BP 2011 Annual Report Download - page 41

Business review: Group overview
BP Annual Report and Form 20-F 2011 39
What you can measure
6 Active portfolio management
We want to focus our portfolio further on our areas of strength, and deliver
increased financial flexibility. By the end of 2013, we expect to have
completed $38 billion of disposals since the start of 2010.
7 New projects with higher margins
We have a strong list of upstream projects due to come onstream over the
next three years. By 2014, unit cash marginsa on production from this new
wave of projects are expected to be around double our existing average.b
8 Operating cash flow growth
We are aiming to generate an increase of around 50% net cash provided by
additional operating activities by 2014 compared with 2011c – approximately
half from ending Deepwater Horizon Oil Spill Trust fund payments and
around half from operations.
9 Use of cash flow for reinvestment and distributions
We will use additional operating cash prudently. We want to use around half
for increased investment in our project inventory for growth, and around half
for other purposes. This may include increased distributions to shareholders
through dividends or share buybacks or repayment of debt.
10 Strong balance sheet
We intend to enhance the strength of our balance sheet by targeting our
level of gearingd at the lower half of the 10-20% range over time.
a 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.
b Assuming a constant oil price of $100 per barrel.
c Assuming an oil price of $100 per barrel in 2014. The projection reflects our expectation that all required
payments into the $20-billion trust fund will have been completed by the end of 2012. It does not reflect
any cash flows relating to other liabilities, contingent liabilities, settlements or contingent assets arising
from the Gulf of Mexico oil spill which may or may not arise at that time. We are not able to reliably
estimate the amount or timing of a number of contingent liabilities. See Financial statements – Note 43 on
page 249 for further information.
d Gearing refers to the ratio of the group’s net debt to net debt plus equity and is a non-GAAP measure. See
Financial statements – Note 35 on page 230 for further information including a reconciliation to gross debt,
which is the nearest equivalent measure on an IFRS basis.
Left Lingen refinery in
Germany is one of Europe’s
most complex refineries due
to its ability to fully upgrade
crude during processing.
Operating cash flow momentum
2011 operating
cash estimate
at oil price of
$113/bbl.
Completion of
contributions to
the $20-billion
trust fund.
Operational
restoration
and growth.
Divested
operations
and
environment.
2014 operating
cash estimate
at oil price
of $100/bbl.