP's Atlantic LNG facility in Trinidad, where BP has been operating since 1961. Meeting the energy challenge We estimate that ...

  • Page 26
    ... gas, deepwater production, and alternative energies such as biofuels and wind power, in addition to conventional oil and gas. As well as simply meeting growth in overall demand, a diverse mix can help to provide enhanced national and global energy security while supporting the transition to a lower...

  • Page 27
    ... information about Alternative Energy, see Other businesses and corporate. Page 101 In detail For definitions of subsidiaries, joint ventures and associates, see Miscellaneous terms. Page 4 On the basis of market capitalization, proved reserves and production. BP Annual Report and Form 20-F 2011...

  • Page 28
    ... with our strategic objectives. We often work with partners to mitigate risk or gain from complementary skills. Through disciplined execution of capital projects we then develop, extract and sell the resources. The benefits are shared with governments and other partners. We move oil and gas through...

  • Page 29
    Business review: Group overview BP's distinctive capabilities and sources of value By operating across the full hydrocarbon value chain we believe we can create more value for shareholders, as benefits and costs can often be shared by our two segments. We can develop shared functional excellence ...

  • Page 30
    ...place in 30 countries including Angola, Azerbaijan, Canada, Egypt, Norway, Russia, Trinidad & Tobago (Trinidad), the UK, the US and other locations within Asia, Australasia, South America, North Africa and the Middle East. Exploration and Production also includes gas marketing and trading activities...

  • Page 31
    ...fining and Marketing segment is responsible for the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers. We have significant operations in Europe, North America and Asia...

  • Page 32
    ... and commercialize seed products with high resistance to environmental stresses, such as water and nutrient limitation. Left Developed with Imperial College London, new Permasense sensors are helping BP corrosion engineers to see what is happening inside pipes. 30 BP Annual Report and Form 20-F 2011

  • Page 33
    ...In detail For more information, see Corporate governance. Page 119 Above In 2011, BP announced the start of natural gas production from the Serrette field, offshore Trinidad. Below A team at work in East Texas. As operator, BP drilled 148 wells across the US Lower 48 states in 2011. In detail For...

  • Page 34
    ... are one team - a group of diverse individuals from around the world united by shared values and a drive to rebuild BP." These words, taken from the BP code of conduct, capture what we strive to stand for as a company - our renewed values. They are an expression of work done across BP in 2011 to de...

  • Page 35
    ... within BP. Our values This statement of our values expresses our aspirations and intentions for BP, as we work together to strengthen safety and risk management, earn back trust and create value. Our values are aligned with, and an extension of, our code of conduct. Safety Safety is good business...

  • Page 36
    ... end of 2012. These shaded areas indicate the approximate coverage of BP's integrated fuels value chains. Lubricants and aviation marketing activity is not reï¬,ected on this map. Alternative Energy Operational assets. Technology assets. BP group headcount by region (including service station staff...

  • Page 37
    Business review: Group overview BP Annual Report and Form 20-F 2011 35

  • Page 38
    ...BP is changing Following the tragic events in the Gulf of Mexico in 2010, we initiated a wide-ranging programme designed to enhance safety and risk management within the group, earn back trust and restore value. Much was achieved in 2011, but there is a great deal more to do. Safety and operational...

  • Page 39
    ... investment, with a particular focus on exploration; managing our portfolio actively; growing operating cash faster than production; and focusing on the major growth engines that capitalize on our strengths - deepwater, gas value chains and giant fields. In the downstream, we are in the business...

  • Page 40
    ...We are determined that BP will deliver world-class performance in safety, risk management and operational discipline. We will be a company that systematically applies our global standards as a single team. We will play to our strengths We have had major successes at finding oil and gas at scale. We...

  • Page 41
    ...20% range over time. Unit cash margin is net cash provided by operating activities for the relevant projects in our Exploration and Production segment, divided by the total number of barrels of oil and gas equivalent produced for the relevant projects. It excludes dividends and production for TNK-BP...

  • Page 42
    .... These milestones mark our aspirations, plans and intended progress over the next three years. At the Cherry Point refinery, BP is investing in a clean diesel project to produce cleaner burning fuels that will comply with new lowersulphur specifications. 40 BP Annual Report and Form 20-F 2011

  • Page 43
    Business review: Group overview 2012 We see the full benefits of our 2011 turnarounds as high-margin production comes back onstream in Angola, the North Sea and elsewhere. Exploration drilling activity increases to 12 wells. Six major upstream project start-ups. Eight rigs expected to be operating...

  • Page 44
    .... As such, BP's risk management system is an integral part of our system of internal control, and is designed to be a simple, consistent and clear framework for managing and reporting all risk from the group's operations to the board. Review of risk management In 2011, we initiated a review of our...

  • Page 45
    ... Right BP's state-of-theart Houston monitoring centre provides realtime communications between rigs in the Gulf of Mexico and experts based onshore. • Third, the system facilitates executive and board oversight and governance over the management of significant risks. It requires executive team...

  • Page 46
    .... Above BP's Cooper River petrochemicals plant in South Carolina operates two PTA units. PTA is used in the production of plastic bottles. Below Working with Falex Corporation, Air BP has developed a faster and more reliable way to test aviation lubricants. 44 BP Annual Report and Form 20-F 2011

  • Page 47
    ... joint venture and contractor relationships actively, and this may include monitoring compliance with applicable standards. As a result of the Deepwater Horizon oil spill there is significant uncertainty regarding the extent and timing of costs and liabilities relating to the incident, the impact...

  • Page 48
    ...are the operator, we conduct activity through a global wells organization that is accountable for systems and processes for designing, constructing and managing wells. See Safety on page 66 for information on the recommendations of BP's internal investigation into the Deepwater Horizon oil spill and...

  • Page 49
    ...of strategic priorities and determination to rebuild the company. Our employees have worked to make BP a safer business and to earn back trust. We also pushed forward on the journey to grow value over the short, medium and long term. The key measures in this section show our progress in numbers, and...

  • Page 50
    ... safety practices throughout the oil and gas industry. BP teams have travelled to 25 countries to share the lessons learned from events in the Gulf of Mexico with our industry, regulators and governments. We also shared equipment and technology developed during the response with the Marine Well...

  • Page 51
    ... provinces of the world. We started upstream operations during the year. See Financial statements - Note 6 on page 200. b Based on sales of consolidated subsidiaries only - this excludes equity-accounted entities. Total net proved reserves 2011a (million barrels of oil equivalent) 10,565 7,183...

  • Page 52
    ... - in major new project developments. In Iraq, working with our partners in the Rumaila Operating Organization, we met a major milestone in reaching initial production targets agreed for the Rumaila field. Refining and Marketing Replacement cost profit before interest and tax for 2011 was $5,474...

  • Page 53
    ... regaining momentum and we have a clear strategy for value creation. Maintaining our absolute commitment to safety, our intention is to build on our strengths so we can grow operating cash ï¬,ows, invest for future growth and increase returns to shareholders. BP Annual Report and Form 20-F 2011 51

  • Page 54
    ...the lower half of the 10-20% range over time. Total shareholder return represents the change in value of a BP 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. In 2011, shareholder return...

  • Page 55
    ... safety-related standards and processes, including operational risk and integrity management. We report greenhouse gas (GHG) emissions on a CO2-equivalent basis, including CO2 and methane. This represents all consolidated entities and BP's share of equity-accounted entities, except TNK-BP. In 2010...

  • Page 56
    54 BP Annual Report and Form 20-F 2011

  • Page 57
    ... Environmental and social responsibility Employees Technology Gulf of Mexico oil spill 80 94 Exploration and Production Refining and Marketing 101 Other businesses and corporate 103 Liquidity and capital resources 106 Regulation of the group's business 110 Certain definitions BP Annual Report...

  • Page 58
    ... share amounts 2009 2008 2007 Income statement data Sales and other operating revenues Replacement cost profit (loss) before interest and taxb By business Exploration and Production Refining and Marketing Other businesses and corporate Gulf of Mexico oil spill responsec Consolidation adjustment...

  • Page 59
    ...ning margin environment and a stronger supply and trading contribution, partly offset by lower production volumes, rig standby costs in the Gulf of Mexico, higher costs related to turnarounds, higher exploration write-offs, and negative impacts of increased relative sweet crude prices in Europe and...

  • Page 60
    ...information on fair value accounting effects is provided on page 110. $ million 2009 2011 2011 2010 2010 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...

  • Page 61
    ... position or market sentiment as to our prospects, at a time when cash ï¬,ows from our business operations may be under pressure, our ability to maintain our long-term investment programme may be impacted with a consequent effect on our growth rate, and may impact shareholder returns, including...

