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

Information about this reportThis document constitutes the Annual Report and Accounts in accordancewith UK requirements and the Annual Report on Form 20-F in accordancewith the US Securities Exchange Act of 1934, for BP p.l.c. for the year ended31 December 2011. A cross reference to Form 20-F requirements is onpage 2.This document contains the Directors’ Report, including theBusiness Review and Management Report, on pages 7-138 and 153-172,and 174. The Directors’ Remuneration Report is on pages 139-151. Theconsolidated financial statements of the group are on pages 173-281 andthe corresponding reports of the auditor are on pages 175-177. The parentcompany financial statements of BP p.l.c. and corresponding auditor’s reportare on pages PC1-PC14 and page PC1 respectively.The statement of directors’ responsibilities, the independentauditor’s report on the annual report and accounts to the members ofBP p.l.c. and the parent company financial statements of BP p.l.c. andcorresponding auditor’s report do not form part of BP’s Annual Report onForm 20-F as filed with the SEC.BP Annual Report and Form 20-F 2011 and BP Summary Review2011 may be downloaded from bp.com/annualreport. No material on the BPwebsite, other than the items identified as BP Annual Report and Form 20-F2011 or BP Summary Review 2011, forms any part of those documents.BP p.l.c. is the parent company of the BP group of companies.Unless otherwise stated, the text does not distinguish between the activitiesand operations of the parent company and those of its subsidiaries.The term ‘shareholder’ in this report means, unless the contextotherwise requires, investors in the equity capital of BP p.l.c., both directand indirect. As BP shares, in the form of ADSs, are listed on the New YorkStock Exchange (NYSE), an Annual Report on Form 20-F is filed with the USSecurities and Exchange Commission (SEC).Cautionary statementIn order to utilize the ‘Safe Harbor’ provisions of the United States PrivateSecurities Litigation Reform Act of 1995 (the “PSLRA”), BP is providing thefollowing cautionary statement. This document contains certain forwardlooking statements within the meaning of the PSLRA with respect to thefinancial condition, results of operations and businesses of BP and certainof the plans and objectives of BP with respect to these items. Thesestatements may generally, but not always, be identified by the use of wordssuch as ‘will’, ‘expects’, ‘is expected to’, ‘aims’, ‘should’, ‘may’, ‘objective’,‘is likely to’, ‘intends’, ‘believes’, ‘anticipates’, ‘plans’, ‘we see’ or similarexpressions. In particular, among other statements, (i) certain statements inthe Chairman’s letter (pages 8-11), the Group chief executive’s letter (pages14-17) and the Business review (pages 18-111), including but not limitedto statements under the headings ‘Our Strategy’, ‘Outlook’ and ‘LookingAhead’, with regard to strategy and strategic priorities, plans to delivershareholder value, expectations regarding the ‘10-point plan’, expectationsregarding future dividend payments, BP’s outlook on global energy trends to2030 and beyond, the intention to make $38 billion of disposals, anticipatedincrease in operating cash flow and margins, future capital expenditure,expected level of investments, the anticipated timing for completion of andfinal proceeds from the disposition of certain BP assets, future productionlevels including expectations for an increase in high-margin production,the timing and composition of future projects including expected startup, completion, timing of production, level of production and margins,expectations for drilling and rig activity in the Gulf of Mexico, the timing andquantum of and timing for completion of contributions to and payments fromthe $20-billion Trust fund, the expected terms of the proposed settlementagreement with the Plaintiffs’ Steering Committee in MDL 2179 and theexpected timing of the fairness hearing and court approvals in respectthereof, the expected amount, source and timing of payments under anysettlements, expectations regarding regulation and taxation of the energyindustry and energy users, future global refinery capacity and utilization,the timing for completion of the Whiting refinery upgrade, plans regardingthe implementation of enhancements to BP’s risk management system,expectations regarding the reduction of net debt and the net debt ratio,the expected future level of depreciation, depletion and amortization, theexpected level of the refining marker margin, the completion of planned andannounced divestments, including the planned disposals of the Texas Cityrefinery and the southern part of the US West Coast FVC, dates or periodsin which production is scheduled or expected to come onstream or a projector action is scheduled or expected to begin or be completed, and the level offuture turnaround activity; (ii) the statements in the Business review (pages18-111), Corporate governance (pages 119-138), the Directors’ remunerationreport (pages 139-151) and Additional information for shareholders (pages153-172) with regard to plans to continue the ongoing process of embeddingOMS, the timing for the implementation