BP 2014 Annual Report Download - page 122

3. Disposals and impairment – continued
In 2013, gains principally resulted from the disposal of our global LPG business and closing adjustments on the sales of the Texas City and Carson
refineries with their associated marketing and logistics assets.
In 2012, gains principally resulted from the disposal of our interests in purified terephthalic acid production in Malaysia, and retail churn in the US.
Losses principally resulted from costs associated with our US refinery divestments.
TNK-BP
In 2013, BP disposed of its 50% interest in TNK-BP to Rosneft, resulting in a gain on disposal of $12,500 million.
Summarized financial information relating to the sale of businesses is shown in the table below. The principal transaction categorized as a business
disposal in 2014 was the sale of certain of our interests on the North Slope of Alaska in our upstream business, which had been classified as held for
sale during 2014. The principal transactions categorized as business disposals in 2013 were the sales of the Texas City and Carson refineries with their
associated marketing and logistics assets. Information relating to sales of fixed assets is excluded from the table.
$ million
2014 2013 2012
Non-current assets 1,452 2,124 610
Current assets 182 2,371 570
Non-current liabilities (395) (94) (263)
Current liabilities (65) (62) (232)
Total carrying amount of net assets disposed 1,174 4,339 685
Recycling of foreign exchange on disposal (7) 23 (15)
Costs on disposala128 13 39
1,295 4,375 709
Gains on sale of businesses 280 69 675
Total consideration 1,575 4,444 1,384
Consideration received (receivable)b96 (414) 76
Proceeds from the sale of businesses related to completed transactions 1,671 4,030 1,460
Deposits received related to assets classified as held for sale –– 146
Disposals completed in relation to which deposits had been received in prior year –(146) –
Proceeds from the sale of businessesc1,671 3,884 1,606
a2013 includes pension and other post-retirement benefit plan curtailment gains of $109 million.
bConsideration received from prior year business disposals or to be received from current year disposals. 2013 includes contingent consideration of $475 million relating to the disposal of the Texas City
refinery.
cSubstantially all of the consideration received was in the form of cash and cash equivalents. Proceeds are stated net of cash and cash equivalents disposed of $32 million (2013 $42 million and 2012
$4 million).
Impairments
Impairment losses in each segment are described below. For information on significant estimates and judgements made in relation to impairments see
Impairment of property, plant and equipment, intangibles and goodwill within Note 1.
Upstream
The 2014 impairment losses of $6,737 million included $4,876 million in the North Sea business, of which $1,964 million related to the Valhall cash-
generating unit (CGU), $660 million related to the Andrew area CGU, and $515 million related to the ETAP CGU. These CGUs have recoverable amounts of
$767 million, $1,431 million, and $1,753 million respectively. Impairment losses also included an $859-million impairment of our PSVM CGU in Angola to its
recoverable amount of $1,964 million, and a $415-million impairment of the Block KG D6 CGU in India to its recoverable amount of $2,364 million. The
recoverable amount of the Block KG D6 CGU is stated after the exploration write-off described in Note 6. All of the impairments relate to producing assets.
The impairments in the North Sea and Angola arose as a result of a lower price environment in the near term, technical reserves revisions, and increases in
expected decommissioning cost estimates. The impairment of Block KG D6 arose following the introduction of a new formula for Indian gas prices. The
recoverable amounts of the Valhall and Block KG D6 CGUs are their fair values less costs of disposal based on the present value of future cash flows, a
level-3 valuation technique in the fair value hierarchy. The key assumptions in the tests were oil and natural gas prices, production volumes and the discount
rate. The recoverable amounts of the Andrew area CGU, the ETAP CGU and the PSVM CGU are their values in use. See Impairment of property, plant and
equipment, intangible assets and goodwill within Note 1 for further information on assumptions used for impairment testing. The discount rate used to
determine the value in use of the PSVM CGU included the 2% premium for higher-risk countries as described in Note 1. A premium was not applied in
determining the recoverable amount of the other CGUs.
The main elements of the 2013 impairment losses of $1,255 million were a $251-million impairment loss relating to the Browse project in Australia and
a $253-million aggregate write-down of a number of assets in the North Sea, caused by increases in expected decommissioning costs. Impairment
reversals arose on certain of our interests in Alaska, the Gulf of Mexico, and the North Sea, triggered by reductions in decommissioning provisions due
to continued review of the expected decommissioning costs and an increase in the discount rate for provisions.
The main elements of the 2012 impairment losses of $3,046 million were a $1,082-million write-down of our interests in certain shale gas assets in the
US, due to reserves revisions, lower values being attributed to recent market transactions and a fall in the gas price; a $999-million impairment loss
relating to the decision to suspend the Liberty project in Alaska; a $706-million aggregate write-down of a number of assets, primarily in the Gulf of
Mexico and North Sea, caused by increases in the decommissioning provision resulting from continued review of the expected decommissioning
costs. Impairment reversals principally arose on certain of our interests in the Gulf of Mexico, triggered by a decision to divest assets.
Downstream
The main elements of the 2014 impairment losses of $1,264 million related to our Bulwer Island refinery and certain midstream assets in our fuels
business, and certain manufacturing assets in our petrochemicals business.
The main elements of the 2013 impairment losses of $484 million related to impairments of certain refineries in the US and elsewhere in our global
fuels portfolio.
The main elements of the 2012 impairment losses of $2,892 million related to assets held for sale for which sales prices had been agreed. This included
$1,552 million relating to the Texas City refinery and associated assets and $1,042 million relating to the Carson refinery and associated assets.
118 BP Annual Report and Form 20-F 2014