  • Page 62
    ... and cash ï¬,ows. For example, BP has borne and will continue to bear the entire burden of its share of any property damage, well control, pollution clean-up and third-party liability expenses arising out of the Gulf of Mexico oil spill. Compliance and control risks Regulatory - the oil industry...

  • Page 63
    ... financially responsible for the clean-up of the Gulf of Mexico oil spill and for certain economic damages as provided for in OPA 90, as well as certain natural resource damages associated with the spill and certain costs determined by federal and state trustees engaged in a joint assessment of...

  • Page 64
    ..., BP has introduced a group-wide operating management system (OMS). Work on the application of OMS in individual operating businesses continues and following the Gulf of Mexico oil spill an enhanced safety and operational risk (S&OR) function was established, reporting directly to the group chief...

  • Page 65
    ...operating locations, could jeopardize performance delivery. In addition, significant management focus is required in responding to the Gulf of Mexico oil spill Incident. Although BP set up the Gulf Coast Restoration Organization to manage the group's long-term response, key management and operating...

  • Page 66
    ...gas marketing entity and an entity that owns a gas pipeline (both entities and related assets located outside Iran), in which Naftiran Intertrade Co. Ltd (NICO) and NICO SPV Limited (collectively NICO) or Iranian Oil Company (UK) Limited (IOC UK) have interests. Production was suspended at the North...

  • Page 67
    ... top engineers and safety specialists, several of whom have experience of other industries where major hazards have to be managed, including the military, nuclear energy and space exploration. Our deployed S&OR teams work with our operating businesses - ranging from upstream oil and gas development...

  • Page 68
    ...fied roles and responsibilities, enhanced training requirements, and enhanced risk management techniques. See Environment and social responsibility section on pages 69-73 for further information on BP's approach to oil spill contingency planning and response. Bly Report - internal investigation...

  • Page 69
    ... share capping and containment equipment with other operators in the Gulf of Mexico, through the Marine Well Containment Company, as well as with operators in the UK North Sea. Further, BP provided project management for the Oil and Gas UK Oil Spill Prevention and Response Advisory Group to develop...

  • Page 70
    ...). Process safety BP uses a disciplined framework for managing the integrity of hazardous operating systems and processes. We apply a combination of good design principles, engineering, and operating and maintenance practices to help deliver process safety performance and we monitor the number of...

  • Page 71
    ... 2011, BP initiated a review into our approach to the management of our relationships with non-operated joint venture operators and partners. This work includes safety and operational risk as well as bribery and corruption risk. Environmental and social responsibility The world's demand for energy...

  • Page 72
    ... in the Gulf of Mexico in 2010 would be a challenge for the group, our response plans are not interdependent. See Safety on pages 65-69 for further information on BP's approach to oil spill prevention and preparedness. Gulf of Mexico - our long-term commitments See Gulf of Mexico oil spill on pages...

  • Page 73
    ... gas version of the World Business Council for Sustainable Development's Global Water Tool, which helps oil and gas companies map their water use and assess risks of freshwater scarcity and related biodiversity impacts, across their portfolio of sites. BP has also invested in a water risk management...

  • Page 74
    ...fits. We run a range of programmes to build the skills of businesses in places where we work and to develop the local supply chain. These range from financing to sharing global standards and practice in areas such as health and safety. The programmes can benefit local companies by empowering them...

  • Page 75
    ... group people committee who review BP Annual Report and Form 20-F 2011 73 Business review: BP in more depth Employees Number of employees at 31 December US Non-US Total 2011 Exploration and Production Refining and Marketinga Other business and corporate Gulf Coast Restoration Organization 2010...

  • Page 76
    ...in 2010. BP continues to apply a policy that the group will not participate directly in party political activity or make any political contributions, whether in cash or in kind. We review employees' rights to political activity in each 74 BP Annual Report and Form 20-F 2011 country where we operate...

  • Page 77
    Business review Exploration and Production In the upstream, our technology investment directly supports business strategy by focusing on safety and operational risk management; operational efficiency; increased recovery and reserves; and winning new access. Our strengths in exploration, deepwater,...

  • Page 78
    ... low-grade waste heat sources cost-effectively across the group. Gulf of Mexico oil spill From response to restoration - summary Building on the efforts of 2010, BP has continued to demonstrate its commitment to the US federal, state and local governments and communities of the Gulf Coast following...

  • Page 79
    ..., verified as meeting the applicable clean-up standards, and moved out of operational activity. It is expected that the majority of the 4,300 miles of the Gulf Coast shoreline within the area of response will be deemed operationally complete within 2012. Environmentally sensitive areas were often...

  • Page 80
    ... BP Annual Report and Form 20-F 2011 cooperative assessment process. We also prepared and participated in a variety of scientific publications and seminars as part of our efforts to share learnings from the oil spill as broadly as possible. NRD process under way In 2011, we continued to work with...

  • Page 81
    .... MOEX paid BP $1.1 billion in cash and Anadarko paid BP $4 billion in cash to settle all outstanding claims between the companies related to the incident and to the prospect. For details regarding the impacts and uncertainties relating to the Gulf of Mexico oil spill refer to Financial statements...

  • Page 82
    ... countries in 2011, including Angola, Azerbaijan, Brazil, Canada, Egypt, India, Iraq, Norway, Russia, Trinidad & Tobago (Trinidad), the UK, the US and other locations within Africa, Asia, Australasia and South America, as well as gas marketing and trading activities, primarily in Canada, Europe and...

  • Page 83
    ... deepwater Gulf of Mexico (not BP-operated). In October 2011, we announced the Salmon gas discovery in Egypt's Nile Delta. In 2011, we took final investment decisions on three projects and two major projects came onstream: Serrette in Trinidad and Pazï¬,or in Angola. Production for 2011 was lower...

  • Page 84
    .... In 2012, we intend to drill 12 exploration wells, start up six major projects, and increase our activity in the Gulf of Mexico to eight operational rigs, subject to approvals by US regulators. 82 BP Annual Report and Form 20-F 2011 Upstream activities Exploration The group explores for oil and...

  • Page 85
    ... a 50:50 joint venture for the sourcing and marketing of gas in India. See India for further information on page 87. Disposals • On 24 January 2011, following the approval of the Colombian authorities, BP completed the sale of its oil and gas exploration, production and transportation business in...

  • Page 86
    ... production host. • On 14 December 2011, the Bureau of Ocean Energy Management held its first western Gulf of Mexico lease sale since August 2009. BP bid on leases for 15 blocks and expects to be awarded leases for 11 blocks in early 2012. Lower 48 states The North America Gas business operates...

  • Page 87
    ... returned to BP is shown in the balance sheet at 31 December 2011 within cash and cash equivalents and within current trade and other payables. • On 24 January 2012, the Republic of Bolivia issued a press statement declaring its intent to nationalize PAE's interests in the Caipipendi Operations...

  • Page 88
    ... retail stations in Russia and Ukraine. a Egypt BP has a long-standing history in Egypt, successfully operating there for close to 50 years. To date BP with its partners has produced almost 40% of Egypt's entire oil production and supplies more than 35% of the domestic gas demand. BP's total assets...

  • Page 89
    ... operate across the gas value chain in India, from exploration and production to distribution and marketing. • On 17 November 2011, the two companies formed a 50:50 joint venture for the sourcing and marketing of gas in India. Iraq Following a successful bid with PetroChina to run the Rumaila oil...

  • Page 90
    ... 88 BP Annual Report and Form 20-F 2011 via BP's LNG marketing and trading business to a variety of markets including the US, the Dominican Republic, Spain, the UK, Japan, India and South Korea. • We have a 10% equity shareholding in the Abu Dhabi Gas Liquefaction Company, which in 2011 supplied...

  • Page 91
    ... in relation to our oil and gas operations. Average sales price per unit of production Europe North America Rest of North Americab South America Africa Asia $ per unit of productiona Australasia Total group average Rest of Asia UK Rest of Europe US Russia Average sales pricec Subsidiaries 2011...

  • Page 92
    ... is review and approval of proved reserves bookings independent of the operating business and that there are effective controls in the approval process and verification that the proved reserves estimates and the related financial impacts are reported in a timely manner. • Capital allocation...

  • Page 93
    ...well as changes in oil and gas prices, changes in operating and development costs and the continued availability of additional development capital. All the group's proved reserves held in subsidiaries and equity-accounted entities are estimated by the group's petroleum engineers. Our proved reserves...

