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FTSE 100
BP
Remuneration of non-executive directors in 2010
a
lhousand
2009 2010
P Anderson
b
- 118
F Bownan
c
- 17
A Burgnans 93 90
C B Carroll 90 90
Sir villian Caslell 115 147
C David
d
113 135
Davis
e
- 69
D J Flinl 35 108
Dr D S Julius 105 100
B elson
l
- 17
CH Svanberg
g
30 750
Direclors leaving lhe board in 2010
E B Davis, Jr
h
105 33
Sir an Prosser
i
165 52
a
This inlornalion has been subjecl lo audil.
b
Appoinled on 1 February 2010.
c
Appoinled on 3 ovenber 2010.
d
Also received 23,000 lor serving as a nenber ol BPs lechnology advisory council.
e
Appoinled on 2 April 2010.
l
Appoinled on 3 ovenber 2010.
g
Also received a relocalion allowance ol 90,000.
h
Also received a superannualion graluily ol 21,000.
i
Also received a superannualion graluily ol 43,945.
o share or share oplion awards were nade lo any nonexeculive direclor
in respecl ol service on lhe board during 2010.
onexeculive direclors have lellers ol appoinlnenl which
recognize lhal, subjecl lo lhe Arlicles ol Associalion, lheir service is al lhe
discrelion ol shareholders. All direclors sland lor reeleclion al each AC.
BP Annual Feporl and Forn 20F 2010 113
Direclors renuneralion reporl
Parl 2 Execulive direclors
renuneralion
2010 renuneralion
SaIary
r Dudleys salary was increased lo $1,700,000 on his pronolion lo
group chiel execulive in Oclober 2010. The London acconnodalion
provided lo hin ceased al lhe end ol 2010. o olher execulive direclor
had a salary increase in 2010.
AnnuaI bonus
The 2010 annual bonus resulls were dranalically allecled by lhe Cull ol
exico accidenl. n lhe judgenenl ol lhe connillee and lhe group chiel
execulive lhis overrode lhe nornal nelrics lor bonus oulcones. As
indicaled in lhe lable on page 112, no bonus was paid lo r Dudley,
Dr Hayward or r nglis lor 2010. r Conn and Dr Crole sinilarly received
no bonus lor lheir group porlion and were liniled lo an onlargel level lor
lheir segnenl/lunclional porlion (accounling lor 30' ol lheir overall
bonus opporlunily. Bolh ol lhese nel or exceeded largels and nade
inporlanl conlribulions lo lhe slabilizalion ol lhe business lollowing lhe
accidenl.
The lolal bonus lo r Conn was 310,500 and lo Dr Crole
$621,000. Ol lhe lolal lor each, onelhird is paid in cash, onelhird is
delerred on a nandalory basis and onelhird is paid eilher in cash or
volunlarily delerred al lhe individuals discrelion. These anounls are
shown in lhe lable on page 112.
Deferred bonus
Onelhird ol lhe bonus awarded lo Dr Crole and r Conn is delerred inlo
shares on a nandalory basis under lhe lerns ol lhe delerred bonus
elenenl. Their delerred shares are nalched on a onelorone basis and will
vesl in lhree years conlingenl on an assessnenl ol salely and
environnenlal suslainabilily over lhe lhreeyear delerral period.
Bolh individuals nay elecl lo deler an addilional lhird inlo shares
on lhe sane basis as lhe nandalory delerral.
All delerred bonuses are converled lo shares based on an average
price ol BP shares over lhe lhree days lollowing lhe conpanys
announcenenl ol 2010 resulls (4.34/share, $46.63/ADS.
2008-2010 share eIement
Fesulls lor lhe 20032010 share elenenl were also slrongly allecled by
lhe Cull ol exico accidenl. BPs Tolal Shareholder Felurn (TSF lor lhe
lhreeyear period was lowesl anong lhe peer group ol oil najors. The
conpanys underlying perlornance relalive lo lhe peer group aclually
renained quile slrong on lhe nelrics hislorically used lo lesl lhe lairness
ol lhe TSF resull. The connillee lell, however, lhal because ol lhe
seriousness ol lhe Cull ol exico accidenl, lhe TSF ranking was an
appropriale resull. o shares, lherelore, vesled under lhe plan lor any
execulive direclor.
2011 renuneralion policy
The basic principles lhal guide renuneralion policy lor execulive
direclors in BP include:
A subslanlial porlion ol execulive renuneralion should be linked lo
success in inplenenling lhe conpanys business slralegy lo
naxinize longlern shareholder value.
The slruclure ol pay should reHecl lhe longlern nalure ol BPs
business and lhe signilcance ol salely and environnenlal risks.
Perlornance condilions lor variable pay should be sel independenlly
by lhe connillee al lhe oulsel ol each year and assessed by lhe
connillee bolh quanlilalively and qualilalively al lhe end ol each
perlornance period.
Perlornance assessnenl should lake inlo accounl nalerial changes
in lhe narkel environnenl (predoninanlly oil prices and BPs
conpelilive posilion (prinarily visavis olher oil najors.
Salaries should be reviewed annually, in lhe conlexl ol lhe lolal
quanlun ol pay, and laking inlo accounl bolh exlernal narkel and
inlernal conpany condilions.
Execulives should develop and be required lo hold a signilcanl
shareholding as lhis represenls lhe besl way lo align lheir inleresls
wilh lhose ol shareholders.
The renuneralion connillee will aclively seek lo undersland
shareholder prelerences and be as lransparenl as possible in
explaining ils renuneralion policy and praclices.
The najorily ol lolal renuneralion is long lern and varies wilh
perlornance, wilh lhe largesl elenenls share based, lurlher aligning
inleresls wilh shareholders.
The connillee reviews lhe pay policy and levels lor execulives
below board, as well as pay and condilions ol enployees lhroughoul lhe
group. These are considered when delernining execulive direclors
renuneralion.
SaIary
The connillee nornally reviews salaries annually, laking inlo accounl
olher large Europebased global conpanies as well as relevanl US
conpanies. These groups are each delned and analysed by lhe
connillees independenl renuneralion advisers.
r Dudleys currenl salary ol $1,700,000 will renain unchanged
in 2011. Bolh r Conn and Dr Crole, who lasl received salary increases
in July 2003, will have lheir salaries increased elleclive 1 April 2011.
r Conns new salary will be 730,000 (lron 690,000 and Dr Croles
will be $1,442,000 (lron $1,330,000.
AnnuaI bonus
Bonus neasures and levels ol eligibilily are sel al lhe slarl ol lhe year
lor lhe senior leadership including execulive direclors. The approach lor
2011 aligns closely wilh lhe group lenplale lor reinlorcing salely and
risk nanagenenl, rebuilding lrusl and reinlorcing value crealion. There
is a balance ol longlern and nearlern objeclives weighled lowards
lhe lop priorilies ol risk idenlilcalion and nanagenenl, salely and
conpliance, and lalenl and capabilily developnenl. Croup neasures lor
execulive direclors will locus on:
Salely and operalional risk nelrics - including lull inplenenlalion ol
lhe S&OF lunclional nodel.
Shorllern perlornance - including key lnancial and operaling nelrics.
Longlern perlornance - including progress on key projecls and
reserves replacenenl.
People - including a new perlornance and reward lranework.
114 BP Annual Feporl and Forn 20F 2010
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Direclors renuneralion reporl
r Dudleys bonus in 2011 will be based enlirely on group neasures.
r Conn and Dr Crole will have 70' ol lheir bonus based on group
neasures and 30' on lhe resulls ol lheir respeclive segnenls. For
r Conn lhese will include relning availabilily, salely and cosl ellciency.
For Dr Crole lhey will locus on lunclional cosls and succession.
As in pasl years, in addilion lo lhe specilc bonus nelrics, lhe
connillee will also review lhe underlying perlornance ol lhe group in lighl
ol lhe overall business plan, conpelilors resulls, analysls reporls and lhe
views ol lhe chairnen ol lhe olher connillees.
Based on lhis broader view, lhe connillee can decide lo reduce
bonuses where lhis is warranled and, in exceplional circunslances, lo pay
no bonuses.
Deferred bonus
Onelhird ol lhe annual bonus will be delerred inlo shares lor lhree years
and nalched by lhe conpany on a onelorone basis. Under lhe rules ol lhe
plan, lhe average share price over lhe lhree days lollowing announcenenl
ol lullyear resulls is used lo delernine lhe nunber ol shares. Bolh
delerred and nalched shares will vesl conlingenl on an assessnenl ol
salely and environnenlal suslainabilily over lhe lhreeyear delerral period.
l lhe connillee assesses lhal lhere has been a nalerial delerioralion in
salely and environnenlal nelrics, or lhere have been najor incidenls
revealing underlying weaknesses in salely and environnenlal
nanagenenl, lhen il nay conclude lhal shares should vesl in parl, or nol
al all. n reaching ils conclusion, lhe connillee will oblain advice lron lhe
salely, elhics and environnenl assurance connillee (SEEAC.
Execulive direclors nay volunlarily deler a lurlher onelhird ol lheir
annual bonus inlo shares, which will be capable ol vesling, and will qualily
lor nalching, on lhe sane basis as sel oul above.
vhere shares vesl, lhe execulive direclor will also receive
addilional shares represenling lhe value ol lhe reinvesled dividends.
This slruclure ol delerred bonuses, paid in shares, places increased
locus on longlern alignnenl and reinlorces lhe crilical inporlance ol
nainlaining high salely and environnenlal slandards.
Performance shares
The share elenenl ol lhe EDP has been a lealure ol lhe plan, wilh sone
nodilcalions, since ils inceplion in 2000. The naxinun nunber ol shares
lhal can be awarded will be 5.5 lines salary lor lhe group chiel execulive
and lour lines salary lor lhe olher execulive direclors.
Perlornance shares will only vesl lo lhe exlenl lhal a perlornance
condilion is nel, as described under perlornance condilions. n addilion,
lhe connillee will have an overriding discrelion, in exceplional
circunslances (relaling lo eilher lhe conpany or a parlicular parlicipanl lo
reduce lhe nunber ol shares lhal vesl (or lo provide lhal no shares vesl.
The conpulsory relenlion period will also be decided by lhe
connillee and will nol nornally be less lhan lhree years. Togelher wilh lhe
perlornance period, lhis gives execulive direclors a sixyear incenlive
slruclure, which is designed lo ensure lheir inleresls are aligned wilh lhose
ol shareholders.
vhere shares vesl, lhe execulive direclor will receive addilional
shares represenling lhe value ol lhe reinvesled dividends.
The connillees policy, reHecled in lhe EDP, conlinues lo be lhal
each execulive direclor builds a signilcanl personal shareholding, wilh a
largel ol shares equivalenl in value lo lve lines salary, wilhin a reasonable
line lron appoinlnenl as an execulive direclor.
Perlornance condilions
Perlornance condilions lor lhe 20112013 share elenenl will be aligned
wilh lhe slralegic agenda lhal has evolved in response lo lasl years
evenls. This locuses on value crealion, reinlorcing salely and risk
nanagenenl, and rebuilding lrusl.
Vesling ol shares will be based 50' on BPs lolal shareholder
relurn (TSF conpared lo lhe olher oil najors, reHecling lhe cenlral
inporlance ol resloring lhe value ol lhe conpany. A lurlher 20' will be
based on lhe reserves replacenenl ralio, also relalive lo lhe olher oil
najors, reHecling a cenlral elenenl ol value crealion. The lnal 30' will be
based on a sel ol slralegic inperalives lor rebuilding lrusl, in parlicular,
reinlorcing salely and risk nanagenenl cullure, rebuilding BPs exlernal
repulalion, and reinlorcing slall alignnenl and norale.
For lhe relalive neasures, TSF and lhe reserve replacenenl ralio,
lhe conparalor group will consisl ol Exxonobil, Shell, Tolal,
ConocoPhillips and Chevron. This group can be allered il circunslances
change, lor exanple, il lhere is signilcanl consolidalion in lhe induslry.
vhile a narrow group, il conlinues lo represenl lhe conparalors lhal bolh
shareholders and nanagenenl use in assessing relalive perlornance.
The TSF will be calculaled as lhe share price perlornance over lhe
lhreeyear period, assuning dividends are reinvesled. All share prices will
be averaged over lhe lhreenonlh period belore lhe beginning and end ol
lhe perlornance period. They will be neasured in US dollars. The reserve
replacenenl ralio is delned according lo induslry slandard specilcalions
and ils calculalion is audiled.
As in previous years, lhe nelhodology used lor lhe relalive
neasures will rank each ol lhe lve conpelilors on each neasure. BPs
perlornance will lhen be conpared lo lhe olher lve. Perlornance shares
lor each conponenl will vesl al levels ol 100', 70' and 35'
respeclively, lor perlornance equivalenl lo lrsl, second and lhird rank. o
shares will vesl lor lourlh or lllh place. For perlornance belween second
and lhird or lrsl and second, lhe vesling percenlage will be inlerpolaled
based on BPs perlornance relalive lo lhe conpany ranked direclly above
and below il.
The renaining 30' ol vesling will be based on a balanced
scorecard ol slralegic inperalives. These will conprise salely and risk
nanagenenl cullure, exlernal repulalion, and inlernal slall alignnenl and
norale. For each ol lhese, specilc nelrics derived lron exlernally
labulaled surveys will be used lo lrack progress. This evidence will be used
by lhe connillee, along wilh inpul lron lhe olher board connillees, lo
judge perlornance on each nelric. The resulls will be explained in lhe
subsequenl direclors renuneralion reporl.
The connillee considers lhal lhis conbinalion ol quanlilalive and
qualilalive neasures reHecls lhe longlern value crealion priorilies ol lhe
conpany as well as lhe key underpinnings lor business suslainabilily. As in
previous years, lhe connillee nay exercise ils discrelion, in a reasonable
and inlorned nanner, lo adjusl vesling levels upwards or downwards il il
concludes lhal lhe lornulaic approach does nol reHecl lhe lrue underlying
heallh and perlornance ol BPs business relalive lo ils peers. l will explain
any adjuslnenls in lhe direclors renuneralion reporl lollowing vesling, in
line wilh ils connilnenl lo lransparency.
BP Annual Feporl and Forn 20F 2010 115
Direclors renuneralion reporl
Pensions
Execulive direclors are eligible lo parlicipale in lhe appropriale pension
schenes applying in lheir hone counlries. Delails are sel oul in lhe
lable below.
UK direclors
UK direclors are nenbers ol lhe regular BP Pension Schene. The core
benells under lhis schene are nonconlribulory. They include a pension
accrual ol 1/60lh ol basic salary lor each year ol service, up lo a naxinun
ol lwolhirds ol lnal basic salary and a dependanls benell ol lwolhirds ol
lhe nenbers pension. The schene pension is nol inlegraled wilh slale
pension benells.
The rules ol lhe BP Pension Schene were anended in 2006 such
lhal lhe nornal relirenenl age is 65. Prior lo 1 Decenber 2006, schene
nenbers could relire on or aller age 60 wilhoul reduclion. Special early
relirenenl lerns apply lo pre1 Decenber 2006 service lor nenbers wilh
long service as al 1 Decenber 2006.
Pension benells in excess ol lhe individual lileline allowance sel
by legislalion are paid via an unapproved, unlunded pension arrangenenl
provided direclly by lhe conpany.
n lhe lighl ol lhe reduced annual allowance lax regine being
inplenenled lron April 2011, lhe conpany is considering allernalive
approaches lo lhe provision ol pension benells lor lulure service lor UK
direclors and olher senior slall inpacled by lhe change.
Allhough r nglis was, like olher UK direclors, a nenber ol lhe
BP Pension Schene, his parlicipalion gave rise lo a US lederal lax liabilily
as he was based in Houslon. During 2010, pursuanl lo a lax equalizalion
arrangenenl lhal applied in respecl ol lhe period since r nglis becane
a direclor in February 2007, under his inlernalional assignnenl
arrangenenls, lhe connillee approved lhe discharge ol lhis US lax liabilily
anounling lo $1.26 nillion in respecl ol 2010. This lgure included an
elenenl in respecl ol lhe addilional value ol r ngliss accrued pension as
a resull ol cryslallizalion ol early relirenenl righls on lhe lerninalion ol his
enploynenl wilh BP.
US direclors
r Dudley and Dr Crole parlicipale in lhe US BP Felirenenl Accunulalion
Plan (US pension plan, which lealures a cash balance lornula. Pension
benells are provided lhrough a conbinalion ol laxqualiled and
nonqualiled benell resloralion plans, consislenl wilh US lax regulalions
as applicable. n addilion, r Dudley relains lhe herilage Anoco relirenenl
plan, which provides benells on a lnal average pay lornula ol 1.67' ol
highesl average earnings (base pay plus bonus in accordance wilh slandard
US praclice lor each year ol service, reduced by 1.5' ol lhe prinary social
securily benell lor each year ol service. The higher benell ol lhe plans
produced by lhe lwo lornulas will be payable and lhis is currenlly lhe
benell delernined under lhe Anoco herilage lerns.
n addilion, BP provides a Supplenenlal Execulive Felirenenl
Benells Plan (supplenenlal plan, which is a nonqualiled arrangenenl
lhal becane elleclive on 1 January 2002 lor US enployees wilh salary
above a speciled salary grade level. r Dudley and Dr Crole are eligible lo
parlicipale under lhe supplenenlal plan. The benell lornula is a largel
ol 1.3' ol lnal average earnings (base pay plus bonus lor each year
ol service, inclusive ol all olher BP (US qualiled and nonqualiled
pension arrangenenls. This benell is unlunded and lherelore paid lron
corporale assels.
Their pension accrual lor 2010, shown in lhe lable below, lakes
inlo accounl lhe lolal anounl lhal could be payable under relevanl plans.
Other benehts
Execulive direclors are eligible lo parlicipale in regular enployee benell
plans and in allenployee share saving schenes applying in lheir hone
counlries. Benells in kind are nol pensionable. BP provided
acconnodalion in London lor r Dudley and lor r nglis during 2010.
This provision ceased lor bolh individuals al lhe end ol 2010.
Pensions
a
(information subject to audit)
lhousand
Addilional pension
Accrued pension earned during lhe Transler value ol Transler value ol Anounl ol BA less
Service al enlillenenl year ended accrued benell
b
accrued benell
b
conlribulions nade by
31 Dec 2010 al 31 Dec 2010 31 Dec 2010
a
al 31 Dec 2009 (A al 31 Dec 2010 (B lhe direclor in 2010
F v Dudley (US 31 years $704 $293 $4,353 $10,336 $5,933
C Conn (UK 25 years 237 12 4,503 5,373 365
Dr B E Crole (US 31 years $1,231 $270 $12,047 $16,501 $4,454
Direclors leaving lhe board in 2010
Dr A B Hayward (UK
c
29 years 605 21 10,340 13,677 2,337
A C nglis (UK
c
30 years 349 12 6,000 7,633 1,633
a
Addilional pension earned during lhe year includes an inHalion increase ol 2.4' lor UK direclors and 1.5' lor US direclors.
b
Transler values have been calculaled in accordance wilh guidance issued by lhe acluarial prolession.
c
Figures are calculaled lo end ol 2010.
116 BP Annual Feporl and Forn 20F 2010
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Directors remuneration report
Performance share element of EDIP (information subject to audit)
Share element interests Interests vested in 2010 and 2011
Market price Potential maximum performance shares
a
of each share
Date of at date of award Number of Market price
award of of performance ordinary of each share
Performance performance shares At 1 Jan Awarded At 31 Dec shares Vesting at vesting
period shares 2010 2010 2010 vested
b
date
R W Dudley
c
2009-2011 06 May 2009 5.00 539,634 539,634
2010-2012 09 Feb 2010 5.64 581,082 581,082
I C Conn 2007-2009 06 Mar 2007 5.12 456,748 95,697 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 578,376 578,376 0
2008-2011
d
13 Feb 2008 5.61 133,452 133,452 155,695 22 Feb 2011 4.91
2008-2013
d
13 Feb 2008 5.61 133,452 133,452
2009-2011 11 Feb 2009 5.10 780,816 780,816
2010-2012 09 Feb 2010 5.64 656,813 656,813
Dr B E Grote
c
2007-2009 06 Mar 2007 5.12 491,640 101,502 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 581,748 581,748 0
2009-2011 11 Feb 2009 5.10 992,928 992,928
2010-2012 09 Feb 2010 5.64 801,894 801,894
Directors leaving the board in 2010
Dr A B Hayward 2007-2009 06 Mar 2007 5.12 706,311 147,985 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 845,319 821,838
e
0
2009-2011 11 Feb 2009 5.10 1,182,540 755,512
e
2010-2012 09 Feb 2010 5.64 994,739 303,948
e
A G Inglis 2007-2009 06 Mar 2007 5.12 400,243 83,859 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 578,376 578,376 0
2008-2011
d
13 Feb 2008 5.61 133,452 0
2008-2013
d
13 Feb 2008 5.61 133,452 0
2009-2011 11 Feb 2009 5.10 780,816 520,544
e
2010-2012 09 Feb 2010 5.64 656,813 218,938
e
a
BPs performance is measured against the oil sector. For awards under the 2007-2009 and 2008-2010 plans, the performance condition is TSR measured against ExxonMobil, Shell, Total and Chevron.
For awards under the 2009-2011 plan, performance conditions are measured 50% on TSR against ExxonMobil, Shell, Total, ConocoPhillips and Chevron and 50% on a balanced scorecard of underlying
performance. For the awards under the 2010-2012 plan, performance conditions are measured one third on TSR against ExxonMobil, Shell, Total, ConocoPhillips and Chevron and two thirds on a balanced
scorecard of underlying performance. Each performance period ends on 31 December of the third year.
b
Represents awards of shares made at the end of the relevant performance period based on performance achieved under rules of the plan and includes re-invested dividends on the shares awarded.
c
Dr Grote and Mr Dudley receive awards in the form of ADSs. The above numbers reect calculated equivalents in ordinary shares.
d
Restricted award under share element of EDIP. As reported in the 2007 directors remuneration report in February 2008, the committee awarded both Mr Inglis and Mr Conn restricted shares, as set out
above. These one-off awards will vest on the third and fth anniversary of the award, dependent on the remuneration committee being satised as to their personal performance at the date of vesting. Any
unvested tranche will lapse in the event of cessation of employment with the company. Mr Inglis left the company on 31 December 2010 and accordingly his restricted awards lapsed.
e
Potential maximum of performance shares has been reduced to reect actual service during performance period on a pro-rated basis.
BP Annual Report and Form 20-F 2010 117
Directors remuneration report
Share options (information subject to audit)
Market price Date from
Option At 31 Dec Option at date of which rst
type At 1 Jan 2010 Granted Exercised 2010 price exercise exercisable Expiry date
R W Dudley
a
BP SOP 1,800 1,800 $48.94 $58.15
b
28 Mar 2003 27 Mar 2010
BP SOP 6,460 6,460 $49.65 23 Feb 2004 22 Feb 2011
BP SOP 1,073 1,073 $43.82 17 Dec 2004 16 Dec 2011
BP SOP 17,835 17,835 $48.99 18 Feb 2005 17 Feb 2012
BP SOP 17,835 17,835 $38.10 17 Feb 2006 16 Feb 2013
I C Conn SAYE 1,498 1,498 4.41 4.93
d
01 Sep 2010 28 Feb 2011
SAYE 617 617 4.87 01 Sep 2011 29 Feb 2012
SAYE 605 605 4.20 01 Sep 2012 28 Feb 2013
EXEC 72,250 72,250 5.67 23 Feb 2004 23 Feb 2011
EXEC 130,000 130,000 5.72 18 Feb 2005 18 Feb 2012
Dr B E Grote
a
BPA 12,600 12,600 $48.94 $58.40-$58.42 28 Mar 2001 27 Mar 2010
EDIP 13,173 13,173 $37.76 $54.36 17 Feb 2004 17 Feb 2010
EDIP 58,333 58,333 $48.53 25 Feb 2005 25 Feb 2011
Directors leaving the
board in 2010
Dr A B Hayward SAYE 3,220 3,220 5.00 01 Sep 2011 29 Feb 2012
EXEC 34,000
c
5.99 n/a 15 May 2003 15 May 2010
EXEC 77,400 77,400 5.67 23 Feb 2004 23 Feb 2011
EXEC 160,000 160,000 5.72 18 Feb 2005 18 Feb 2012
EDIP 275,000 275,000 4.22 6.31
b
25 Feb 2005 25 Feb 2011
A G Inglis EXEC 72,250 72,250 5.67 23 Feb 2004 22 Feb 2011
EXEC 119,000 119,000 5.72 18 Feb 2005 17 Feb 2012
EXEC 119,000 119,000 3.88 6.31 17 Feb 2006 16 Feb 2013
EXEC 100,500 100,500 4.22 6.31 25 Feb 2007 24 Feb 2014
The closing market prices of an ordinary share and of an ADS on 31 December 2010 were 4.66 and $44.17 respectively.
During 2010, the highest market prices were 6.55 and $62.32 respectively and the lowest market prices were 3.03 and $27.02 respectively.
BPA = BP Amoco share option plan, which applied to US executive directors prior to the adoption of the EDIP.
EDIP = Executive Directors Incentive Plan adopted by shareholders in 2010 as described on page 114.
EXEC = Executive Share Option Scheme. These options were granted to the relevant individuals prior to their appointments as directors and are not subject to performance conditions.
SAYE = Save As You Earn employee share scheme.
BP SOP = BP Share Option Plan. These options were granted to Mr Dudley prior to his appointment as a director and are not subject to performance conditions.
a
Numbers shown are ADSs under option. One ADS is equivalent to six ordinary shares.
b
Closing market price for information. Shares were retained after exercise of options.
c
Options lapsed.
d
Options exercised on 22 February 2011. Closing market price for information only, as shares were retained after exercise of options.
Executive directors external appointments
The board encourages executive directors to broaden their knowledge and
experience by taking up appointments outside the company. Each executive
director is permitted to accept one non-executive appointment, from which
they may retain any fee. External appointments are subject to agreement by
the chairman and reported to the board. Any external appointment must not
conict with a directors duties and commitments to BP.
During the year, the fees received by executive directors for external
appointments were as follows:
Executive director
Appointee
company
Additional position
held at appointee
company
Total
fees
I C Conn Rolls-Royce
Senior
Independent
Director
65,000
Dr B E Grote Unilever Audit committee Unilever PLC
member
33,000
Unilever NV
47,500
A G Inglis
a
BAE
Systems
Chair of
Corporate
Responsibility
Committee
49,280
a
Member of BAE Systems Board until 9 July 2010.
118 BP Annual Report and Form 20-F 2010
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Direclors renuneralion reporl
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Service conlracls
Director
Conlracl Salary as al
dale 31 Dec 2010
F v Dudley 6 Apr 2009 $1,700,000
C Conn 22 Jul 2004 690,000
Dr B E Crole 7 Aug 2000 $1,330,000
Service conlracls have a nolice period ol one year and nay be lerninaled
by lhe conpany al any line wilh innediale ellecl on paynenl in lieu ol
nolice equivalenl lo one years salary or lhe anounl ol salary lhal would
have been paid il lhe conlracl had been lerninaled on lhe expiry ol lhe
renainder ol lhe nolice period. The service conlracls are expressed lo
expire al a nornal relirenenl age ol 60 (subjecl lo age discrininalion.
Dr Croles conlracl is wilh BP Exploralion (Alaska nc. He is
seconded lo BP p.l.c. under a secondnenl agreenenl ol 7 Augusl 2000,
which expires al lhe dale ol lhe 2012 AC. r Dudleys conlracl is wilh
BP Corporalion orlh Anerica nc. He is seconded lo BP p.l.c. under a
secondnenl agreenenl ol 15 April 2009, which expires on 15 April 2012.
Bolh secondnenls can be lerninaled by one nonlhs nolice by eilher parly
and lerninale aulonalically on lhe lerninalion ol lheir service conlracls.
There are no olher provisions lor conpensalion payable on early
lerninalion ol lhe above conlracls. n lhe evenl ol lhe early lerninalion ol
any ol lhe conlracls by lhe conpany, olher lhan lor cause (or under a
specilc lerninalion paynenl provision, lhe relevanl direclors lhen currenl
salary and benells would be laken inlo accounl in calculaling any liabilily ol
lhe conpany. The connillee will consider niligalion lo reduce
conpensalion lo a deparling direclor, when appropriale lo do so.
Direclors leaving lhe board
r nglis and Dr Hayward slepped down lron lhe board on
31 Oclober 2010 and 30 ovenber 2010 respeclively. r nglis renained
in enploynenl on his exisling salary and benells unlil ceasing
enploynenl on 31 Decenber 2010, Dr Hayward ceased enploynenl
on 30 ovenber 2010.
r nglis and Dr Hayward, who were enployed under service
conlracls wilh lhe conpany daled 1 February 2007 and 29 January 2003
respeclively, were each enlilled lo one years salary (690,000 and
1,045,000 respeclively on lerninalion as conpensalion in accordance
wilh lheir conlraclual enlillenenls. Dr Hayward was paid a lurlher 30,000
conpensalion in respecl ol UK slalulory enploynenl righls. As r nglis
was based in Houslon, lhe conpany agreed, in accordance wilh his
inlernalional assignnenl arrangenenls, lo nake a paynenl ol 200,000 lo
cover various repalrialion and relocalion cosls. The conpany reinbursed
bolh individuals legal lees in conneclion wilh lheir lerninalion
arrangenenls, and agreed lo pay cerlain oulplacenenl lees in lhe case ol
r nglis.
Bolh individuals were eligible lor a bonus lor 2010 based on lhe
achievenenl ol bonus largels and lheir period ol service during lhe year.
The connillee considered bonuses lor lhese individuals al lhe sane line
as lor lhe renaining execulive direclors and, lor lhe reasons explained
above, delernined lhal no bonuses should be awarded.
As regards longlern incenlives, bolh individuals relained lheir
unvesled perlornance awards under lhe EDP in respecl ol lhe 200310,
200911 and 201012 share elenenls and lhese will vesl al lhe nornal
line lo lhe exlenl lhe perlornance largels are nel (bul subjecl lo
proraling lor service during lhe perlornance period. Furlher delails ol
lhese awards are sel oul on page 117. Bolh individuals relained lheir
oulslanding share oplions as sel oul in lhe lable on page 113. The relenlion
share award granled under lhe EDP lo r nglis in 2003 lapsed as a resull
ol lhe lerninalion ol his enploynenl.
vilh ellecl lron 1 Decenber 2010, Dr Hayward has been engaged
by BP lo serve as a nonexeculive direclor ol TKBP, lor which he will be
paid a lee ol $150,000 per annun.
Fenuneralion connillee
Dr Julius (chairnan, r Burgnans, r David and r Davis are
independenl nonexeculive direclors and were connillee nenbers during
lhe year. The chairnan ol lhe board also allends neelings. The group chiel
execulive was consulled on nallers relaling lo lhe olher execulive
direclors who reporl lo hin and on nallers relaling lo lhe perlornance ol
lhe conpany, neilher he nor lhe chairnan were presenl when nallers
allecling lheir own renuneralion were discussed. r Burgnans will
becone chairnan ol lhe connillee lollowing Dr Juliuss relirenenl al lhe
2011 AC.
The renuneralion connillees lasks are:
To delernine, on behall ol lhe board, lhe lerns ol engagenenl and
renuneralion ol lhe group chiel execulive and lhe execulive direclors
and lo reporl on lhese lo lhe shareholders.
To delernine, on behall ol lhe board, nallers ol policy over which lhe
conpany has aulhorily regarding lhe eslablishnenl or operalion ol lhe
conpanys pension schene ol which lhe execulive direclors are
nenbers.
To noninale, on behall ol lhe board, any lruslees (or direclors ol
corporale lruslees ol lhe schene.
To review and approve lhe policies and aclions being applied by lhe
group chiel execulive in renuneraling senior execulives olher lhan
execulive direclors lo ensure alignnenl and proporlionalily.
To reconnend lo lhe board lhe quanlun and slruclure ol renuneralion
lor lhe chairnan.
Constitution and operation
Each nenber ol lhe renuneralion connillee is subjecl lo annual
reeleclion as a direclor ol lhe conpany. The board considers all connillee
nenbers lo be independenl (see page 95.
They have no personal lnancial inleresl, olher lhan as shareholders,
in lhe connillees decisions.
The connillee nel six lines in lhe period under review.
The connillee is accounlable lo shareholders lhrough ils annual
reporl on execulive direclors renuneralion. l will consider lhe oulcone ol
lhe vole al lhe AC on lhe direclors renuneralion reporl and lake inlo
accounl lhe views ol shareholders in ils lulure decisions. The connillee
values ils dialogue wilh najor shareholders on renuneralion nallers.
Advice
r Aronson, an independenl consullanl, is lhe connillees secrelary and
independenl adviser. Advice was also received lron r Jackson, lhe
conpany secrelary, and lron lhe conpany secrelarys ollce, which is
independenl ol execulive nanagenenl and reporls lo lhe chairnan ol
lhe board.
The connillee also appoinls exlernal advisers lo provide specialisl
advice and services on parlicular renuneralion nallers. The independence
ol lhe advice is subjecl lo annual review.
n 2010, lhe connillee conlinued lo engage Towers valson as ils
principal exlernal adviser. Towers valson also provided olher renuneralion
and benells advice lo parls ol lhe group.
Freshlelds Bruckhaus Deringer LLP provided legal advice on
specilc nallers lo lhe connillee, as well as providing sone legal advice
lo lhe group.
BP Annual Feporl and Forn 20F 2010 119
Direclors renuneralion reporl
Parl 3 onexeculive direclors
renuneralion
PoIicy
The board sels lhe level ol renuneralion lor all nonexeculive direclors
wilhin a linil approved lron line lo line by shareholders. Key elenenls ol
BPs policy on nonexeculive direclor renuneralion include:
Fenuneralion should be sullcienl lo allracl, nolivale and relain
worldclass nonexeculive lalenl.
Fenuneralion ol nonexeculive direclors is proposed by lhe chairnan
and agreed by lhe board and should be proporlional lo lheir conlribulion
lowards lhe inleresls ol lhe conpany.
Fenuneralion praclice should be consislenl wilh recognized besl
praclice slandards lor nonexeculive direclors renuneralion.
Fenuneralion should be in lhe lorn ol cash lees, payable nonlhly.
onexeculive direclors should nol receive share oplions lron lhe
conpany.
onexeculive direclors are encouraged lo eslablish a holding in BP
shares ol lhe equivalenl value ol one years base lee.
Process
BP reviews lhe quanlun and slruclure ol chairnan and nonexeculive
renuneralion on an annual basis. The chairnans renuneralion is reviewed
by lhe renuneralion connillee, which nakes a reconnendalion lo lhe
board, lhe chairnan does nol vole on his own renuneralion. onexeculive
direclor renuneralion is reviewed by lhe chairnan, who nakes a
reconnendalion lo lhe board, nonexeculive direclors do nol vole on lheir
own renuneralion.
Following a review, lhe decision was laken nol lo increase lhe lee
levels ol BP nonexeculive direclors. However, il was decided lhal
nenbers ol lhe Cull ol exico connillee would receive a connillee
nenbership lee ol 5,000 (lhe sane lee level as lhe olher nain board
connillees and lhal lhe chair ol lhe Cull ol exico connillee would
receive a connillee chairnanship lee ol 30,000.
Fee structure
The lable below shows lhe currenl lee slruclure lor nonexeculive direclors
on 1 January 2011.
lhousand
Fee level
Chairnan
a
750
Senior independenl direclor
b
120
Board nenber 75
Audil, Cull ol exico and salely, elhics and environnenl
assurance connillees (SEEAC chairnanship lees
c
30
Fenuneralion connillee chairnanship lee
c
20
Connillee nenbership lee
d
Transallanlic allendance allowance 5
a
The chairnan renains ineligible lor connillee chairnanship and nenbership lees or
lransallanlic allendance allowance. He has lhe use ol a lully nainlained ollce lor conpany
business, a chaulleured car and securily advice in London. He receives secrelarial supporl as
appropriale lo his needs in Sweden and a relocalion allowance lor expenses incurred in relocaling
lo London.
b
The senior independenl direclor is slill eligible lor connillee chairnanship lees and lransallanlic
allendance allowance plus any connillee nenbership lees.
c
Connillee chairnen do nol receive an addilional nenbership lee lor lhe connillee lhey chair.
d
For nenbers ol lhe SEEAC, lhe audil, lhe Cull ol exico and lhe renuneralion connillees.
5
Remuneration of non-executive directors in 2010
a
lhousand
2009 2010
P Anderson
b
- 118
F Bownan
c
- 17
A Burgnans 93 90
C B Carroll 90 90
Sir villian Caslell 115 147
C David
d
113 135
Davis
e
- 69
D J Flinl 35 108
Dr D S Julius 105 100
B elson
l
- 17
CH Svanberg
g
30 750
Direclors leaving lhe board in 2010
E B Davis, Jr
h
105 33
Sir an Prosser
i
165 52
a
This inlornalion has been subjecl lo audil.
Appoinled on 1 February 2010.
Appoinled on 3 ovenber 2010.
Also received 23,000 lor serving as a nenber ol BPs lechnology advisory council.
Appoinled on 2 April 2010.
Appoinled on 3 ovenber 2010.
Also received a relocalion allowance ol 90,000.
Also received a superannualion graluily ol 21,000.
Also received a superannualion graluily ol 43,945.
o share or share oplion awards were nade lo any nonexeculive direclor
in respecl ol service on lhe board during 2010.
onexeculive direclors have lellers ol appoinlnenl which
recognize lhal, subjecl lo lhe Arlicles ol Associalion, lheir service is al lhe
discrelion ol shareholders. All direclors sland lor reeleclion al each AC.
Superannuation gratuities
Unlil 2002, BP nainlained a longslanding praclice whereby nonexeculive
direclors who relired lron lhe board aller al leasl six years service were
eligible lor consideralion lor a superannualion graluily. The board was, and
conlinues lo be, aulhorized lo nake such paynenls under lhe conpanys
Arlicles ol Associalion and lhe anounl ol lhe paynenl is delernined al lhe
boards discrelion, laking inlo consideralion lhe direclors period ol service
and olher relevanl laclors.
n 2002, lhe board revised ils policy wilh respecl lo superannualion
graluilies so lhal:
onexeculive direclors appoinled lo lhe board aller 1 July 2002 would
nol be eligible lor consideralion lor such a paynenl.
vhile nonexeculive direclors in service al 1 July 2002 would renain
eligible lor consideralion lor a paynenl, service aller lhal dale would
nol be laken inlo accounl by lhe board in considering lhe anounl ol any
such paynenl.
Sir an Prosser and Erroll Davis, Jr, who bolh relired on 15 April 2010, were
paid superannualion graluilies ol 43,945 and 21,000 respeclively. This is
in line wilh lhe policy arrangenenls agreed in 2002 and oullined above.
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Directors remuneration report
Non-executive directors of Amoco Corporation
Non-executive directors who were formerly non-executive directors of
Amoco Corporation have residual entitlements under the Amoco Non-
Employee Directors Restricted Stock Plan. Directors were allocated
restricted stock in remuneration for their service on the board of Amoco
Corporation prior to its merger with BP in 1998. On merger, interests in
Amoco shares in the plan were converted into interests in BP ADSs. The
restricted stock will vest on the retirement of the non-executive director at
the age of 70 (or earlier at the discretion of the board). Since the merger, no
further entitlements have accrued to any director under the plan. The
residual interests, as interests in a long-term incentive scheme, are set out
in the table below:
Date on
Interest in BP ADSs which director
at 1 Jan 2010
a
reaches age 70
b
Director leaving the board in 2010
E B Davis, Jr
c
4,490 5 August 2014
a
No awards were granted and no awards lapsed during the year. The awards were granted over
Amoco stock prior to the merger but their notional weighted average market value at the date of
grant (applying the subsequent merger ratio of 0.66167 of a BP ADS for every Amoco share) was
$27.87 per BP ADS.
b
For the purposes of the regulations, the date on which the director retires from the board at or after
the age of 70 is the end of the qualifying period. If the director retires prior to this date, the board
may waive the restrictions.
c
Erroll Davis, Jr retired from the board on 15 April 2010. He had received awards of Amoco shares
under the plan between 23 April 1991 and 28 April 1998 prior to the merger. These interests had
been converted into BP ADSs at the time of the merger. In accordance with the terms of the plan,
the board exercised its discretion over this award and the shares vested on 21 May 2010 (when the
BP ADS market price was $43.86) without payment by him.
With the retirement of Erroll Davis, Jr, no former Amoco non-executives
now serve on the BP p.l.c. board.
Past directors
Mr Miles (who was a non-executive director of BP until April 2006) was
appointed as a director and non-executive chairman of BP Pension Trustees
Limited (BPPT) in October 2006, retiring from BPPT on 29 September
2010. During 2010 he received 112,500 for this role.
Sir Ian Prosser (who retired as a non-executive director of BP in April
2010) was appointed as a director of BPPT on 24 June 2010, and appointed
non-executive chairman of BPPT on 29 September 2010. During 2010 he
received 51,923 for this role.
Dr Walter Massey (who retired as a non-executive director of BP in
April 2008) was appointed to the BP America External Advisory Council in
April 2008 for a period of two years. During 2010 he received $31,250
for this role.
Peter Sutherland (who was chairman of BP until 31 December
2009) continued his membership of the BP International Advisory Board
after his retirement from the board of BP. During 2010 he received
100,000 for this role.
This directors remuneration report was approved by the board and signed
on its behalf by David J Jackson, company secretary on 2 March 2011.
BP Annual Report and Form 20-F 2010 121
122 BP Annual Feporl and Forn 20F 2010
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Addilional inlornalion
lor shareholders
139 Adninislralion
139 Annual general neeling
140 Exhibils
124 Crilical accounling policies
127 Properly, planls and equipnenl
127 Share ownership
123 ajor shareholders and relaled
parly lransaclions
129 Dividends
130 Legal proceedings
133 Felalionships wilh suppliers and
conlraclors
134 Share prices and lislings
135 alerial conlracls
135 Exchange conlrols
135 Taxalion
137 Docunenls on display
137 Purchases ol equily securilies by
lhe issuer and alllialed purchasers
133 Fees and charges payable by a
holder ol ADSs
133 Fees and paynenls nade by lhe
Deposilary lo lhe issuer
139 Calledup share capilal
BP Annual Feporl and Forn 20F 2010 123
Addilional inlornalion lor shareholders
Crilical accounling policies
The signilcanl accounling policies ol lhe group are sunnarized in Financial
slalenenls - ole 1 on page 150.
nherenl in lhe applicalion ol nany ol lhe accounling policies used
in preparing lhe lnancial slalenenls is lhe need lor BP nanagenenl lo
nake eslinales and assunplions lhal allecl lhe reporled anounls ol
assels and liabililies al lhe dale ol lhe lnancial slalenenls and lhe
reporled anounls ol revenues and expenses during lhe reporling period.
Aclual oulcones could diller lron lhe eslinales and assunplions used.
The lollowing sunnary provides nore inlornalion aboul lhe crilical
accounling policies lhal could have a signilcanl inpacl on lhe resulls ol
lhe group and should be read in conjunclion wilh lhe oles on lnancial
slalenenls.
The accounling policies and areas lhal require lhe nosl signilcanl
judgenenls and eslinales used in lhe preparalion ol lhe consolidaled
lnancial slalenenls are in relalion lo oil and nalural gas accounling,
including lhe eslinalion ol reserves, lhe recoverabilily ol assel carrying
values, laxalion, derivalive lnancial inslrunenls, provisions and
conlingencies, and in parlicular, provisions and conlingencies relaled lo lhe
Cull ol exico oil spill, and pensions and olher poslrelirenenl benells.
OiI and naturaI gas accounting
The group lollows lhe principles ol lhe successlul ellorls nelhod ol
accounling lor ils oil and nalural gas exploralion and produclion aclivilies.
The acquisilion ol geological and geophysical seisnic inlornalion,
prior lo lhe discovery ol proved reserves, is expensed as incurred.
Exploralion licence and leasehold properly acquisilion cosls are
capilalized wilhin inlangible assels and are reviewed al each reporling dale
lo conlrn lhal lhere is no indicalion lhal lhe carrying anounl exceeds lhe
recoverable anounl. This review includes conlrning lhal exploralion drilling
is slill under way or lrnly planned or lhal il has been delernined, or work
is under way lo delernine, lhal lhe discovery is econonically viable based
on a range ol lechnical and connercial consideralions and sullcienl
progress is being nade on eslablishing developnenl plans and lining. l
no lulure aclivily is planned, lhe renaining balance ol lhe licence and
properly acquisilion cosls is wrillen oll. Lower value licences are
pooled and anorlized on a slraighlline basis over lhe eslinaled period
ol exploralion.
For exploralion wells and exploralorylype slraligraphic lesl wells,
cosls direclly associaled wilh lhe drilling ol wells are inilially capilalized
wilhin inlangible assels, pending delerninalion ol whelher polenlially
econonic oil and gas reserves have been discovered by lhe drilling ellorl.
These cosls include enployee renuneralion, nalerials and luel used, rig
cosls, delay renlals and paynenls nade lo conlraclors. The delerninalion
is usually nade wilhin one year aller well conplelion, bul can lake longer,
depending on lhe conplexily ol lhe geological slruclure. l lhe well did nol
encounler polenlially econonic oil and gas quanlilies, lhe well cosls are
expensed as a dry hole and are reporled in exploralion expense.
Exploralion wells lhal discover polenlially econonic quanlilies ol oil and
nalural gas and are in areas where najor capilal expendilure (e.g. ollshore
plallorn or a pipeline would be required belore produclion could begin,
and where lhe econonic viabilily ol lhal najor capilal expendilure depends
on lhe successlul conplelion ol lurlher exploralion work in lhe area,
renain capilalized on lhe balance sheel as long as addilional exploralion
appraisal work is under way or lrnly planned.
l is nol unusual lo have exploralion wells and exploralorylype
slraligraphic lesl wells renaining suspended on lhe balance sheel lor
several years while addilional appraisal drilling and seisnic work on lhe
polenlial oil and nalural gas leld is perlorned or while lhe oplinun
developnenl plans and lining are eslablished.
All such carried cosls are subjecl lo regular lechnical, connercial and
nanagenenl review on al leasl an annual basis lo conlrn lhe conlinued
inlenl lo develop, or olherwise exlracl value lron, lhe discovery. vhere
lhis is no longer lhe case, lhe cosls are innedialely expensed.
Once a projecl is sanclioned lor developnenl, lhe carrying values
ol exploralion licence and leasehold properly acquisilion cosls and
cosls associaled wilh exploralion wells and exploralorylype slraligraphic
lesl wells, are lranslerred lo produclion assels wilhin properly, planl
and equipnenl.
The capilalized exploralion and developnenl cosls lor proved oil
and nalural gas properlies (which include lhe cosls ol drilling unsuccesslul
appraisal and developnenl wells are anorlized on lhe basis ol oil
equivalenl barrels lhal are produced in a period as a percenlage ol lhe
eslinaled proved reserves. Cosls ol connon lacililies subjecl lo
deprecialion are expendilures incurred lo dale, logelher wilh lulure capilal
expendilure expecled lo be incurred in relalion lo lhese connon lacililies
and excluding lulure drilling cosls.
The eslinaled proved reserves used in lhese unilolproduclion
calculalions vary wilh lhe nalure ol lhe capilalized expendilure. The
reserves used in lhe calculalion ol lhe unilolproduclion anorlizalion are
as lollows:
Cosl ol producing wells - proved developed reserves.
Licence and properly acquisilion, connon lacililies and lulure
deconnissioning cosls - lolal proved reserves.
The inpacl ol changes in eslinaled proved reserves is deall wilh
prospeclively by anorlizing lhe renaining carrying value ol lhe assel over
lhe expecled lulure produclion. l proved reserves eslinales are revised
downwards, earnings could be allecled by higher deprecialion expense or
an innediale wriledown ol lhe properlys carrying value (see discussion
o! recoverabi|i!, o! asse! carr,ing va|ues be|ov.
On 31 Decenber 2003, lhe SEC published a revision ol
Fule 410 (a ol Fegulalion SX lor lhe eslinalion ol reserves. n 2009, lhe
applicalion ol lhe lechnical aspecls ol lhese revised rules resulled in an
innalerial increase ol less lhan 1' lo BPs lolal proved reserves. The
eslinalion ol oil and nalural gas reserves and BPs process lo nanage
reserves bookings is described in Exploralion and Produclion - Oil and gas
disclosures on page 50, which is unaudiled. As discussed below, oil and
nalural gas reserves have a direcl inpacl on lhe assessnenl ol lhe
recoverabilily ol assel carrying values reporled in lhe lnancial slalenenls.
The 2010 novenenls in proved reserves are reHecled in lhe lables
showing novenenls in oil and gas reserves by region in Financial
slalenenls - Supplenenlary inlornalion on oil and nalural gas (unaudiled
on pages 223243.
RecoverabiIity of asset carrying vaIues
BP assesses ils lxed assels, including goodwill, lor possible inpairnenl il
lhere are evenls or changes in circunslances lhal indicale lhal carrying
values ol lhe assels nay nol be recoverable and, as a resull, charges lor
inpairnenl are recognized in lhe groups resulls lron line lo line. Such
indicalors include changes in lhe groups business plans, changes in
connodily prices leading lo suslained unprollable perlornance, an
increase in lhe discounl rale, low planl ulilizalion, evidence ol physical
danage and, lor oil and nalural gas properlies, signilcanl downward
revisions ol eslinaled volunes or increases in eslinaled lulure
developnenl expendilure. l lhere are low oil prices, nalural gas prices,
relning nargins or narkeling nargins during an exlended period, lhe
group nay need lo recognize signilcanl inpairnenl charges.
The assessnenl lor inpairnenl enlails conparing lhe carrying
value ol lhe assel or cashgeneraling unil wilh ils recoverable anounl,
lhal is, lhe higher ol lair value less cosls lo sell and value in use. Value in
use is usually delernined on lhe basis ol discounled eslinaled lulure nel
cash Hows. Delerninalion as lo whelher and how nuch an assel is
inpaired involves nanagenenl eslinales on highly uncerlain nallers such
as lulure connodily prices, lhe ellecls ol inHalion on operaling expenses,
discounl rales, produclion prolles and lhe oullook lor global or regional
narkel supplyanddenand condilions lor crude oil, nalural gas and
relned producls.
124 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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For oil and nalural gas properlies, lhe expecled lulure cash Hows are
eslinaled using nanagenenls besl eslinale ol lulure oil and nalural gas
prices and reserves volunes. Prices lor oil and nalural gas used lor lulure
cash How calculalions are based on narkel prices lor lhe lrsl lve years
and lhe groups longlern planning assunplions lherealler. As al
31 Decenber 2010, lhe groups longlern planning assunplions were
$75 per barrel lor Brenl and $6.50/nnBlu lor Henry Hub (2009 $75 per
barrel and $7.50/nnBlu. These longlern planning assunplions are
subjecl lo periodic review and nodilcalion. The eslinaled lulure level ol
produclion is based on assunplions aboul lulure connodily prices,
produclion and developnenl cosls, leld decline rales, currenl lscal
regines and olher laclors.
The lulure cash Hows are adjusled lor risks specilc lo lhe
cashgeneraling unil and are discounled using a prelax discounl rale. The
discounl rale is derived lron lhe groups posllax weighled average cosl ol
capilal and is adjusled where applicable lo lake inlo accounl any specilc
risks relaling lo lhe counlry where lhe cashgeneraling unil is localed,
allhough olher rales nay be used il appropriale lo lhe specilc
circunslances. n 2010 lhe rales ranged lron 11' lo 14' noninal
(2009 9' lo 13' noninal. The rale applied in each counlry is reassessed
each year.
rrespeclive ol whelher lhere is any indicalion ol inpairnenl, BP is
required lo lesl annually lor inpairnenl ol goodwill acquired in a business
conbinalion. The group carries goodwill ol approxinalely $3.6 billion on ils
balance sheel (2009 $3.6 billion, principally relaling lo lhe Allanlic Fichleld
and Burnah Caslrol acquisilions. n lesling goodwill lor inpairnenl, lhe
group uses a sinilar approach lo lhal described above lor assel
inpairnenl. l lhere are low oil prices or nalural gas prices or relning
nargins or narkeling nargins lor an exlended period, lhe group nay need
lo recognize signilcanl goodwill inpairnenl charges. n 2009, an
inpairnenl loss ol $1.6 billion was recognized lo wrile oll all ol lhe
goodwill allocaled lo lhe US vesl Coasl luels value chain (FVC. The
prevailing weak relning environnenl, logelher wilh a review ol lulure
nargin expeclalions in lhe FVC, led lo a reduclion in lhe expecled lulure
cash Hows.
Taxation
The conpulalion ol lhe groups incone lax expense involves lhe
inlerprelalion ol applicable lax laws and regulalions in nany jurisdiclions
lhroughoul lhe world. The resolulion ol lax posilions laken by lhe group,
lhrough negolialions wilh relevanl lax aulhorilies or lhrough liligalion, can
lake several years lo conplele and in sone cases il is dillcull lo predicl
lhe ullinale oulcone.
n addilion, lhe group has carrylorward lax losses and lax credils in
cerlain laxing jurisdiclions lhal are available lo ollsel againsl lulure laxable
proll. However, delerred lax assels are recognized only lo lhe exlenl lhal il
is probable lhal laxable proll will be available againsl which lhe unused lax
losses or lax credils can be ulilized. anagenenl judgenenl is exercised
in assessing whelher lhis is lhe case.
To lhe exlenl lhal aclual oulcones diller lron nanagenenls
eslinales, incone lax charges or credils nay arise in lulure periods. For
nore inlornalion see Financial slalenenls - ole 19 on page 177 and
ole 44 on page 213.
Derivative hnanciaI instruments
The group uses derivalive lnancial inslrunenls lo nanage cerlain
exposures lo Huclualions in loreign currency exchange rales, inleresl rales
and connodily prices as well as lor lrading purposes. n addilion,
derivalives enbedded wilhin olher lnancial inslrunenls or olher hosl
conlracls are lrealed as separale derivalives when lheir risks and
characlerislics are nol closely relaled lo lhose ol lhe hosl conlracl. All such
derivalives are inilially recognized al lair value on lhe dale on which a
derivalive conlracl is enlered inlo and are subsequenlly reneasured al lair
value. Cains and losses arising lron changes in lhe lair value ol derivalives
lhal are nol designaled as elleclive hedging inslrunenls are recognized in
lhe incone slalenenl.
n sone cases lhe lair values ol derivalives are eslinaled using
nodels and olher valualion nelhods due lo lhe absence ol quoled prices
or olher observable, narkelcorroboraled dala. n parlicular, lhis applies lo
lhe najorily ol lhe groups nalural gas enbedded derivalives. These are
prinarily longlern UK gas conlracls lhal use pricing lornulae nol relaled
lo gas prices, lor exanple, oil producl and power prices. These conlracls
are valued using nodels wilh inpuls lhal include price curves lor each ol
lhe dillerenl producls lhal are buill up lron aclive narkel pricing dala and
exlrapolaled lo lhe expiry ol lhe conlracls using lhe naxinun available
exlernal pricing inlornalion. Addilionally, where liniled dala exisls lor
cerlain producls, prices are inlerpolaled using hisloric and longlern pricing
relalionships. Price volalilily is also an inpul lor lhe nodels. Changes in lhe
key assunplions could have a nalerial inpacl on lhe gains and losses on
enbedded derivalives recognized in lhe incone slalenenl. For nore
inlornalion see Financial slalenenls - ole 34 on page 192. An analysis
ol lhe sensilivily ol lhe lair value ol lhe enbedded derivalives lo changes
in lhe key assunplions is provided in Financial slalenenls - ole 27
on page 135.
Provisions and contingencies
The group holds provisions lor lhe lulure deconnissioning ol oil and
nalural gas produclion lacililies and pipelines al lhe end ol lheir econonic
lives. The largesl deconnissioning obligalions lacing BP relale lo lhe
plugging and abandonnenl ol wells and lhe renoval and disposal ol oil and
nalural gas plallorns and pipelines around lhe world. The eslinaled
discounled cosls ol perlorning lhis work are recognized as we drill lhe
wells and inslall lhe lacililies, reHecling our legal obligalions al lhal line.
A corresponding assel ol an anounl equivalenl lo lhe provision is also
crealed wilhin properly, planl and equipnenl. This assel is deprecialed
over lhe expecled lile ol lhe produclion lacilily or pipeline. osl ol lhese
deconnissioning evenls are nany years in lhe lulure and lhe precise
requirenenls lhal will have lo be nel when lhe renoval evenl aclually
occurs are uncerlain. Deconnissioning lechnologies and cosls are
conslanlly changing, as well as polilical, environnenlal, salely and public
expeclalions. Consequenlly, lhe lining and anounls ol lulure cash Hows
are subjecl lo signilcanl uncerlainly. Changes in lhe expecled lulure cosls
are reHecled in bolh lhe provision and lhe assel.
Deconnissioning provisions associaled wilh downslrean and
pelrochenicals lacililies are generally nol recognized, as such polenlial
obligalions cannol be neasured, given lheir indelerninale selllenenl
dales. The group perlorns periodic reviews ol ils downslrean and
pelrochenicals longlived assels lor any changes in lacls and circunslances
lhal nighl require lhe recognilion ol a deconnissioning provision.
The lining and anounl ol lulure expendilures are reviewed
annually, logelher wilh lhe inleresl rale used in discounling lhe cash Hows.
The inleresl rale used lo delernine lhe balance sheel obligalion al lhe end
ol 2010 was 1.5' (2009 1.75'. The inleresl rale represenls lhe real rale
(i.e. excluding lhe inpacls ol inHalion on longdaled governnenl bonds.
BP Annual Feporl and Forn 20F 2010 125
Addilional inlornalion lor shareholders
Olher provisions and liabililies are recognized in lhe period when il
becones probable lhal lhere will be a lulure oulHow ol lunds resulling
lron pasl operalions or evenls and lhe anounl ol cash oulHow can be
reliably eslinaled. The lining ol recognilion and quanlilcalion ol lhe
liabilily require lhe applicalion ol judgenenl lo exisling lacls and
circunslances, which can be subjecl lo change. Since lhe aclual cash
oulHows can lake place nany years in lhe lulure, lhe carrying anounls ol
provisions and liabililies are reviewed regularly and adjusled lo lake accounl
ol changing lacls and circunslances.
A change in eslinale ol a recognized provision or liabilily would
resull in a charge or credil lo nel incone in lhe period in which lhe change
occurs (wilh lhe exceplion ol deconnissioning cosls as described above.
Provisions lor environnenlal renedialion are nade when a cleanup
is probable and lhe anounl ol lhe obligalion can be reliably eslinaled.
Cenerally, lhis coincides wilh connilnenl lo a lornal plan ol aclion or, il
earlier, on diveslnenl or on closure ol inaclive siles. The provision lor
environnenlal liabililies is eslinaled based on currenl legal and
conslruclive requirenenls, lechnology, price levels and expecled plans
lor renedialion. Aclual cosls and cash oulHows can diller lron
eslinales because ol changes in laws and regulalions, public
expeclalions, prices, discovery and analysis ol sile condilions and
changes in cleanup lechnology.
The provision lor environnenlal liabililies is reviewed al leasl
annually. The inleresl rale used lo delernine lhe balance sheel obligalion
al 31 Decenber 2010 was 1.5' (2009 1.75'.
As lurlher described in Financial slalenenls - ole 44 on
page 213, lhe group is subjecl lo clains and aclions. The lacls and
circunslances relaling lo parlicular cases are evalualed regularly in
delernining whelher il is probable lhal lhere will be a lulure oulHow ol
lunds and, once eslablished, whelher a provision relaling lo a specilc
liligalion should be adjusled. Accordingly, signilcanl nanagenenl
judgenenl relaling lo conlingenl liabililies is required, since lhe oulcone ol
liligalion is dillcull lo predicl.
GuIf of Mexico oiI spiII
As a consequence ol lhe Cull ol exico oil spill, as described on
pages 3439, BP has incurred cosls during lhe year and has recognized
liabililies lor lulure cosls. Liabililies ol uncerlain lining or anounl and
conlingenl liabililies have been accounled lor and/or disclosed in
accordance wilh AS 37 Provisions, conlingenl liabililies and conlingenl
assels. BPs righls and obligalions in relalion lo lhe $20billion lrusl lund
which was eslablished during lhe year have been accounled lor in
accordance wilh FFC 5 Fighls lo inleresls arising lron deconnissioning,
resloralion and environnenlal rehabililalion lunds.
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all
obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and
lhe ullinale exposure and cosl lo BP will be dependenl on nany laclors.
Furlhernore, lhe anounl ol clains lhal becone payable by BP, lhe anounl
ol lnes ullinalely levied on BP (including any delerninalion ol BPs
negligence, lhe oulcone ol liligalion, and any cosls arising lron any
longerlern environnenlal consequences ol lhe oil spill, will also inpacl
upon lhe ullinale cosl lor BP. Allhough lhe provision recognized is lhe
currenl besl eslinale ol expendilures required lo sellle cerlain presenl
obligalions al lhe end ol lhe reporling period, lhere are lulure expendilures
lor which il is nol possible lo neasure lhe obligalion reliably.
The nagnilude and lining ol possible obligalions in relalion lo lhe
Cull ol exico oil spill are subjecl lo a very high degree ol uncerlainly as
described lurlher in Fisk laclors on pages 2732. Any such possible
obligalions are lherelore conlingenl liabililies and, al presenl, il is nol
praclicable lo eslinale lheir nagnilude or possible lining ol paynenl.
Furlhernore, olher nalerial unanlicipaled obligalions nay arise in lulure in
relalion lo lhe incidenl. Feler lo Financial slalenenls - ole 44 on
page 213 lor lurlher inlornalion.
Expendilure lo be nel lron lhe $20billion lrusl lund
n June 2010 BP agreed wilh lhe US governnenl lhal il would eslablish a
lrusl lund ol $20 billion lo be available lo salisly legilinale individual and
business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF,
slale and local governnenl clains resolved by BP, lnal judgnenls and
selllenenls, slale and local response cosls, and nalural resource danages
and relaled cosls. Fines, penallies and clains adninislralion cosls are nol
covered by lhe lrusl lund. BPs obligalion lo nake conlribulions lo lhe lrusl
lund was recognized in lull and is included wilhin olher payables on lhe
balance sheel aller laking accounl ol lhe line value ol noney. The
eslablishnenl ol lhe lrusl lund does nol represenl a cap or Hoor on BPs
liabililies and BP does nol adnil lo a liabilily ol lhis anounl.
An assel has been recognized represenling BPs righl lo receive
reinbursenenl lron lhe lrusl lund. This is lhe porlion ol lhe eslinaled
lulure expendilure provided lor lhal will be sellled by paynenls lron lhe
lrusl lund. BP will nol aclually receive any reinbursenenls lron lhe lrusl
lund, bul ralher paynenls will be nade direclly lo clainanls lron lhe
lrusl lund.
BP has provided lor ils besl eslinale ol ilens lhal will be paid
lhrough lhe $20billion lrusl lund. l is nol possible, al lhis line, lo neasure
reliably any olher ilens lhal will be paid lron lhe lrusl lund, nanely any
obligalion in relalion lo alural Fesource Danages clains, and clains
asserled in civil liligalion, nor is il praclicable lo eslinale lheir nagnilude or
possible lining ol paynenl. Allhough lhese ilens, which will be paid
lhrough lhe lrusl lund, have nol been provided lor al lhis line, BPs lull
obligalion under lhe $20billion lrusl lund has been expensed in lhe incone
slalenenl, laking accounl ol lhe line value ol noney.
Olher expendilure nol covered by lhe $20billion lrusl lund
For lhose ilens nol covered by lhe lrusl lund il is nol possible lo neasure
reliably any obligalion in relalion lo olher liligalion or polenlial lnes and
penallies, excepl lor lhose relaling lo lhe Clean valer Acl. There are a
nunber ol lederal and slale environnenlal and olher provisions ol law,
olher lhan lhe Clean valer Acl, under which one or nore governnenlal
agencies could seek civil lnes and penallies lron BP. Civen lhe large
nunber ol clains lhal nay be asserled, il is nol possible al lhis line lo
delernine whelher and lo whal exlenl any such clains would be
successlul or whal penallies or lnes would be assessed.
Conlingenl assels relaling lo lhe Cull ol exico oil spill
BP is lhe operalor ol lhe acondo well and holds a 65' working inleresl,
wilh lhe renaining 35' inleresl held by lwo coowners, Anadarko
Pelroleun Corporalion (APC and OEX Ollshore 2007 LLC (OEX.
Under lhe Operaling Agreenenl, OEX and APC are responsible lor
reinbursing BP lor lheir proporlionale shares ol lhe cosls ol all operalions
and aclivilies conducled under lhe Operaling Agreenenl. n addilion, lhe
parlies are responsible lor lheir proporlionale shares ol all liabililies
resulling lron operalions or aclivilies conducled under lhe Operaling
Agreenenl, excepl where liabilily resulls lron a parlys gross negligence
or willul nisconducl, in which case lhal parly is solely responsible. BP
does nol believe lhal il has been grossly negligenl under lhe lerns ol lhe
Operaling Agreenenl or al law.
As al 31 Decenber 2010, $6 billion had been billed lo lhe
coowners, which BP believes lo be conlraclually recoverable. As lurlher
cosls are incurred, BP believes lhal addilional anounls are billable lo our
coowners under lhe Operaling Agreenenl.
Our coowners have each wrillen lo BP indicaling lhal lhey are
wilhholding paynenl in lighl ol lhe invesligalions surrounding, and
delerninalion ol lhe rool causes ol, lhe incidenl. n addilion, APC has
publicly accused BP ol having been grossly negligenl and slaled il has no
liabilily lor lhe incidenl, bolh ol which clains BP relules and inlends lo
challenge in any legal proceedings. There are also audil righls concerning
billings under lhe Operaling Agreenenl which nay be exercised by APC
and OEX, and which nay or nay nol lead lo an adjuslnenl ol lhe
anounl billed. BP nay ullinalely need lo enlorce ils righls lo collecl
paynenl lron lhe coowners lhrough an arbilralion proceeding as provided
lor in lhe Operaling Agreenenl. There is a risk lhal anounls billed lo
coowners nay nol ullinalely be recovered should our coowners be lound
nol liable lor lhese cosls or be unable lo pay lhen.
126 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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BP believes lhal il has a conlraclual righl lo recover lhe coowners shares
ol lhe cosls incurred, however, no recovery anounls have been recognized
in lhe lnancial slalenenls as al 31 Decenber 2010.
Pensions and other post-retirement benehts
Accounling lor pensions and olher poslrelirenenl benells involves
judgenenl aboul uncerlain evenls, including eslinaled relirenenl dales,
salary levels al relirenenl, norlalily rales, rales ol relurn on plan assels,
delerninalion ol discounl rales lor neasuring plan obligalions, assunplions
lor inHalion rales, US heallhcare cosl lrend rales and rales ol ulilizalion ol
heallhcare services by US relirees.
These assunplions are based on lhe environnenl in each counlry.
Delerninalion ol lhe projecled benell obligalions lor lhe groups delned
benell pension and poslrelirenenl plans is inporlanl lo lhe recorded
anounls lor such obligalions on lhe balance sheel and lo lhe anounl ol
benell expense in lhe incone slalenenl. The assunplions used nay vary
lron year lo year, which will allecl lulure resulls ol operalions. Any
dillerences belween lhese assunplions and lhe aclual oulcone also allecl
lulure resulls ol operalions.
Pension and olher poslrelirenenl benell assunplions are reviewed
by nanagenenl al lhe end ol each year. These assunplions are used lo
delernine lhe projecled benell obligalion al lhe yearend and hence lhe
surpluses and delcils recorded on lhe groups balance sheel, and pension
and olher poslrelirenenl benell expense lor lhe lollowing year.
The pension and olher poslrelirenenl benell assunplions al
Decenber 2010, 2009 and 2003 are provided in Financial slalenenls -
ole 33 on page 202.
