BP 2012 Annual Report Download - page 202

4. Non-current assets held for sale continued
On 1 February 2013, BP announced that it had completed the sale of its Texas City refinery and a portion of its retail and logistics network in the south-
eastern US to Marathon Petroleum Corporation for $0.6 billion in relation to the fixed assets, $1.1 billion related to working capital, principally inventory,
and a six-year earn-out arrangement, of up to $0.7 billion, based on future margins and refinery throughput. The consideration is subject to post-closing
adjustments and will be fair-valued for accounting purposes. The assets, and associated liabilities, of the refinery and related retail and logistics network
are classified as held for sale in the group balance sheet at 31 December 2012.
TNK-BP
On 22 October 2012, BP announced that it had signed heads of terms for a proposed transaction to sell its 50% share in TNK-BP to Rosneft. From this
date, BP’s investment in TNK-BP met the criteria to be classified as an asset held for sale. Consequently, BP ceased equity accounting for its share of
TNK-BP’s earnings from the date of the announcement. The TNK-BP segment result includes a dividend of $709 million paid by TNK-BP subsequent to
the reclassification. BP continues to report its share of TNK-BP’s production and reserves until the transaction closes.
On 22 November 2012, BP announced that it, Rosneft and Rosneftegaz – the Russian state-owned parent company of Rosneft – had signed definitive
and binding sale and purchase agreements for the sale of BP’s 50% interest in TNK-BP to Rosneft and for BP’s investment in Rosneft. On completion,
the overall effect of the transaction will be that BP will receive $11.6 billion in cash ($12.3 billion previously announced less the $0.7 billion dividend
received by BP), subject to closing adjustments, and acquire an 18.5% stake in Rosneft for its stake in TNK-BP. Combined with BP’s existing 1.25%
shareholding, this will result in BP owning 19.75% of Rosneft. Completion of the transaction is subject to certain customary closing conditions, including
governmental, regulatory and anti-trust approvals. Completion is expected to occur in the first half of 2013.
Impairment losses amounting to $2,594 million (2011 $398 million) have been recognized in relation to certain assets classified as held for sale as at
31 December 2012. See Note 5 for further information.
Non-current assets classified as held for sale are not depreciated. It is estimated that the benefit arising from the absence of depreciation for the assets
noted above amounted to approximately $435 million (2011 $166 million). In addition, BP’s share of profits of approximately $731 million were not
recognized in 2012 as a result of the discontinuance of equity accounting.
Deposits of $632 million ($30 million at 31 December 2011) received in advance of completion of certain of these transactions have been classified as
finance debt on the group balance sheet at 31 December 2012.
The major classes of assets and liabilities reclassified as held for sale as at 31 December are as follows:
$ million
2012 2011
Assets
Property, plant and equipment 3,663 4,772
Goodwill 89 8
Intangible assets 103 20
Investments in jointly controlled entities 108 122
Investments in associates 12,322 38
Loans 96 –
Inventories 2,377 3,167
Cash ––
Other current assets 557 293
Assets classified as held for sale 19,315 8,420
Liabilities
Trade and other payables 158 300
Provisions 688 98
Deferred tax liabilities –140
Liabilities directly associated with assets classified as held for sale 846 538
There were accumulated foreign exchange losses of $26 million recognized within other comprehensive income relating to the assets held for sale at
31 December 2012 (2011 nil).
2011
At 31 December 2011, within the Upstream segment, the Canadian natural gas liquids (NGL) business was classified as an asset held for sale and the
sale completed in the first half of 2012. The investment in the Phu My 3 plant facility was classified as held for sale in the group balance sheet at
31 December 2011, for which a disposal deposit of $30 million had been received. This disposal did not complete during the year, the deposit was
repaid and the assets are no longer classified as held for sale.
Within the Downstream segment, the Texas City refinery and related assets, and the southern part of the US West Coast fuels value chain, including
the Carson refinery were classified as assets held for sale at 31 December 2011.
200 Financial statements
BP Annual Report and Form 20-F 2012