  • Page 94
    ... production and the option and ability to make lifting and sales arrangements independently. In 2011, BP sold its holdings in Venezuela and Vietnam to TNK-BP. It also made acquisitions in India through a joint venture with Reliance, Brazil and additional volumes in the US Gulf of Mexico and UK North...

  • Page 95
    ... compensation payable, Pan American Energy's shares of Chaco. c BP-operated. d Natural gas production volumes exclude gas consumed in operations within the lease boundaries of the producing field, but the related reserves are included in the group's reserves. BP Annual Report and Form 20-F 2011 93

  • Page 96
    ...fining and Marketing segment is responsible for the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers. We have significant operations in Europe, North America and Asia...

  • Page 97
    ... and tax for 2009 with that of 2012, after adjusting for non-operating items, fair value accounting effects and the impact of changes in the refining margin and petrochemicals environment (including energy costs), foreign exchange impacts and price-lag effects for crude and product purchases...

  • Page 98
    ... by our integrated supply and trading function, primarily for optimizing crude oil supplies to our refineries and in other trading. 79 thousand barrels per day relate to revenues reported by Exploration and Production. Prior years' comparative financial information The replacement cost pro...

  • Page 99
    ... fuels marketing businesses notably the UK, Turkey, China and France. At the end of 2011, the operating capital employed relating to the fuels business was approximately $44 billion. Fuels value chains The six FVCs seek to optimize the activities of our assets across the supply chain...

  • Page 100
    ...statements - Note 26 on pages 217-222. The group's trading activities in oil are managed by the integrated supply and trading function. In order to carry out the unique delegations from the BP group, the integrated supply and trading function operates and enforces a robust system of internal control...

  • Page 101
    ...will be integrated into the fuels value chains. Lubricants Our lubricants business manufactures and markets lubricants and related products and services to the automotive, industrial, marine, aviation and energy markets across the world. At the end of 2011, the operating capital employed relating to...

  • Page 102
    ... investment levels slightly in 2012 versus 2011 and 2010, focusing on key safety and operational integrity priorities, maintaining our quality manufacturing and marketing portfolio, strengthening our US East of Rockies FVC business through the Whiting refinery modernization project, and continuing...

  • Page 103
    ... Alternative Energy business, Shipping, Treasury (which includes interest income on the group's cash and cash equivalents), and corporate activities worldwide. It also included the group's aluminium business until its disposal in 2011. The replacement cost loss before interest and tax for the year...

  • Page 104
    ... financial markets and supports the financing of BP's projects around the world. Treasury trades foreign exchange and interest rate products in the financial markets, hedging group exposures and generating incremental value through optimizing and managing cash ï¬,ows. Trading activities are...

  • Page 105
    Business review Liquidity and capital resources Following the Deepwater Horizon oil spill in 2010, the group initially faced significant costs relating to the immediate response activities as well as significant uncertainty regarding the ultimate magnitude of its liabilities and timing of cash ...

  • Page 106
    ...balance sheet. b The amounts are undiscounted. Environmental liabilities include those relating to the Gulf of Mexico oil spill, including liabilities for spill response costs. c Represents the expected future contributions to funded pension plans and payments by the group for unfunded pension plans...

  • Page 107
    ... to capital expenditure relating to investments in equity-accounted entities amounting to $610 million. Contracts were in place for $332 million of this total. Cash ï¬,ow The following table summarizes the group's cash ï¬,ows. $ million 2009 2011 2010 Net cash provided by operating activities Net...

  • Page 108
    ... group's business BP's activities, including its oil and gas exploration and production, pipelines and transportation, refining and marketing, petrochemicals production, trading, alternative energy and shipping activities, are conducted in many different countries and are subject to a broad range...

  • Page 109
    ...taxes. The taxes imposed on oil and gas production profits and activities may be substantially higher than those imposed on other activities, for example in Abu Dhabi, Angola, Egypt, Norway, the UK, the US, Russia and Trinidad & Tobago. Environmental regulation BP operates in more than 80 countries...

  • Page 110
    ...be determined at this time. We also expect the industry in general, and BP in particular, to become subject to greater regulation and increased operating costs in the Gulf of Mexico in the future. For further disclosures relating to the consequences of the 2010 Deepwater Horizon oil spill, see Legal...

  • Page 111
    ... sources in 2010, with these regulations taking effect in January 2011 and the second phase taking effect on 1 July 2011. The EPA has committed to additional actions, beginning in 2012, relating to smaller sources of GHG emissions. BP Annual Report and Form 20-F 2011 109 Business review: BP in more...

  • Page 112
    ..., BP's management believes it is helpful to disclose this information. Non-GAAP 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...

  • Page 113
    ... BP's Exploration and Production and Refining and Marketing segments both participate in regional and global commodity trading markets in order to manage, transact and hedge the crude oil, refined products and natural gas that the group either produces or consumes in its manufacturing operations...

  • Page 114
    112 BP Annual Report and Form 20-F 2011

  • Page 115
    Directors and senior management 114 Directors and senior management 117 Directors' interests Directors and senior management BP Annual Report and Form 20-F 2011 113

  • Page 116
    ... President (Safety and Operational Risk) Group General Counsel Executive Vice President (Exploration) Executive Vice President (Production) Executive Vice President (Strategy and Integration) Executive Vice President (Developments) Executive Vice President (Chairman and President of BP America Inc...

  • Page 117
    ... director of GE. He will retire from the BP board at the conclusion of the 2012 AGM. I C Conn Iain Conn (49) joined BP in 1986. Following a variety of roles in oil trading, commercial refining, retail and commercial marketing operations, and exploration and production, in 2000 he became group...

  • Page 118
    ... North Sea and was strategic performance unit leader for BP's North America Gas business. In 2007, he became group vice president, Exploration and Production and a member of the exploration and production operating committee. In 2008, he became group head of safety and operations and in October 2010...

  • Page 119
    ... working in most parts of refining, marketing, trading and gas and power in the US, UK and Continental Europe. In 2007 he became vice president, human resources for Refining and Marketing in BP and in 2010 he added corporate and functions to his portfolio. On 1 March 2011 he became group human...

  • Page 120
    118 BP Annual Report and Form 20-F 2011

  • Page 121
    Corporate governance Corporate governance Over this coming year we will maintain focus, discipline and follow through at the board as we continue to deal with a volume of issues. 120 Board performance report 126 Committee reports 133 Risk management and internal control review Corporate governance...

  • Page 122
    ... Grote stepped down as CFO at the end of 2011 but will remain on the board as an executive director during 2012, with responsibility for BP's integrated supply and trading operations, Alternative Energy, shipping, technology and remediation activities. Sir William Castell has decided not to seek re...

  • Page 123
    ... committee Owners/shareholders BP Board Governance Principles BP goal Governance process Delegation model Executive limitations Board Monitoring, information and assurance Ernst & Young Internal audit Finance function Strategy/group risks/annual plan Safety & operational risk function General...

  • Page 124
    ... Strategy and planning. • Group investor event on governance and board activities. BP's business • History of the integrated oil company and BP. • Upstream (exploration, development, production, overview of our operations). • Refining and Marketing. • Alternative Energy. Functional...

  • Page 125
    ... several strategic and safety and operational group risks, including risks associated with the macroeconomic outlook, the delivery of the 10-point plan, the group's exposure to Russia, crisis management, reputational impact and the recruitment and development of staff. • The audit committee has...

  • Page 126
    ... oil • Annual plan • Competitor analysis • Disposal programme BP board activities in 2011 Assurance • Group financial outlook • Independent expert's annual report • Legal update • Technology review • US overview • Corporate reporting • UK Bribery Act Risk • Risk management...

  • Page 127
    .... Total number of meetings the director did attend. Committee chairman. * Attendance for audit committee and SEEAC includes a joint meeting between the two committees. NB: The chairman also attends meetings of the remuneration and Gulf of Mexico committees. AGM We continue to have a well-attended...

  • Page 128
    ... 11 times over the past year including one joint meeting with the safety, ethics and environment assurance committee (SEEAC). This joint meeting reviews the general auditor's report on internal control and risk management systems for the year in preparation for the board's report to shareholders in...

  • Page 129
    ... monitoring in 2011 were liquidity management, trading risk and corruption risk. During the year, the committee also undertook functional reviews of information technology and services, integrated supply and trading, business service centres and the governance and control of major project investment...

  • Page 130
    ... times in 2011 including a joint meeting with the audit committee at which the general auditor's report on internal control and risk management systems for the year was reviewed in preparation for the board's report to shareholders in the annual report. In that joint meeting the committees reviewed...