The assuned rale ol inveslnenl relurn, discounl rale, inHalion rale
and lhe US heallhcare cosl lrend rale have a signilcanl ellecl on lhe
anounls reporled. A sensilivily analysis ol lhe inpacl ol changes in lhese
assunplions on lhe benell expense and obligalion is provided in Financial
slalenenls - ole 33 on page 202.
n addilion lo lhe lnancial assunplions, we regularly review lhe
denographic and norlalily assunplions. orlalily assunplions reHecl besl
praclice in lhe counlries in which we provide pensions and have been
chosen wilh regard lo lhe lalesl available published lables adjusled where
appropriale lo reHecl lhe experience ol lhe group and an exlrapolalion ol
pasl longevily inprovenenls inlo lhe lulure. A sensilivily analysis ol lhe
inpacl ol changes in lhe norlalily assunplions on lhe benell expense and
obligalion is provided in Financial slalenenls - ole 33 on page 202.
Acluarial gains and losses are recognized in lull wilhin olher
conprehensive incone in lhe year in which lhey occur.
Properly, planls and equipnenl
BP has lreehold and leasehold inleresls in real eslale in nunerous
counlries, bul no individual properly is signilcanl lo lhe group as a whole.
See Exploralion and Produclion on page 40 lor a descriplion ol lhe groups
signilcanl reserves and sources ol crude oil and nalural gas. Signilcanl
plans lo conslrucl, expand or inprove specilc lacililies are described under
each ol lhe business headings wilhin lhis seclion.
Share ownership
Directors and senior management
As al 24 February 2011, lhe lollowing direclors ol BP p.l.c. held inleresls
in BP ordinary shares ol 25 cenls each or lheir calculaled equivalenl as sel
oul below:
Ordinary Perlornance Feslricled
Direclor shares shares
a
shares
b
CH Svanberg 925,000 - -
F v Dudley 230,799
c
1,120,716
c
P Anderson 6,000
c
- -
F L Bownan 7,320
c
- -
A Burgnans 10,156 - -
C B Carroll 10,500
c
- -
Sir villian Caslell 32,500 - -
C Conn 417,553
d
2,016,005 133,452
C David 159,000
c
- -
E L Davis 10,000 - -
D J Flinl 15,000 - -
Dr B E Crole 1,372,643
e
2,376,570
c
Dr D S Julius 15,000 - -
B F elson - - -
F P hleko - - -
Perlornance shares awarded under lhe BP Execulive Direclors ncenlive Plan. These lgures
represenl lhe naxinun possible vesling levels. The aclual nunber ol shares/ADSs lhal vesl will
depend on lhe exlenl lo which perlornance condilions have been salisled over a lhreeyear period.
Feslricled share award under lhe BP Execulive Direclors ncenlive Plan. These shares will vesl in
2013, subjecl lo lhe direclors conlinued service and salislaclory perlornance.
Held as ADSs.
ncludes 43,024 shares held as ADSs.
Held as ADSs, excepl lor 94 shares held as ordinary shares.
As al 24 February 2011, lhe lollowing direclors ol BP p.l.c. held oplions
under lhe BP group share oplion schenes lor ordinary shares or lheir
calculaled equivalenl as sel oul below:
Direclor Oplions
F v Dudley
a
259,213
C Conn 203,472
Dr B E Crole
a b
349,993
Held as ADSs.
These oplions lapsed on 25 February 2011.
There are no direclors or nenbers ol senior nanagenenl who own nore
lhan 1' ol lhe ordinary shares oulslanding. Al 24 February 2011, all
direclors and senior nanagenenl as a group held inleresls in 9,736,214
ordinary shares or lheir calculaled equivalenl, 6,045,743 perlornance
shares or lheir calculaled equivalenl and 1,479,297 oplions lor ordinary
shares or lheir calculaled equivalenl under lhe BP group share
oplions schenes.
Addilional delails regarding lhe oplions granled and perlornance
shares awarded can be lound in lhe direclors renuneralion reporl on
pages 117113.
-
-
a
b
c
d
e
a
b
BP Annual Feporl and Forn 20F 2010 127
Addilional inlornalion lor shareholders
EmpIoyee share pIans
The lollowing lable shows enployee share oplions granled.
Oplions lhousands
2010 2009 2003
Enployee share oplions granled
during lhe year
a
10,420 9,630 3,063
a
For lhe oplions oulslanding al 31 Decenber 2010, lhe exercise price ranges and weighled average
renaining conlraclual lives are shown in Financial slalenenls - ole 41 on page 214.
BP ollers nosl ol ils enployees lhe opporlunily lo acquire a shareholding
in lhe conpany lhrough savingsrelaled and/or nalching share plan
arrangenenls. BP also uses perlornance plans (see Financia| s!a!enen!s
- No!e 4! on page 2!4 as elenenls ol renuneralion lor execulive
direclors and senior enployees.
Shares acquired lhrough lhe conpanys enployee share plans rank
pari passu wilh shares in issue and have no special righls, save as
described below. For legal and praclical reasons, lhe rules ol lhese plans
sel oul lhe consequences ol a change ol conlrol ol lhe conpany, and
generally provide lor oplions and condilional awards lo vesl on an
acceleraled basis.
Savings and matching pIans
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on
a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase ol
shares al a lxed price delernined when lhe oplion is granled. This price is
usually sel al a 20' discounl lo lhe narkel price al lhe line ol granl. The
oplion nusl be exercised wilhin six nonlhs ol nalurily ol lhe savings
conlracl, olherwise il lapses. The plan is run in lhe UK and oplions are
granled annually, usually in June. Parlicipanls leaving lor a qualilying reason
will have six nonlhs in which lo use lheir savings lo exercise lheir oplions
on a proraled basis.
BP Sharealch plans
These are nalching share plans under which BP nalches enployees own
conlribulions ol shares up lo a predelernined linil. The plans are run in lhe
UK and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly
basis wilh shares being held in lrusl lor lve years belore lhey can be
released lree ol any incone lax and nalional insurance liabilily. n olher
counlries, lhe plan is run on an annual basis wilh shares being held in lrusl
lor lhree years. The plan is operaled on a cash basis in lhose counlries
where lhere are regulalory reslriclions prevenling lhe holding ol BP shares.
vhen lhe enployee leaves BP all shares nusl be renoved lron lrusl and
unils under lhe plan operaled on a cash basis nusl be encashed.
Once shares have been awarded lo an enployee under lhe plan,
lhe enployee nay inslrucl lhe lruslee how lo vole lheir shares.
Local plans
n sone counlries, BP provides local schene benells, lhe rules and
qualilcalions lor which vary according lo local circunslances.
Cashsellled sharebased paynenls
Cranls are sellled in cash where parlicipanls are localed in a counlry
whose regulalory environnenl prohibils lhe holding ol BP shares.
Enployee share ownership plans (ESOPs
ESOPs have been eslablished lo hold BP shares lo salisly any releases
nade lo parlicipanls under lhe Execulive Direclors ncenlive Plan, lhe
LongTern Perlornance Plan and lhe Share Oplion plans. The ESOPs have
waived lheir righls lo dividends on shares held lor lulure awards and are
lunded by lhe group. Pending vesling, lhe ESOPs have independenl
lruslees lhal have lhe discrelion in relalion lo lhe voling ol such shares.
Unlil such line as lhe conpanys own shares held by lhe ESOP lrusls vesl
uncondilionally in enployees, lhe anounl paid lor lhose shares is deducled
in arriving al shareholders equily (see Financia| s!a!enen!s - No!e 40 on
page 2!0. Assels and liabililies ol lhe ESOPs are recognized as assels and
liabililies ol lhe group.
Al 31 Decenber 2010, lhe ESOPs held 11,477,253 shares (2009
13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure
awards, which had a narkel value ol $32 nillion (2009 $174 nillion and
2003 $220 nillion.
Pursuanl lo lhe various BP group share oplion schenes, lhe
lollowing oplions lor ordinary shares ol lhe conpany were oulslanding al
13 February 2011:
Expiry dales Exercise price
Oplions oulslanding (shares ol oplions per share
261,526,262 20112016 $6.09$11.92
ore delails on share oplions appear in Financial slalenenls - ole 41 on
page 214.
ajor shareholders and relaled
parly lransaclions
Register of members hoIding BP ordinary shares as at
31 December 2010
unber ol Percenlage ol Percenlage ol
ordinary lolal ordinary lolal ordinary
Fange ol holdings shareholders shareholders share capilal
1200 59,514 13.36 0.02
2011,000 113,266 37.43 0.30
1,00110,000 124,516 39.46 1.30
10,001100,000 11,433 3.64 1.12
100,0011,000,000 960 0.30 1.72
Over 1,000,000
a
309 0.26 95.04
Tolals 315,553 100.00 100.00
ncludes JPorgan Chase Bank holding 25.33' ol lhe lolal ordinary issued share capilal (excluding
shares held in lreasury as lhe approved deposilary lor ADSs, a breakdown ol which is shown in
lhe lable below.
Register of hoIders of American depositary shares (ADSs) as at
31 December 2010
a
Percenlage
unber ol ol lolal ADS Percenlage ol
Fange ol holdings ADS holders holders lolal ADSs
1200 64,433 55.73 0.46
2011,000 32,209 27.35 1.39
1,00110,000 17,933 15.51 5.35
10,001100,000 1,051 0.91 2.13
100,0011,000,000 11 0.00 0.21
Over 1,000,000
b
1 0.00 39.41
Tolals 115,633 100.00 100.00
a
One ADS represenls six 25 cenl ordinary shares.
b
One holder ol ADSs represenls sone 795,332 underlying shareholders.
As al 31 Decenber 2010, lhere were also 1,630 prelerence shareholders.
Prelerence shareholders represenled 0.44' and ordinary shareholders
represenled 99.56' ol lhe lolal issued noninal share capilal ol lhe
conpany (excluding shares held in lreasury as al lhal dale.
a
123 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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SubstantiaI sharehoIdings and other information
The disclosure ol cerlain najor inleresls in lhe share capilal ol lhe
conpany is governed by lhe Disclosure and Transparency Fules (DTF
nade by lhe UK Financial Services Aulhorily and lhe US Securilies
Exchange Acl ol 1934. Under DTF 5, we have received nolilcalion lhal
BlackFock, nc. holds 5.72' ol lhe voling righls ol lhe issued share capilal
ol lhe conpany, and Legal & Ceneral Croup Plc holds 3.72' ol lhe voling
righls ol lhe issued share capilal ol lhe conpany.
The conpany has been noliled lhal JPorgan Chase Bank, as
deposilary lor Anerican deposilary shares (ADSs holds inleresls lhrough
ils noninee, Cuaranly oninees Liniled, in 4,333,530,141 ordinary shares
(26.01' ol lhe conpanys ordinary share capilal excluding shares held in
lreasury and shares boughl back lor cancellalion. During 2009, BlackFock,
nc. acquired Barclays Clobal nveslors, resulling in an increase in lhe share
inleresl ol BlackFock, nc. BlackFock, nc. holds inleresls in 1,073,313,330
ordinary shares (5.74' ol lhe ordinary share capilal excluding shares held
in lreasury and shares boughl back lor cancellalion. Legal & Ceneral Croup
plc hold inleresls in 701,642,233 ordinary shares (3.73' ol lhe conpanys
ordinary share capilal excluding shares held in lreasury and shares boughl
back lor cancellalion. The conpanys najor shareholders do nol have
dillerenl voling righls.
As parl ol an agreed slralegic alliance wilh Fosnell Oil Conpany
(Fosnell, lhe conpany has agreed lo issue 5' ol ils ordinary share capilal
(excluding shares held in lreasury and shares boughl back lor cancellalion
lo Fosnell in exchange lor lhe receipl ol approxinalely 9.5' ol Fosnells
ordinary share capilal. Once issued, lhese shares are subjecl lo nulual
lockup arrangenenls. eilher parly can, subjecl lo cerlain exceplions,
dispose ol lhe olher parlys shares lor a period ol lwo years. The lockup
does nol prevenl Fosnell lron accepling a lakeover oller lor lhe whole ol
lhe conpanys share capilal or lron providing an irrevocable underlaking lo
accepl a lakeover oller which has been reconnended by lhe conpany.
Following lhe expiralion ol lhe lockup period, orderly narkeling provisions
will apply lo lhe disposal ol eilher parlys shares.
See Legal proceedings on page 133 lor inlornalion on an inlerin
injunclion, granled by lhe English High Courl on 1 February 2011,
reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell
lransaclions pending lhe oulcone ol arbilralion proceedings.
The conpany has also been noliled ol lhe lollowing inleresls in
prelerence shares: The alional Farners Union ulual nsurance Sociely
Liniled holds inleresls in 945,000 3' cunulalive lrsl prelerence shares
(13.07' ol lhal class and 937,000 9' cunulalive second prelerence
shares (13.03' ol lhal class. & C nveslnenl anagenenl Lld. holds
inleresls in 523,150 3' cunulalive lrsl prelerence shares (7.30' ol lhal
class and 644,450 9' cunulalive second prelerence shares (11.77' ol
lhal class. Duncan Lawrie Lld. holds inleresls in 459,376 3' cunulalive
lrsl prelerence shares (6.36' ol lhal class. Lazard Assel anagenenl Lld.
holds inleresls in 374,000 3' cunulalive lrsl prelerence shares (5.17' ol
lhal class and 404,500 9' cunulalive second prelerence shares (7.39' ol
lhal class. Foyal London Assel anagenenl Lld. holds inleresls in 433,000
9' cunulalive second prelerence shares (3.00' ol lhal class. Fuller LLP
holds inleresls in 393,000 9' cunulalive second prelerence shares (7.27'
ol lhal class. Carlnore nveslnenl anagenenl Liniled disposed ol ils
inleresl in 394,533 3' cunulalive lrsl prelerence shares and 500,000 9'
cunulalive second prelerence shares during 2010.
The lolal prelerence shares in issue conprise only 0.44' ol lhe
conpanys lolal issued noninal share capilal (excluding shares held in
lreasury, lhe resl being ordinary shares.
ReIated party transactions
Transaclions belween lhe group and ils signilcanl joinlly conlrolled enlilies
and associales are sunnarized in Financial slalenenls - ole 25 on
page 133 and ole 26 on page 134. n lhe ordinary course ol ils business,
lhe group enlers inlo lransaclions wilh various organizalions wilh which
cerlain ol ils direclors or execulive ollcers are associaled. Excepl as
described in lhis reporl, lhe group did nol have nalerial lransaclions or
lransaclions ol an unusual nalure wilh, and did nol nake loans lo, relaled
parlies in lhe period connencing 1 January 2010 lo 13 February 2011.
Dividends
vhen dividends are paid on ils ordinary shares, BPs policy is lo pay inlerin
dividends on a quarlerly basis. During 2010 lhe BP board announced an
agreed package ol neasures lo neel ils obligalions as a responsible parly
arising lron lhe Cull ol exico incidenl. As a consequence ol lhis
agreenenl, lhe BP board reviewed ils dividend policy and decided lhal, in
lhe circunslances, il would be prudenl lo cancel lhe previously announced
lrslquarler dividend and lhal no inlerin dividends would be announced in
respecl ol lhe second and lhird quarlers ol 2010. On 1 February 2011 lhe
BP board announced lhal il would pay a dividend lor lhe lourlh quarler 2010.
BP policy is lo announce dividends lor ordinary shares in US dollars
and slale an equivalenl pounds slerling dividend. Dividends on BP ordinary
shares will be paid in pounds slerling and on BP ADSs in US dollars. The
rale ol exchange used lo delernine lhe slerling anounl equivalenl is lhe
average ol lhe narkel exchange rales in London over lhe lour business
days prior lo lhe slerling equivalenl announcenenl dale. The direclors nay
choose lo declare dividends in any currency provided lhal a slerling
equivalenl is announced, bul il is nol lhe conpanys inlenlion lo change ils
currenl policy ol announcing dividends on ordinary shares in US dollars.
The lollowing lable shows dividends announced and paid by lhe conpany per ADS lor each ol lhe pasl lve years.
arch June Seplenber Decenber Tolal
Dividends per Anerican deposilary share
2006 UK pence 31.7 31.5 31.9 31.4 126.5
US cenls 56.25 56.25 53.95 53.95 230.4
Canadian cenls 64.5 64.1 67.4 66.5 262.5
2007 UK pence 31.5 30.9 31.7 31.3 125.9
US cenls 61.95 61.95 64.95 64.95 253.3
Canadian cenls 73.3 69.5 67.3 63.6 274.2
2003 UK pence 40.9 41.0 42.2 52.2 176.3
US cenls 31.15 31.15 34.0 34.0 330.3
Canadian cenls 30.3 32.5 35.3 103.6 357.7
2009 UK pence 53.91 57.50 51.02 51.07 213.5
US cenls 34 34 34 34 336
Canadian cenls
a
n/a n/a n/a n/a n/a
2010 UK pence 52.07 - - - 52.07
US cents 84 - - - 84
a
BP shares were delisled lron lhe Toronlo Slock Exchange on 15 Augusl 2003 and lhe lasl dividend paynenl in Canadian dollars was nade on 3 Decenber 2003.
BP Annual Feporl and Forn 20F 2010 129
Addilional inlornalion lor shareholders
A dividend reinveslnenl plan (DFP was in place lor lhe lourlhquarler
dividend paid in arch 2010, allowing holders ol BP ordinary shares lo
elecl lo reinvesl lhe nel cash dividend in shares purchased on lhe London
Slock Exchange. Following shareholder approval al BPs AC on 15 April
2010, a Scrip Dividend Progranne (Progranne was inlroduced and lhe
DFP was wilhdrawn. The Progranne enables BP ordinary shareholders
and ADS holders lo elecl lo receive new lully paid ordinary shares in BP (or
ADSs in lhe case ol ADS holders inslead ol cash. The operalion ol lhe
Progranne is always subjecl lo lhe direclors decision lo nake lhe scrip
oller available in respecl ol any parlicular dividend. Should lhe direclors
decide nol lo oller lhe scrip in respecl ol any parlicular dividend, cash will
aulonalically be paid inslead.
Fulure dividends will be dependenl on lulure earnings, lhe lnancial
condilion ol lhe group, lhe Fisk laclors sel oul on pages 27 32 and olher
nallers lhal nay allecl lhe business ol lhe group sel oul in Our slralegy
on pages 1920 and in Liquidily and capilal resources on page 64.
Legal proceedings
Proceedings and investigations reIating to the
GuIf of Mexico oiI spiII
BP p.l.c., BP Exploralion & Produclion nc. (BP E&P and various olher BP
enlilies (colleclively relerred lo as BP are anong lhe conpanies naned as
delendanls in nore lhan 400 privale civil lawsuils resulling lron lhe
20 April 2010 explosions and lre on lhe senisubnersible rig Deepwaler
Horizon and resulling oil spill (lhe ncidenl and lurlher aclions are likely lo
be broughl. BP E&P is lease operalor ol ississippi Canyon, Block 252 in
lhe Cull ol exico, where lhe Deepwaler Horizon was deployed al lhe
line ol lhe ncidenl, and holds a 65' working inleresl. The olher working
inleresl owners are Anadarko Pelroleun Conpany and OEX Ollshore
2007 LLC. The Deepwaler Horizon, which was owned and operaled by
cerlain allliales ol Transocean, Lld. (Transocean, sank on 22 April 2010.
The pending lawsuils and/or clains arising lron lhe ncidenl have been
broughl in US lederal and slale courls. Plainlills include individuals,
corporalions and governnenlal enlilies and nany ol lhe lawsuils purporl lo
be class aclions. The lawsuils asserl, anong olhers, clains lor personal
injury in conneclion wilh lhe ncidenl ilsell and lhe response lo il, and
wronglul dealh, connercial or econonic injury, breach ol conlracl and
violalions ol slalules. The lawsuils seek various renedies including
conpensalion lo injured workers and lanilies ol deceased workers,
recovery lor connercial losses and properly danage, clains lor
environnenlal danage, renedialion cosls, injunclive reliel, lreble danages
and punilive danages. Purporled classes ol clainanls include residenls ol
lhe slales ol Louisiana, ississippi, Alabana, Florida, Texas, Tennessee,
Kenlucky, Ceorgia and Soulh Carolina, properly owners and renlal agenls,
lshernen and persons dependenl on lhe lshing induslry, charler boal
owners and deck hands, narina owners, gasoline dislribulors, shipping
inleresls, reslauranl and holel owners and olhers who are properly and/or
business owners alleged lo have sullered econonic loss. Shareholder
derivalive lawsuils have also been lled in US lederal and slale courls
againsl various currenl and lorner ollcers and direclors ol BP alleging,
anong olher lhings, breach ol lduciary duly, gross nisnanagenenl,
abuse ol conlrol and wasle ol corporale assels. Purporled class aclion
lawsuils have also been lled in US lederal courls againsl BP enlilies and
various currenl and lorner ollcers and direclors alleging securilies lraud
clains and violalions ol lhe Enployee Felirenenl ncone Securily Acl
(EFSA. n addilion, BP has been naned in several lawsuils alleging clains
under lhe FackeleernHuenced and Corrupl Organizalions Acl (FCO. n
Augusl 2010, nany ol lhe lawsuils pending in lederal courl were
consolidaled by lhe Federal Judicial Panel on ullidislricl Liligalion inlo
lwo nullidislricl liligalion proceedings, one in lederal courl in Houslon lor
lhe securilies, derivalive and EFSA cases and anolher in lederal courl in
ew Orleans lor lhe renaining cases. Since lale Seplenber, nosl ol lhe
Deepwaler Horizon relaled cases have been pending belore lhese courls.
On 13 February 2011, cerlain Transocean allliales lled a lhird parly
conplainl againsl BP, lhe US governnenl, and olher corporalions involved in
lhe ncidenl, lhereby naning lhose enlilies as lornal parlies in Transoceans
Linilalion ol Liabilily aclion pending in lederal courl in ew Orleans.
Under OPA 90, BP E&P has been designaled as one ol lhe responsible
parlies lor lhe oil spill resulling lron lhe ncidenl. Accordingly, BP E&P is
one ol lhe parlies lhal lhe US governnenl alleges is lnancially responsible
lor lhe cleanup ol lhe spill and lor econonic danages as provided by OPA
90. n addilion, pursuanl lo OPA 90, lhe US Coasl Cuard has requesled
reinbursenenl lron BP and lhe olher responsible parlies lor ils cosls ol
responding lo lhe ncidenl, and BP has paid all anounls so billed lo dale.
Conlinuing requesls lor cosl reinbursenenl are expecled lron lhe US
Coasl Cuard and olher governnenlal aulhorilies. n addilion, BP is
parlicipaling wilh lederal and slale lruslees in a cooperalive assessnenl
ol polenlial nalural resource danages associaled wilh lhe spill. Under
OPA 90, lhe US governnenl alleges lhal BP E&P is one ol lhe parlies
lnancially responsible lor paying lhe reasonable assessnenl cosls incurred
by lhese lruslees as well as nalural resource danages lhal resull lron lhe
ncidenl.
BP E&P has eslablished and connilled lo lund lhe Deepwaler
Horizon Oil Spill Trusl, a $20billion lrusl lund lo pay cosls and salisly
legilinale clains. BP E&P conlribuled $5 billion lo lhe lrusl lund in 2010.
This will be supplenenled by addilional paynenls ol $1.25 billion per
quarler unlil a lolal ol $20 billion has been paid inlo lhe lrusl lund. vhile
lhe lrusl lund is building, BP E&P has pledged collaleral consisling ol an
overriding royally inleresl in oil and gas produclion lron cerlain assels in
lhe Cull ol exico sullcienl al any line lo secure lhe dillerence belween
lhe anounl deposiled as ol lhal dale and $20 billion. The eslablishnenl ol
lhis lrusl does nol represenl a cap on BPs liabililies, and BP does nol
adnil lo a liabilily ol lhis anounl. The lrusl lund will pay clains
adninislered by lhe CCCF, slale and local governnenl clains resolved by
BP, lnal judgnenls, selllenenls, slale and local response cosls, and
nalural resource danages and relaled cosls. Paynenls lron lhe lrusl lund
will be nade upon adjudicalion or resolulion ol clains or lhe lnal
delerninalion ol olher cosls covered by lhe accounl. There will be a sunsel
on lhe lrusl lund, and lunds, il any, renaining once lhe clains process has
been conpleled will reverl lo BP E&P.
BP is subjecl lo a nunber ol invesligalions relaled lo lhe ncidenl
by nunerous agencies ol lhe US governnenl. On 27 April 2010, lhe US
Coasl Cuard and lhe inerals anagenenl Service (renaned lhe Bureau
ol Ocean Energy anagenenl, Fegulalion and Enlorcenenl in June 2010
convened a joinl invesligalion ol lhe ncidenl by eslablishing a arine
Board ol nvesligalion ained al delernining lhe causes ol lhe ncidenl and
reconnending salely inprovenenls. BP was designaled as one ol several
Parlies in nleresl in lhe invesligalion.
On 21 ay 2010, Presidenl Obana signed an execulive order
eslablishing lhe alional Connission on lhe BP Deepwaler Horizon Oil
Spill and Ollshore Drilling (alional Connission lo exanine and reporl on,
wilhin six nonlhs ol lhe dale ol lhe Connissions lrsl neeling, lhe
relevanl lacls and circunslances concerning lhe causes ol lhe Cull ol
exico oil spill incidenl and develop oplions lor guarding againsl, and
niligaling lhe inpacl ol, oil spills associaled wilh ollshore drilling, laking
inlo consideralion lhe environnenlal, public heallh, and econonic ellecls
ol such oplions. On 11 January 2011, lhe alional Connission published
ils lnal reporl on lhe causes ol lhe ncidenl and ils reconnendalions lor
policy and regulalory changes lor ollshore drilling. On 17 February 2011,
lhe alional Connissions Chiel Counsel published a separale reporl on
his invesligalion lhal provides addilional inlornalion aboul lhe causes ol
lhe ncidenl.
130 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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On 7 July 2010, lhe US Chenical Salely and Hazard nvesligalion Board
(CSB inlorned BP ol ils inlenl lo conducl an invesligalion ol lhe ncidenl.
The invesligalion is locused on lhe 20 April 2010 explosions and lre, and
nol lhe resulling oil spill or response ellorls. The CSB is expecled lo issue
wilhin lwo years several invesligalion reporls lhal will seek lo idenlily lhe
alleged rool cause(s ol lhe ncidenl, and reconnend inprovenenls lo BP
and induslry praclices and lo regulalory progrannes lo prevenl recurrence
and niligale polenlial consequences. Also, al lhe requesl ol lhe
Deparlnenl ol lhe nlerior, lhe alional Acadeny ol Engineering/alional
Fesearch Council eslablished a Connillee (Connillee lo exanine lhe
perlornance ol lhe lechnologies and praclices involved in lhe probable
causes ol lhe explosion, including lhe perlornance ol lhe blowoul
prevenler and relaled lechnology lealures, and lo idenlily and reconnend
available lechnology, induslry besl praclices, besl available slandards, and
olher neasures in lhe US and around lhe world relaled lo oil and gas
deepwaler exploralory drilling and well conplelion lo avoid lulure
occurrence ol such evenls. On 17 ovenber 2010 lhe Connillee issued
ils inlerin reporl selling lorlh lhe connillees prelininary lndings and
observalions on various aclions and decisions including well design,
cenenling operalions, well noniloring, and well conlrol aclions. The
inlerin reporl also considers nanagenenl, oversighl, and regulalion ol
ollshore operalions. ve expecl lhal lhe Connillee will issue ils lnal
reporl lhal presenls lhe Connillees lnal analysis, including lndings and/
or reconnendalions, by 1 June 2011 (a prepublicalion version ol reporl,
wilh lurlher peer review and a lnal published version lo lollow by 30
Decenber 2011.
A second, unrelaled alional Acadenies Connillee will be looking
al lhe nelhodologies available lor assessing spill inpacls on ecosyslens in
lhe Cull ol exico, and a sunnary ol lhe known ellecls ol lhe spill, lhe
inpacls in lhe conlexl ol slresses lron olher hunan aclivilies in lhe Cull,
and idenlilcalion ol research and noniloring needs lo nore lully
undersland lhe ellecls ol lhe spill and gauge progress lowards recovery
and resloralion. On 14 June 2010, lhe US Coasl Cuard inilialed an ncidenl
Specilc Preparedness Feview (SPF lo exanine lhe inplenenlalion and
ellecliveness ol lhe response and recovery operalions relaling lo lhe spill.
ve undersland lhal lhe SPF process has been conpleled and a Feporl
(Feporl has been generaled, however lhe Feporl has nol yel been nade
publicly available. ve expecl lhal lhe Feporl will be nade publicly available
soneline in lhe lrsl quarler ol 2011. Addilionally, BP represenlalives have
appeared belore nulliple connillees ol lhe US Congress lhal have been
conducling inquiries inlo lhe ncidenl. BP has provided docunenls and
wrillen inlornalion in response lo requesls by lhese connillees and will
conlinue lo do so. See Fisk laclors - Conpliance and conlrol risks on
page 29.
On 1 June 2010, lhe US Deparlnenl ol Juslice (DoJ announced
lhal il is conducling an invesligalion inlo lhe ncidenl enconpassing
possible violalions ol US civil or crininal laws. The Uniled Slales lled a civil
conplainl againsl BP E&P and olhers on 15 Decenber 2010. The conplainl
seeks a declaralion ol liabilily under OPA 90 and civil penallies under lhe
Clean valer Acl. Paragraph 92 ol lhe conplainl sels lorlh a purporled
reservalion ol righls on behall ol lhe Uniled Slales lo anend lhe
conplainl or lle addilional conplainls seeking various renedies under
various laws and regulalions, including bul nol liniled lo eighl specilcally
nenlioned lederal slalules. Paragraph 92 ol lhe conplainl likewise
conlains a sinilar reservalion ol righls regarding lhe conducl ol
adninislralive proceedings under lhe Ouler Conlinenlal Shell Lands Acl,
43 U.S.C. ss 1301 e! seq., and lhe Federal Oil and Cas Foyally
anagenenl Acl, 30 U.S.C. ss 1701 e! seq.
Cilizens groups have also lled eilher lawsuils or nolices ol inlenl lo
lle lawsuils seeking civil penallies and injunclive reliel under lhe Clean
valer Acl and olher environnenlal slalules. Olher US lederal agencies
nay connence invesligalions relaling lo lhe ncidenl. The SEC and DoJ
are invesligaling securilies nallers arising in relalion lo lhe ncidenl.
The Allorney Ceneral lor lhe Slale ol Alabana has lled a lawsuil
seeking danages lor alleged econonic and environnenlal harns, including
nalural resource danages, as a resull ol lhe ncidenl. l is possible lhal lhe
Slale Allorneys Ceneral ol Louisiana, ississippi, Florida, Texas or olher
slales and/or local governnenls, such as coaslal nunicipalilies also nay
iniliale invesligalions and bring civil or crininal aclions seeking danages,
penallies and lnes lor violaling slale or local slalules. The Louisiana
Deparlnenl ol Environnenlal Oualily has issued an adninislralive order
seeking injunclive reliel and environnenlal civil penallies under slale law,
and several local governnenls in Louisiana have lled suils under slale
wildlile slalules seeking penallies lor danage lo wildlile as a resull ol lhe
spill. On 10 Decenber 2010, lhe ississippi Deparlnenl ol Environnenlal
Oualily issued a Conplainl and olice ol Violalion alleging violalions ol
several Slale environnenlal slalules.
On 15 Seplenber 2010, lhree exican slales bordering lhe Cull ol
exico (Veracruz, Ouinlana Foo, and Tanaulipas lled lawsuils in lederal
courl in Texas againsl several BP enlilies. These lawsuils allege lhal lhe oil
spill harned lheir lourisn, lshing, and connercial shipping induslries
(resulling in, anong olher lhings, dininished lax revenue, danaged nalural
resources and lhe environnenl, and caused lhe slales lo incur expenses in
preparing a response lo lhe oil spill.
BPs polenlial liabililies resulling lron pending and lulure clains,
lawsuils and enlorcenenl aclions relaling lo lhe ncidenl, logelher wilh lhe
polenlial cosl ol inplenenling renedies soughl in lhe various proceedings,
cannol be lully eslinaled al lhis line bul lhey have had and are expecled
lo have a nalerial adverse inpacl on lhe groups business, conpelilive
posilion, cash Hows, prospecls, liquidily, shareholder relurns and/or
inplenenlalion ol ils slralegic agenda, parlicularly in lhe US. Furlhernore,
BP has laken a prelax charge in ils incone slalenenl ol $40.9 billion in
lolal during 2010, and lhese polenlial liabililies nay conlinue lo have a
nalerial adverse ellecl on lhe groups resulls and lnancial condilion.
Other IegaI proceedings
Fron 25 Oclober 2007 lo 23 Oclober 2010, BP Anerica nc. (BP Anerica
was subjecl lo oversighl by an independenl nonilor, who had aulhorily lo
invesligale and reporl alleged violalions ol lhe US Connodily Exchange
Acl or US Connodily Fulures Trading Connission (CFTC regulalions and
lo reconnend correclive aclion. The appoinlnenl ol lhe independenl
nonilor was a condilion ol lhe delerred proseculion agreenenl (DPA
enlered inlo wilh lhe DoJ on 25 Oclober 2007 relaling lo allegalions lhal
BP Anerica nanipulaled lhe price ol February 2004 TET physical propane
and allenpled lo nanipulale lhe price ol TET propane in April 2003 and lhe
conpanion consenl order wilh lhe CFTC, enlered lhe sane day, resolving
all crininal and civil enlorcenenl nallers pending al lhal line concerning
propane lrading by BP Producls orlh Anerica nc. (BP Producls. The DPA
required BP Anericas and cerlain ol ils allliales conlinued cooperalion
wilh lhe US governnenls invesligalion and proseculion ol lhe lrades in
queslion, as well as olher lrading nallers lhal nay arise. The DPA had a
lern ol lhree years bul could be exlended by lwo addilional oneyear
periods, and conlenplaled disnissal ol all charges al lhe end ol lhe lern
lollowing lhe DoJs delerninalion lhal BP Anerica has conplied wilh lhe
lerns ol lhe DPA. The inilial lhree year lern has expired and lhe DoJs
nolion lo disniss lhe aclion underlying lhe DPA was granled on
31 January 2011. nvesligalions inlo BPs lrading aclivilies conlinue lo be
conducled lron line lo line. The US Federal Energy Fegulalory
Connission (FEFC and lhe US Connodily Fulures Trading Connission
(CFTC are currenlly invesligaling several BP enlilies regarding lrading in
lhe nexlday nalural gas narkel al Houslon Ship Channel during Oclober
and ovenber 2003. The FEFC Ollce ol Enlorcenenl slall noliled BP on
12 ovenber 2010 ol lheir prelininary conclusions relaling lo alleged
narkel nanipulalion in violalion ol 13 C.F.F. Sec. 1c.1. The FEFC slall will
delernine whelher lo pursue lhe invesligalion, lo close lhe invesligalion,
or lo seek aulhorily lo pursue resolulion by selllenenl. On 30 ovenber
2010, CFTC Enlorcenenl slall also provided BP wilh a nolice ol inlenl lo
reconnend charges based on lhe sane conducl alleging lhal BP engaged
in allenpled narkel nanipulalion in violalion ol Seclion 6(c, 6(d, and 9(a
(2 ol lhe Connodily Exchange Acl. BP subnilled responses lo bolh
nolices on 23 Decenber 2010 providing a delailed response lhal il did nol
engage in any inappropriale or unlawlul aclivily. Privale conplainls,
including class aclions, were also lled againsl BP Producls and allliales
alleging propane price nanipulalion. The conplainls conlained allegalions
sinilar lo lhose in lhe CFTC aclion as well as ol violalions ol lederal and
slale anlilrusl and unlair conpelilion laws and slale consuner proleclion
slalules and unjusl enrichnenl. The conplainls soughl aclual and punilive
danages and injunclive reliel. Selllenenl in bolh groups ol lhe class
BP Annual Feporl and Forn 20F 2010 131
Addilional inlornalion lor shareholders
aclions (lhe direcl and indirecl purchasers has received lnal courl approval.
Two independenl lawsuils lron class nenbers who opled oul ol lhe direcl
purchaser selllenenl are slill pending.
On 23 arch 2005, an explosion and lre occurred in lhe
isonerizalion unil ol BP Producls Texas Cily relnery as lhe unil was
coning oul ol planned nainlenance. Filleen workers died in lhe incidenl
and nany olhers were injured. BP Producls has resolved all civil injury
clains arising lron lhe arch 2005 incidenl.
n arch 2007, lhe US Chenical Salely and Hazard nvesligalion
Board (CSB issued a reporl on lhe incidenl. The reporl conlained
reconnendalions lo lhe Texas Cily relnery and lo lhe board ol direclors ol
BP. n ay 2007, BP responded lo lhe CSBs reconnendalions. BP and
lhe CSB will conlinue lo discuss BPs responses wilh lhe objeclive ol lhe
CSBs agreeing lo close oul ils reconnendalions.
On 25 Oclober 2007, lhe DoJ announced lhal il had enlered inlo a
crininal plea agreenenl wilh BP Producls relaled lo lhe arch 2005
explosion and lre. On 4 February 2003, BP Producls pleaded guilly,
pursuanl lo lhe plea agreenenl, lo one lelony violalion ol lhe risk
nanagenenl planning regulalions pronulgaled under lhe US Clean Air Acl
(CAA and on 12 arch 2009, lhe courl accepled lhe plea agreenenl. n
conneclion wilh lhe plea agreenenl, BP Producls paid a $50nillion
crininal lne and was senlenced lo lhree years probalion which is sel lo
expire on 12 arch 2012. Conpliance wilh a 2005 US Occupalional Salely
and Heallh Adninislralion (OSHA selllenenl agreenenl (2005
Agreenenl and a 2006 agreed order enlered inlo by BP Producls wilh lhe
Texas Connission on Environnenlal Oualily (TCEO are condilions ol
probalion.
The Texas Ollce ol Allorney Ceneral, on behall ol TCEO, has lled a
pelilion againsl BP Producls asserling cerlain air enissions and reporling
violalions al lhe Texas Cily relnery lron 2005 lo 2010, including in relalion
lo lhe arch 2005 explosion and lre. BP is conlesling lhe pelilion in a
pending civil proceeding. n arch 2010, TCEO noliled lhe DoJ ol ils beliel
lhal cerlain ol lhe alleged violalions nay violale lhe 25 Oclober 2007 plea
agreenenl.
On 9 Augusl 2010, lhe Texas Allorney Ceneral lled a separale
pelilion againsl BP Producls asserling enissions violalions relaling lo a
6 April 2010 conpressor lre and subsequenl Haring evenl al lhe Texas Cily
relnerys ullracracker unil. This enissions evenl is also lhe subjecl ol a
nunber ol civil suils by nany area workers and residenls alleging personal
injury and properly danages and seeking subslanlial danages.
n Seplenber 2009, BP Producls lled a pelilion lo clarily specilc
required aclions and deadlines under lhe 2005 Agreenenl wilh OSHA. Thal
agreenenl resolved cilalions issued in conneclion wilh lhe arch 2005
Texas Cily relnery explosion. OSHA denied BP Producls pelilion.
n Oclober 2009 OSHA issued cilalions lo lhe Texas Cily relnery
seeking a lolal ol $37.4 nillion in civil penallies lor alleged violalions ol lhe
2005 Agreenenl and alleged process salely nanagenenl violalions.
BP Producls conlesled lhese cilalions. These nallers were subsequenlly
lranslerred lor review lo lhe Occupalional Salely and Heallh (OSH Feview
Connission.
A selllenenl agreenenl belween BP Producls and OSHA in
Augusl 2010 (2010 Agreenenl resolved lhe pelilion lled by BP Producls
in Seplenber 2009 and lhe alleged violalions ol lhe 2005 Agreenenl.
BP Producls has paid a penally ol $50.6 nillion in lhal naller and agreed lo
perlorn cerlain abalenenl aclions. Conpliance wilh lhe 2010 Agreenenl
(which is sel lo expire on 12 arch 2012 is also a condilion ol probalion
due lo lhe linkage belween lhis 2010 Agreenenl and lhe 2005 Agreenenl.
On 6 ay 2010, cerlain persons qualilying under lhe US Crine
Viclins Fighls Acl as viclins in relalion lo lhe Texas Cily plea agreenenl
requesled lhal lhe lederal courl revoke BP Producls probalion based on
alleged violalions ol lhe Courls condilions ol probalion. The alleged
violalions ol probalion relale lo lhe alleged lailure lo conply wilh lhe
2005 Agreenenl.
The OSHA process salely nanagenenl cilalions issued in Oclober
2009 were nol resolved by lhe Augusl 2010 selllenenl agreenenl. The
proposed penallies in lhal naller are $30.7 nillion. The naller is currenlly
belore lhe OSH Feview Connission which has assigned an Adninislralive
Law Judge lor purposes ol nedialion. These cilalions do nol allege
violalions ol lhe 2005 Agreenenl.
A shareholder derivalive aclion was lled againsl several currenl and lorner
BP ollcers and direclors based on alleged violalions ol lhe CAA and OSHA
regulalions al lhe Texas Cily relnery subsequenl lo lhe arch 2005
explosion and lre. An invesligalion by a special connillee ol BPs board
inlo lhe shareholder allegalions has been conpleled and lhe connillee
has reconnended lhal lhe allegalions do nol warranl aclion by BP againsl
lhe ollcers and direclors. BP has lled a nolion lo disniss lhe shareholder
derivalive aclion.
On 29 ovenber 2007, BP Exploralion (Alaska nc. (BPXA enlered
inlo a crininal plea agreenenl wilh lhe DoJ relaling lo leaks ol crude oil in
arch and Augusl 2006. BPXAs guilly plea, lo a nisdeneanour violalion ol
lhe US valer Pollulion Conlrol Acl, included a lern ol lhree years
probalion. On 29 ovenber 2009 a spill ol approxinalely 360 barrels ol
crude oil and produced waler was discovered benealh a line running lron a
well pad lo lhe Lisburne Processing Cenler in Prudhoe Bay, Alaska. On
17 ovenber 2010, lhe US Probalion Ollcer lled a pelilion in lederal
dislricl courl lo revoke BPXAs probalion based on an allegalion lhal lhe
Lisburne evenl was a crininal violalion ol slale or lederal law. A hearing is
scheduled lor lhe week ol 25 April 2011. On 12 ay 2003, a BP p.l.c.
shareholder lled a consolidaled conplainl alleging violalions ol lederal
securilies law on behall ol a pulalive class ol BP p.l.c. shareholders againsl
BP p.l.c., BPXA, BP Anerica, and lour ollcers ol lhe conpanies, based on
alleged nisrepresenlalions concerning lhe inlegrily ol lhe Prudhoe Bay
pipeline belore ils shuldown on 6 Augusl 2006. On 3 February 2010, lhe
inlh Circuil Courl ol Appeals accepled BPs appeal lron a decision ol lhe
lower courl granling in parl and denying in parl BPs nolion lo disniss lhe
lawsuil. Brielng is conplele and we awail oral argunenl.
On 31 arch 2009, lhe DoJ lled a conplainl againsl BPXA seeking
civil penallies and injunclive reliel relaling lo lhe 2006 oil releases. The
conplainl alleges lhal BPXA violaled various lederal environnenlal and
pipeline salely slalules and associaled regulalions in conneclion wilh lhe
lwo releases and ils nainlenance and operalion ol orlh Slope pipelines.
The Slale ol Alaska also lled a conplainl on 31 arch 2009 againsl BPXA
seeking civil penallies and danages relaling lo lhese evenls. The conplainl
alleges lhal lhe lwo releases and BPXAs corrosion nanagenenl praclices
violaled various slalulory, conlraclual and connon law dulies lo lhe Slale,
resulling in penally liabilily, danages lor losl royallies and laxes, and liabilily
lor punilive danages.
Approxinalely 200 lawsuils were lled in slale and lederal courls in
Alaska seeking conpensalory and punilive danages arising oul ol lhe
Exxon Valdez oil spill in Prince villian Sound in arch 1939. osl ol lhose
suils naned Exxon (now Exxonobil, Alyeska Pipeline Service Conpany
(Alyeska, which operales lhe oil lerninal al Valdez, and lhe olher oil
conpanies lhal own Alyeska. Alyeska inilially responded lo lhe spill unlil
lhe response was laken over by Exxon. BP owns a 46.9' inleresl (reduced
during 2001 lron 50' by a sale ol 3.1' lo Phillips in Alyeska lhrough a
subsidiary ol BP Anerica nc. and brieHy indireclly owned a lurlher 20'
inleresl in Alyeska lollowing BPs conbinalion wilh Allanlic Fichleld.
Alyeska and ils owners have sellled all lhe clains againsl lhen under
lhese lawsuils. Exxon has indicaled lhal il nay lle a clain lor conlribulion
againsl Alyeska lor a porlion ol lhe cosls and danages lhal il has incurred.
l any clains are asserled by Exxon lhal allecl Alyeska and ils owners, BP
will delend lhe clains vigorously.
132 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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Since 1937, Allanlic Fichleld Conpany (Allanlic Fichleld, a subsidiary ol
BP, has been naned as a codelendanl in nunerous lawsuils broughl in lhe
US alleging injury lo persons and properly caused by lead pignenl in painl.
The najorily ol lhe lawsuils have been abandoned or disnissed againsl
Allanlic Fichleld. Allanlic Fichleld is naned in lhese lawsuils as alleged
successor lo nlernalional Snelling and Felning and anolher conpany lhal
nanulaclured lead pignenl during lhe period 19201946. Plainlills include
individuals and governnenlal enlilies. Several ol lhe lawsuils purporl lo be
class aclions. The lawsuils seek various renedies including conpensalion
lo leadpoisoned children, cosl lo lnd and renove lead painl lron buildings,
nedical noniloring and screening progrannes, public warning and
educalion ol lead hazards, reinbursenenl ol governnenl heallhcare cosls
and special educalion lor leadpoisoned cilizens and punilive danages. o
lawsuil againsl Allanlic Fichleld has been sellled nor has Allanlic Fichleld
been subjecl lo a lnal adverse judgnenl in any proceeding. The anounls
clained and, il such suils were successlul, lhe cosls ol inplenenling lhe
renedies soughl in lhe various cases could be subslanlial. vhile il is nol
possible lo predicl lhe oulcone ol lhese legal aclions, Allanlic Fichleld
believes lhal il has valid delences. l inlends lo delend such aclions
vigorously and believes lhal lhe incurrence ol liabilily is renole.
Consequenlly, BP believes lhal lhe inpacl ol lhese lawsuils on lhe groups
resulls, lnancial posilion or liquidily will nol be nalerial.
On 3 arch 2010, OSHA issued cilalions lo BPs Toledo relnery
alleging violalions ol lhe Process Salely anagenenl Slandard, wilh
penallies ol approxinalely $3 nillion. These cilalions resulled lron an
inspeclion conducled pursuanl lo OSHAs Pelroleun Felnery Process
Salely anagenenl alional Enphasis Progran. BP Producls has
conlesled lhe cilalions, and lhe naller is currenlly belore lhe OSH Feview
Connission which has assigned an Adninislralive Law Judge lor purposes
ol nedialion.
BP is lhe operalor and 56' inleresl owner ol lhe Allanlis unil in
produclion in lhe Cull ol exico. n April 2009, Kennelh Abboll, as relalor,
lled a US False Clains Acl lawsuil againsl BP, alleging lhal BP violaled
lederal regulalions, and nade lalse slalenenls in conneclion wilh ils
conpliance wilh lhose regulalions, by lailing lo have necessary
docunenlalion lor lhe Allanlis subsea and olher syslens. Thal conplainl
was unsealed in ay 2010 and served on BP in June 2010. n Seplenber
2010, Kennelh Abboll and Food & valer valch lled an anended
conplainl in lhe False Clains Acl lawsuil seeking an injunclion shulling
down lhe Allanlis plallorn.
BP Producls US relneries are subjecl lo a 2001 consenl decree
wilh lhe EPA lhal resolved alleged violalions ol lhe CAA, and
inplenenlalion ol lhe decrees requirenenls conlinues. A 2009
anendnenl lo lhe decree resolves renaining alleged air violalions al lhe
Texas Cily relnery lhrough lhe paynenl ol a $12nillion civil lne, a
$6nillion supplenenlal environnenlal projecl and enhanced CAA
conpliance neasures eslinaled lo cosl approxinalely $150 nillion. The
lne has been paid, and BP Producls is inplenenling lhe olher provisions.
On 30 Seplenber 2010, lhe EPA and BP Producls lodged a civil
consenl decree wilh lhe lederal courl in Houslon. Following a public
connenl period, lhe lederal courl approved lhe selllenenl on
30 Decenber 2010. The decree resolves allegalions ol civil violalions ol lhe
risk nanagenenl planning regulalions pronulgaled under lhe CAA lhal are
alleged lo have occurred in 2004 and 2005 al lhe Texas Cily relnery. The
agreenenl requires lhal BP Producls pays a $15nillion civil penally and
lhal lhe Texas Cily relnery enhance reporling lo lhe EPA regarding
enployee lraining, equipnenl inspeclion and incidenl invesligalion.
Various environnenlal groups and lhe EPA have challenged cerlain
aspecls ol lhe operaling pernil issued by lhe ndiana Deparlnenl ol
Environnenlal anagenenl (DE lor upgrades lo lhe vhiling relnery.
n response lo lhese challenges, lhe DE has reviewed lhe pernils and
responded lornally lo lhe EPA. The EPA, eilher lhrough lhe DE or
direclly, can cause lhe pernil lo be nodiled, reissued, lerninaled or
revoked. BP is in discussions wilh lhe EPA and lhe DE over lhese and
olher CAA issues relaling lo lhe vhiling relnery.
BP is also in selllenenl negolialions wilh EPA lo resolve alleged CAA
violalions al lhe vhiling, Toledo, Carson and Cherry Poinl relneries.
An applicalion was broughl in lhe English High Courl on 1 February
2011 by Alla Pelroleun Holdings Liniled and OCP Venlures Liniled
againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled
alleging breach ol lhe shareholders agreenenl on lhe parl ol BP and
seeking an inlerin injunclion reslraining BP lron laking sleps lo conclude,
inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell
Oil Conpany relaling lo oil and gas exploralion, produclion, relning and
narkeling in Fussia. Those lransaclions include lhe issue or lransler ol
shares belween Fosnell Oil Conpany and any BP group conpany. The
courl granled an inlerin order reslraining BP lron laking any lurlher sleps
in relalion lo lhe Fosnell lransaclions pending an expediled UCTFAL
arbilralion procedure in accordance wilh lhe Shareholders Agreenenl
belween lhe parlies.
The arbilralion has connenced and lhe injunclion has been
exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo
nallers in dispule belween lhe parlies on a lnal basis during lhe week
connencing 7 arch 2011. The expediled hearing will decide, anong
olher nallers, whelher lhe injunclion will be exlended beyond
11 arch 2011.
On 9 February 2011, Apache Canada Lld connenced an arbilralion
againsl BP Canada Energy. Apache alleges lhal in lhe lulure various ol lhe
siles lhal il acquired lron BP Canada Energy pursuanl lo lhe parlies July
2010 Purchase and Sale Agreenenl will have lo have work carried oul lo
bring lhe siles inlo conpliance wilh applicable Alberla environnenlal laws,
and Apache Canada Lld clains lhal lhe purchase price should be adjusled
lor ils eslinaled possible cosls. BP Canada Energy denies such cosls will
arise or require any adjuslnenl lo lhe purchase price. The process ol
selecling lhe arbilralor has begun. o hearing dales have been sel.
Felalionships wilh suppliers
and conlraclors
EssentiaI contracts
BP has conlraclual and olher arrangenenls wilh nunerous lhird parlies in
supporl ol ils business aclivilies. This reporl does nol conlain inlornalion
aboul any ol lhese lhird parlies as none ol our arrangenenls wilh lhen are
considered lo be essenlial lo lhe business ol BP.
SuppIiers and contractors
Our processes are designed lo enable us lo choose suppliers carelully on
neril, avoiding conHicls ol inleresl and inappropriale gills and
enlerlainnenl. ve expecl suppliers lo conply wilh legal requirenenls and
we seek lo do business wilh suppliers who acl in line wilh BPs
connilnenls lo conpliance and elhics, as oullined in our code ol conducl.
ve engage wilh suppliers in a variely ol ways, including perlornance
review neelings lo idenlily nulually advanlageous ways lo inprove
perlornance.
Creditor payment poIicy and practice
Slalulory regulalions issued under lhe UK Conpanies Acl 2006 require
conpanies lo nake a slalenenl ol lheir policy and praclice in respecl ol
lhe paynenl ol lrade credilors. n view ol lhe inlernalional nalure ol lhe
groups operalions lhere is no specilc groupwide policy in respecl ol
paynenls lo suppliers. Felalionships wilh suppliers are, however, governed
by lhe groups policy connilnenl lo longlern relalionships lounded on
lrusl and nulual advanlage. vilhin lhis overall policy, individual operaling
conpanies are responsible lor agreeing lerns and condilions lor lheir
business lransaclions and ensuring lhal suppliers are aware ol lhe lerns ol
paynenl.
BP Annual Feporl and Forn 20F 2010 133
Addilional inlornalion lor shareholders
Share prices and lislings
Markets and market prices
The prinary narkel lor BPs ordinary shares is lhe London Slock Exchange
(LSE. BPs ordinary shares are a consliluenl elenenl ol lhe Financial Tines
Slock Exchange 100 ndex. BPs ordinary shares are also lraded on lhe
Franklurl slock exchange in Cernany.
Trading ol BPs shares on lhe LSE is prinarily lhrough lhe use ol lhe
Slock Exchange Eleclronic Trading Service (SETS, inlroduced in 1997 lor
lhe largesl conpanies in lerns ol narkel capilalizalion whose prinary
lisling is lhe LSE. Under SETS, buy and sell orders al specilc prices nay be
senl eleclronically lo lhe exchange by any lrn lhal is a nenber ol lhe
LSE, on behall ol a clienl or on behall ol ilsell acling as a principal. The
orders are lhen anonynously displayed in lhe order book. vhen lhere is a
nalch on a buy and a sell order, lhe lrade is execuled and aulonalically
reporled lo lhe LSE. Trading is conlinuous lron 3.00 a.n. lo 4.30 p.n. UK
line bul, in lhe evenl ol a 20' novenenl in lhe share price eilher way,
lhe LSE nay inpose a lenporary hall in lhe lrading ol lhal conpanys
shares in lhe order book lo allow lhe narkel lo reeslablish equilibriun.
Dealings in ordinary shares nay also lake place belween an inveslor and a
narkelnaker, via a nenber lrn, oulside lhe eleclronic order book.
n lhe US, lhe conpanys securilies are lraded in lhe lorn ol ADSs,
lor which JPorgan Chase Bank, .A. is lhe deposilary (lhe Deposilary
and lransler agenl. The Deposilarys principal ollce is 1 Chase anhallan
Plaza, Floor 53, ew York, Y 100051401, US. Each ADS represenls six
ordinary shares. ADSs are lisled on lhe ew York Slock Exchange. ADSs
are evidenced by Anerican deposilary receipls (ADFs, which nay be
issued in eilher cerlilcaled or book enlry lorn.
The lollowing lable sels lorlh lor lhe periods indicaled lhe highesl
and lowesl niddle narkel quolalions lor BPs ordinary shares and ADSs
lor lhe periods shown. These are derived lron lhe highesl and lowesl
sales prices as reporled on lhe LSE and ew York Slock Exchange
(YSE, respeclively.
Pence Dollars
Anerican
deposilary
Ordinary shares shares
a
High Low High Low
Year ended 31 Decenber
2006 723.00 553.50 76.35 63.52
2007 640.00 504.50 79.77 53.62
2003 657.25 370.00 77.69 37.57
2009 613.40 400.00 60.00 33.71
2010 658.20 296.00 62.38 26.75
Year ended 31 Decenber
2009: Firsl quarler 566.50 400.00 49.33 33.71
Second quarler 543.75 426.50 53.24 33.50
Third quarler 563.50 459.25 55.61 44.63
Fourlh quarler 613.40 523.00 60.00 50.60
2010: Firsl quarler 640.10 555.00 62.38 52.00
Second quarler 658.20 296.00 60.98 26.75
Third quarler 438.25 312.65 41.59 28.79
Fourlh quarler 479.00 418.25 44.83 39.58
2011: Firsl quarler (lo 13 February 514.90 471.65 49.50 44.83
onlh ol
Seplenber 2010 436.15 375.75 41.30 35.67
Oclober 2010 443.50 418.25 42.08 39.58
ovenber 2010 459.20 420.70 44.37 39.76
Decenber 2010 479.00 426.15 44.83 40.15
January 2011 514.90 479.00 49.50 44.83
February 2011 (lo 13 February 495.60 471.65 48.28 45.46
a
An ADS is equivalenl lo six 25cenl ordinary shares.
arkel prices lor lhe ordinary shares on lhe LSE and in allerhours lrading
oll lhe LSE, in each case while lhe YSE is open, and lhe narkel prices lor
ADSs on lhe YSE are closely relaled due lo arbilrage anong lhe various
narkels, allhough dillerences nay exisl lron line lo line due lo various
laclors, including UK slanp duly reserve lax.
On 13 February 2011, 314,755,024 ADSs (equivalenl lo
approxinalely 4,333,530,144 ordinary shares or sone 26.01' ol lhe lolal
issued share capilal, excluding shares held in lreasury and shares boughl
back lor cancellalion were oulslanding and were held by approxinalely
114,334 ADS holders. Ol lhese, aboul 113,490 had regislered addresses in
lhe US al lhal dale. One ol lhe regislered holders ol ADSs represenls
sone 795,332 underlying holders.
On 13 February 2011, lhere were approxinalely 314,347 holders ol record
ol ordinary shares. Ol lhese holders, around 1,574 had regislered addresses
in lhe US and held a lolal ol sone 4,239,336 ordinary shares.
Since cerlain ol lhe ordinary shares and ADSs were held by brokers
and olher noninees, lhe nunber ol holders ol record in lhe US nay nol
be represenlalive ol lhe nunber ol benelcial holders or ol lheir counlry
ol residence.
134 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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alerial conlracls
On 6 Augusl 2010, BP enlered inlo a lrusl agreenenl wilh
John S arlin, Jr and Kenl D Syverud, as individual lruslees, and Ciligroup
TruslDelaware, .A., as corporale lruslee (lhe Trusl Agreenenl which
eslablished lhe Deepwaler Horizon Oil Spill Trusl (lhe Trusl lo be lunded in
lhe anounl ol $20 billion (lhe lrusl lund over lhe period lo lhe lourlh
quarler ol 2013. The lrusl lund is available lo salisly legilinale individual
and business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF,
slale and local governnenl clains resolved by BP, lnal judgnenls and
selllenenls, slale and local response cosls, and nalural resource danages
and relaled cosls. Fines, penallies and clains adninislralion cosls are nol
covered by lhe lrusl lund. Under lhe lerns ol lhe Trusl Agreenenl, BP has
no righl lo access lhe lunds once lhey have been conlribuled lo lhe lrusl
lund. BP will receive lunds lron lhe lrusl lund only upon ils expiralion, il
lhere are any lunds renaining al lhal poinl. BP has lhe aulhorily under lhe
Trusl Agreenenl lo presenl cerlain resolved clains, including nalural
resource danages clains and slale and local response clains, lo lhe Trusl
lor paynenl, by providing lhe lruslees wilh all lhe required docunenls
eslablishing lhal such clains are valid under lhe Trusl Agreenenl. However,
any such paynenls can only be nade on lhe aulhorily ol lhe lruslee and
any lunds dislribuled are paid direclly lo lhe clainanls, nol lo BP. The Trusl
Agreenenl is governed by lhe laws ol lhe Slale ol Delaware.
On 30 Seplenber 2010, BP enlered a pledge and collaleral
agreenenl in lavour ol John S arlin, Jr and Kenl D Syverud (lhe Pledge
Agreenenl, which pledged cerlain Cull ol exico assels as collaleral lor
lhe lrusl lund lunding obligalion. The pledged collaleral consisls ol an
overriding royally inleresl in oil and gas produclion ol BPs Thunder Horse,
Allanlis, ad Dog, Creal vhile and ars, Ursa and a Kika assels in lhe
Cull ol exico. A whollyowned conpany called Verano Collaleral Holdings
LLC (Verano has been crealed lo hold lhe overriding royally inleresl, which
is capped al $1.25 billion per quarler and $17 billion in lolal. Verano has
pledged lhe overriding royally inleresl lo lhe Trusl as collaleral lor BPs
renaining conlribulion obligalions lo lhe Trusl. BP conlribuled a lurlher
$2 billion lo lhe lrusl lund since lhis arrangenenl was eslablished, lhereby
reducing lhe anounl ol lhe pledge lo $15 billion al lhe end ol lhe year. An
evenl ol delaull under lhe Pledge Agreenenl will arise il BP lails lo nake
any conlribulion under lhe Trusl Agreenenl when due or olherwise lails lo
observe cerlain olher obligalions, subjecl lo speciled cure periods.
Following an evenl ol delaull, lhe lruslees will be enlilled lo exercise all
renedies as secured parlies in respecl ol lhe collaleral, including receipl ol
royally inleresls lron lhe pledged assels, having all or parl ol lhe liniled
liabilily conpany inleresls regislered in lhe lruslees nane and selling lhe
collaleral al public or privale sale. The Pledge Agreenenl is governed by lhe
laws ol lhe Slale ol Texas.
Exchange conlrols
There are currenlly no UK loreign exchange conlrols or reslriclions on
renillances ol dividends on lhe ordinary shares or on lhe conducl ol lhe
conpanys operalions.
There are no linilalions, eilher under lhe laws ol lhe UK or under
lhe conpanys Arlicles ol Associalion, reslricling lhe righl ol nonresidenl
or loreign owners lo hold or vole BP ordinary or prelerence shares in lhe
conpany.
Taxalion
This seclion describes lhe nalerial US lederal incone lax and UK laxalion
consequences ol owning ordinary shares or ADSs lo a US holder who
holds lhe ordinary shares or ADSs as capilal assels lor lax purposes. l
does nol apply, however, lo nenbers ol special classes ol holders subjecl
lo special rules and holders lhal, direclly or indireclly, hold 10' or nore ol
lhe conpanys voling slock. n addilion, il a parlnership holds lhe shares or
ADSs, lhe US lederal incone lax lrealnenl ol a parlner will generally
depend on lhe slalus ol lhe parlner and lhe lax lrealnenl ol lhe
parlnership and nay nol be described lully below.
A US holder is any benelcial owner ol ordinary shares or ADSs lhal
are lor US lederal incone lax purposes (i a cilizen or residenl ol lhe US,
(ii a US doneslic corporalion, (iii an eslale whose incone is subjecl lo US
lederal incone laxalion regardless ol ils source, or (iv a lrusl il a US courl
can exercise prinary supervision over lhe lrusls adninislralion and
one or nore US persons are aulhorized lo conlrol all subslanlial decisions
ol lhe lrusl.
This seclion is based on lhe nlernal Fevenue Code ol 1936, as
anended, ils legislalive hislory, exisling and proposed regulalions
lhereunder, published rulings and courl decisions, and lhe laxalion laws ol
lhe UK, all as currenlly in ellecl, as well as lhe incone lax convenlion
belween lhe US and lhe UK lhal enlered inlo lorce on 31 arch 2003 (lhe
Trealy. These laws are subjecl lo change, possibly on a relroaclive basis.
This seclion is lurlher based in parl on lhe represenlalions ol lhe
Deposilary and assunes lhal each obligalion in lhe Deposil Agreenenl
and any relaled agreenenl will be perlorned in accordance wilh ils lerns.
For purposes ol lhe Trealy and lhe eslale and gill lax Convenlion
(lhe Eslale Tax Convenlion, and lor US lederal incone lax and UK
laxalion purposes, a holder ol ADFs evidencing ADSs will be lrealed as lhe
owner ol lhe conpanys ordinary shares represenled by lhose ADFs.
Exchanges ol ordinary shares lor ADFs and ADFs lor ordinary shares
generally will nol be subjecl lo US lederal incone lax or lo UK laxalion
olher lhan slanp duly or slanp duly reserve lax, as described below.
nveslors should consull lheir own lax adviser regarding lhe US
lederal, slale and local, lhe UK and olher lax consequences ol owning and
disposing ol ordinary shares and ADSs in lheir parlicular circunslances,
and in parlicular whelher lhey are eligible lor lhe benells ol lhe Trealy.
Taxation of dividends
UK laxalion
Under currenl UK laxalion law, no wilhholding lax will be deducled lron
dividends paid by lhe conpany, including dividends paid lo US holders. A
shareholder lhal is a conpany residenl lor lax purposes in lhe UK or
lrading in lhe UK lhrough a pernanenl eslablishnenl generally will nol be
laxable in lhe UK on a dividend il receives lron lhe conpany. A
shareholder who is an individual residenl lor lax purposes in lhe UK
is subjecl lo UK lax bul enlilled lo a lax credil on cash dividends paid
on ordinary shares or ADSs ol lhe conpany equal lo oneninlh ol lhe
cash dividend.
US lederal incone laxalion
A US holder is subjecl lo US lederal incone laxalion on lhe gross anounl
ol any dividend paid by lhe conpany oul ol ils currenl or accunulaled
earnings and prolls (as delernined lor US lederal incone lax purposes.
Dividends paid lo a noncorporale US holder in laxable years beginning
belore 1 January 2013 lhal conslilule qualiled dividend incone will be
laxable lo lhe holder al a naxinun lax rale ol 15', provided lhal lhe
holder has a holding period in lhe ordinary shares or ADSs ol nore lhan
60 days during lhe 121day period beginning 60 days belore lhe exdividend
dale and neels olher holding period requirenenls. Dividends paid by lhe
conpany wilh respecl lo lhe shares or ADSs will generally be qualiled
dividend incone.
BP Annual Feporl and Forn 20F 2010 135
Addilional inlornalion lor shareholders
As noled above in UK laxalion, a US holder will nol be subjecl lo UK
wilhholding lax. A US holder will include in gross incone lor US lederal
incone lax purposes lhe anounl ol lhe dividend aclually received lron lhe
conpany and lhe receipl ol a dividend will nol enlille lhe US holder lo a
loreign lax credil.
For US lederal incone lax purposes, a dividend nusl be included in
incone when lhe US holder, in lhe case ol ordinary shares, or lhe
Deposilary, in lhe case ol ADSs, aclually or conslruclively receives lhe
dividend, and will nol be eligible lor lhe dividendsreceived deduclion
generally allowed lo US corporalions in respecl ol dividends received lron
olher US corporalions. Dividends will be incone lron sources oulside
lhe US, and generally will be passive calegory incone or, in lhe case
ol cerlain US holders, general calegory incone, each ol which is
lrealed separalely lor purposes ol conpuling a US holders loreign
lax credil linilalion.
The anounl ol lhe dividend dislribulion on lhe ordinary shares or
ADSs lhal is paid in pounds slerling will be lhe US dollar value ol lhe
pounds slerling paynenls nade, delernined al lhe spol pounds slerling/
US dollar rale on lhe dale lhe dividend dislribulion is includible in incone,
regardless ol whelher lhe paynenl is, in lacl, converled inlo US dollars.
Cenerally, any gain or loss resulling lron currency exchange Huclualions
during lhe period lron lhe dale lhe pounds slerling dividend paynenl is
includible in incone lo lhe dale lhe paynenl is converled inlo US dollars
will be lrealed as ordinary incone or loss and will nol be eligible lor lhe
15' lax rale on qualiled dividend incone. The gain or loss generally will
be incone or loss lron sources wilhin lhe US lor loreign lax credil
linilalion purposes.
