BP Annual Report and Form 20-F 2011 - Company Reporting

Business reviewBP believes that, taking into account the amounts of undrawn borrowingfacilities and increased levels of cash and cash equivalents, and theongoing ability to generate cash, including further disposal proceeds, thegroup has sufficient working capital for foreseeable requirements.Uncertainty remains regarding the amount and timing of futureexpenditures relating to the Deepwater Horizon oil spill and the implicationsfor future activities. See Risk factors on pages 59-63, and Financialstatements – Note 2 on page 190, Note 36 on page 231 and Note 43 onpage 249 for further information.Off-balance sheet arrangementsAt 31 December 2011, the group’s share of third-party finance debt ofequity-accounted entities was $7,003 million (2010 $6,987 million). Theseamounts are not reflected in the group’s debt on the balance sheet.The group has issued third-party guarantees under which amountsoutstanding at 31 December 2011 are $415 million (2010 $404 million) inrespect of liabilities of jointly controlled entities and associates and $1,430million (2010 $1,339 million) in respect of liabilities of other third parties.Of these amounts, $220 million (2010 $355 million) of the jointly controlledentities and associates guarantees relate to borrowings and for otherthird-party guarantees, $1,267 million (2010 $1,324 million) relates toguarantees of borrowings. Details of operating lease commitments, whichare not recognized on the balance sheet, are shown in the table below andin Note 14 on page 208.Contractual commitmentsThe following table summarizes the group’s principal contractual obligations at 31 December 2011, distinguishing between those for which a liability isrecognized on the balance sheet and those for which no liability is recognized. Further information on borrowings and finance leases is given in Financialstatements – Note 34 on page 229 and more information on operating leases is given in Financial statements – Note 14 on page 208.$ millionPayments due by periodExpected payments by period under contractualobligations and commercial commitments Total 2012 2013 2014 2015 20162017 andthereafterBalance sheet obligationsBorrowings a 47,242 9,570 7,812 7,262 5,438 4,586 12,574Finance lease future minimum lease payments 1,034 454 54 49 49 48 380Deepwater Horizon Oil Spill Trust funding liability 4,884 4,884 – – – – –Decommissioning liabilities b 19,693 610 546 433 305 346 17,453Environmental liabilities b 3,646 1,665 588 232 187 192 782Pensions and other post-retirement benefits c 29,171 1,945 1,933 1,944 1,938 1,921 19,490Total balance sheet obligations 105,670 19,128 10,933 9,920 7,917 7,093 50,679Off-balance sheet obligationsOperating leases d 16,072 4,182 3,286 2,207 1,630 1,223 3,544Unconditional purchase obligations e 197,404 115,679 18,155 12,388 8,311 7,168 35,703Total off-balance sheet obligations 213,476 119,861 21,441 14,595 9,941 8,391 39,247Total 319,146 138,989 32,374 24,515 17,858 15,484 89,926a Expected payments include interest payments on borrowings totalling $3,751 million ($896 million in 2012, $746 million in 2013, $582 million in 2014, $443 million in 2015, $333 million in 2016 and $751million thereafter), and exclude disposal deposits of $30 million included in current finance debt on the balance sheet.b The amounts are undiscounted. Environmental liabilities include those relating to the Gulf of Mexico oil spill, including liabilities for spill response costs.c Represents the expected future contributions to funded pension plans and payments by the group for unfunded pension plans and the expected future payments for other post-retirement benefits.d The future minimum lease payments are before deducting related rental income from operating sub-leases. In the case of an operating lease entered into solely by BP as the operator of a jointly controlledasset, the amounts shown in the table represent the net future minimum lease payments, after deducting amounts reimbursed, or to be reimbursed, by joint venture partners. Where BP is not theoperator of a jointly controlled asset BP’s share of the future minimum lease payments are included in the amounts shown, whether BP has co-signed the lease or not. Where operating lease costs areincurred in relation to the hire of equipment used in connection with a capital project, some or all of the cost may be capitalized as part of the capital cost of the project.e Represents any agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms. The amounts shown include arrangements to secure long-termaccess to supplies of crude oil, natural gas, feedstocks and pipeline systems. In addition, the amounts shown for 2012 include purchase commitments existing at 31 December 2011 entered intoprincipally to meet the group’s short-term manufacturing and marketing requirements. The price risk associated with these crude oil, natural gas and power contracts is discussed in Financial statements– Note 26 on page 217.The following table summarizes the nature of the group’s unconditional purchase obligations.$ millionPayments due by period2017 andUnconditional purchase obligations Total 2012 2013 2014 2015 2016 thereafterCrude oil and oil products 130,824 90,690 9,095 5,684 3,344 2,853 19,158Natural gas 38,370 17,591 5,258 3,589 2,516 2,087 7,329Chemicals and other refinery feedstocks 9,962 2,573 1,129 1,115 1,028 979 3,138Power 3,038 2,169 644 212 11 2 –Utilities 892 181 154 106 97 75 279Transportation 8,061 1,183 957 926 731 661 3,603Use of facilities and services 6,257 1,292 918 756 584 511 2,196Total 197,404 115,679 18,155 12,388 8,311 7,168 35,703104 BP Annual Report and Form 20-F 2011