  • Page 131
    ...his induction programme in 2011. 2011 SEEAC activities Safety, operations and environment The committee receives regular reports from the S&OR function, including quarterly reports prepared for executive management on the group's health, safety and environmental performance and operational integrity...

  • Page 132
    ... a well-balanced and experienced resource, and also noted the valuable contribution made by Mr Wilson in his capacity as the independent expert. Gulf of Mexico committee Chairman's introduction The Gulf of Mexico committee was very active in 2011, meeting 16 times over the course of the year. In...

  • Page 133
    ... GCRO's plans for expenditures and investments on major projects or matters beyond those included within the established claims administration processes. • Oversee management strategy and actions to restore the group's reputation in the US. Committee processes Information and advice The committee...

  • Page 134
    ... to develop a shortlist. Based on this, the committee determined an initial focus on candidates in the fields of science and technology. Safety, technology and risk management Food and consumer goods; leading a global business Cynthia Carroll Oil, gas and extractive industry experience; leading...

  • Page 135
    ... annual plan presented by the group chief executive. A joint meeting of the audit and safety, ethics and environment assurance committees in February 2012 reviewed a report from the general auditor as part of the board's annual review of the risk management and internal control systems. The report...

  • Page 136
    ...on the New York Stock Exchange (NYSE). The significant differences between BP's corporate governance practices as a UK company and those required by NYSE listing standards for US companies are listed as follows: Independence BP has adopted a robust set of board governance principles, which reï¬,ect...

  • Page 137
    ... of BP's financial statements for external reporting purposes in accordance with IFRS. As of the end of the 2011 fiscal year, management conducted an assessment of the effectiveness of internal control over financial reporting in accordance with the Internal Control Revised Guidance for Directors...

  • Page 138
    ... internal accounting and risk management control reviews (excluding any services relating to information systems design and implementation); non-statutory audit; project assurance and advice on business and accounting process improvement (excluding any services relating to information systems design...

  • Page 139
    ... dividend, cash will automatically be paid instead. Apart from shareholders' rights to share in BP's profits by dividend (if any is declared or announced), the Articles of Association provide that the directors may set aside: • A special reserve fund out of the balance of profits each year...

  • Page 140
    ... terms of the deposit agreement relating to BP ADSs. The substance and timing of notices is described on page 137 under the heading Voting rights. Under the Act, the AGM of shareholders must be held within the six-month period once every year. All general meetings shall be held at a time and place...

  • Page 141
    ...150 Remuneration committee Executive directors' remuneration 2011 Remuneration policy Remuneration policy for 2012 in more depth Pensions Share plans in detail Service contracts and external appointments 151 Non-executive directors' remuneration BP Annual Report and Form 20-F 2011 139 00 BP Annual...

  • Page 142
    ... 2010, eliminated. The long-term plan has, over the last five years, vested less than 10% of the possible shares, reï¬,ecting the impact of major incidents. In this context, the committee carefully considered 2011 performance against targets set at the start of the year. Safety and risk management...

  • Page 143
    ...executive directors. Annual bonuses are shown in the year they were earned. Increase in salary for Mr Dudley relates to his appointment to group chief executive in October 2010. This reï¬,ects the amount of total bonus paid in cash with the deferred bonus as set out in the conditional equity section...

  • Page 144
    ... Implementation of change programmes Retaining and building capability Rebuilding trust External reputation Internal alignment and morale Restoring value Underlying replacement cost profit Total cash costs Upstream operating cash Refining and Marketing profitability 142 BP Annual Report and Form...

  • Page 145
    ... replacement cost profit was around 90% and total cash costs were 7% above. Upstream operating cash was some 3% better than target and Refining and Marketing profitability met its plan level. Refining and Marketing had a strong year overall with record earnings, good safety, and high utilization...

  • Page 146
    ... the committee at the start of each year and assessed by the committee at the end of each performance period. Assessment should take into account material changes in the market environment (predominantly oil prices) and BP's competitive position (primarily vis-à -vis other oil majors). • Informed...

  • Page 147
    ...Value creation (50%). - Operating cash ï¬,ow. - Underlying replacement cost profit. - Total cash costs. - Gearing. - Divestments. - Upstream production efficiency. - Upstream major project delivery. - Refining and Marketing net income per barrel. Directors' remuneration report One-third of annual...

  • Page 148
    ... bonus, paid in shares, places increased focus on long-term alignment with shareholders, and reinforces the critical importance of maintaining high safety and environmental standards. It effectively translates the outcome of a portion of the annual performance bonus into a long-term plan with...

  • Page 149
    ... conditions Performance conditions for the 2012-2014 share element will be aligned with the company's strategic agenda which continues to focus on value creation, reinforcing safety and risk management, and rebuilding trust. Vesting of shares will be based one-third on BP's total shareholder return...

  • Page 150
    ... $18,251 $4,908 £1,209 $1,750 Additional pension earned during the year includes an inï¬,ation increase of 4.8% for UK directors and 3.6% for US directors. Transfer values have been calculated in accordance with guidance issued by the actuarial profession. 148 BP Annual Report and Form 20-F 2011

  • Page 151
    ... above numbers reï¬,ect calculated equivalents in ordinary shares. d The market price of ordinary shares on 9 March 2011 was £4.85 and for ADSs was $47.41. e Restricted award under share element of EDIP. As reported in the 2007 directors' remuneration report in February 2008, the committee awarded...

  • Page 152
    ... to his appointment as a director and are not subject to performance conditions. a b c Numbers shown are ADSs under option. One ADS is equivalent to six ordinary shares. Options lapsed. Options exercised on 22 February 2011. Closing market price for information. Shares were retained after exercise...

  • Page 153
    ... as a director and non-executive chairman of BP Pension Trustees Limited on 29 September 2010. During 2011, he received £100,000 for this role. Peter Sutherland (who was chairman of BP until 31 December 2009) continued his membership of the BP international advisory board after his retirement from...

  • Page 154
    152 BP Annual Report and Form 20-F 2011

  • Page 155
    ... 157 Property, plant and equipment 157 Share ownership 158 Major shareholders 159 Called-up share capital 159 Dividends 160 Legal proceedings 167 Relationships with suppliers and contractors 167 Share prices and listings 168 Material contracts 168 Exchange controls 171 Fees and charges payable by...

  • Page 156
    ...management estimates on highly uncertain matters such as future commodity prices, the effects of inï¬,ation on operating expenses, discount rates, production profiles and the outlook for global or regional market supply-and-demand conditions for crude oil, natural gas and refined products. 154 BP...

  • Page 157
    ...management's best estimate of future oil and natural gas prices and reserves volumes. Prices for oil and natural gas used for future cash ï¬,ow calculations are based on market prices for the first five years and the group's long-term price assumptions thereafter. As at 31 December 2011, the group...

  • Page 158
    ...public expectations, prices, discovery and analysis of site conditions and changes in clean-up technology. The provision for environmental liabilities is reviewed at least annually. The interest rate used to determine the balance sheet obligation at 31 December 2011 was 0.5% (2010 1.5%). Information...

  • Page 159
    ...group's balance sheet, and pension and other post-retirement benefit expense for the following year. The pension and other post-retirement benefit assumptions at December 2011, 2010 and 2009 are provided in Financial statements - Note 37 on page 234. The assumed rate of investment return, discount...

  • Page 160
    ...market value of $1,682 million (2010: 38,382,657 BP ADSs and $1,715 million). Participants in the fund as of the record date may direct the trustee how to vote their portion of the BP Stock Fund. Cash-settled share-based payments Grants are settled in cash where participants are located in a country...

  • Page 161
    ... Limited BlackRock, Inc. Legal & General Group plc Dividends When dividends are paid on its ordinary shares, BP's policy is to pay interim dividends on a quarterly basis. BP policy is also to announce dividends for ordinary shares in US dollars and state an equivalent sterling dividend. Dividends...

  • Page 162
    ... and former officers and directors alleging, among other things, securities fraud claims, violations of the Employee Retirement Income Security Act (ERISA) and contractual and quasi-contractual claims related to the cancellation of the dividend on 16 June 2010. In addition, BP has been named in...

  • Page 163
    ...claims against BP in Transocean's Limitation of Liability action, each claiming a right to contribution from BP for damages assessed against them as a result of the Incident, based on allegations of negligence. M-I also BP Annual Report and Form 20-F 2011 161 Additional information for shareholders

  • Page 164
    ...facts regarding safety procedures and BP's (and other defendants') ability to manage the oil spill, unjust enrichment from economic and other damages to the State of Louisiana and its citizens, and punitive damages. The Louisiana Department of Environmental Quality has issued an administrative order...