Dislribulions in excess ol lhe conpanys earnings and prolls, as
delernined lor US lederal incone lax purposes, will be lrealed as a relurn
ol capilal lo lhe exlenl ol lhe US holders basis in lhe ordinary shares or
ADSs and lherealler as capilal gain, subjecl lo laxalion as described in
Taxalion ol capilal gains - US lederal incone laxalion.
n addilion, lhe laxalion ol dividends nay be subjecl lo lhe rules lor
passive loreign inveslnenl conpanies (PFC, described below under
Taxalion ol capilal gains - US lederal incone laxalion. Dislribulions nade
by a PFC do nol conslilule qualiled dividend incone and are nol eligible
lor lhe 15' lax rale.
Taxation of capitaI gains
UK laxalion
A US holder nay be liable lor bolh UK and US lax in respecl ol a gain on
lhe disposal ol ordinary shares or ADSs il lhe US holder is (i a cilizen ol lhe
US residenl or ordinarily residenl in lhe UK, (ii a US doneslic corporalion
residenl in lhe UK by reason ol ils business being nanaged or conlrolled in
lhe UK or (iii a cilizen ol lhe US or a corporalion lhal carries on a lrade or
prolession or vocalion in lhe UK lhrough a branch or agency or, in respecl
ol corporalions lor accounling periods beginning on or aller 1 January
2003, lhrough a pernanenl eslablishnenl, and lhal have used, held, or
acquired lhe ordinary shares or ADSs lor lhe purposes ol such lrade,
prolession or vocalion ol such branch, agency or pernanenl eslablishnenl.
However, such persons nay be enlilled lo a lax credil againsl lheir US
lederal incone lax liabilily lor lhe anounl ol UK capilal gains lax or UK
corporalion lax on chargeable gains (as lhe case nay be lhal is paid in
respecl ol such gain.
Under lhe Trealy, capilal gains on disposilions ol ordinary shares or
ADSs generally will be subjecl lo lax only in lhe jurisdiclion ol residence ol
lhe relevanl holder as delernined under bolh lhe laws ol lhe UK and lhe
US and as required by lhe lerns ol lhe Trealy.
Under lhe Trealy, individuals who are residenls ol eilher lhe UK or lhe US
and who have been residenls ol lhe olher jurisdiclion (lhe US or lhe UK, as
lhe case nay be al any line during lhe six years innedialely preceding
lhe relevanl disposal ol ordinary shares or ADSs nay be subjecl lo lax wilh
respecl lo capilal gains arising lron a disposilion ol ordinary shares or
ADSs ol lhe conpany nol only in lhe jurisdiclion ol which lhe holder is
residenl al lhe line ol lhe disposilion bul also in lhe olher jurisdiclion.
US lederal incone laxalion
A US holder who sells or olherwise disposes ol ordinary shares or ADSs
will recognize a capilal gain or loss lor US lederal incone lax purposes
equal lo lhe dillerence belween lhe US dollar value ol lhe anounl realized
and lhe holders lax basis, delernined in US dollars, in lhe ordinary shares
or ADSs. Capilal gain ol a noncorporale US holder lhal is recognized in
laxable years beginning belore 1 January 2013 is generally laxed al a
naxinun rale ol 15' il lhe holders holding period lor such ordinary
shares or ADSs exceeds one year. The gain or loss will generally be incone
or loss lron sources wilhin lhe US lor loreign lax credil linilalion
purposes. The deduclibilily ol capilal losses is subjecl lo linilalions.
ve do nol believe lhal ordinary shares or ADSs will be lrealed as
slock ol a passive loreign inveslnenl conpany, or PFC, lor US lederal
incone lax purposes, bul lhis conclusion is a laclual delerninalion lhal is
nade annually and lhus is subjecl lo change. l we are lrealed as a PFC,
unless a US holder elecls lo be laxed annually on a narklonarkel basis
wilh respecl lo ordinary shares or ADSs, gain realized on lhe sale or olher
disposilion ol ordinary shares or ADSs would in general nol be lrealed as
capilal gain. nslead, a US holder would be lrealed as il he or she had
realized such gain ralably over lhe holding period lor ordinary shares or
ADSs and would be laxed al lhe highesl lax rale in ellecl lor each such
year lo which lhe gain was allocaled, in addilion lo which an inleresl
charge in respecl ol lhe lax allribulable lo each such year would apply.
Cerlain excess dislribulions would be sinilarly lrealed il we were
lrealed as a PFC.
AdditionaI tax considerations
Scrip Dividend Progranne
The conpany has inlroduced an oplional Scrip Dividend Progranne,
wherein holders ol ordinary shares or ADSs nay elecl lo receive any
dividends in lhe lorn ol new lullypaid ordinary shares or ADSs ol lhe
conpany, inslead ol cash. Please consull your lax adviser lor lhe
consequences lo you.
UK inherilance lax
The Eslale Tax Convenlion applies lo inherilance lax. ADSs held by an
individual who is doniciled lor lhe purposes ol lhe Eslale Tax Convenlion
in lhe US and is nol lor lhe purposes ol lhe Eslale Tax Convenlion a
nalional ol lhe UK will nol be subjecl lo UK inherilance lax on lhe
individuals dealh or on lransler during lhe individuals lileline unless,
anong olher lhings, lhe ADSs are parl ol lhe business properly ol a
pernanenl eslablishnenl silualed in lhe UK used lor lhe perlornance ol
independenl personal services. n lhe exceplional case where ADSs are
subjecl lo bolh inherilance lax and US lederal gill or eslale lax, lhe Eslale
Tax Convenlion generally provides lor lax payable in lhe US lo be crediled
againsl lax payable in lhe UK or lor lax paid in lhe UK lo be crediled
againsl lax payable in lhe US, based on priorily rules sel lorlh in lhe
Eslale Tax Convenlion.
136 BP Annual Feporl and Forn 20F 2010
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Addilional inlornalion lor shareholders
UK slanp duly and slanp duly reserve lax
The slalenenls below relale lo whal is underslood lo be lhe currenl
praclice ol H Fevenue & Cuslons in lhe UK under exisling law.
Provided lhal any inslrunenl ol lransler is nol execuled in lhe UK
and renains al all lines oulside lhe UK and lhe lransler does nol relale lo
any naller or lhing done or lo be done in lhe UK, no UK slanp duly is
payable on lhe acquisilion or lransler ol ADSs. eilher will an agreenenl lo
lransler ADSs in lhe lorn ol ADFs give rise lo a liabilily lo slanp duly
reserve lax.
Purchases ol ordinary shares, as opposed lo ADSs, lhrough lhe
CFEST syslen ol paperless share lranslers will be subjecl lo slanp duly
reserve lax al 0.5'. The charge will arise as soon as lhere is an agreenenl
lor lhe lransler ol lhe shares (or, in lhe case ol a condilional agreenenl,
when lhe condilion is lulllled. The slanp duly reserve lax will apply lo
agreenenls lo lransler ordinary shares even il lhe agreenenl is nade
oulside lhe UK belween lwo nonresidenls. Purchases ol ordinary shares
oulside lhe CFEST syslen are subjecl eilher lo slanp duly al a rale ol 5
per 1,000 (or parl, unless lhe slanp duly is less lhan 5, when no slanp
duly is charged, or slanp duly reserve lax al 0.5'. Slanp duly and slanp
duly reserve lax are generally lhe liabilily ol lhe purchaser.
A subsequenl lransler ol ordinary shares lo lhe Deposilarys
noninee will give rise lo lurlher slanp duly al lhe rale ol 1.50 per 100
(or parl or slanp duly reserve lax al lhe rale ol 1.5' ol lhe value ol lhe
ordinary shares al lhe line ol lhe lransler. An ADF holder elecling lo
receive ADSs inslead ol a cash dividend will be responsible lor lhe slanp
duly reserve lax due on issue ol shares lo lhe Deposilarys noninee and
calculaled al lhe rale ol 1.5' on lhe issue price ol lhe shares. l is
underslood lhal H Fevenue & Cuslons praclice is lo calculale lhe issue
price by relerence lo lhe lolal cash receipl lo which a US holder would
have been enlilled had lhe eleclion lo receive ADSs inslead ol a cash
dividend nol been nade. ADF holders elecling lo receive ADSs inslead ol
lhe cash dividend aulhorize lhe Deposilary lo sell sullcienl shares lo cover
lhis liabilily.
Docunenls on display
BP Annua| Fepor! and Forn 20-F 20!0 is also available online al
vvv.bp.con/annua|repor!. Shareholders nay oblain a hard copy ol BPs
conplele audiled lnancial slalenenls, lree ol charge, by conlacling BP
Dislribulion Services al +44 (0370 241 3269 or lhrough an enail requesl
addressed lo bpdis!ribu!ionservicesbp.con (UK and Fesl ol vorld or
lron Precision F al + 1 333 301 2505 or lhrough an enail requesl
addressed lo bprepor!sprecisionir.con (US and Canada.
The conpany is subjecl lo lhe inlornalion requirenenls ol lhe US
Securilies Exchange Acl ol 1934 applicable lo loreign privale issuers. n
accordance wilh lhese requirenenls, lhe conpany lles ils Annual Feporl
on Forn 20F and olher relaled docunenls wilh lhe SEC. l is possible lo
read and copy docunenls lhal have been lled wilh lhe SEC al lhe SECs
public relerence roon localed al 100 F Slreel E, vashinglon, DC 20549,
US. You nay also call lhe SEC al +1 300SEC0330 or log on lo vvv.sec.
gov. n addilion, BPs SEC llings are available lo lhe public al lhe SECs
websile vvv.sec.gov. BP discloses on ils websile al vvv.bp.con/
NYScorpora!egovernanceru|es, and in lhis reporl (see Corpora!e
governance prac!ices (Forn 20-F !en !6C) on page !05 signilcanl ways
(il any in which ils corporale governance praclices diller lron lhose
nandaled lor US conpanies under YSE lisling slandards.
Purchases ol equily securilies by lhe issuer and alllialed purchasers
Al lhe AC on 15 April 2010, aulhorizalion was given lo repurchase up lo 1.9 billion ordinary shares in lhe period lo lhe nexl AC in 2011 or 15 July 2011,
lhe lalesl dale by which an AC nusl be held. This aulhorizalion is renewed annually al lhe AC. o repurchases ol shares were nade in lhe period
1 January 2010 lo 13 February 2011.
The lollowing lable provides delails ol share purchases nade by ESOP lrusls.
axinun
Tolal nunber nunber ol
ol shares shares lhal
purchased as nay yel
Tolal nunber ol Average parl ol publicly be purchased
shares paid per share announced under lhe
purchased $ progrannes progranne
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2010
January 51 10.36
February 144,523 11.41
arch 626 8.41
April 5,001,610 11.41
ay 1,941,069 11.41
June 181,384 11.41
July 4,550,658 6.25
Augusl 849 6.82
Seplenber 817,606 6.32
Oclober niI
ovenber 280,559 7.20
Decenber 38 7.18
2011
January 338,506 7.86
February (lo 13 February 311,362 7.60
a
o shares were repurchased pursuanl lo a publicly announced plan. Transaclions represenl lhe purchase ol ordinary shares by ESOP lrusls lo salisly lulure requirenenls ol enployee share schenes.
BP Annual Feporl and Forn 20F 2010 137
Addilional inlornalion lor shareholders
Fees and charges payable by a holder ol ADSs
The Deposilary collecls lees lor delivery and surrender ol ADSs direclly lron inveslors deposiling shares or surrendering ADSs lor lhe purpose ol
wilhdrawal or lron inlernediaries acling lor lhen. The Deposilary collecls lees lor naking dislribulions lo inveslors by deducling lhose lees lron lhe
anounls dislribuled or by selling a porlion ol lhe dislribulable properly lo pay lhe lees.
The charges ol lhe Deposilary payable by inveslors are as lollows:
Type ol service Deposilary aclions Fee
Deposiling or subsliluling lhe
underlying shares
ssuance ol ADSs againsl lhe deposil ol shares, including
deposils and issuances in respecl ol:
Share dislribulions, slock splils, righls, nerger
Exchange ol securilies or olher lransaclions or
evenl or olher dislribulion allecling lhe ADSs or
deposiled securilies
$5.00 per 100 ADSs (or porlion lhereol
evidenced by lhe new ADSs delivered
Selling or exercising righls Dislribulion or sale ol securilies, lhe lee being in an
anounl equal lo lhe lee lor lhe execulion and delivery
ol ADSs lhal would have been charged as a resull ol
lhe deposil ol such securilies
$5.00 per 100 ADSs (or porlion lhereol
vilhdrawing an
underlying share
Acceplance ol ADSs surrendered lor wilhdrawal ol
deposiled securilies
$5.00 lor each 100 ADSs (or porlion
lhereol evidenced by lhe ADSs
surrendered
Expenses ol lhe Deposilary
Expenses incurred on behall ol holders in conneclion wilh:
Slock lransler or olher laxes and governnenlal
charges
Cable, lelex, eleclronic and lacsinile
lransnission/delivery
Transler or regislralion lees, il applicable, lor lhe
regislralion ol lranslers ol underlying shares
Expenses ol lhe Deposilary in conneclion wilh lhe
conversion ol loreign currency inlo US dollars
(which are paid oul ol such loreign currency
Expenses payable al lhe sole discrelion
ol lhe Deposilary by billing holders or
by deducling charges lron one or
nore cash dividends or olher cash
dislribulions
Fees and paynenls nade by lhe
Deposilary lo lhe issuer
The Deposilary has agreed lo reinburse cerlain conpany expenses relaled
lo lhe conpanys ADS progranne and incurred by lhe conpany in
conneclion wilh lhe progranne. The Deposilary reinbursed lo lhe
conpany, or paid anounls on lhe conpanys behall lo lhird parlies, or
waived ils lees and expenses, ol $4,647,254 lor lhe year ended
31 Decenber 2010.
The lable below sels lorlh lhe lypes ol expenses lhal lhe
Deposilary has agreed lo reinburse, and lhe invoices relaling lo lhe year
ended 31 Decenber 2010 lhal were reinbursed:
Calegory ol expense reinbursed Anounl reinbursed lor lhe year
lo lhe conpany ended 31 Decenber 2010
YSE lisling lees $500,000
Tolal $500,000
The Deposilary has also agreed lo waive lees lor slandard cosls associaled
wilh lhe adninislralion ol lhe ADS progranne and has paid cerlain
expenses direclly lo lhird parlies on behall ol lhe conpany. The lable below
sels lorlh lhose expenses lhal lhe Deposilary waived or paid direclly lo
lhird parlies relaling lo lhe year ended 31 Decenber 2010:
Calegory ol expense waived or paid Anounl reinbursed lor lhe year
direclly lo lhird parlies ended 31 Decenber 2010
Service lees and oul ol pockel expenses waived
a
$2,302,432
Broker reinbursenenls
b
$1,150,475
Olher lhirdparly nailing cosls
c
$136,542
Legal advice
d
$26,391
Olher lhirdparly expenses paid direclly $31,364
Tolal $4,147,254
ncludes lees in relalion lo lransler agenl cosls and cosls ol lhe ol BP Direcl Access Plan operaled
by JPorgan Chase.
Broker reinbursenenls are lees payable lo Broadridge lor lhe dislribulion ol hard copy nalerial lo
ADF benelcial holders in lhe Deposilary Trusl Conpany. Corporale nalerials include inlornalion
relaled lo shareholders neelings and relaled voling inslruclions. These lees are SEC approved.
Paynenl ol lees lo Precision F and CBC ellon lor dislribulion ol hard copy nalerials lo ADF
benelcial holders, proxy solicilalion and inveslor supporl.
Feinbursenenl lor legal advice lron Ziegler, Ziegler & Associales.
Under cerlain circunslances, including renoval ol lhe Deposilary or
lerninalion ol lhe ADF progranne by lhe conpany, lhe conpany is
required lo repay lhe Deposilary anounls reinbursed and/or expenses
paid lo or on behall ol lhe conpany during lhe 12nonlh period prior lo
nolice ol renoval or lerninalion.
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133 BP Annual Feporl and Forn 20F 2010
Addilional inlornalion lor shareholders
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Calledup share capilal
Delails ol lhe allolled, calledup and lullypaid share capilal al 31 Decenber
2010 are sel oul in Financial slalenenls - ole 39 on page 209.
Al lhe AC on 15 April 2010, aulhorizalion was given lo lhe
direclors lo allol shares up lo an aggregale noninal anounl equal lo
$3,143 nillion. Aulhorily was also given lo lhe direclors lo allol shares lor
cash and lo dispose ol lreasury shares, olher lhan by way ol righls issue,
up lo a naxinun ol $236 nillion, wilhoul having lo oller such shares lo
exisling shareholders. These aulhorilies are given lor lhe period unlil lhe
nexl AC in 2011 or 15 July 2011, whichever is lhe earlier. These
aulhorilies are renewed annually al lhe AC.
Adninislralion
l you have any queries aboul lhe adninislralion ol shareholdings, such as
change ol address, change ol ownership, dividend paynenls, lhe scrip
dividend progranne or lo change lhe way you receive your conpany
docunenls (such as lhe BP Annua| Fepor! and Forn 20-F, BP Sunnar,
Feviev and No!ice o! BP Annua| Cenera| ee!ing please conlacl lhe BP
Fegislrar or ADS Deposilary.
UK - Fegislrars Ollce
The BP Fegislrar, Equinili
Aspecl House, Spencer Foad, Lancing, vesl Sussex B99 6DA
Freephone in UK 0300 701107, lel +44 (0121 415 7005
Texlphone 0371 334 2255, lax +44 (0371 334 2100
Please nole lhal any nunbers quoled wilh lhe prelx 0371 will be
charged al 3p per ninule lron a BT landline. Olher nelwork providers
cosls nay vary.
US - ADS Deposilary
JPorgan Chase Bank, .A.
PO Box 64504, Sl Paul, 551640504
Tolllree in US and Canada +1 377 633 5672, lel +1 651 306 4333
For lhe hearing inpaired +1 651 453 2133
Annual general neeling
The 2011 AC will be held on Thursday, 14 April 2011 al 11.30 a.n.
al ExCeL London, One veslern Caleway, Foyal Vicloria Dock, London
E16 1XL. A separale nolice convening lhe neeling is dislribuled lo
shareholders, which includes an explanalion ol lhe ilens ol business lo
be considered al lhe neeling.
All resolulions ol which nolice has been given will be decided
on a poll.
Ernsl & Young LLP have expressed lheir willingness lo conlinue in
ollce as audilors and a resolulion lor lheir reappoinlnenl is included in
No!ice o! BP Annua| Cenera| ee!ing 20!!.
By order ol lhe board
David J Jackson
Secrelary
2 arch 2011
BP p.l.c.
Fegislered in England and vales o. 102493
BP Annual Feporl and Forn 20F 2010 139
Addilional inlornalion lor shareholders
Exhibils
The lollowing docunenls are lled in lhe Securilies and Exchange
Connission (SEC EDCAF syslen, as parl ol lhis Annual Feporl on
Forn 20F, and can be viewed on lhe SECs websile:
Exhibil 1. enorandun and Arlicles ol Associalion ol BP p.l.c.1
Exhibil 4.1 The BP Execulive Direclors ncenlive Plan1
Exhibil 4.2 Anended Direclors Service Conlracl and Secondnenl
Agreenenl lor F v Dudley1
Exhibil 4.3 Anended Direclors Service Conlracl and Secondnenl
Agreenenl lor B E Crole1
Exhibil 7. Conpulalion ol Falio ol Earnings lo Fixed Charges
(Unaudiled1
Exhibil 3. Subsidiaries (included as ole 46 lo lhe Financial
Slalenenls
Exhibil 10.1 Trusl Agreenenl daled as ol 6 Augusl 2010 anong BP
Exploralion & Produclion nc., John S arlin, Jr and
Kenl D Syverud, as individual lruslees, and Ciligroup
TruslDelaware, .A., as corporale lruslee, as anended
by an Addendun, daled 6 Augusl 20101
Exhibil 10.2 Pledge and Collaleral Agreenenl daled as ol
30 Seplenber 2010 by BP Exploralion & Produclion nc.
in lavor ol John S arlin, Jr and Kenl D Syverud, as
individual lruslees1
Exhibil 11. Code ol Elhics'1
Exhibil 12. Fule 13a - 14(a Cerlilcalions1
Exhibil 13. Fule 13a - 14(b Cerlilcalions#1
Exhibil 99. Deepwaler Horizon Accidenl nvesligalion Feporl''
' ncorporaled by relerence lo lhe conpanys Annual Feporl on Forn 20F lor lhe year ended
31 Decenber 2009.
'' ncorporaled by relerence lo lhe Conpanys Feporl on Forn 6K lled on 24 Seplenber 2010
(File o. 00106262.
# Furnished only.
1 ncluded only in lhe annual reporl lled in lhe Securilies and Exchange Connission EDCAF
syslen.
The lolal anounl ol longlern securilies ol lhe Fegislranl and ils
subsidiaries aulhorized under any one inslrunenl does nol exceed 10'
ol lhe lolal assels ol BP p.l.c. and ils subsidiaries on a consolidaled
basis. The conpany agrees lo lurnish copies ol any or all such
inslrunenls lo lhe SEC on requesl.
140 BP Annual Feporl and Forn 20F 2010
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Financial slalenenls
142 Consolidaled lnancial slalenenls
ol lhe BP group
Slalenenl ol direclors responsibililies in respecl ol lhe
consolidaled lnancial slalenenls 142
ndependenl audilors reporls 143
Croup incone slalenenl 146
Croup slalenenl ol conprehensive incone 147
Croup slalenenl ol changes in equily 147
Croup balance sheel 143
Croup cash How slalenenl 149
150 oles on lnancial slalenenls
1 Signilcanl accounling policies 150
2 Signilcanl evenl - Cull ol exico oil spill 153
3 Acquisilions 162
4 oncurrenl assels held lor sale 163
5 Disposals and inpairnenl 164
6 Evenls aller lhe reporling period 166
7 Segnenlal analysis 167
3 nleresl and olher incone 172
9 Produclion and sinilar laxes 172
10 Deprecialion, deplelion and anorlizalion 172
11 npairnenl review ol goodwill 173
12 Dislribulion and adninislralion expenses 175
13 Currency exchange gains and losses 175
14 Fesearch and developnenl 175
15 Operaling leases 175
16 Exploralion lor and evalualion ol oil and nalural
gas resources 176
17 Audilors renuneralion 176
13 Finance cosls 177
19 Taxalion 177
20 Dividends 179
21 Earnings per ordinary share 130
22 Properly, planl and equipnenl 131
23 Coodwill 132
24 nlangible assels 132
25 nveslnenls in joinlly conlrolled enlilies 133
26 nveslnenls in associales 134
27 Financial inslrunenls and lnancial risk laclors 135
23 Olher inveslnenls 190
29 nvenlories 190
30 Trade and olher receivables 191
31 Cash and cash equivalenls 191
32 Valualion and qualilying accounls 191
33 Trade and olher payables 192
34 Derivalive lnancial inslrunenls 192
35 Finance debl 197
36 Capilal disclosures and analysis ol changes in
nel debl 193
37 Provisions 199
33 Pensions and olher poslrelirenenl benells 202
39 Calledup share capilal 209
40 Capilal and reserves 210
41 Sharebased paynenls 214
42 Enployee cosls and nunbers 216
43 Fenuneralion ol direclors and senior nanagenenl 217
44 Conlingenl liabililies and conlingenl assels 213
45 Capilal connilnenls 219
46 Subsidiaries, joinlly conlrolled enlilies and
associales 220
47 Condensed consolidaling inlornalion on
cerlain US subsidiaries 222
223 Supplenenlary inlornalion
on oil and nalural gas (unaudiled
PC1 Parenl conpany lnancial
slalenenls ol BP p.l.c.
Slalenenl ol direclors responsibililies in respecl
ol lhe parenl conpany lnancial slalenenls PC1
ndependenl audilors reporl lo lhe nenbers ol BP p.l.c. PC2
Conpany balance sheel PC3
Conpany cash How slalenenl PC4
Conpany slalenenl ol lolal recognized gains and losses PC4
oles on lnancial slalenenls PC5
1 Accounling policies PC5
2 Taxalion PC6
3 Fixed assels inveslnenls PC6
4 Deblors PC7
5 Credilors PC7
6 Pensions PC3
7 Calledup share capilal PC11
3 Capilal and reserves PC11
9 Cash How PC12
10 Conlingenl liabililies PC12
11 Sharebased paynenls PC13
12 Audilors renuneralion PC15
13 Direclors renuneralion PC15
14 Posl balance sheel evenls PC16
BP Annual Feporl and Forn 20F 2010 141
Statement of directors responsibilities in respect of the consolidated
nancial statements
The directors are responsible for preparing the Annual Report and the consolidated nancial statements in accordance with applicable United Kingdom law,
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as adopted by the European Union.
The directors are required to prepare nancial statements for each nancial year that present fairly the nancial position of the group and the
nancial performance and cash ows of the group for that period. In preparing those nancial statements, the directors are required to:
Select suitable accounting policies and then apply them consistently.
Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information.
Provide additional disclosure when compliance with the specic requirements of IFRS is insufcient to enable users to understand the impact of
particular transactions, other events and conditions on the groups nancial position and nancial performance.
State that the company has complied with IFRS, subject to any material departures disclosed and explained in the consolidated nancial statements.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the nancial position of the
group and enable them to ensure that the consolidated nancial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors draw attention to Notes 2, 37 and 44 on the nancial statements which describe the uncertainties surrounding the amounts and
timings of liabilities arising from the Gulf of Mexico oil spill.
The groups business activities, performance, position and risks are set out in this report. The nancial position of the group, its cash ows, liquidity
position and borrowing facilities are detailed in the appropriate sections on pages 63 to 67 and elsewhere in the notes on nancial statements. The report
also includes details of the groups risk mitigation and management. Information on the Gulf of Mexico oil spill and BPs response is included on pages 34
to 39 and elsewhere in this report, including Corporate responsibility on pages 68 to 76. The group has considerable nancial resources, and the directors
believe that the group is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that
the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the annual report and accounts.
Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as dened by Section 418(3) of the
Companies Act 2006) of which the groups auditors are unaware, and the directors have taken all the steps they ought to have taken to make themselves
aware of any relevant audit information and to establish that the groups auditors are aware of that information.
The directors conrm that to the best of their knowledge:
The consolidated nancial statements, prepared in accordance with IFRS as issued by the International Accounting Standards Board, IFRS as
adopted by the European Union and in accordance with the provisions of the Companies Act 2006, give a true and fair view of the assets, liabilities,
nancial position and prot or loss of the group; and
The management report, which is incorporated in the directors report, includes a fair review of the development and performance of the business
and the position of the group, together with a description of the principal risks and uncertainties.
Consolidated nancial statements of the BP group
This page does not form part of BPs Annual Report on Form 20-F as led with the SEC.
142 BP Annual Report and Form 20-F 2010
Consolidaled lnancial slalenenls ol lhe BP group
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ndependenl audilors reporl on lhe Annual Feporl and Accounls
lo lhe nenbers ol BP p.l.c.
ve have audiled lhe consolidaled lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 which conprise lhe group incone slalenenl,
lhe group slalenenl ol conprehensive incone, lhe group slalenenl ol changes in equily, lhe group balance sheel, lhe group cash How slalenenl and
lhe relaled noles 1 lo 46. The lnancial reporling lranework lhal has been applied in lheir preparalion is applicable law and nlernalional Financial Feporling
Slandards (FFS as adopled by lhe European Union.
This reporl is nade solely lo lhe conpanys nenbers, as a body, in accordance wilh Chapler 3 ol Parl 16 ol lhe Conpanies Acl 2006. Our audil
work has been underlaken so lhal we nighl slale lo lhe conpanys nenbers lhose nallers we are required lo slale lo lhen in an audilors reporl and
lor no olher purpose. To lhe lullesl exlenl pernilled by law, we do nol accepl or assune responsibilily lo anyone olher lhan lhe conpany and lhe
conpanys nenbers as a body, lor our audil work, lor lhis reporl, or lor lhe opinions we have lorned.
Respective responsibiIities of directors and auditors
As explained nore lully in lhe Slalenenl ol direclors responsibililies in respecl ol lhe consolidaled lnancial slalenenls sel oul on page 142, lhe direclors
are responsible lor lhe preparalion ol lhe consolidaled lnancial slalenenls and lor being salisled lhal lhey give a lrue and lair view. Our responsibilily is
lo audil and express an opinion on lhe consolidaled lnancial slalenenls in accordance wilh applicable law and nlernalional Slandards on Audiling (UK
and reland. Those slandards require us lo conply wilh lhe Audiling Praclices Boards Elhical Slandards lor Audilors.
Scope of the audit of the hnanciaI statements
An audil involves oblaining evidence aboul lhe anounls and disclosures in lhe lnancial slalenenls sullcienl lo give reasonable assurance lhal lhe
lnancial slalenenls are lree lron nalerial nisslalenenl, whelher caused by lraud or error. This includes an assessnenl ol: whelher lhe accounling
policies are appropriale lo lhe groups circunslances and have been consislenlly applied and adequalely disclosed, lhe reasonableness ol signilcanl
accounling eslinales nade by lhe direclors, and lhe overall presenlalion ol lhe lnancial slalenenls.
Opinion on hnanciaI statements
n our opinion lhe consolidaled lnancial slalenenls:
give a lrue and lair view ol lhe slale ol lhe groups allairs as al 31 Decenber 2010 and ol ils loss lor lhe year lhen ended,
have been properly prepared in accordance wilh FFS as adopled by lhe European Union, and
have been prepared in accordance wilh lhe requirenenls ol lhe Conpanies Acl 2006 and Arlicle 4 ol lhe AS Fegulalion.
Separate opinion in reIation to IFRS as issued by the InternationaI Accounting Standards Board
As explained in ole 1 lo lhe consolidaled lnancial slalenenls, lhe group in addilion lo applying FFS as adopled by lhe European Union, has also applied
FFS as issued by lhe nlernalional Accounling Slandards Board (ASB.
n our opinion lhe consolidaled lnancial slalenenls conply wilh FFS as issued by lhe ASB.
Emphasis of matter - signihcant uncertainty over provisions and contingencies reIated to the GuIf of Mexico oiI spiII
n lorning our opinion we have considered lhe adequacy ol lhe disclosures nade in oles 2, 37 and 44 lo lhe lnancial slalenenls concerning lhe
provisions, lulure expendilures lor which reliable eslinales cannol be nade and olher conlingencies relaled lo lhe Cull ol exico oil spill signilcanl
evenl. The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe
ullinale exposure and cosl lo BP will be dependenl on nany laclors. Aclual cosls could ullinalely be signilcanlly higher or lower lhan lhose recorded as
lhe clains and selllenenl process progresses. Our opinion is nol qualiled in respecl ol lhese nallers.
Opinion on other matter prescribed by the Companies Act 2006
n our opinion lhe inlornalion given in lhe Direclors Feporl lor lhe lnancial year lor which lhe consolidaled lnancial slalenenls are prepared is consislenl
wilh lhe consolidaled lnancial slalenenls.
Matters on which we are required to report by exception
ve have nolhing lo reporl in respecl ol lhe lollowing:
Under lhe Conpanies Acl 2006 we are required lo reporl lo you il, in our opinion:
cerlain disclosures ol direclors renuneralion speciled by law are nol nade, or
we have nol received all lhe inlornalion and explanalions we require lor our audil.
Under lhe Lisling Fules we are required lo review:
lhe direclors slalenenl, sel oul on page 142, in relalion lo going concern,
lhe parl ol lhe BP board perlornance reporl relaling lo lhe conpanys conpliance wilh lhe nine provisions ol lhe June 2003 Conbined Code
speciled lor our review, and
cerlain elenenls ol lhe reporl lo shareholders by lhe Board on direclors renuneralion.
Other matter
ve have reporled separalely on lhe parenl conpany lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 and on lhe inlornalion in lhe
Direclors Fenuneralion Feporl lhal is described as having been audiled.
Ernst & Young LLP
Allisler vilson (Senior Slalulory Audilor
lor and on behall ol Ernsl & Young LLP, Slalulory Audilor
London
2 arch 2011
The nainlenance and inlegrily ol lhe BP p.l.c. websile are lhe responsibilily ol lhe direclors, lhe work carried oul by lhe audilors does nol involve consideralion ol lhese nallers and, accordingly, lhe
audilors accepl no responsibilily lor any changes lhal nay have occurred lo lhe lnancial slalenenls since lhey were inilially presenled on lhe websile.
Legislalion in lhe Uniled Kingdon governing lhe preparalion and disseninalion ol lnancial slalenenls nay diller lron legislalion in olher jurisdiclions.
This page does nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 143
Consolidaled lnancial slalenenls ol lhe BP group
Feporl ol ndependenl Fegislered Public Accounling Firn on lhe
Annual Feporl on Forn 20F
The Board of Directors and SharehoIders of BP p.I.c.
ve have audiled lhe acconpanying group balance sheels ol BP p.l.c. as ol 31 Decenber 2010 and 2009, and lhe relaled group incone slalenenl, group
cash How slalenenl, group slalenenl ol conprehensive incone and group slalenenl ol changes in equily, lor each ol lhe lhree years in lhe period
ended 31 Decenber 2010. These lnancial slalenenls are lhe responsibilily ol lhe conpanys nanagenenl. Our responsibilily is lo express an opinion on
lhese lnancial slalenenls based on our audils.
ve conducled our audils in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales. Those slandards
require lhal we plan and perlorn lhe audil lo oblain reasonable assurance aboul whelher lhe lnancial slalenenls are lree ol nalerial nisslalenenl. An
audil includes exanining, on a lesl basis, evidence supporling lhe anounls and disclosures in lhe lnancial slalenenls. An audil also includes assessing
lhe accounling principles used and signilcanl eslinales nade by nanagenenl, as well as evalualing lhe overall lnancial slalenenl presenlalion. ve
believe lhal our audils provide a reasonable basis lor our opinion.
n our opinion, lhe lnancial slalenenls relerred lo above presenl lairly, in all nalerial respecls, lhe group lnancial posilion ol BP p.l.c. al 31 Decenber
2010 and 2009, and lhe group resulls ol operalions and cash Hows lor each ol lhe lhree years in lhe period ended 31 Decenber 2010, in accordance wilh
nlernalional Financial Feporling Slandards as adopled by lhe European Union and nlernalional Financial Feporling Slandards as issued by lhe nlernalional
Accounling Slandards Board.
n lorning our opinion we have considered lhe adequacy ol lhe disclosures nade in oles 2, 37 and 44 lo lhe lnancial slalenenls concerning lhe
provisions, lulure expendilures lor which reliable eslinales cannol be nade and olher conlingencies relaled lo lhe Cull ol exico oil spill signilcanl evenl.
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe ullinale
exposure and cosl lo BP will be dependenl on nany laclors. Aclual cosls could ullinalely be signilcanlly higher or lower lhan lhose recorded as lhe clains
and selllenenl process progresses. Our opinion is nol qualiled in respecl ol lhese nallers.
ve also have audiled, in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales, BP p.l.c.s inlernal
conlrol over lnancial reporling as ol 31 Decenber 2010, based on crileria eslablished in lhe nlernal Conlrol: Fevised Cuidance lor Direclors on lhe
Conbined Code (Turnbull as issued by lhe nslilule ol Charlered Accounlanls in England and vales (lhe Turnbull crileria and our reporl daled 2 arch
2011 expressed an unqualiled opinion lhereon.
/s/ERNST & YOUNG LLP
Ernsl & Young LLP
London, England
2 arch 2011
The nainlenance and inlegrily ol lhe BP p.l.c. websile are lhe responsibilily ol lhe direclors, lhe work carried oul by lhe audilors does nol involve consideralion ol lhese nallers and, accordingly, lhe
audilors accepl no responsibilily lor any changes lhal nay have occurred lo lhe lnancial slalenenls since lhey were inilially presenled on lhe websile.
Legislalion in lhe Uniled Kingdon governing lhe preparalion and disseninalion ol lnancial slalenenls nay diller lron legislalion in olher jurisdiclions.
144 BP Annual Feporl and Forn 20F 2010
Consolidaled lnancial slalenenls ol lhe BP group
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Feporl ol ndependenl Fegislered Public Accounling Firn on lhe
Annual Feporl on Forn 20F
The Board of Directors and SharehoIders of BP p.I.c.
ve have audiled BP p.l.c.s inlernal conlrol over lnancial reporling as ol 31 Decenber 2010, based on crileria eslablished in nlernal Conlrol: Fevised
Cuidance lor Direclors on lhe Conbined Code (Turnbull as issued by lhe nslilule ol Charlered Accounlanls in England and vales (lhe Turnbull crileria.
BP p.l.c.s nanagenenl is responsible lor nainlaining elleclive inlernal conlrol over lnancial reporling, and lor ils assessnenl ol lhe ellecliveness ol
inlernal conlrol over lnancial reporling included in lhe acconpanying anagenenls reporl on inlernal conlrol over lnancial reporling on page 106. Our
responsibilily is lo express an opinion on lhe conpanys inlernal conlrol over lnancial reporling based on our audil.
ve conducled our audil in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales. Those slandards
require lhal we plan and perlorn lhe audil lo oblain reasonable assurance aboul whelher elleclive inlernal conlrol over lnancial reporling was nainlained
in all nalerial respecls. Our audil included oblaining an underslanding ol inlernal conlrol over lnancial reporling, assessing lhe risk lhal a nalerial
weakness exisls, lesling and evalualing lhe design and operaling ellecliveness ol inlernal conlrol based on lhe assessed risk, and perlorning such olher
procedures as we considered necessary in lhe circunslances. ve believe lhal our audil provides a reasonable basis lor our opinion.
A conpanys inlernal conlrol over lnancial reporling is a process designed lo provide reasonable assurance regarding lhe reliabilily ol lnancial reporling
and lhe preparalion ol lnancial slalenenls lor exlernal purposes in accordance wilh generally accepled accounling principles. A conpanys inlernal conlrol
over lnancial reporling includes lhose policies and procedures lhal (1 perlain lo lhe nainlenance ol records lhal, in reasonable delail, accuralely and lairly
reHecl lhe lransaclions and disposilions ol lhe assels ol lhe conpany, (2 provide reasonable assurance lhal lransaclions are recorded as necessary lo pernil
preparalion ol lnancial slalenenls in accordance wilh generally accepled accounling principles, and lhal receipls and expendilures ol lhe conpany are being
nade only in accordance wilh aulhorizalions ol nanagenenl and direclors ol lhe conpany, and (3 provide reasonable assurance regarding prevenlion or
linely deleclion ol unaulhorized acquisilion, use, or disposilion ol lhe conpanys assels lhal could have a nalerial ellecl on lhe lnancial slalenenls.
Because ol ils inherenl linilalions, inlernal conlrol over lnancial reporling nay nol prevenl or delecl nisslalenenls. Also, projeclions ol any
evalualion ol ellecliveness lo lulure periods are subjecl lo lhe risk lhal conlrols nay becone inadequale because ol changes in condilions, or lhal lhe
degree ol conpliance wilh lhe policies or procedures nay deleriorale.
n our opinion, BP p.l.c. nainlained, in all nalerial respecls, elleclive inlernal conlrol over lnancial reporling as ol 31 Decenber 2010, based on lhe
Turnbull crileria.
ve also have audiled, in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales, lhe group balance
sheels ol BP p.l.c. as ol 31 Decenber 2010 and 2009, and lhe relaled group incone slalenenl, group cash How slalenenl, group slalenenl ol
conprehensive incone and group slalenenl ol changes in equily, lor each ol lhe lhree years in lhe period ended 31 Decenber 2010, and our reporl
daled 2 arch 2011 expressed an unqualiled opinion lhereon.
/s/ERNST & YOUNG LLP
Ernsl & Young LLP
London, England
2 arch 2011
Consenl ol independenl regislered public accounling lrn
ve consenl lo lhe incorporalion by relerence ol our reporls daled 2 arch 2011 wilh respecl lo lhe group lnancial slalenenls ol BP p.l.c., and lhe
ellecliveness ol inlernal conlrol over lnancial reporling ol BP p.l.c., included in lhis Annual Feporl (Forn 20F lor lhe year ended 31 Decenber 2010 in
lhe lollowing regislralion slalenenls:
Fegislralion Slalenenl on Forn F3 (File o. 333157906 ol BP Capilal arkels p.l.c. and BP p.l.c., and
Fegislralion Slalenenls on Forn S3 (File os. 333149773, 333119934, 333103923, 33379399, 33367206, 333102533, 333103924,
333123432, 333123433, 333131533, 333146363, 333146370, 333146373, 333131534 and 333132619 ol BP p.l.c.
/s/ERNST & YOUNG LLP
Ernsl & Young LLP
London, England
2 arch 2011
The nainlenance and inlegrily ol lhe BP p.l.c. websile are lhe responsibilily ol lhe direclors, lhe work carried oul by lhe audilors does nol involve consideralion ol lhese nallers and, accordingly, lhe
audilors accepl no responsibilily lor any changes lhal nay have occurred lo lhe lnancial slalenenls since lhey were inilially presenled on lhe websile.
Legislalion in lhe Uniled Kingdon governing lhe preparalion and disseninalion ol lnancial slalenenls nay diller lron legislalion in olher jurisdiclions.
BP Annual Feporl and Forn 20F 2010 145
Consolidaled lnancial slalenenls ol lhe BP group
www.bp.con/downloads/inconeslalenenl
Croup incone slalenenl
For lhe year ended 31 Decenber $ nillion
ole 2010 2009 2003
Sales and olher operaling revenues 7 297,107 239,272 361,143
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax 1,175 1,236 3,023
Earnings lron associales - aller inleresl and lax 3,582 2,615 793
nleresl and olher incone 3 681 792 736
Cains on sale ol businesses and lxed assels 5 6,383 2,173 1,353
Tolal revenues and olher incone 308,928 246,133 367,053
Purchases 216,211 163,772 266,932
Produclion and nanulacluring expenses
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64,615 23,202 26,756
Produclion and sinilar laxes 9 5,244 3,752 3,953
Deprecialion, deplelion and anorlizalion 10 11,164 12,106 10,935
npairnenl and losses on sale ol businesses and lxed assels 5 1,689 2,333 1,733
Exploralion expense 16 843 1,116 332
Dislribulion and adninislralion expenses 12 12,555 14,033 15,412
Fair value (gain loss on enbedded derivalives 34 309 (607 111
Proll (loss belore inleresl and laxalion (3,702) 26,426 35,239
Finance cosls
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13 1,170 1,110 1,547
el lnance expense (incone relaling lo pensions and olher poslrelirenenl benells 33 (47) 192 (591
Proll (loss belore laxalion (4,825) 25,124 34,233
Taxalion
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19 (1,501) 3,365 12,617
Proll (loss lor lhe year (3,324) 16,759 21,666
Allribulable lo
BP shareholders (3,719) 16,573 21,157
inorily inleresl 395 131 509
(3,324) 16,759 21,666
Earnings per share - cenls
Proll (loss lor lhe year allribulable lo BP shareholders
Basic 21 (19.81) 33.49 112.59
Diluled 21 (19.81) 37.54 111.56
See ole 2 lor inlornalion on lhe inpacl ol lhe Cull ol exico oil spill on lhe incone slalenenl line ilens.
a
146 BP Annual Feporl and Forn 20F 2010
Consolidaled lnancial slalenenls ol lhe BP group
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Croup slalenenl ol conprehensive incone
For lhe year ended 31 Decenber $ nillion
ole 2010 2009 2003
Proll (loss lor lhe year (3,324) 16,759 21,666
Currency lranslalion dillerences 259 1,326 (4,362
Exchange gains on lranslalion ol loreign operalions lranslerred lo gain or loss on sale ol
businesses and lxed assels (20) (27 -
Acluarial loss relaling lo pensions and olher poslrelirenenl benells 33 (320) (632 (3,430
Availablelorsale inveslnenls narked lo narkel (191) 705 (994
Availablelorsale inveslnenls - recycled lo lhe incone slalenenl (150) 2 526
Cash How hedges narked lo narkel (65) 652 (1,173
Cash How hedges - recycled lo lhe incone slalenenl (25) 366 45
Cash How hedges - recycled lo lhe balance sheel 53 136 (33
Taxalion 19 (137) 525 2,946
Olher conprehensive incone (596) 3,503 (11,430
Tolal conprehensive incone (3,920) 20,262 10,136
Allribulable lo
BP shareholders (4,318) 20,137 9,752
inorily inleresl 398 125 434
(3,920) 20,262 10,136
Croup slalenenl ol changes in equily
$ nillion
2010 2009 2003
BP BP BP
sharehoIders' Minority TotaI shareholders inorily Tolal shareholders inorily Tolal
equity interest equity equily inleresl equily equily inleresl equily
Al 1 January 101,613 500 102,113 91,303 306 92,109 93,690 962 94,652
Tolal conprehensive incone (4,318) 398 (3,920) 20,137 125 20,262 9,752 434 10,136
Dividends (2,627) (315) (2,942) (10,433 (416 (10,399 (10,342 (425 (10,767
Fepurchase ol ordinary
share capilal - - - - - - (2,414 - (2,414
Sharebased paynenls
(nel ol lax 339 - 339 721 - 721 617 - 617
Changes in associales equily - - - (43 - (43 - - -
Transaclions involving
ninorily inleresls (20) 321 301 (22 (15 (37 - (165 (165
Al 31 Decenber 94,987 904 95,891 101,613 500 102,113 91,303 306 92,109
BP Annual Feporl and Forn 20F 2010 147
Consolidaled lnancial slalenenls ol lhe BP group
www.bp.con/downloads/balancesheel
Croup balance sheel
Al 31 Decenber $ nillion
ole 2010 2009
oncurrenl assels
Properly, planl and equipnenl 22 110,163 103,275
Coodwill 23 8,598 3,620
nlangible assels 24 14,298 11,543
nveslnenls in joinlly conlrolled enlilies 25 12,286 15,296
nveslnenls in associales 26 13,335 12,963
Olher inveslnenls 23 1,191 1,567
Fixed assels 159,871 153,269
Loans 894 1,039
Olher receivables 30 6,298 1,729
Derivalive lnancial inslrunenls 34 4,210 3,965
Prepaynenls 1,432 1,407
Delerred lax assels 19 528 516
Delned benell pension plan surpluses 33 2,176 1,390
175,409 163,315
Currenl assels
Loans 247 249
nvenlories 29 26,218 22,605
Trade and olher receivables 30 36,549 29,531
Derivalive lnancial inslrunenls 34 4,356 4,967
Prepaynenls 1,574 1,753
Currenl lax receivable 693 209
Olher inveslnenls 23 1,532
Cash and cash equivalenls 31 18,556 3,339
89,725 67,653
Assels classiled as held lor sale 4 7,128 -
96,853 67,653
Tolal assels 272,262 235,963
Currenl liabililies
Trade and olher payables 33 46,329 35,204
Derivalive lnancial inslrunenls 34 3,856 4,631
Accruals 5,612 6,202
Finance debl 35 14,626 9,109
Currenl lax payable 2,920 2,464
Provisions 37 9,489 1,660
82,832 59,320
Liabililies direclly associaled wilh assels classiled as held lor sale 4 1,047
83,879 59,320
oncurrenl liabililies
Olher payables 33 14,285 3,193
Derivalive lnancial inslrunenls 34 3,677 3,474
Accruals 637 703
Finance debl 35 30,710 25,513
Delerred lax liabililies 19 10,908 13,662
Provisions 37 22,418 12,970
Delned benell pension plan and olher poslrelirenenl benell plan delcils 33 9,857 10,010
92,492 74,535
Tolal liabililies 176,371 133,355
el assels 95,891 102,113
Equily
Share capilal 39 5,183 5,179
Feserves 89,804 96,434
BP shareholders equily 40 94,987 101,613
inorily inleresl 40 904 500
Tolal equily 40 95,891 102,113
CH Svanberg Chairnan
F v Dudley Croup Chiel Execulive
2 arch 2011
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143 BP Annual Feporl and Forn 20F 2010
Consolidaled lnancial slalenenls ol lhe BP group
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Croup cash How slalenenl
For lhe year ended 31 Decenber $ nillion
ole 2010 2009 2003
Operaling aclivilies
Proll (loss belore laxalion (4,825) 25,124 34,233
Adjuslnenls lo reconcile proll (loss belore laxalion lo nel cash provided by
operaling aclivilies
Exploralion expendilure wrillen oll 16 375 593 335
Deprecialion, deplelion and anorlizalion 10 11,164 12,106 10,935
npairnenl and (gain loss on sale ol businesses and lxed assels 5 (4,694) 160 330
Earnings lron joinlly conlrolled enlilies and associales (4,757) (3,901 (3,321
Dividends received lron joinlly conlrolled enlilies and associales 3,277 3,003 3,723
nleresl receivable (277) (253 (407
nleresl received 205 203 335
Finance cosls 13 1,170 1,110 1,547
nleresl paid (912) (909 (1,291
el lnance expense (incone relaling lo pensions and olher poslrelirenenl benells 33 (47) 192 (591
Sharebased paynenls 197 450 459
el operaling charge lor pensions and olher poslrelirenenl benells, less conlribulions
and benell paynenls lor unlunded plans (959) (337 (173
el charge lor provisions, less paynenls 19,217 650 (293
(ncrease decrease in invenlories (3,895) (5,363 9,010
(ncrease decrease in olher currenl and noncurrenl assels (15,620) 7,595 2,439
ncrease (decrease in olher currenl and noncurrenl liabililies 20,607 (5,323 (6,101
ncone laxes paid (6,610) (6,324 (12,324
el cash provided by operaling aclivilies 13,616 27,716 33,095
nvesling aclivilies
Capilal expendilure (18,421) (20,650 (22,653
Acquisilions, nel ol cash acquired (2,468) 1 (395
nveslnenl in joinlly conlrolled enlilies (461) (573 (1,009
nveslnenl in associales (65) (164 (31
Proceeds lron disposals ol lxed assels 5 7,492 1,715 913
Proceeds lron disposals ol businesses, nel ol cash disposed 5 9,462 966 11
Proceeds lron loan repaynenls 501 530 647
Olher - 47 (200
el cash used in invesling aclivilies (3,960) (13,133 (22,767
Financing aclivilies
el issue (repurchase ol shares 169 207 (2,567
Proceeds lron longlern lnancing 11,934 11,567 7,961
Fepaynenls ol longlern lnancing (4,702) (6,021 (3,321
el decrease in shorllern debl (3,619) (4,405 (1,315
Dividends paid
BP shareholders (2,627) (10,433 (10,342
inorily inleresl (315) (416 (425
el cash provided by (used in lnancing aclivilies 840 (9,551 (10,509
Currency lranslalion dillerences relaling lo cash and cash equivalenls (279) 110 (134
ncrease in cash and cash equivalenls 10,217 142 4,635
Cash and cash equivalenls al beginning ol year 8,339 3,197 3,562
Cash and cash equivalenls al end ol year 18,556 3,339 3,197
BP Annual Feporl and Forn 20F 2010 149
Notes on nancial statements
1. Signicant accounting policies
Authorization of nancial statements and statement of compliance
with International Financial Reporting Standards
The consolidated nancial statements of the BP group for the year ended
31 December 2010 were approved and signed by the chairman and group
chief executive on 2 March 2011 having been duly authorized to do so by
the board of directors. BP p.l.c. is a public limited company incorporated
and domiciled in England and Wales. The consolidated nancial statements
have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB), IFRS as adopted by the European Union (EU) and in accordance
with the provisions of the Companies Act 2006. IFRS as adopted by the EU
differs in certain respects from IFRS as issued by the IASB, however, the
differences have no impact on the groups consolidated nancial
statements for the years presented. The signicant accounting policies of
the group are set out below.
Basis of preparation
The consolidated nancial statements have been prepared in accordance
with IFRS and IFRS Interpretations Committee (IFRIC) interpretations
issued and effective for the year ended 31 December 2010, or issued and
early adopted. The standards and interpretations adopted in the year are
described further on page 157.
The accounting policies that follow have been consistently applied
to all years presented. The group balance sheet as at 1 January 2009 is not
presented as it is not affected by the retrospective adoption of any new
accounting policies during the year, nor any other retrospective
restatements or reclassications.
The consolidated nancial statements are presented in US dollars
and all values are rounded to the nearest million dollars ($ million), except
where otherwise indicated.
For further information regarding the key judgements and estimates
made by management in applying the groups accounting policies, refer to
Critical accounting policies on pages 124 to 127, which forms part of these
nancial statements.
Basis of consolidation
The group nancial statements consolidate the nancial statements of
BP p.l.c. and the entities it controls (its subsidiaries) drawn up to
31 December each year. Control comprises the power to govern the
nancial and operating policies of the investee so as to obtain benet from
its activities and is achieved through direct and indirect ownership of voting
rights; currently exercisable or convertible potential voting rights; or by way
of contractual agreement. Subsidiaries are consolidated from the date of
their acquisition, being the date on which the group obtains control, and
continue to be consolidated until the date that such control ceases. The
nancial statements of subsidiaries are prepared for the same reporting
year as the parent company, using consistent accounting policies.
Intercompany balances and transactions, including unrealized prots arising
from intragroup transactions, have been eliminated. Unrealized losses are
eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Minority interests represent the equity in subsidiaries
that is not attributable, directly or indirectly, to the group.
Segmental reporting
The groups operating segments are established on the basis of those
components of the group that are evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. During the second quarter of 2010 a separate organization
was created within the group to deal with the ongoing response to the Gulf
of Mexico oil spill. This organization reports directly to the group chief
executive ofcer and its costs are excluded from the results of the existing
operating segments. Under IFRS its costs are therefore presented as a
reconciling item between the sum of the results of the reportable
segments and the group results.
The accounting policies of the operating segments are the same as the
groups accounting policies described in this note, except that IFRS requires
that the measure of prot or loss disclosed for each operating segment is
the measure that is provided regularly to the chief operating decision
maker. For BP, this measure of prot or loss is replacement cost prot
before interest and tax which reects the replacement cost of supplies by
excluding from prot inventory holding gains and losses. Replacement cost
prot for the group is not a recognized measure under generally accepted
accounting practice (GAAP). For further information see Note 7.
Interests in joint ventures
A joint venture is a contractual arrangement whereby two or more parties
(venturers) undertake an economic activity that is subject to joint control.
Joint control exists only when the strategic nancial and operating
decisions relating to the activity require the unanimous consent of the
venturers. A jointly controlled entity is a joint venture that involves the
establishment of a company, partnership or other entity to engage in
economic activity that the group jointly controls with its fellow venturers.
The results, assets and liabilities of a jointly controlled entity are
incorporated in these nancial statements using the equity method of
accounting. Under the equity method, the investment in a jointly controlled
entity is carried in the balance sheet at cost, plus post-acquisition changes
in the groups share of net assets of the jointly controlled entity, less
distributions received and less any impairment in value of the investment.
Loans advanced to jointly controlled entities that have the characteristics of
equity nancing are also included in the investment on the group balance
sheet. The group income statement reects the groups share of the
results after tax of the jointly controlled entity.
Financial statements of jointly controlled entities are prepared for
the same reporting year as the group. Where necessary, adjustments are
made to those nancial statements to bring the accounting policies used
into line with those of the group.
Unrealized gains on transactions between the group and its jointly
controlled entities are eliminated to the extent of the groups interest in the
jointly controlled entities. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
The group assesses investments in jointly controlled entities for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. If any such indication of impairment
exists, the carrying amount of the investment is compared with its
recoverable amount, being the higher of its fair value less costs to sell and
value in use. Where the carrying amount exceeds the recoverable amount,
the investment is written down to its recoverable amount.
The group ceases to use the equity method of accounting on the
date from which it no longer has joint control or signicant inuence over
the joint venture or associate respectively, or when the interest becomes
held for sale.
Certain of the groups activities, particularly in the Exploration and
Production segment, are conducted through joint ventures where the
venturers have a direct ownership interest in, and jointly control, the assets
of the venture. BP recognizes, on a line-by-line basis in the consolidated
nancial statements, its share of the assets, liabilities and expenses of
these jointly controlled assets incurred jointly with the other partners, along
with the groups income from the sale of its share of the output and any
liabilities and expenses that the group has incurred in relation to the venture.
Interests in associates
An associate is an entity over which the group is in a position to exercise
signicant inuence through participation in the nancial and operating
policy decisions of the investee, but which is not a subsidiary or a jointly
controlled entity. The results, assets and liabilities of an associate are
incorporated in these nancial statements using the equity method of
accounting as described above for jointly controlled entities.
150 BP Annual Report and Form 20-F 2010
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Foreign currency transIation
Funclional currency is lhe currency ol lhe prinary econonic environnenl in
which an enlily operales and is nornally lhe currency in which lhe enlily
prinarily generales and expends cash.
n individual conpanies, lransaclions in loreign currencies are
inilially recorded in lhe lunclional currency by applying lhe rale ol exchange
ruling al lhe dale ol lhe lransaclion. onelary assels and liabililies
denoninaled in loreign currencies are relranslaled inlo lhe lunclional
currency al lhe rale ol exchange ruling al lhe balance sheel dale. Any
resulling exchange dillerences are included in lhe incone slalenenl.
onnonelary assels and liabililies, olher lhan lhose neasured al lair
value, are nol relranslaled subsequenl lo inilial recognilion.
n lhe consolidaled lnancial slalenenls, lhe assels and liabililies ol
nonUS dollar lunclional currency subsidiaries, joinlly conlrolled enlilies and
associales, including relaled goodwill, are lranslaled inlo US dollars al lhe
rale ol exchange ruling al lhe balance sheel dale. The resulls and cash
Hows ol nonUS dollar lunclional currency subsidiaries, joinlly conlrolled
enlilies and associales are lranslaled inlo US dollars using average rales ol
exchange. Exchange adjuslnenls arising when lhe opening nel assels and
lhe prolls lor lhe year relained by nonUS dollar lunclional currency
subsidiaries, joinlly conlrolled enlilies and associales are lranslaled inlo US
dollars are laken lo a separale conponenl ol equily and reporled in lhe
slalenenl ol conprehensive incone. Exchange gains and losses arising on
longlern inlragroup loreign currency borrowings used lo lnance lhe
groups nonUS dollar inveslnenls are also laken lo equily. On disposal ol a
nonUS dollar lunclional currency subsidiary, joinlly conlrolled enlily or
associale, lhe delerred cunulalive anounl ol exchange gains and losses
recognized in equily relaling lo lhal parlicular nonUS dollar operalion is
reclassiled lo lhe incone slalenenl.
Business combinations and goodwiII
Business conbinalions are accounled lor using lhe acquisilion nelhod.
The idenlilable assels acquired and liabililies assuned are neasured al
lheir lair values al lhe acquisilion dale. The cosl ol an acquisilion is
neasured as lhe aggregale ol lhe consideralion lranslerred, neasured al
acquisiliondale lair value, and lhe anounl ol any ninorily inleresl in lhe
acquiree. inorily inleresls are slaled eilher al lair value or al lhe
proporlionale share ol lhe recognized anounls ol lhe acquirees idenlilable
nel assels. Acquisilion cosls incurred are expensed and included in
dislribulion and adninislralion expenses.
Coodwill is neasured as being lhe excess ol lhe aggregale ol lhe
consideralion lranslerred, lhe anounl recognized lor any ninorily inleresl
and lhe acquisiliondale lair values ol any previously held inleresl in lhe
acquiree over lhe lair value ol lhe idenlilable assels acquired and liabililies
assuned al lhe acquisilion dale.
Al lhe acquisilion dale, any goodwill acquired is allocaled lo each ol
lhe cashgeneraling unils expecled lo benell lron lhe conbinalions
synergies. For lhis purpose, cashgeneraling unils are sel al one level
below a business segnenl.
Following inilial recognilion, goodwill is neasured al cosl less any
accunulaled inpairnenl losses. Coodwill is reviewed lor inpairnenl annually
or nore lrequenlly il evenls or changes in circunslances indicale lhal lhe
carrying value nay be inpaired. npairnenl is delernined by assessing lhe
recoverable anounl ol lhe cashgeneraling unil lo which lhe goodwill relales.
vhere lhe recoverable anounl ol lhe cashgeneraling unil is less lhan lhe
carrying anounl, an inpairnenl loss is recognized. An inpairnenl loss
recognized lor goodwill is nol reversed in a subsequenl period.
Coodwill arising on business conbinalions prior lo 1 January 2003
is slaled al lhe previous carrying anounl, less subsequenl inpairnenls,
under UK generally accepled accounling praclice.
Coodwill nay also arise upon inveslnenls in joinlly conlrolled
enlilies and associales, being lhe surplus ol lhe cosl ol inveslnenl over
lhe groups share ol lhe nel lair value ol lhe idenlilable assels. Such
goodwill is recorded wilhin inveslnenls in joinlly conlrolled enlilies and
associales, and any inpairnenl ol lhe inveslnenl is included wilhin lhe
earnings lron joinlly conlrolled enlilies and associales.
Business conbinalions underlaken prior lo 2010 were accounled lor using
lhe acquisilion nelhod ol accounling bul lhere were sone dillerences in lhe
accounling lrealnenl conpared lo whal is required lor 2010. See npac! o!
nev n!erna!iona| Financia| Fepor!ing S!andards on page 157 lor lurlher
inlornalion. There were no nalerial business conbinalions underlaken prior
lo 2010 in lhe periods covered by lhese lnancial slalenenls.
Non-current assets heId for saIe
oncurrenl assels and disposal groups classiled as held lor sale are
neasured al lhe lower ol carrying anounl and lair value less cosls lo sell.
oncurrenl assels and disposal groups are classiled as held lor sale
il lheir carrying anounls will be recovered lhrough a sale lransaclion ralher
lhan lhrough conlinuing use. This condilion is regarded as nel only when
lhe sale is highly probable and lhe assel or disposal group is available lor
innediale sale in ils presenl condilion subjecl only lo lerns lhal are usual
and cuslonary lor sales ol such assels. anagenenl nusl be connilled
lo lhe sale, which should be expecled lo qualily lor recognilion as a conpleled
sale wilhin one year lron lhe dale ol classilcalion as held lor sale.
Properly, planl and equipnenl and inlangible assels once classiled
as held lor sale are nol deprecialed. The group ceases lo use lhe equily
nelhod ol accounling on lhe dale lron which an inleresl in a joinlly
conlrolled enlily or an inleresl in an associale becones held lor sale.
IntangibIe assets
nlangible assels, olher lhan goodwill, include expendilure on lhe
exploralion lor and evalualion ol oil and nalural gas resources, conpuler
sollware, palenls, licences and lradenarks and are slaled al lhe anounl
inilially recognized, less accunulaled anorlizalion and accunulaled
inpairnenl losses. For inlornalion on expendilure on lhe exploralion lor
and evalualion ol oil and gas resources, see lhe accounling policy lor oil
and nalural gas exploralion, appraisal and developnenl expendilure below.
nlangible assels acquired separalely lron a business are carried
inilially al cosl. The inilial cosl is lhe aggregale anounl paid and lhe lair
value ol any olher consideralion given lo acquire lhe assel. An inlangible
assel acquired as parl ol a business conbinalion is neasured al lair value
al lhe dale ol acquisilion and is recognized separalely lron goodwill il lhe
assel is separable or arises lron conlraclual or olher legal righls.
nlangible assels wilh a lnile lile are anorlized on a slraighlline
basis over lheir expecled uselul lives. For palenls, licences and lradenarks,
expecled uselul lile is lhe shorler ol lhe duralion ol lhe legal agreenenl
and econonic uselul lile, and can range lron lhree lo 15 years. Conpuler
sollware cosls generally have a uselul lile ol lhree lo lve years.
The expecled uselul lives ol assels are reviewed on an annual basis
and, il necessary, changes in uselul lives are accounled lor prospeclively.
The carrying value ol inlangible assels is reviewed lor inpairnenl
whenever evenls or changes in circunslances indicale lhe carrying value
nay nol be recoverable.
OiI and naturaI gas expIoration, appraisaI and deveIopment
expenditure
Oil and nalural gas exploralion, appraisal and developnenl expendilure
is accounled lor using lhe principles ol lhe successlul ellorls nelhod
ol accounling.
Licence and proper!, acquisi!ion cos!s
Exploralion licence and leasehold properly acquisilion cosls are capilalized
wilhin inlangible assels and are reviewed al each reporling dale lo conlrn
lhal lhere is no indicalion lhal lhe carrying anounl exceeds lhe recoverable
anounl. This review includes conlrning lhal exploralion drilling is slill
under way or lrnly planned or lhal il has been delernined, or work is
under way lo delernine, lhal lhe discovery is econonically viable based on
a range ol lechnical and connercial consideralions and sullcienl progress
is being nade on eslablishing developnenl plans and lining. l no lulure
aclivily is planned, lhe renaining balance ol lhe licence and properly
acquisilion cosls is wrillen oll. Lower value licences are pooled and
anorlized on a slraighlline basis over lhe eslinaled period ol exploralion.
Upon recognilion ol proved reserves and inlernal approval lor developnenl,
lhe relevanl expendilure is lranslerred lo properly, planl and equipnenl.
BP Annual Feporl and Forn 20F 2010 151
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1. Signilcanl accounling policies conlinued
xp|ora!ion and appraisa| expendi!ure
Ceological and geophysical exploralion cosls are charged againsl incone as
incurred. Cosls direclly associaled wilh an exploralion well are inilially
capilalized as an inlangible assel unlil lhe drilling ol lhe well is conplele
and lhe resulls have been evalualed. These cosls include enployee
renuneralion, nalerials and luel used, rig cosls and paynenls nade lo
conlraclors. l polenlially connercial quanlilies ol hydrocarbons are nol
lound, lhe exploralion well is wrillen oll as a dry hole. l hydrocarbons are
lound and, subjecl lo lurlher appraisal aclivily, are likely lo be capable ol
connercial developnenl, lhe cosls conlinue lo be carried as an assel.
Cosls direclly associaled wilh appraisal aclivily, underlaken lo
delernine lhe size, characlerislics and connercial polenlial ol a reservoir
lollowing lhe inilial discovery ol hydrocarbons, including lhe cosls ol
appraisal wells where hydrocarbons were nol lound, are inilially capilalized
as an inlangible assel.
All such carried cosls are subjecl lo lechnical, connercial and
nanagenenl review al leasl once a year lo conlrn lhe conlinued inlenl lo
develop or olherwise exlracl value lron lhe discovery. vhen lhis is no
longer lhe case, lhe cosls are wrillen oll. vhen proved reserves ol oil and
nalural gas are delernined and developnenl is approved by nanagenenl,
lhe relevanl expendilure is lranslerred lo properly, planl and equipnenl.
Deve|opnen! expendi!ure
Expendilure on lhe conslruclion, inslallalion and conplelion ol
inlraslruclure lacililies such as plallorns, pipelines and lhe drilling ol
developnenl wells, including service and unsuccesslul developnenl or
delinealion wells, is capilalized wilhin properly, planl and equipnenl and is
deprecialed lron lhe connencenenl ol produclion as described below in
lhe accounling policy lor properly, planl and equipnenl.
Property, pIant and equipment
Properly, planl and equipnenl is slaled al cosl, less accunulaled
deprecialion and accunulaled inpairnenl losses.
The inilial cosl ol an assel conprises ils purchase price or
conslruclion cosl, any cosls direclly allribulable lo bringing lhe assel inlo
operalion, lhe inilial eslinale ol any deconnissioning obligalion, il any,
and, lor qualilying assels, borrowing cosls. The purchase price or
conslruclion cosl is lhe aggregale anounl paid and lhe lair value ol any
olher consideralion given lo acquire lhe assel. The capilalized value ol a
lnance lease is also included wilhin properly, planl and equipnenl.
Exchanges ol assels are neasured al lair value unless lhe exchange
lransaclion lacks connercial subslance or lhe lair value ol neilher lhe
assel received nor lhe assel given up is reliably neasurable. The cosl ol lhe
acquired assel is neasured al lhe lair value ol lhe assel given up, unless
lhe lair value ol lhe assel received is nore clearly evidenl. vhere lair value
is nol used, lhe cosl ol lhe acquired assel is neasured al lhe carrying
anounl ol lhe assel given up. The gain or loss on derecognilion ol lhe
assel given up is recognized in proll or loss.
