BP 2013 Annual Report Download - page 275

PSA
A production-sharing agreement (PSA) is an arrangement through which
an oil company bears the risks and costs of exploration, development and
production. In return, if exploration is successful, the oil company
receives entitlement to variable physical volumes of hydrocarbons,
representing recovery of the costs incurred and a stipulated share of the
production remaining after such cost recovery.
Directors’ report information
This section of BP Annual Report and Form 20-F 2013 forms part of, and
includes certain disclosures which are required by law to be included in,
the Directors’ report.
Indemnity provisions
In accordance with BP’s Articles of Association, each director is granted
an indemnity from the company in respect of liabilities incurred as a
result of their office, to the extent permitted by law. These indemnities
were in force throughout the financial year and at the date of this report.
In respect of those liabilities for which directors may not be indemnified,
the company maintained a directors’ and officers’ liability insurance
policy throughout 2013. During the year, a review of the terms and
scope of the policy was undertaken. The policy has been renewed for
2014. Although their defence costs may be met, neither the company’s
indemnity nor insurance provides cover in the event that the director is
proved to have acted fraudulently or dishonestly. In addition, each
director of the company’s subsidiaries, which subsidiaries are trustees
of the group’s pension schemes, is granted an indemnity from the
company in respect of liabilities incurred as a result of such a
subsidiary’s activities as a trustee of the pension scheme, to the extent
permitted by law. These indemnities were in force throughout the
financial year and at the date of this report.
Financial risk management objectives and policies
The disclosures in relation to financial risk management objectives and
policies, including the policy for hedging, are included in Our
management of risk on page 49 and Liquidity and capital resources on
page 56.
Exposure to price risk, credit risk, liquidity risk and cash
flow risk
The disclosures in relation to exposure to price risk, credit risk, liquidity
risk and cash flow risk are included in Financial statements – Note 19.
Important events since the end of the financial year
Disclosures of the particulars of the important events affecting BP which
have occurred since the end of the financial year are included in the
Strategic report as well as in other places in the Directors’ report.
Likely future developments in the business
An indication of the likely future developments of the business is
included in the Strategic report.
Research and development
An indication of the activities of the company in the field of research and
development is included in Our strategy on page 13.
Branches
As a global group our interests and activities are held or operated through
subsidiaries, branches, joint arrangements or associates established in –
and subject to the laws and regulations of – many different jurisdictions.
Employees
The disclosures concerning policies in relation to the employment of
disabled persons and employee involvement are included in Corporate
responsibility – Employees on page 47.
Greenhouse gas emissions
The disclosures in relation to greenhouse gas emissions are included in
Corporate responsibility – Environment and society on page 45.
Cautionary statement
This document contains certain forecasts, projections and forward-looking
statements – that is, statements related to future, not past events – with
respect to the financial condition, results of operations and businesses of
BP and certain of the plans and objectives of BP with respect to these
items. These statements may generally, but not always, be identified by
the use of words such as ‘will’, ‘expects’, ‘is expected to’, ‘aims’, ‘should’,
‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’, ‘anticipates’, ‘plans’, ‘we
see’ or similar expressions. In particular, among other statements, (i) certain
statements in the Chairman’s letter (pages 6-7), the Group chief executive’s
letter (pages 8-9), the Strategic report (pages 1-58) and Additional
disclosures (pages 235-272), including but not limited to statements under
the headings ‘Our market outlook’, ‘Beyond 2035’, ‘Our business model’,
‘Our strategy’, ‘Outlook’ and ‘Looking ahead’, and including but not limited
to statements regarding plans to optimize BP’s portfolio of assets,
expectations regarding future distributions to shareholders, the estimated
levels of capital expenditure in 2014, the expected levels of capital
expenditure from 2015 to 2018, plans regarding the future divestment of
$10 billion in assets by the end of 2015 and the prospects for and timing of
planned and future divestments, prospects for future value creation arising
from certain of BP’s new investments in 2013, BP’s outlook on global
energy trends to 2035 and beyond, including the role of oil, gas and
renewables in coming decades, plans to make disciplined financial choices,
including the disciplined allocation of capital, expectations regarding the ‘10-
point plan’, plans to explore future opportunities with Rosneft, the
anticipated delivery of an increase in operating cash flow by more than
50% by 2014 versus 2011 and expectations regarding growth in
sustainable free cash flow beyond 2014, the expected implementation in
the future of lessons learned from the In Amenas terrorist attacks, the
expected design-life of the field at Valhall, plans to grow BP’s exploration
position and focus on high-value upstream assets in deep water, giant
fields and selected gas value chains, expectations regarding financial
momentum from the assets portfolio in the future, plans to grow free cash
flow by leveraging newly upgraded assets, customer relationships and
technology in the downstream business, plans to create shareholder value
and increase sustainable free cash flows, plans and expectations regarding
Project 20K,LoSal technology, the ‘virtual arrival system’, Veba Combi-
Cracking technology and SaaBre and Hummingbird technologies, plans
relating to future hiring and workforce, expectations that the 2014 start-ups
will have double the 2011 average unit operating cash margins, the
expected target net debt ratio in 2014 and beyond, the expected level of
depreciation, depletion and amortization in the future, the expected level of
the underlying effective tax rate in 2014, plans to generate $30 billion to
$31 billion of operating cash flow in 2014, plans to use around half of the
extra cash in 2014 for increased investments and around half for other
purposes including distributions, the expected levels of full-year underlying
and reported production in 2014, expectations regarding BP’s plans to
separate its US Lower 48 onshore oil and gas business, including the
timing thereof and the expected impact on BP’s resource position and
portfolio in the future, the prospects for movement in and the levels of oil
and gas prices in 2014, the timing and composition of planned and future
projects including expected final investment decisions, start up,
construction, commissioning, completion, timing of production, level of
production and margins, plans for gas discovery and production in India,
plans to enhance safety, compliance and risk management, increase
efficiency and reliability, improve margins and create new market
opportunities, expectations regarding and plans to deliver a strong
performance in safety, portfolio management, competitive returns and
material and growing cash flows in the Downstream segment,
expectations regarding refining margins in 2014, the expected impact of
refinery turnarounds in 2014, expectations regarding the market
environments for lubricants and petrochemicals in 2014, plans to increase
lubricant revenues in the future, the expected level of heavy crude
processing at the Whiting refinery during the second quarter 2014 and
Whiting’s prospects for supporting BP’s ability to deliver increased cash
flow in 2014 and beyond, plans to continue to develop biofuel blend
capabilities, BP’s plans for LPG in the future, Air BP’s future strategic aims,
the timing of first production at the third PTA plant at Zhuhai and the
expected capacity thereof in the future, expectations regarding the material
impacts of investments in Asia and the deployment of new PTA technology
in existing plants and new asset platforms, plans to access Asian demand
and feedstock sources, expectations for the environment for PTA, acetic
Additional disclosures
BP Annual Report and Form 20-F 2013 271