  • Page 165
    ... sought in the various proceedings, cannot be fully estimated at this time but they have had and are expected to have a material adverse impact on the group's business, competitive position, cash ï¬,ows, prospects, BP Annual Report and Form 20-F 2011 163 Additional information for shareholders

  • Page 166
    ...liabilities may continue to have a material adverse effect on the group's results and financial condition. See Financial statements - Note 2 on pages 190-194 for information regarding the financial impact of the Incident. Investigations and reports relating to the Deepwater Horizon oil spill BP is...

  • Page 167
    ... Petroleum Refinery Process Safety Management National Emphasis Program. BP Products has contested the citations, and the matter is currently scheduled for trial before the OSH Review Commission in June 2012. In April 2009, Kenneth Abbott, as relator, filed a US False Claims Act lawsuit against BP...

  • Page 168
    ... with Rosneft Oil Company, originally announced on 14 January 2011, relating to oil and gas exploration, production, refining and marketing in Russia (the Arctic Opportunity). Those transactions included the issue or transfer of shares between Rosneft Oil Company and any BP group company (pursuant...

  • Page 169
    ...lowest sales prices as reported on the LSE and NYSE, respectively. Pence Ordinary shares High Low Dollars American depositary sharesa High Low Year ended 31 December 2007 2008 2009 2010 2011 Year ended 31 December 2010: First quarter Second quarter Third quarter Fourth quarter 2011: First quarter...

  • Page 170
    ... prices for ADSs on the NYSE, are closely 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 17 February 2012, 838,650,908 ADSs (equivalent to approximately 5,031,905,448 ordinary shares...

  • Page 171
    ...US federal income tax purposes). Dividends paid to a non-corporate US holder in taxable years beginning before 1 January 2013 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%, provided that the holder has a holding period in the ordinary shares or...

  • Page 172
    ... rate of 1.5% of the value of the ordinary shares at the time of the transfer. An ADR holder electing to receive ADSs instead of a cash dividend will be responsible for the stamp duty reserve tax due on issue of shares to the Depositary's nominee and calculated at the rate of 1.5% on the issue price...

  • Page 173
    ... third-party expenses paid directly Total a $500,000 $1,940,127 $798,177 $76,736 $2,918 $12,868 $3,330,826 Includes fees in relation to transfer agent costs and costs of the BP Scrip Dividend Programme operated by JPMorgan Chase Bank, N.A. b Broker reimbursements are fees payable to Broadridge for...

  • Page 174
    ... Scrip Dividend Programme or to change the way you receive your company documents (such as the BP Annual Report and Form 20-F, BP Summary Review and Notice of BP Annual General Meeting) please contact the BP Registrar or BP ADS Depositary. Ordinary and preference shareholders - BP Registrar Equiniti...

  • Page 175
    ...and losses Research and development Operating leases Exploration for and evaluation of oil and natural gas resources Auditor's remuneration Finance costs Taxation Dividends Earnings per ordinary share Property, plant and equipment Goodwill Intangible assets Investments in jointly controlled entities...

  • Page 176
    ... on the Gulf of Mexico oil spill and BP's response is included on pages 76 to 79 and elsewhere in this report, including Safety on pages 65 to 69. The group has considerable financial resources, and the directors believe that the group is well placed to manage its business risks successfully. After...

  • Page 177
    ... the consolidated financial statements of BP p.l.c. for the year ended 31 December 2011 which comprise the group income statement, the group statement of comprehensive income, the group statement of changes in equity, the group balance sheet, the group cash ï¬,ow statement and the related notes...

  • Page 178
    ... BP group Report of Independent Registered Public Accounting Firm on the Annual Report on Form 20-F The Board of Directors and Shareholders of BP p.l.c. We have audited the accompanying group balance sheets of BP p.l.c. as of 31 December 2011 and 2010, and the related group income statement, group...

  • Page 179
    ... the standards of the Public Company Accounting Oversight Board (United States), the group balance sheets of BP p.l.c. as of 31 December 2011 and 2010, and the related group income statement, group statement of comprehensive income, group statement of changes in equity and group cash ï¬,ow statement...

  • Page 180
    Consolidated financial statements of the BP group http://www.bp.com/downloads/incomestatement Group income statement For the year ended 31 December Note 2011 2010 $ million 2009 Sales and other operating revenues Earnings from jointly controlled entities - after interest and tax Earnings from ...

  • Page 181
    ... to market Available-for-sale investments - recycled to the income statement Cash ï¬,ow hedges marked to market Cash ï¬,ow hedges - recycled to the income statement Cash ï¬,ow hedges - recycled to the balance sheet Share of equity-accounted entities' other comprehensive income, net of tax Taxation...

  • Page 182
    Consolidated financial statements of the BP group http://www.bp.com/downloads/balancesheet Group balance sheet At 31 December Note 2011 $ million 2010a Non-current assets Property, plant and equipment Goodwill Intangible assets Investments in jointly controlled entities Investments in associates ...

  • Page 183
    ... of businesses, net of cash disposeda Proceeds from loan repayments Other Net cash used in investing activities Financing activities Net issue of shares Proceeds from long-term financing Repayments of long-term financing Net increase (decrease) in short-term debt Dividends paid BP shareholders...

  • Page 184
    ... Financial Reporting Standards The consolidated financial statements of the BP group for the year ended 31 December 2011 were approved and signed by the chairman and group chief executive on 6 March 2012 having been duly authorized to do so by the board of directors. BP p.l.c. is a public limited...

  • Page 185
    ...measured at the lower of carrying amount and fair value less costs to sell. rate of exchange ruling at the balance sheet date. Any resulting exchange Non-current assets and disposal groups are classified as held for differences are included in the income statement. Non-monetary assets sale if their...

  • Page 186
    ... assessing value in use, the estimated future cash ï¬,ows are adjusted for the risks specific to the asset group and are discounted to their present value using a pre-tax discount rate that reï¬,ects current market assessments of the time value of money. An assessment is made at each reporting date...

  • Page 187
    ...is determined 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...

  • Page 188
    ... accounting policies continued Leases Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease term at the fair value of the leased property or, if lower, at the present value...

  • Page 189
    ... in the company (market conditions). Non-vesting conditions, such as the condition income statement in the period in which they become payable. that employees contribute to a savings-related plan, are taken into account in the grant-date fair value, and failure to meet a non-vesting condition is...

  • Page 190
    ... between the proceeds from sale and the original cost being taken to the profit and loss account reserve. No gain or loss is recognized in the income statement on the purchase, sale, issue or cancellation of equity shares. Revenue Revenue arising from the sale of goods is recognized when the...

  • Page 191
    ...are effective for annual periods beginning on or after 1 July 2012. BP intends to adopt the amendments with effect from 1 January 2013. The adoption of the amended standard is expected to only have a presentational impact on the group's financial statements, with no effect on the reported income or...

  • Page 192
    ... and environmental rehabilitation funds'. Key aspects of the accounting for the oil spill are summarized below. The financial impacts of the Gulf of Mexico oil spill on the income statement, balance sheet and cash ï¬,ow statement of the group are shown in the table below. Amounts related to...

  • Page 193
    ...quarter of 2013, which is available to satisfy legitimate individual and business claims administered by the Gulf Coast Claims Facility (GCCF), state and local government claims resolved by BP, final judgments and settlements, state and local response costs, and natural resource damages and related...

  • Page 194
    ...nancial statements http://www.bp.com/downloads/gom 2. Significant event - Gulf of Mexico oil spill continued The portion of the provision recognized during the year for items that will be covered by the trust fund, including the increased estimate of the cost of individual and business claims as...

  • Page 195
    ... to take account of the time value of money, was charged to the income statement in 2010. Other items Provisions at 31 December 2011 also include amounts in relation to completing the oil spill response, BP's commitment to a 10-year research programme in the Gulf of Mexico, estimated penalties...

  • Page 196
    ...http://www.bp.com/downloads/gom 2. Significant event - Gulf of Mexico oil spill continued The total amount in the income statement is analysed in the table below. Costs charged directly to the income statement in 2010 in relation to spill response, environmental and litigation and claims are those...

  • Page 197
    ... in the Exploration and Production segment with Devon, undertaken in a number of stages during 2010 and 2011. This transaction strengthens BP's position in the Gulf of Mexico, enhances interests in Azerbaijan and facilitates the development of Canadian assets. On 27 April 2010, BP acquired 100...