Expendilure on najor nainlenance rells or repairs conprises lhe
cosl ol replacenenl assels or parls ol assels, inspeclion cosls and
overhaul cosls. vhere an assel or parl ol an assel lhal was separalely
deprecialed is replaced and il is probable lhal lulure econonic benells
associaled wilh lhe ilen will How lo lhe group, lhe expendilure is
capilalized and lhe carrying anounl ol lhe replaced assel is derecognized.
nspeclion cosls associaled wilh najor nainlenance progrannes are
capilalized and anorlized over lhe period lo lhe nexl inspeclion. Overhaul
cosls lor najor nainlenance progrannes, and all olher nainlenance cosls
are expensed as incurred.
Oil and nalural gas properlies, including relaled pipelines, are
deprecialed using a unilolproduclion nelhod. The cosl ol producing wells
is anorlized over proved developed reserves. Licence acquisilion, connon
lacililies and lulure deconnissioning cosls are anorlized over lolal proved
reserves. The unilolproduclion rale lor lhe anorlizalion ol connon
lacililies cosls lakes inlo accounl expendilures incurred lo dale, logelher
wilh lhe lulure capilal expendilure expecled lo be incurred in relalion lo
lhese connon lacililies and excluding lulure drilling cosls.
Olher properly, planl and equipnenl is deprecialed on a slraighl line basis
over ils expecled uselul lile. The uselul lives ol lhe groups olher properly,
planl and equipnenl are as lollows:
Land inprovenenls 15 lo 25 years
Buildings 20 lo 50 years
Felneries 20 lo 30 years
Pelrochenicals 20 lo 30 years
Pipelines 10 lo 50 years
Service slalions 15 years
Ollce equipnenl 3 lo 7 years
Fixlures and lllings 5 lo 15 years
The expecled uselul lives ol properly, planl and equipnenl are reviewed on
an annual basis and, il necessary, changes in uselul lives are accounled lor
prospeclively.
The carrying value ol properly, planl and equipnenl is reviewed lor
inpairnenl whenever evenls or changes in circunslances indicale lhe
carrying value nay nol be recoverable.
An ilen ol properly, planl and equipnenl is derecognized upon
disposal or when no lulure econonic benells are expecled lo arise lron
lhe conlinued use ol lhe assel. Any gain or loss arising on derecognilion ol
lhe assel (calculaled as lhe dillerence belween lhe nel disposal proceeds
and lhe carrying anounl ol lhe ilen is included in lhe incone slalenenl in
lhe period in which lhe ilen is derecognized.
Impairment of intangibIe assets and property, pIant and equipment
The group assesses assels or groups ol assels lor inpairnenl whenever
evenls or changes in circunslances indicale lhal lhe carrying value ol an
assel nay nol be recoverable, lor exanple, low prices or nargins lor an
exlended period or, lor oil and gas assels, signilcanl downward revisions
ol eslinaled volunes or increases in eslinaled lulure developnenl
expendilure. l any such indicalion ol inpairnenl exisls, lhe group nakes
an eslinale ol lhe assels recoverable anounl. ndividual assels are
grouped lor inpairnenl assessnenl purposes al lhe lowesl level al which
lhere are idenlilable cash Hows lhal are largely independenl ol lhe cash
Hows ol olher groups ol assels. An assel groups recoverable anounl is
lhe higher ol ils lair value less cosls lo sell and ils value in use. vhere lhe
carrying anounl ol an assel group exceeds ils recoverable anounl, lhe
assel group is considered inpaired and is wrillen down lo ils recoverable
anounl. n assessing value in use, lhe eslinaled lulure cash Hows are
adjusled lor lhe risks specilc lo lhe assel group and are discounled lo lheir
presenl value using a prelax discounl rale lhal reHecls currenl narkel
assessnenls ol lhe line value ol noney.
An assessnenl is nade al each reporling dale as lo whelher lhere
is any indicalion lhal previously recognized inpairnenl losses nay no
longer exisl or nay have decreased. l such indicalion exisls, lhe
recoverable anounl is eslinaled. A previously recognized inpairnenl loss
is reversed only il lhere has been a change in lhe eslinales used lo
delernine lhe assels recoverable anounl since lhe lasl inpairnenl loss
was recognized. l lhal is lhe case, lhe carrying anounl ol lhe assel is
increased lo ils recoverable anounl. Thal increased anounl cannol exceed
lhe carrying anounl lhal would have been delernined, nel ol deprecialion,
had no inpairnenl loss been recognized lor lhe assel in prior years. Such
reversal is recognized in proll or loss. Aller such a reversal, lhe
deprecialion charge is adjusled in lulure periods lo allocale lhe assels
revised carrying anounl, less any residual value, on a syslenalic basis over
ils renaining uselul lile.
152 BP Annual Feporl and Forn 20F 2010
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1. Signilcanl accounling policies conlinued
FinanciaI assets
Financial assels are classiled as loans and receivables, availablelorsale
lnancial assels, lnancial assels al lair value lhrough proll or loss, or as
derivalives designaled as hedging inslrunenls in an elleclive hedge, as
appropriale. Financial assels include cash and cash equivalenls, lrade
receivables, olher receivables, loans, olher inveslnenls, and derivalive
lnancial inslrunenls. The group delernines lhe classilcalion ol ils lnancial
assels al inilial recognilion. Financial assels are recognized inilially al lair
value, nornally being lhe lransaclion price plus, in lhe case ol lnancial
assels nol al lair value lhrough proll or loss, direclly allribulable
lransaclion cosls.
The subsequenl neasurenenl ol lnancial assels depends on lheir
classilcalion, as lollows:
Loans and receivab|es
Loans and receivables are nonderivalive lnancial assels wilh lxed or
delerninable paynenls lhal are nol quoled in an aclive narkel. Such
assels are carried al anorlized cosl using lhe elleclive inleresl nelhod il
lhe line value ol noney is signilcanl. Cains and losses are recognized in
incone when lhe loans and receivables are derecognized or inpaired, as
well as lhrough lhe anorlizalion process. This calegory ol lnancial assels
includes lrade and olher receivables.
Avai|ab|e-!or-sa|e !nancia| asse!s
Availablelorsale lnancial assels are lhose nonderivalive lnancial assels
lhal are nol classiled as loans and receivables. Aller inilial recognilion,
availablelorsale lnancial assels are neasured al lair value, wilh gains or
losses recognized wilhin olher conprehensive incone. Accunulaled
changes in lair value are recorded as a separale conponenl ol equily unlil
lhe inveslnenl is derecognized or inpaired.
The lair value ol quoled inveslnenls is delernined by relerence lo
bid prices al lhe close ol business on lhe balance sheel dale. vhere lhere
is no aclive narkel, lair value is delernined using valualion lechniques.
vhere lair value cannol be reliably neasured, assels are carried al cosl.
Financia| asse!s a! !air va|ue !hrough pro!! or |oss
Derivalives, olher lhan lhose designaled as elleclive hedging inslrunenls,
are classiled as held lor lrading and are included in lhis calegory. These
assels are carried on lhe balance sheel al lair value wilh gains or losses
recognized in lhe incone slalenenl.
Deriva!ives designa!ed as hedging ins!runen!s in an e!!ec!ive hedge
Such derivalives are carried on lhe balance sheel al lair value. The
lrealnenl ol gains and losses arising lron revalualion is described
below in lhe accounling policy lor derivalive lnancial inslrunenls and
hedging aclivilies.
Impairment of hnanciaI assets
The group assesses al each balance sheel dale whelher a lnancial assel or
group ol lnancial assels is inpaired.
Loans and receivab|es
l lhere is objeclive evidence lhal an inpairnenl loss on loans and
receivables carried al anorlized cosl has been incurred, lhe anounl ol lhe
loss is neasured as lhe dillerence belween lhe assels carrying anounl
and lhe presenl value ol eslinaled lulure cash Hows discounled al lhe
lnancial assels original elleclive inleresl rale. The carrying anounl ol
lhe assel is reduced, wilh lhe anounl ol lhe loss recognized in lhe
incone slalenenl.
Avai|ab|e-!or-sa|e !nancia| asse!s
l an availablelorsale lnancial assel is inpaired, lhe cunulalive loss
previously recognized in equily is lranslerred lo lhe incone slalenenl.
Any subsequenl recovery in lhe lair value ol lhe assel is recognized wilhin
olher conprehensive incone.
l lhere is objeclive evidence lhal an inpairnenl loss on an
unquoled equily inslrunenl lhal is carried al cosl has been incurred, lhe
anounl ol lhe loss is neasured as lhe dillerence belween lhe assels
carrying anounl and lhe presenl value ol eslinaled lulure cash Hows
discounled al lhe currenl narkel rale ol relurn lor a sinilar lnancial assel.
Inventories
nvenlories, olher lhan invenlory held lor lrading purposes, are slaled al
lhe lower ol cosl and nel realizable value. Cosl is delernined by lhe lrslin
lrsloul nelhod and conprises direcl purchase cosls, cosl ol produclion,
lransporlalion and nanulacluring expenses. el realizable value is
delernined by relerence lo prices exisling al lhe balance sheel dale.
nvenlories held lor lrading purposes are slaled al lair value less
cosls lo sell and any changes in nel realizable value are recognized in lhe
incone slalenenl.
Supplies are valued al cosl lo lhe group nainly using lhe average
nelhod or nel realizable value, whichever is lhe lower.
FinanciaI IiabiIities
Financial liabililies are classiled as lnancial liabililies al lair value lhrough
proll or loss, derivalives designaled as hedging inslrunenls in an elleclive
hedge, or as lnancial liabililies neasured al anorlized cosl, as appropriale.
Financial liabililies include lrade and olher payables, accruals, nosl ilens ol
lnance debl and derivalive lnancial inslrunenls. The group delernines lhe
classilcalion ol ils lnancial liabililies al inilial recognilion. The neasurenenl
ol lnancial liabililies depends on lheir classilcalion, as lollows:
Financia| |iabi|i!ies a! !air va|ue !hrough pro!! or |oss
Derivalives, olher lhan lhose designaled as elleclive hedging inslrunenls,
are classiled as held lor lrading and are included in lhis calegory. These
liabililies are carried on lhe balance sheel al lair value wilh gains or losses
recognized in lhe incone slalenenl.
Deriva!ives designa!ed as hedging ins!runen!s in an e!!ec!ive hedge
Such derivalives are carried on lhe balance sheel al lair value. The
lrealnenl ol gains and losses arising lron revalualion is described
below in lhe accounling policy lor derivalive lnancial inslrunenls and
hedging aclivilies.
Financia| |iabi|i!ies neasured a! anor!ized cos!
All olher lnancial liabililies are inilially recognized al lair value. For
inlereslbearing loans and borrowings lhis is lhe lair value ol lhe proceeds
received nel ol issue cosls associaled wilh lhe borrowing.
Aller inilial recognilion, olher lnancial liabililies are subsequenlly
neasured al anorlized cosl using lhe elleclive inleresl nelhod. Anorlized
cosl is calculaled by laking inlo accounl any issue cosls, and any discounl
or preniun on selllenenl. Cains and losses arising on lhe repurchase,
selllenenl or cancellalion ol liabililies are recognized respeclively in
inleresl and olher revenues and lnance cosls.
This calegory ol lnancial liabililies includes lrade and olher payables
and lnance debl.
BP Annual Feporl and Forn 20F 2010 153
oles on lnancial slalenenls
1. Signilcanl accounling policies conlinued
Leases
Finance leases, which lransler lo lhe group subslanlially all lhe risks and
benells incidenlal lo ownership ol lhe leased ilen, are capilalized al lhe
connencenenl ol lhe lease lern al lhe lair value ol lhe leased properly
or, il lower, al lhe presenl value ol lhe nininun lease paynenls. Finance
charges are allocaled lo each period so as lo achieve a conslanl rale ol
inleresl on lhe renaining balance ol lhe liabilily and are charged direclly
againsl incone.
Capilalized leased assels are deprecialed over lhe shorler ol lhe
eslinaled uselul lile ol lhe assel or lhe lease lern.
Operaling lease paynenls are recognized as an expense in lhe
incone slalenenl on a slraighlline basis over lhe lease lern.
For bolh lnance and operaling leases, conlingenl renls
are recognized in lhe incone slalenenl in lhe period in which lhey
are incurred.
Derivative hnanciaI instruments and hedging activities
The group uses derivalive lnancial inslrunenls lo nanage cerlain
exposures lo Huclualions in loreign currency exchange rales, inleresl rales
and connodily prices as well as lor lrading purposes. Such derivalive
lnancial inslrunenls are inilially recognized al lair value on lhe dale on
which a derivalive conlracl is enlered inlo and are subsequenlly
reneasured al lair value. Derivalives are carried as assels when lhe lair
value is posilive and as liabililies when lhe lair value is negalive.
Conlracls lo buy or sell a nonlnancial ilen lhal can be sellled nel
in cash or anolher lnancial inslrunenl, or by exchanging lnancial
inslrunenls as il lhe conlracls were lnancial inslrunenls, wilh lhe
exceplion ol conlracls lhal were enlered inlo and conlinue lo be held lor
lhe purpose ol lhe receipl or delivery ol a nonlnancial ilen in accordance
wilh lhe groups expecled purchase, sale or usage requirenenls, are
accounled lor as lnancial inslrunenls.
Cains or losses arising lron changes in lhe lair value ol derivalives
lhal are nol designaled as elleclive hedging inslrunenls are recognized in
lhe incone slalenenl.
For lhe purpose ol hedge accounling, hedges are classiled as:
Fair value hedges when hedging exposure lo changes in lhe lair value
ol a recognized assel or liabilily.
Cash How hedges when hedging exposure lo variabilily in cash Hows
lhal is eilher allribulable lo a parlicular risk associaled wilh a
recognized assel or liabilily or a highly probable lorecasl lransaclion.
Hedges ol a nel inveslnenl in a loreign operalion.
Al lhe inceplion ol a hedge relalionship lhe group lornally designales and
docunenls lhe hedge relalionship lor which lhe group wishes lo clain
hedge accounling, logelher wilh lhe risk nanagenenl objeclive and
slralegy lor underlaking lhe hedge. The docunenlalion includes
idenlilcalion ol lhe hedging inslrunenl, lhe hedged ilen or lransaclion,
lhe nalure ol lhe risk being hedged, and how lhe enlily will assess lhe
hedging inslrunenl ellecliveness in ollselling lhe exposure lo changes in
lhe hedged ilens lair value or cash Hows allribulable lo lhe hedged ilen.
Such hedges are expecled al inceplion lo be highly elleclive in achieving
ollselling changes in lair value or cash Hows. Hedges neeling lhe crileria
lor hedge accounling are accounled lor as lollows:
Fair va|ue hedges
The change in lair value ol a hedging derivalive is recognized in proll or
loss. The change in lhe lair value ol lhe hedged ilen allribulable lo lhe risk
being hedged is recorded as parl ol lhe carrying value ol lhe hedged ilen
and is also recognized in proll or loss.
The group applies lair value hedge accounling lor hedging lxed
inleresl rale risk on borrowings. The gain or loss relaling lo lhe elleclive
porlion ol lhe inleresl rale swap is recognized in lhe incone slalenenl
wilhin lnance cosls, ollselling lhe anorlizalion ol lhe inleresl on lhe
underlying borrowings.
l lhe crileria lor hedge accounling are no longer nel, or il lhe group
revokes lhe designalion, lhe adjuslnenl lo lhe carrying anounl ol a
hedged ilen lor which lhe elleclive inleresl rale nelhod is used is
anorlized lo proll or loss over lhe period lo nalurily.
Cash !ov hedges
For cash How hedges, lhe elleclive porlion ol lhe gain or loss on lhe
hedging inslrunenl is recognized wilhin olher conprehensive incone,
while lhe inelleclive porlion is recognized in proll or loss. Anounls laken
lo equily are lranslerred lo lhe incone slalenenl when lhe hedged
lransaclion allecls proll or loss. The gain or loss relaling lo lhe elleclive
porlion ol inleresl rale swaps hedging variable rale borrowings is
recognized in lhe incone slalenenl wilhin lnance cosls.
vhere lhe hedged ilen is lhe cosl ol a nonlnancial assel or
liabilily, such as a lorecasl lransaclion lor lhe purchase ol properly, planl
and equipnenl, lhe anounls recognized wilhin olher conprehensive
incone are lranslerred lo lhe inilial carrying anounl ol lhe nonlnancial
assel or liabilily.
l lhe hedging inslrunenl expires or is sold, lerninaled or exercised
wilhoul replacenenl or rollover, or il ils designalion as a hedge is revoked,
anounls previously recognized wilhin olher conprehensive incone renain
in equily unlil lhe lorecasl lransaclion occurs and are lranslerred lo lhe
incone slalenenl or lo lhe inilial carrying anounl ol a nonlnancial
assel or liabilily as above. l a lorecasl lransaclion is no longer expecled lo
occur, anounls previously recognized in equily are reclassiled lo lhe
incone slalenenl.
Hedges o! a ne! inves!nen! in a !oreign opera!ion
For hedges ol a nel inveslnenl in a loreign operalion, lhe elleclive porlion
ol lhe gain or loss on lhe hedging inslrunenl is recognized wilhin olher
conprehensive incone, while lhe inelleclive porlion is recognized in proll
or loss. Anounls laken lo equily are lranslerred lo lhe incone slalenenl
when lhe loreign operalion is sold or parlially disposed ol.
nbedded deriva!ives
Derivalives enbedded in olher lnancial inslrunenls or olher hosl conlracls
are lrealed as separale derivalives when lheir risks and characlerislics are
nol closely relaled lo lhose ol lhe hosl conlracl. Conlracls are assessed lor
enbedded derivalives when lhe group becones a parly lo lhen, including
al lhe dale ol a business conbinalion. Enbedded derivalives are neasured
al lair value al each balance sheel dale. Any gains or losses arising lron
changes in lair value are laken direclly lo lhe incone slalenenl.
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1. Signilcanl accounling policies conlinued
Provisions, contingencies and reimbursement assets
Provisions are recognized when lhe group has a presenl obligalion (legal or
conslruclive as a resull ol a pasl evenl, il is probable lhal an oulHow ol
resources enbodying econonic benells will be required lo sellle lhe
obligalion and a reliable eslinale can be nade ol lhe anounl ol lhe
obligalion. vhere appropriale, lhe lulure cash How eslinales are adjusled
lo reHecl risks specilc lo lhe liabilily.
l lhe ellecl ol lhe line value ol noney is nalerial, provisions are
delernined by discounling lhe expecled lulure cash Hows al a prelax
risklree rale lhal reHecls currenl narkel assessnenls ol lhe line value ol
noney. vhere discounling is used, lhe increase in lhe provision due lo lhe
passage ol line is recognized wilhin lnance cosls. Provisions are splil
belween anounls expecled lo be sellled wilhin 12 nonlhs ol lhe balance
sheel dale (currenl and anounls expecled lo be sellled laler (noncurrenl.
Conlingenl liabililies are possible obligalions whose exislence will
only be conlrned by lulure evenls nol wholly wilhin lhe conlrol ol lhe
group, or presenl obligalions where il is nol probable lhal an oulHow ol
resources will be required or lhe anounl ol lhe obligalion cannol be
neasured wilh sullcienl reliabilily. Conlingenl liabililies are nol recognized
in lhe lnancial slalenenls bul are disclosed unless lhe possibilily ol an
oulHow ol econonic resources is considered renole.
vhere lhe group nakes conlribulions inlo a separalely
adninislered lund lor resloralion, environnenlal or olher obligalions, which
il does nol conlrol, and lhe groups righl lo lhe assels in lhe lund is
reslricled, lhe obligalion lo conlribule lo lhe lund is recognized as a liabilily
where il is probable lhal such addilional conlribulions will be nade. The
group recognizes a reinbursenenl assel separalely, being lhe lower ol lhe
anounl ol lhe associaled resloralion, environnenlal or olher provision and
lhe groups share ol lhe lair value ol lhe nel assels ol lhe lund available
lo conlribulors.
Anounls lhal BP has a conlraclual righl lo recover lron lhird
parlies are conlingenl assels. Such anounls are nol recognized in lhe
accounls unless lhey are virlually cerlain lo be received.
Deconnissioning
Liabililies lor deconnissioning cosls are recognized when lhe group has
an obligalion lo disnanlle and renove a lacilily or an ilen ol planl and lo
reslore lhe sile on which il is localed, and when a reliable eslinale ol lhal
liabilily can be nade. vhere an obligalion exisls lor a new lacilily, such as
oil and nalural gas produclion or lransporlalion lacililies, lhis will be on
conslruclion or inslallalion. An obligalion lor deconnissioning nay also
cryslallize during lhe period ol operalion ol a lacilily lhrough a change in
legislalion or lhrough a decision lo lerninale operalions. The anounl
recognized is lhe presenl value ol lhe eslinaled lulure expendilure
delernined in accordance wilh local condilions and requirenenls.
A corresponding ilen ol properly, planl and equipnenl ol an
anounl equivalenl lo lhe provision is also recognized. This is subsequenlly
deprecialed as parl ol lhe assel.
Olher lhan lhe unwinding discounl on lhe provision, any change in
lhe presenl value ol lhe eslinaled expendilure is reHecled as an
adjuslnenl lo lhe provision and lhe corresponding ilen ol properly, planl
and equipnenl. Such changes include loreign exchange gains and losses
arising on lhe relranslalion ol lhe liabilily inlo lhe lunclional currency ol
lhe reporling enlily, when il is known lhal lhe liabilily will be sellled in a
loreign currency.
nvironnen!a| expendi!ures and |iabi|i!ies
Environnenlal expendilures lhal relale lo currenl or lulure revenues are
expensed or capilalized as appropriale. Expendilures lhal relale lo an
exisling condilion caused by pasl operalions and do nol conlribule lo
currenl or lulure earnings are expensed.
Liabililies lor environnenlal cosls are recognized when a cleanup is
probable and lhe associaled cosls can be reliably eslinaled. Cenerally, lhe
lining ol recognilion ol lhese provisions coincides wilh lhe connilnenl
lo a lornal plan ol aclion or, il earlier, on diveslnenl or on closure ol
inaclive siles.
The anounl recognized is lhe besl eslinale ol lhe expendilure
required. vhere lhe liabilily will nol be sellled lor a nunber ol years,
lhe anounl recognized is lhe presenl value ol lhe eslinaled
lulure expendilure.
EmpIoyee benehts
vages, salaries, bonuses, social securily conlribulions, paid annual leave
and sick leave are accrued in lhe period in which lhe associaled services
are rendered by enployees ol lhe group. Delerred bonus arrangenenls
lhal have a vesling dale nore lhan 12 nonlhs aller lhe period end are
valued on an acluarial basis using lhe projecled unil credil nelhod and
anorlized on a slraighlline basis over lhe service period unlil lhe award
vesls. The accounling policies lor sharebased paynenls and lor pensions
and olher poslrelirenenl benells are described below.
Share-based payments
qui!,-se!!|ed !ransac!ions
The cosl ol equilysellled lransaclions wilh enployees is neasured by
relerence lo lhe lair value al lhe dale al which equily inslrunenls are
granled and is recognized as an expense over lhe vesling period, which
ends on lhe dale on which lhe relevanl enployees becone lully enlilled lo
lhe award. Fair value is delernined by using an appropriale valualion
nodel. n valuing equilysellled lransaclions, no accounl is laken ol any
vesling condilions, olher lhan condilions linked lo lhe price ol lhe shares ol
lhe conpany (narkel condilions. onvesling condilions, such as lhe
condilion lhal enployees conlribule lo a savingsrelaled plan, are laken inlo
accounl in lhe granldale lair value, and lailure lo neel a nonvesling
condilion is lrealed as a cancellalion, where lhis is wilhin lhe conlrol ol
lhe enployee.
o expense is recognized lor awards lhal do nol ullinalely vesl,
excepl lor awards where vesling is condilional upon a narkel condilion,
which are lrealed as vesling irrespeclive ol whelher or nol lhe narkel
condilion is salisled, provided lhal all olher perlornance condilions are
salisled.
Al each balance sheel dale belore vesling, lhe cunulalive expense
is calculaled, represenling lhe exlenl lo which lhe vesling period has
expired and nanagenenls besl eslinale ol lhe achievenenl or olherwise
ol nonnarkel condilions and lhe nunber ol equily inslrunenls lhal will
ullinalely vesl or, in lhe case ol an inslrunenl subjecl lo a narkel
condilion, be lrealed as vesling as described above. The novenenl in
cunulalive expense since lhe previous balance sheel dale is recognized in
lhe incone slalenenl, wilh a corresponding enlry in equily.
vhen lhe lerns ol an equilysellled award are nodiled or a new
award is designaled as replacing a cancelled or sellled award, lhe cosl
based on lhe original award lerns conlinues lo be recognized over lhe
original vesling period. n addilion, an expense is recognized over lhe
renainder ol lhe new vesling period lor lhe increnenlal lair value ol any
nodilcalion, based on lhe dillerence belween lhe lair value ol lhe
original award and lhe lair value ol lhe nodiled award, bolh as neasured
on lhe dale ol lhe nodilcalion. o reduclion is recognized il lhis dillerence
is negalive.
vhen an equilysellled award is cancelled, il is lrealed as il il had
vesled on lhe dale ol cancellalion and any cosl nol yel recognized in lhe
incone slalenenl lor lhe award is expensed innedialely.
BP Annual Feporl and Forn 20F 2010 155
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1. Signilcanl accounling policies conlinued
Cash-se!!|ed !ransac!ions
The cosl ol cashsellled lransaclions is neasured al lair value and
recognized as an expense over lhe vesling period, wilh a corresponding
liabilily recognized on lhe balance sheel.
Pensions and other post-retirement benehts
The cosl ol providing benells under lhe delned benell plans is
delernined separalely lor each plan using lhe projecled unil credil nelhod,
which allribules enlillenenl lo benells lo lhe currenl period (lo delernine
currenl service cosl and lo lhe currenl and prior periods (lo delernine lhe
presenl value ol lhe delned benell obligalion. Pasl service cosls are
recognized innedialely when lhe conpany becones connilled lo a
change in pension plan design. vhen a selllenenl (elininaling all
obligalions lor benells already accrued or a curlailnenl (reducing lulure
obligalions as a resull ol a nalerial reduclion in lhe schene nenbership or
a reduclion in lulure enlillenenl occurs, lhe obligalion and relaled plan
assels are reneasured using currenl acluarial assunplions and lhe
resullanl gain or loss is recognized in lhe incone slalenenl during lhe
period in which lhe selllenenl or curlailnenl occurs.
The inleresl elenenl ol lhe delned benell cosl represenls lhe
change in presenl value ol schene obligalions resulling lron lhe passage
ol line, and is delernined by applying lhe discounl rale lo lhe opening
presenl value ol lhe benell obligalion, laking inlo accounl nalerial changes
in lhe obligalion during lhe year. The expecled relurn on plan assels is
based on an assessnenl nade al lhe beginning ol lhe year ol longlern
narkel relurns on plan assels, adjusled lor lhe ellecl on lhe lair value ol
plan assels ol conlribulions received and benells paid during lhe year.
The dillerence belween lhe expecled relurn on plan assels and lhe
inleresl cosl is recognized in lhe incone slalenenl as olher lnance
incone or expense.
Acluarial gains and losses are recognized in lull wilhin olher
conprehensive incone in lhe year in which lhey occur.
The delned benell pension plan surplus or delcil in lhe balance
sheel conprises lhe lolal lor each plan ol lhe presenl value ol lhe delned
benell obligalion (using a discounl rale based on high qualily corporale
bonds, less lhe lair value ol plan assels oul ol which lhe obligalions are lo
be sellled direclly. Fair value is based on narkel price inlornalion and, in
lhe case ol quoled securilies, is lhe published bid price.
Conlribulions lo delned conlribulion schenes are recognized in lhe
incone slalenenl in lhe period in which lhey becone payable.
Corporate taxes
ncone lax expense represenls lhe sun ol lhe lax currenlly payable and
delerred lax. nleresl and penallies relaling lo lax are also included in
incone lax expense.
The lax currenlly payable is based on lhe laxable prolls lor lhe
period. Taxable proll dillers lron nel proll as reporled in lhe incone
slalenenl because il excludes ilens ol incone or expense lhal are laxable
or deduclible in olher periods and il lurlher excludes ilens lhal are never
laxable or deduclible. The groups liabilily lor currenl lax is calculaled using
lax rales lhal have been enacled or subslanlively enacled by lhe balance
sheel dale.
Delerred lax is provided, using lhe liabilily nelhod, on all lenporary
dillerences al lhe balance sheel dale belween lhe lax bases ol assels and
liabililies and lheir carrying anounls lor lnancial reporling purposes.
Delerred lax liabililies are recognized lor all laxable lenporary
dillerences:
Excepl where lhe delerred lax liabilily arises on goodwill lhal is nol lax
deduclible or lhe inilial recognilion ol an assel or liabilily in a
lransaclion lhal is nol a business conbinalion and, al lhe line ol
lhe lransaclion, allecls neilher lhe accounling proll nor laxable proll
or loss.
n respecl ol laxable lenporary dillerences associaled wilh
inveslnenls in subsidiaries, joinlly conlrolled enlilies and associales,
excepl where lhe group is able lo conlrol lhe lining ol lhe reversal ol
lhe lenporary dillerences and il is probable lhal lhe lenporary
dillerences will nol reverse in lhe loreseeable lulure.
Delerred lax assels are recognized lor all deduclible lenporary dillerences,
carrylorward ol unused lax credils and unused lax losses, lo lhe exlenl
lhal il is probable lhal laxable proll will be available againsl which lhe
deduclible lenporary dillerences and lhe carrylorward ol unused lax
credils and unused lax losses can be ulilized:
Excepl where lhe delerred incone lax assel relaling lo lhe deduclible
lenporary dillerence arises lron lhe inilial recognilion ol an assel or
liabilily in a lransaclion lhal is nol a business conbinalion and, al lhe
line ol lhe lransaclion, allecls neilher lhe accounling proll nor
laxable proll or loss.
n respecl ol deduclible lenporary dillerences associaled wilh
inveslnenls in subsidiaries, joinlly conlrolled enlilies and associales,
delerred lax assels are recognized only lo lhe exlenl lhal il is probable
lhal lhe lenporary dillerences will reverse in lhe loreseeable lulure
and laxable proll will be available againsl which lhe lenporary
dillerences can be ulilized.
The carrying anounl ol delerred lax assels is reviewed al each balance
sheel dale and reduced lo lhe exlenl lhal il is no longer probable lhal
sullcienl laxable proll will be available lo allow all or parl ol lhe delerred
incone lax assel lo be ulilized.
Delerred lax assels and liabililies are neasured al lhe lax rales lhal
are expecled lo apply lo lhe year when lhe assel is realized or lhe liabilily is
sellled, based on lax rales (and lax laws lhal have been enacled or
subslanlively enacled al lhe balance sheel dale.
Tax relaling lo ilens recognized in olher conprehensive incone
is recognized in olher conprehensive incone and lax relaling lo ilens
recognized in equily is recognized direclly in equily and nol in lhe
incone slalenenl.
Customs duties and saIes taxes
Fevenues, expenses and assels are recognized nel ol lhe anounl ol
cuslons dulies or sales lax excepl:
vhere lhe cuslons duly or sales lax incurred on a purchase ol goods
and services is nol recoverable lron lhe laxalion aulhorily, in which
case lhe cuslons duly or sales lax is recognized as parl ol lhe cosl ol
acquisilion ol lhe assel or as parl ol lhe expense ilen as applicable.
Feceivables and payables are slaled wilh lhe anounl ol cuslons duly
or sales lax included.
The nel anounl ol sales lax recoverable lron, or payable lo, lhe laxalion
aulhorily is included as parl ol receivables or payables in lhe balance sheel.
Own equity instruments
The groups holdings in ils own equily inslrunenls, including ordinary
shares held by Enployee Share Ownership Plans (ESOPs, are classiled as
lreasury shares, or own shares lor lhe ESOPs, and are shown as
deduclions lron shareholders equily al cosl. Consideralion received lor
lhe sale ol such shares is also recognized in equily, wilh any dillerence
belween lhe proceeds lron sale and lhe original cosl being laken lo lhe
proll and loss accounl reserve. o gain or loss is recognized in lhe incone
slalenenl on lhe purchase, sale, issue or cancellalion ol equily shares.
156 BP Annual Feporl and Forn 20F 2010
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1. Signilcanl accounling policies conlinued
Revenue
Fevenue arising lron lhe sale ol goods is recognized when lhe signilcanl
risks and rewards ol ownership have passed lo lhe buyer and il can be
reliably neasured.
Fevenue is neasured al lhe lair value ol lhe consideralion received
or receivable and represenls anounls receivable lor goods provided
in lhe nornal course ol business, nel ol discounls, cuslons dulies and
sales laxes.
Fevenues associaled wilh lhe sale ol oil, nalural gas, nalural gas
liquids, liqueled nalural gas, pelroleun and pelrochenicals producls and all
olher ilens are recognized when lhe lille passes lo lhe cusloner. Physical
exchanges are reporled nel, as are sales and purchases nade wilh a
connon counlerparly, as parl ol an arrangenenl sinilar lo a physical
exchange. Sinilarly, where lhe group acls as agenl on behall ol a lhird
parly lo procure or narkel energy connodilies, any associaled lee incone
is recognized bul no purchase or sale is recorded. Addilionally, where
lorward sale and purchase conlracls lor oil, nalural gas or power have been
delernined lo be lor lrading purposes, lhe associaled sales and purchases
are reporled nel wilhin sales and olher operaling revenues whelher or nol
physical delivery has occurred.
Cenerally, revenues lron lhe produclion ol oil and nalural gas
properlies in which lhe group has an inleresl wilh joinl venlure parlners are
recognized on lhe basis ol lhe groups working inleresl in lhose properlies
(lhe enlillenenl nelhod. Dillerences belween lhe produclion sold and lhe
groups share ol produclion are nol signilcanl.
nleresl incone is recognized as lhe inleresl accrues (using lhe
elleclive inleresl rale lhal is lhe rale lhal exaclly discounls eslinaled
lulure cash receipls lhrough lhe expecled lile ol lhe lnancial inslrunenl lo
lhe nel carrying anounl ol lhe lnancial assel.
Dividend incone lron inveslnenls is recognized when lhe
shareholders righl lo receive lhe paynenl is eslablished.
Research
Fesearch cosls are expensed as incurred.
Finance costs
Finance cosls direclly allribulable lo lhe acquisilion, conslruclion or
produclion ol qualilying assels, which are assels lhal necessarily lake a
subslanlial period ol line lo gel ready lor lheir inlended use, are added lo
lhe cosl ol lhose assels, unlil such line as lhe assels are subslanlially
ready lor lheir inlended use. All olher lnance cosls are recognized in lhe
incone slalenenl in lhe period in which lhey are incurred.
Use of estimates
The preparalion ol lnancial slalenenls requires nanagenenl lo nake
eslinales and assunplions lhal allecl lhe reporled anounls ol assels
and liabililies as well as lhe disclosure ol conlingenl assels and liabililies al
lhe balance sheel dale and lhe reporled anounls ol revenues and
expenses during lhe reporling period. Aclual oulcones could diller lron
lhose eslinales.
Impact of new InternationaI FinanciaI Reporting Standards
Adop!ed !or 20!0
The lollowing revised or anended FFSs were adopled by lhe group wilh
ellecl lron 1 January 2010.
n January 2003, lhe ASB issued a revised version ol FFS 3
Business Conbinalions. The revised slandard slill requires lhe purchase
nelhod ol accounling lo be applied lo business conbinalions bul
inlroduces sone changes lo lhe accounling lrealnenl. For exanple,
conlingenl consideralion is neasured al lair value al lhe dale ol acquisilion
and subsequenlly reneasured lo lair value wilh changes recognized in
proll or loss. Coodwill nay be calculaled based on lhe parenls share ol
nel assels or il nay include goodwill relaled lo lhe ninorily inleresl. All
lransaclion cosls are expensed. Assels and liabililies arising lron business
conbinalions lhal occurred belore 1 January 2010 were nol required lo be
reslaled and lhus, on adoplion lhere was no ellecl on lhe groups reporled
incone or nel assels.
n January 2003, lhe ASB issued a revised version ol AS 27
Consolidaled and Separale Financial Slalenenls, which requires lhe
ellecls ol all lransaclions wilh ninorily inleresls lo be recorded in equily il
lhere is no change in conlrol. vhen conlrol is losl, any renaining inleresl in
lhe enlily is reneasured lo lair value and a gain or loss recognized in proll
or loss. There was no ellecl on lhe groups reporled incone or nel assels
on adoplion.
n addilion, several olher slandards and inlerprelalions were
adopled in lhe year which had no signilcanl inpacl on lhe lnancial
slalenenls.
No! ,e! adop!ed
The lollowing pronouncenenls lron lhe ASB will becone elleclive
lor lulure lnancial reporling periods and have nol yel been adopled by
lhe group.
As parl ol lhe ASBs projecl lo replace AS 39 Financial
nslrunenls: Fecognilion and easurenenl, in ovenber 2009, lhe ASB
issued lhe lrsl phase ol FFS 9 Financial nslrunenls, dealing wilh lhe
classilcalion and neasurenenl ol lnancial assels. n Oclober 2010, lhe
ASB updaled FFS 9 by incorporaling lhe requirenenls lor lhe accounling
lor lnancial liabililies. The new slandard is elleclive lor annual periods
beginning on or aller 1 January 2013 wilh lransilional arrangenenls
depending upon lhe dale ol inilial applicalion. BP has nol yel decided lhe
dale ol inilial applicalion lor lhe group and has nol yel conpleled ils
evalualion ol lhe ellecl ol adoplion. The new slandard has nol yel been
adopled by lhe EU.
There are no olher slandards and inlerprelalions in issue bul nol yel
adopled lhal lhe direclors anlicipale will have a nalerial ellecl on lhe
reporled incone or nel assels ol lhe group.
BP Annual Feporl and Forn 20F 2010 157
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www.bp.con/downloads/gon
2. Signilcanl evenl - Cull ol exico oil spill
As a consequence ol lhe Cull ol exico oil spill, as described on pages 34 lo 39, BP has incurred cosls during lhe year and has recognized liabililies lor
lulure cosls. Liabililies ol uncerlain lining or anounl and conlingenl liabililies have been accounled lor and/or disclosed in accordance wilh AS 37
Provisions, conlingenl liabililies and conlingenl assels. These are discussed in lurlher delail in ole 37 lor provisions and ole 44 lor conlingenl liabililies.
BPs righls and obligalions in relalion lo lhe $20billion lrusl lund which was eslablished during lhe year have been accounled lor in accordance wilh
FFC 5 Fighls lo inleresls arising lron deconnissioning, resloralion and environnenlal rehabililalion lunds. Key aspecls ol lhe accounling lor lhe oil spill
are sunnarized below.
The lnancial inpacls ol lhe Cull ol exico oil spill on lhe incone slalenenl, balance sheel and cash How slalenenl ol lhe group are shown in lhe
lable below. Anounls relaled lo lhe lrusl lund are separalely idenliled.
$ nillion
2010
Ol which:
anounl relaled
TotaI lo lhe lrusl lund
Income statement
Produclion and nanulacluring expenses 40,858 7,261
Proll (loss belore inleresl and laxalion (40,858) (7,261)
Finance cosls 77 73
Proll (loss belore laxalion (40,935) (7,334)
Less: Taxalion 12,894 -
Proll (loss lor lhe period (28,041) (7,334)
BaIance sheet
Currenl assels
Trade and olher receivables 5,943 5,943
Currenl liabililies
Trade and olher payables (6,587) (5,002)
Provisions (7,938) -
el currenl liabililies (8,582) 941
oncurrenl assels
Olher receivables 3,601 3,601
oncurrenl liabililies
Olher payables (9,899) (9,899)
Provisions (8,397) -
Delerred lax 11,255 -
el noncurrenl liabililies (3,440) (6,298)
el assels (12,022) (5,357)
Cash ow statement
Proll (loss belore laxalion (40,935) (7,334)
Finance cosls 77 73
el charge lor provisions, less paynenls 19,354 -
ncrease in olher currenl and noncurrenl assels (12,567) (12,567)
ncrease in olher currenl and noncurrenl liabililies 16,413 14,828
Prelax cash Hows (17,658) (5,000)
Trust fund
BP has eslablished lhe Deepwaler Horizon Oil Spill Trusl (lhe Trusl lo be lunded in lhe anounl ol $20 billion (lhe lrusl lund over lhe period lo lhe lourlh
quarler ol 2013, which is available lo salisly legilinale individual and business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF, slale and local
governnenl clains resolved by BP, lnal judgnenls and selllenenls, slale and local response cosls, and nalural resource danages and relaled cosls. n
2010 BP conlribuled $5 billion lo lhe lund, and lurlher quarlerly conlribulions ol $1.25 billion are lo be nade during 2011 lo 2013. The incone slalenenl
charge lor 2010 includes $20 billion in relalion lo lhe lrusl lund, adjusled lo lake accounl ol lhe line value ol noney. Fines, penallies and clains
adninislralion cosls are nol covered by lhe lrusl lund. The eslablishnenl ol lhe lrusl lund does nol represenl a cap or Hoor on BPs liabililies and BP does
nol adnil lo a liabilily ol lhis anounl.
Under lhe lerns ol lhe Trusl agreenenl, BP has no righl lo access lhe lunds once lhey have been conlribuled lo lhe lrusl lund and BP has no
decisionnaking role in conneclion wilh lhe paynenl by lhe lrusl lund ol individual and business clains resolved by lhe CCCF. BP will receive lunds lron
lhe lrusl lund only upon ils expiralion, il lhere are any lunds renaining al lhal poinl. BP has lhe aulhorily under lhe Trusl agreenenl lo presenl cerlain
resolved clains, including nalural resource danages clains and slale and local response clains, lo lhe Trusl lor paynenl, by providing lhe lruslees wilh all
lhe required docunenls eslablishing lhal such clains are valid under lhe Trusl agreenenl. However, any such paynenls can only be nade on lhe aulhorily
ol lhe Truslee and any lunds dislribuled are paid direclly lo lhe clainanls, nol lo BP. BP will nol sellle any such ilens direclly or receive reinbursenenl
lron lhe lrusl lund lor such ilens.
153 BP Annual Feporl and Forn 20F 2010
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2. Signilcanl evenl - Cull ol exico oil spill conlinued
BPs obligalion lo nake conlribulions lo lhe lrusl lund was recognized in lull, anounling lo $20 billion on an undiscounled basis as il is connilled lo
naking lhese conlribulions. On inilial recognilion lhe discounled anounl recognized was $19,530 nillion. Aller BPs conlribulions ol $5 billion lo lhe lrusl
lund during 2010, and adjuslnenls lor discounling, lhe renaining liabilily as al 31 Decenber 2010 was $14,901 nillion. This liabilily is recorded wilhin
olher payables on lhe balance sheel, apporlioned belween currenl and noncurrenl elenenls according lo lhe agreed schedule ol conlribulions.
The lable below shows novenenls in lhe lunding obligalion, recognized wilhin olher payables on lhe balance sheel, during lhe period lo
31 Decenber 2010.
$ nillion
Trusl lund liabilily inilially recognized - discounled 19,580
Unwinding ol discounl 73
Change in discounl rale 240
Conlribulions (5,000)
Olher 8
Al 31 Decenber 2010 14,901
Ol which - currenl 5,002
- noncurrenl 9,399
An assel has been recognized represenling BPs righl lo receive reinbursenenl lron lhe lrusl lund. This is lhe porlion ol lhe eslinaled lulure expendilure
provided lor lhal will be sellled by paynenls lron lhe lrusl lund. ve use lhe lern reinbursenenl assel lo describe lhis assel. BP will nol aclually
receive any reinbursenenls lron lhe lrusl lund, inslead paynenls will be nade direclly lo clainanls lron lhe lrusl lund, and BP will be released lron ils
corresponding obligalion.
The porlion ol lhe provision recognized during lhe year lor ilens lhal will be covered by lhe lrusl lund was $12,567 nillion. Ol lhis anounl,
paynenls ol $3,023 nillion were nade during lhe year lron lhe lrusl lund. The renaining reinbursenenl assel as al 31 Decenber 2010 was $9,544
nillion and is recorded wilhin olher receivables on lhe balance sheel. The anounl ol lhe reinbursenenl assel is equal lo lhe anounl ol provisions as al
31 Decenber 2010 lhal will be covered by lhe lrusl lund - see ole 37 in lhe lable under Provisions re|a!ing !o !he Cu|! o! exico oi| spi||.
ovenenls in lhe reinbursenenl assel are presenled in lhe lable below:
$ nillion
ncrease in provision lor ilens covered by lhe lrusl lund 12,567
Anounls paid direclly by lhe lrusl lund (3,023)
Al 31 Decenber 2010 9,544
Ol which - currenl 5,943
- noncurrenl 3,601
The anounl ol lhe incone slalenenl charge relaled lo lhe lrusl lund conprises:
$ nillion
Trusl lund liabilily - discounled 19,580
Change in discounl rale relaling lo lrusl lund liabilily 240
Fecognilion ol reinbursenenl assel (12,567)
Olher 8
Tolal charge relaling lo lhe lrusl lund 7,261
As noled above, lhe obligalion lo lund lhe $20billion lrusl lund has been recognized in lull. Any increases in lhe provision lhal will be covered by lhe lrusl
lund (up lo lhe anounl ol $20 billion have no nel incone slalenenl ellecl as a reinbursenenl assel is also recognized, as described above. These
charges lor provisions, and lhe associaled reinbursenenl assel, recognized during lhe year anounled lo $12,567 nillion. Thus, a lurlher $7,433 nillion
could be provided in subsequenl periods lor ilens covered by lhe lrusl lund wilh no nel inpacl on lhe incone slalenenl. Such lulure increases in
anounls provided could arise lron adjuslnenls lo exisling provisions, or lron lhe inilial recognilion ol provisions lor ilens lhal currenlly cannol be
eslinaled reliably, nanely lnal judgnenls and selllenenls and nalural resource danages and relaled cosls.
l is nol possible al lhis line lo conclude as lo whelher lhe $20billion lund will be sullcienl lo salisly all clains under lhe Oil Pollulion Acl ol 1990
(OPA 90 lhal will ullinalely be paid. Furlher inlornalion on lhose ilens lhal currenlly cannol be reliably eslinaled is provided under Provisions and
con!ingencies and in ole 44.
The Trusl agreenenl does nol require BP lo nake lurlher conlribulions lo lhe lrusl lund in excess ol lhe agreed $20 billion should lhis be
insullcienl lo cover all clains adninislered by lhe CCCF, or lo sellle olher ilens lhal are covered by lhe lrusl lund, as described above. Should lhe
$20billion lrusl lund nol be sullcienl, BP would connence sellling legilinale clains and olher cosls by naking paynenls direclly lo clainanls. n lhis
case, increases in eslinaled lulure expendilure above $20 billion would be recognized as provisions wilh a corresponding charge in lhe incone slalenenl.
The provisions would be ulilized and derecognized al lhe poinl lhal BP nade lhe paynenls.
On 30 Seplenber 2010, BP pledged cerlain Cull ol exico assels as collaleral lor lhe lrusl lund lunding obligalion. The pledged collaleral consisls
ol an overriding royally inleresl in oil and gas produclion ol BPs Thunder Horse, Allanlis, ad Dog, Creal vhile and ars, Ursa and a Kika assels in lhe
Cull ol exico. A whollyowned conpany called Verano Collaleral Holdings LLC (Verano has been crealed lo hold lhe overriding royally inleresl, which is
capped al $1.25 billion per quarler and $17 billion in lolal. Verano has pledged lhe overriding royally inleresl lo lhe Trusl as collaleral lor BPs renaining
conlribulion obligalions lo lhe Trusl. BP conlribuled a lurlher $2 billion lo lhe lrusl lund since lhis arrangenenl was eslablished, lhereby reducing lhe
anounl ol lhe pledge lo $15 billion al lhe end ol lhe year. There is no change in operalorship or lhe narkeling ol lhe produclion lron lhe assels and lhere
is no ellecl on lhe olher parlners inleresls in lhe assels. For lnancial reporling purposes Verano is a consolidaled enlily ol BP and lhere is no inpacl on
lhe consolidaled lnancial slalenenls lron lhe pledge ol lhe overriding royally inleresl.
BP Annual Feporl and Forn 20F 2010 159
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2. Signilcanl evenl - Cull ol exico oil spill conlinued
Provisions and contingencies
Al 31 Decenber 2010 BP has recorded cerlain provisions and disclosed cerlain conlingencies as a consequence ol lhe Cull ol exico oil spill.
These are described below under Oi| Po||u!ion Ac! o! !990 and O!her i!ens.
Oil Pollulion Acl ol 1990 (OPA 90
The clains againsl BP under lhe OPA 90 and lor personal injury lall inlo lhree calegories: (i clains by individuals and businesses lor renoval cosls, danage
lo real or personal properly, losl prolls or inpairnenl ol earning capacily, loss ol subsislence use ol nalural resources and lor personal injury (ndividual
and Business Clains, (ii clains by slale and local governnenl enlilies lor renoval cosls, physical danage lo real or personal properly, loss ol
governnenl revenue and increased public services cosls (Slale and Local Clains, and (iii clains by lhe Uniled Slales, a Slale lruslee, an ndian lribe
lruslee, or a loreign lruslee lor nalural resource danages (alural Fesource Danages clains. n addilion, BP laces civil liligalion in which clains lor
liabilily under OPA 90 along wilh olher causes ol aclions, including personal injury clains, are asserled by individuals, businesses and governnenl enlilies.
A provision has been recorded lor ndividual and Business Clains and Slale and Local Clains. A provision has also been recorded lor clains
adninislralion cosls and nalural resource danage assessnenl cosls.
BP considers lhal il is nol possible lo neasure reliably any obligalion in relalion lo alural Fesource Danages clains under OPA 90 or liligalion lor
violalions ol OPA 90. These ilens are lherelore disclosed as conlingenl liabililies.
The $20billion lrusl lund described above is available lo salisly lhe OPA 90 clains and liligalion relerred lo above wilh lhe exceplion ol clains
adninislralion cosls which are borne separalely by BP. BPs righls and obligalions in relalion lo lhe lrusl lund have been recognized and $20 billion,
adjusled lo lake accounl ol lhe line value ol noney, was charged lo lhe incone slalenenl. The eslablishnenl ol lhe lrusl lund does nol represenl a cap
or Hoor on BPs liabililies and BP does nol adnil liabilily lor lhis anounl.
Olher ilens
Provisions al 31 Decenber 2010 also include anounls in relalion lo ollshore and onshore oil spill response, BPs connilnenl lo a 10year research
progranne in lhe Cull ol exico, eslinaled penallies lor liabilily under Clean valer Acl Seclion 311 and legal lees where we have been able lo eslinale
reliably lhose which will arise in lhe nexl lwo years. These are nol covered by lhe lrusl lund.
The provision does nol reHecl any anounls in relalion lo lnes and penallies excepl lor lhose relaling lo lhe Clean valer Acl, as il is nol possible lo
eslinale reliably eilher lhe anounl or lining ol such addilional ilens. BP also considers lhal il is nol possible lo neasure reliably any obligalion in relalion
lo liligalion or any obligalion in relalion lo legal lees beyond lwo years. These ilens are lherelore disclosed as conlingenl liabililies.
o anounls have been recognized lor recovery ol cosls lron our coowners ol lhe acondo well because under FFS recovery nusl be virlually
cerlain lor receivables lo be recognized. All ol lhese ilens are lherelore disclosed as conlingenl assels.
Furlher inlornalion on provisions is provided below and in ole 37. Furlher inlornalion on conlingenl liabililies and conlingenl assels is provided in
ole 44.
A provision has been recognized lor eslinaled lulure expendilure relaling lo lhe oil spill, lor ilens lhal can be reliably neasured al lhis line, in
accordance wilh BPs accounling policy lor provisions, as sel oul in ole 1.
The lolal anounl recognized as a provision during lhe year was $30,261 nillion (including $12,567 nillion lor ilens covered by lhe lrusl lund and
$17,694 nillion lor olher ilens. Aller deducling anounls ulilized during lhe year lolalling $13,935 nillion (including paynenls lron lhe lrusl lund ol
$3,023 nillion and paynenls nade direclly by BP ol $10,912 nillion, and aller adjuslnenls lor discounling, lhe renaining provision as al 31 Decenber
2010 was $16,335 nillion.
ovenenls in lhe provision are presenled in lhe lable below.
$ nillion
ncrease in provision - ilens nol covered by lhe lrusl lund 17,694
- ilens covered by lhe lrusl lund 12,567
Unwinding ol discounl 4
Change in discounl rale 5
Ulilizalion - paid by BP (10,912)
- paid by lhe lrusl lund (3,023)
Al 31 Decenber 2010 16,335
Ol which - currenl 7,933
- noncurrenl 3,397
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe ullinale
exposure and cosl lo BP will be dependenl on nany laclors. Furlhernore, lhe anounl ol clains lhal becone payable by BP, lhe anounl ol lnes ullinalely
levied on BP (including any delerninalion ol BPs negligence, lhe oulcone ol liligalion, and any cosls arising lron any longerlern environnenlal
consequences ol lhe oil spill, will also inpacl upon lhe ullinale cosl lor BP. Allhough lhe provision recognized is lhe currenl besl reliable eslinale ol
expendilures required lo sellle cerlain presenl obligalions al lhe end ol lhe reporling period, lhere are lulure expendilures lor which il is nol possible lo
neasure lhe obligalion reliably as noled above.
160 BP Annual Feporl and Forn 20F 2010
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2. Signilcanl evenl - Cull ol exico oil spill conlinued
Impact upon the group income statement and cash ow statement
The group incone slalenenl lor 2010 includes a prelax charge ol $40,935 nillion in relalion lo lhe Cull ol exico oil spill. This conprises cosls incurred
up lo 31 Decenber 2010, eslinaled obligalions lor lulure cosls lhal can be eslinaled reliably al lhis line and righls and obligalions relaling lo lhe lrusl
lund. Finance cosls ol $77 nillion reHecl lhe unwinding ol discounl on lhe lrusl lund liabilily and provisions.
The anounl ol lhe provision recognized during lhe year can be reconciled lo lhe incone slalenenl charge as lollows:
$ nillion
ncrease in provision 30,261
Change in discounl rale relaling lo provisions 5
Cosls charged direclly lo lhe incone slalenenl 3,339
Trusl lund liabilily - discounled 19,580
Change in discounl rale relaling lo lrusl lund liabilily 240
Fecognilion ol reinbursenenl assel (12,567)
(Proll loss belore inleresl and laxalion 40,858
Cosls charged direclly lo lhe incone slalenenl relale lo expendilure incurred prior lo lhe eslablishnenl ol a provision al lhe end ol lhe second quarler
and ongoing operaling cosls ol lhe CCFO. The accounling associaled wilh lhe recognilion ol lhe lrusl lund liabilily and lhe expendilure which will be
sellled lron lhe lrusl lund is described above.
The lolal charge in lhe incone slalenenl is analysed in lhe lable below. Cosls charged direclly lo lhe incone slalenenl in relalion lo spill
response, environnenlal and liligalion and clains are lhose lhal arose prior lo recording a provision al lhe end ol lhe second quarler ol lhe year.
$ nillion
Trusl lund liabilily - discounled 19,580
Change in discounl rale relaling lo lrusl lund liabilily 240
Fecognilion ol reinbursenenl assel (12,567)
Olher 8
Tolal charge relaling lo lhe lrusl lund 7,261
Spill response - anounl provided 10,883
- cosls charged direclly lo lhe incone slalenenl 2,745
Tolal charge relaling lo spill response 13,628
Environnenlal - anounl provided 929
- change in discounl rale relaling lo provisions 5
- cosls charged direclly lo lhe incone slalenenl 70
Tolal charge relaling lo environnenlal 1,004
Liligalion and clains - anounl provided 14,939
- cosls charged direclly lo lhe incone slalenenl 184
Tolal charge relaling lo liligalion and clains 15,123
Clean valer Acl penallies - anounl provided 3,510
Olher cosls charged direclly lo lhe incone slalenenl 332
(Proll loss belore inleresl and laxalion 40,858
Finance cosls 77
(Proll loss belore laxalion 40,935
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly as described
above under Provisions and conlingencies.
Fesponse operalions lollowing lhe Deepwaler Horizon incidenl in April 2010 have been nanaged by lhe lederal governnenls response lranework,
which lransilioned on 17 Decenber lron lhe Uniled Area Connand (UAC lo lhe Cull Coasl incidenl nanagenenl lean (CCT. Bolh lhe UAC and now
lhe CCT link lhe organizalions responding lo lhe incidenl and provide a lorun lor lhose organizalions lo nake consensus decisions. l consensus
cannol be reached lhe US Coasl Cuard coordinalor carries lhe lnal decision on response relaled aclions deened necessary. As such, lhe aclivilies
underlaken by BP and ils subconlraclors, and lhe associaled cosls, are nol wholly wilhin BPs conlrol. This will conlinue lo be lhe case unlil conlrol ol lhe
response operalions lransilions lo lhe Cull Coasl Fesloralion Organizalion.
n parlicular, lhe cenlralized approval process eslablished lor lhe procurenenl ol nalerials, equipnenl and personnel has nol been used lor all ol
lhe procurenenl aclivily lhal has laken place. The lypes ol aclivily lhal lell oulside lhe cenlralized approval process included aspecls ol lhe surlace and
shoreline response. unerous personnel and vessels were involved in aclivilies which included skinning, boon deploynenl and shoreline clean up. Due
lo lhe scale ol lhe incidenl and lhe need lo respond rapidly, procurenenl aulhorily was vesled wilh slale onscene coordinalors, various responsible
parlies and various slale and local governnenl aulhorilies. So long as lhe expenses incurred are lound lo be consislenl wilh lhe alional Conlingency
Plan, lhe responsible parlies will be expecled lo pay lhese cosls, regardless ol whelher or nol lhey were involved in or approved lhe decision lo procure
lhe resource. vilh lhe large nunber ol parlies involved, lhe resulling lunding Hows are conplex and resulled in dillcully nainlaining real line noniloring
ol expenses.
Prelax cash Hows anounled lo $17,653 nillion and lhe inpacl on nel cash provided by operaling aclivilies, on a posllax basis, anounled lo
$16,019 nillion.
BP Annual Feporl and Forn 20F 2010 161
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3. Acquisilions
Acquisitions in 2010
BP nade a nunber ol acquisilions in 2010 lor a lolal consideralion ol $3.6 billion, ol which $3 billion conprised cash consideralion. The nosl signilcanl
acquisilion was a lransaclion in lhe Exploralion and Produclion segnenl wilh Devon Energy (Devon, underlaken in a nunber ol slages during 2010.
This lransaclion slrenglhens BPs posilion in lhe Cull ol exico, enhances inleresls in Azerbaijan and lacililales lhe developnenl ol Canadian assels.
On 27 April 2010, BP acquired 100' ol Devons Cull ol exico deepwaler properlies lor $1.3 billion. This included a nunber ol exploralion
properlies, Devons inleresl in lhe najor Paleogene discovery Kaskida (giving BP a 100' inleresl in lhe projecl, lour producing assels and one non
producing assel. As parl ol lhe lransaclion, BP sold lo Devon a 50' slake in ils Kirby oil sands inleresls in Alberla, Canada lor $500 nillion and Devon
connilled lo lund an addilional $150 nillion ol capilal cosls on BPs behall by issuing a pronissory nole lo BP. n addilion, lhe conpanies lorned a 50:50
joinl venlure, operaled by Devon, lo pursue lhe developnenl ol lhe inleresl. On 16 Augusl 2010, lhe group acquired Devons 3.29' (aller preenplion
exercised by sone ol lhe parlners inleresl in lhe BPoperaled AzeriChiragCunashli (ACC developnenl in lhe Azerbaijan seclor ol lhe Caspian Sea lor
$1.1 billion, increasing BPs inleresl lo 37.43'.
The acquisilion has been accounled lor using lhe acquisilion nelhod. The acquisilion dale lair values are provisional and nay be adjusled once lhe
lransaclion is lnalized. Coodwill ol $332 nillion has been recognized on lhis acquisilion As parl ol lhe Devon lransaclion, lhe gain on lhe disposal ol lhe
groups 50' inleresl in lhe Kirby oil sands in Alberla, Canada anounled lo $633 nillion.
The lnal parl ol lhe Devon lransaclion, lhe acquisilion ol 100' ol Devons equily slake in a nunber ol enlilies holding all ol Devons assels in Brazil
lor consideralion ol $3.2 billion, is expecled lo conplele in early 2011.
n addilion lo lhe Devon lransaclion, BP nade a nunber ol olher ninor acquisilions in 2010, lhe nosl signilcanl ol which was lhe acquisilion by
BPs Allernalive Energy business ol Vereniun Corporalions lignocellulosic bioluels business, lor consideralion ol $93 nillion.
Acquisitions in 2009
BP nade no signilcanl acquisilions in 2009.
Acquisitions in 2008
BP nade a nunber ol acquisilions in 2003 lor a lolal consideralion ol $403 nillion. These business conbinalions were in lhe Exploralion and Produclion
segnenl and Olher businesses and corporale and lhe nosl signilcanl was lhe acquisilion ol vhiling Clean Energy, a cogeneralion power planl. Fair value
adjuslnenls were nade lo lhe acquired assels and liabililies.
162 BP Annual Feporl and Forn 20F 2010
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4. oncurrenl assels held lor sale
As a resull ol lhe groups disposal progranne lollowing lhe Cull ol exico oil spill, various assels, and associaled liabililies, have been presenled as held
lor sale in lhe group balance sheel al 31 Decenber 2010. The carrying anounl ol lhe assels held lor sale is $7,123 nillion, wilh associaled liabililies ol
$1,047 nillion. ncluded wilhin lhese anounls are lhe lollowing ilens, all ol which relale lo lhe Exploralion and Produclion segnenl.
n July 2010, BP announced lhe slarl ol aclive narkeling ol ils assels in Pakislan and Vielnan. On 14 Decenber 2010, BP announced lhal il had
reached agreenenl lo sell ils exploralion and produclion assels in Pakislan lo Uniled Energy Croup Liniled lor $775 nillion in cash. These assels, and
associaled liabililies, have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale is expecled lo be conpleled in lhe
lrsl hall ol 2011, subjecl lo closing condilions and governnenl and regulalory approvals.
n Vielnan, BP is seeking lo divesl ils inleresls in ollshore gas produclion (Block 06.1, a receiving lerninal and associaled pipelines and a power
generalion assel (Phu y 3. On 13 Oclober 2010, BP announced lhal il had reached agreenenl lo sell lhe assels in Vielnan, logelher wilh ils upslrean
businesses and associaled inleresls in Venezuela, lo TKBP lor $1.3 billion in cash, subjecl lo poslclosing adjuslnenls. The Venezuelan assels include
BPs inleresls in lhe Pelroperija, Boqueron and Pelroonagas joinl venlures. These assels, and associaled liabililies, have been classiled as held lor sale in
lhe group balance sheel al 31 Decenber 2010. The sales ol lhe Vielnan and Venezuela businesses are expecled lo be conpleled in lhe lrsl hall ol 2011,
subjecl lo regulalory and olher approvals and condilions.
On 3 Augusl 2010, BP announced an agreenenl lo dispose ol ils oil and gas exploralion, produclion and lransporlalion business in Colonbia lo a
consorliun ol Ecopelrol, Colonbias nalional oil conpany (51', and Talisnan ol Canada (49' lor $1.9 billion in cash, subjecl lo poslclosing adjuslnenls.
These assels and associaled liabililies have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale conpleled on
24 January 2011.
On 25 Oclober 2010, BP announced lhal il had reached agreenenl lo sell ils recenlly acquired inleresls in lour nalure producing deepwaler oil and
gas lelds in lhe US Cull ol exico lo arubeni Oil and Cas lor $650 nillion in cash, subjecl lo poslclosing adjuslnenls. BP acquired lhe inleresls in lhese
lelds lron Devon Energy earlier in 2010 as parl ol a wider acquisilion ol assels in lhe Cull ol exico, Brazil and Azerbaijan. These assels, and associaled
liabililies, have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale conpleled on 20 January 2011.
On 23 ovenber 2010, BP announced lhal il had reached agreenenl lo sell ils inleresls in Pan Anerican Energy (PAE lo Bridas Corporalion lor
$7.06 billion in cash. PAE is an Argenlinabased oil and gas conpany owned by BP (60' and Bridas Corporalion (40'. The lransaclion excludes lhe
shares ol PAE E&P Bolivia Lld. BPs inveslnenl in PAE has been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale is
expecled lo be conpleled in 2011, subjecl lo closing condilions and governnenl and regulalory approvals.
npairnenl losses anounling lo $192 nillion have been recognized in relalion lo cerlain assels reclassiled as held lor sale. See ole 5 lor
lurlher inlornalion.
oncurrenl assels classiled as held lor sale are nol deprecialed. l is eslinaled lhal lhe benell arising lron lhe absence ol deprecialion lor lhe
assels noled above anounled lo approxinalely $162 nillion in 2010. Sinilarly, equily accounling ceases lor any equilynelhod inveslnenl upon
reclassilcalion as an assel held lor sale. l is eslinaled lhal prolls ol approxinalely $9 nillion were nol recognized in 2010 as a resull ol lhe
disconlinuance ol equily accounling.
Disposal proceeds ol $6,197 nillion received in advance ol conplelion ol lhese lransaclions have been classiled as lnance debl on lhe group
balance sheel and ol lhis, $4,730 nillion has been secured on lhe assels held lor sale. See ole 35 lor lurlher inlornalion.
The najorily ol lhe lransaclions noled above are subjecl lo poslclosing adjuslnenls, which nay include adjuslnenls lor working capilal and
adjuslnenls lor prolls allribulable lo lhe purchaser belween lhe agreed elleclive dale and lhe closing dale ol lhe lransaclion. Such poslclosing
adjuslnenls nay resull in lhe lnal anounls received by BP lron lhe purchasers dillering lron lhe disposal proceeds noled above.
The najor classes ol assels and liabililies reclassiled as held lor sale as al 31 Decenber 2010 are as lollows:
$ nillion
2010
Assels
Properly, planl and equipnenl 2,971
Coodwill 87
nlangible assels 135
nveslnenls in joinlly conlrolled enlilies 3,108
nveslnenls in associales 333
Loans 12
Cash 34
Olher currenl assels 448
Assels classiled as held lor sale 7,128
Liabililies
Trade and olher payables 597
Provisions 383
Delerred lax liabililies 67
Liabililies direclly associaled wilh assels classiled as held lor sale 1,047
There were no accunulaled loreign exchange gains or losses recognized direclly in equily relaling lo lhe assels held lor sale al 31 Decenber 2010.
BP Annual Feporl and Forn 20F 2010 163
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5. Disposals and inpairnenl
$ nillion
2010 2009 2003
Proceeds lron disposal ol businesses, nel ol cash disposed 9,462 966 11
Proceeds lron disposal ol lxed assels 7,492 1,715 913
16,954 2,631 929
By business
Exploralion and Produclion 14,392 940 19
Felning and arkeling 1,840 1,294 313
Olher businesses and corporale 722 447 97
16,954 2,631 929
ncluded in proceeds lron disposal are deposils ol $6,197 nillion received lron counlerparlies in respecl ol disposal lransaclions in lhe Exploralion and
Produclion segnenl nol conpleled al 31 Decenber 2010 (2009 and 2003 nil. For lurlher inlornalion on disposal lransaclions nol yel conpleled
see ole 4.
Delerred consideralion relaling lo disposals ol businesses and lxed assels al 31 Decenber 2010 anounled lo $562 nillion receivable wilhin one
year (2009 $307 nillion and 2003 $15 nillion and $271 nillion receivable aller one year (2009 $691 nillion and 2003 $64 nillion.
