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

Our performanceWe track performance against key financialand non-financial indicators. This year, inalignment with our 10-point strategic plan,we have introduced gearing as a key measure.Replacement cost profit (loss)per ordinary share (cents)Operating cash flow($ billion)Gearing (net debt ratio)(%)Total shareholder return(%)95.85136.2074.49(26.17)126.411601208060024.738.127.713.622.2504030201022.121.420.421.220.530201014.1ADS basisOrdinary share basis6.8(34.6)(15.1)33.027.6(24.1)(21.4)3.02.56040200-202007 2008 2009 2010 20112007 2008 2009 2010 20112007 2008 2009 2010 20112007 2008 2009 2010 2011Replacement cost profit (loss) reflectsthe replacement cost of supplies. It isarrived at by excluding from profitinventory holding gains and losses andtheir associated tax effect. Replacementcost profit for the group is the profitabilitymeasure used by management. It is anon-GAAP measure. See page 56 forthe equivalent measure on an IFRS basis.In 2011, we returned to profitabilityfollowing the financial impact of theDeepwater Horizon oil spill in 2010.Operating cash flow is net cash flowprovided by operating activities, fromthe group cash flow statement.Operating activities are the principalrevenue-generating activities of thegroup and other activities that are notinvesting or financing activities.In 2011, operating cash flowrecovered, primarily due to a reductionin cash outflow in respect of theDeepwater Horizon oil spill.Gearing enables investors to see howsignificant net debt is relative to equityfrom shareholders. Net debt is equal togross finance debt, plus associatedderivatives, less cash and cashequivalents. Net debt and net debt ratioare non-GAAP measures. See Financialstatements – Note 35 on page 230 for thenearest equivalent measure on an IFRSbasis and for further information.In 2011, gearing decreased slightlyand we expect it to reduce to the lowerhalf of the 10-20% range over time.Total shareholder return represents thechange in value of a BP shareholdingover a calendar year, assuming thatdividends are re-invested to purchaseadditional shares at the closing priceapplicable on the ex-dividend date.In 2011, shareholder return improvedwith the resumption of dividends.Reserves replacement ratio(%)Production(mboe/d)Refining availability(%)1504,2501001121211291061031209060303,8183,8383,9983,8223,4544,0003,7503,5003,25082.988.893.695.094.8959085802007 2008 2009 2010 20112007 2008 2009 2010 20112007 2008 2009 2010 2011Proved reserves replacement ratio (alsoknown as the production replacementratio) is the extent to which productionis replaced by proved reserves additions.The ratio is expressed in oil equivalentterms and includes changes resultingfrom revisions to previous estimates,improved recovery and extensions,and discoveries. The measure reflectsboth subsidiaries and equity-accountedentities, but excludes acquisitionsand disposals.The 2011 reserves additions forTNK-BP include the effect of movingfrom life-of-licence measurement tolife-of-field measurement, reflectingTNK-BP’s track record of successfullicence renewal. Excluding this effect,BP’s 2011 reserves replacement ratiowould have been 83%.We report crude oil, natural gas liquids(NGLs) and natural gas produced fromsubsidiaries and equity-accountedentities. These are converted to barrelsof oil equivalent (boe) at 1 barrel ofNGL = 1boe and 5,800 standard cubicfeet of natural gas = 1boe.Reported production in 2011 was10% lower than in 2010, due to higherturnaround and maintenance activity,and the impact of the drillingmoratorium in the Gulf of Mexico.Refining availability represents SolomonAssociates’ operational availability,which is defined as the percentageof the year that a unit is available forprocessing after subtracting theannualized time lost due to turnaroundactivity and all planned mechanical,process and regulatory maintenancedowntime.Refining availability decreased slightlyin 2011 principally due to the secondquarter weather-related power outageat Texas City.52 BP Annual Report and Form 20-F 2011