  • Page 198
    ... has been reclassified in the group balance sheet from assets classified as held for sale to investments in jointly controlled entities. BP's share of PAE's profit for 2011 has been recognized in full in the group income statement; the 2010 income statement has not been adjusted as the amount...

  • Page 199
    Notes on financial statements 5. Disposals and impairment 2011 2010 $ million 2009 Proceeds from disposals of fixed assets Proceeds from disposals of businesses, net of cash disposed By business Exploration and Production Refining and Marketing Other businesses and corporate 3,500 (768) 2,732 ...

  • Page 200
    ...-for-sale financial assets that are quoted investments, the fair value is determined by reference to bid prices at the close of business at the balance sheet date. Any cumulative loss previously recognized in other comprehensive income is transferred to the income statement. 198 BP Annual Report...

  • Page 201
    ... businesses and corporate During 2011, 2010 and 2009, Other businesses and corporate recognized impairment losses totalling $58 million, $113 million and $189 million respectively related to various assets in the Alternative Energy business. Financial statements BP Annual Report and Form 20-F 2011...

  • Page 202
    ... Marketing. BP's activities in low-carbon energy are managed through our Alternative Energy business, which is reported in Other businesses and corporate. The group is managed on an integrated basis. Exploration and Production's activities include oil and natural gas exploration, field development...

  • Page 203
    ... Marketing Other businesses and corporate Gulf of Mexico oil spill response Consolidation adjustment and eliminations By business Total group Segment revenues Sales and other operating revenues Less: sales between businesses Third party sales and other operating revenues Equity-accounted earnings...

  • Page 204
    ... Marketing Other businesses and corporate Gulf of Mexico oil spill response Consolidation adjustment and eliminations By business Total group Segment revenues Sales and other operating revenues Less: sales between businesses Third party sales and other operating revenues Equity-accounted earnings...

  • Page 205
    ... statements http://www.bp.com/downloads/segmentalanalysis 6. Segmental analysis continued $ million 2009 Exploration and Production Refining and Marketing Other businesses and corporate Consolidation adjustment and eliminations By business Total group Segment revenues Sales and other operating...

  • Page 206
    Notes on financial statements http://www.bp.com/downloads/segmentalanalysis 6. Segmental analysis continued $ million 2011 Total By geographical area US Non-US Revenues Third party sales and other operating revenuesa Results Replacement cost profit before interest and taxation Non-current ...

  • Page 207
    ... 69 53 88 225 32 535 567 792 a Total interest and other income related to financial instruments amounted to $151 million (2010 $148 million and 2009 $116 million). 8. Production and similar taxes 2011 2010 $ million 2009 US Non-US http://www.bp.com/downloads/dda 1,854 6,426 8,280 1,093 4,151...

  • Page 208
    ...cost inï¬,ation rates, are set by senior management. These environmental assumptions take account of existing prices, global supply-demand equilibrium for oil and natural gas, other macroeconomic factors and historical trends and variability. Exploration and Production 2011 Total UK US Rest of world...

  • Page 209
    ... review of goodwill continued The key assumptions required for the value-in-use estimation are the oil and natural gas prices, production volumes and the discount rate. To test the sensitivity of the headroom to changes in production volumes and oil and natural gas prices, management has developed...

  • Page 210
    .... The group also routinely enters into bareboat charters, time-charters and spot-charters for ships on standard industry terms. The most significant items of plant and machinery hired under operating leases are drilling rigs used in the Exploration and Production segment. At 31 December 2011 the...

  • Page 211
    ... within the group totals relating to activity associated with the exploration for and evaluation of oil and natural gas resources. All such activity is recorded within the Exploration and Production segment. $ million 2009 2011 2010 Exploration and evaluation costs Exploration expenditure written...

  • Page 212
    ... higher/lower rates Tax reported in equity-accounted entities Adjustments in respect of prior years Current year losses unrelieved Goodwill impairment Tax incentives for investment Gulf of Mexico oil spill non-deductible costs Permanent differences relating to disposals Other Effective tax rate 26...

  • Page 213
    ...www.bp.com/downloads/taxation 18. Taxation continued Deferred tax 2011 Income statement 2010 2009 2011 $ million Balance sheet 2010 Deferred tax liability Depreciation Pension plan surpluses Other taxable temporary differences Deferred tax asset Pension plan and other post-retirement benefit plan...

  • Page 214
    ... the first three quarters of 2010 in light of the Gulf of Mexico oil spill and commitments to fund the $20-billion Trust. Pence per share 2009 Cents per share 2009 $ million 2009 2011 2010 2011 2010 2011 2010 Dividends announced and paid in cash Preference shares Ordinary shares March June...

  • Page 215
    ... statements http://www.bp.com/downloads/ppe 21. Property, plant and equipment $ million Plant, Oil and gas machinery and equipment properties Fixtures, fittings and office equipment Transportation Oil depots, storage tanks and service stations Land and land improvements Buildings Total Cost...

  • Page 216
    Notes on financial statements 22. Goodwill 2011 $ million 2010 Cost At 1 January Exchange adjustments Acquisitions Reclassified as assets held for sale Deletions At 31 December Impairment losses At 1 January Impairment losses for the year Reclassified as assets held for sale At 31 December Net ...

  • Page 217
    ... for the purchase of LNG, crude oil and oil products, refinery operating costs and storage and handling services. See Note 44 for further information on capital commitments relating to BP's investments in jointly controlled entities. Financial statements BP Annual Report and Form 20-F 2011 215

  • Page 218
    ... period. Income statement information shown below includes data relating to associates reclassified as assets held for sale for the period up until their date of reclassification as held for sale. $ million 2009 Total TNK-BP Other 2011 Total TNK-BP Other 2010 Total TNK-BP Other Sales and...

  • Page 219
    ... trading of new products, instruments and strategies and material commitments. In addition, the integrated supply and trading function undertakes derivative activity for risk management purposes under a separate control framework as described more fully below. Financial statements BP Annual Report...

  • Page 220
    ... 2011 Year end High Low Average Group trading Oil price trading Gas and power trading 83 84 20 28 23 6 42 39 11 28 27 7 70 39 62 15 10 7 34 19 27 33 25 18 The major components of market risk are commodity price risk, foreign currency exchange risk, interest rate risk and equity price...

  • Page 221
    ... within oil price trading in the value-at-risk table above. Since BP has global operations, ï¬,uctuations in foreign currency exchange rates can have significant effects on the group's reported results. The effects of most exchange rate ï¬,uctuations are absorbed in business operating results...

  • Page 222
    ... manages bank deposit limits to ensure cash is well-diversified and to reduce concentration risks. At 31 December 2011, 98% of the cash and cash equivalents balance was deposited with financial institutions rated at least A by Standard & Poor's and A2 by Moody's. Direct cash and cash equivalent...

  • Page 223
    ... and ten years. Flexible commercial paper is issued at competitive rates to meet short-term borrowing requirements as and when needed. As a further liquidity measure, the group continues to maintain suitable levels of cash and cash equivalents, invested with highly rated banks or money market funds...

  • Page 224
    ... these bonds and repurchased them. The outstanding bonds associated with these long-term gas supply contracts held by BP are recorded within other investments, with the related liability recorded within other payables on the balance sheet. The fair value of the gas pre-paid bonds is the same as the...

  • Page 225
    ...; and short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risk of changes in value and have a maturity of three months or less from the date of acquisition. The carrying amounts of cash at bank and in hand and term bank deposits...

  • Page 226
    ...relation to commodity prices, foreign currency exchange rates and interest rates, including management of the balance between ï¬,oating rate and fixed rate debt, consistent with risk management policies and objectives. Additionally, the group has a well-established entrepreneurial trading operation...

  • Page 227
    ...their original business objective, and are recognized at fair value with changes in fair value recognized in the income statement. Trading activities are undertaken by using a range of contract types in combination to create incremental gains by arbitraging prices between markets, locations and time...

  • Page 228
    ... continued The following table shows the changes in the day-one profits and losses deferred on the balance sheet. http://www.bp.com/downloads/dfi 2011 Natural gas price $ million 2010 Natural gas price Power price Oil price Fair value of contracts not recognized through the income statement...

  • Page 229
    ...-for-sale investment held by the group. This arrangement contained an embedded derivative whose fair value was related to the equity price of the investment and was categorized in level 2 of the fair value hierarchy. The arrangement was terminated in 2011. Financial statements BP Annual Report and...

  • Page 230
    ...xed rate debt issued by the group. The effectiveness of each hedge relationship is quantitatively assessed and demonstrated to continue to be highly effective. The gain on the hedging derivative instruments taken to the income statement in 2011 was $328 million (2010 $563 million gain and 2009 $98...