$ nillion
2010 2009 2003
Cains on sale ol businesses and lxed assels
Exploralion and Produclion 5,267 1,717 34
Felning and arkeling 999 334 1,253
Olher businesses and corporale 117 72 61
6,383 2,173 1,353
$ nillion
2010 2009 2003
Losses on sale ol businesses and lxed assels
Exploralion and Produclion 196 23 13
Felning and arkeling 119 154 297
Olher businesses and corporale 6 21 1
321 203 316
npairnenl losses
Exploralion and Produclion 1,259 113 1,136
Felning and arkeling 144 1,334 159
Olher businesses and corporale 113 139 227
1,516 2,141 1,572
npairnenl reversals
Exploralion and Produclion - (3 (155
Felning and arkeling (141) - -
Olher businesses and corporale (7) (3 -
(148) (11 (155
npairnenl and losses on sale ol businesses and lxed assels 1,689 2,333 1,733
DisposaIs
As parl ol lhe response lo lhe consequences ol lhe Cull ol exico oil spill, lhe group announced plans lo deliver up lo $30 billion ol disposal proceeds
by lhe end ol 2011. Prior lo lhis, in lhe nornal course ol business, lhe group has sold inleresls in exploralion and produclion properlies, service slalions
and pipeline inleresls as well as noncore businesses. The group has also disposed ol olher assels in lhe pasl, such as relneries, when lhis has nel
slralegic objeclives.
See ole 4 lor lurlher inlornalion relaling lo assels and associaled liabililies held lor sale al 31 Decenber 2010.
Exploralion and Produclion
n 2010, lhe najor lransaclions were lhe sale lo Apache Corporalion ol Pernian Basin assels in lhe US, Canadian upslrean gas assels and exploralion
concessions in Egypl and lhe sale lo Devon Energy, as parl ol an acquisilion lransaclion described in ole 3, ol 50' ol our inleresls in Kirby oil sands in
Canada. All ol lhese lransaclions resulled in gains.
n 2009, lhe najor lransaclions were lhe sale ol BP vesl Java Liniled in ndonesia, lhe sale ol our 49.9' inleresl in Kazakhslan Pipeline Venlures
LLC and lhe sale ol our 46' slake in LukArco, all ol which resulled in gains. ve also exchanged inleresls in a nunber ol lelds in lhe orlh Sea wilh
BC Croup plc.
There were no signilcanl disposals in 2003.
164 BP Annual Feporl and Forn 20F 2010
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Felning and arkeling
n 2010, gains resulled lron our disposals ol lhe French relail luels and convenience business lo Delek Europe, lhe luels narkeling business in Bolswana
lo Puna Energy, cerlain nonslralegic pipelines and lerninals in lhe US, our inleresls in elhylene and polyelhylene produclion in alaysia lo Pelronas and
our inleresl in a lulures exchange. Losses resulled lron lhe disposal ol a nunber ol assels in lhe segnenl porllolio.
n 2009, gains on disposal nainly resulled lron lhe disposal ol our ground luels narkeling business in Creece and relail churn in lhe US, Europe
and Auslralasia. Losses resulled lron lhe conlinued disposal ol conpanyowned and conpanyoperaled relail siles in lhe US, relail churn and disposals ol
assels elsewhere in lhe segnenl porllolio. Felail churn is lhe overall process ol acquiring and disposing ol relail siles by which lhe group ains lo inprove
lhe qualily and nix ol ils porllolio ol service slalions.
n 2003, lhe najor lransaclions resulling in gains were lhe conlribulion ol our Toledo relnery lo a US joinlly conlrolled enlily in an exchange
lransaclion wilh Husky Energy and lhe disposals ol our inleresl in lhe Dixie Pipeline and cerlain relail assels in lhe US. The losses on sale relaled nainly
lo lhe disposal ol relail assels in lhe US and Europe. n addilion, cerlain assels al our Acelyls planl in Hull, UK, and olher inleresls in lhe UK and Europe
were sold.
Olher businesses and corporale
n 2010, we disposed ol our 35' inleresl in KPower, a gaslred power assel in Soulh Korea, and conlribuled our Cedar Creek 2 wind energy developnenl
assel in exchange lor a 50' equily inleresl in a joinlly conlrolled enlily, Cedar Creek Holdings LLC (Cedar Creek 2 and cash. n addilion, lhere was a
relurn ol capilal in lhe joinlly conlrolled enlilies Fowler Holdings LLC and Cedar Creek Holdings LLC which did nol change our percenlage inleresl in
eilher enlily.
During 2009, we disposed ol our wind energy business in ndia and conlribuled our Fowler 2 wind energy developnenl assel in exchange lor a
50' equily inleresl in a joinlly conlrolled enlily, Fowler Holdings LLC. n addilion, lhere was a relurn ol capilal in lhe joinlly conlrolled enlily Fowler Fidge
vind Farn LLC which did nol change our percenlage inleresl in lhe enlily.
Sunnarized lnancial inlornalion relaling lo lhe sale ol businesses is shown in lhe lable below. nlornalion relaling lo sales ol lxed assels is excluded
lron lhe lable.
$ nillion
2010 2009 2003
oncurrenl assels 2,319 536 759
Currenl assels 310 444 435
oncurrenl liabililies (303) (146 -
Currenl liabililies (124) (152 (134
Tolal carrying anounl ol nel assels disposed 2,202 632 1,110
Fecycling ol loreign exchange on disposal (52) (27 -
Cosls on disposal 18 3 7
2,168 653 1,117
Proll on sale ol businesses
a
1,968 314 1,721
Tolal consideralion 4,136 972 2,333
Fair value ol inleresl received in a joinlly conlrolled enlily - - (2,333
Consideralion received (receivable
b
20 (6 11
Proceeds lron lhe sale ol businesses relaled lo conpleled lransaclions 4,156 966 11
Deposils received relaled lo assels classiled as held lor sale 5,306 - -
Proceeds lron lhe sale ol businesses
c
9,462 966 11
a
Ol which $929 nillion gain was nol recognized in lhe incone slalenenl in 2003 as il represenled an unrealized gain on lhe lransler ol lhe Toledo relnery inlo a joinlly conlrolled enlily.
b
Consideralion received lron prior year business disposals or nol yel received lron currenl year disposals.
c
el ol cash and cash equivalenls disposed ol $55 nillion (2009 $91 nillion and 2003 nil.
Impairment
n assessing whelher a wriledown is required in lhe carrying value ol a polenlially inpaired inlangible assel, ilen ol properly, planl and equipnenl or an
equilyaccounled inveslnenl, lhe assels carrying value is conpared wilh ils recoverable anounl. The recoverable anounl is lhe higher ol lhe assels lair
value less cosls lo sell and value in use. Unless indicaled olherwise, lhe recoverable anounl used in assessing lhe inpairnenl charges described below is
value in use. The group eslinales value in use using a discounled cash How nodel. The lulure cash Hows are adjusled lor risks specilc lo lhe assel and
are discounled using a prelax discounl rale. This discounl rale is derived lron lhe groups posllax weighled average cosl ol capilal and is adjusled where
applicable lo lake inlo accounl any specilc risks relaling lo lhe counlry where lhe cashgeneraling unil is localed, allhough olher rales nay be used il
appropriale lo lhe specilc circunslances. n 2010 lhe rales used ranged lron 1114' (2009 913'. The rale applied in each counlry is reassessed each
year. n cerlain circunslances an inpairnenl assessnenl nay be carried oul using lair value less cosls lo sell as lhe recoverable anounl when, lor
exanple, a recenl narkel lransaclion lor a sinilar assel has laken place. For inpairnenls ol availablelorsale lnancial assels lhal are quoled inveslnenls,
lhe lair value is delernined by relerence lo bid prices al lhe close ol business al lhe balance sheel dale. Any cunulalive loss previously recognized in olher
conprehensive incone is lranslerred lo lhe incone slalenenl.
BP Annual Feporl and Forn 20F 2010 165
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5. Disposals and inpairnenl conlinued
Exploralion and Produclion
During 2010, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $1,259 nillion. The nain elenenls were lhe wriledown ol assels
in lhe Cull ol exico ol $501 nillion lriggered by an increase in lhe deconnissioning assel as a resull ol new regulalions in lhe US relaling lo idle
inlraslruclure, inpairnenls ol oil and gas properlies in lhe Cull ol exico and onshore orlh Anerica ol $310 nillion and $30 nillion respeclively as a
resull ol decisions lo dispose ol assels al a price lower lhan lhe assels carrying values, a wriledown ol accunulaled cosls in Sakhalin, Fussia by
$341 nillion, lriggered by a change in lhe oullook on lhe lulure recoverabilily ol lhe inveslnenl, and several olher individually insignilcanl inpairnenl
charges anounling lo $27 nillion.
During 2009, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $113 nillion. The nain elenenls were lhe wriledown ol
our $42 nillion inveslnenl in lhe Easl Shnidl inleresl in Fussia, lriggered by a decision lo nol proceed lo developnenl, a $62 nillion charge associaled
wilh our nErgize gas scheduling syslen, and several olher individually insignilcanl inpairnenl charges anounling lo $14 nillion.
During 2003, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $1,136 nillion. The nain elenenls were lhe wriledown ol
our inveslnenl in Fosnell by $517 nillion, lo ils lair value delernined by relerence lo an aclive narkel, due lo a signilcanl decline in lhe narkel value ol
lhe inveslnenl, inpairnenl ol oil and gas properlies in lhe Cull ol exico ol $270 nillion lriggered by downward revisions ol reserves, an inpairnenl ol
exploralion assels in Vielnan ol $210 nillion lollowing BPs decision lo wilhdraw lron aclivilies in lhe area concerned, inpairnenl ol oil and gas properlies
in Egypl ol $35 nillion lriggered by cosl increases, and several olher individually insignilcanl inpairnenl charges anounling lo $104 nillion.
These charges were parlly ollsel by reversals ol previously recognized inpairnenl losses anounling lo $155 nillion. Ol lhis lolal, $122 nillion
resulled lron a reassessnenl ol lhe econonics ol Fhourde El Baguel in Algeria.
Felning and arkeling
During 2010, lhe Felning and arkeling segnenl recognized inpairnenl losses anounling lo $144 nillion relaling lo relail churn in European businesses
and olher ninor assel disposals. These losses were largely ollsel by lhe reversal ol a previously recognized inpairnenl charge ol $141 nillion relaling lo
lhe inveslnenl in our associale China Anerican Pelrochenical Conpany resulling lron a change in narkel condilions.
During 2009, an inpairnenl loss ol $1,579 nillion was recognized againsl lhe goodwill allocaled lo lhe US vesl Coasl luels value chain (FVC. The
goodwill was originally recognized al lhe line ol lhe AFCO acquisilion in 2000. The prevailing weak relning environnenl, logelher wilh a review ol lulure
nargin expeclalions in lhe FVC, has led lo a reduclion in lhe expecled lulure cash Hows. Olher inpairnenl losses were also recognized by lhe segnenl
on a nunber ol assels which anounled lo $255 nillion.
During 2003, lhe Felning and arkeling segnenl recognized inpairnenl losses on a nunber ol assels which anounled lo $159 nillion.
Olher businesses and corporale
During 2010, 2009 and 2003, Olher businesses and corporale recognized inpairnenl losses lolalling $113 nillion, $139 nillion and $227 nillion
respeclively relaled lo various assels in lhe Allernalive Energy business.
6. Evenls aller lhe reporling period
On 22 February 2011, BP announced ils inlenlion lo sell ils inleresls in a nunber ol operaled oil and gas lelds in lhe UK. The assels involved are lhe vylch
Farn onshore oilleld in Dorsel and all ol BPs operaled gas lelds in lhe soulhern orlh Sea, including associaled pipeline inlraslruclure and lhe Dinlinglon
lerninal. BP ains lo conplele lhe diveslnenls around lhe end ol 2011, subjecl lo receipl ol suilable ollers and regulalory and lhirdparly approvals. The
assels do nol yel neel lhe crileria lo be reclassiled as noncurrenl assels held lor sale and il is nol yel possible lo eslinale lhe lnancial ellecl ol lhese
inlended lransaclions.
On 21 February 2011, BP announced a najor slralegic alliance wilh Feliance nduslries Liniled (Feliance in ndia. As parl ol lhis alliance, BP will
purchase a 30 per cenl slake in 23 oil and gas produclionsharing conlracls lhal Feliance operales in ndia, including lhe producing KC D6 block, and lhe
lornalion ol a 50:50 joinl venlure belween lhe lwo conpanies lor lhe sourcing and narkeling ol gas in ndia. The upslrean joinl venlure will conbine BPs
deepwaler exploralion and developnenl capabililies wilh Feliances projecl nanagenenl and operalions experlise. The 23 oil and gas blocks logelher
cover approxinalely 270,000 square kilonelres, and Feliance will conlinue lo be lhe operalor under lhe produclionsharing conlracls. BP will pay Feliance
an aggregale consideralion ol $7.2 billion, and conplelion adjuslnenls, lor lhe inleresls lo be acquired in lhe 23 produclionsharing conlracls. Fulure
perlornance paynenls ol up lo $1.3 billion could be paid based on exploralion success lhal resulls in developnenl ol connercial discoveries. Conplelion
ol lhe lransaclions is subjecl lo ndian regulalory approvals and olher cuslonary condilions.
On 1 February 2011, BP announced lhal, lollowing a slralegic review, il inlends lo divesl lhe Texas Cily relnery and lhe soulhern parl ol ils US
vesl Coasl luels value chain, including lhe Carson relnery, by lhe end ol 2012 subjecl lo all necessary legal and regulalory approvals. BP will ensure
currenl obligalions al Texas Cily are lulllled. The assels do nol yel neel lhe crileria lo be reclassiled as noncurrenl assels held lor sale and il is nol yel
possible lo eslinale lhe lnancial ellecl ol lhese inlended lransaclions.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany whereby BP will receive approxinalely 9.5' ol Fosnells
shares in exchange lor BP issuing new ordinary shares lo Fosnell, resulling in Fosnell holding 5' ol BPs ordinary voling shares. The aggregale value ol
lhe shares in BP lo be issued lo Fosnell is approxinalely $7.3 billion (as al close ol lrading in London on 14 January 2011. BP has agreed lo issue
933,694,633 ordinary shares lo Fosnell, Fosnell has agreed lo lransler 1,010,153,003 ordinary shares lo BP. Conplelion ol lhe lransaclion is subjecl lo
lhe oulcone ol lhe courl applicalion relerred lo in lhe paragraph below, and relaled pending arbilral proceedings. Aller conplelion, BPs increased
inveslnenl in Fosnell will conlinue lo be recognized as an availablelorsale lnancial assel. During lhe period lron enlering inlo lhe agreenenl unlil
conplelion, lhe agreenenl represenls a derivalive lnancial inslrunenl and changes in ils lair value will be recognized in BPs incone slalenenl in 2011.
166 BP Annual Feporl and Forn 20F 2010
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6. Evenls aller lhe reporling period conlinued
An applicalion was broughl in lhe English High Courl on 1 February 2011 by Alla Pelroleun Holdings Liniled (APH and OCP Venlures Liniled (OCP
againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled. APH is a conpany owned by Alpha Croup. APH and OCP each own 25' ol TKBP,
in which BP also has a 50' shareholding. This applicalion alleges breach ol lhe shareholders agreenenl on lhe parl ol BP and seeks an inlerin injunclion
reslraining BP lron laking sleps lo conclude, inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell Oil Conpany relaling lo oil and
gas exploralion, produclion, relning and narkeling in Fussia. Those lransaclions include lhe issue or lransler ol shares belween Fosnell Oil Conpany and
any BP group conpany. The courl granled an inlerin order reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell lransaclions pending an
expediled UCTFAL arbilralion procedure in accordance wilh lhe shareholders agreenenl belween lhe parlies. The arbilralion has connenced and lhe
injunclion has been exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo nallers in dispule belween lhe parlies on a lnal basis
during lhe week connencing 7 arch 2011. The expediled hearing will decide, anong olher nallers, whelher lhe injunclion will be exlended beyond
11 arch 2011.
7. Segnenlal analysis
The groups organizalional slruclure reHecls lhe various aclivilies in which BP is engaged. n 2010, BP had lwo reporlable segnenls: Exploralion and
Produclion and Felning and arkeling. BPs aclivilies in lowcarbon energy are nanaged lhrough our Allernalive Energy business, which is reporled in
Olher businesses and corporale. The group is nanaged on an inlegraled basis.
Exploralion and Produclions aclivilies include oil and nalural gas exploralion, leld developnenl and produclion, nidslrean lransporlalion, slorage
and processing, and lhe narkeling and lrading ol nalural gas, including liqueled nalural gas (LC, logelher wilh power and nalural gas liquids (CLs.
BP announced lhal in 2011 il inlends lo organize ils Exploralion and Produclion segnenl in lhree lunclional divisions - Exploralion, Developnenls
and Produclion, inlegraled lhrough a Slralegy and nlegralion organizalion. This will nol allecl lhe groups reporlable segnenls and Exploralion and
Produclion will conlinue lo be reporled as a single operaling segnenl.
Felning and arkelings aclivilies include lhe supply and lrading, relning, nanulacluring, narkeling and lransporlalion ol crude oil, pelroleun and
pelrochenicals producls and relaled services.
Olher businesses and corporale conprises lhe Allernalive Energy business, Shipping, lhe groups aluniniun business, Treasury (which in lhe
segnenlal analysis includes all ol lhe groups cash, cash equivalenls and associaled inleresl incone, and corporale aclivilies worldwide. The Allernalive
Energy business is an operaling segnenl lhal has been aggregaled wilh lhe olher aclivilies wilhin Olher businesses and corporale as il does nol neel
lhe nalerialily lhresholds lor separale segnenl reporling.
n 2010, lollowing lhe Cull ol exico incidenl, we eslablished lhe Cull Coasl Fesloralion Organizalion (CCFO and equipped il wilh dedicaled
resources and capabililies lo nanage all aspecls ol our response lo lhe incidenl. This organizalion reporls direclly lo lhe group chiel execulive and is
overseen by a specilc new board connillee, however il is nol an operaling segnenl.
The accounling policies ol lhe operaling segnenls are lhe sane as lhe groups accounling policies described in ole 1. However, FFS requires
lhal lhe neasure ol proll or loss disclosed lor each operaling segnenl is lhe neasure lhal is provided regularly lo lhe chiel operaling decision naker lor
lhe purposes ol perlornance assessnenl and resource allocalion. For BP, lhis neasure ol proll or loss is replacenenl cosl proll or loss belore inleresl
and lax which reHecls lhe replacenenl cosl ol supplies by excluding lron proll or loss invenlory holding gains and losses
a
. Feplacenenl cosl proll or loss
lor lhe group is nol a recognized CAAP neasure.
Sales belween segnenls are nade al prices lhal approxinale narkel prices, laking inlo accounl lhe volunes involved. Segnenl revenues and
segnenl resulls include lransaclions belween business segnenls. These lransaclions and any unrealized prolls and losses are elininaled on
consolidalion, unless unrealized losses provide evidence ol an inpairnenl ol lhe assel lranslerred. Sales lo exlernal cusloners by region are based on lhe
localion ol lhe seller. The UK region includes lhe UKbased inlernalional aclivilies ol Felning and arkeling.
All surpluses and delcils recognized on lhe group balance sheel in respecl ol pension and olher poslrelirenenl benell plans are allocaled lo
Olher businesses and corporale. However, lhe periodic expense relaling lo lhese plans is allocaled lo lhe olher operaling segnenls based upon lhe
business in which lhe enployees work.
Cerlain lnancial inlornalion is provided separalely lor lhe US as lhis is an individually nalerial counlry lor BP, and lor lhe UK as lhis is BPs counlry
ol donicile.
a
nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired during lhe period and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod aller adjusling lor any changes in provisions where lhe nel realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO nelhod, which we use lor FFS
reporling, lhe cosl ol invenlory charged lo lhe incone slalenenl is based on ils hisloric cosl ol purchase, or nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels, lhis can have a
signilcanl dislorling ellecl on reporled incone. The anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any relaled
novenenls in nel realizable value provisions and lhe charge lhal would have arisen il an average cosl ol supplies was used lor lhe period. For lhis purpose, lhe average cosl ol supplies during lhe period
is principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol invenlory acquired in lhe period by lhe nunber ol barrels acquired. The anounls disclosed are nol separalely reHecled in lhe lnancial
slalenenls as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol invenlories held as parl ol a lrading posilion and cerlain olher lenporary invenlory posilions.
BP Annual Feporl and Forn 20F 2010 167
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7. Segnenlal analysis conlinued
$ nillion
2010
Other GuIf of ConsoIidation
ExpIoration Rehning businesses Mexico adjustment
and and and oiI spiII and TotaI
By business Production Marketing corporate response eIiminations group
Segnenl revenues
Sales and olher operaling revenues 66,266 266,751 3,328 - (39,238) 297,107
Less: sales belween businesses (37,049) (1,358) (831) - 39,238 -
Third parly sales and olher operaling revenues 29,217 265,393 2,497 - - 297,107
Equilyaccounled earnings 3,979 755 23 - - 4,757
nleresl revenues 83 46 109 - - 238
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 30,886 5,555 (1,516) (40,858) 447 (5,486)
nvenlory holding gains
a
84 1,684 16 - - 1,784
Proll (loss belore inleresl and laxalion 30,970 7,239 (1,500) (40,858) 447 (3,702)
Finance cosls (1,170)
el lnance incone relaling lo pensions and olher
poslrelirenenl benells 47
Loss belore laxalion (4,825)
Olher incone slalenenl ilens
Deprecialion, deplelion and anorlizalion 8,616 2,258 290 - - 11,164
npairnenl losses 1,259 144 113 - - 1,516
npairnenl reversals - 141 7 - - 148
Fair value loss on enbedded derivalives 309 - - - - 309
Charges lor provisions, nel ol wrileback ol unused provisions,
including change in discounl rale 303 275 206 30,266 - 31,050
Segnenl assels
Equilyaccounled inveslnenls 17,738 7,043 840 - - 25,621
Addilions lo noncurrenl assels 20,113 4,030 1,226 - - 25,369
Addilions lo olher inveslnenls 20
Elenenl ol acquisilions nol relaled lo noncurrenl assels
Addilions lo deconnissioning assel (1,972)
Capilal expendilure and acquisilions 17,753 4,029 1,234 - - 23,016
a
nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired during lhe period and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod aller adjusling lor any changes in provisions where lhe nel realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO nelhod, which we use lor FFS
reporling, lhe cosl ol invenlory charged lo lhe incone slalenenl is based on ils hisloric cosl ol purchase, or nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels, lhis can have a
signilcanl dislorling ellecl on reporled incone. The anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any relaled
novenenls in nel realizable value provisions and lhe charge lhal would have arisen il an average cosl ol supplies was used lor lhe period. For lhis purpose, lhe average cosl ol supplies during lhe period
is principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol invenlory acquired in lhe period by lhe nunber ol barrels acquired. The anounls disclosed are nol separalely reHecled in lhe lnancial
slalenenls as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol invenlories held as parl ol a lrading posilion and cerlain olher lenporary invenlory posilions.
(401)
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7. Segnenlal analysis conlinued
$ nillion
2009
Olher Consolidalion
Exploralion Felning businesses adjuslnenl
and and and and Tolal
By business Produclion arkeling corporale elininalions group
Segnenl revenues
Sales and olher operaling revenues 57,626 213,050 2,343 (34,247 239,272
Less: sales belween businesses (32,540 (321 (336 34,247 -
Third parly sales and olher operaling revenues 25,036 212,229 1,957 - 239,272
Equilyaccounled earnings 3,309 553 34 - 3,901
nleresl revenues 93 32 95 - 225
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 24,300 743 (2,322 (717 22,504
nvenlory holding gains
a
142 3,774 6 - 3,922
Proll (loss belore inleresl and laxalion 24,942 4,517 (2,316 (717 26,426
Finance cosls (1,110
el lnance expense relaling lo pensions and olher poslrelirenenl benells (192
Proll belore laxalion 25,124
Olher incone slalenenl ilens
Deprecialion, deplelion and anorlizalion 9,557 2,236 313 - 12,106
npairnenl losses 113 1,334 139 - 2,141
npairnenl reversals 3 - 3 - 11
Fair value (gain loss on enbedded derivalives (664 57 - - (607
Charges lor provisions, nel ol wrileback ol unused provisions,
including change in discounl rale 307 756 433 - 1,551
Segnenl assels
Equilyaccounled inveslnenls 20,239 6,332 1,033 - 23,259
Addilions lo noncurrenl assels 15,355 4,033 1,297 - 21,235
Addilions lo olher inveslnenls 19
Elenenl ol acquisilions nol relaled lo noncurrenl assels (7
Addilions lo deconnissioning assel (933
Capilal expendilure and acquisilions 14,396 4,114 1,299 - 20,309
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nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired during lhe period and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod aller adjusling lor any changes in provisions where lhe nel realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO nelhod, which we use lor FFS
reporling, lhe cosl ol invenlory charged lo lhe incone slalenenl is based on ils hisloric cosl ol purchase, or nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels, lhis can have a
signilcanl dislorling ellecl on reporled incone. The anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any relaled
novenenls in nel realizable value provisions and lhe charge lhal would have arisen il an average cosl ol supplies was used lor lhe period. For lhis purpose, lhe average cosl ol supplies during lhe period
is principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol invenlory acquired in lhe period by lhe nunber ol barrels acquired. The anounls disclosed are nol separalely reHecled in lhe lnancial
slalenenls as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol invenlories held as parl ol a lrading posilion and cerlain olher lenporary invenlory posilions.
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7. Segnenlal analysis conlinued
$ nillion
2003
Olher Consolidalion
Exploralion Felning businesses adjuslnenl
and and and and Tolal
By business Produclion arkeling corporale elininalions group
Segnenl revenues
Sales and olher operaling revenues 36,170 320,039 4,634 (49,700 361,143
Less: sales belween businesses (45,931 (1,913 (1,351 49,700 -
Third parly sales and olher operaling revenues 40,239 313,121 2,733 - 361,143
Equilyaccounled earnings 3,565 131 125 - 3,321
nleresl revenues 114 35 220 - 369
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 33,303 4,176 (1,223 466 41,727
nvenlory holding losses
a
(393 (6,060 (35 - (6,433
Proll (loss belore inleresl and laxalion 37,915 (1,334 (1,253 466 35,239
Finance cosls (1,547
el lnance incone relaling lo pensions and olher poslrelirenenl benells 591
Proll belore laxalion 34,233
Olher incone slalenenl ilens
Deprecialion, deplelion and anorlizalion 3,440 2,203 337 - 10,935
npairnenl losses 1,136 159 227 - 1,572
npairnenl reversals 155 - - - 155
Fair value (gain loss on enbedded derivalives 163 (57 5 - 111
Charges lor provisions, nel ol wrileback ol unused provisions 573 479 657 - 1,709
Segnenl assels
Equilyaccounled inveslnenls 20,131 6,622 1,073 - 27,326
Addilions lo noncurrenl assels 21,534 6,636 1,302 - 30,022
Addilions lo olher inveslnenls 52
Elenenl ol acquisilions nol relaled lo noncurrenl assels 11
Addilions lo deconnissioning assel 615
Capilal expendilure and acquisilions 22,227 6,634 1,339 - 30,700
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nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired during lhe period and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod aller adjusling lor any changes in provisions where lhe nel realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO nelhod, which we use lor FFS
reporling, lhe cosl ol invenlory charged lo lhe incone slalenenl is based on ils hisloric cosl ol purchase, or nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels, lhis can have a
signilcanl dislorling ellecl on reporled incone. The anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any relaled
novenenls in nel realizable value provisions and lhe charge lhal would have arisen il an average cosl ol supplies was used lor lhe period. For lhis purpose, lhe average cosl ol supplies during lhe period
is principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol invenlory acquired in lhe period by lhe nunber ol barrels acquired. The anounls disclosed are nol separalely reHecled in lhe lnancial
slalenenls as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol invenlories held as parl ol a lrading posilion and cerlain olher lenporary invenlory posilions.
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7. Segnenlal analysis conlinued
$ nillion
2010
By geographical area US Non-US TotaI
Fevenues
Third parly sales and olher operaling revenues
a
101,768 195,339 297,107
Fesulls
Feplacenenl cosl proll (loss belore inleresl and laxalion (30,087) 24,601 (5,486)
oncurrenl assels
Olher noncurrenl assels
b c
67,498 92,614 160,112
Olher inveslnenls 1,191
Loans 894
Olher receivables 6,298
Derivalive lnancial inslrunenls 4,210
Delerred lax assels 528
Delned benell pension plan surpluses 2,176
Tolal noncurrenl assels 175,409
Capilal expendilure and acquisilions 10,370 12,646 23,016
a
onUS region includes UK $62,794 nillion.
b
onUS region includes UK $16,650 nillion.
c
Excluding lnancial inslrunenls, delerred lax assels and poslenploynenl benell plan surpluses.
$ nillion
2009
By geographical area US onUS Tolal
Fevenues
Third parly sales and olher operaling revenues
a
33,932 155,290 239,272
Fesulls
Feplacenenl cosl proll belore inleresl and laxalion 2,306 19,693 22,504
oncurrenl assels
Olher noncurrenl assels
b c
64,529 93,530 153,109
Olher inveslnenls 1,567
Loans 1,039
Olher receivables 1,729
Derivalive lnancial inslrunenls 3,965
Delerred lax assels 516
Delned benell pension plan surpluses 1,390
Tolal noncurrenl assels 163,315
Capilal expendilure and acquisilions 9,365 10,444 20,309
a
onUS region includes UK $51,172 nillion.
b
onUS region includes UK $16,713 nillion.
c
Excluding lnancial inslrunenls, delerred lax assels and poslenploynenl benell plan surpluses.
$ nillion
2003
By geographical area US onUS Tolal
Fevenues
Third parly sales and olher operaling revenues
a
123,364 237,779 361,143
Fesulls
Feplacenenl cosl proll belore inleresl and laxalion 10,673 31,049 41,727
oncurrenl assels
Olher noncurrenl assels
b c
62,679 39,323 152,502
Olher inveslnenls 355
Loans 995
Olher receivables 710
Derivalive lnancial inslrunenls 5,054
Delned benell pension plan surpluses 1,733
Tolal noncurrenl assels 161,354
Capilal expendilure and acquisilions 16,046 14,654 30,700
a
onUS region includes UK $31,773 nillion.
b
onUS region includes UK $15,990 nillion.
c
Excluding lnancial inslrunenls, and poslenploynenl benell plan surpluses.
BP Annual Feporl and Forn 20F 2010 171
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3. nleresl and olher incone
$ nillion
2010 2009 2003
nleresl incone
nleresl incone lron availablelorsale lnancial assels
a
23 15 32
nleresl incone lron loans and receivables
a
88 69 163
nleresl lron loans lo equilyaccounled enlilies 36 53 115
Olher inleresl 91 33 59
238 225 369
Olher incone
Dividend incone lron availablelorsale lnancial assels
a
37 32 37
Olher incone 406 535 330
443 567 367
681 792 736
a
Tolal inleresl and olher incone relaled lo lnancial inslrunenls anounled lo $143 nillion (2009 $116 nillion and 2003 $232 nillion.
9. Produclion and sinilar laxes
$ nillion
2010 2009 2003
US 1,093 649 2,602
onUS 4,151 3,103 6,351
5,244 3,752 3,953
www.bp.con/downloads/dda
10. Deprecialion, deplelion and anorlizalion
$ nillion
By business 2010 2009 2003
Exploralion and Produclion
US 3,751 4,150 3,012
onUS 4,865 5,407 5,423
8,616 9,557 3,440
Felning and arkeling
US 955 919 325
onUS
a
1,303 1,317 1,333
2,258 2,236 2,203
Olher businesses and corporale
US 140 136 132
onUS 150 177 205
290 313 337
By geographical area
US 4,846 5,205 3,969
onUS
a
6,318 6,901 7,016
11,164 12,106 10,935
a
onUS area includes lhe UKbased inlernalional aclivilies ol Felning and arkeling.
172 BP Annual Feporl and Forn 20F 2010
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11. npairnenl review ol goodwill
$ nillion
Coodwill al 31 Decenber 2010 2009
Exploralion and Produclion 4,450 4,297
Felning and arkeling 4,074 4,245
Olher businesses and corporale 74 73
8,598 3,620
Coodwill acquired lhrough business conbinalions has been allocaled lo groups ol cashgeneraling unils lhal are expecled lo benell lron lhe synergies ol
lhe acquisilion. For Exploralion and Produclion, goodwill has been allocaled lo each geographic region, lhal is UK, US and Fesl ol vorld, and lor Felning
and arkeling, goodwill has been allocaled lo lhe Fhine luels value chain (FVC, Lubricanls and Olher.
n assessing whelher goodwill has been inpaired, lhe carrying anounl ol lhe cashgeneraling unil (including goodwill is conpared wilh lhe
recoverable anounl ol lhe cashgeneraling unil. The recoverable anounl is lhe higher ol lair value less cosls lo sell and value in use. n lhe absence ol any
inlornalion aboul lhe lair value ol a cashgeneraling unil, lhe recoverable anounl is deened lo be lhe value in use.
The group calculales lhe value in use using a discounled cash How nodel. The lulure cash Hows are adjusled lor risks specilc lo lhe cashgeneraling unil
and are discounled using a prelax discounl rale. The discounl rale is derived lron lhe groups posllax weighled average cosl ol capilal and is adjusled
where applicable lo lake inlo accounl any specilc risks relaling lo lhe counlry where lhe cashgeneraling unil is localed. The rale lo be applied lo each
counlry is reassessed each year. Discounl rales ol 12' and 14' have been used lor goodwill inpairnenl calculalions perlorned in 2010 (2009 11'
and 13'.
The business segnenl plans, which are approved on an annual basis by senior nanagenenl, are lhe prinary source ol inlornalion lor lhe
delerninalion ol value in use. They conlain lorecasls lor oil and nalural gas produclion, relnery lhroughpuls, sales volunes lor various lypes ol relned
producls (e.g. gasoline and lubricanls, revenues, cosls and capilal expendilure. As an inilial slep in lhe preparalion ol lhese plans, various environnenlal
assunplions, such as oil prices, nalural gas prices, relning nargins, relned producl nargins and cosl inHalion rales, are sel by senior nanagenenl. These
environnenlal assunplions lake accounl ol exisling prices, global supplydenand equilibriun lor oil and nalural gas, olher nacroecononic laclors and
hislorical lrends and variabilily.
ExpIoration and Production
$ nillion
2010 2009
Rest of Fesl ol
UK US WorId TotaI UK US vorld Tolal
Coodwill 341 3,479 630 4,450 341 3,441 515 4,297
Excess ol recoverable anounl over carrying anounl 7,556 18,968 41,714 n/a 7,721 15,523 n/a n/a
The value in use is based on lhe cash Hows expecled lo be generaled by lhe projecled oil or nalural gas produclion prolles up lo lhe expecled dales ol
cessalion ol produclion ol each producing leld. As lhe produclion prolle and relaled cash Hows can be eslinaled lron lhe conpanys pasl experience,
nanagenenl believes lhal lhe cash Hows generaled over lhe eslinaled lile ol leld is lhe appropriale basis upon which lo assess goodwill and individual
assels lor inpairnenl. The dale ol cessalion ol produclion depends on lhe inleraclion ol a nunber ol variables, such as lhe recoverable quanlilies ol
hydrocarbons, lhe produclion prolle ol lhe hydrocarbons, lhe cosl ol lhe developnenl ol lhe inlraslruclure necessary lo recover lhe hydrocarbons, lhe
produclion cosls, lhe conlraclual duralion ol lhe produclion concession and lhe selling price ol lhe hydrocarbons produced. As each producing leld has
specilc reservoir characlerislics and econonic circunslances, lhe cash Hows ol lhe lelds are conpuled using appropriale individual econonic nodels
and key assunplions agreed by BPs nanagenenl lor lhe purpose. Capilal expendilure and operaling cosls lor lhe lrsl lour years and expecled
hydrocarbon produclion prolles up lo 2020 are derived lron lhe business segnenl plan. Eslinaled produclion quanlilies and cash Hows up lo lhe dale ol
cessalion ol produclion on a leldbyleld basis are developed lo be consislenl wilh lhis. The produclion prolles used are consislenl wilh lhe resource
volunes approved as parl ol BPs cenlrallyconlrolled process lor lhe eslinalion ol proved reserves and lolal resources.
Consislenl wilh prior years, lhe 2010 review lor inpairnenl was carried oul during lhe lourlh quarler.
The lable above shows lhe carrying anounl ol lhe goodwill allocaled lo each ol lhe regions ol lhe Exploralion and Produclion segnenl and lhe
excess ol lhe recoverable anounl over lhe carrying anounl (lhe headroon in lhe cashgeneraling unils lo which lhe goodwill has been allocaled.
Consislenl wilh prior periods, nidslrean and inlangible oil and gas assels were excluded lron lhe headroon calculalion.
For 2010, lhe Brenl oil price assunplion was an average $35 per barrel in 2011, $33 per barrel in 2012, $39 per barrel in 2013, $39 per barrel in
2014, $90 per barrel in 2015 and $75 per barrel in 2016 and beyond. The Henry Hub nalural gas price assunplion was an average ol $4.25/nnBlu in 2011,
$4.96/nnBlu in 2012, $5.29/nnBlu in 2013, $5.49/nnBlu in 2014, $5.67/nnBlu in 2015 and $6.50/nnBlu in 2016 and beyond. The prices lor lhe lrsl
lve years were derived lron lorward price curves in lhe lourlh quarler. Prices in 2016 and beyond were delernined using longlern views ol global supply
and denand, building upon pasl experience ol lhe induslry and consislenl wilh exlernal sources. These prices were adjusled lo arrive al appropriale
consislenl price assunplions lor dillerenl qualilies ol oil and gas.
n 2009, as pernilled by AS 36, lhe delailed calculalions ol recoverable anounl perlorned in 2003 lor lhe US and lhe UK, and lhe calculalions
perlorned in 2005 lor lhe Fesl ol vorld, were used lor lhe 2009 inpairnenl lesl as lhe crileria ol AS 36 were considered lo be salisled: lhe headroon
was subslanlial in 2003 (lor lhe US and lhe UK and 2005 (lor lhe Fesl ol vorld, lhere had been no signilcanl change in lhe assels and liabililies, and lhe
likelihood lhal lhe recoverable anounl would be less lhan lhe carrying anounl al lhe line ol lhe lesl was renole. For 2003, lhe Brenl oil assunplion
was an average $49 per barrel in 2009, $59 per barrel in 2010, $65 per barrel in 2011, $63 per barrel in 2012, $70 per barrel in 2013 and $75 per barrel in
2014 and beyond. The Henry Hub nalural gas price assunplion was an average ol $6.16/nnBlu in 2009, $7.15/nnBlu in 2010, $7.34/nnBlu in 2011,
$7.62/nnBlu in 2012, $7.60/nnBlu in 2013 and $7.50/nnBlu in 2014 and beyond. The prices lor lhe lrsl lve years were derived lron lorward price
curves al lhe yearend. Prices in 2014 and beyond were delernined using longlern views ol global supply and denand, building upon pasl experience ol
lhe induslry and consislenl wilh exlernal sources. These prices were adjusled lo arrive al appropriale consislenl price assunplions lor dillerenl qualilies ol
oil and gas.
BP Annual Feporl and Forn 20F 2010 173
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The key assunplions required lor lhe valueinuse eslinalion are lhe oil and nalural gas prices, produclion volunes and lhe discounl rale. To lesl lhe
sensilivily ol lhe headroon lo changes in produclion volunes and oil and nalural gas prices, nanagenenl has developed rules ol lhunb lor key
assunplions. Applying lhese gives an indicalion ol lhe inpacl on lhe headroon ol possible changes in lhe key assunplions. Due lo lhe nonlinear
relalionship ol dillerenl variables, lhe calculalions were done using a nunber ol sinpliled assunplions, lherelore a delailed calculalion al any given price
nay produce a dillerenl resull.
l was eslinaled lhal il lhe oil price assunplion lor 2016 and beyond was around 20' lower lor lhe UK and US, and around onelhird lower lor
Fesl ol vorld, lhis would cause lhe recoverable anounl lo be equal lo lhe carrying anounl ol goodwill and relaled noncurrenl assels lor each
cashgeneraling unil. l was eslinaled lhal no reasonably possible change in lhe longlern price ol gas would cause lhe headroon in lhe UK, US or Fesl
ol vorld lo be reduced lo zero.
Eslinaled produclion volunes are based on delailed dala lor lhe lelds and lake inlo accounl developnenl plans lor lhe lelds agreed by
nanagenenl as parl ol lhe longlern planning process. n 2010, il was eslinaled lhal, il all our produclion were lo be reduced by 10' lor lhe whole ol
lhe nexl 15 years, lhis would nol be sullcienl lo reduce lhe excess ol recoverable anounl over lhe carrying anounls ol each cashgeneraling unil lo zero.
Consequenlly, nanagenenl believes no reasonably possible change in lhe produclion assunplion would cause lhe carrying anounls lo exceed lhe
recoverable anounls.
anagenenl also believes lhal currenlly lhere is no reasonably possible change in discounl rale lhal would cause lhe carrying anounls in lhe UK,
US or Fesl ol vorld lo exceed lhe recoverable anounls.
Rehning and Marketing
$ nillion
2010 2009
Rhine FVC Lubricants Other TotaI Fhine FVC Lubricanls Olher Tolal
Coodwill 629 3,285 160 4,074 655 3,416 174 4,245
Excess ol recoverable anounl over
carrying anounl 4,091 n/a n/a n/a 2,034 n/a n/a n/a
Cash Hows lor each cashgeneraling unil are derived lron lhe business segnenl plan. To delernine lhe value in use lor each ol lhe cashgeneraling unils,
cash Hows lor a period ol 10 years are discounled and aggregaled wilh a lerninal value.
Fhine FVC
The key assunplions lo which lhe calculalion ol value in use lor lhe Fhine FVC is nosl sensilive are relnery gross nargins, produclion volunes, and
discounl rale. n 2010 lhe nelhod used lo calculale lhe nargin per barrel presenled has been updaled and conparalive lgures presenled have also been
updaled. The revised nargin neasure, lhe regional Felnery arker argin (F, is based on a single represenlalive crude wilh producl yields
characlerislic ol lhe lypical level ol upgrading conplexily available in lhe region. Cross nargin assunplions used in lhe Fhine FVC plan are consislenl wilh
lhose used lo develop lhe regional F. The average values assigned lo lhe regional F and relnery produclion volune over lhe plan period are
$11.05 per barrel and 243nnbbl a year (2009 $10.60 per barrel and 254nnbbl a year. These values reHecl pasl experience and are consislenl wilh
exlernal sources. Cash Hows beyond lhe lveyear plan period are exlrapolaled using a noninal 4' growlh rale (2009 cash Hows beyond lhe lveyear plan
period were exlrapolaled using a noninal 2.4' growlh rale.
2010
Sensilivily analysis
Sensilivily ol value in use lo a change in relnery nargins ol $1 per barrel ($ billion 1.6
Adverse change in relnery nargins lo reduce recoverable anounl lo carrying anounl ($ per barrel 2.6
Sensilivily ol value in use lo a 5' change in produclion volune ($ billion 0.9
Adverse change in produclion volune lo reduce recoverable anounl lo carrying anounl (nnbbl per year 54
Sensilivily ol value in use lo a change in lhe discounl rale ol 1' ($ billion 0.8
Discounl rale lo reduce recoverable anounl lo carrying anounl 19%
Lubricanls
As pernilled by AS 36, lhe delailed calculalions ol recoverable anounl perlorned in 2009 were used lor lhe 2010 inpairnenl lesl as lhe crileria in lhal
slandard were considered lo be salisled: lhe headroon was subslanlial in 2009, lhere had been no signilcanl change in lhe assels and liabililies, and lhe
likelihood lhal lhe recoverable anounl would be less lhan lhe carrying anounl al lhe line ol lhe lesl was renole.
The key assunplions lo which lhe calculalion ol value in use lor lhe Lubricanls unil is nosl sensilive are operaling unil nargins, sales
volunes, and discounl rale. The values assigned lo lhese key assunplions reHecl pasl experience. o reasonably possible change in any ol lhese key
assunplions would cause lhe unils carrying anounl lo exceed ils recoverable anounl. Cash Hows beyond lhe lwoyear plan period were exlrapolaled
using a noninal 3' growlh rale.
US vesl Coasl FVC
As disclosed in ole 5, lhe inpairnenl review ol goodwill allocaled lo lhe US vesl Coasl FVC resulled in lhe recognilion ol an inpairnenl loss in 2009 lo
wrile oll lhe enlire balance ol $1,579 nillion.
174 BP Annual Feporl and Forn 20F 2010
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12. Dislribulion and adninislralion expenses
$ nillion
2010 2009 2003
Dislribulion 11,393 12,793 14,075
Adninislralion 1,162 1,240 1,337
12,555 14,033 15,412
13. Currency exchange gains and losses
$ nillion
2010 2009 2003
Currency exchange losses charged lo incone
a
218 193 156
a
Excludes exchange gains and losses arising on lnancial inslrunenls neasured al lair value lhrough proll or loss.
14. Fesearch and developnenl
$ nillion
2010 2009 2003
Expendilure on research and developnenl 780 537 595
n addilion lo lhe expendilure on research and developnenl presenled in lhe lable above, BP also nade donalions lo exlernal organizalions lor research
purposes, including lhe Cull ol exico Fesearch nilialive as described on page 72. These donalions are nol included in lhe anounls reporled above.
15. Operaling leases
n lhe case ol an operaling lease enlered inlo by BP as lhe operalor ol a joinlly conlrolled assel, lhe anounls shown in lhe lables below represenl lhe nel
operaling lease expense and nel lulure nininun lease paynenls. These nel anounls are aller deducling anounls reinbursed, or lo be reinbursed, by
joinl venlure parlners, whelher lhe joinl venlure parlners have cosigned lhe lease or nol. vhere BP is nol lhe operalor ol a joinlly conlrolled assel, BPs
share ol lhe lease expense and lulure nininun lease paynenls is included in lhe anounls shown, whelher BP has cosigned lhe lease or nol.
The lable below shows lhe expense lor lhe year in respecl ol operaling leases.
$ nillion
2010 2009 2003
ininun lease paynenls 5,371 4,109 4,114
Conlingenl renlals (60) (9 97
Sublease renlals (121) (133 (194
5,190 3,967 4,017
The lulure nininun lease paynenls al 31 Decenber, belore deducling relaled renlal incone lron operaling subleases ol $365 nillion (2009 $379 nillion,
are shown in lhe lable below. This does nol include lulure conlingenl renlals. vhere lhe lease renlals are dependenl on a variable laclor, lhe lulure nininun
lease paynenls are based on lhe laclor as al inceplion ol lhe lease.
$ nillion
Fulure nininun lease paynenls 2010 2009
Payable wilhin
1 year 3,521 3,251
2 lo 5 years 6,798 7,334
Therealler 3,654 4,131
13,973 14,716
BP Annual Feporl and Forn 20F 2010 175
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16. Exploralion lor and evalualion ol oil and nalural gas resources
The lollowing lnancial inlornalion represenls lhe anounls included wilhin lhe group lolals relaling lo aclivily associaled wilh lhe exploralion lor and
evalualion ol oil and nalural gas resources. All such aclivily is recorded wilhin lhe Exploralion and Produclion segnenl.
$ nillion
2010 2009 2003
Exploralion and evalualion cosls
Exploralion expendilure wrillen oll
a
375 593 335
Olher exploralion cosls 468 523 497
Exploralion expense lor lhe year
b
843 1,116 332
nlangible assels - exploralion and appraisal expendilure 13,126 10,333 9,031
el assels 13,126 10,333 9,031
Capilal expendilure 6,422 2,715 4,730
el cash used in operaling aclivilies 468 523 497
el cash used in invesling aclivilies 6,428 3,306 4,163
a
2010 includes $157 nillion relaled lo deconnissioning provisions lor idle inlraslruclure, as required by BOEFEs olice ol Lessees 2010 CO5 issued in Oclober 2010.
b
n addilion lo lhese anounls, an inpairnenl charge ol $210 nillion was recognized in 2003 relaling lo exploralion assels in Vielnan lollowing BPs decision lo wilhdraw lron aclivilies in lhe area concerned.
17. Audilors renuneralion
$ nillion
Fees - Ernsl & Young 2010 2009 2003
Fees payable lo lhe conpanys audilors lor lhe audil ol lhe conpanys accounls
a
13 13 16
Fees payable lo lhe conpanys audilors and ils associales lor olher services
Audil ol lhe conpanys subsidiaries pursuanl lo legislalion 22 22 23
Olher services pursuanl lo legislalion 12 11 13
47 46 57
Tax services 2 1 2
Services relaling lo corporale lnance lransaclions 1 - 2
All olher services 4 6 5
Audil lees in respecl ol lhe BP pension plans 1 1 1
55 54 67
a
Fees in respecl ol lhe audil ol lhe accounls ol BP p.l.c. including lhe groups consolidaled lnancial slalenenls.
2010 includes $1 nillion ol addilional lees lor 2009 and 2003 includes $3 nillion ol addilional lees lor 2007. Audilors renuneralion is included in lhe
incone slalenenl wilhin dislribulion and adninislralion expenses.
The lax services relale lo incone lax and indirecl lax conpliance, enployee lax services and lax advisory services.
15. Operaling leases conlinued
The group enlers inlo operaling leases ol ships, planl and nachinery, connercial vehicles and land and buildings. Typical duralions ol lhe leases are as lollows:
Years
Ships up lo 15
Planl and nachinery up lo 10
Connercial vehicles up lo 15
Land and buildings up lo 40
The group has enlered inlo a nunber ol slruclured operaling leases lor ships and in nosl cases lhe lease renlal paynenls vary wilh narkel inleresl rales.
The variable porlion ol lhe lease paynenls above or below lhe anounl based on lhe narkel inleresl rale prevailing al inceplion ol lhe lease is lrealed as
conlingenl renlal expense. The group also roulinely enlers inlo bareboal charlers, linecharlers and spolcharlers lor ships on slandard induslry lerns.
The nosl signilcanl ilens ol planl and nachinery hired under operaling leases are drilling rigs used in lhe Exploralion and Produclion segnenl.
Al 31 Decenber 2010 lhe lulure nininun lease paynenls relaling lo drilling rigs anounled lo $4,515 nillion (2009 $4,919 nillion. n sone cases, drilling
rig lease renlal rales are adjusled periodically lo narkel rales lhal are inHuenced by oil prices and nay be signilcanlly dillerenl lron lhe rales al lhe
inceplion ol lhe lease. Dillerences belween lhe rale paid and rale al inceplion ol lhe lease are lrealed as conlingenl renlal expense.
Connercial vehicles hired under operaling leases are prinarily railcars. Felail service slalion siles and ollce acconnodalion are lhe nain ilens in
lhe land and buildings calegory.
The lerns and condilions ol lhese operaling leases do nol inpose any signilcanl lnancial reslriclions on lhe group. Sone ol lhe leases ol ships
and buildings allow lor renewals al BPs oplion.
176 BP Annual Feporl and Forn 20F 2010
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13. Finance cosls
$ nillion
2010 2009 2003
nleresl payable 955 906 1,319
Capilalized al 2.75' (2009 2.75' and 2003 4.00'
a
(254) (133 (162
Unwinding ol discounl on provisions
b
234 247 237
Unwinding ol discounl on olher payables
b
235 145 103
1,170 1,110 1,547
a
T ax reliel on capilalized inleresl is $71 nillion (2009 $63 nillion and 2003 $42 nillion.
b
Unwinding ol discounl on provisions relaling lo lhe Cull ol exico oil spill was $4 nillion and unwinding ol discounl on olher payables relaling lo lhe Cull ol exico oil spill was $73 nillion. See ole 2 lor
lurlher inlornalion on lhe lnancial inpacls ol lhe Cull ol exico oil spill.
17. Audilors renuneralion conlinued
The audil connillee has eslablished preapproval policies and procedures lor lhe engagenenl ol Ernsl & Young lo render audil and cerlain assurance and
lax services. The audil lees payable lo Ernsl & Young are reviewed by lhe audil connillee in lhe conlexl ol olher global conpanies lor coslellecliveness.
Ernsl & Young perlorned lurlher assurance and lax services lhal were nol prohibiled by regulalory or olher prolessional requirenenls and were pre
approved by lhe connillee. Ernsl & Young is engaged lor lhese services when ils experlise and experience ol BP are inporlanl. osl ol lhis work is ol an
audil nalure. Tax services were awarded eilher lhrough a lull conpelilive lender process or lollowing an assessnenl ol lhe experlise ol Ernsl & Young
conpared wilh lhal ol olher polenlial service providers. These services are lor a lxed lern.
Under SEC regulalions, lhe renuneralion ol lhe audilor ol $55 nillion (2009 $54 nillion and 2003 $67 nillion is required lo be presenled as
lollows: audil services $47 nillion (2009 $46 nillion and 2003 $57 nillion, olher audil relaled services $1 nillion (2009 $2 nillion and 2003 $1 nillion, lax
services $2 nillion (2009 $1 nillion and 2003 $2 nillion, and lees lor all olher services $5 nillion (2009 $5 nillion and 2003 $7 nillion.
www.bp.con/downloads/laxalion
19. Taxalion
Tax on proht
$ nillion
2010 2009 2003
Currenl lax
Charge lor lhe year 6,766 6,045 13,463
Adjuslnenl in respecl ol prior years (74) (300 (35
6,692 5,745 13,333
Delerred lax
Originalion and reversal ol lenporary dillerences in lhe currenl year (8,157) 2,131 (324
Adjuslnenl in respecl ol prior years (36) 439 (442
(8,193) 2,620 (766
Tax on proll (loss (1,501) 3,365 12,617
Tax incIuded in other comprehensive income
$ nillion
2010 2009 2003
Currenl lax (107) - (264
Delerred lax 244 (525 (2,632
137 (525 (2,946
Tax incIuded directIy in equity
$ nillion
2010 2009 2003
Currenl lax (37) - -
Delerred lax 64 (65 190
27 (65 190
BP Annual Feporl and Forn 20F 2010 177
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$ nillion
2010
excIuding 2010
impacts of impacts of
GuIf of GuIf of
Mexico oiI Mexico oiI
spiII spiII 2010 2009 2003
Proll (loss belore laxalion 36,110 (40,935) (4,825) 25,124 34,233
Tax charge (credil on proll (loss 11,393 (12,894) (1,501) 3,365 12,617
Elleclive lax rale 32% 31% 31% 33' 37'
' ol proll or loss belore laxalion
UK slalulory corporalion lax rale 28 28 28 23 23
ncrease (decrease resulling lron
UK supplenenlary and overseas laxes al higher rales 9 7 (6) 3 14
Tax reporled in equilyaccounled enlilies (3) - 23 (3 (2
Adjuslnenls in respecl ol prior years - - 2 1 (2
Currenl year losses unrelieved (prior year losses ulilized - - 1 - (1
Coodwill inpairnenl - - - 2 -
Tax incenlives lor inveslnenl (1) - 9 (2 (1
Cull ol exico oil spill nondeduclible cosls - (4) (30) - -
Olher (1) - 4 (1 1
Elleclive lax rale 32 31 31 33 37
Deferred tax
$ nillion
ncone slalenenl Balance sheel
2010 2009 2003 2010 2009
Delerred lax liabilily
Deprecialion 1,565 1,933 1,243 27,309 25,393
Pension plan surpluses 38 (6 103 469 271
Olher laxable lenporary dillerences 1,178 973 (2,471 5,538 4,307
2,781 2,955 (1,115 33,316 29,976
Delerred lax assel
Pension plan and olher poslrelirenenl benell plan delcils 179 130 104 (2,155) (2,269
Deconnissioning, environnenlal and olher provisions (8,151) 36 (333 (13,296) (4,930
Derivalive lnancial inslrunenls (56) 30 223 (298) (243
Tax credil (1,088) (516 330 (2,118) (1,034
Loss carry lorward 24 402 (212 (943) (1,014
Olher deduclible lenporary dillerences (1,882) (567 232 (4,126) (2,340
(10,974) (335 349 (22,936) (11,330
el delerred lax (credil charge and nel delerred lax liabilily (8,193) 2,620 (766 10,380 13,146
Ol which - delerred lax liabililies 10,908 13,662
- delerred lax assels 528 516
$ nillion
Analysis ol novenenls during lhe year 2010 2009
Al 1 January 18,146 16,193
Exchange adjuslnenls 3 (7
Charge (credil lor lhe year on proll (loss (8,193) 2,620
Charge (credil lor lhe year in olher conprehensive incone 244 (525
Charge (credil lor lhe year in equily 64 (65
Acquisilions 187
Feclassiled as liabililies direclly associaled wilh assels held lor sale (67)
Delelions (4) (75
Al 31 Decenber 10,380 13,146
-
-
www.bp.con/downloads/laxalion
19. Taxalion conlinued
ReconciIiation of the effective tax rate
The lollowing lable provides a reconcilialion ol lhe UK slalulory corporalion lax rale lo lhe elleclive lax rale ol lhe group on proll or loss belore laxalion.
For 2010, lhe ilens presenled in lhe reconcilialion are dislorled as a resull ol lhe overall lax credil lor lhe year and lhe loss belore laxalion. n order
lo provide a nore neaninglul analysis ol lhe elleclive lax rale, lhe lable also presenls separale reconcilialions lor lhe group excluding lhe inpacls ol lhe
Cull ol exico oil spill, and lor lhe inpacls ol lhe Cull ol exico oil spill in isolalion.
173 BP Annual Feporl and Forn 20F 2010
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20. Dividends
Following lhe Cull ol exico oil spill and lhe agreenenl lo eslablish lhe $20billion lrusl lund, lhe BP board reviewed ils dividend policy and decided lo
cancel lhe previously announced lrslquarler 2010 ordinary share dividend scheduled lor paynenl on 21 June 2010, and lurlher decided lhal no ordinary
share dividends would be paid in respecl ol lhe second and lhird quarlers ol 2010. On 1 February 2011, BP announced lhe resunplion ol quarlerly
dividend paynenls. The quarlerly dividend lo be paid on 23 arch 2011 is 7 cenls per ordinary share ($0.42 per Anerican Deposilary Share (ADS. The
corresponding anounl in slerling will be announced on 14 arch 2011. A scrip dividend allernalive is available, allowing shareholders lo elecl lo receive
lheir dividend in lhe lorn ol new ordinary shares and ADS holders in lhe lorn ol new ADSs.
pence per share cenls per share $ nillion
2010 2009 2003 2010 2009 2003 2010 2009 2003
Dividends announced and paid
Prelerence shares 2 2 2
Ordinary shares
arch 8.679 9.313 6.313 14.000 14.000 13.525 2,625 2,619 2,553
June - 9.534 6.330 - 14.000 13.525 - 2,619 2,545
Seplenber - 3.503 7.039 - 14.000 14.000 - 2,620 2,623
Decenber - 3.512 3.705 - 14.000 14.000 - 2,623 2,619
8.679 36.417 29.337 14.000 56.000 55.050 2,627 10,433 10,342
Dividend announced per ordinary
share, payable in arch 2011
a
7.000 1,315
a
The anounl in slerling will be announced on 14 arch 2011.
The group does nol accounl lor dividends unlil lhey are paid. The lnancial slalenenls lor lhe year ended 31 Decenber 2010 do nol reHecl lhe dividend
announced on 1 February 2011 and payable in arch 2011, lhis will be lrealed as an approprialion ol proll in lhe year ended 31 Decenber 2011.
www.bp.con/downloads/laxalion
19. Taxalion conlinued
The group has recognized signilcanl cosls in lhe year in relalion lo lhe Cull ol exico oil spill. Tax has been calculaled on lhe expendilures lhal qualily lor
lax reliel al lhe US slalulory lax rale. A delerred lax assel has been recognized in respecl ol provisions lor lulure expendilure lhal are expecled lo qualily
lor lax reliel. This is included under lhe heading deconnissioning, environnenlal and olher provisions and has resulled in a signilcanl reduclion in lhe
overall delerred lax liabilily ol lhe group conpared lo 2009.
Delerred lax assels are recognized lo lhe exlenl lhal il is probable lhal laxable proll will be available againsl which lhe deduclible lenporary
dillerences and lhe carrylorward ol unused lax credils and unused lax losses can be ulilized.
Al 31 Decenber 2010, lhe group had approxinalely $3.9 billion (2009 $4.3 billion
a
ol carrylorward lax losses, predoninanlly in Europe, lhal would
be available lo ollsel againsl lulure laxable proll. A delerred lax assel has been recognized in respecl ol $3.0 billion ol losses (2009 $3.2 billion. o
delerred lax assel has been recognized in respecl ol $0.9 billion ol losses (2009 $1.6 billion
a
. Subslanlially all lhe lax losses have no lxed expiry dale.
Al 31 Decenber 2010, lhe group had approxinalely $13.9 billion ol unused lax credils predoninanlly in lhe UK and US (2009 $12.5 billion.
Al 31 Decenber 2010 lhere is a delerred lax assel ol $2.1 billion in respecl ol unused lax credils (2009 $1.0 billion. o delerred lax assel has been
recognized in respecl ol $11.3 billion ol lax credils (2009 $11.5 billion. n 2010 $0.3 billion ol lax credils were ulilized on which a delerred lax assel had nol
previously been recognized.
n 2009 a change in UK legislalion repealed double laxalion reliel in relalion lo loreign dividends, onshore pooling and ulilizalion ol eligible unrelieved
loreign lax elininaling lhe associaled lax credils. The UK lax credils, arising in UK branches overseas, wilh no delerred lax assel, anounling lo $9.9 billion
(2009 $9.5 billion, do nol have a lxed expiry dale. n addilion lhere are also lenporary dillerences in overseas branches ol UK conpanies wilh no delerred
lax assel recognized. Al 31 Decenber 2010 lhe unrecognized delerred lax anounled lo $0.9 billion (2009 $0.5 billion. These credils and lenporary
dillerences arise in UK branches predoninanlly based in high lax rale jurisdiclions so are unlikely lo have value in lhe lulure as UK laxes on lhese overseas
branches are largely niligaled by double lax reliel on lhe local loreign lax.
The US lax credils wilh no delerred lax assel, anounling lo $1.9 billion (2009 $2.0 billion expire 10 years aller generalion, and lhe najorily expire
in lhe period 20142013.
The olher najor conponenls ol lenporary dillerences al lhe end ol 2010 are lax deprecialion, provisions and olher ilens in relalion lo lhe Cull ol
exico oil spill, US invenlory holding gains (classiled as olher laxable lenporary dillerences and pension plan and olher poslrelirenenl benell
plan delcils.
n 2010 lhere are no nalerial lenporary dillerences associaled wilh inveslnenls in subsidiaries and equily accounled enlilies lor which delerred
lax liabililies have nol been recognized.
n 2010 lhe enaclnenl ol a 1' reduclion in lhe rale ol UK corporalion lax on prolls arising lron aclivilies oulside lhe orlh Sea has reduced lhe
delerred lax charge by $36 nillion. n 2009 lhere were no changes in lhe slalulory lax rales lhal nalerially inpacled lhe groups lax charge.
a
2009 conparalive dala has been anended.
BP Annual Feporl and Forn 20F 2010 179
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21. Earnings per ordinary share
cenls per share
2010 2009 2003
Basic earnings per share (19.81) 33.49 112.59
Diluled earnings per share (19.81) 37.54 111.56
Basic earnings per ordinary share anounls are calculaled by dividing lhe proll or loss lor lhe year allribulable lo ordinary shareholders by lhe weighled
average nunber ol ordinary shares oulslanding during lhe year. The average nunber ol shares oulslanding excludes lreasury shares and lhe shares held
by lhe Enployee Share Ownership Plans (ESOPs and includes cerlain shares lhal will be issuable in lhe lulure under enployee share plans.
For lhe diluled earnings per share calculalion, lhe weighled average nunber ol shares oulslanding during lhe year is adjusled lor lhe nunber ol
shares lhal are polenlially issuable in conneclion wilh enployee sharebased paynenl plans using lhe lreasury slock nelhod. l lhe inclusion ol polenlially
issuable shares would decrease lhe loss per share, lhe polenlially issuable shares are excluded lron lhe diluled earnings per share calculalion.
$ nillion
2010 2009 2003
Proll (loss allribulable lo BP shareholders (3,719) 16,573 21,157
Less dividend requirenenls on prelerence shares 2 2 2
Proll (loss lor lhe year allribulable lo BP ordinary shareholders (3,721) 16,576 21,155
shares lhousand
2010 2009 2003
Basic weighled average nunber ol ordinary shares 18,785,912 13,732,459 13,739,327
Polenlial dilulive ellecl ol ordinary shares issuable under enployee share schenes 211,895 203,232 172,690
18,997,807 13,935,691 13,962,517
The nunber ol ordinary shares oulslanding al 31 Decenber 2010, excluding lreasury shares and lhe shares held by lhe ESOPs, and including cerlain
shares lhal will be issuable in lhe lulure under enployee share plans was 13,796,497,760. Belween 31 Decenber 2010 and 13 February 2011, lhe
lalesl praclicable dale belore lhe conplelion ol lhese lnancial slalenenls, lhere was a nel increase ol 2,303,313 in lhe nunber ol ordinary shares
oulslanding as a resull ol share issues in relalion lo enployee share schenes. The nunber ol polenlial ordinary shares issuable lhrough lhe exercise
ol enployee share schenes was 203,667,935 al 31 Decenber 2010. There has been an decrease ol 35,044,060 in lhe nunber ol polenlial ordinary
shares belween 31 Decenber 2010 and 13 February 2011.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany lhal, subjecl lo lhe oulcone ol lhe courl applicalion
relerred lo in ole 6, would resull in BP issuing 933,694,633 new ordinary shares lo Fosnell when lhe lransaclion conpleles. See ole 6 lor lurlher
inlornalion regarding lhis lransaclion.
