Results reported under International Financial Reporting Standards (“IFRS”)
USD millions unless otherwise stated
|
2Q11 |
1Q12 |
2Q12 |
|
1H12 |
1H11 |
|
1,952 |
2,037 |
2,032 |
Total Oil and Gas Production (mboe/d) |
2,035 |
1,956 |
|
15,382 |
16,089 |
14,255 |
Gross revenue |
30,344 |
29,203 |
|
3,427 |
3,605 |
2,248 |
EBITDA |
5,853 |
7,381 |
|
2,191 |
2,176 |
808 |
Net Income(a) |
2,984 |
4,808 |
|
3,585 |
3,434 |
3,199 |
Operating Cash flow |
6,633 |
6,068 |
|
5,266 |
7,521 |
5,566 |
Net Debt |
5,566 |
5,266 |
|
1,297 |
1,105 |
1,263 |
Capex (organic) |
2,368 |
2,201 |
*Profit for the period attributable to Group shareholders
Jonathan Muir, Chief Financial Officer, said:
“In the first half of 2012, TNK-BP demonstrated its resilience and the quality of its people by delivering strong operational metrics across the whole spectrum of our business. We increased production by 4% year-on-year to 2.035 million barrels of oil equivalent per day thanks to a growing contribution from greenfield operations in Verkhnechonskoye and Uvat, progress in sustaining production levels in West Siberia and input from our international ventures. In downstream, continued improvements at our Russian refineries resulted in a 49% increase in the production of gasoline and diesel compliant with Euro-4 and Euro-5 quality standards.
In addition, our focus on capital efficiency and working capital management resulted in a 9% increase in free cash flow to USD 3.9 bn along with an 8% growth in capital investments to support our major projects.
This increase was achieved despite a decline in EBITDA year on year, which was due primarily to the impact in 2Q of negative export duty lag in a declining oil price environment, as well as higher taxes and tariffs, coupled with the impairment charge on our Ukrainian refinery.
Finally, strong cash balances at the end of the period and a conservative gearing ratio of 23% provide for sustainability of our business in times of volatility.
In the second half of 2012 we will continue to rigorously pursue our focus on efficient operational and project delivery and execution and maintain our commitment to improving performance in the area of health, safety and environment.”
1H12 OPERATIONAL HIGHLIGHTS
- Liquids production continued to grow, reaching 1,760 mb/d including affiliates, up 2.6% on the first half of 2011.
- Gas sales increased by 14.3% to 275 mboe/d due to the contribution from assets in Vietnam and Venezuela as well as growing gas processing volumes in West Siberia and Orenburg.
- Contribution from our greenfields, Verkhnechonskoye and the Uvat group of fields, increased to 17% of total liquids production, up from 12% in the first half of 2011.
- Progress was achieved in realization of the West Siberia intervention program with liquids production decline improving by 0.9% in the first half of 2012 compared to the same period last year.
- On the international front, successful drilling campaigns to increase production in Venezuela and to commission the Lan Do satellite development in Vietnam were executed.
- Joint Operating Agreement Governance structure was implemented in Brazil following acquisition from HRT O&G of a 45% stake in 21 exploratory blocks in the Solimoes Basin.
- In refining, the share of high quality fuels rose significantly due to continued modernization at our Russian refineries: production of Euro-4 gasoline in 1H12 increased more than twofold to 1.98 mln tons and production of diesel compliant with Euro-4 and Euro-5 standards grew by 25% compared to 1H11.
- In retail, volumes increased by 19% with our market position in Russia strengthened through geographical expansion and a growing number of premium BP-branded sites and new offer TNK-branded sites.
- We continued development of our B2B business, increasing direct sales to airlines, promoting our new innovative bitumen and expanding in lubricants.
1H12 FINANCIAL HIGHLIGHTS
- Gross revenue for 1H12 increased by 4% relative to 1H11 driven by a 3% higher Urals price and production growth.
- Export duties and taxes other than income tax increased by 16% for 1H12 relative to 1H11. This increase is significantly higher than the Urals growth largely due to the negative impact of duty lag and increased excise and MET rates.
- Costs (operating expenses, transportation and SD&A) remained relatively flat period-on-period. The negative effects of higher transportation tariffs and other inflationary pressures were offset by the positive effect of the weaker rouble.
- EBITDA for 1H12 amounted to USD 5.9 bn which is 21% lower compared to 1H11. The negative duty lag effect in the declining price environment was aggravated by the comparative impact of one-off events (impairment charges on LINIK of USD 0.2 bn in 1H12 and gain on the Kovykta assets disposal of USD 0.2 bn in 1H11).
- 1H12 Net Income amounted to USD 3.0 bn, which is 38% lower compared to 1H11 due to the impact of the lower EBITDA, higher DD&A expense as a result of increased share of greenfields production and the negative foreign exchange effect on deferred tax.
- Operating cash flow for 1H12 totalled USD 6.6 bn, up 9% compared to 1H11: the lower EBITDA was compensated by the positive effect of active working capital management, and by a price-driven reduction of accounts receivable as well as by the positive impact of non-operating and non-cash items.
- Organic capital investments in 1H12 amounted to USD 2.4 bn, 8% above 1H11, largely related to refinery quality upgrades (Ryazan and Saratov), field development (primarily, Uvat) as well as foreign projects (Vietnam and Brazil).
2Q12 v. 1Q12 RESULTS
- Gross revenue for 2Q12 decreased by 11% quarter-on-quarter primarily reflecting lower Urals prices.
- Export duties and other taxes decreased by 1% quarter-on-quarter primarily due to the lower Urals price and decreased export volumes offset by the negative impact of duty lag.
- Costs (operating expenses, transportation and SD&A) decreased by 2% largely due to the effect of the weaker rouble.
- EBITDA for 2Q12 was 38% lower compared to 1Q12 as a result of weaker markets, especially, a severe negative duty lag comparative impact of USD 20 per barrel.
- 2Q12 Net Income decreased by 63% relative to 1Q12 due to lower EBITDA and the negative foreign exchange effect on deferred tax.
- Operating cash flow in 2Q12 decreased by 7% compared to 1Q12: the lower EBITDA was partly offset by the comparative impact of changes in working capital, mainly due to a lower level of accounts receivable at the end of 2Q12.
- Organic capital investments in 2Q12 amounted to USD 1.3 bn, 14% above 1Q12, largely related to refinery quality upgrades (Ryazan and Saratov) and field development activity (primarily, Yamal).
- Compared to the 2Q11 results, 2Q12 EBITDA and Net Income decreased by 34% and 63%, respectively. This primarily reflects a weaker external environment with the Urals price 7% lower and the negative duty lag comparative impact of USD 14 per barrel as well as the negative foreign exchange effect on deferred tax partly offset by the positive impact of the weaker rouble on costs.