  • Page 231
    .... The terms and conditions of these finance leases do not impose any significant financial restrictions on the group. Future minimum lease payments under finance leases are set out below. Financial statements $ million 2010 2011 Future minimum lease payments payable within 1 year 2 to 5 years...

  • Page 232
    ..., discounted cash ï¬,ow analyses based on the group's current incremental borrowing rates for similar types and maturities of borrowing. $ million 2010 Fair value Carrying amount Fair value 2011 Carrying amount Short-term borrowings Long-term borrowings Net obligations under finance leases Total...

  • Page 233
    ...and in Note 2. Provisions relating to the Gulf of Mexico oil spill, included in the table above, are separately presented below: $ million Environmental Spill response Litigation and claims Clean Water Act penalties Total Financial statements At 1 January 2011 New or increased provisions Unwinding...

  • Page 234
    ... at 31 December 2011 relating to the Gulf of Mexico oil spill including amounts in relation to environmental expenditure, spill response costs, litigation and claims, and Clean Water Act penalties, each of which is described below. The total amounts that will ultimately be paid by BP are subject to...

  • Page 235
    ...-quarter 2010 interim financial statements. At the time that charge was taken, the latest estimate from the intra-agency Flow Rate Technical Group created by the National Incident Commander in charge of the spill response was between 35,000 and 60,000 barrels per day. The mid-point of that range...

  • Page 236
    ...used to determine the pension liabilities at that date and the pension expense for 2012. % Other 2011 2010 2009 Financial assumptions 2011 2010 UK 2009 2011 2010 US 2009 Discount rate for pension plan liabilities Discount rate for other post-retirement benefit plans Rate of increase in salaries...

  • Page 237
    ...-term view, and the size of the resulting equity risk premium over government bond yields is reviewed each year for reasonableness. Our assumption for return on bonds reï¬,ects the portfolio mix of government fixed-interest, index-linked and corporate bonds. Financial statements BP Annual Report...

  • Page 238
    ... listed on stock exchanges as well as unlisted investments. Movements in the value of plan assets during the year are shown in detail in the table on page 238. 2011 Expected long-term rate of return % Expected long-term rate of return % 2010 Expected long-term rate of return % 2009 Market value...

  • Page 239
    ... benefits continued The assumed rate of investment return, discount rate, inï¬,ation, US healthcare cost trend rate and the mortality assumptions all have a significant effect on the amounts reported. A one-percentage point change in the following assumptions for the group's plans would have...

  • Page 240
    ... part of the investment return, the costs of administering our pension plan benefits are generally included in current service cost and the costs of administering our other post-retirement benefit plans are included in the benefit obligation. Included within production and manufacturing expenses...

  • Page 241
    ... part of the investment return, the costs of administering our pension plan benefits are generally included in current service cost and the costs of administering our other post-retirement benefit plans are included in the benefit obligation. Included within production and manufacturing expenses...

  • Page 242
    ... group balance sheet. $ million 2007 2011 2010 2009 2008 History of surplus (deficit) and of experience gains and losses Benefit obligation at 31 December Fair value of plan assets at 31 December Deficit Experience losses on plan liabilities Actual return less expected return on pension plan...

  • Page 243
    ... 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. Treasury shares 2011 Shares Nominal value thousand $ million Shares thousand 2010 Nominal value $ million Shares thousand 2009...

  • Page 244
    ... loss relating to pensions and other post-retirement benefits Available-for-sale investments (including recycling) Cash ï¬,ow hedges (including recycling) Share of equity-accounted entities' other comprehensive income, net of tax Profit for the year Total comprehensive income Dividends Share-based...

  • Page 245
    Notes on financial statements $ million Total own shares and treasury shares Foreign currency translation reserve Availablefor-sale investments Total fair value reserves Sharebased payment reserve Profit and loss account BP shareholders' equity Own shares Treasury shares Cash ï¬,ow hedges ...

  • Page 246
    ... to profit in respect of employee share-based payment plans where the scheme has not yet been settled by means of an award of shares to an individual. Profit and loss account The balance held on this reserve is the accumulated retained profits of the group. 244 BP Annual Report and Form 20...

  • Page 247
    ... 2011 Net of tax Currency translation differences (including recycling) Actuarial loss relating to pensions and other post-retirement benefits Available-for-sale investments (including recycling) Cash ï¬,ow hedges (including recycling) Share of equity-accounted entities' other comprehensive income...

  • Page 248
    ... price equivalent to the market price of a BP share immediately preceding the date of grant were granted to participants in 2011. These options are not subject to any performance conditions and will be exercisable between the third and tenth anniversaries of the grant date. Share Value Plan In 2012...

  • Page 249
    ... Carlo Financial statements The group uses the observable market price for ordinary shares at the date of grant to determine the fair value of non-TSR restricted share units. The group used a Monte Carlo simulation to determine the fair values of the TSR elements of the 2011, 2010 and 2009 CPP...

  • Page 250
    ...Share-based payments Pension and other post-retirement benefit costs 9,827 851 584 1,065 12,327 9,242 789 576 1,166 11,773 2010 9,702 780 521 1,213 12,216 2009 Number of employees at 31 December 2011 Exploration and Production Refining and Marketingb Other businesses and corporate Gulf Coast...

  • Page 251
    ...management team. Short-term employee benefits In addition to fees paid to the non-executive chairman and non-executive directors, these amounts comprise, for executive directors and senior managers, salary and benefits earned during the year, plus cash bonuses awarded for the year. Deferred annual...

  • Page 252
    ... decommission oil and natural gas production facilities and related pipelines. Provision is made for the estimated costs of these activities, however there is uncertainty regarding both the amount and timing of these costs, given the long-term nature of these obligations. BP believes that the impact...

  • Page 253
    ... parent company's annual return made to the Registrar of Companies. Country of incorporation Subsidiaries % Principal activities International *BP Corporate Holdings BP Europa SE BP Exploration Operating Company *BP Global Investments *BP International BP Oil International *BP Shipping *Burmah...

  • Page 254
    ...nancial statements 45. Subsidiaries, jointly controlled entities and associates continued Jointly controlled entities % Country of incorporation Principal activities Angola Angola LNG Supply Services Argentina Pan American Energya Canada Sunrise Oil Sands China Shanghai SECCO Petrochemical Company...

  • Page 255
    ... 2011 BP p.l.c. BP group Sales and other operating revenues Earnings from jointly controlled entities - after interest and tax Earnings from associates - after interest and tax Equity-accounted income of subsidiaries - after interest and tax Interest and other revenues Gains on sale of businesses...

  • Page 256
    ... Income statement continued For the year ended 31 December Issuer BP Exploration (Alaska) Inc. Guarantor Other subsidiaries Eliminations and reclassifications $ million 2010 BP p.l.c. BP group Sales and other operating revenues Earnings from jointly controlled entities - after interest and tax...

  • Page 257
    ... Income statement continued For the year ended 31 December Issuer BP Exploration (Alaska) Inc. Guarantor Other subsidiaries Eliminations and reclassifications $ million 2009 BP p.l.c. BP group Sales and other operating revenues Earnings from jointly controlled entities - after interest and tax...

  • Page 258
    ...nancial statements 46. Condensed consolidating information on certain US subsidiaries continued Balance Sheet At 31 December Issuer BP Exploration (Alaska) Inc. Guarantor Eliminations and Other subsidiaries reclassifications $ million 2011 BP p.l.c. BP group Non-current assets Property, plant...

  • Page 259
    Notes on financial statements 46. Condensed consolidating information on certain US subsidiaries continued Balance Sheet continued At 31 December Issuer BP Exploration (Alaska) Inc. Guarantor Eliminations Other and a subsidiaries reclassifications $ million 2010 BP p.l.c. BP groupa Non-current...

  • Page 260
    ... consolidating information on certain US subsidiaries continued Cash ï¬,ow statement For the year ended 31 December Issuer BP Exploration (Alaska) Inc. Guarantor Eliminations and Other subsidiaries reclassifications $ million 2011 BP p.l.c. BP group Net cash provided by operating activities...

  • Page 261
    ... equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. For details on BP's proved reserves and production compliance and governance processes, see pages 90 to 91. Financial statements BP Annual Report and Form 20-F 2011 259

  • Page 262
    Supplementary information on oil and natural gas (unaudited) Oil and natural gas exploration and production activities Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2011 Total UK US Russia Rest of Asia Subsidiaries Capitalized costs ...

