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

Notes on financial statements15. Exploration for and evaluation of oil and natural gas resourcesThe following financial information represents the amounts included within the group totals relating to activity associated with the exploration for andevaluation of oil and natural gas resources. All such activity is recorded within the Exploration and Production segment.$ million2011 2010 2009Exploration and evaluation costsExploration expenditure written off 1,024 375 593Other exploration costs 496 468 523Exploration expense for the year 1,520 843 1,116Intangible assets – exploration and appraisal expenditure 19,887 13,126 10,388Liabilities 306 157 –Net assets 19,581 12,969 10,388Capital expenditure 8,911 6,422 2,715Net cash used in operating activities 496 468 523Net cash used in investing activities 8,556 6,428 3,30616. Auditor’s remuneration$ millionFees – Ernst & Young 2011 2010 2009Fees payable to the company’s auditors for the audit of the company’s accounts a 15 13 13Fees payable to the company’s auditors and its associates for other servicesAudit of the company’s subsidiaries pursuant to legislation 19 22 22Other services pursuant to legislation 10 12 1144 47 46Tax services 2 2 1Services relating to corporate finance transactions 4 1 –All other services 4 4 6Audit fees in respect of the BP pension plans 1 1 155 55 54aFees in respect of the audit of the accounts of BP p.l.c. including the group’s consolidated financial statements.2011 includes $1 million of additional fees for 2010 and 2010 includes $1 million of additional fees for 2009. Auditor’s remuneration is included in theincome statement within distribution and administration expenses.The tax services relate to income tax and indirect tax compliance, employee tax services and tax advisory services.The audit committee has established pre-approval policies and procedures for the engagement of Ernst & Young to render audit and certainassurance and tax services. The audit fees payable to Ernst & Young are reviewed by the audit committee in the context of other global companies forcost-effectiveness. Ernst & Young performed further assurance and tax services that were not prohibited by regulatory or other professional requirementsand were pre-approved by the committee. Ernst & Young is engaged for these services when its expertise and experience of BP are important. Most ofthis work is of an audit nature. Tax services were awarded either through a full competitive tender process or following an assessment of the expertise ofErnst & Young compared with that of other potential service providers. These services are for a fixed term.Under SEC regulations, the remuneration of the auditor of $55 million (2010 $55 million and 2009 $54 million) is required to be presented asfollows: audit $44 million (2010 $47 million and 2009 $46 million); other audit-related services $1 million (2010 $1 million and 2009 $2 million); tax$2 million (2010 $2 million and 2009 $1 million); and fees for all other services $8 million (2010 $5 million and 2009 $5 million).17. Finance costs$ million2011 2010 2009Interest payable 1,135 955 906Capitalized at 2.63% (2010 2.75% and 2009 2.75%) a (347) (254) (188)Unwinding of discount on provisions b 243 234 247Unwinding of discount on other payables b 215 235 1451,246 1,170 1,110aTax relief on capitalized interest is $107 million (2010 $71 million and 2009 $63 million).bUnwinding of discount on provisions relating to the Gulf of Mexico oil spill was $6 million (2010 $4 million and 2009 nil) and unwinding of discount on other payables relating to the Gulf of Mexico oil spillwas $52 million (2010 $73 million and 2009 nil). See Note 2 for further information on the financial impacts of the Gulf of Mexico oil spill.Financial statementsBP Annual Report and Form 20-F 2011 209