130 BP Annual Feporl and Forn 20F 2010
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www.bp.con/downloads/ppe
22. Properly, planl and equipnenl
$ nillion
OiI depots,
PIant, Fixtures, storage
Land OiI and machinery httings and tanks and
and Iand gas and ofhce Transport- service
improvements BuiIdings properties equipment equipment ation stations TotaI
Cosl
Al 1 January 2010 3,786 2,918 157,197 41,599 3,022 12,441 10,295 231,258
Exchange adjuslnenls (85) (68) 3 35 (41) 28 (72) (200)
Addilions 39 96 11,980 3,354 279 152 610 16,510
Acquisilions 2 3 1,931 41 5 15 - 1,997
Translers - - 2,633 - - - - 2,633
Feclassiled as assels held lor sale (6) (10) (6,610) (1,083) (87) (212) - (8,008)
Delelions (176) (104) (6,950) (1,119) (213) (208) (1,181) (9,951)
Al 31 Decenber 2010 3,560 2,835 160,184 42,827 2,965 12,216 9,652 234,239
Deprecialion
Al 1 January 2010 571 1,389 86,975 18,903 1,893 7,852 5,400 122,983
Exchange adjuslnenls 1 (46) - (19) (25) 16 (13) (86)
Charge lor lhe year 34 82 8,024 1,492 291 268 606 10,797
npairnenl losses 57 5 918 117 1 - 21 1,119
Feclassiled as assels held lor sale - (8) (4,342) (514) (76) (97) - (5,037)
Delelions (91) (38) (3,528) (796) (208) (99) (940) (5,700)
Al 31 Decenber 2010 572 1,384 88,047 19,183 1,876 7,940 5,074 124,076
el book anounl al 31 Decenber 2010 2,988 1,451 72,137 23,644 1,089 4,276 4,578 110,163
Cosl
Al 1 January 2009 3,964 2,742 146,313 37,905 3,045 12,295 10,345 217,109
Exchange adjuslnenls 143 35 2 377 33 66 546 1,307
Addilions 59 313 11,923 3,743 145 115 739 17,042
Translers - - 745 - - - - 745
Delelions (335 (222 (2,291 (926 (251 (35 (1,335 (5,445
Al 31 Decenber 2009 3,736 2,913 157,197 41,599 3,022 12,441 10,295 231,253
Deprecialion
Al 1 January 2009 593 1,313 79,955 17,293 1,696 7,542 5,507 113,909
Exchange adjuslnenls 19 33 - 446 54 30 272 359
Charge lor lhe year 31 102 3,951 1,372 302 239 613 11,665
npairnenl losses 33 53 10 135 10 3 52 406
Delelions (165 (117 (1,941 (393 (169 (17 (1,049 (3,356
Al 31 Decenber 2009 571 1,339 36,975 13,903 1,393 7,352 5,400 122,933
el book anounl al 31 Decenber 2009 3,215 1,529 70,222 22,696 1,129 4,539 4,395 103,275
el book anounl al 1 January 2009 3,366 1,429 66,353 20,607 1,349 4,753 4,333 103,200
Assels held under lnance leases al nel book anounl
included above
Al 31 Decenber 2010 - 14 236 386 - 7 18 661
Al 31 Decenber 2009 - 14 225 110 - 7 19 375
Deconnissioning assel al nel book anounl
included above Cosl Deprecialion el
Al 31 Decenber 2010 9,237 4,585 4,652
Al 31 Decenber 2009 7,963 4,129 3,339
Assels under conslruclion included above
Al 31 Decenber 2010 23,055
Al 31 Decenber 2009 19,120
BP Annual Feporl and Forn 20F 2010 131
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23. Coodwill
$ nillion
2010 2009
Cosl
Al 1 January 10,199 9,373
Exchange adjuslnenls (154) 350
Acquisilions 335 -
Feclassiled as assels held lor sale (87) -
Delelions (116) (29
Al 31 Decenber 10,177 10,199
npairnenl losses
Al 1 January (1,579) -
npairnenl losses lor lhe year - (1,579
Al 31 Decenber (1,579) (1,579
el book anounl al 31 Decenber 8,598 3,620
el book anounl al 1 January 8,620 9,373
24. nlangible assels
$ nillion
2010 2009
ExpIoration Exploralion
and appraisaI Other and appraisal Olher
expenditure intangibIes TotaI expendilure inlangibles Tolal
Cosl
Al 1 January 10,713 3,284 13,997 9,425 2,927 12,352
Exchange adjuslnenls 6 (29) (23) 3 75 33
Acquisilions 982 118 1,100 - - -
Addilions 5,440 297 5,737 2,715 441 3,156
Translers (2,633) - (2,633) (745 - (745
Feclassiled as assels held lor sale (134) (4) (138) - - -
Delelions (898) (263) (1,161) (690 (159 (349
Al 31 Decenber 13,476 3,403 16,879 10,713 3,234 13,997
Anorlizalion
Al 1 January 325 2,124 2,449 394 1,693 2,092
Exchange adjuslnenls - (11) (11) - 32 32
Charge lor lhe year 375 367 742 593 441 1,034
npairnenl losses - - - - 90 90
Feclassiled as assels held lor sale - (3) (3) - - -
Delelions (350) (246) (596) (662 (137 (799
Al 31 Decenber 350 2,231 2,581 325 2,124 2,449
el book anounl al 31 Decenber 13,126 1,172 14,298 10,333 1,160 11,543
el book anounl al 1 January 10,388 1,160 11,548 9,031 1,229 10,260
nlangible assels wilh a carrying anounl ol $66 nillion (2009 $66 nillion have been pledged lo secure cerlain group liabililies.
132 BP Annual Feporl and Forn 20F 2010
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The signilcanl joinlly conlrolled enlilies ol lhe BP group al 31 Decenber 2010 are shown in ole 46. Sunnarized lnancial inlornalion lor lhe groups
share ol joinlly conlrolled enlilies is shown below.
$ nillion
2010
a
2009 2003
TKBP Olher Tolal
Sales and olher operaling revenues 11,679 9,396 25,936 10,796 36,732
Proll belore inleresl and laxalion 1,730 1,315 3,533 1,343 4,931
Finance cosls 122 155 275 135 460
Proll belore laxalion 1,608 1,660 3,313 1,153 4,471
Taxalion 433 374 332 397 1,279
inorily inleresl - - 169 - 169
Proll lor lhe year 1,175 1,236 2,262 761 3,023
oncurrenl assels 12,054 15,357
Currenl assels 3,595 4,124
Tolal assels 15,649 19,931
Currenl liabililies 1,615 2,276
oncurrenl liabililies 2,701 3,763
Tolal liabililies 4,316 6,044
11,333 13,937
Croup inveslnenl in joinlly conlrolled enlilies
Croup share ol nel assels (as above 11,333 13,937
Loans nade by group conpanies lo joinlly conlrolled enlilies 953 1,359
12,286 15,296
a
Balance sheel inlornalion shown above excludes dala relaling lo joinlly conlrolled enlilies reclassiled as assels held lor sale as al 31 Decenber 2010. ncone slalenenl inlornalion shown above includes
dala relaling lo joinlly conlrolled enlilies reclassiled as assels held lor sale during 2010 lor lhe period lron 1 January 2010 up unlil lheir dale ol reclassilcalion as held lor sale.
Our inveslnenl in TKBP was reclassiled lron a joinlly conlrolled enlily lo an associale wilh ellecl lron 9 January 2009, lhe dale lhal BP lnalized a revised
shareholder agreenenl wilh ils Fussian parlners in TKBP, Alla AccessFenova (AAF. The lornerly evenlybalanced nain board slruclure was replaced by
one wilh lour represenlalives each lron BP and AAF, plus lhree independenl direclors. The change in accounling classilcalion lron a joinlly conlrolled
enlily lo an associale reHecled lhe abilily ol lhe independenl direclors ol TKBP lo decide on cerlain nallers in lhe evenl ol disagreenenl belween lhe
shareholder represenlalives on lhe board. The groups inveslnenl conlinues lo be accounled lor using lhe equily nelhod.
Transaclions belween lhe group and ils joinlly conlrolled enlilies are sunnarized below.
$ nillion
Sales lo joinlly conlrolled enlilies 2010 2009 2003
Amount Anounl Anounl
receivabIe at receivable al receivable al
Producl SaIes 31 December Sales 31 Decenber Sales 31 Decenber
LC, crude oil and oil producls, nalural gas, enployee services 3,804 1,352 2,132 1,323 2,971 1,036
$ nillion
Purchases lron joinlly conlrolled enlilies 2010 2009 2003
Amount Anounl Anounl
payabIe at payable al payable al
Producl Purchases 31 December
a
Purchases 31 Decenber
a
Purchases 31 Decenber
a
LC, crude oil and oil producls, nalural gas,
relnery operaling cosls, planl processing lees 8,063 683 5,377 214 9,115 132
a
Anounls payable lo joinlly conlrolled enlilies shown above exclude $2,533 nillion (2009 $2,509 nillion and 2003 $2,365 nillion relaling lo BPs conlribulion on lhe eslablishnenl ol lhe Sunrise Oil Sands
joinl venlure.
The lerns ol lhe oulslanding balances receivable lron joinlly conlrolled enlilies are lypically 30 lo 45 days, excepl lor a receivable lron Fuhr Oel ol
$535 nillion (2009 $419 nillion, which will be paid over several years as il relales parlly lo pension paynenls. The balances are unsecured and will be
sellled in cash. There are no signilcanl provisions lor doubllul debls relaling lo lhese balances and no signilcanl expense recognized in lhe incone
slalenenl in respecl ol bad or doubllul debls. Dividends receivable are nol included in lhe above balances.
www.bp.con/downloads/inveslnenls
25. nveslnenls in joinlly conlrolled enlilies
BP Annual Feporl and Forn 20F 2010 133
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$ nillion
2010
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2009 2003
TNK-BP Other TotaI TKBP Olher Tolal
Sales and olher operaling revenues 22,323 10,031 32,354 17,377 3,301 25,673 11,709
Proll belore inleresl and laxalion 3,866 1,215 5,081 3,173 311 3,939 1,065
Finance cosls 128 22 150 220 19 239 33
Proll belore laxalion 3,738 1,193 4,931 2,953 792 3,750 1,032
Taxalion 913 228 1,141 371 125 996 234
inorily inleresl 208 - 208 139 - 139 -
Proll lor lhe year 2,617 965 3,582 1,943 667 2,615 793
oncurrenl assels 14,686 4,024 18,710 13,437 4,573 13,010
Currenl assels 4,500 1,989 6,489 4,205 1,337 6,092
Tolal assels 19,186 6,013 25,199 17,642 6,460 24,102
Currenl liabililies 3,284 1,888 5,172 3,122 1,640 4,762
oncurrenl liabililies 5,283 1,914 7,197 4,797 2,277 7,074
Tolal liabililies 8,567 3,802 12,369 7,919 3,917 11,336
inorily inleresl 624 - 624 532 - 532
9,995 2,211 12,206 9,141 2,543 11,634
Croup inveslnenl in associales
Croup share ol nel assels (as above 9,995 2,211 12,206 9,141 2,543 11,634
Loans nade by group conpanies lo associales - 1,129 1,129 - 1,279 1,279
9,995 3,340 13,335 9,141 3,322 12,963
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Balance sheel inlornalion shown above excludes dala relaling lo associales reclassiled as held lor sale as al 31 Decenber 2010. ncone slalenenl inlornalion shown above includes dala relaling lo
associales reclassiled as assels held lor sale during 2010 lor lhe period lron 1 January 2010 up unlil lhe dale ol reclassilcalion as held lor sale.
Our inveslnenl in TKBP was reclassiled lron a joinlly conlrolled enlily lo an associale wilh ellecl lron 9 January 2009. See ole 25 lor lurlher
inlornalion.
Transaclions belween lhe group and ils associales are sunnarized below.
$ nillion
Sales lo associales 2010 2009 2003
Amount Anounl Anounl
receivabIe at receivable al receivable al
Producl SaIes 31 December Sales 31 Decenber Sales 31 Decenber
LC, crude oil and oil producls, nalural gas, enployee services 3,561 330 2,301 320 3,243 219
Purchases lron associales 2010 2009 2003
Amount Anounl Anounl
payabIe at payable al payable al
Producl Purchases 31 December Purchases 31 Decenber Purchases 31 Decenber
Crude oil and oil producls, nalural gas, lransporlalion larill 4,889 633 5,110 614 4,635 295
The lerns ol lhe oulslanding balances receivable lron associales are lypically 30 lo 45 days. The balances are unsecured and will be sellled in cash. There
are no signilcanl provisions lor doubllul debls relaling lo lhese balances and no signilcanl expense recognized in lhe incone slalenenl in respecl ol bad
or doubllul debls.
The anounls receivable and payable al 31 Decenber 2010, as shown in lhe lable above, exclude $299 nillion (2009 $376 nillion due lron and due
lo an inlernediale associale which provides lunding lor our associale The BakuTbilisiCeyhan Pipeline Conpany. These balances are expecled lo be sellled
in cash lhroughoul lhe period lo 2015.
Dividends receivable al 31 Decenber 2010 ol $39 nillion (2009 $19 nillion are also excluded lron lhe lable above.
On 13 Oclober 2010, BP announced lhal il had reached agreenenl lo sell assels in Vielnan, logelher wilh ils upslrean businesses and associaled
inleresls in Venezuela, lo TKBP which is an associale and lherelore a relaled parly ol lhe group. This lransaclion is parl ol lhe groups disposal
progranne and is lhe resull ol nornal connercial negolialions. See ole 4 lor lurlher inlornalion. As al 31 Decenber 2010, a deposil ol $972 nillion had
been received lron TKBP in advance ol conplelion ol lhis lransaclion and is reporled wilhin lnance debl on lhe group balance sheel. This disposal
deposil is nol reHecled in lhe anounl payable in lhe lable above. See ole 35 lor lurlher inlornalion.
www.bp.con/downloads/inveslnenls
26. nveslnenls in associales
The signilcanl associales ol lhe group are shown in ole 46. The principal associale in 2010 and 2009 is TKBP. Sunnarized lnancial
inlornalion lor lhe groups share ol associales is sel oul below.
134 BP Annual Feporl and Forn 20F 2010
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27. Financial inslrunenls and lnancial risk laclors
The accounling classilcalion ol each calegory ol lnancial inslrunenls, and lheir carrying anounls, are sel oul below.
$ nillion
Al 31 Decenber 2010
FinanciaI
AvaiIabIe-for- At fair vaIue Derivative IiabiIities TotaI
Loans and saIe hnanciaI through proht hedging measured at carrying
Note receivabIes assets and Ioss instruments amortized cost amount
Financial assels
Olher inveslnenls - equily shares 28 - 1,191 - - - 1,191
- olher 28 - 1,532 - - - 1,532
Loans 1,141 - - - - 1,141
Trade and olher receivables 30 32,380 - - - - 32,380
Derivalive lnancial inslrunenls 34 - - 7,222 1,344 - 8,566
Cash and cash equivalenls 31 13,462 5,094 - - - 18,556
Financial liabililies
Trade and olher payables 33 - - - - (56,499) (56,499)
Derivalive lnancial inslrunenls 34 - - (7,254) (279) - (7,533)
Accruals - - - - (6,249) (6,249)
Finance debl 35 - - - - (39,139) (39,139)
46,983 7,817 (32) 1,065 (101,887) (46,054)
$ nillion
Al 31 Decenber 2009
Financial
Availablelor Al lair value Derivalive liabililies Tolal
Loans and sale lnancial lhrough proll hedging neasured al carrying
ole receivables assels and loss inslrunenls anorlized cosl anounl
Financial assels
Olher inveslnenls 23 - 1,567 - - - 1,567
Loans 1,233 - - - - 1,233
Trade and olher receivables 30 31,016 - - - - 31,016
Derivalive lnancial inslrunenls 34 - - 7,960 972 - 3,932
Cash and cash equivalenls 31 6,570 1,769 - - - 3,339
Financial liabililies
Trade and olher payables 33 - - - - (34,325 (34,325
Derivalive lnancial inslrunenls 34 - - (7,339 (766 - (3,155
Accruals - - - - (6,905 (6,905
Finance debl 35 - - - - (34,627 (34,627
33,374 3,336 571 206 (75,357 (32,370
The lair value ol lnance debl is shown in ole 35. For all olher lnancial inslrunenls, lhe carrying anounl is eilher lhe lair value, or approxinales lhe lair value.
FinanciaI risk factors
The group is exposed lo a nunber ol dillerenl lnancial risks arising lron nalural business exposures as well as ils use ol lnancial inslrunenls including:
narkel risks relaling lo connodily prices, loreign currency exchange rales, inleresl rales and equily prices, credil risk, and liquidily risk.
The group lnancial risk connillee (CFFC advises lhe group chiel lnancial ollcer (CFO who oversees lhe nanagenenl ol lhese risks. The CFFC
is chaired by lhe CFO and consisls ol a group ol senior nanagers including lhe group lreasurer and lhe heads ol lhe lnance, lax and lhe inlegraled supply
and lrading lunclions. The purpose ol lhe connillee is lo advise on lnancial risks and lhe appropriale lnancial risk governance lranework lor lhe group.
The connillee provides assurance lo lhe CFO and lhe group chiel execulive (CCE, and via lhe CCE lo lhe board, lhal lhe groups lnancial risklaking
aclivily is governed by appropriale policies and procedures and lhal lnancial risks are idenliled, neasured and nanaged in accordance wilh group policies
and group risk appelile.
The groups lrading aclivilies in lhe oil, nalural gas and power narkels are nanaged wilhin lhe inlegraled supply and lrading lunclion, while
lhe aclivilies in lhe lnancial narkels are nanaged by lhe inlegraled supply and lrading lunclion, on behall ol lhe lreasury lunclion. All derivalive aclivily
is carried oul by specialisl leans lhal have lhe appropriale skills, experience and supervision. These leans are subjecl lo close lnancial and
nanagenenl conlrol.
The inlegraled supply and lrading lunclion nainlains lornal governance processes lhal provide oversighl ol narkel risk associaled wilh lrading
aclivily. These processes neel generally accepled induslry praclice and reHecl lhe principles ol lhe Croup ol Thirly Clobal Derivalives Sludy
reconnendalions. A policy and risk connillee nonilors and validales linils and risk exposures, reviews incidenls and validales riskrelaled policies,
nelhodologies and procedures. A connilnenls connillee approves valuealrisk delegalions, lhe lrading ol new producls, inslrunenls and slralegies
and nalerial connilnenls.
n addilion, lhe inlegraled supply and lrading lunclion underlakes derivalive aclivily lor risk nanagenenl purposes under a separale conlrol
lranework as described nore lully below.
BP Annual Feporl and Forn 20F 2010 135
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(i) Connodi!, price risk
The groups inlegraled supply and lrading lunclion uses convenlional lnancial and connodily inslrunenls and physical cargoes available in lhe relaled
connodily narkels. Oil and nalural gas swaps, oplions and lulures are used lo niligale price risk. Power lrading is underlaken using a conbinalion ol
overlhecounler lorward conlracls and olher derivalive conlracls, including oplions and lulures. This aclivily is on bolh a slandalone basis and in
conjunclion wilh gas derivalives in relalion lo gasgeneraled power nargin. n addilion, CLs are lraded around cerlain US invenlory localions using
overlhecounler lorward conlracls in conjunclion wilh overlhecounler swaps, oplions and physical invenlories. Trading valuealrisk inlornalion in relalion
lo lhese aclivilies is shown in lhe lable above.
As described above, lhe group also carries oul risk nanagenenl ol cerlain nalural business exposures using overlhecounler swaps and exchange
lulures conlracls. Togelher wilh cerlain physical supply conlracls lhal are classiled as derivalives, lhese conlracls lall oulside ol lhe valuealrisk
lranework. For lhese derivalive conlracls lhe sensilivily ol lhe nel lair value lo an innediale 10' increase or decrease in all relerence prices would have
been $104 nillion al 31 Decenber 2010 (2009 $73 nillion. This lgure does nol include any corresponding econonic benell or disbenell lhal would arise
lron lhe nalural business exposure which would be expecled lo ollsel lhe gain or loss on lhe overlhecounler swaps and exchange lulures conlracls
nenlioned above.
n addilion, lhe group has enbedded derivalives relaling lo cerlain nalural gas conlracls. The nel lair value ol lhese conlracls was a liabilily ol
$1,607 nillion al 31 Decenber 2010 (2009 liabilily ol $1,331 nillion. Key inlornalion on lhe nalural gas conlracls is given below.
Al 31 Decenber 2010 2009
Fenaining conlracl lerns 4 years and 5 months to 7 years and 9 months 9 nonlhs lo 3 years 9 nonlhs
Conlraclual/nolional anounl 1,688 miIIion therms 2,460 nillion lherns
For lhese enbedded derivalives lhe sensilivily ol lhe nel lair value lo an innediale 10' lavourable or adverse change in lhe key assunplions is
as lollows.
$ nillion
Al 31 Decenber 2010 2009
Discount Discounl
Gas price OiI price Power price rate Cas price Oil price Power price rale
Favourable 10' change 145 48 10 10 175 26 23 20
Unlavourable 10' change (180) (68) (10) (10) (215 (43 (19 (20
27. Financial inslrunenls and lnancial risk laclors conlinued
(a arkel risk
arkel risk is lhe risk or uncerlainly arising lron possible narkel price novenenls and lheir inpacl on lhe lulure perlornance ol a business. The prinary
connodily price risks lhal lhe group is exposed lo include oil, nalural gas and power prices lhal could adversely allecl lhe value ol lhe groups lnancial
assels, liabililies or expecled lulure cash Hows. The group enlers inlo derivalives in a welleslablished enlrepreneurial lrading operalion. n addilion, lhe
group has developed a conlrol lranework ained al nanaging lhe volalilily inherenl in cerlain ol ils nalural business exposures. n accordance wilh lhe
conlrol lranework lhe group enlers inlo various lransaclions using derivalives lor risk nanagenenl purposes.
The group neasures narkel risk exposure arising lron ils lrading posilions using valuealrisk lechniques. For 2010, lhe various valuealrisk nodels
used in prior years were consolidaled as parl ol a process sinplilcalion inlo a onle Carlo lranework. This nakes a slalislical assessnenl ol lhe narkel
risk arising lron possible lulure changes in narkel prices over a oneday holding period. The calculalion ol lhe range ol polenlial changes in lair value lakes
inlo accounl a snapshol ol lhe endolday exposures and lhe hislory ol oneday price novenenls, logelher wilh lhe correlalion ol lhese price novenenls.
The valuealrisk neasure is supplenenled by slress lesling.
The valuealrisk lable does nol incorporale any ol lhe groups nalural business exposures or any derivalives enlered inlo lo risk nanage lhose
exposures. The resulls ol lhe gas price lrading are included wilhin Exploralion and Produclion segnenl resulls, and lhe gas price lrading valuealrisk
includes gas and power lrading. The resulls ol lhe oil price lrading are included wilhin Felning and arkeling segnenl resulls, and lhe oil price lrading
valuealrisk includes oil, inleresl rale and currency lrading. arkel risk exposure in respecl ol enbedded derivalives is also nol included in lhe valuealrisk
lable. nslead separale sensilivily analyses are disclosed below.
Valuealrisk linils are in place lor each lrading aclivily and lor lhe groups lrading aclivily in lolal. The board has delegaled a linil ol $100 nillion
value al risk in supporl ol lhis lrading aclivily. The high and low values al risk indicaled in lhe lable below lor each lype ol aclivily are independenl ol each
olher. Through lhe porllolio ellecl lhe high value al risk lor lhe group as a whole is lower lhan lhe sun ol lhe highs lor lhe consliluenl parls. The polenlial
novenenl in lair values is expressed lo a 95' conldence inlerval. This neans lhal, in slalislical lerns, one would expecl lo see a decrease in lair values
grealer lhan lhe lrading value al risk on one occasion per nonlh il lhe porllolio were lell unchanged.
$ nillion
Value al risk lor 1 day al 95' conldence inlerval 2010 2009
High Low Average Year end High Low Average Year end
Croup lrading 70 15 34 33 79 24 45 30
Cas price lrading 62 7 27 18 62 11 23 26
Oil price lrading 39 10 19 25 75 11 29 13
The najor conponenls ol narkel risk are connodily price risk, loreign currency exchange risk, inleresl rale risk and equily price risk, each ol which is
discussed below.
136 BP Annual Feporl and Forn 20F 2010
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27. Financial inslrunenls and lnancial risk laclors conlinued
The sensilivilies lor risk nanagenenl aclivily and enbedded derivalives are hypolhelical and should nol be considered lo be prediclive ol lulure
perlornance. n addilion, lor lhe purposes ol lhis analysis, in lhe above lable, lhe ellecl ol a varialion in a parlicular assunplion on lhe lair value ol lhe
enbedded derivalives is calculaled independenlly ol any change in anolher assunplion. n realily, changes in one laclor nay conlribule lo changes in
anolher, which nay nagnily or counleracl lhe sensilivilies. Furlhernore, lhe eslinaled lair values as disclosed should nol be considered indicalive ol
lulure earnings on lhese conlracls.
(ii) Foreign currenc, exchange risk
vhere lhe group enlers inlo loreign currency exchange conlracls lor enlrepreneurial lrading purposes lhe aclivily is conlrolled using lrading valuealrisk
lechniques as explained above. This aclivily is included wilhin oil price lrading in lhe valuealrisk lable above.
Since BP has global operalions, Huclualions in loreign currency exchange rales can have signilcanl ellecls on lhe groups reporled resulls. The
ellecls ol nosl exchange rale Huclualions are absorbed in business operaling resulls lhrough changing cosl conpeliliveness, lags in narkel adjuslnenl lo
novenenls in rales and lranslalion dillerences accounled lor on specilc lransaclions. For lhis reason, lhe lolal ellecl ol exchange rale Huclualions is nol
idenlilable separalely in lhe groups reporled resulls. The nain underlying econonic currency ol lhe groups cash Hows is lhe US dollar. This is because BPs
najor producl, oil, is priced inlernalionally in US dollars. BPs loreign currency exchange nanagenenl policy is lo nininize econonic and nalerial
lransaclional exposures arising lron currency novenenls againsl lhe US dollar. The group coordinales lhe handling ol loreign currency exchange risks
cenlrally, by nelling oll nalurallyoccurring opposile exposures wherever possible, and lhen dealing wilh any nalerial residual loreign currency exchange risks.
The group nanages lhese exposures by conslanlly reviewing lhe loreign currency econonic value al risk and ains lo nanage such risk lo keep lhe
12nonlh loreign currency value al risk below $200 nillion. Al 31 Decenber 2010, lhe loreign currency value al risk was $31 nillion (2009 $140 nillion.
Al no poinl over lhe pasl lhree years did lhe value al risk exceed lhe naxinun risk linil. The nosl signilcanl exposures relale lo capilal expendilure
connilnenls and olher UK and European operalional requirenenls, lor which a hedging progranne is in place and hedge accounling is clained as
oullined in ole 34.
For highly probable lorecasl capilal expendilures lhe group locks in lhe US dollar cosl ol nonUS dollar supplies by using currency lorwards and
lulures. The nain exposures are slerling, euro, orwegian krone, Auslralian dollar, Korean won and Singapore dollar and al 31 Decenber 2010 open
conlracls were in place lor $939 nillion slerling, $115 nillion euro, $212 nillion orwegian krone and $143 nillion Auslralian dollar capilal expendilures
naluring wilhin lve years, wilh over 30' ol lhe deals naluring wilhin lwo years (2009 $300 nillion slerling, $491 nillion Canadian dollar, $299 nillion
euro, $240 nillion orwegian krone, $215 nillion Auslralian dollar, $51 nillion Korean won and $41 nillion Singapore dollar capilal expendilures naluring
wilhin six years wilh over 65' ol lhe deals naluring wilhin lwo years.
For olher UK, European, Canadian and Auslralian operalional requirenenls lhe group uses cylinders and currency lorwards lo hedge lhe eslinaled
exposures on a 12nonlh rolling basis. Al 31 Decenber 2010, lhe open posilions relaling lo cylinders consisled ol receive slerling, pay US dollar,
purchased call and sold pul oplions (cylinders lor $1,340 nillion (2009 $1,337 nillion, receive euro, pay US dollar cylinders lor $650 nillion (2009
$1,716 nillion, receive Auslralian dollar, pay US dollar cylinders lor $236 nillion (2009 $297 nillion. Al 31 Decenber 2010 lhe open posilions relaling lo
currency lorwards consisled ol buy slerling, sell US dollar currency lorwards lor $925 nillion (2009 nil, buy Euro, sell US dollar currency lorwards lor
$630 nillion (2009 nil, and buy Canadian dollar, sell US dollar, currency lorwards lor $162 nillion (2009 nil.
n addilion, nosl ol lhe groups borrowings are in US dollars or are hedged wilh respecl lo lhe US dollar. Al 31 Decenber 2010, lhe lolal loreign
currency nel borrowings nol swapped inlo US dollars anounled lo $652 nillion (2009 $465 nillion. Ol lhis lolal, $125 nillion was denoninaled in
currencies olher lhan lhe lunclional currency ol lhe individual operaling unil being enlirely Canadian dollars (2009 $113 nillion, being enlirely Canadian
dollars. l is eslinaled lhal a 10' change in lhe corresponding exchange rales would resull in an exchange gain or loss in lhe incone slalenenl ol
$12 nillion (2009 $11 nillion.
(iii) n!eres! ra!e risk
vhere lhe group enlers inlo noney narkel conlracls lor enlrepreneurial lrading purposes lhe aclivily is conlrolled using valuealrisk lechniques as
described above. This aclivily is included wilhin oil price lrading in lhe valuealrisk lable above.
BP is also exposed lo inleresl rale risk lron lhe possibilily lhal changes in inleresl rales will allecl lulure cash Hows or lhe lair values ol ils lnancial
inslrunenls, principally lnance debl.
vhile lhe group issues debl in a variely ol currencies based on narkel opporlunilies, il uses derivalives lo swap lhe debl lo a Hoaling rale exposure,
nainly lo US dollar Hoaling, bul in cerlain delned circunslances nainlains a US dollar lxed rale exposure lor a proporlion ol debl. The proporlion ol
Hoaling rale debl nel ol inleresl rale swaps al 31 Decenber 2010 was 67' ol lolal lnance debl oulslanding (2009 63'. The weighled average inleresl
rale on lnance debl al 31 Decenber 2010 is 2' (2009 2' and lhe weighled average nalurily ol lxed rale debl is lve years (2009 lour years.
The groups earnings are sensilive lo changes in inleresl rales on lhe Hoaling rale elenenl ol lhe groups lnance debl. l lhe inleresl rales
applicable lo Hoaling rale inslrunenls were lo have increased by 1' on 1 January 2011, il is eslinaled lhal lhe groups proll belore laxalion lor 2011
would decrease by approxinalely $303 nillion (2009 $219 nillion decrease in 2010. This assunes lhal lhe anounl and nix ol lxed and Hoaling rale debl,
including lnance leases, renains unchanged lron lhal in place al 31 Decenber 2010 and lhal lhe change in inleresl rales is elleclive lron lhe beginning
ol lhe year. vhere lhe inleresl rale applicable lo an inslrunenl is resel during a quarler il is assuned lhal lhis occurs al lhe beginning ol lhe quarler and
renains unchanged lor lhe resl ol lhe year. n realily, lhe lxed/Hoaling rale nix will Hucluale over lhe year and inleresl rales will change conlinually.
Furlhernore, lhe ellecl on earnings shown by lhis analysis does nol consider lhe ellecl ol any olher changes in general econonic aclivily lhal nay
acconpany such an increase in inleresl rales.
(iv) qui!, price risk
The group holds equily inveslnenls, lypically nade lor slralegic purposes, lhal are classiled as noncurrenl availablelorsale lnancial assels and are
neasured inilially al lair value wilh changes in lair value recognized in olher conprehensive incone. Accunulaled lair value changes are recycled lo lhe
incone slalenenl on disposal, or when lhe inveslnenl is inpaired. o inpairnenl losses have been recognized in 2010 (2009 nil and 2003 $546 nillion
relaling lo lisled noncurrenl availablelorsale inveslnenls. For lurlher inlornalion see ole 23.
Al 31 Decenber 2010, il is eslinaled lhal an increase ol 10' in quoled equily prices would resull in an innediale credil lo olher conprehensive
incone ol $95 nillion (2009 $130 nillion credil lo olher conprehensive incone, whilsl a decrease ol 10' in quoled equily prices would resull in an
innediale charge lo olher conprehensive incone ol $95 nillion (2009 $130 nillion charge lo olher conprehensive incone. BP has derivalive posilions
lhal resull in opposile inpacls such lhal a 10' increase in equily prices would resull in a charge lo proll or loss ol $70 nillion (2009 nil and a 10'
decrease in equily prices would resull in a gain lo proll or loss ol $67 nillion (2009 nil.
BP Annual Feporl and Forn 20F 2010 137
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27. Financial inslrunenls and lnancial risk laclors conlinued
Al 31 Decenber 2010, a single equily inveslnenl nade up 30' (2009 73' ol lhe carrying anounl ol noncurrenl availablelorsale lnancial assels lhus
lhe groups exposure is concenlraled on changes in lhe share price ol lhis equily in parlicular.
(b Credil risk
Credil risk is lhe risk lhal a cusloner or counlerparly lo a lnancial inslrunenl will lail lo perlorn or lail lo pay anounls due causing lnancial loss lo lhe
group and arises lron cash and cash equivalenls, derivalive lnancial inslrunenls and deposils wilh lnancial inslilulions and principally lron credil
exposures lo cusloners relaling lo oulslanding receivables.
The group has a credil policy, approved by lhe CFO, lhal is designed lo ensure lhal consislenl processes are in place lhroughoul lhe group lo
neasure and conlrol credil risk. Credil risk is considered as parl ol lhe riskreward balance ol doing business. On enlering inlo any business conlracl lhe
exlenl lo which lhe arrangenenl exposes lhe group lo credil risk is considered. Key requirenenls ol lhe policy are lornal delegaled aulhorilies lo lhe
sales and narkeling leans lo incur credil risk and lo a specialized credil lunclion lo sel counlerparly linils, lhe eslablishnenl ol credil syslens and
processes lo ensure lhal counlerparlies are raled and linils sel, and syslens lo nonilor exposure againsl linils and reporl regularly on lhose exposures,
and innedialely on any excesses, and lo lrack and reporl credil losses. The lreasury lunclion provides a sinilar credil risk nanagenenl aclivily wilh
respecl lo groupwide exposures lo banks and olher lnancial inslilulions.
vhile lhe global credil environnenl showed signs ol slabilizalion and inprovenenl in 2010, econonic and polilical uncerlainlies conlinue lo drive
heighlened awareness, discussion and coordinalion around lhe credil risks arising lron lhe groups aclivilies.
Belore lrading wilh a new counlerparly can slarl, ils credilworlhiness is assessed and a credil raling is allocaled lhal indicales lhe probabilily ol
delaull, along wilh a credil exposure linil. The assessnenl process lakes inlo accounl all available qualilalive and quanlilalive inlornalion aboul lhe
counlerparly and lhe group, il any, lo which lhe counlerparly belongs. The counlerparlys business aclivilies, lnancial resources and business risk
nanagenenl processes are laken inlo accounl in lhe assessnenl, lo lhe exlenl lhal lhis inlornalion is publicly available or olherwise disclosed lo BP by
lhe counlerparly, logelher wilh exlernal credil ralings. Credilworlhiness conlinues lo be evalualed aller lransaclions have been inilialed and a walchlisl ol
higherrisk counlerparlies is nainlained.
The group does nol ain lo renove credil risk bul expecls lo experience a cerlain level ol credil losses. The group allenpls lo niligale credil risk by
enlering inlo conlracls lhal pernil nelling and allow lor lerninalion ol lhe conlracl on lhe occurrence ol cerlain evenls ol delaull. Depending on lhe
credilworlhiness ol lhe counlerparly, lhe group nay require collaleral or olher credil enhancenenls such as cash deposils or lellers ol credil and parenl
conpany guaranlees. Trade receivables and payables, and derivalive assels and liabililies, are presenled on a nel basis where uncondilional nelling
arrangenenls are in place wilh counlerparlies and where lhere is an inlenl lo sellle anounls due on a nel basis. The naxinun credil exposure associaled
wilh lnancial assels is equal lo lhe carrying anounl. Al 31 Decenber 2010, lhe naxinun credil exposure was $60,643 nillion (2009 $49,575 nillion.
Collaleral received and recognized in lhe balance sheel al lhe year end was $313 nillion (2009 $549 nillion and collaleral held oll balance sheel was
$52 nillion (2009 $43 nillion. Credil exposure exisls in relalion lo guaranlees issued by group conpanies under which anounls oulslanding al
31 Decenber 2010 were $404 nillion (2009 $319 nillion in respecl ol liabililies ol joinlly conlrolled enlilies and associales and $664 nillion (2009 $667
nillion in respecl ol liabililies ol olher lhird parlies.
olwilhslanding lhe processes described above, signilcanl unexpecled credil losses can occasionally occur. Exposure lo unexpecled losses
increases wilh concenlralions ol credil risk lhal exisl when a nunber ol counlerparlies are involved in sinilar aclivilies or operale in lhe sane induslry
seclor or geographical area, which nay resull in lheir abilily lo neel conlraclual obligalions being inpacled by changes in econonic, polilical or olher
condilions. The groups principal cusloners, suppliers and lnancial inslilulions wilh which il conducls business are localed lhroughoul lhe world. n addilion,
lhese risks are nanaged by nainlaining a group walchlisl and aggregaling nullisegnenl exposures lo ensure lhal a nalerial credil risk is nol nissed.
Feporls are regularly prepared and presenled lo lhe CFFC lhal cover lhe groups overall credil exposure and expecled loss lrends, exposure by
segnenl, and overall qualily ol lhe porllolio. The reporls also include delails ol lhe largesl counlerparlies by exposure level and expecled loss, and delails
ol counlerparlies on lhe group walchlisl.
Sone niligalion ol credil exposure is achieved by: nelling arrangenenls, credil supporl agreenenls which require lhe counlerparly lo provide
collaleral or olher credil risk niligalion, and credil insurance and olher risk lransler inslrunenls.
For lhe conlracls conprising derivalive lnancial inslrunenls in an assel posilion al 31 Decenber 2010, il is eslinaled lhal over 30' (2009 over
30' ol lhe unniligaled credil exposure is lo counlerparlies ol inveslnenl grade credil qualily.
For cash and cash equivalenls, lhe lreasury lunclion dynanically nanages bank deposil linils lo ensure cash is welldiversiled and lo avoid
concenlralion risks. Al 31 Decenber 2010, over 30' ol lhe cash and cash equivalenls balance was deposiled wilh lnancial inslilulions raled A+ or higher.
Trade and olher receivables ol lhe group are analysed in lhe lable below. By conparing lhe BP credil ralings lo lhe equivalenl exlernal credil ralings,
il is eslinaled lhal approxinalely 5060' (2009 approxinalely 5560' ol lhe unniligaled lrade receivables porllolio exposure is ol inveslnenl grade
credil qualily. vilh respecl lo lhe lrade and olher receivables lhal are neilher inpaired nor pasl due, lhere are no indicalions as ol lhe reporling dale lhal
lhe deblors will nol neel lheir paynenl obligalions.
The group does nol lypically renegoliale lhe lerns ol lrade receivables, however, il a renegolialion does lake place, lhe oulslanding balance
is included in lhe analysis based on lhe original paynenl lerns. There were no signilcanl renegolialed balances oulslanding al 31 Decenber 2010 or
31 Decenber 2009.
$ nillion
Trade and olher receivables al 31 Decenber 2010 2009
eilher inpaired nor pasl due 30,181 29,426
npaired (nel ol valualion allowance 67 91
ol inpaired and pasl due in lhe lollowing periods
wilhin 30 days 1,358 303
31 lo 60 days 249 151
61 lo 90 days 101 76
over 90 days 424 464
32,380 31,016
133 BP Annual Feporl and Forn 20F 2010
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27. Financial inslrunenls and lnancial risk laclors conlinued
The novenenl in lhe valualion allowance lor lrade receivables is sel oul below.
$ nillion
2010 2009
Al 1 January 430 391
Exchange adjuslnenls (9) 12
Charge lor lhe year 150 157
Ulilizalion (143) (130
Al 31 Decenber 428 430
(c Liquidily risk
Liquidily risk is lhe risk lhal suilable sources ol lunding lor lhe groups business aclivilies nay nol be available. The groups liquidily is nanaged cenlrally
wilh operaling unils lorecasling lheir cash and currency requirenenls lo lhe cenlral lreasury lunclion. Unless reslricled by local regulalions, subsidiaries
pool lheir cash surpluses lo lreasury, which will lhen arrange lo lund olher subsidiaries requirenenls, or invesl any nel surplus in lhe narkel or arrange lor
necessary exlernal borrowings, while nanaging lhe groups overall nel currency posilions.
Following lhe Cull ol exico oil spill, lhe group laced signilcanl challenges in nanaging liquidily risk. The group was required lo nake subslanlial
cash paynenls in conneclion wilh lhe oil spill and also experienced increased requirenenls during lhe year lo posl lellers ol credil lo collaleralize a
nunber ol environnenlal liabililies lolalling $624 nillion and posl lurlher cash collaleral under lrading agreenenls lolalling $723 nillion. Furlher inlornalon
is provided in Liquidily and capilal resources on pages 63 lo 67.
n nanaging ils liquidily risk, lhe group has access lo a wide range ol lunding al conpelilive rales lhrough capilal narkels and banks. The groups
lreasury lunclion cenlrally coordinales relalionships wilh banks, borrowing requirenenls, loreign exchange requirenenls and cash nanagenenl. The
group believes il has access lo sullcienl lunding lhrough ils own currenl cash holdings and lulure cash generalion including disposal proceeds, lhe
connercial paper narkels, and by using undrawn connilled borrowing lacililies, lo neel loreseeable liquidily requirenenls. Al 31 Decenber 2010, lhe
group had subslanlial anounls ol undrawn borrowing lacililies available, including connilled lacililies ol $12,500 nillion (2009 $4,950 nillion, consisling
ol $5,250 nillion ol slandby lacililies (ol which $400 nillion is available lo draw and repay by nidSeplenber 2011, $4,550 nillion unlil nidOclober 2011,
and $300 nillion unlil nidJanuary 2013 and $7,250 nillion ol 364day lacililies (ol which $4,000 nillion can be drawn unlil lale ay 2011 and is repayable
up lo 364 days lron lhe dale ol drawing, $2,000 nillion drawn unlil lhe end ol June 2011, $750 nillion drawn unlil early July 2011, and $500 nillion drawn
unlil lale Augusl 2011. These lacililies are wilh a nunber ol inlernalional banks and borrowings under lhen would be al preagreed rales.
The group has in place a European Debl ssuance Progranne (DP under which lhe group nay raise up lo $20 billion ol debl lor nalurilies ol one
nonlh or longer. Al 31 Decenber 2010, lhe anounl drawn down againsl lhe DP was $12,272 nillion (2009 $11,403 nillion. n addilion, lhe group has in
place an unliniled US Shell Fegislralion under which il nay raise debl wilh nalurilies ol one nonlh or longer.
The group has longlern debl ralings ol A2 (slable oullook assigned by oodys and A (negalive oullook assigned by Slandard & Poors, a
downgrading lron Aa1 (slable oullook and AA (slable oullook, respeclively assigned prior lo lhe Cull ol exico oil spill.
Since lhe credil raling downgrading, we have issued $6.2 billion ol longlern debl early in lhe lourlh quarler 2010, and issued shorllern
connercial paper al conpelilive rales, as and when required. As an addilional neasure, we have increased and nainlained lhe cash and cash equivalenls
held by lhe group lo $13.6 billion al lhe end ol 2010, conpared wilh $3.3 billion al lhe end ol 2009.
The anounls shown lor lnance debl in lhe lable below include expecled inleresl paynenls on borrowings and lhe lulure nininun lease
paynenls wilh respecl lo lnance leases.
ncluded wilhin currenl lnance debl are US nduslrial Fevenue/unicipal bonds where bondholders have lhe oplion lo lender lhe bonds lor
repaynenl al inleresl resel dales, and lhe nexl resel dale lalls wilhin 12 nonlhs ol lhe balance sheel dale. The anounls al lhe end ol 2010 lolalled $379
nillion, down lron $2,395 nillion al lhe end ol 2009. The reduclion largely reHecls lhe inilial lailure lo renarkel lhe bonds lollowing lhe Cull ol exico oil
spill, as well as aclive nanagenenl by BP lo wilhdraw or renegoliale lernoul ol lhe bonds on resel dales lo lurlher renove lhe uncerlainly ol lhe
liquidily risk. Also included wilhin currenl lnance debl al lhe end ol 2009 was an anounl ol $1,622 nillion lor loans associaled wilh longlern gas supply
conlracls backed by gas prepaid bonds wilh lender oplions al inleresl rale resels wilh BP as lhe liquidily provider. Following lhe Cull ol exico oil spill lhe
bonds lailed renarkeling requiring BP lo acquire and hold all ol lhe bonds, wilh corresponding reduclion lo nil in lhe anounl reHecled in lnance debl al
lhe end ol 2010.
Currenl lnance debl on lhe group balance sheel al 31 Decenber 2010 includes $6,197 nillion (2009 nil in respecl ol cash deposils received
lor disposals expecled lo conplele in 2011 which will be considered exlinguished on conplelion ol lhe lransaclions. This anounl is excluded lron lhe
lable below.
The lable also shows lhe lining ol cash oulHows relaling lo lrade and olher payables and accruals.
$ nillion
2010 2009
Trade and Trade and
other Finance olher Finance
payabIes
a
AccruaIs debt payables Accruals debl
vilhin one year 42,691 5,612 9,353 31,413 6,202 9,790
1 lo 2 years 6,549 278 6,816 1,059 231 6,361
2 lo 3 years 6,242 125 7,542 1,039 106 5,359
3 lo 4 years 411 42 6,105 566 73 5,523
4 lo 5 years 365 28 5,494 67 49 3,151
5 lo 10 years 323 110 6,642 35 163 5,723
Over 10 years 25 54 724 46 76 1,150
56,606 6,249 42,676 34,325 6,905 37,562
a
Trade and olher payables al 31 Decenber 2010 includes lhe Cull ol exico oil spill lrusl lund liabilily which is payable as lollows: $5,003 nillion wilhin one year, $5,000 nillion payable in 1 lo 2 years and
$5,000 nillion payable in 2 lo 3 years.
BP Annual Feporl and Forn 20F 2010 139
Notes on nancial statements
27. Financial instruments and nancial risk factors continued
The group manages liquidity risk associated with derivative contracts, other than derivative hedging instruments, based on the expected maturities of both
derivative assets and liabilities as indicated in Note 34. Management does not currently anticipate any cash ows that could be of a signicantly different
amount, or could occur earlier than the expected maturity analysis provided.
The table below shows cash outows for derivative hedging instruments based upon contractual payment dates. The amounts reect the maturity
prole of the fair value liability where the instruments will be settled net, and the gross settlement amount where the pay leg of a derivative will be settled
separately from the receive leg, as in the case of cross-currency interest rate swaps hedging non-US dollar nance debt. The swaps are with high
investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible. Not shown in the table are the gross
settlement amounts for the receive leg of derivatives that are settled separately from the pay leg, which amount to $6,725 million at 31 December 2010
(2009 $7,999 million) to be received on the same day as the related cash outows.
$ million
2010 2009
Within one year 986 2,826
1 to 2 years 1,682 1,395
2 to 3 years 1,358 1,669
3 to 4 years 1,124 1,349
4 to 5 years 295 1,104
5 to 10 years 947 322
6,392 8,665
The group has issued third-party guarantees, as described above under credit risk. These amounts represent the maximum exposure of the group,
substantially all of which could be called within one year.
28. Other investments
$ million
2010 2009
Current Non-current Non-current
Listed 953 1,296
Unlisted 1,532 238 271
1,532 1,191 1,567
Other non-current investments comprise equity investments that have no xed maturity date or coupon rate. These investments are classied as
available-for-sale nancial assets and as such are recorded at fair value with the gain or loss arising as a result of changes in fair value recorded directly in
equity. Accumulated fair value changes are recycled to the income statement on disposal, or when the investment is impaired.
The fair value of listed investments has been determined by reference to quoted market bid prices and as such are in level 1 of the fair value
hierarchy. Unlisted investments are stated at cost less accumulated impairment losses and are in level 3 of the fair value hierarchy.
At 31 December 2010, current unlisted investments relate to repurchased gas pre-paid bonds see Note 35 for further information.
In 2010, no impairment losses were incurred relating to either unlisted investments or other listed investments. In 2009, impairment losses were
incurred of $13 million relating to unlisted investments and nil relating to other listed investments.
BP has pledged listed equity investments with a carrying value of $948 million as part of a nancing arrangement. As BP has retained substantially
all the risks and rewards associated with the shares they continue to be reected as an asset on the balance sheet, with a liability being reected within
nance debt. BP can request to have the shares returned at any time with 20 days notice, up to the date of maturity (in three tranches, up to December
2013), subject to repayment of the outstanding loan.
29. Inventories
$ million
2010 2009
Crude oil 8,969 6,237
Natural gas 112 105
Rened petroleum and petrochemical products 13,997 12,337
23,078 18,679
Supplies 1,669 1,661
24,747 20,340
Trading inventories 1,471 2,265
26,218 22,605
Cost of inventories expensed in the income statement 216,211 163,772
The inventory valuation at 31 December 2010 is stated net of a provision of $41 million (2009 $46 million) to write inventories down to their net realizable
value. The net movement in the year in respect of inventory net realizable value provisions was $5 million credit (2009 $1,366 million credit).
190 BP Annual Report and Form 20-F 2010
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30. Trade and olher receivables
$ nillion
2010 2009
Current Non-current Currenl oncurrenl
Financial assels
Trade receivables 24,255 - 22,604 -
Anounls receivable lron joinlly conlrolled enlilies 751 601 1,317 11
Anounls receivable lron associales 448 220 417 293
Olher receivables 4,763 1,342 4,949 1,420
30,217 2,163 29,237 1,729
onlnancial assels
Cull ol exico oil spill lrusl lund reinbursenenl assel
a
5,943 3,601 - -
Olher receivables 389 534 244 -
6,332 4,135 244 -
36,549 6,298 29,531 1,729
a
See ole 2 lor lurlher inlornalion.
Trade and olher receivables are predoninanlly noninleresl bearing. See ole 27 lor lurlher inlornalion.
Feceivables wilh a carrying value ol $13 nillion (2009 nil have been pledged as securily lor cerlain ol lhe groups liabililies.
31. Cash and cash equivalenls
$ nillion
2010 2009
Cash al bank and in hand 8,209 3,359
Tern bank deposils 5,253 3,211
Olher cash equivalenls 5,094 1,769
18,556 3,339
Cash and cash equivalenls conprise cash in hand, currenl balances wilh banks and sinilar inslilulions, lern deposils ol lhree nonlhs or less wilh banks
and sinilar inslilulions, and shorllern highly liquid inveslnenls lhal are readily converlible lo known anounls ol cash, are subjecl lo insignilcanl risk ol
changes in value and have a nalurily ol lhree nonlhs or less lron lhe dale ol acquisilion. The carrying anounls ol cash al bank and in hand and lern bank
deposils approxinale lheir lair values. Subslanlially all ol lhe olher cash equivalenls are calegorized wilhin level 1 ol lhe lair value hierarchy.
Cash and cash equivalenls al 31 Decenber 2010 includes $1,039 nillion (2009 $1,095 nillion lhal is reslricled. This relales principally lo anounls
required lo cover inilial nargins on lrading exchanges.
See ole 27 lor lurlher inlornalion.
32. Valualion and qualilying accounls
$ nillion
2010 2009 2003
DoubtfuI Fixed assets - Doubllul Fixed assels - Doubllul Fixed assels -
debts investments debls inveslnenls debls inveslnenls
Al 1 January 430 349 391 935 406 146
Charged lo cosls and expenses 150 376 157 66 191 647
Charged lo olher accounls
a
(9) (3) 12 6 (32 143
Deduclions (143) (182) (130 (653 (174 (1
Al 31 Decenber 428 540 430 349 391 935
a
Principally currency lransaclions.
Valualion and qualilying accounls are deducled in lhe balance sheel lron lhe assels lo which lhey apply.
BP Annual Feporl and Forn 20F 2010 191
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33. Trade and olher payables
$ nillion
2010 2009
Current Non-current Currenl oncurrenl
Financial liabililies
Trade payables 27,510 - 22,336 -
Anounls payable lo joinlly conlrolled enlilies 1,361 1,905 304 2,419
Anounls payable lo associales 712 220 692 293
Cull ol exico oil spill lrusl lund liabilily
a
5,002 9,899 - -
Olher payables 8,100 1,790 7,531 195
42,685 13,814 31,413 2,912
onlnancial liabililies
Olher payables 3,644 471 3,791 236
46,329 14,285 35,204 3,193
a
See ole 2 lor lurlher inlornalion.
Trade and olher payables are predoninanlly inleresl lree, however lhe Cull ol exico oil spill lrusl lund is recorded on a discounled basis. See ole 27 lor
lurlher inlornalion.
34. Derivalive lnancial inslrunenls
An oulline ol lhe groups lnancial risks and lhe objeclives and policies pursued in relalion lo lhose risks is sel oul in ole 27.
n lhe nornal course ol business lhe group enlers inlo derivalive lnancial inslrunenls (derivalives lo nanage ils nornal business exposures in
relalion lo connodily prices, loreign currency exchange rales and inleresl rales, including nanagenenl ol lhe balance belween Hoaling rale and lxed rale
debl, consislenl wilh risk nanagenenl policies and objeclives. Addilionally, lhe group has a welleslablished enlrepreneurial lrading operalion lhal is
underlaken in conjunclion wilh lhese aclivilies using a sinilar range ol conlracls.
AS 39 prescribes slricl crileria lor hedge accounling, whelher as a cash How or lair value hedge or a hedge ol a nel inveslnenl in a loreign
operalion, and requires lhal any derivalive lhal does nol neel lhese crileria should be classiled as held lor lrading and lair valued, wilh gains and losses
recognized in lhe incone slalenenl.
The lair values ol derivalive lnancial inslrunenls al 31 Decenber are sel oul below.
$ nillion
2010 2009
Fair Fair Fair Fair
vaIue vaIue value value
asset IiabiIity assel liabilily
Derivalives held lor lrading
Currency derivalives 194 (280) 313 (226
Oil price derivalives 1,099 (877) 1,140 (1,191
alural gas price derivalives 5,350 (3,951) 5,636 (3,960
Power price derivalives 561 (432) 632 (497
Olher derivalives - (89) 47 (47
7,204 (5,629) 7,323 (5,921
Enbedded derivalive connodily price conlracls 18 (1,625) 137 (1,463
Cash How hedges
Currency lorwards, lulures and cylinders 134 (124) 132 (114
Crosscurrency inleresl rale swaps 101 (1) 44 (293
235 (125) 226 (412
Fair value hedges
Currency lorwards, lulures and swaps 772 (80) 490 (232
nleresl rale swaps 337 (74) 256 (122
1,109 (154) 746 (354
8,566 (7,533) 3,932 (3,155
Ol which - currenl 4,356 (3,856) 4,967 (4,631
- noncurrenl 4,210 (3,677) 3,965 (3,474
192 BP Annual Feporl and Forn 20F 2010
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34. Derivalive lnancial inslrunenls conlinued
Derivatives heId for trading
The group nainlains aclive lrading posilions in a variely ol derivalives. The conlracls nay be enlered inlo lor risk nanagenenl purposes, lo salisly supply
requirenenls or lor enlrepreneurial lrading. Cerlain conlracls are classiled as held lor lrading, regardless ol lheir original business objeclive, and are
recognized al lair value wilh changes in lair value recognized in lhe incone slalenenl. Trading aclivilies are underlaken by using a range ol conlracl lypes
in conbinalion lo creale increnenlal gains by arbilraging prices belween narkels, localions and line periods. The nel ol lhese exposures is nonilored
using narkel valuealrisk lechniques as described in ole 27.
The lollowing lables show lurlher inlornalion on lhe lair value ol derivalives and olher lnancial inslrunenls held lor lrading purposes.
Derivalive assels held lor lrading have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years TotaI
Currency derivalives 124 41 18 11 - - 194
Oil price derivalives 797 128 82 64 21 7 1,099
alural gas price derivalives 2,591 1,100 652 375 231 401 5,350
Power price derivalives 389 125 35 11 1 - 561
3,901 1,394 787 461 253 408 7,204
$ nillion
2009
Less lhan Over
1 year 12 years 23 years 34 years 45 years 5 years Tolal
Currency derivalives 162 33 33 22 16 2 313
Oil price derivalives 314 136 69 59 44 13 1,140
alural gas price derivalives 2,953 1,059 532 354 136 497 5,636
Power price derivalives 496 139 32 12 3 - 632
Olher derivalives 47 - - - - - 47
4,477 1,417 716 447 249 517 7,323
Derivalive liabililies held lor lrading have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years TotaI
Currency derivalives (228) (6) (46) - - - (280)
Oil price derivalives (794) (76) (6) (1) - - (877)
alural gas price derivalives (2,174) (741) (484) (161) (114) (277) (3,951)
Power price derivalives (287) (103) (32) (9) (1) - (432)
Olher derivalives - (29) (60) - - - (89)
(3,483) (955) (628) (171) (115) (277) (5,629)
$ nillion
2009
Less lhan Over
1 year 12 years 23 years 34 years 45 years 5 years Tolal
Currency derivalives (110 (53 (20 (32 (4 (2 (226
Oil price derivalives (1,033 (67 (29 (11 (1 - (1,191
alural gas price derivalives (2,331 (607 (243 (222 (73 (424 (3,960
Power price derivalives (335 (109 (39 (11 (3 - (497
Olher derivalives (47 - - - - - (47
(3,956 (341 (336 (276 (36 (426 (5,921
l al inceplion ol a conlracl lhe valualion cannol be supporled by observable narkel dala, any gain or loss delernined by lhe valualion nelhodology is nol
recognized in lhe incone slalenenl bul is delerred on lhe balance sheel and is connonly known as dayone proll or loss. This delerred gain or loss is
recognized in lhe incone slalenenl over lhe lile ol lhe conlracl unlil subslanlially all ol lhe renaining conlracl lern can be valued using observable narkel
dala al which poinl any renaining delerred gain or loss is recognized in lhe incone slalenenl. Changes in valualion lron lhis inilial valualion are recognized
innedialely lhrough lhe incone slalenenl.
BP Annual Feporl and Forn 20F 2010 193
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34. Derivalive lnancial inslrunenls conlinued
The lollowing lable shows lhe changes in lhe dayone prolls and losses delerred on lhe balance sheel.
$ nillion
2010 2009
NaturaI alural
OiI price gas price Oil price gas price
Fair value ol conlracls nol recognized lhrough lhe incone slalenenl al 1 January 21 33 32 33
Fair value ol new conlracls al inceplion nol recognized in lhe incone slalenenl - 39 - (14
Fair value recognized in lhe incone slalenenl (21) (3) (11 (36
Fair value ol conlracls nol recognized lhrough proll al 31 Decenber - 69 21 33
The lollowing lable shows lhe lair value ol derivalive assels and derivalive liabililies held lor lrading, analysed by nalurily period and by nelhodology ol lair
value eslinalion.
FFS 7 Financial nslrunenls: Disclosures sels oul a lair value hierarchy which consisls ol lhree levels lhal describe lhe nelhodology ol eslinalion
as lollows:
Level 1 - using quoled prices in aclive narkels lor idenlical assels or liabililies.
Level 2 - using inpuls lor lhe assel or liabilily, olher lhan quoled prices, lhal are observable eilher direclly (i.e. as prices or indireclly
(i.e. derived lron prices.
Level 3 - using inpuls lor lhe assel or liabilily lhal are nol based on observable narkel dala such as prices based on inlernal nodels or olher
valualion nelhods.
This inlornalion is presenled on a gross basis, lhal is, belore nelling by counlerparly.
$ nillion
2010
Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years TotaI
Fair value ol derivalive assels
Level 1 122 36 12 5 - - 175
Level 2 7,132 1,928 639 239 109 - 10,047
Level 3 341 314 296 267 165 410 1,793
7,595 2,278 947 511 274 410 12,015
Less: nelling by counlerparly (3,694) (884) (160) (50) (21) (2) (4,811)
3,901 1,394 787 461 253 408 7,204
Fair value ol derivalive liabililies
Level 1 (239) (6) (46) - - - (291)
Level 2 (6,733) (1,685) (617) (107) (44) - (9,186)
Level 3 (205) (148) (125) (114) (92) (279) (963)
(7,177) (1,839) (788) (221) (136) (279) (10,440)
Less: nelling by counlerparly 3,694 884 160 50 21 2 4,811
(3,483) (955) (628) (171) (115) (277) (5,629)
el lair value 418 439 159 290 138 131 1,575
$ nillion
2009
Less lhan Over
1 year 12 years 23 years 34 years 45 years 5 years Tolal
Fair value ol derivalive assels
Level 1 163 76 23 17 10 1 290
Level 2 9,544 2,132 915 357 146 - 13,144
Level 3 264 133 162 143 123 527 1,417
9,971 2,446 1,100 522 234 523 14,351
Less: nelling by counlerparly (5,494 (1,029 (334 (75 (35 (11 (7,023
4,477 1,417 716 447 249 517 7,323
Fair value ol derivalive liabililies
Level 1 (95 (39 (14 (24 - (1 (173
Level 2 (9,036 (1,631 (597 (234 (47 - (11,645
Level 3 (269 (150 (109 (93 (74 (436 (1,131
(9,450 (1,370 (720 (351 (121 (437 (12,949
Less: nelling by counlerparly 5,494 1,029 334 75 35 11 7,023
(3,956 (341 (336 (276 (36 (426 (5,921
el lair value 521 576 330 171 163 91 1,902
194 BP Annual Feporl and Forn 20F 2010
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34. Derivalive lnancial inslrunenls conlinued
The lollowing lable shows lhe changes during lhe year in lhe nel lair value ol derivalives held lor lrading purposes wilhin level 3 ol lhe lair value hierarchy.
$ nillion
OiI NaturaI gas Power
price price price TotaI
el lair value ol conlracls al 1 January 2010 215 72 (1) 286
Cains (losses recognized in lhe incone slalenenl 21 637 (1) 657
Selllenenls (54) (11) 1 (64)
Purchases - - - -
Sales - - - -
Translers oul ol level 3 (18) (38) - (56)
Translers inlo level 3 - 4 - 4
Exchange adjuslnenls - 3 - 3
el lair value ol conlracls al 31 Decenber 2010 164 667 (1) 830
$ nillion
Oil alural gas Power
Currency price price price Olher Tolal
el lair value ol conlracls al 1 January 2009 3 149 17 - - 169
Cains (losses recognized in lhe incone slalenenl (1 205 91 - (1 294
Selllenenls - (91 (5 - - (96
Purchases - - - 1 - 1
Sales - - - (2 1 (1
Translers oul ol level 3 (2 (50 (4 - - (56
Translers inlo level 3 - 2 (25 - - (23
Exchange adjuslnenls - - (2 - - (2
el lair value ol conlracls al 31 Decenber 2009 - 215 72 (1 - 236
The anounl recognized in lhe incone slalenenl lor lhe year relaling lo level 3 heldlorlrading derivalives slill held al 31 Decenber 2010 was a
$651 nillion gain (2009 $273 nillion gain relaling lo derivalives slill held al 31 Decenber 2009.
Cains and losses relaling lo derivalive conlracls are included eilher wilhin sales and olher operaling revenues or wilhin purchases in lhe incone
slalenenl depending upon lhe nalure ol lhe aclivily and lype ol conlracl involved. The conlracl lypes lrealed in lhis way include lulures, oplions, swaps
and cerlain lorward sales and lorward purchases conlracls. Cains or losses arise on conlracls enlered inlo lor risk nanagenenl purposes, oplinizalion
aclivily and enlrepreneurial lrading. They also arise on cerlain conlracls lhal are lor nornal procurenenl or sales aclivily lor lhe group bul lhal are required
lo be lair valued under accounling slandards. Also included wilhin sales and olher operaling revenues are gains and losses on invenlory held lor lrading
purposes. The lolal anounl relaling lo all ol lhese ilens was a nel gain ol $1,423 nillion (2009 $3,735 nillion nel gain and 2003 $6,721 nillion nel gain.
Enbedded derivalives
Prior lo lhe developnenl ol an aclive gas lrading narkel, UK gas conlracls were priced using a baskel ol available price indices, prinarily relaling lo oil
producls, power and inHalion. Aller lhe developnenl ol an aclive UK gas narkel, cerlain conlracls were enlered inlo or renegolialed using pricing
lornulae nol direclly relaled lo gas prices, lor exanple, oil producl and power prices. n lhese circunslances, pricing lornulae have been delernined lo be
derivalives, enbedded wilhin lhe overall conlraclual arrangenenls lhal are nol clearly and closely relaled lo lhe underlying connodily. The resulling lair
value relaling lo lhese conlracls is recognized on lhe balance sheel wilh gains or losses recognized in lhe incone slalenenl.
All lhe enbedded derivalives relale lo connodily prices, are calegorized in level 3 ol lhe lair value hierarchy and are valued using inpuls lhal
include price curves lor each ol lhe dillerenl producls lhal are buill up lron aclive narkel pricing dala. vhere necessary, lhese are exlrapolaled lo lhe
expiry ol lhe conlracls (lhe lasl ol which is in 2013 using all available exlernal pricing inlornalion. Addilionally, where liniled dala exisls lor cerlain
producls, prices are inlerpolaled using hisloric and longlern pricing relalionships.
Enbedded derivalive assels and liabililies have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years TotaI
Assels 18 - - - - - 18
Liabililies (325) (326) (285) (281) (212) (196) (1,625)
el lair value (307) (326) (285) (281) (212) (196) (1,607)
$ nillion
2009
Less lhan Over
1 year 12 years 23 years 34 years 45 years 5 years Tolal
Assels 134 - - - - 3 137
Liabililies (154 (236 (231 (227 (232 (333 (1,463
el lair value (20 (236 (231 (227 (232 (335 (1,331
BP Annual Feporl and Forn 20F 2010 195
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34. Derivalive lnancial inslrunenls conlinued
The lollowing lable shows lhe changes during lhe year in lhe nel lair value ol enbedded derivalives, wilhin level 3 ol lhe lair value hierarchy.
$ nillion
2010 2009
Commodity Connodily
price price
el lair value ol conlracls al 1 January (1,331) (1,392
Selllenenls 37 221
Cains (losses recognized in lhe incone slalenenl
a
(350) 535
Exchange adjuslnenls 37 (195
el lair value ol conlracls al 31 Decenber (1,607) (1,331
a
The anounl lor gains (losses recognized in lhe incone slalenenl lor 2009 includes a loss ol $224 nillion arising as a resull ol relnenenls in lhe nodelling and valualion nelhods used lor lhese conlracls.
The anounl recognized in lhe incone slalenenl lor lhe year relaling lo level 3 enbedded derivalives slill held al 31 Decenber 2010 was a $350 nillion
loss (2009 $347 nillion gain relaling lo enbedded derivalives slill held al 31 Decenber 2009.
The lair value gain (loss on enbedded derivalives is shown below.
$ nillion
2010 2009 2003
Connodily price enbedded derivalives (309) 607 (106
nleresl rale enbedded derivalives - - (5
Fair value (loss gain (309) 607 (111
Cash ow hedges
Al 31 Decenber 2010, lhe group held currency lorwards and lulures conlracls and cylinders lhal were being used lo hedge lhe loreign currency risk ol
highly probable lorecasl lransaclions, as well as crosscurrency inleresl rale swaps lo lx lhe US dollar inleresl rale and US dollar redenplion value,
wilh nalching crilical lerns on lhe currency leg ol lhe swap wilh lhe underlying nonUS dollar debl issuance. ole 27 oullines lhe nanagenenl ol risk
aspecls lor currency and inleresl rale risk. For cash How hedges lhe group only clains hedge accounling lor lhe inlrinsic value on lhe currency wilh any
lair value allribulable lo line value laken innedialely lo lhe incone slalenenl. There were no highly probable lransaclions lor which hedge accounling
has been clained lhal have nol occurred and no signilcanl elenenl ol hedge inellecliveness requiring recognilion in lhe incone slalenenl. For cash
How hedges lhe prelax anounl renoved lron equily during lhe period and included in lhe incone slalenenl is a gain ol $25 nillion (2009 loss ol
$366 nillion and 2003 loss ol $45 nillion. The enlire gain ol $25 nillion is included in produclion and nanulacluring expenses (2009 $332 nillion loss in
produclion and nanulacluring expense and $34 nillion loss in lnance cosls, 2003 $1 nillion loss in produclion and nanulacluring expense and
$44 nillion loss in lnance cosls. The anounl renoved lron equily during lhe period and included in lhe carrying anounl ol nonlnancial assels was a
loss ol $53 nillion (2009 $136 nillion loss and 2003 $33 nillion gain.
The anounls relained in equily al 31 Decenber 2010 are expecled lo nalure and inpacl lhe incone slalenenl by a gain ol $39 nillion in 2011, a
loss ol $23 nillion in 2012 and a loss ol $50 nillion in 2013 and beyond.
Fair vaIue hedges
Al 31 Decenber 2010, lhe group held inleresl rale and crosscurrency inleresl rale swap conlracls as lair value hedges ol lhe inleresl rale risk on lxed
rale debl issued by lhe group. The ellecliveness ol each hedge relalionship is quanlilalively assessed and denonslraled lo conlinue lo be highly elleclive.
The gain on lhe hedging derivalive inslrunenls laken lo lhe incone slalenenl in 2010 was $563 nillion (2009 $93 nillion loss and 2003 $2 nillion gain
ollsel by a loss on lhe lair value ol lhe lnance debl ol $554 nillion (2009 $117 nillion gain and 2003 $20 nillion loss.