  • Page 263
    ... natural gas (unaudited) Oil and natural gas exploration and production activities continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2011 Total UK US Russia Rest of Asia Equity-accounted entities (BP share)a Capitalized costs at...

  • Page 264
    ... information on oil and natural gas (unaudited) Oil and natural gas exploration and production activities continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2010 Total UK US Russia Rest of Asia Subsidiariesa Capitalized costs...

  • Page 265
    ... natural gas (unaudited) Oil and natural gas exploration and production activities continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2010 Total UK US Russia Rest of Asia Equity-accounted entities (BP share)a Capitalized costs at...

  • Page 266
    ... information on oil and natural gas (unaudited) Oil and natural gas exploration and production activities continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2009 Total UK US Russia Rest of Asia Subsidiariesa Capitalized costs...

  • Page 267
    ... natural gas (unaudited) Oil and natural gas exploration and production activities continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2009 Total UK US Russia Rest of Asia Equity-accounted entities (BP share)a Capitalized costs at...

  • Page 268
    ... information on oil and natural gas (unaudited) Movements in estimated net proved reserves million barrels Crude oila Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2011 Total UK US e Russia Rest of Asia Subsidiaries At 1 January 2011 Developed...

  • Page 269
    ... on oil and natural gas (unaudited) Movements in estimated net proved reserves continued billion cubic feet Natural gasa Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2011 Total UK US Russia Rest of Asia Subsidiaries At 1 January 2011 Developed...

  • Page 270
    Supplementary information on oil and natural gas (unaudited) Movements in estimated net proved reserves continued million barrels Bitumena Rest of North America 2011 Total Equity-accounted entities (BP share) At 1 January 2011 Developed Undeveloped Changes attributable to Revisions of previous ...

  • Page 271
    ... net proved reserves continued million barrels of oil equivalent Total hydrocarbonsa Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2011 Total UK USe Russia Rest of Asia Subsidiaries At 1 January 2011 Developed Undeveloped Changes attributable...

  • Page 272
    ... on oil and natural gas (unaudited) Movements in estimated net proved reserves continued million barrels Crude oila Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2010 Total UK USe Russia Rest of Asia Subsidiaries At 1 January 2010 Developed...

  • Page 273
    ... on oil and natural gas (unaudited) Movements in estimated net proved reserves continued billion cubic feet Natural gasa Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2010 Total UK US Russia Rest of Asia Subsidiaries At 1 January 2010 Developed...

  • Page 274
    Supplementary information on oil and natural gas (unaudited) Movements in estimated net proved reserves continued million barrels Bitumena Rest of North America 2010 Total Equity-accounted entities (BP share) At 1 January 2010 Developed Undeveloped Changes attributable to Revisions of previous ...

  • Page 275
    ...barrels of oil equivalent in South America; and 21 million barrels of oil equivalent in Rest of Asia. m Includes 9 million barrels of oil equivalent (excluding gas consumed in operations) relating to production from assets held for sale at 31 December 2010. b BP Annual Report and Form 20-F 2011 273

  • Page 276
    ... on oil and natural gas (unaudited) Movements in estimated net proved reserves continued million barrels Crude oila Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2009 Total UK USe Russia Rest of Asia Subsidiaries At 1 January 2009 Developed...

  • Page 277
    ... on oil and natural gas (unaudited) Movements in estimated net proved reserves continued billion cubic feet Natural gasa Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2009 Total UK US Russia Rest of Asia Subsidiaries At 1 January 2009 Developed...

  • Page 278
    ... net proved reserves continued million barrels of oil equivalent Total hydrocrabonsa Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia 2009 Total UK USe Russia Rest of Asia Subsidiaries At 1 January 2009 Developed Undeveloped Changes attributable...

  • Page 279
    ... in the standardized measure of discounted future net cash ï¬,ows: $ million Total subsidiaries and equity-accounted entities Subsidiaries Equity-accounted entities (BP share) Sales and transfers of oil and gas produced, net of production costs Development costs for the current year as estimated...

  • Page 280
    ... relating to proved oil and gas reserves continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2010 Total UK US Russia Rest of Asia At 31 December 2010 Subsidiaries Future cash inï¬,owsa Future production costb Future development...

  • Page 281
    ... relating to proved oil and gas reserves continued Europe North America Rest of Europe Rest of North America South America Africa Asia Australasia $ million 2009 Total UK US Russia Rest of Asia At 31 December 2009 Subsidiaries Future cash inï¬,owsa Future production costb Future development...

  • Page 282
    ... North America Rest of Europe Rest of North America South America Africa Asia Australasia Total UK US Russia Rest of Asia Number of productive wells at 31 December 2011 197 Oil wellsa - gross 97 - net 273 Gas wellsb - gross - net 137 Oil and natural gas acreage at 31 December 2011 Developed...

  • Page 283
    ... the number of exploratory and development oil and natural gas wells in the process of being drilled by the group and its equityaccounted entities as of 31 December 2011. Suspended development wells and long-term suspended exploratory wells are also included in the table. Europe North America Rest...

  • Page 284
    ...fies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. BP p.l.c. (Registrant) /s/D.J. JACKSON D.J. Jackson Company Secretary Dated 6 March 2012 282 BP Annual Report and Form 20-F 2011

  • Page 285
    ... related to the Gulf of Mexico oil spill. Ernst & Young LLP Allister Wilson (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 6 March 2012 Financial statements The maintenance and integrity of the BP p.l.c. website are the responsibility of the directors...

  • Page 286
    ... statements of BP p.l.c. Company balance sheet At 31 December Note 2011 $ million 2010 Fixed assets Investments Subsidiary undertakings Associated undertakings Total fixed assets Current assets Debtors - amounts falling due: Within one year After more than one year Deferred taxation Cash at bank...

  • Page 287
    ... 31 December Note 2011 $ million 2010 Net cash (outï¬,ow) inï¬,ow from operating activities Servicing of finance and returns on investments Interest received Interest paid Dividends received Net cash inï¬,ow from servicing of finance and returns on investments Tax paid Capital expenditure and...

  • Page 288
    ... sheet 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...

  • Page 289
    ...1. Accounting policies continued Deferred taxation Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay...

  • Page 290
    ... undertakings, joint ventures and associated undertakings will be attached to the company's annual return made to the Registrar of Companies. Country of incorporation % Principal activities International BP Global Investments BP International BP Holdings North America BP Corporate Holdings Burmah...

  • Page 291
    ...are used to determine the pension liabilities at that date and the pension cost for 2012. % 2009 Financial assumptions 2011 2010 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...

  • Page 292
    Parent company financial statements of BP p.l.c. 6. Pensions continued 2011 $ million 2010 Analysis of the amount charged to operating profit Current service costa Settlement, curtailment and special termination benefitsb Payments to defined contribution plans Total operating chargec Analysis ...

  • Page 293
    ...recognized on balance sheet The aggregate level of employer contributions into the BP Pension Fund in 2012 is expected to be $492 million. (2,088) - (2,088) - (2,088) (2,088) 1,870 (480) 1,390 1,537 (147) 1,390 2011 2010 2009 2008 $ million 2007 History of surplus and of experience gains and...

  • Page 294
    ...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. 8. Capital and reserves $ million Share capital Share premium account Capital redemption reserve Merger reserve Own...

  • Page 295
    ... Total intrinsic value for vested cash-settled share-based payments 579 5 584 12 1 577 (1) 576 16 1 For ease of presentation, options and shares detailed in the tables within this note are stated as UK ordinary share equivalents in US dollars. US employees are granted American Depositary Shares...

  • Page 296
    ... price equivalent to the market price of a BP share immediately preceding the date of grant were granted to participants in 2011. These options are not subject to any performance conditions and will be exercisable between the third and tenth anniversaries of the grant date. Share Value Plan In 2012...

  • Page 297
    ... value 16.0 $9.43 Market value The group uses the observable market price for ordinary shares at the date of grant to determine the fair value of non-TSR restricted share units. The group used a Monte Carlo simulation to determine the fair values of the TSR elements of the 2011, 2010 and 2009...

  • Page 298
    ...cost involved in doing so is not significant. Further information Full details of individual directors' remuneration are given in the directors' remuneration report on pages 139 to 151. The parent company financial statements of BP p.l.c. on pages PC1 - PC14 do not form part of BP's Annual Report...

  • Page 299
    ... Review 2011 in print or read more online from late March 2012. bp.com/sustainability © BP p.l.c. 2012 You can order BP's printed publications, free of charge, from: US and Canada Precision IR Toll-free +1 888 301 2505 Fax +1 804 327 7549 [email protected] UK and Rest of World BP...

  • Page 300