of the Bly report recommendations,intentions to implement group-wide practices for oil spill preparednessand response and crisis management, plans to spend $700 million oncertain refinery-related safety measures, plans to implement enhanced andstandardized technical practices across the refining business, the timing forthe completion of the Shoreline Clean-up, the timing of, cost of, source ofpayment and provision for future remediation and restoration programmesand environmental operating and capital expenditures, the anticipated futurelevel of time for conversion of proved undeveloped reserves to provedreserves, expectations regarding Refining and Marketing’s intentions toachieve $2 billion in performance improvement by the end of 2012, plans tohalve US refining capacity by the end of 2012, the timing for the completionof construction at the Cherry Point refinery, anticipated investment inAlternative Energy, expectations regarding greater regulation and increasedoperating costs in the Gulf of Mexico in the future, and costs for providingpension and other post-retirement benefits; (iii) the statements in theBusiness review (pages 103-106) with regard to future dividend and optionalscrip dividend payments, future capital expenditures and capital expenditurecommitments, taxation, intentions to maintain a significant liquidity buffer,future working capital and cash flows, gearing and the net debt ratio,expected payments under contractual and commercial commitments andpurchase obligations, and including under ‘Liquidity and capital resources– Trend information’, with regard to production excluding TNK-BP, theexpected level of turnarounds, the marketing environment in fuels, lubricantsand petrochemicals, underlying average quarterly charge from Otherbusinesses and corporate, and expectations regarding future disposals;and (iv) certain statements in the Business review (page 84) and Additionalinformation for shareholders (pages 160-166) regarding the anticipatedtiming of trial proceedings, court decisions and potential investigations andcivil or criminal actions by US state and/or local governments; are all forwardlooking in nature.By their nature, forward-looking statements involve risk anduncertainty because they relate to events and depend on circumstancesthat will or may occur in the future and are outside the control of BP. Actualresults may differ materially from those expressed in such statements,depending on a variety of factors, including the specific factors identified inthe discussions accompanying such forward-looking statements; the timingof bringing new fields onstream; the timing of certain disposals; future levelsof industry product supply, demand and pricing; OPEC quota restrictions;PSA effects; operational problems; general economic conditions; politicalstability and economic growth in relevant areas of the world; changes inlaws and governmental regulations; regulatory or legal actions including thetypes of enforcement action pursued and the nature of remedies sought;the actions of prosecutors, regulatory authorities and courts; the actionsof all parties to the Deepwater Horizon oil spill-related litigation at variousphases of the litigation; exchange rate fluctuations; development and useof new technology; the success or otherwise of partnering; the actionsof competitors; the actions of contractors; natural disasters and adverseweather conditions; changes in public expectations and other changesto business conditions; wars and acts of terrorism or sabotage; and otherfactors discussed elsewhere in this report including under ‘Risk factors’(pages 59-63). In addition to factors set forth elsewhere in this report, thoseset out above are important factors, although not exhaustive, that may causeactual results and developments to differ materially from those expressed orimplied by these forward-looking statements.Statements regarding competitive positionStatements referring to BP’s competitive position are based on thecompany’s belief and, in some cases, rely on a range of sources, includinginvestment analysts’ reports, independent market studies and BP’s internalassessments of market share based on publicly available information aboutthe financial results and performance of market participants.Unless otherwise indicated, information in this document reflects 100% of the assets andoperations of the company and its subsidiaries that were consolidated at the date or for theperiods indicated, including minority interests. The company was incorporated in 1909 in Englandand Wales and changed its name to BP p.l.c. in 2001. BP’s primary share listing is the LondonStock Exchange. Ordinary shares are also traded on the Frankfurt Stock Exchange in Germanyand, in the US, the company’s securities are traded on the New York Stock Exchange in the formof ADSs (see page 167 for more details).The registered office of BP p.l.c., and our worldwide headquarters, is:1 St James’s Square,London SW1Y 4PD, UK.Tel +44 (0)20 7496 4000.Registered in England and Wales No. 102498. Stock exchange symbol ‘BP’.Our agent in the US is BP America Inc.,501 Westlake Park Boulevard, Houston, Texas 77079.Tel +1 281 366 2000.BP Annual Report and Form 20-F 2011 5