OREANDA-NEWS. August 8, 2012. BP's second-quarter replacement cost (RC) profit was USD 238 million, compared with USD 5,407 million a year ago. After adjusting for a net loss from non-operating items of USD 3,339 million and net unfavourable fair value accounting effects of USD 108 million (both on a post-tax basis), underlying RC profit for the second quarter was USD 3,685 million, compared with USD 5,705 million for the same period last year. For the half year, RC profit was USD 5,167 million, compared with USD 11,018 million a year ago. After adjusting for a net loss from non-operating items of USD 3,154 million and net unfavourable fair value accounting effects of USD 163 million (both on a post-tax basis), underlying RC profit for the half year was USD 8,484 million, compared with USD 11,209 million for the same period last year. RC profit or loss for the group, underlying RC profit or loss and fair value accounting effects are non-GAAP measures and further information is provided on pages 4, 19 and 21.

Non-operating items for the second quarter on a pre-tax basis amounted to a net loss of USD 5,002 million and included impairment losses of USD 4,782 million(d) relating primarily to certain refineries, US shale gas assets and the decision to suspend the Liberty project in Alaska. All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net adverse impact on a pre-tax basis of USD 847 million for the quarter and USD 823 million for the half year 2012. For further information on the Gulf of Mexico oil spill and its consequences see pages 2 - 3, Note 2 on pages 23 - 28, Principal risks and uncertainties on pages 32 - 38, Legal proceedings on pages 39 - 49 and Legal proceedings on pages 160 - 164 of BPВ’s Annual Report and Form 20-F 2011.

Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were USD 212 million for the second quarter, compared with USD 249 million for the same period last year. For the half year, the respective amounts were USD 442 million and USD 488 million.

Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the quarter and half year was USD 4.4 billion and USD 7.8 billion respectively, compared with USD 7.8 billion and USD 10.3 billion in the same periods of last year. The amounts for the quarter and half year of 2012 included net cash outflows of USD 1.7 billion and USD 2.9 billion respectively relating to the Gulf of Mexico oil spill (second quarter 2011 USD 1.9 billion outflow, half year 2011 USD 4.7 billion outflow).

Net debt at the end of the quarter was USD 31.7 billion, compared with USD 27.0 billion a year ago. The ratio of net debt to net debt plus equity was 21.9% compared with 19.9% a year ago. Net debt is a non-GAAP measure. See page 5 for further information.

The quarterly dividend expected to be paid on 25 September 2012 is 8 cents per share (USD 0.48 per ADS). The corresponding amount in sterling will be announced on 11 September 2012. A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the scrip dividend programme are available at bp.com/scrip.

The effective tax rate on RC profit for the second quarter and half year was 44% and 34% respectively, compared with 34% and 36% a year ago. After adjusting for non-operating items and fair value accounting effects the effective tax rate on underlying RC profit for the second quarter and half year was 34% and 33% respectively, compared with 34% and 36% a year ago. Half-year 2011 included the impact of a one-off deferred tax adjustment in respect of the increase in the supplementary charge on UK oil and gas production. In the third quarter we expect a one-off charge of around USD 250 million to USD 300 million related to further changes to the UK taxation of North Sea production.

Total capital expenditure for the second quarter and half year was USD 5.4 billion and USD 11.1 billion respectively, of which organic capital expenditure was USD 5.3 billion and USD 10.6 billion respectively(e). Disposal proceeds were USD 1.9 billion for the quarter and USD 3.2 billion for the half year. Since the start of 2010, we have announced disposals for a total of USD 24 billion.

We now expect depreciation, depletion and amortization for 2012 to be around USD 1.4 billion higher than for 2011, with the revision mainly due to higher decommissioning costs.

(a)This results announcement also represents BP’s half-yearly financial report (see page 12).

(b)Profit (loss) attributable to BP shareholders.

(c)See footnote (a) on page 4 for definitions of RC profit and underlying RC profit.

(d)See pages 20 and 21 respectively for further information on non-operating items and fair value accounting effects.

(e)Organic capital expenditure excludes acquisitions and asset exchanges, and expenditure associated with deepening our natural gas asset base