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

Notes on financial statements34. Finance debt$ million2011 2010Current Non-current Total Current Non-current TotalBorrowings 8,675 34,816 43,491 8,312 30,017 38,329Net obligations under finance leases 339 353 692 117 693 8109,014 35,169 44,183 8,429 30,710 39,139Disposal deposits 30 – 30 6,197 – 6,1979,044 35,169 44,213 14,626 30,710 45,336Current finance debt includes the portion of long-term borrowings and net obligations under finance leases that will mature in the next 12 months,amounting to $5,214 million (2010 $6,976 million).The main elements of current borrowings are the current portion of long-term bonds of $4,875 million (2010 $6,859 million) and issued commercialpaper of $3,635 million (2010 $1,025 million).Deposits for disposal transactions expected to complete in 2012 of $30 million are also included in current finance debt (2010 $6,197 million fortransactions expected to complete in 2011). This debt will be considered extinguished on completion of the transactions.At 31 December 2011, $131 million (2010 $790 million) of finance debt was secured by the pledging of assets, and no finance debt was secured inconnection with deposits received relating to certain disposal transactions expected to complete in subsequent periods (2010 $4,780 million). In addition,in connection with $2,344 million (2010 $4,588 million) of finance debt, BP has entered into crude oil sales contracts in respect of oil produced fromcertain fields in offshore Angola and Azerbaijan to provide security to the lending banks. The remainder of finance debt was unsecured.The following table shows, by major currency, the group’s finance debt at 31 December and the weighted average interest rates achieved at thosedates through a combination of borrowings and derivative financial instruments entered into to manage interest rate and currency exposures. The disposaldeposits noted above are excluded from this analysis.Weightedaverageinterestrate%Weightedaveragetime forwhich rateis fixedYearsFixed rate debt Floating rate debt TotalAmount$ millionWeightedaverageinterestrate%Amount$ millionAmount$ million2011US dollar 4 5 15,016 1 27,285 42,301Euro 5 3 25 3 1,575 1,600Other currencies 4 12 240 3 42 28215,281 28,902 44,1832010US dollar 4 5 14,797 1 21,076 35,873Euro 4 3 53 2 2,988 3,041Other currencies 6 18 140 4 85 22514,990 24,149 39,139The euro debt not swapped to US dollar is naturally hedged for the foreign currency risk by holding equivalent euro cash and cash equivalent amounts.Finance leasesThe group uses finance leases to acquire property, plant and equipment. These leases have terms of renewal but no purchase options and escalationclauses. Renewals are at the option of the lessee. The terms and conditions of these finance leases do not impose any significant financial restrictions onthe group. Future minimum lease payments under finance leases are set out below.$ million2011 2010Future minimum lease payments payable within1 year 454 1532 to 5 years 200 535Thereafter 380 4381,034 1,126Less: finance charges 342 316Net obligations 692 810Of which – payable within 1 year 339 117– payable within 2 to 5 years 99 404– payable thereafter 254 289Financial statementsBP Annual Report and Form 20-F 2011 229