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

Business reviewOur performanceKey statistics$ million2011 2010 2009Sales and other operating revenues a 75,475 66,266 57,626Replacement cost profit before interestand tax 30,500 30,886 24,800Capital expenditure and acquisitions 25,535 17,753 14,896$ per barrelAverage BP crude oil realizations b 107.91 77.54 59.86Average BP NGL realizations b 51.18 42.78 29.60Average BP liquids realizations b c 101.29 73.41 56.26Average West Texas Intermediateoil price d 95.04 79.45 61.92Average Brent oil price d 111.26 79.50 61.67$ per thousand cubic feetAverage BP natural gas realizations b 4.69 3.97 3.25Average BP US natural gas realizations b 3.34 3.88 3.07$ per million British thermal unitsAverage Henry Hub gas price e 4.04 4.39 3.99pence per thermAverage UK National Balancing Pointgas price d 56.33 42.45 30.85thousand barrels per dayLiquids production for subsidiaries c f 992 1,229 1,400Liquids production for equity-accountedentities c f 1,165 1,145 1,135Total of subsidiaries and equityaccountedentities c f 2,157 2,374 2,535million cubic feet per dayNatural gas production for subsidiaries f 6,393 7,332 7,450Natural gas production for equityaccountedentities f 1,125 1,069 1,035Total of subsidiaries and equityaccountedentities f 7,518 8,401 8,485thousand barrels of oil equivalent per dayTotal production for subsidiaries f g 2,094 2,492 2,684Total production for equity-accountedentities f g 1,360 1,330 1,314Total of subsidiaries and equityaccountedentities f g 3,454 3,822 3,998million barrelsEstimated net proved crude oil reservesfor subsidiaries c h 5,153 5,559 5,658Estimated net proved crude oil reservesfor equity-accounted entities c i 5,234 4,971 4,853Estimated net proved bitumen reservesfor equity-accounted entities 178 179 –Total of subsidiaries and equityaccountedentities c h i 10,565 10,709 10,511billion cubic feetEstimated net proved natural gasreserves for subsidiaries j 36,381 37,809 40,388Estimated net proved natural gasreserves for equity-accountedentities k 5,278 4,891 4,742Total of subsidiaries and equityaccountedentities j k 41,659 42,700 45,130million barrels of oil equivalentEstimated net proved reserves forsubsidiaries h j 11,426 12,077 12,621Estimated net proved reserves forequity-accounted entities i k 6,322 5,994 5,671Total of subsidiaries and equityaccountedentities h i j k 17,748 18,071 18,292a Includes sales between businesses.b Realizations are based on sales of consolidated subsidiaries only, which excludes equity-accountedentities.c Crude oil and natural gas liquids.d All traded days average.e Henry Hub First of Month Index.f Net of royalties.g Expressed in thousands of barrels of oil equivalent per day (mboe/d). Natural gas is converted to oilequivalent at 5.8 billion cubic feet = 1 million barrels.h Includes 20 million barrels (22 million barrels at 31 December 2010 and 23 million barrels at31 December 2009) in respect of the 30% minority interest in BP Trinidad and Tobago LLC.i Includes 310 million barrels (254 million barrels at 31 December 2010 and 243 million barrels at31 December 2009) in respect of the 7.37% minority interest in TNK-BP (7.03% at 31 December2010 and 6.86% at 31 December 2009).j Includes 2,759 billion cubic feet of natural gas (2,921 billion cubic feet at 31 December 2010 and3,068 billion cubic feet at 31 December 2009) in respect of the 30% minority interest in BP Trinidadand Tobago LLC.k Includes 174 billion cubic feet (137 billion cubic feet at 31 December 2010 and 131 billion cubic feetat 31 December 2009) in respect of the 6.27% minority interest in TNK-BP (7.03% at 31 December2010 and 6.86% at 31 December 2009).2011 performanceSafety and operational riskIn Exploration and Production, ensuring safe, reliable and compliantoperations remains our highest priority. The organizational and governancechanges in Exploration and Production and S&OR have been designed toensure we achieve this, supported by a systematic framework provided byBP’s operating management system (OMS). All Exploration and Productionoperated businesses, with the exception of those recently acquired, arenow applying our OMS to govern their BP operations and have begunworking to achieve conformance to standards and practices required byOMS through the performance improvement cycle process. We continueto work to enhance local systems and processes at all our sites. See Safetyon pages 65-66 for more information on OMS.Safety performance is monitored by a suite of input and outputmetrics which focus on personal and process safety including operationalintegrity, occupational health and all aspects of compliance.In 2011, there were no workforce fatalities in Exploration andProduction. In 2010, there was one workforce fatality.The recordable injury frequency (RIF), which measures the numberof recordable injuries to the BP workforce per 200,000 hours worked, was0.30. This is lower than 2010 when it was 0.32 and 2009 when it was 0.39.Our day away from work case frequency (DAFWCF) in 2011 was 0.060.This is lower than 2010 when it was 0.063 but higher than 2009 when itwas 0.038.In 2011, the number of reported loss of primary containment(LOPC) incidents in Exploration and Production was 152, down from 194in 2010. The number of reported oil spills equal to or larger than 1 barrelduring 2011 was 71, down from 117 in 2010.Financial and operating performanceWe continually seek access to resources and in 2011, in addition to newaccess resulting from acquisitions as detailed on page 83, this includedAngola, where BP gained access to five new deepwater exploration andproduction blocks covering 24,200km 2 ; Australia, where BP was awardedfour blocks covering 24,500km 2 in the Ceduna Sub Basin off the coast ofSouth Australia; Azerbaijan, where the republic of Azerbaijan ratified theShafag-Asiman production-sharing agreement (PSA) covering 1,100km 2in the Caspian Sea; China, where BP was awarded access to a 9,700km 2block in the South China Sea; deepwater Gulf of Mexico, where 12 leasesfrom the March 2010 Outer Continental Shelf Lease Sale 213 covering280km 2 were executed; Indonesia, where BP was awarded four coalbedmethane PSAs covering 4,800km 2 in the Barito basin of South Kalimantanand two oil and gas PSAs covering 16,400km 2 offshore in the Arafura Sea;and Trinidad, where BP was awarded two deepwater blocks covering3,600km 2 , subject to government approval.In September 2011, we announced the Moccasin oil discovery inthe deepwater Gulf of Mexico (not BP-operated). In October 2011, weannounced the Salmon gas discovery in Egypt’s Nile Delta. In 2011, wetook final investment decisions on three projects and two major projectscame onstream: Serrette in Trinidad and Pazflor in Angola.Production for 2011 was lower than last year. After adjusting for theeffect of entitlement changes in our PSAs and the effect of acquisitionsand disposals, underlying production was 7% lower than 2010. Thisprimarily reflects lower Gulf of Mexico production as a result of the impactof the drilling moratorium as well as the impact of turnaround maintenanceactivities. In 2011, full-year production growth in TNK-BP was 2.8%.Sales and other operating revenues for 2011 were $75 billion,compared with $66 billion in 2010 and $58 billion in 2009. The increaseBusiness review: BP in more depthBP Annual Report and Form 20-F 2011 81