The inleresl rale and crosscurrency inleresl rale swaps have an average nalurily ol lour lo lve years, (2009 lour lo lve years and are used lo
converl slerling, euro, Swiss lranc, Auslralian dollar, Japanese yen and Hong Kong dollar denoninaled borrowings inlo US dollar Hoaling rale debl.
ole 27 oullines lhe groups approach lo inleresl rale risk nanagenenl.
Hedges of net investments in foreign operations
The group held currency swap conlracls as a hedge ol a longlern inveslnenl in a UK subsidiary lhal expired in 2009. The loss on lhe hedge recognized in
equily in 2003 was $33 nillion. US dollars had been sold lorward lor slerling purchased and nalched lhe underlying liabilily wilh no signilcanl
inellecliveness reHecled in lhe incone slalenenl.
196 BP Annual Feporl and Forn 20F 2010
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35. Finance debl
$ nillion
2010 2009
Current Non-current TotaI Currenl oncurrenl Tolal
Borrowings 8,312 30,017 38,329 9,013 25,020 34,033
el obligalions under lnance leases 117 693 810 91 493 539
8,429 30,710 39,139 9,109 25,513 34,627
Disposal deposils 6,197 - 6,197 - - -
14,626 30,710 45,336 9,109 25,513 34,627
Currenl lnance debl includes lhe porlion ol longlern debl lhal will nalure in lhe nexl 12 nonlhs, anounling lo $6,976 nillion (2009 $3,965 nillion.
Deposils lor disposal lransaclions expecled lo conplele in 2011 ol $6,197 nillion (2009 nil are also included. This debl will be considered exlinguished on
conplelion ol lhe lransaclions.
Currenl lnance debl also includes US nduslrial Fevenue/unicipal bonds ol $379 nillion (2009 $2,395 nillion wilh earliesl conlraclual repaynenl
dales wilhin one year, and lhe 2009 balance included $1,622 nillion lor loans associaled wilh longlern gas supply conlracls backed by gas prepaid bonds.
The bondholders lypically have lhe oplion lo lender lhese bonds lor repaynenl on inleresl resel dales wilh any bonds lhal are lendered being renarkeled.
The reduclion in currenl lnance debl in 2010 allribulable lo such bonds largely reHecls lhe unsuccesslul renarkeling ol lhe bonds during lhe year. BP has
repaid $2,460 nillion ol US nduslrial Fevenue/unicipal bonds and al 31 Decenber 2010 eilher held or had relired lhe bonds. All ol lhe oulslanding bonds
associaled wilh longlern gas supply conlracls, anounling lo $1,527 nillion were held by BP wilh lhe liabilily now recorded wilhin olher payables on lhe
balance sheel and lhe bonds recorded wilhin olher currenl inveslnenls.
Al 31 Decenber 2010 $790 nillion (2009 $113 nillion ol lnance debl was secured by lhe pledging ol assels, and $4,730 nillion was secured in
conneclion wilh deposils received relaling lo cerlain disposal lransaclions expecled lo conplele in 2011 (2009 nil. n addilion, in conneclion wilh
$4,533 nillion (2009 nil ol lnance debl, BP has enlered inlo crude oil sales conlracls in respecl ol oil produced lron cerlain lelds in ollshore Angola and
Azerbaijan lo provide securily lo lhe lending banks. The renainder ol lnance debl was unsecured.
The lollowing lable shows, by najor currency, lhe groups lnance debl al 31 Decenber and lhe weighled average inleresl rales achieved al lhose
dales lhrough a conbinalion ol borrowings and derivalive lnancial inslrunenls enlered inlo lo nanage inleresl rale and currency exposures. The disposal
deposils noled above are excluded lron lhis analysis.
Fixed rate debt FIoating rate debt TotaI
Weighted
Weighted average Weighted
average time for average
interest which rate interest
rate is hxed Amount rate Amount Amount
% Years $ miIIion % $ miIIion $ miIIion
2010
US dollar 4 5 14,797 1 21,076 35,873
Euro 4 3 53 2 2,988 3,041
Olher currencies 6 18 140 4 85 225
14,990 24,149 39,139
2009
US dollar 4 4 12,525 1 20,566 33,091
Euro 4 2 63 2 1,199 1,262
Olher currencies 6 14 171 3 103 274
12,759 21,363 34,627
The Euro debl nol swapped lo US dollar is nalurally hedged lor lhe loreign currency risk by holding equivalenl Euro cash and cash equivalenl anounls.
Finance Ieases
The group uses lnance leases lo acquire properly, planl and equipnenl. These leases have lerns ol renewal bul no purchase oplions and escalalion
clauses. Fenewals are al lhe oplion ol lhe lessee. Fulure nininun lease paynenls under lnance leases are sel oul below.
$ nillion
2010 2009
Fulure nininun lease paynenls payable wilhin
1 year 153 109
2 lo 5 years 535 329
Therealler 438 407
1,126 345
Less lnance charges 316 256
el obligalions 810 539
Ol which - payable wilhin 1 year 117 91
- payable wilhin 2 lo 5 years 404 202
- payable lherealler 289 296
BP Annual Feporl and Forn 20F 2010 197
Notes on nancial statements
35. Finance debt continued
Fair values
The estimated fair value of nance debt is shown in the table below together with the carrying amount as reected in the balance sheet.
Long-term borrowings in the table below include the portion of debt that matures in the year from 31 December 2010, whereas in the balance
sheet the amount would be reported within current nance debt. The disposal deposits noted above are excluded from this analysis.
The carrying amount of the groups short-term borrowings, comprising mainly commercial paper, bank loans, overdrafts and US Industrial Revenue/
Municipal bonds, approximates their fair value. The fair value of the groups long-term borrowings and nance lease obligations is estimated using quoted
prices or, where these are not available, discounted cash ow analyses based on the groups current incremental borrowing rates for similar types and
maturities of borrowing.
$ million
2010 2009
Carrying Carrying
Fair value amount Fair value amount
Short-term borrowings 1,453 1,453 5,144 5,144
Long-term borrowings 37,600 36,876 29,918 28,894
Net obligations under nance leases 928 810 599 589
Total nance debt 39,981 39,139 35,661 34,627
36. Capital disclosures and analysis of changes in net debt
The group denes capital as the total equity of the group. The groups approach to managing capital is set out in its nancial framework which was revised
during 2010, with the objective of maintaining a capital structure that allows the group to execute its strategy and is resilient to inherent volatility. The group
intends to invest to grow the company and shareholder value sustainably through the business cycle, whilst providing the group with nancial exibility in
the medium term as the disposal programme is completed and commitments to the Deepwater Horizon Oil Spill Trust are fullled.
In the light of the Gulf of Mexico oil spill and the agreement to establish the $20-billion trust fund, the BP board reviewed its dividend policy and
decided that no ordinary share dividends would be paid in respect of the rst three quarters of 2010. On 1 February 2011, BP announced the resumption of
quarterly dividend payments, with a fourth quarter dividend of 7 cents per share. We believe this level is supported by the success of our disposal
programme thus far, and by the improving business environment, but is balanced by the recognition of our continuing obligation to fund the trust until the
end of 2013 and the need to retain nancial exibility. We intend to increase the dividend level over time in line with the circumstances of the company.
Going forward, the group intends to maintain a signicant cash liquidity buffer and reduce the net debt ratio to within a range of 10-20%.
The group monitors capital on the basis of the net debt ratio, that is, the ratio of net debt to net debt plus equity. Net debt is calculated as gross
nance debt, as shown in the balance sheet, plus the fair value of associated derivative nancial instruments that are used to hedge foreign exchange and
interest rate risks relating to nance debt, for which hedge accounting is claimed, less cash and cash equivalents. Net debt and net debt ratio are
non-GAAP measures. BP uses these measures to provide useful information to investors. Net debt enables investors to see the economic effect of gross
debt, related hedges and cash and cash equivalents in total. The net debt ratio enables investors to see how signicant net debt is relative to equity from
shareholders. The derivatives are reported on the balance sheet within the headings Derivative nancial instruments. All components of equity are
included in the denominator of the calculation. At 31 December 2010 the net debt ratio was 21% (2009 20%).
During 2010, the company did not repurchase any of its own shares.
$ million
At 31 December 2010 2009
Gross debt 45,336 34,627
Less: Cash and cash equivalents 18,556 8,339
Less: Fair value asset of hedges related to nance debt 916 127
Net debt 25,864 26,161
Equity 95,891 102,113
Net debt ratio 21% 20%
www.bp.com/downloads/changesinnetdebt
An analysis of changes in net debt is provided below.
$ million
2010 2009
Cash and Cash and
Finance cash Net Finance cash Net
Movement in net debt debt
a
equivalents debt debt
a
equivalents debt
At 1 January (34,500) 8,339 (26,161) (33,238) 8,197 (25,041)
Exchange adjustments 194 (279) (85) (60) 110 50
Net cash ow (3,613) 10,496 6,883 (1,141) 32 (1,109)
Movement in nance debt relating to investing activities
b
(6,197) (6,197)
Other movements (304) (304) (61) (61)
At 31 December (44,420) 18,556 (25,864) (34,500) 8,339 (26,161)
a
Including fair value of associated derivative nancial instruments.
b
See Note 35 for further information.
198 BP Annual Report and Form 20-F 2010
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$ nillion
Litigation and CIean Water
Decommissioning EnvironmentaI SpiII response cIaims Act penaIties Other TotaI
Al 1 January 2010 9,020 1,719 - 1,076 - 2,815 14,630
Exchange adjuslnenls (114) - - (7) - (50) (171)
Acquisilions 188 - - 2 - 15 205
ew or increased provisions 1,800 1,290 10,883 15,171 3,510 808 33,462
vrileback ol unused provisions (12) (120) - (51) - (466) (649)
Unwinding ol discounl 168 29 - 18 - 19 234
Change in discounl rale 444 22 - 9 - (6) 469
Ulilizalion (164) (460) (9,840) (4,250) - (755) (15,469)
Feclassiled as liabililies direclly associaled wilh
assels held lor sale (381) (1) - - - (1) (383)
Delelions (405) (14) - (1) - (1) (421)
Al 31 Decenber 2010 10,544 2,465 1,043 11,967 3,510 2,378 31,907
Ol which - currenl 432 635 982 7,011 - 429 9,489
- noncurrenl 10,112 1,830 61 4,956 3,510 1,949 22,418
$ nillion
Deconnissioning Environnenlal Liligalion Olher Tolal
Al 1 January 2009 3,413 1,691 1,446 2,093 13,653
Exchange adjuslnenls 393 15 22 29 464
ew or increased provisions 169 533 302 1,256 2,315
vrileback ol unused provisions - (259 (99 (223 (536
Unwinding ol discounl 134 32 15 16 247
Change in discounl rale 324 13 (35 3 315
Ulilizalion (333 (303 (574 (361 (1,626
Delelions (90 (53 (1 (3 (152
Al 31 Decenber 2009 9,020 1,719 1,076 2,315 14,630
Ol which - currenl 237 363 433 572 1,660
- noncurrenl 3,733 1,351 643 2,243 12,970
The group nakes lull provision lor lhe lulure cosl ol deconnissioning oil and nalural gas produclion lacililies and relaled pipelines on a discounled basis on
lhe inslallalion ol lhose lacililies. The provision lor lhe cosls ol deconnissioning lhese produclion lacililies and pipelines al lhe end ol lheir econonic lives
has been eslinaled using exisling lechnology, al currenl prices or lulure assunplions, depending on lhe expecled lining ol lhe aclivily, and discounled
using a real discounl rale ol 1.5' (2009 1.75'. These cosls are generally expecled lo be incurred over lhe nexl 30 years. vhile lhe provision is based on
lhe besl eslinale ol lulure cosls and lhe econonic lives ol lhe lacililies and pipelines, lhere is uncerlainly regarding bolh lhe anounl and lining ol lhese
cosls.
Provisions lor environnenlal renedialion are nade when a cleanup is probable and lhe anounl ol lhe obligalion can be eslinaled reliably.
Cenerally, lhis coincides wilh connilnenl lo a lornal plan ol aclion or, il earlier, on diveslnenl or on closure ol inaclive siles. The provision lor
environnenlal liabililies has been eslinaled using exisling lechnology, al currenl prices and discounled using a real discounl rale ol 1.5' (2009 1.75'.
The najorily ol lhese cosls are expecled lo be incurred over lhe nexl 10 years. The exlenl and cosl ol lulure renedialion progrannes are inherenlly
dillcull lo eslinale. They depend on lhe scale ol any possible conlaninalion, lhe lining and exlenl ol correclive aclions, and also lhe groups share ol lhe
liabilily.
The liligalion calegory includes provisions lor nallers relaled lo, lor exanple, connercial dispules, producl liabilily, and allegalions ol exposures
ol lhird parlies lo loxic subslances. ncluded wilhin lhe olher calegory al 31 Decenber 2010 are provisions lor delerred enployee conpensalion ol
$723 nillion (2009 $739 nillion and lor expecled renlal shorllalls on surplus properlies ol $45 nillion (2009 $246 nillion. These provisions are discounled
using eilher a noninal discounl rale ol 3.75' (2009 4.0' or a real discounl rale ol 1.5' (2009 1.75', as appropriale.
www.bp.con/downloads/provisions
BP Annual Feporl and Forn 20F 2010 199
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www.bp.con/downloads/provisions
37. Provisions conlinued
Provisions reIating to the GuIf of Mexico oiI spiII
The Cull ol exico oil spill is described on pages 34 lo 39 and in ole 2. Provisions relaling lo lhe Cull ol exico oil spill, included in lhe lable above, are
separalely presenled below:
$ nillion
Litigation and CIean Water
EnvironmentaI SpiII response cIaims Act penaIties TotaI
Al 1 January 2010 - - - - -
ew or increased provisions 929 10,883 14,939 3,510 30,261
Unwinding ol discounl 4 - - - 4
Change in discounl rale 5 - - - 5
Ulilizalion (129) (9,840) (3,966) - (13,935)
Al 31 Decenber 2010 809 1,043 10,973 3,510 16,335
Ol which - currenl 314 982 6,642 - 7,938
- noncurrenl 495 61 4,331 3,510 8,397
Ol which - payable lron lhe lrusl lund 382 - 9,162 - 9,544
As described in ole 2, BP has recorded provisions al 31 Decenber 2010 relaling lo lhe Cull ol exico oil spill including anounls in relalion lo
environnenlal expendilure, spill response cosls, liligalion and clains, and Clean valer Acl penallies, each ol which is described below.
Environnenlal
The anounls connilled by BP lor a 10year research progranne lo sludy lhe inpacl ol lhe incidenl on lhe narine and shoreline environnenl ol lhe
Cull ol exico have been provided lor. BPs connilnenl is lo provide $500 nillion ol lunding, and lhe renaining connilnenl, on a discounled basis, ol
$427 nillion was included in provisions al 31 Decenber 2010. This anounl is expecled lo be spenl evenly over lhe 10year period.
As a responsible parly under lhe OPA 90, BP laces clains by lhe Uniled Slales, as well as by Slale, lribal, and loreign lruslees, il any, lor nalural
resource danages (alural Fesource Danages clains. These danages include, anongsl olher lhings, lhe reasonable cosls ol assessing lhe injury lo
nalural resources as well as sone energency resloralion projecls which are expecled lo occur over lhe nexl lwo years. BP has been incurring nalural
resource danage assessnenl cosls and a provision has been nade lor lhe eslinaled cosls ol lhe assessnenl phase. The assessnenl covers a large area
ol polenlial inpacl and will lake sone line lo conplele in order lo delernine bolh lhe severily and duralion ol lhe inpacl ol lhe oil spill. The process ol
inlerpreling lhe large volune ol dala collecled is expecled lo lake al leasl several nonlhs and, in order lo delernine polenlial injuries lo cerlain aninal
populalions, dala will need lo be collecled over one or nore reproduclive cycles. This expecled assessnenl spend is based upon pasl experience as well
as idenliled projecls. A provision ol $332 nillion has been eslablished lor lhese ilens. Unlil lhe size, localion and duralion ol lhe inpacl is assessed, il is
nol possible lo eslinale reliably eilher lhe anounls or lining ol lhe renaining alural Fesource Danages clains, lherelore no anounls have been
provided lor lhese ilens and lhey are disclosed as a conlingenl liabilily. See ole 44 lor lurlher inlornalion.
Spill response
The renaining provision lor spill response includes lhe eslinaled lulure cosls ol bolh subsea operalions as well as surlace and shoreline work.
The subsea response provision is based on lhe renaining aclivilies expecled lo be underlaken and has been calculaled using daily rales ol cosls
incurred lo dale. This includes lhe rig cosls lo conplele lhe plugging and abandonnenl ol lhe second reliel well, which is in progress and is expecled lo
conplele in early arch 2011, and lhe recovery ol lhe subsea inlraslruclure used as parl ol lhe various conlainnenl syslens. The najorily ol lhe vessels
involved in lhe response have now been deconlaninaled. The provision includes lhe cosls ol deconlaninaling lhe renaining 25 vessels, which is expecled
lo be conplele by lhe end ol April 2011.
The provision lor surlace and shoreline response is based on lhe daily cosls currenlly being incurred which are underpinned by headcounl,
equipnenl and lhe nunber ol vessels on hire. Al lhe end ol lhe year, lhere were approxinalely 360 vessels on hire and lhe nunber ol personnel involved
in response aclivilies was approxinalely 6,200. BP and lhe US Coasl Cuard are working closely wilh slale and local ollcials lo clean Cull Coasl beaches
belore lhe 2011 spring and sunner lourisn seasons and lhis is lhe basis on which lhe provision al 31 Decenber 2010 has been calculaled. The provision
also includes an eslinale ol lulure lederal response cosls and ongoing noniloring lhal will be required unlil lhe end ol lhe second quarler ol 2012.
Liligalion and clains
ndividua| and Business C|ains, and S!a!e and Loca| C|ains under !he Oi| Po||u!ion Ac! o! !990 (OPA 90) and c|ains !or persona| injur,
BP laces clains under OPA 90 by individuals and businesses lor renoval cosls, danage lo real or personal properly, losl prolls or inpairnenl ol earning
capacily, loss ol subsislence use ol nalural resources and lor personal injury (ndividual and Business Clains and by slale and local governnenl enlilies
lor renoval cosls, physical danage lo real or personal properly, loss ol governnenl revenue and increased public services cosls (Slale and Local Clains.
The eslinaled lulure cosl ol sellling ndividual and Business Clains, Slale and Local Clains under OPA 90 and clains lor personal injuries, bolh
reporled and unreporled, has been provided lor. Clains adninislralion cosls have also been provided lor.
BP believes lhal lhe hislory ol clains received lo dale, and selllenenls nade, provides sullcienl dala lo enable lhe conpany lo use an approach
based on a conbinalion ol acluarial nelhods and nanagenenl judgenenls lo eslinale BF (ncurred Bul ol Feporled clains lo delernine a reliable
besl eslinale ol BPs exposure lor clains nol yel reporled in relalion lo ndividual and Business clains, and Slale and Local clains under OPA 90. The
anounl provided lor lhese clains has been delernined in accordance wilh FFS and represenls BPs currenl besl eslinale ol lhe expendilure required lo
sellle ils obligalions al lhe balance sheel dale. The neasurenenl ol lhis provision is subjecl lo signilcanl uncerlainly. Aclual cosls could ullinalely be
signilcanlly higher or lower lhan lhose recorded as lhe clains and selllenenl process progresses.
n eslinaling lhe anounl ol lhe provision, BP has delernined a range ol possible oulcones lor ndividual and Business Clains, and Slale and Local
Clains. These delerninalions are based on BPs clains paynenl experience, lhe applicalion ol insurance induslry benchnark dala, lhe use ol a
conbinalion ol acluarial and slalislical nelhods and nanagenenl judgenenls where appropriale. The nelhods selecled are consislenl wilh lhose used by
lhe insurance induslry lo eslinale a range ol lolal expendilures lor bolh reporled and unreporled clains. These nelhods have been adopled on lhe basis
lhal, al lhis slage ol developnenl, lhe applicalion ol insurance induslry slandard lechniques lor lhe eslinalion ol ullinale losses is an appropriale
approach lor lhe cosls arising lron lhe Deepwaler Horizon oil spill.
200 BP Annual Feporl and Forn 20F 2010
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37. Provisions conlinued
Through lhe applicalion ol lhis approach, BP has concluded lhal a reasonable range ol possible oulcones lor lhe anounl ol lhe provision as al
31 Decenber 2010 is $6 billion lo $13 billion. BP believes lhal lhe provision recorded al 31 Decenber 2010 ol $9.2 billion represenls a reliable besl
eslinale lron wilhin lhis range ol possible oulcones. This anounl is shown as payable lron lhe lrusl lund under Li!iga!ion and c|ains in lhe lable above.
The provision is in addilion lo lhe $3.4 billion ol clains paid in 2010. Ol lhis lolal paid, $3.2 billion is included wilhin ulilizalion ol provision in lhe lable, and
lhe renaining $0.2 billion was a period expendilure prior lo lhe recognilion ol lhe provision al lhe end ol lhe second quarler 2010. Also included wilhin lhe
lolal ulilizalion ol provision ol $4 billion under Li!iga!ion and c|ains are anounls relaling lo clains adninislralion cosls and legal lees. Ol lhe lolal
paynenls ol $3.4 billion during lhe year, $3 billion was paid oul ol lhe lrusl lund and $0.4 billion was paid by BP.
BPs nanagenenl has ulilized acluarial lechniques and ils judgenenl in delernining lhis reliable besl eslinale. However, il is possible lhal lhe lnal
oulcone could lie oulside lhis range.
any key assunplions underlie and inHuence bolh lhe range ol possible oulcones and lhe reliable besl eslinales ol lolal expendilures derived lor
bolh calegories ol clains. These key assunplions include lhe anounls lhal will ullinalely be paid in relalion lo currenl clains, lhe nunber, lype and
anounls lor clains nol yel reporled, lhe scope and nunber ol clains lhal can be resolved successlully in lhe clains process, lhe resolulion ol rejecled
clains, lhe oulcones ol any liligalion, lhe ellecls on lourisn and lsheries and olher econonic and environnenlal laclors.
The oulcones ol clains and liligalion are likely lo be paid oul over nany years lo cone. BP will reevaluale lhe assunplions underlying lhis analysis
on a quarlerly basis as nore inlornalion becones available and lhe clains process nalures.
BP also laces olher liligalion lor which no reliable eslinale ol lhe cosl can currenlly be nade. Therelore no anounls have been provided lor lhese
ilens. See ole 44 lor lurlher inlornalion.
Lega| !ees
Eslinaled legal lees have been provided lor where we have been able lo eslinale reliably lhose which will arise in lhe nexl lwo years.
Clean valer Acl penallies
A provision has been nade lor lhe eslinaled penallies lor slricl liabilily under Seclion 311 ol lhe Clean valer Acl. Such penallies are subjecl lo a slalulory
naxinun calculaled as lhe producl ol a perbarrel naxinun penally rale and lhe nunber ol barrels ol oil spilled. Uncerlainlies currenlly exisl in relalion lo
bolh lhe perbarrel penally rale lhal will ullinalely be inposed and lhe volune ol oil spilled.
A charge lor polenlial Clean valer Acl Seclion 311 penallies was lrsl included in BPs secondquarler 2010 inlerin lnancial slalenenls. Al lhe
line lhal charge was laken, lhe lalesl eslinale lron lhe inlraagency Flow Fale Technical Croup crealed by lhe alional ncidenl Connander in charge ol
lhe spill response was belween 35,000 and 60,000 barrels per day. The nidpoinl ol lhal range, 47,500 barrels per day, was used lor lhe purposes ol
calculaling lhe charge. For lhe purposes ol calculaling lhe anounl ol lhe oil How lhal was discharged inlo lhe Cull ol exico, lhe anounl ol oil lhal had
been or was projecled lo be caplured in vessels on lhe surlace was sublracled lron lhe lolal eslinaled How up unlil when lhe well was capped on
15 July 2010. The resull ol lhis calculalion was an eslinale lhal approxinalely 3.2 nillion barrels ol oil had been discharged inlo lhe Cull. This eslinale ol
3.2 nillion barrels was calculaled using a lolal How ol 47,500 barrels per day nulliplied by lhe 35 days lron 22 April 2010 lhrough 15 July 2010 less an
eslinale ol lhe anounl caplured on lhe surlace (approxinalely 350,000 barrels.
This eslinaled discharge volune was lhen nulliplied by $1,100 per barrel - lhe naxinun anounl lhe slalule allows in lhe absence ol gross
negligence or willul nisconducl - lor lhe purposes ol eslinaling a polenlial penally. This resulled in a provision ol $3,510 nillion lor polenlial penallies
under Seclion 311.
n ulilizing lhe $1,100 perbarrel inpul, lhe conpany look inlo accounl lhal lhe aclual perbarrel penally a courl nay inpose, or lhal lhe Covernnenl
nighl agree lo in selllenenl, could be lower lhan $1,100 per barrel il il were delernined lhal such a lower penally was appropriale based on lhe laclors a
courl is direcled lo consider in assessing a penally. n parlicular, in delernining lhe anounl ol a civil penally, Seclion 311 direcls a courl lo consider a
nunber ol enuneraled laclors, including lhe seriousness ol lhe violalion or violalions, lhe econonic benell lo lhe violalor, il any, resulling lron lhe
violalion, lhe degree ol culpabilily involved, any olher penally lor lhe sane incidenl, any hislory ol prior violalions, lhe nalure, exlenl, and degree ol
success ol any ellorls ol lhe violalor lo nininize or niligale lhe ellecls ol lhe discharge, lhe econonic inpacl ol lhe penally on lhe violalor, and any olher
nallers as juslice nay require. Civil penallies above $1,100 per barrel up lo a slalulory naxinun ol $4,300 per barrel ol oil discharged would only be
inposed il gross negligence or willul nisconducl were alleged and subsequenlly proven. The conpany expecls lo seek assessnenl ol a penally lower
lhan $1,100 per barrel based on several ol lhese laclors. However, lhe $1,100 perbarrel rale was ulilized lor lhe purposes ol calculaling a charge aller
considering and weighing all possible oulcones and in lighl ol: (i lhe conpanys conclusion lhal il did nol acl wilh gross negligence or engage in willul
nisconducl, and (ii lhe uncerlainly as lo whelher a courl would assess a penally below lhe $1,100 slalulory naxinun.
On 2 Augusl 2010, lhe Uniled Slales Deparlnenl ol Energy and lhe Flow Fale Technical Croup had issued an eslinale lhal 4.9 nillion barrels ol oil
had Howed lron lhe acondo well, and 4.05 nillion barrels had been discharged inlo lhe Cull (lhe dillerence being lhe anounl ol oil caplured by vessels
on lhe surlace as parl ol BPs well conlainnenl ellorls.
l was and renains BPs view, based on lhe analysis ol available dala by ils experls, lhal lhe 2 Augusl 2010 Covernnenl eslinale and olher sinilar
eslinales are nol reliable eslinales because lhey are based on inconplele or inaccurale inlornalion, resl in large parl on assunplions lhal have nol been
validaled, and are subjecl lo lar grealer uncerlainlies lhan have been acknowledged. As BP has publicly asserled, including al a 22 Oclober 2010 neeling
wilh lhe slall ol lhe alional Connission on lhe BP Deepwaler Horizon Oil Spill and Ollshore Drilling, lhe conpany believes lhal lhe 2 Augusl 2010
discharge eslinale and sinilar eslinales are overslaled by a signilcanl anounl, and lhal lhe How rale is polenlially in lhe range ol 2050' lower. l lhe
How rale is 50' lower lhan lhe 2 Augusl 2010 eslinale, lhen lhe anounl ol oil lhal Howed lron lhe acondo well would be approxinalely 2.5 nillion
barrels, and lhe anounl discharged inlo lhe Cull would be approxinalely 1.6 nillion barrels. l lhe How rale is 20' lower lhan lhe 2 Augusl 2010 eslinale,
lhen lhe anounl ol oil lhal Howed lron lhe acondo well would be approxinalely 3.9 nillion barrels and lhe anounl discharged inlo lhe Cull would be
approxinalely 3.1 nillion barrels, which is nol nalerially dillerenl lron lhe anounl we used lor our original eslinale al lhe second quarler.
BP Annual Feporl and Forn 20F 2010 201
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37. Provisions conlinued
Therelore, lor lhe purposes ol calculaling a provision lor lnes and penallies under Seclion 311 ol lhe Clean valer Acl, lhe conpany has conlinued lo use
an eslinale ol 3.2 nillion barrels ol oil discharged lo lhe Cull ol exico as ils currenl besl eslinale, as delned in paragraphs 3640 ol AS 37 Provisions,
conlingenl liabililies and conlingenl assels, ol lhe anounl which nay be used in calculaling lhe penally under Seclion 311 ol lhe Clean valer Acl. This
reHecls an eslinale ol lolal How lron lhe well ol approxinalely 4 nillion barrels, and an eslinale ol approxinalely 350,000 barrels caplured by vessels on
lhe surlace. n ulilizing lhis eslinale, lhe conpany has laken inlo consideralion nol only ils own analysis ol lhe How and discharge issue, bul also lhe
analyses and conclusions ol olher parlies, including lhe US governnenl. The eslinale ol BP and ol olher parlies as lo how nuch oil was discharged lo lhe
Cull ol exico nay change, perhaps nalerially, over line. One laclor lhal would inpacl lhe How rale eslinale is lhe conplelion ol lhe analysis on lhe
blowoul prevenler which is now in lhe cuslody ol lhe lederal governnenl. Sinilar silualions exisl wilh regard lo olher pieces ol physical evidence crilical lo
lhe How rale analysis. Changes in eslinales as lo How and discharge could allecl lhe anounl aclually assessed lor Clean valer Acl lnes and penallies.
The yearend provision conlinued lo be based on a perbarrel penally ol $1,100 lor lhe reasons discussed above, including lhe conpanys
conlinued conclusion lhal il did nol acl wilh gross negligence or engage in willul nisconducl.
The anounl and lining ol lhese cosls will depend upon whal is ullinalely delernined lo be lhe volune ol oil spilled and lhe perbarrel penally rale
lhal is inposed. l is nol currenlly praclicable lo eslinale lhe lining ol expending lhese cosls and lhe provision has been included wilhin noncurrenl
liabililies on lhe balance sheel. o olher anounls have been provided as al 31 Decenber 2010 in relalion lo olher polenlial lnes and penallies because il
is nol possible lo neasure lhe obligalion reliably. Fines and penallies are nol covered by lhe lrusl lund.
www.bp.con/downloads/pensions
33. Pensions and olher poslrelirenenl benells
osl group conpanies have pension plans, lhe lorns and benells ol which vary wilh condilions and praclices in lhe counlries concerned. Pension benells
nay be provided lhrough delned conlribulion plans (noney purchase schenes or delned benell plans (lnal salary and olher lypes ol schenes wilh
connilled pension paynenls. For delned conlribulion plans, relirenenl benells are delernined by lhe value ol lunds arising lron conlribulions paid in
respecl ol each enployee. For delned benell plans, relirenenl benells are based on such laclors as lhe enployees pensionable salary and lenglh ol
service. Delned benell plans nay be exlernally lunded or unlunded. The assels ol lunded plans are generally held in separalely adninislered lrusls.
n parlicular, lhe prinary pension arrangenenl in lhe UK is a lunded lnal salary pension plan under which relired enployees draw lhe najorily ol
lheir benell as an annuily. vilh ellecl lron 1 April 2010, BP closed ils UK plan lo new joiners olher lhan sone ol lhose joining lhe orlh Sea SPU. The
plan renains open lo ongoing accrual lor lhose enployees who had joined BP on or belore 31 arch 2010. The najorily ol new joiners in lhe UK have lhe
oplion lo join a delned conlribulion plan.
n lhe US, a range ol relirenenl arrangenenls are provided. These include a lunded lnal salary pension plan lor cerlain herilage enployees and a
cash balance arrangenenl lor new hires. Felired US enployees lypically lake lheir pension benell in lhe lorn ol a lunp sun paynenl. US enployees are
also eligible lo parlicipale in a delned conlribulion (401k plan in which enployee conlribulions are nalched wilh conpany conlribulions.
The level ol conlribulions lo lunded delned benell plans is lhe anounl needed lo provide adequale lunds lo neel pension obligalions as lhey lall
due. During 2010, conlribulions ol $411 nillion (2009 $9 nillion and 2003 $6 nillion and $694 nillion (2009 $795 nillion and 2003 $362 nillion were
nade lo lhe UK plans and US plans respeclively. n addilion, conlribulions ol $133 nillion (2009 $204 nillion and 2003 $130 nillion were nade lo olher
lunded delned benell plans. The aggregale level ol conlribulions in 2011 is expecled lo be approxinalely $1,250 nillion, and includes conlribulions in all
counlries lhal we expecl lo be required lo nake by law or under conlraclual agreenenls as well as an allowance lor discrelionary lunding.
Cerlain group conpanies, principally in lhe US, provide poslrelirenenl heallhcare and lile insurance benells lo lheir relired enployees and
dependanls. The enlillenenl lo lhese benells is usually based on lhe enployee renaining in service unlil relirenenl age and conplelion ol a nininun
period ol service. The plans are lunded lo a liniled exlenl.
The obligalion and cosl ol providing pensions and olher poslrelirenenl benells is assessed annually using lhe projecled unil credil nelhod. The
dale ol lhe nosl recenl acluarial review was 31 Decenber 2010. The groups principal plans are subjecl lo a lornal acluarial valualion every lhree years in
lhe UK, wilh valualions being required nore lrequenlly in nany olher counlries. The nosl recenl lornal acluarial valualion ol lhe UK pension plans was as
al 31 Decenber 2003.
The nalerial lnancial assunplions used lor eslinaling lhe benell obligalions ol lhe various plans are sel oul below. The assunplions are reviewed
by nanagenenl al lhe end ol each year, and are used lo evaluale accrued pension and olher poslrelirenenl benells al 31 Decenber. The sane
assunplions are used lo delernine pension and olher poslrelirenenl benell expense lor lhe lollowing year, lhal is, lhe assunplions al 31 Decenber
2010 are used lo delernine lhe pension liabililies al lhal dale and lhe pension expense lor 2011.
'
Financial assunplions UK US Olher
2010 2009 2003 2010 2009 2003 2010 2009 2003
Discounl rale lor pension
plan liabililies 5.5 5.3 6.3 4.7 5.4 6.3 5.3 5.3 5.7
Discounl rale lor olher posl
relirenenl benell plans n/a n/a n/a 5.3 5.3 6.2 n/a n/a n/a
Fale ol increase in salaries 5.4 5.3 4.9 4.1 4.2 2.2 3.8 3.3 3.5
Fale ol increase lor pensions
in paynenl 3.5 3.4 3.0 - - - 1.8 1.3 1.7
Fale ol increase in delerred
pensions 3.5 3.4 3.0 - - - 1.3 1.2 1.0
nHalion 3.5 3.4 3.0 2.3 2.4 0.4 2.3 2.3 2.0
Our discounl rale assunplions are based on lhirdparly AA corporale bond indices and lor our largesl plans in lhe UK, US and Cernany we use yields lhal
reHecl lhe nalurily prolle ol lhe expecled benell paynenls. The inHalion rale assunplions lor our UK and US plans are based on lhe dillerence belween
lhe yields on indexlinked and lxedinleresl longlern governnenl bonds. n olher counlries we use eilher lhis approach, or lhe cenlral bank inHalion
largel, or advice lron lhe local acluary depending on lhe inlornalion lhal is available lo us. The inHalion assunplions are used lo delernine lhe rale ol
increase lor pensions in paynenl and lhe rale ol increase in delerred pensions where lhere is such an increase.
202 BP Annual Feporl and Forn 20F 2010
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33. Pensions and olher poslrelirenenl benells conlinued
Our assunplions lor lhe rale ol increase in salaries are based on our inHalion assunplion plus an allowance lor expecled longlern real salary growlh.
These include allowance lor pronolionrelaled salary growlh, ol belween 0.3' and 0.4' depending on counlry. n addilion lo lhe lnancial assunplions,
we regularly review lhe denographic and norlalily assunplions.
The norlalily assunplions reHecl besl praclice in lhe counlries in which we provide pensions, and have been chosen wilh regard lo lhe lalesl
available published lables adjusled where appropriale lo reHecl lhe experience ol lhe group and an exlrapolalion ol pasl longevily inprovenenls inlo lhe
lulure. BPs nosl subslanlial pension liabililies are in lhe UK, lhe US and Cernany where our norlalily assunplions are as lollows:
Years
orlalily assunplions UK US Cernany
2010 2009 2003 2010 2009 2003 2010 2009 2003
Lile expeclancy al age 60 lor a
nale currenlly aged 60 26.1 26.0 25.9 24.7 24.6 24.4 23.3 23.2 23.0
Lile expeclancy al age 60 lor a
nale currenlly aged 40 29.1 29.0 23.9 26.2 26.1 25.9 26.2 26.1 25.9
Lile expeclancy al age 60 lor a
lenale currenlly aged 60 28.7 23.6 23.5 26.3 26.3 26.1 27.9 27.3 27.6
Lile expeclancy al age 60 lor a
lenale currenlly aged 40 31.6 31.5 31.4 27.2 27.2 27.0 30.6 30.4 30.3
Our assunplion lor lulure US heallhcare cosl lrend rale lor lhe lrsl year aller lhe reporling dale reHecls lhe rale ol aclual cosl increases seen in recenl
years. The ullinale lrend rale reHecls our longlern expeclalions ol lhe level al which cosl inHalion will slabilize based on pasl heallhcare cosl inHalion
seen over a longer period ol line. The assuned lulure US heallhcare cosl lrend rale assunplions are as lollows:
'
2010 2009 2003
Firsl years US heallhcare cosl lrend rale 7.8 3.0 3.1
Ullinale US heallhcare cosl lrend rale 5.0 5.0 5.0
Year in which ullinale lrend rale is reached 2018 2016 2014
Pension plan assels are generally held in lrusls. The prinary objeclive ol lhe lrusls is lo accunulale pools ol assels sullcienl lo neel lhe obligalions ol
lhe various plans. The assels ol lhe lrusls are invesled in a nanner consislenl wilh lduciary obligalions and principles lhal reHecl currenl praclices in
porllolio nanagenenl.
A signilcanl proporlion ol lhe assels are held in equilies, owing lo a higher expecled level ol relurn over lhe long lern wilh an acceplable level ol
risk. n order lo provide reasonable assurance lhal no single securily or lype ol securily has an unwarranled inpacl on lhe lolal porllolio, lhe inveslnenl
porllolios are highly diversiled. The longlern assel allocalion policy lor lhe najor plans is as lollows:
Policy range
Assel calegory '
Tolal equily 4575
Bonds/cash 17.550
Properly/real eslale 010
Sone ol lhe groups pension plans use derivalive lnancial inslrunenls as parl ol lheir assel nix and lo nanage lhe level ol risk. The groups nain pension
plans do nol invesl direclly in eilher securilies or properly/real eslale ol lhe conpany or ol any subsidiary.
Felurn on assel assunplions reHecl lhe groups expeclalions buill up by assel class and by plan. The groups expeclalion is derived lron a
conbinalion ol hislorical relurns over lhe long lern and lhe lorecasls ol narkel prolessionals. Our assunplion lor relurn on equilies is based on a
longlern view, and lhe size ol lhe resulling equily risk preniun over governnenl bond yields is reviewed each year lor reasonableness. Our assunplion
lor relurn on bonds reHecls lhe porllolio nix ol governnenl lxedinleresl, indexlinked and corporale bonds.
BP Annual Feporl and Forn 20F 2010 203
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33. Pensions and olher poslrelirenenl benells conlinued
The expecled longlern rales ol relurn and narkel values ol lhe various calegories ol assels held by lhe delned benell plans al 31 Decenber are sel oul
below. The narkel values shown include lhe ellecls ol derivalive lnancial inslrunenls. The anounls classiled as equilies include inveslnenls in conpanies
lisled on slock exchanges as well as unlisled inveslnenls. The narkel value ol unlisled inveslnenls al 31 Decenber 2010 was $3,343 nillion (2009
$2,956 nillion and 2003 $2,319 nillion. The narkel value ol pension assels al lhe end ol 2010 was higher lhan al lhe end ol 2009 due lo a rise in lhe narkel
value ol inveslnenls when expressed in lheir local currencies parlially ollsel by a decrease in value lhal arises lron changes in exchange rales (decreasing
lhe reporled value ol inveslnenls when expressed in US dollars. ovenenls in lhe value ol plan assels during lhe year are shown in delail in lhe lable on
page 206.
2010 2009 2003
Expected Expecled Expecled
Iong-term longlern longlern
rate of Market rale ol arkel rale ol arkel
return vaIue relurn value relurn value
% $ miIIion ' $ nillion ' $ nillion
UK pension plans
Equilies 8.0 18,546 3.0 16,945 3.0 13,704
Bonds 5.0 3,866 5.3 3,701 6.1 3,253
Properly 6.5 1,462 6.5 1,269 6.5 973
Cash 1.4 406 1.1 634 2.9 299
7.2 24,280 7.3 22,549 7.4 13,239
US pension plans
Equilies 8.5 5,058 3.5 4,326 3.5 3,991
Bonds 4.5 1,419 4.3 1,213 3.7 1,247
Properly 8.0 7 3.0 3 3.0 3
Cash 0.3 165 0.9 271 1.9 131
8.0 6,649 3.0 5,323 3.0 5,377
US olher poslrelirenenl benell plans
Equilies - - 3.5 3 3.5 9
Bonds - - 4.3 4 3.7 4
Cash 0.3 8 - - - -
0.3 8 7.6 12 7.3 13
Olher plans
Equilies 8.0 1,182 3.6 1,091 3.4 799
Bonds 4.2 1,874 4.4 1,651 4.2 1,431
Properly 6.3 83 6.5 32 6.3 127
Cash 2.7 155 2.0 245 3.1 113
5.4 3,294 5.9 3,069 5.3 2,525
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33. Pensions and olher poslrelirenenl benells conlinued
The assuned rale ol inveslnenl relurn, discounl rale, inHalion, US heallhcare cosl lrend rale and lhe norlalily assunplions all have a signilcanl ellecl on
lhe anounls reporled.
A onepercenlage poinl change in lhe lollowing assunplions lor lhe groups plans would have had lhe ellecls shown in lhe lable below. The ellecls
shown lor lhe expense in 2011 include currenl service cosl and inleresl on plan liabililies.
$ nillion
One-percentage point
Increase Decrease
nveslnenl relurn
Ellecl on pension and olher poslrelirenenl benell expense in 2011 (343) 343
Discounl rale
Ellecl on pension and olher poslrelirenenl benell expense in 2011 (76) 101
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 (5,370) 6,864
nHalion rale
Ellecl on pension and olher poslrelirenenl benell expense in 2011 470 (364)
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 5,060 (4,135)
US heallhcare cosl lrend rale
Ellecl on US olher poslrelirenenl benell expense in 2011 31 (24)
Ellecl on US olher poslrelirenenl benell obligalion al 31 Decenber 2010 401 (328)
One addilional year ol longevily in lhe norlalily assunplions would have lhe ellecls shown in lhe lable below. The ellecl shown lor lhe expense in 2011
includes currenl service cosl and inleresl on plan liabililies.
$ nillion
US other post-
UK US retirement German
pension pension beneht pension
pIans pIans pIans pIans
One addilional years longevily
Ellecl on pension and olher poslrelirenenl benell expense in 2011 41 4 4 9
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 581 73 72 187
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33. Pensions and olher poslrelirenenl benells conlinued
$ nillion
2010
US other post-
UK US retirement
pension pension beneht Other
pIans pIans pIans pIans TotaI
Analysis ol lhe anounl charged lo proll (loss belore inleresl and laxalion
Currenl service cosl
a
393 241 48 120 802
Pasl service cosl - - - 3 3
Selllenenl, curlailnenl and special lerninalion benells 24 - - 161 185
Paynenls lo delned conlribulion plans 1 187 - 35 223
Tolal operaling charge
b
418 428 48 319 1,213
Analysis ol lhe anounl crediled (charged lo olher lnance expense
Expecled relurn on plan assels 1,580 465 1 178 2,224
nleresl on plan liabililies (1,183) (396) (169) (429) (2,177)
Olher lnance incone (expense 397 69 (168) (251) 47
Analysis ol lhe anounl recognized in olher conprehensive incone
Aclual relurn less expecled relurn on pension plan assels 1,577 425 (1) 36 2,037
Change in assunplions underlying lhe presenl value ol lhe plan liabililies (1,144) (498) (132) (489) (2,263)
Experience gains and losses arising on lhe plan liabililies 12 (167) (8) 69 (94)
Acluarial (loss gain recognized in olher conprehensive incone 445 (240) (141) (384) (320)
ovenenls in benell obligalion during lhe year
Benell obligalion al 1 January 21,425 7,519 2,996 8,133 40,073
Exchange adjuslnenls (835) - - (269) (1,104)
Currenl service cosl
a
393 241 48 120 802
Pasl service cosl - - - 3 3
nleresl cosl 1,183 396 169 429 2,177
Curlailnenl - - - 4 4
Selllenenl 11 - - 18 29
Special lerninalion benells
c
13 - - 139 152
Conlribulions by plan parlicipanls
d
39 - - 13 52
Benell paynenls (lunded plans
e
(952) (758) (4) (192) (1,906)
Benell paynenls (unlunded plans
e
(3) (75) (192) (387) (657)
Acquisilions - - - 2 2
Disposals (43) - - (29) (72)
Acluarial loss on obligalion 1,132 665 140 420 2,357
Benell obligalion al 31 Decenber
a l
22,363 7,988 3,157 8,404 41,912
ovenenls in lair value ol plan assels during lhe year
Fair value ol plan assels al 1 January 22,549 5,823 12 3,069 31,453
Exchange adjuslnenls (881) - - 29 (852)
Expecled relurn on plan assels
a g
1,580 465 1 178 2,224
Conlribulions by plan parlicipanls
d
39 - - 13 52
Conlribulions by enployers (lunded plans 411 694 - 187 1,292
Benell paynenls (lunded plans
e
(952) (758) (4) (192) (1,906)
Acquisilions - - - 2 2
Disposals (43) - - (28) (71)
Acluarial gain (loss on plan assels
g
1,577 425 (1) 36 2,037
Fair value ol plan assels al 31 Decenber 24,280 6,649 8 3,294 34,231
Surplus (delcil al 31 Decenber 1,917 (1,339) (3,149) (5,110) (7,681)
Fepresenled by
Assel recognized 2,120 - - 56 2,176
Liabilily recognized (203) (1,339) (3,149) (5,166) (9,857)
1,917 (1,339) (3,149) (5,110) (7,681)
The surplus (delcil nay be analysed belween lunded and unlunded plans as lollows
Funded 2,115 (838) (39) (223) 1,015
Unlunded (198) (501) (3,110) (4,887) (8,696)
1,917 (1,339) (3,149) (5,110) (7,681)
The delned benell obligalion nay be analysed belween lunded and unlunded plans
as lollows
Funded (22,165) (7,487) (47) (3,517) (33,216)
Unlunded (198) (501) (3,110) (4,887) (8,696)
(22,363) (7,988) (3,157) (8,404) (41,912)
a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pension plan benells are generally included in currenl service cosl and lhe
cosls ol adninislering our olher poslrelirenenl benell plans are included in lhe benell obligalion.
b
ncluded wilhin produclion and nanulacluring expenses and dislribulion and adninislralion expenses.
c
The charge lor special lerninalion benells represenls lhe increased liabilily arising as a resull ol early relirenenls occurring as parl ol reslrucluring progrannes.
d
osl ol lhe conlribulions nade by plan parlicipanls aller 1 January 2010 inlo UK pension plans were nade under salary sacrilce.
e
The benell paynenls anounl shown above conprises $2,507 nillion benells plus $56 nillion ol plan expenses incurred in lhe adninislralion ol lhe benell.
l
The benell obligalion lor olher plans includes $3,371 nillion lor lhe Cernan plan, which is largely unlunded.
g
The aclual relurn on plan assels is nade up ol lhe sun ol lhe expecled relurn on plan assels and lhe acluarial gain on plan assels as disclosed above.
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33. Pensions and olher poslrelirenenl benells conlinued
$ nillion
2009
US olher posl
UK US relirenenl
pension pension benell Olher
plans plans plans plans Tolal
Analysis ol lhe anounl charged lo proll belore inleresl and laxalion
Currenl service cosl
a
311 243 43 117 719
Pasl service cosl - - (22 1 (21
Selllenenl, curlailnenl and special lerninalion benells 37 - - 53 90
Paynenls lo delned conlribulion plans - 205 - 23 233
Tolal operaling charge
b
343 443 26 199 1,021
Analysis ol lhe anounl crediled (charged lo olher lnance expense
Expecled relurn on plan assels 1,426 405 1 147 1,979
nleresl on plan liabililies (1,112 (456 (133 (420 (2,171
Olher lnance incone (expense 314 (51 (132 (273 (192
Analysis ol lhe anounl recognized in olher conprehensive incone
Aclual relurn less expecled relurn on pension plan assels 1,761 617 2 169 2,549
Change in assunplions underlying lhe presenl value ol lhe plan liabililies (2,217 (501 (50 (42 (2,310
Experience gains and losses arising on lhe plan liabililies (141 (229 71 (122 (421
Acluarial (loss gain recognized in olher conprehensive incone (597 (113 23 5 (632
ovenenls in benell obligalion during lhe year
Benell obligalion al 1 January 16,655 7,534 3,003 7,655 34,347
Exchange adjuslnenls 1,396 - - 363 2,259
Currenl service cosl
a
311 243 43 117 719
Pasl service cosl - - (22 1 (21
nleresl cosl 1,112 456 133 420 2,171
Curlailnenl - - - 11 11
Selllenenl - - - (3 (3
Special lerninalion benells
c
37 - - 45 32
Conlribulions by plan parlicipanls 37 - - 10 47
Benell paynenls (lunded plans
d
(977 (1,371 (4 (209 (2,561
Benell paynenls (unlunded plans
d
(4 (73 (191 (399 (667
Disposals - - - (42 (42
Acluarial (gain loss on obligalion 2,353 730 (21 164 3,231
Benell obligalion al 31 Decenber
a e
21,425 7,519 2,996 3,133 40,073
ovenenls in lair value ol plan assels during lhe year
Fair value ol plan assels al 1 January 13,239 5,377 13 2,525 26,154
Exchange adjuslnenls 2,054 - - 242 2,296
Expecled relurn on plan assels
a l
1,426 405 1 147 1,979
Conlribulions by plan parlicipanls 37 - - 10 47
Conlribulions by enployers (lunded plans 9 795 - 204 1,003
Benell paynenls (lunded plans
d
(977 (1,371 (4 (209 (2,561
Disposals - - - (19 (19
Acluarial gain on plan assels
l
1,761 617 2 169 2,549
Fair value ol plan assels al 31 Decenber 22,549 5,323 12 3,069 31,453
Surplus (delcil al 31 Decenber 1,124 (1,696 (2,934 (5,064 (3,620
Fepresenled by
Assel recognized 1,290 - - 100 1,390
Liabilily recognized (166 (1,696 (2,934 (5,164 (10,010
1,124 (1,696 (2,934 (5,064 (3,620
The surplus (delcil nay be analysed belween lunded and unlunded plans as lollows
Funded 1,237 (1,230 (33 (164 (190
Unlunded (163 (416 (2,951 (4,900 (3,430
1,124 (1,696 (2,934 (5,064 (3,620
The delned benell obligalion nay be analysed belween lunded and unlunded plans
as lollows
Funded (21,262 (7,103 (45 (3,233 (31,643
Unlunded (163 (416 (2,951 (4,900 (3,430
(21,425 (7,519 (2,996 (3,133 (40,073
a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pension plan benells are generally included in currenl service cosl and lhe
cosls ol adninislering our olher poslrelirenenl benell plans are included in lhe benell obligalion.
b
ncluded wilhin produclion and nanulacluring expenses and dislribulion and adninislralion expenses.
c
The charge lor special lerninalion benells represenls lhe increased liabilily arising as a resull ol early relirenenls occurring as parl ol reslrucluring progrannes.
d
The benell paynenls anounl shown above conprises $3,174 nillion benells plus $54 nillion ol plan expenses incurred in lhe adninislralion ol lhe benell.
e
The benell obligalion lor olher plans includes $3,330 nillion lor lhe Cernan plan, which is largely unlunded.
l
The aclual relurn on plan assels is nade up ol lhe sun ol lhe expecled relurn on plan assels and lhe acluarial gain on plan assels as disclosed above.
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33. Pensions and olher poslrelirenenl benells conlinued
$ nillion
2003
US olher posl
UK US relirenenl
pension pension benell Olher
plans plans plans plans Tolal
Analysis ol lhe anounl charged lo proll belore inleresl and laxalion
Currenl service cosl
a
443 235 40 123 351
Pasl service cosl 7 74 - 1 32
Selllenenl, curlailnenl and special lerninalion benells 30 - - 12 42
Paynenls lo delned conlribulion plans - 170 - 25 195
Tolal operaling charge
b
435 479 40 166 1,170
Analysis ol lhe anounl crediled (charged lo olher lnance expense
Expecled relurn on plan assels 2,094 632 2 194 2,922
nleresl on plan liabililies (1,239 (444 (193 (450 (2,331
Olher lnance incone (expense 355 133 (196 (256 591
Analysis ol lhe anounl recognized in olher conprehensive incone
Aclual relurn less expecled relurn on pension plan assels (6,946 (2,395 (3 (404 (10,253
Change in assunplions underlying lhe presenl value ol lhe plan liabililies 1,570 3 215 214 2,002
Experience gains and losses arising on lhe plan liabililies (73 (194 13 70 (179
Acluarial (loss gain recognized in olher conprehensive incone (5,449 (3,036 225 (120 (3,430
a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pensions lund benells are generally included in currenl service cosl, and lhe
cosls ol adninislering our olher poslrelirenenl benell plans are included in lhe benell obligalion.
b
ncluded wilhin produclion and nanulacluring expenses and dislribulion and adninislralion expenses.
Al 31 Decenber 2010, reinbursenenl balances due lron or lo olher conpanies in respecl ol pensions anounled lo $433 nillion reinbursenenl assels
(2009 $443 nillion and $13 nillion reinbursenenl liabililies (2009 $14 nillion. These balances are nol included as parl ol lhe pension liabilily, bul are
reHecled elsewhere in lhe group balance sheel.
$ nillion
2010 2009 2003 2007 2006
Hislory ol surplus (delcil and ol experience gains and losses
Benell obligalion al 31 Decenber 41,912 40,073 34,347 43,100 42,433
Fair value ol plan assels al 31 Decenber 34,231 31,453 26,154 42,799 39,910
Delcil (7,681) (3,620 (3,693 (301 (2,523
Experience losses on plan liabililies (94) (421 (173 (200 (124
Aclual relurn less expecled relurn on pension plan assels 2,037 2,549 (10,253 302 1,967
Aclual relurn on plan assels 4,261 4,523 (7,331 3,157 4,377
Acluarial (loss gain recognized in olher conprehensive incone (320) (632 (3,430 1,717 2,615
Cunulalive anounl recognized in olher conprehensive incone (3,942) (3,622 (2,940 5,490 3,773
Estimated future beneht payments
The expecled benell paynenls, which reHecl expecled lulure service, as appropriale, bul exclude plan expenses, up unlil 2020 are as lollows:
$ nillion
US other post-
UK US retirement
pension pension beneht Other
pIans pIans pIans pIans TotaI
2011 994 805 207 612 2,618
2012 1,035 807 209 581 2,632
2013 1,069 810 213 584 2,676
2014 1,122 808 217 588 2,735
2015 1,167 788 221 576 2,752
20162020 6,581 3,636 1,132 2,815 14,164
www.bp.con/downloads/pensions
203 BP Annual Feporl and Forn 20F 2010
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39. Calledup share capilal
The allolled, called up and lully paid share capilal al 31 Decenber was as lollows:
2010 2009 2003
Shares Shares Shares
ssued (thousand) $ miIIion (lhousand $ nillion (lhousand $ nillion
3' cunulalive lrsl prelerence shares ol 1 each 7,233 12 7,233 12 7,233 12
9' cunulalive second prelerence shares ol 1 each 5,473 9 5,473 9 5,473 9
21 21 21
Ordinary shares ol 25 cenls each
Al 1 January 20,629,665 5,158 20,613,453 5,155 20,363,424 5,216
ssue ol new shares lor enployee share schenes
a
17,495 4 11,207 3 24,791 6
Fepurchase ol ordinary share capilal
b
- - - - (269,757 (67
Al 31 Decenber 20,647,160 5,162 20,629,665 5,153 20,613,453 5,155
5,183 5,179 5,176
Aulhorized
3' cunulalive lrsl prelerence shares ol 1 each 7,250 12 7,250 12 7,250 12
9' cunulalive second prelerence shares ol 1 each 5,500 9 5,500 9 5,500 9
Ordinary shares ol 25 cenls each 36,000,000 9,000 36,000,000 9,000 36,000,000 9,000
a
Consideralion received relaling lo lhe issue ol new shares lor enployee share schenes anounled lo $133 nillion (2009 $34 nillion and 2003 $130 nillion.
b
Purchased lor a lolal consideralion ol nil (2009 nil and 2003 $2,914 nillion, all ol which were lor cancellalion. Al 31 Decenber 2010, 112,303,237 (2009 112,303,237 and 2003 150,444,403 ordinary shares
boughl back were awailing cancellalion. These shares have been excluded lron ordinary shares in issue shown above. Transaclion cosls ol share repurchases anounled lo nil (2009 nil and
2003 $16 nillion.
Voling on subslanlive resolulions labled al a general neeling is on a poll. On a poll, shareholders presenl in person or by proxy have lwo voles lor every 5
in noninal anounl ol lhe lrsl and second prelerence shares held and one vole lor every ordinary share held. On a showolhands vole on olher resolulions
(procedural nallers al a general neeling, shareholders presenl in person or by proxy have one vole each.
n lhe evenl ol lhe winding up ol lhe conpany, prelerence shareholders would be enlilled lo a sun equal lo lhe capilal paid up on lhe prelerence
shares, plus an anounl in respecl ol accrued and unpaid dividends and a preniun equal lo lhe higher ol (i 10' ol lhe capilal paid up on lhe prelerence
shares and (ii lhe excess ol lhe average narkel price ol such shares on lhe London Slock Exchange during lhe previous six nonlhs over par value.
Treasury shares
2010 2009 2003
Shares NominaI vaIue Shares oninal value Shares oninal value
(thousand) $ miIIion (lhousand $ nillion (lhousand $ nillion
Al 1 January 1,869,777 467 1,333,151 472 1,940,639 435
Shares gilled lo lhe Enployee Share Ownership Plans - - (1,265 (1 (10,000 (2
Shares lranslerred al narkel price lo lhe Enployee
Share Ownership Plans (7,125) (2) - - (20,000 (5
Shares reissued lo enployee share schenes (11,953) (3) (17,109 (4 (22,433 (6
Al 31 Decenber 1,850,699 462 1,369,777 467 1,333,151 472
For each year presenled, lhe balance al 1 January represenls lhe naxinun nunber ol shares held in lreasury during lhe year, represenling 9.1'
(2009 9.2' and 2003 9.3' ol lhe calledup ordinary share capilal ol lhe conpany.
During 2010, lhe novenenl in lreasury shares represenled less lhan 0.1' (2009 less lhan 0.1' and 2003 0.25' ol lhe ordinary share capilal ol lhe
conpany.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany lhal would resull in BP issuing 933,694,633 new ordinary
shares lo Fosnell when lhe lransaclion conpleles, which is subjecl lo lhe nallers disclosed in ole 6.
BP Annual Feporl and Forn 20F 2010 209
Notes on nancial statements
40. Capital and reserves
Share Capital
Share premium redemption Merger
capital account reserve reserve
At 1 January 2010 5,179 9,847 1,072 27,206
Currency translation differences (including recycling)
Actuarial loss relating to pensions and other post-retirement benets
Available-for-sale investments (including recycling)
Cash ow hedges (including recycling)
Prot (loss) for the year
Total comprehensive income
Dividends
Share-based payments
a
4 140
Transactions involving minority interests
At 31 December 2010 5,183 9,987 1,072 27,206
Share Capital
Share premium redemption Merger
capital account reserve reserve
At 1 January 2009 5,176 9,763 1,072 27,206
Currency translation differences (including recycling)
Actuarial loss relating to pensions and other post-retirement benets
Available-for-sale investments (including recycling)
Cash ow hedges (including recycling)
Prot for the year
Total comprehensive income
Dividends
Share-based payments
a
3 84
Changes in associates equity
Transactions involving minority interests
At 31 December 2009 5,179 9,847 1,072 27,206
Share Capital
Share premium redemption Merger
capital account reserve reserve
At 1 January 2008 5,237 9,581 1,005 27,206
Currency translation differences (including recycling)
Actuarial loss relating to pensions and other post-retirement benets
Available-for-sale investments (including recycling)
Cash ow hedges (including recycling)
Prot for the year
Total comprehensive income
Dividends
Repurchase of ordinary share capital (67) 67
Share-based payments
a
6 182
Transactions involving minority interests
At 31 December 2008 5,176 9,763 1,072 27,206
a
Includes new share issues and movements in own shares and treasury shares where these relate to share-based payment plans.
210 BP Annual Report and Form 20-F 2010
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$ nillion
Foreign Share-
currency AvaiIabIe- based Proht BP
Own Treasury transIation for-saIe Cash ow payment and Ioss sharehoIders' Minority TotaI
shares shares reserve investments hedges reserve account equity interest equity
(214) (21,303) 4,811 754 22 1,584 72,655 101,613 500 102,113
- - 126 - 2 - - 128 3 131
- - - - - - (418) (418) - (418)
- - - (291) - - - (291) - (291)
- - - - (18) - - (18) - (18)
- - - - - - (3,719) (3,719) 395 (3,324)
- - 126 (291) (16) - (4,137) (4,318) 398 (3,920)
- - - - - - (2,627) (2,627) (315) (2,942)
88 218 - - - 2 (113) 339 - 339
- - - - - - (20) (20) 321 301
(126) (21,085) 4,937 463 6 1,586 65,758 94,987 904 95,891
Foreign Share
currency Available based Proll BP
Own Treasury lranslalion lorsale Cash How paynenl and loss shareholders inorily Tolal
shares shares reserve inveslnenls hedges reserve accounl equily inleresl equily
(326 (21,513 2,353 63 (366 1,295 67,030 91,303 306 92,109
- - 2,453 (2 (37 - - 2,419 (56 2,363
- - - - - - (473 (473 - (473
- - - 693 - - - 693 - 693
- - - - 925 - - 925 - 925
- - - - - - 16,573 16,573 131 16,759
- - 2,453 691 333 - 16,100 20,137 125 20,262
- - - - - - (10,433 (10,433 (416 (10,399
112 210 - - - 239 23 721 - 721
- - - - - - (43 (43 - (43
- - - - - - (22 (22 (15 (37
(214 (21,303 4,311 754 22 1,534 72,655 101,613 500 102,113
Foreign Share
currency Available based Proll BP
Own Treasury lranslalion lorsale Cash How paynenl and loss shareholders inorily Tolal
shares shares reserve inveslnenls hedges reserve accounl equily inleresl equily
(60 (22,112 6,540 431 106 1,196 64,510 93,690 962 94,652
- - (4,137 - - - - (4,137 (75 (4,262
- - - - - - (5,323 (5,323 - (5,323
- - - (413 - - - (413 - (413
- - - - (972 - - (972 - (972
- - - - - - 21,157 21,157 509 21,666
- - (4,137 (413 (972 - 15,329 9,752 434 10,136
- - - - - - (10,342 (10,342 (425 (10,767
- - - - - - (2,414 (2,414 - (2,414
(266 599 - - - 99 (3 617 - 617
- - - - - - - - (165 (165
(326 (21,513 2,353 63 (366 1,295 67,030 91,303 306 92,109
BP Annual Feporl and Forn 20F 2010 211
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40. Capilal and reserves conlinued
Share capitaI
The balance on lhe share capilal accounl represenls lhe aggregale noninal value ol all ordinary and prelerence shares in issue, including lreasury shares.
Share premium account
The balance on lhe share preniun accounl represenls lhe anounls received in excess ol lhe noninal value ol lhe ordinary and prelerence shares.
CapitaI redemption reserve
The balance on lhe capilal redenplion reserve represenls lhe aggregale noninal value ol all lhe ordinary shares repurchased and cancelled.
Merger reserve
The balance on lhe nerger reserve represenls lhe lair value ol lhe consideralion given in excess ol lhe noninal value ol lhe ordinary shares issued in an
acquisilion nade by lhe issue ol shares.
Own shares
Own shares represenl BP shares held in Enployee Share Ownership Plans (ESOPs lo neel lhe lulure requirenenls ol lhe enployee sharebased
paynenl plans.
Treasury shares
Treasury shares represenl BP shares repurchased and available lor reissue.
Foreign currency transIation reserve
The loreign currency lranslalion reserve is used lo record exchange dillerences arising lron lhe lranslalion ol lhe lnancial slalenenls ol loreign
operalions. Upon disposal ol loreign operalions, lhe relaled accunulaled exchange dillerences are recycled lo lhe incone slalenenl. This reserve is also
used lo record lhe ellecl ol hedging nel inveslnenls in loreign operalions.
AvaiIabIe-for-saIe investments
This reserve records lhe changes in lair value ol availablelorsale inveslnenls. On disposal or inpairnenl, lhe cunulalive changes in lair value are recycled
lo lhe incone slalenenl.
Cash ow hedges
This reserve records lhe porlion ol lhe gain or loss on a hedging inslrunenl in a cash How hedge lhal is delernined lo be an elleclive hedge. vhen lhe
hedged lransaclion allecls proll or loss, lhe gain or loss on lhe hedging inslrunenl is lranslerred oul ol equily lo eilher proll or loss or lhe carrying value
ol assels, as appropriale. l lhe lorecasl lransaclion is no longer expecled lo occur lhe gain or loss recognized in equily is lranslerred lo proll or loss.
Share-based payment reserve
This reserve represenls cunulalive anounls charged lo proll in respecl ol enployee sharebased paynenl plans where lhe schene has nol yel been
sellled by neans ol an award ol shares lo an individual.
Proht and Ioss account
The balance held on lhis reserve is lhe accunulaled relained prolls ol lhe group.
212 BP Annual Feporl and Forn 20F 2010
Notes on nancial statements
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40. Capital and reserves continued
The pre-tax amounts of each component of other comprehensive income, and the related amounts of tax, are shown in the table below.
$ million
2010
Pre-tax Tax Net of tax
Currency translation differences (including recycling) 239 (108) 131
Actuarial loss relating to pensions and other post-retirement benets (320) (98) (418)
Available-for-sale investments (including recycling) (341) 50 (291)
Cash ow hedges (including recycling) (37) 19 (18)
Other comprehensive income (459) (137) (596)
$ million
2009
Pre-tax Tax Net of tax
Currency translation differences (including recycling) 1,799 564 2,363
Actuarial loss relating to pensions and other post-retirement benets (682) 204 (478)
Available-for-sale investments (including recycling) 707 (14) 693
Cash ow hedges (including recycling) 1,154 (229) 925
Other comprehensive income 2,978 525 3,503
$ million
2008
Pre-tax Tax Net of tax
Currency translation differences (including recycling) (4,362) 100 (4,262)
Actuarial loss relating to pensions and other post-retirement benets (8,430) 2,602 (5,828)
Available-for-sale investments (including recycling) (468) 50 (418)
Cash ow hedges (including recycling) (1,166) 194 (972)
Other comprehensive income (14,426) 2,946 (11,480)
BP Annual Report and Form 20-F 2010 213
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41. Sharebased paynenls
Effect of share-based payment transactions on the group's resuIt and hnanciaI position
$ nillion
2010 2009 2003
Tolal expense recognized lor equilysellled sharebased paynenl lransaclions 577 506 524
Tolal (credil expense recognized lor cashsellled sharebased paynenl lransaclions (1) 15 (16
Tolal expense recognized lor sharebased paynenl lransaclions 576 521 503
Closing balance ol liabilily lor cashsellled sharebased paynenl lransaclions 16 32 21
Tolal inlrinsic value lor vesled cashsellled sharebased paynenls 1 7 2
For ease ol presenlalion, oplion and share holdings delailed in lhe lables wilhin lhis nole are slaled as UK ordinary share equivalenls in US dollars.
US enployees are granled Anerican Deposilary Shares (ADSs or oplions over lhe conpanys ADSs (one ADS is equivalenl lo six ordinary shares. The
sharebased paynenl plans lhal exisled during lhe year are delailed below. All plans are ongoing unless olherwise slaled.
PIans for executive directors
Execulive Direclors ncenlive Plan (EDP - share elenenl
An equilysellled incenlive plan lor execulive direclors wilh a lhreeyear perlornance period. For share plan perlornance periods 20032010 lhe
award ol shares is delernined by conparing BPs lolal shareholder relurn (TSF againsl lhe olher oil najors (Exxonobil, Shell, Tolal and Chevron.
For lhe perlornance period 20092011 lhe award ol shares is delernined 50' on TSF versus a conpelilor group ol oil najors (which in lhis period
also included ConocoPhillips and 50' on a balanced scorecard (BSC ol lhree underlying perlornance neasures versus lhe sane conpelilor
group. For lhe period 20102012 lhe award ol shares is delernined one lhird on TSF versus a conpelilor group ol oil najors (idenlical lo lhe
20092011 plan group and lwo lhirds on a BSC ol lhree underlying perlornance laclors. Aller lhe perlornance period, lhe shares lhal vesl (nel ol
lax are lhen subjecl lo a lhreeyear relenlion period. The direclors renuneralion reporl on pages 112 lo 121 includes lull delails ol lhe plan.
Execulive Direclors ncenlive Plan (EDP - delerred nalching share elenenl
Following lhe renewal ol lhe EDP al lhe 2010 Annual Ceneral eeling, a delerred nalching share elenenl is in place requiring a nandalory one lhird ol
direclors annual bonus lo be delerred inlo shares lor lhree years. The shares are nalched by lhe conpany on a onelorone basis. Vesling ol bolh delerred
and nalching shares is conlingenl on an assessnenl ol salely and environnenlal suslainabilily over lhe lhreeyear delerral period and a direclor nay
volunlarily deler an addilional one lhird ol bonus inlo shares on lhe sane lerns.
Execulive Direclors ncenlive Plan (EDP - share oplion elenenl
An equilysellled share oplion plan lor execulive direclors lhal pernils oplions lo be granled al an exercise price no lower lhan lhe narkel price ol a share
on lhe dale lhal lhe oplion is granled. The oplions are exercisable up lo lhe sevenlh anniversary ol lhe granl dale and lhe lasl granls were nade in 2004.
Fron 2005 onwards lhe renuneralion connillees policy is nol lo nake lurlher granls ol share oplions lo execulive direclors.
PIans for senior empIoyees
The group operales a nunber ol equilysellled share plans under which share unils are granled lo ils senior leaders and cerlain enployees. These
plans lypically have a lhreeyear perlornance or reslricled period during which lhe unils accrue nel nolional dividends which are lrealed as having
been reinvesled. Leaving enploynenl during lhe lhreeyear period will nornally preclude lhe conversion ol unils inlo shares, bul special
arrangenenls apply where lhe parlicipanl leaves lor a qualilying reason.
Cranls are sellled in cash where parlicipanls are localed in a counlry whose regulalory environnenl prohibils lhe holding ol BP shares.
Perlornance unil plans
The nunber ol unils granled is nade by relerence lo level ol seniorily ol lhe enployees. The nunber ol unils converled lo shares is delernined by
relerence lo perlornance neasures over lhe lhreeyear perlornance period. The nain perlornance neasure used is BPs TSF conpared againsl lhe olher
oil najors. n addilion, lree cash How (FCF is used as a perlornance neasure lor one ol lhe perlornance plans. Plans included in lhis calegory are lhe
Conpelilive Perlornance Plan (CPP, lhe ediun Tern Perlornance Plan (TPP and, in parl, lhe Perlornance Share Plan (PSP.
Feslricled share unil plans
Share unil granls under BPs reslricled plans lypically lake inlo accounl lhe enployees perlornance in eilher lhe currenl or lhe prior year, lrack record ol
delivery, business and leadership skills and longlern polenlial. One reslricled share unil plan used in special circunslances lor senior enployees, such as
recruilnenl and relenlion, nornally has no perlornance condilions. Plans included in lhis calegory are lhe Execulive Perlornance Plan (EPP, lhe Feslricled
Share Plan (FSP, lhe Delerred Annual Bonus Plan (DAB and, in parl, lhe Perlornance Share Plan (PSP.
BP Share Oplion Plan (BPSOP
Share oplions wilh an exercise price equivalenl lo lhe narkel price ol a share innedialely preceding lhe dale ol granl were granled lo parlicipanls
annually unlil 2006. There were no perlornance condilions and lhe oplions are exercisable belween lhe lhird and lenlh anniversaries ol lhe granl dale.
Savings and matching pIans
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase
ol shares al a lxed price delernined when lhe oplion is granled. This price is usually sel al a 20' discounl lo lhe narkel price al lhe line ol
granl. The oplion nusl be exercised wilhin six nonlhs ol nalurily ol lhe savings conlracl, olherwise il lapses. The plan is run in lhe UK and
oplions are granled annually, usually in June. Parlicipanls leaving lor a qualilying reason will have six nonlhs in which lo use lheir savings lo
exercise lheir oplions on a proraled basis.
214 BP Annual Feporl and Forn 20F 2010
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41. Sharebased paynenls conlinued
BP Sharealch Plans
These are nalching share plans under which BP nalches enployees own conlribulions ol shares up lo a predelernined linil. The plans are run in lhe UK
and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly basis wilh shares being held in lrusl lor lve years belore lhey can be released lree ol
any incone lax and nalional insurance liabilily. n olher counlries lhe plan is run on an annual basis wilh shares being held in lrusl lor lhree years. The plan
is operaled on a cash basis in lhose counlries where lhere are regulalory reslriclions prevenling lhe holding ol BP shares. vhen lhe enployee leaves BP
all shares nusl be renoved lron lrusl and unils under lhe plan operaled on a cash basis nusl be encashed.
Local plans
n sone counlries BP provides local schene benells, lhe rules and qualilcalions lor which vary according lo local circunslances.
EmpIoyee Share Ownership PIans (ESOPs)
ESOPs have been eslablished lo acquire BP shares lo salisly any awards nade lo parlicipanls under lhe BP share plans as required. The ESOPs
have waived lheir righls lo dividends on shares held lor lulure awards and are lunded by lhe group. Unlil such line as lhe conpanys own shares
held by lhe ESOP lrusls vesl uncondilionally lo enployees, lhe anounl paid lor lhose shares is deducled in arriving al shareholders equily
(see ole 40. Assels and liabililies ol lhe ESOPs are recognized as assels and liabililies ol lhe group.
Al 31 Decenber 2010 lhe ESOPs held 11,477,253 shares (2009 13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure awards, which
had a narkel value ol $32 nillion (2009 $174 nillion and 2003 $220 nillion.
Share option transactions
Delails ol share oplion lransaclions lor lhe year under lhe share oplion plans are as lollows:
2010 2009 2003
Weighted veighled veighled
Number average unber average unber average
of exercise price ol exercise price ol exercise price
options $ oplions $ oplions $
Oulslanding al 1 January 295,895,357 8.73 326,254,599 3.70 353,094,243 3.51
Cranled 10,420,287 6.08 9,679,336 6.55 3,062,399 3.96
Forleiled (9,499,661) 7.88 (5,954,325 3.31 (2,502,734 3.50
Exercised (31,839,034) 7.97 (21,293,371 7.53 (37,277,395 6.97
Expired (1,670,227) 8.71 (12,790,332 3.01 (121,364 7.00
Oulslanding al 31 Decenber 263,306,722 8.75 295,395,357 3.73 326,254,599 3.70
Exercisable al 31 Decenber 242,530,635 8.90 274,635,063 3.30 260,173,933 3.22
The weighled average share price al lhe dale ol exercise was $9.54 (2009 $9.10 and 2003 $10.37. For lhe oplions oulslanding al 31 Decenber 2010, lhe
exercise price ranges and weighled average renaining conlraclual lives are shown below.
Options outstanding Options exercisabIe
Weighted Weighted Weighted
Number average average Number average
of remaining Iife exercise price of exercise price
Fange ol exercise prices shares Years $ shares $
$6.09 - $7.53 54,821,144 2.68 6.36 39,231,453 6.40
$7.54 - $3.99 115,187,261 1.71 8.19 112,551,834 8.17
$9.00 - $10.45 21,827,393 3.54 9.88 19,276,424 9.98
$10.46 - $11.92 71,470,924 4.81 11.14 71,470,924 11.14
263,306,722 2.90 8.75 242,530,635 8.90
Fair vaIues and associated detaiIs for options and shares granted
2010 2009 2003
ShareSave ShareSave ShareSave ShareSave ShareSave ShareSave
3 year 5 year 3 year 5 year 3 year 5 year
Oplion pricing nodel used BinomiaI BinomiaI Binonial Binonial Binonial Binonial
veighled average lair value $0.06 $0.08 $1.07 $1.07 $1.32 $1.74
veighled average share price $4.58 $4.58 $7.37 $7.37 $11.26 $11.26
veighled average exercise price $5.90 $5.90 $6.92 $6.92 $9.70 $9.70
Expecled volalilily 22% 23% 32' 32' 23' 23'
Oplion lile 3.5 years 5.5 years 3.5 years 5.5 years 3.5 years 5.5 years
Expecled dividends 8.40% 8.40% 7.40' 7.40' 4.60' 4.60'
Fisk lree inleresl rale 1.25% 2.00% 3.00' 3.75' 5.00' 5.00'
Expecled exercise behaviour 100% year 4 100% year 6 100' year 4 100' year 6 100' year 4 100' year 6
The group uses a valualion nodel lo delernine lhe lair value ol oplions granled. The nodel uses lhe inplied volalilily ol ordinary share price lor lhe quarler
wilhin which lhe granl dale ol lhe relevanl plan lalls. The lair value is adjusled lor lhe expecled rales ol early cancellalion. anagenenl is responsible lor
all inpuls and assunplions in relalion lo lhe nodel, including lhe delerninalion ol expecled volalilily.
BP Annual Feporl and Forn 20F 2010 215
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41. Sharebased paynenls conlinued
EDIP- EDIP-
Shares granled in 2010 CPP EPP TSR BSC RSP DAB PSP
unber ol equily inslrunenls
granled (nillion 1.3 7.6 1.2 2.5 21.4 24.5 16.0
veighled average lair value $19.81 $9.43 $4.42 $8.94 $6.78 $9.43 $9.43
Fair value neasurenenl basis Monte CarIo Market vaIue Monte CarIo Market vaIue Market vaIue Market vaIue Market vaIue
EDP EDP
Shares granled in 2009 CPP EPP TSF BSC FSP DAB PSP
unber ol equily inslrunenls
granled (nillion 1.4 7.6 2.1 2.1 2.4 33.9 16.5
veighled average lair value $9.76 $6.56 $2.74 $7.27 $3.76 $6.56 $3.32
Fair value neasurenenl basis onle Carlo arkel value onle Carlo arkel value arkel value arkel value onle Carlo
TPP TPP EDP EDP
Shares granled in 2003 TSF FCF TSF FET
a
FSP DAB PSP
unber ol equily inslrunenls
granled (nillion 9.1 9.1 2.6 0.5 7.7 5.3 16.7
veighled average lair value $5.07 $10.34 $4.55 $11.13 $3.33 $10.34 $12.39
Fair value neasurenenl basis onle Carlo arkel value onle Carlo arkel value arkel value arkel value onle Carlo
a
EDP - relenlion elenenl.
The group used a onle Carlo sinulalion lo delernine lhe lair value ol lhe TSF elenenl ol lhe 2010, 2009 and 2003 CPP, TPP, and EDP plans, and in
2009 and 2003 lor lhe PSP plan. n accordance wilh lhe rules ol lhe plans lhe nodel sinulales BPs TSF and conpares il againsl our principal slralegic
conpelilors over lhe lhreeyear period ol lhe plans. The nodel lakes inlo accounl lhe hisloric dividends, share price volalililies and covariances ol BP and
each conparalor conpany lo produce a predicled dislribulion ol relalive share perlornance. This is applied lo lhe reward crileria lo give an expecled value
ol lhe TSF elenenl.
Accounling expense does nol necessarily represenl lhe aclual value ol sharebased paynenls nade lo recipienls, which are delernined by lhe
renuneralion connillee according lo eslablished crileria.
www.bp.con/downloads/enployee
42. Enployee cosls and nunbers
$ nillion
Enployee cosls 2010 2009 2003
vages and salaries
a
9,242 9,702 10,333
Social securily cosls 789 730 305
Sharebased paynenls 576 521 503
Pension and olher poslrelirenenl benell cosls 1,166 1,213 579
11,773 12,216 12,230
unber ol enployees al 31 Decenber 2010 2009 2003
Exploralion and Produclion 21,100 21,500 21,400
Felning and arkeling
b
52,300 51,600 61,500
Olher businesses and corporale 6,200 7,200 9,100
Cull Coasl Fesloralion Organizalion 100 - -
79,700 30,300 92,000
By geographical area
US 22,100 22,300 29,300
onUS
b
57,600 57,500 62,700
79,700 30,300 92,000
2010 2009 2003
Average nunber ol enployees US Non-US TotaI US onUS Tolal US onUS Tolal
Exploralion and Produclion 8,100 13,500 21,600 7,900 13,300 21,700 7,300 13,300 21,600
Felning and arkeling 12,600 38,300 50,900 14,700 40,700 55,400 21,600 43,400 65,000
Olher businesses and corporale 1,900 5,000 6,900 2,300 5,300 3,100 2,600 6,500 9,100
22,600 56,800 79,400 24,900 60,300 35,200 32,000 63,700 95,700
a
ncludes lerninalion paynenls ol $166 nillion (2009 $945 nillion and 2003 $669 nillion.
b
ncludes 15,200 (2009 13,900 and 2003 21,200 service slalion slall.
216 BP Annual Feporl and Forn 20F 2010
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43. Fenuneralion ol direclors and senior nanagenenl
Remuneration of directors
$ nillion
2010 2009 2003
Tolal lor all direclors
Enolunenls 15 19 19
Cains nade on lhe exercise ol share oplions 2 2 1
Anounls awarded under incenlive schenes 4 2 -
Enolunenls
These anounls conprise lees paid lo lhe nonexeculive chairnan and lhe nonexeculive direclors and, lor execulive direclors, salary and benells
earned during lhe relevanl lnancial year, plus bonuses awarded lor lhe year. Also included was conpensalion lor loss ol ollce ol $3 nillion in 2010
(2009 nil and 2003 $1 nillion.
Pension conlribulions
During 2010 lhree execulive direclors parlicipaled in a nonconlribulory pension schene eslablished lor UK enployees by a separale lrusl lund lo which
conlribulions are nade by BP based on acluarial advice. Two US execulive direclors parlicipaled in lhe US BP Felirenenl Accunulalion Plan during 2010.
Ollce lacililies lor lorner chairnen and depuly chairnen
l is cuslonary lor lhe conpany lo nake available lo lorner chairnen and depuly chairnen, who were previously enployed execulives, lhe use ol ollce
and basic secrelarial lacililies lollowing lheir relirenenl. The cosl involved in doing so is nol signilcanl.
Furlher inlornalion
Full delails ol individual direclors renuneralion are given in lhe direclors renuneralion reporl on pages 112 lo 121.
Remuneration of directors and senior management
$ nillion
2010 2009 2003
Tolal lor all senior nanagenenl
Shorllern enployee benells 25 36 34
Poslrelirenenl benells 3 3 4
Sharebased paynenls 29 20 20
Senior nanagenenl, in addilion lo execulive and nonexeculive direclors, includes olher senior nanagers who are nenbers ol lhe execulive
nanagenenl lean.
Shorllern enployee benells
n addilion lo lees paid lo lhe nonexeculive chairnan and nonexeculive direclors, lhese anounls conprise, lor execulive direclors and senior nanagers,
salary and benells earned during lhe year, plus cash bonuses awarded lor lhe year. Delerred annual bonus awards, lo be sellled in shares, are included
in sharebased paynenls. Shorllern enployee benells includes conpensalion lor loss ol ollce ol $3 nillion (2009 $6 nillion and 2003 $3 nillion.
Poslrelirenenl benells
The anounls represenl lhe eslinaled cosl lo lhe group ol providing delned benell pensions and olher poslrelirenenl benells lo senior nanagenenl
in respecl ol lhe currenl year ol service neasured in accordance wilh AS 19 Enployee Benells.
Sharebased paynenls
This is lhe cosl lo lhe group ol senior nanagenenls parlicipalion in sharebased paynenl plans, as neasured by lhe lair value ol oplions and shares
granled accounled lor in accordance wilh FFS 2 Sharebased Paynenls. The nain plans in which senior nanagenenl have parlicipaled are lhe EDP,
DAB and FSP. For delails ol lhese plans reler lo ole 41.
BP Annual Feporl and Forn 20F 2010 217
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44. Conlingenl liabililies and conlingenl assels
Contingent IiabiIities reIating to the GuIf of Mexico oiI spiII
As a consequence ol lhe Cull ol exico oil spill, as described on pages 34 lo 39, BP has incurred cosls during lhe year and recognized provisions lor
cerlain lulure cosls. Furlher inlornalion is provided in ole 2 and ole 37.
BP has provided lor ils besl eslinale ol cerlain clains under lhe Oil Pollulion Acl ol 1990 (OPA 90 lhal will be paid lhrough lhe $20billion lrusl
lund. l is nol possible, al lhis line, lo neasure reliably any olher ilens lhal will be paid lron lhe lrusl lund, nanely any obligalion in relalion lo alural
Fesource Danages clains, and clains asserled in civil liligalion, nor is il praclicable lo eslinale lheir nagnilude or possible lining ol paynenl.
alural resource danages resulling lron lhe oil spill are currenlly being assessed (see ole 37 lor lurlher inlornalion. BP and lhe lederal and slale
lruslees are collecling exlensive dala in order lo assess lhe exlenl ol danage lo wildlile, shoreline, near shore and deepwaler habilals, and recrealional
uses, anong olher lhings. Because lhe allecled areas and lheir uses vary by seasons, we anlicipale lhal we will need al leasl a lull year, and perhaps
nalerially longer, aller lhe inilial oil inpacls lo gain an underslanding ol lhe nalural resource danages. n addilion, il early resloralion projecls are
underlaken, lhese projecls could niligale lhe lolal danages resulling lron lhe incidenl. Accordingly, unlil lhe size, localion and duralion ol lhe inpacl have
been delernined and lhe ellecls ol early resloralion projecls are assessed, or olher aclions such as polenlial lulure selllenenl discussions occur, il is nol
possible lo oblain a range ol oulcones or lo eslinale reliably eilher lhe anounls or lining ol lhe renaining alural Fesource Danages clains.
BP is naned as a delendanl in nore lhan 400 civil lawsuils broughl by individuals, corporalions and governnenlal enlilies in US lederal and slale
courls resulling lron lhe Cull ol exico oil spill. Addilional lawsuils are likely lo be broughl. The lawsuils asserl, anong olhers, clains lor personal injury in
conneclion wilh lhe incidenl ilsell and lhe response lo il, and wronglul dealh, connercial or econonic injury, breach ol conlracl and violalions ol slalules.
The lawsuils, nany ol which purporl lo be class aclions, seek various renedies including conpensalion lo injured workers and lanilies ol deceased
workers, recovery lor connercial losses and properly danage, clains lor environnenlal danage, renedialion cosls, injunclive reliel, lreble danages and
punilive danages. These pending lawsuils are al lhe very early slages ol proceedings and nosl ol lhe clains have been consolidaled inlo one ol lwo
nullidislricl liligalion proceedings. A lrial ol liabilily issues in lhe pending nullidislricl liligalion is currenlly scheduled lor February 2012. Danage issues
will be scheduled lor lrial lherealler. Unlil lurlher lacl and experl disclosures occur, courl rulings clarily lhe issues in dispule, liabilily and danage lrial
aclivily nears, or olher aclions such as possible selllenenls occur, il is nol possible given lhese uncerlainlies lo arrive al a range ol oulcones or a reliable
eslinale ol lhe liabilily. See Lega| proceedings on page 130 lor lurlher inlornalion.
Therelore no anounls have been provided lor lhese ilens as ol 31 Decenber 2010. Allhough lhese ilens, which will be paid lhrough lhe lrusl
lund, have nol been provided lor al lhis line, BPs lull obligalion under lhe $20billion lrusl lund has been expensed in lhe incone slalenenl, laking
accounl ol lhe line value ol noney. The aggregale ol anounls paid and provided lor ilens lo be sellled lron lhe lrusl lund currenlly lalls wilhin lhe
anounl connilled by BP lo lhe lrusl lund.
For lhose ilens nol covered by lhe lrusl lund il is nol possible lo neasure reliably any obligalion in relalion lo olher liligalion or polenlial lnes and
penallies excepl, subjecl lo cerlain assunplions delailed in ole 37, lor lhose relaling lo lhe Clean valer Acl. l is also nol possible lo reliably eslinale
legal lees beyond lwo years. There are a nunber ol lederal and slale environnenlal and olher provisions ol law, olher lhan lhe Clean valer Acl, under
which one or nore governnenlal agencies could seek civil lnes and penallies lron BP. For exanple, a conplainl lled by lhe Uniled Slales soughl lo
reserve lhe abilily lo seek penallies and olher reliel under a nunber ol olher laws. Civen lhe large nunber ol clains lhal nay be asserled, il is nol possible
al lhis line lo delernine whelher and lo whal exlenl any such clains would be successlul or whal penallies or lnes would be assessed.
Therelore no anounls have been provided lor lhese ilens.
The nagnilude and lining ol possible obligalions in relalion lo lhe Cull ol exico oil spill are subjecl lo a very high degree ol uncerlainly as
described lurlher in Fisk !ac!ors on pages 27 lo 32. Any such possible obligalions are lherelore conlingenl liabililies and, al presenl, il is nol praclicable lo
eslinale lheir nagnilude or possible lining ol paynenl. Furlhernore, olher nalerial unanlicipaled obligalions nay arise in lulure in relalion lo lhe incidenl.
Contingent assets reIating to the GuIf of Mexico oiI spiII
BP is lhe operalor ol lhe acondo well and holds a 65' working inleresl, wilh lhe renaining 35' inleresl held by lwo coowners, Anadarko Pelroleun
Corporalion (APC and OEX Ollshore 2007 LLC (OEX. Under lhe Operaling Agreenenl, OEX and APC are responsible lor reinbursing BP lor lheir
proporlionale shares ol lhe cosls ol all operalions and aclivilies conducled under lhe Operaling Agreenenl. n addilion, lhe parlies are responsible lor lheir
proporlionale shares ol all liabililies resulling lron operalions or aclivilies conducled under lhe Operaling Agreenenl, excepl where liabilily resulls lron a
parlys gross negligence or willul nisconducl, in which case lhal parly is solely responsible. BP does nol believe lhal il has been grossly negligenl nor has
il engaged in willul nisconducl under lhe lerns ol lhe Operaling Agreenenl or al law.
As ol 31 Decenber 2010, $6 billion had been billed lo lhe coowners, which BP believes lo be conlraclually recoverable. Billings lo coowners are
based upon cosls incurred lo dale ralher lhan anounls provided in lhe period. As lurlher cosls are incurred, BP believes lhal cerlain ol lhe cosls will be
billable lo our coowners under lhe Operaling Agreenenl.
Our coowners have each wrillen lo BP indicaling lhal lhey are wilhholding paynenl in lighl ol lhe invesligalions surrounding, and pending
delerninalion ol lhe rool causes ol, lhe incidenl. n addilion, APC has publicly accused BP ol having been grossly negligenl and slaled il has no liabilily lor
lhe incidenl, bolh ol which clains BP relules and inlends lo challenge in any legal proceedings. There are also audil righls concerning billings under lhe
Operaling Agreenenl which nay be exercised by APC and OEX, and which nay or nay nol lead lo an adjuslnenl ol lhe anounl billed. BP nay
ullinalely need lo enlorce ils righls lo collecl paynenl lron lhe coowners lhrough an arbilralion proceeding as provided lor in lhe Operaling Agreenenl.
There is a risk lhal anounls billed lo coowners nay nol ullinalely be recovered should our coowners be lound nol liable lor lhese cosls or be unable lo
pay lhen.
BP believes lhal il has a conlraclual righl lo recover lhe coowners shares ol lhe cosls incurred, however, no recovery anounls have been
recognized in lhe lnancial slalenenls as al 31 Decenber 2010.
213 BP Annual Feporl and Forn 20F 2010
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44. Conlingenl liabililies and conlingenl assels conlinued
Other contingent IiabiIities
There were conlingenl liabililies al 31 Decenber 2010 in respecl ol guaranlees and indennilies enlered inlo as parl ol lhe ordinary course ol lhe groups
business. o nalerial losses are likely lo arise lron such conlingenl liabililies. Furlher inlornalion is included in ole 27.
Lawsuils arising oul ol lhe Exxon Valdez oil spill in Prince villian Sound, Alaska, in arch 1939 were lled againsl Exxon (now Exxonobil, Alyeska
Pipeline Service Conpany (Alyeska, which operales lhe oil lerninal al Valdez, and lhe olher oil conpanies lhal own Alyeska. Alyeska inilially responded lo
lhe spill unlil lhe response was laken over by Exxon. BP owns a 46.9' inleresl (reduced during 2001 lron 50' by a sale ol 3.1' lo Phillips in Alyeska
lhrough a subsidiary ol BP Anerica nc. and brieHy indireclly owned a lurlher 20' inleresl in Alyeska lollowing BPs conbinalion wilh Allanlic Fichleld
Conpany (Allanlic Fichleld. Alyeska and ils owners have sellled all lhe clains againsl lhen under lhese lawsuils. Exxon has indicaled lhal il nay lle a
clain lor conlribulion againsl Alyeska lor a porlion ol lhe cosls and danages lhal Exxon has incurred. BP will delend any such clains vigorously. l is nol
possible lo eslinale any lnancial ellecl.
n lhe nornal course ol lhe groups business, legal proceedings are pending or nay be broughl againsl BP group enlilies arising oul ol currenl and
pasl operalions, including nallers relaled lo connercial dispules, producl liabilily, anlilrusl, prenisesliabilily clains, general environnenlal clains and
allegalions ol exposures ol lhird parlies lo loxic subslances, such as lead pignenl in painl, asbeslos and olher chenicals. BP believes lhal lhe inpacl ol
lhese legal proceedings on lhe groups resulls ol operalions, liquidily or lnancial posilion will nol be nalerial.
vilh respecl lo lead pignenl in painl in parlicular, Allanlic Fichleld, a subsidiary ol BP, has been naned as a codelendanl in nunerous lawsuils
broughl in lhe US alleging injury lo persons and properly. Allhough il is nol possible lo predicl lhe oulcone ol lhe legal proceedings, Allanlic Fichleld
believes il has valid delences lhal render lhe incurrence ol a liabilily renole, however, lhe anounls clained and lhe cosls ol inplenenling lhe renedies
soughl in lhe various cases could be subslanlial. The najorily ol lhe lawsuils have been abandoned or disnissed againsl Allanlic Fichleld. o lawsuil
againsl Allanlic Fichleld has been sellled nor has Allanlic Fichleld been subjecl lo a lnal adverse judgnenl in any proceeding. Allanlic Fichleld inlends lo
delend such aclions vigorously.
The group lles incone lax relurns in nany jurisdiclions lhroughoul lhe world. Various lax aulhorilies are currenlly exanining lhe groups incone lax
relurns. Tax relurns conlain nallers lhal could be subjecl lo dillering inlerprelalions ol applicable lax laws and regulalions and lhe resolulion ol lax
posilions lhrough negolialions wilh relevanl lax aulhorilies, or lhrough liligalion, can lake several years lo conplele. vhile il is dillcull lo predicl lhe
ullinale oulcone in sone cases, lhe group does nol anlicipale lhal lhere will be any nalerial inpacl upon lhe groups resulls ol operalions, lnancial
posilion or liquidily.
The group is subjecl lo nunerous nalional and local environnenlal laws and regulalions concerning ils producls, operalions and olher aclivilies.
These laws and regulalions nay require lhe group lo lake lulure aclion lo renediale lhe ellecls on lhe environnenl ol prior disposal or release ol
chenicals or pelroleun subslances by lhe group or olher parlies. Such conlingencies nay exisl lor various siles including relneries, chenical planls, oil
lelds, service slalions, lerninals and wasle disposal siles. n addilion, lhe group nay have obligalions relaling lo prior assel sales or closed lacililies. The
ullinale requirenenl lor renedialion and ils cosl are inherenlly dillcull lo eslinale. However, lhe eslinaled cosl ol known environnenlal obligalions has
been provided in lhese accounls in accordance wilh lhe groups accounling policies. vhile lhe anounls ol lulure cosls could be signilcanl and could be
nalerial lo lhe groups resulls ol operalions in lhe period in which lhey are recognized, il is nol praclical lo eslinale lhe anounls involved. BP does nol
expecl lhese cosls lo have a nalerial ellecl on lhe groups lnancial posilion or liquidily.
The group also has obligalions lo deconnission oil and nalural gas produclion lacililies and relaled pipelines. Provision is nade lor lhe eslinaled
cosls ol lhese aclivilies, however lhere is uncerlainly regarding bolh lhe anounl and lining ol lhese cosls, given lhe longlern nalure ol lhese
obligalions. BP believes lhal lhe inpacl ol any reasonably loreseeable changes lo lhese provisions on lhe groups resulls ol operalions, lnancial posilion or
liquidily will nol be nalerial.
The group generally reslricls ils purchase ol insurance lo silualions where lhis is required lor legal or conlraclual reasons. This is because exlernal
insurance is nol considered an econonic neans ol lnancing losses lor lhe group. Losses will lherelore be borne as lhey arise ralher lhan being spread
over line lhrough insurance preniuns wilh allendanl lransaclion cosls. The posilion is reviewed periodically.
45. Capilal connilnenls
Aulhorized lulure capilal expendilure lor properly, planl and equipnenl by group conpanies lor which conlracls had been placed al 31 Decenber 2010
anounled lo $11,279 nillion (2009 $9,312 nillion. n addilion, al 31 Decenber 2010, lhe group had conlracls in place lor lulure capilal expendilure
relaling lo inveslnenls in joinlly conlrolled enlilies ol $437 nillion (2009 $622 nillion and inveslnenls in associales ol $30 nillion (2009 $170 nillion.
BPs share ol capilal connilnenls ol joinlly conlrolled enlilies anounled lo $1,117 nillion (2009 $926 nillion.
BP Annual Feporl and Forn 20F 2010 219
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46. Subsidiaries, joinlly conlrolled enlilies and associales
The nore inporlanl subsidiaries, joinlly conlrolled enlilies and associales ol lhe group al 31 Decenber 2010 and lhe group percenlage ol ordinary share
capilal or joinl venlure inleresl (lo nearesl whole nunber are sel oul below. Those held direclly by lhe parenl conpany are narked wilh an aslerisk (', lhe
percenlage owned being lhal ol lhe group unless olherwise indicaled. A conplele lisl ol inveslnenls in subsidiaries, joinlly conlrolled enlilies and
associales will be allached lo lhe parenl conpanys annual relurn nade lo lhe Fegislrar ol Conpanies.
Counlry ol
Subsidiaries ' incorporalion Principal aclivilies
nlernalional
'BP Corporale Holdings 100 England & vales nveslnenl holding
'BP Europa SE 100 Cernany Felning and narkeling and pelrochenicals
BP Exploralion Op. Co. 100 England & vales Exploralion and produclion
'BP Clobal nveslnenls 100 England & vales nveslnenl holding
'BP nlernalional 100 England & vales nlegraled oil operalions, inveslnenl holding, lnance
BP Oil nlernalional 100 England & vales nlegraled oil operalions
'BP Shipping 100 England & vales Shipping
'Burnah Caslrol 100 Scolland Lubricanls
Jupiler nsurance 100 Cuernsey nsurance
Algeria
BP Anoco Exploralion (n Anenas 100 Scolland Exploralion and produclion
BP Exploralion (El Djazair 100 Bahanas Exploralion and produclion
Angola
BP Exploralion (Angola 100 England & vales Exploralion and produclion
Auslralia
BP Oil Auslralia 100 Auslralia nlegraled oil operalions
BP Auslralia Capilal arkels 100 Auslralia Finance
BP Developnenls Auslralia 100 Auslralia Exploralion and produclion
BP Finance Auslralia 100 Auslralia Finance
Azerbaijan
Anoco Caspian Sea Pelroleun 100 Brilish Virgin slands Exploralion and produclion
BP Exploralion (Caspian Sea 100 England & vales Exploralion and produclion
Canada
BP Canada Energy 100 Canada Exploralion and produclion
BP Canada Finance 100 Canada Finance
Egypl
BP Egypl Co. 100 US Exploralion and produclion
ndonesia
BP Berau 100 US Exploralion and produclion
ew Zealand
BP Oil ew Zealand 100 ew Zealand arkeling
orway
BP orge 100 orway Exploralion and produclion
Spain
BP Espaa 100 Spain Felning and narkeling
Soulh Alrica
'BP Soulhern Alrica 75 Soulh Alrica Felning and narkeling
Trinidad & Tobago
BP Trinidad and Tobago 70 US Exploralion and produclion
UK
BP Capilal arkels 100 England & vales Finance
BP Oil UK 100 England & vales arkeling
Briloil 100 Scolland Exploralion and produclion
US
'BP Holdings orlh Anerica 100 England & vales nveslnenl holding
Allanlic Fichleld Co. 100 US
BP Anerica 100 US
BP Anerica Produclion Conpany 100 US
BP Anoco Chenical Conpany 100 US
BP Conpany orlh Anerica 100 US
BP Corporalion orlh Anerica 100 US Exploralion and produclion, relning and
BP Exploralion and Produclion 100 US narkeling, pipelines and pelrochenicals
BP Exploralion (Alaska 100 US
BP Producls orlh Anerica 100 US
BP vesl Coasl Producls 100 US
Slandard Oil Co. 100 US
Verano Collaleral Holdings 100 US
BP Capilal arkels Anerica 100 US Finance
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46. Subsidiaries, joinlly conlrolled enlilies and associales conlinued
Counlry ol incorporalion
Joinlly conlrolled enlilies ' or regislralion Principal aclivilies
Angola
Angola LC Supply Services 14 US LC processing and lransporlalion
Argenlina
Pan Anerican Energy
a b
60 US Exploralion and produclion
Canada
Sunrise Oil Sands 50 Canada Exploralion and produclion
China
Shanghai SECCO Pelrochenical Co. 50 China Pelrochenicals
Cernany
Fuhr Oel 50 Cernany Felning and narkeling and pelrochenicals
Fussia
Elvary ellegaz Holdings BV 49 elherlands Exploralion and appraisal
Trinidad & Tobago
Allanlic 4 Holdings 33 US LC nanulaclure
Allanlic LC 2/3 Conpany ol Trinidad and Tobago 43 Trinidad & Tobago LC nanulaclure
US
BPHusky Felning 50 US Felning
valson Cogeneralion
a
51 US Power generalion
Venezuela
Pelrononagas
b
17 Venezuela Exploralion and produclion
a
The enlily is nol conlrolled by BP as cerlain key business decisions require joinl approval ol bolh BP and lhe ninorily parlner. l is lherelore classiled as a joinlly conlrolled enlily ralher lhan a subsidiary.
b
As al 31 Decenber 2010 lhe groups inleresls in Pan Anerican Energy and Pelrononagas have been reclassiled as assels held lor sale. See ole 4 lor lurlher inlornalion.
Associales ' Counlry ol incorporalion Principal aclivilies
Abu Dhabi
Abu Dhabi arine Areas 37 England & vales Crude oil produclion
Abu Dhabi Pelroleun Co. 24 England & vales Crude oil produclion
Azerbaijan
The BakuTbilisiCeyhan Pipeline Co. 30 Caynan slands Pipelines
Soulh Caucasus Pipeline Co. 26 Caynan slands Pipelines
Fussia
TKBP 50 Brilish Virgin slands nlegraled oil operalions
BP Annual Feporl and Forn 20F 2010 221
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BP p.l.c. lully and uncondilionally guaranlees lhe paynenl obligalions ol ils 100'owned subsidiary BP Exploralion (Alaska nc. under lhe BP Prudhoe Bay
Foyally Trusl. The lollowing lnancial inlornalion lor BP p.l.c., BP Exploralion (Alaska nc. and all olher subsidiaries on a condensed consolidaling basis is
inlended lo provide inveslors wilh neaninglul and conparable lnancial inlornalion aboul BP p.l.c. and ils subsidiary issuers ol regislered securilies and is
provided pursuanl lo Fule 310 ol Fegulalion SX in lieu ol lhe separale lnancial slalenenls ol each subsidiary issuer ol public debl securilies. nveslnenls
include lhe inveslnenls in subsidiaries recorded under lhe equily nelhod lor lhe purposes ol lhe condensed consolidaling lnancial inlornalion. Equily
incone ol subsidiaries is lhe groups share ol proll relaled lo such inveslnenls. The elininalions and reclassilcalions colunn includes lhe necessary
anounls lo elininale lhe inlerconpany balances and lransaclions belween BP p.l.c., BP Exploralion (Alaska nc. and olher subsidiaries. The lnancial
inlornalion presenled in lhe lollowing lables lor BP Exploralion (Alaska nc. lor all years includes equily incone arising lron subsidiaries ol BP Exploralion
(Alaska nc. sone ol which operale oulside ol Alaska and excludes lhe BP groups nidslrean operalions in Alaska lhal are reporled lhrough dillerenl legal
enlilies and lhal are included wilhin lhe olher subsidiaries colunn in lhese lables. BP p.l.c. also lully and uncondilionally guaranlees securilies issued by
BP Capilal arkels p.l.c. and BP Capilal arkels Anerica nc. These conpanies are 100'owned lnance subsidiaries ol BP p.l.c.
Income statement
$ nillion
For the year ended 31 December 2010
Issuer Guarantor
BP EIiminations
ExpIoration Other and
(AIaska) Inc. BP p.I.c. subsidiaries recIassihcations BP group
Sales and olher operaling revenues 4,793 - 297,107 (4,793) 297,107
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax - - 1,175 - 1,175
Earnings lron associales - aller inleresl and lax - - 3,582 - 3,582
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 620 (3,567) - 2,947 -
nleresl and olher revenues - 188 714 (221) 681
Cains on sale ol businesses and lxed assels - 260 6,376 (253) 6,383
Tolal revenues and olher incone 5,413 (3,119) 308,954 (2,320) 308,928
Purchases 637 - 220,367 (4,793) 216,211
Produclion and nanulacluring expenses 966 - 63,649 - 64,615
Produclion and sinilar laxes 998 - 4,246 - 5,244
Deprecialion, deplelion and anorlizalion 351 - 10,813 - 11,164
npairnenl and losses on sale ol businesses and lxed assels 1,524 - 1,689 (1,524) 1,689
Exploralion expense - - 843 - 843
Dislribulion and adninislralion expenses 16 673 11,975 (109) 12,555
Fair value loss on enbedded derivalives - - 309 - 309
Proll (loss belore inleresl and laxalion 921 (3,792) (4,937) 4,106 (3,702)
Finance cosls 2 31 1,249 (112) 1,170
el lnance (incone expense relaling lo pensions and
olher poslrelirenenl benells 4 (388) 337 - (47)
Proll (loss belore laxalion 915 (3,435) (6,523) 4,218 (4,825)
Taxalion 143 31 (1,675) - (1,501)
Proll (loss lor lhe year 772 (3,466) (4,848) 4,218 (3,324)
Allribulable lo
BP shareholders 772 (3,466) (5,243) 4,218 (3,719)
inorily inleresl - - 395 - 395
772 (3,466) (4,848) 4,218 (3,324)
222 BP Annual Feporl and Forn 20F 2010
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Income statement DPOUJOVFE
$ nillion
For lhe year ended 31 Decenber 2009
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
Sales and olher operaling revenues 4,139 - 239,272 (4,139 239,272
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax - - 1,236 - 1,236
Earnings lron associales - aller inleresl and lax - - 2,615 - 2,615
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 333 17,315 - (13,153 -
nleresl and olher revenues 17 144 332 (201 792
Cains on sale ol businesses and lxed assels - 9 2,173 (9 2,173
Tolal revenues and olher incone 5,044 17,463 246,173 (22,552 246,133
Purchases 510 - 167,451 (4,139 163,772
Produclion and nanulacluring expenses 970 - 22,232 - 23,202
Produclion and sinilar laxes 602 - 3,150 - 3,752
Deprecialion, deplelion and anorlizalion 424 - 11,632 - 12,106
npairnenl and losses on sale ol businesses and lxed assels - - 2,333 - 2,333
Exploralion expense - - 1,116 - 1,116
Dislribulion and adninislralion expenses 27 1,145 12,974 (103 14,033
Fair value gain on enbedded derivalives - - (607 - (607
Proll belore inleresl and laxalion 2,511 16,323 25,347 (13,255 26,426
Finance cosls 22 26 1,155 (93 1,110
el lnance (incone expense relaling lo pensions and
olher poslrelirenenl benells 10 (310 492 - 192
Proll belore laxalion 2,479 16,607 24,200 (13,162 25,124
Taxalion 533 20 7,762 - 3,365
Proll lor lhe year 1,396 16,537 16,433 (13,162 16,759
Allribulable lo
BP shareholders 1,396 16,537 16,257 (13,162 16,573
inorily inleresl - - 131 - 131
1,396 16,537 16,433 (13,162 16,759
BP Annual Feporl and Forn 20F 2010 223
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Income statement DPOUJOVFE
$ nillion
For lhe year ended 31 Decenber 2003
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
Sales and olher operaling revenues 6,732 - 361,143 (6,732 361,143
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax - - 3,023 - 3,023
Earnings lron associales - aller inleresl and lax - - 793 - 793
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 469 20,295 - (20,764 -
nleresl and olher revenues 514 173 1,025 (976 736
Cains on sale ol businesses and lxed assels - - 1,353 - 1,353
Tolal revenues and olher incone 7,765 20,463 367,342 (23,522 367,053
Purchases 395 - 272,369 (6,732 266,932
Produclion and nanulacluring expenses 1,033 - 25,673 - 26,756
Produclion and sinilar laxes 2,343 - 6,610 - 3,953
Deprecialion, deplelion and anorlizalion 365 - 10,620 - 10,935
npairnenl and losses on sale ol businesses and lxed assels - - 1,733 - 1,733
Exploralion expense - - 332 - 332
Dislribulion and adninislralion expenses 22 23 15,469 (107 15,412
Fair value loss on enbedded derivalives - - 111 - 111
Proll belore inleresl and laxalion 3,057 20,440 33,375 (21,633 35,239
Finance cosls 153 169 2,039 (369 1,547
el lnance (incone expense relaling lo pensions and
olher poslrelirenenl benells - (322 231 - (591
Proll belore laxalion 2,399 21,093 31,055 (20,764 34,233
Taxalion 944 (64 11,737 - 12,617
Proll lor lhe year 1,955 21,157 19,313 (20,764 21,666
Allribulable lo
BP shareholders 1,955 21,157 13,309 (20,764 21,157
inorily inleresl - - 509 - 509
1,955 21,157 19,313 (20,764 21,666
224 BP Annual Feporl and Forn 20F 2010
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BaIance sheet
$ nillion
At 31 December 2010
Issuer Guarantor
BP EIiminations
ExpIoration Other and
(AIaska) Inc. BP p.I.c. subsidiaries recIassihcations BP group
oncurrenl assels
Properly, planl and equipnenl 7,679 - 102,484 - 110,163
Coodwill - - 8,598 - 8,598
nlangible assels 425 - 13,873 - 14,298
nveslnenls in joinlly conlrolled enlilies - - 12,286 - 12,286
nveslnenls in associales - 2 13,333 - 13,335
Olher inveslnenls - - 1,191 - 1,191
Subsidiaries - equilyaccounled basis 4,489 112,227 - (116,716) -
Fixed assels 12,593 112,229 151,765 (116,716) 159,871
Loans - 38 5,161 (4,305) 894
Olher receivables - - 6,298 - 6,298
Derivalive lnancial inslrunenls - - 4,210 - 4,210
Prepaynenls - - 1,432 - 1,432
Delerred lax assels - - 528 - 528
Delned benell pension plan surpluses - 1,870 306 - 2,176
12,593 114,137 169,700 (121,021) 175,409
Currenl assels
Loans - - 247 - 247
nvenlories 244 - 25,974 - 26,218
Trade and olher receivables 3,173 14,444 42,783 (23,851) 36,549
Derivalive lnancial inslrunenls - - 4,356 - 4,356
Prepaynenls 6 - 1,568 - 1,574
Currenl lax receivable - - 693 - 693
Olher inveslnenls - - 1,532 - 1,532
Cash and cash equivalenls (1) 4 18,553 - 18,556
3,422 14,448 95,706 (23,851) 89,725
Assels classiled as held lor sale - - 7,128 - 7,128
Tolal assels 16,015 128,585 272,534 (144,872) 272,262
Currenl liabililies
Trade and olher payables 4,931 2,362 62,887 (23,851) 46,329
Derivalive lnancial inslrunenls - - 3,856 - 3,856
Accruals - 23 5,589 - 5,612
Finance debl - - 14,626 - 14,626
Currenl lax payable 182 - 2,738 - 2,920
Provisions - - 9,489 - 9,489
5,113 2,385 99,185 (23,851) 82,832
Liabililies direclly associaled wilh assels classiled as held lor sale - - 1,047 - 1,047
5,113 2,385 100,232 (23,851) 83,879
oncurrenl liabililies
Olher payables 9 4,258 14,323 (4,305) 14,285
Derivalive lnancial inslrunenls - - 3,677 - 3,677
Accruals - 35 602 - 637
Finance debl - - 30,710 - 30,710
Delerred lax liabililies 2,026 410 8,472 - 10,908
Provisions 958 - 21,460 - 22,418
Delned benell pension plan and olher poslrelirenenl benell
plan delcils - - 9,857 - 9,857
2,993 4,703 89,101 (4,305) 92,492
Tolal liabililies 8,106 7,088 189,333 (28,156) 176,371
el assels 7,909 121,497 83,201 (116,716) 95,891
Equily
BP shareholders equily 7,909 121,497 82,297 (116,716) 94,987
inorily inleresl - - 904 - 904
Tolal equily 7,909 121,497 83,201 (116,716) 95,891
BP Annual Feporl and Forn 20F 2010 225
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BaIance sheet DPOUJOVFE
$ nillion
Al 31 Decenber 2009
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
oncurrenl assels
Properly, planl and equipnenl 7,366 - 100,909 - 103,275
Coodwill - - 3,620 - 3,620
nlangible assels 321 - 11,227 - 11,543
nveslnenls in joinlly conlrolled enlilies - - 15,296 - 15,296
nveslnenls in associales - 2 12,961 - 12,963
Olher inveslnenls - - 1,567 - 1,567
Subsidiaries equilyaccounled basis 4,424 101,760 - (106,134 -
Fixed assels 12,111 101,762 150,530 (106,134 153,269
Loans 233 1,173 5,490 (5,912 1,039
Olher receivables - - 1,729 - 1,729
Derivalive lnancial inslrunenls - - 3,965 - 3,965
Prepaynenls - - 1,407 - 1,407
Delerred lax assels - - 516 - 516
Delned benell pension plan surpluses - 1,071 319 - 1,390
12,394 104,011 164,006 (112,096 163,315
Currenl assels
Loans - - 249 - 249
nvenlories 221 - 22,334 - 22,605
Trade and olher receivables 13,529 30,707 35,352 (55,557 29,531
Derivalive lnancial inslrunenls - - 4,967 - 4,967
Prepaynenls 3 2 1,743 - 1,753
Currenl lax receivable - - 209 - 209
Cash and cash equivalenls (22 23 3,333 - 3,339
13,736 30,737 73,737 (55,557 67,653
Tolal assels 31,130 134,743 237,743 (167,653 235,963
Currenl liabililies
Trade and olher payables 4,662 2,374 33,725 (55,557 35,204
Derivalive lnancial inslrunenls - - 4,631 - 4,631
Accruals - 27 6,175 - 6,202
Finance debl 55 - 9,054 - 9,109
Currenl lax payable 172 - 2,292 - 2,464
Provisions - - 1,660 - 1,660
4,339 2,401 107,537 (55,557 59,320
oncurrenl liabililies
Olher payables 229 4,254 4,627 (5,912 3,193
Derivalive lnancial inslrunenls - - 3,474 - 3,474
Accruals - 74 629 - 703
Finance debl - - 25,513 - 25,513
Delerred lax liabililies 1,372 149 16,641 - 13,662
Provisions 1,043 - 11,922 - 12,970
Delned benell pension plan and olher poslrelirenenl benell
plan delcils - - 10,010 - 10,010
3,149 4,477 72,321 (5,912 74,535
Tolal liabililies 3,033 6,373 130,403 (61,469 133,355
el assels 23,092 127,370 57,335 (106,134 102,113
Equily
BP shareholders equily 23,092 127,370 56,335 (106,134 101,613
inorily inleresl - - 500 - 500
Tolal equily 23,092 127,370 57,335 (106,134 102,113
226 BP Annual Feporl and Forn 20F 2010
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Cash ow statement
$ nillion
For lhe year ended 31 Decenber 2010
Issuer Guarantor
BP EIiminations
ExpIoration Other and
(AIaska) Inc. BP p.I.c. subsidiaries recIassihcations BP group
el cash provided by operaling aclivilies 829 32,111 (4,584) (14,740) 13,616
el cash used in invesling aclivilies (752) (29,325) 26,117 - (3,960)
el cash (used in provided by lnancing aclivilies (56) (2,810) (11,034) 14,740 840
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - (279) - (279)
(Decrease increase in cash and cash equivalenls 21 (24) 10,220 - 10,217
Cash and cash equivalenls al beginning ol year (22) 28 8,333 - 8,339
Cash and cash equivalenls al end ol year (1) 4 18,553 - 18,556
$ nillion
For lhe year ended 31 Decenber 2009
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
el cash provided by operaling aclivilies 1,022 14,514 47,466 (35,236 27,716
el cash used in invesling aclivilies (935 (4,227 (12,971 - (13,133
el cash used in lnancing aclivilies (99 (10,270 (34,463 35,236 (9,551
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - 110 - 110
(Decrease increase in cash and cash equivalenls (12 17 137 - 142
Cash and cash equivalenls al beginning ol year (10 11 3,196 - 3,197
Cash and cash equivalenls al end ol year (22 23 3,333 - 3,339
$ nillion
For lhe year ended 31 Decenber 2003
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
el cash provided by operaling aclivilies 1,105 12,665 41,600 (17,275 33,095
el cash used in invesling aclivilies (396 - (21,371 - (22,767
el cash used in lnancing aclivilies (209 (12,393 (14,677 17,275 (10,509
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - (134 - (134
(Decrease increase in cash and cash equivalenls - (233 4,363 - 4,635
Cash and cash equivalenls al beginning ol year (10 244 3,323 - 3,562
Cash and cash equivalenls al end ol year (10 11 3,196 - 3,197
BP Annual Feporl and Forn 20F 2010 227
Supplementary information on oil and natural gas (unaudited)
The regional analysis presented below is on a continent basis, with separate disclosure for countries that contain 15% or more of the total proved
reserves (for subsidiaries plus equity-accounted entities), in accordance with SEC and FASB requirements. For 2009 and 2010, where relevant,
information for equity-accounted entities is provided in the same level of detail as for subsidiaries. Also for 2009 and 2010, proved reserves are based
on revised SEC denitions.
Oil and gas reserves certain denitions
Unless the context indicates otherwise, the following terms have the meanings shown below:
Proved oil and gas reserves
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions,
operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates
that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the
hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identied by drilling and limited by uid contacts, if any; and
(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically
producible oil or gas on the basis of available geoscience and engineering data.
(ii) In the absence of data on uid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well
penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has dened a highest known oil (HKO) elevation and the potential exists for an associated gas
cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data
and reliable technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, uid injection)
are included in the proved classication when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favourable than in the reservoir as a whole, the
operation of an installed programme in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the
reasonable certainty of the engineering analysis on which the project or programme was based; and
(B) The project has been approved for development by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be
the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted
arithmetic average of the rst-day-of-the-month price for each month within such period, unless prices are dened by contractual arrangements,
excluding escalations based upon future conditions.
Undeveloped oil and gas reserves
Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for recompletion.
(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production
when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater
distances.
(ii) Undrilled locations can be classied as having undeveloped reserves only if a development plan has been adopted indicating that they are
scheduled to be drilled within ve years, unless the specic circumstances, justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of uid injection or
other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir
or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
Developed oil and gas reserves
Developed oil and gas reserves are reserves of any category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor
compared to the cost of a new well; and
(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not
involving a well.
For details on BPs proved reserves and production compliance and governance processes, see pages 51 to 52.
228 BP Annual Report and Form 20-F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities
$ nillion
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US America Russia Asia
Subsidiaries
a
Capilalized cosls al 31 Decenber
b j
Cross capilalized cosls
Proved properlies 36,161 7,846 67,724 278 6,047 27,014 - 11,497 3,088 159,655
Unproved properlies 787 179 5,968 1,363 220 2,694 - 1,113 1,149 13,473
36,948 8,025 73,692 1,641 6,267 29,708 - 12,610 4,237 173,128
Accunulaled deprecialion 27,688 3,515 33,972 216 3,282 13,893 - 4,569 1,205 88,340
el capilalized cosls 9,260 4,510 39,720 1,425 2,985 15,815 - 8,041 3,032 84,788
Cosls incurred lor lhe year ended 31 Decenber
b j
Acquisilion ol properlies
c
Proved - - 655 1 - - - 1,121 - 1,777
Unproved - 519 1,599 1,200 - - - 151 - 3,469
- 519 2,254 1,201 - - - 1,272 - 5,246
Exploralion and appraisal cosls
d
401 13 1,096 78 68 607 7 316 120 2,706
Developnenl 726 816 3,034 251 414 3,003 - 1,244 187 9,675
Tolal cosls 1,127 1,348 6,384 1,530 482 3,610 7 2,832 307 17,627
Fesulls ol operalions lor lhe year ended 31 Decenber
Sales and olher operaling revenues
e
Third parlies 1,472 58 1,148 90 1,896 3,158 - 1,272 1,398 10,492
Sales belween businesses 3,405 1,134 18,819 453 1,574 4,353 - 6,697 929 37,364
4,877 1,192 19,967 543 3,470 7,511 - 7,969 2,327 47,856
Exploralion expendilure 82 (2) 465 25 9 189 7 51 17 843
Produclion cosls 1,018 152 2,867 240 445 938 9 365 124 6,158
Produclion laxes 52 - 1,093 2 249 - - 3,764 109 5,269
Olher cosls (incone
l
(316) 76 3,502 129 209 130 76 90 195 4,091
Deprecialion, deplelion and anorlizalion 897 209 3,477 95 575 1,771 - 829 168 8,021
npairnenls and (gains losses on sale ol
businesses and lxed assels (1) - (1,441) (2,190) (3) (427) 341
k
- - (3,721)
1,732 435 9,963 (1,699) 1,484 2,601 433 5,099 613 20,661
Proll (loss belore laxalion
g
3,145 757 10,004 2,242 1,986 4,910 (433) 2,870 1,714 27,195
Allocable laxes 1,333 530 3,504 610 1,084 1,771 (23) 813 410 10,032
Fesulls ol operalions 1,812 227 6,500 1,632 902 3,139 (410) 2,057 1,304 17,163
Exploralion and Produclion segnenl replacenenl cosl proll belore inleresl and lax
Exploralion and produclion aclivilies -
subsidiaries (as above 3,145 757 10,004 2,242 1,986 4,910 (433) 2,870 1,714 27,195
idslrean aclivilies - subsidiaries
h
23 42 (347) 3 49 (26) 4 (23) (13) (288)
Equilyaccounled enlilies
i
- 4 27 171 614 63 2,613 487 - 3,979
Tolal replacenenl cosl proll
belore inleresl and lax 3,168 803 9,684 2,416 2,649 4,947 2,184 3,334 1,701 30,886
a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol subsidiaries. They do nol include any cosls relaling lo lhe Cull ol exico oil spill. idslrean
aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion,
our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in lhe US, Canada, UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe Trans
Alaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen pipeline, lhe Soulh Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed
in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes.
l
ncludes properly laxes, olher governnenl lake and lhe lair value loss on enbedded derivalives ol $309 nillion. The UK region includes a $322 nillion gain ollsel by corresponding charges prinarily in lhe
US, relaling lo lhe group sellinsurance progranne.
g
Excludes lhe unwinding ol lhe discounl on provisions and payables anounling lo $313 nillion which is included in lnance cosls in lhe group incone slalenenl.
h
idslrean aclivilies exclude invenlory holding gains and losses.
i
The prolls ol equilyaccounled enlilies are included aller inleresl and lax.
j
Excludes balances associaled wilh assels held lor sale.
k
This anounl represenls lhe wriledown ol our inveslnenl in Sakhalin. A porlion ol lhese cosls was previously reporled wilhin capilalized cosls ol equily accounled enlilies wilh lhe renainder previously
reporled as a loan, which was nol included in lhe disclosures ol oil and nalural gas exploralion and produclion aclivilies.
BP Annual Feporl and Forn 20F 2010 229
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities DPOUJOVFE
$ nillion
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US America Russia Asia
Equilyaccounled enlilies (BP share
a
Capilalized cosls al 31 Decenber
b
Cross capilalized cosls
Proved properlies - - - 142 103 - 14,486 3,192 - 17,923
Unproved properlies - - - 1,284 - - 652 - - 1,936
- - - 1,426 103 - 15,138 3,192 - 19,859
Accunulaled deprecialion - - - - - - 6,300 2,674 - 8,974
el capilalized cosls - - - 1,426 103 - 8,838 518 - 10,885
Cosls incurred lor lhe year ended 31 Decenber
b
Acquisilion ol properlies
c
Proved - - - - - - - - - -
Unproved - - - - 9 - 66 - - 75
- - - - 9 - 66 - - 75
Exploralion and appraisal cosls
d
- - - - 2 - 94 - - 96
Developnenl - - - 49 549 - 1,416 355 - 2,369
Tolal cosls - - - 49 560 - 1,576 355 - 2,540
Fesulls ol operalions lor lhe year ended 31 Decenber
Sales and olher operaling revenues
e
Third parlies - - - - 2,268 - 5,610 87 - 7,965
Sales belween businesses - - - - - - 3,432 460 - 3,892
- - - - 2,268 - 9,042 547 - 11,857
Exploralion expendilure - - - - 22 - 40 - - 62
Produclion cosls - - - - 316 - 1,602 184 - 2,102
Produclion laxes - - - - 911 - 3,567 - - 4,478
Olher cosls (incone - - - 67 75 - 3 (2) - 143
Deprecialion, deplelion and anorlizalion - - - - 269 - 954 363 - 1,586
npairnenls and losses on sale ol
businesses and lxed assels - - - - - - 43 - - 43
- - - 67 1,593 - 6,209 545 - 8,414
Proll (loss belore laxalion - - - (67) 675 - 2,833 2 - 3,443
Allocable laxes - - - - 260 - 475 33 - 768
Fesulls ol operalions - - - (67) 415 - 2,358 (31) - 2,675
Exploralion and produclion aclivilies -
equilyaccounled enlilies aller
lax (as above - - - (67) 415 - 2,358 (31) - 2,675
idslrean and olher aclivilies aller lax
l
- 4 27 238 199 63 255 518 - 1,304
Tolal replacenenl cosl proll
aller inleresl and lax - 4 27 171 614 63 2,613 487 - 3,979
a
These lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol equilyaccounled enlilies. They do nol include anounls relaling lo assels held lor sale. idslrean
aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion as well as downslrean aclivilies
ol TKBP are excluded. The anounls reporled lor equilyaccounled enlilies exclude lhe corresponding anounls lor lheir equilyaccounled enlilies.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls and sales laxes.
l
ncludes inleresl, ninorily inleresl and lhe nel resulls ol equilyaccounled enlilies ol equilyaccounled enlilies.
230 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
F
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www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities DPOUJOVFE
$ nillion
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Subsidiaries
a
Capilalized cosls al 31 Decenber
b
Cross capilalized cosls
Proved properlies 35,096 6,644 64,366 3,967 3,346 24,476 _ 10,900 2,394 156,639
Unproved properlies 752 - 5,464 147 193 2,377 - 733 1,039 10,710
35,343 6,644 69,330 4,114 3,544 26,353 - 11,633 3,933 167,399
Accunulaled deprecialion 26,794 3,306 31,723 2,309 4,337 12,492 - 4,793 1,033 37,302
el capilalized cosls 9,054 3,333 33,102 1,305 3,707 14,361 - 6,335 2,395 30,097
Cosls incurred lor lhe year ended 31 Decenber
b
Acquisilion ol properlies
c
Proved 179 - (17 - - - - 306 - 463
Unproved (1 - 370 1 - 13 - - 10 393
173 - 353 1 - 13 - 306 10 366
Exploralion and appraisal cosls
d
133 - 1,377 79 73 712 3 315 53 2,305
Developnenl 751 1,054 4,203 336 453 2,707 - 560 277 10,396
Tolal cosls 1,112 1,054 5,933 466 531 3,437 3 1,131 340 14,067
Fesulls ol operalions lor lhe year ended 31 Decenber
Sales and olher operaling revenues
e
Third parlies 2,239 63 972 99 1,525 1,346 - 636 735 3,170
Sales belween businesses 2,432 309 15,100 434 1,409 5,313 - 6,257 726 32,530
4,721 377 16,072 533 2,934 7,159 - 6,393 1,511 40,750
Exploralion expendilure 59 - 663 30 16 219 3 49 22 1,116
Produclion cosls 1,243 164 2,321 234 395 903 15 361 70 6,261
Produclion laxes (3 - 649 1 220 - - 2,354 72 3,793
Olher cosls (incone
l
(1,259 51 2,353 145 134 144 76 967 173 2,339
Deprecialion, deplelion and anorlizalion 1,143 135 3,357 170 697 2,041 - 757 96 3,951
npairnenls and (gains losses on
sale ol businesses and lxed assels (122 (7 (203 - (11 (1 - (702
j
- (1,051
1,066 393 10,135 630 1,501 3,311 99 4,236 433 21,909
Proll (loss belore laxalion
g
3,655 434 5,937 (97 1,433 3,343 (99 2,607 1,073 13,341
Allocable laxes 1,563 76 1,902 (53 916 1,517 (25 632 2 6,530
Fesulls ol operalions 2,037 403 4,035 (39 517 2,331 (74 1,925 1,071 12,261
Exploralion and Produclion segnenl replacenenl cosl proll belore inleresl and lax
Exploralion and produclion aclivilies -
subsidiaries (as above 3,655 434 5,937 (97 1,433 3,343 (99 2,607 1,073 13,341
idslrean aclivilies - subsidiaries
h j
925 17 719 333 17 (27 (37 513 (315 2,650
Equilyaccounled enlilies
i
- 5 29 134 630 56 1,924 531 - 3,309
Tolal replacenenl cosl proll
belore inleresl and lax 4,530 506 6,635 370 2,030 3,377 1,733 3,656 753 24,300
a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol subsidiaries. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural
gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion, our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in
lhe US, Canada, UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe TransAlaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen
pipeline, lhe Soulh Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes. Sales belween businesses and lhird parly sales have been anended in lhe US wilhoul nel ellecl lo lolal sales.
l
ncludes properly laxes, olher governnenl lake and lhe lair value gain on enbedded derivalives ol $663 nillion. The UK region includes a $733 nillion gain ollsel by corresponding charges prinarily in lhe
US, relaling lo lhe group sellinsurance progranne.
g
Excludes lhe unwinding ol lhe discounl on provisions and payables anounling lo $303 nillion which is included in lnance cosls in lhe group incone slalenenl.
h
idslrean aclivilies exclude invenlory holding gains and losses.
i
The prolls ol equilyaccounled enlilies are included aller inleresl and lax.
j
ncludes lhe gain on disposal ol upslrean assels associaled wilh our sale ol our 46' slake in LukArco (see ole 5.
BP Annual Feporl and Forn 20F 2010 231
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities DPOUJOVFE
$ nillion
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Equilyaccounled enlilies (BP share
a
Capilalized cosls al 31 Decenber
b
Cross capilalized cosls
Proved properlies - - - - 5,739 - 13,266 2,259 - 21,314
Unproved properlies - - - 1,373 197 - 737 - - 2,312
- - - 1,373 5,936 - 14,003 2,259 - 23,626
Accunulaled deprecialion - - - - 2,034 - 5,550 1,739 - 9,373
el capilalized cosls - - - 1,373 3,902 - 3,453 520 - 14,253
Cosls incurred lor lhe year ended 31 Decenber
b
Acquisilion ol properlies
c
Proved - - - - - - - - - -
Unproved - - - - 31 - 10 - - 41
- - - - 31 - 10 - - 41
Exploralion and appraisal cosls
d
- - - - 21 - 77 3 - 101
Developnenl - - - 30 533 - 1,132 246 - 1,996
Tolal cosls - - - 30 590 - 1,269 249 - 2,133
Fesulls ol operalions lor lhe year ended 31 Decenber
Sales and olher operaling revenues
e
Third parlies - - - - 1,977 - 4,919 351 - 7,247
Sales belween businesses - - - - - - 2,333 - - 2,333
- - - - 1,977 - 7,757 351 - 10,035
Exploralion expendilure - - - - 23 - 37 - - 60
Produclion cosls - - - - 354 - 1,423 159 - 1,941
Produclion laxes - - - - 702 - 2,597 - - 3,299
Olher cosls (incone - - - - (69 - 12 (2 - (59
Deprecialion, deplelion and anorlizalion - - - - 231 - 1,073 274 - 1,623
npairnenls and losses on
sale ol businesses and lxed assels - - - - - - 72 - - 72
- - - - 1,291 - 5,219 431 - 6,941
Proll (loss belore laxalion - - - - 636 - 2,533 (30 - 3,144
Allocable laxes - - - - 270 - 501 - - 771
Fesulls ol operalions - - - - 416 - 2,037 (30 - 2,373
Exploralion and produclion aclivilies -
equilyaccounled enlilies aller
lax (as above - - - - 416 - 2,037 (30 - 2,373
idslrean and olher aclivilies aller lax
l
- 5 29 134 214 56 (113 611 - 936
Tolal replacenenl cosl proll
aller inleresl and lax - 5 29 134 630 56 1,924 531 - 3,309
a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol equilyaccounled enlilies. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude
oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion as well as downslrean aclivilies ol TKBP are excluded. The anounls reporled lor equily
accounled enlilies exclude lhe corresponding anounls lor lheir equilyaccounled enlilies.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes.
l
ncludes inleresl, ninorily inleresl and lhe nel resulls ol equilyaccounled enlilies ol equilyaccounled enlilies.
232 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
F
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www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities DPOUJOVFE
$ nillion
2003
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Subsidiaries
a
Capilalized cosls al 31 Decenber
b
Cross capilalized cosls
Proved properlies 34,614 5,507 59,913 3,517 7,934 21,563 - 10,639 2,531 146,323
Unproved properlies 626 - 5,006 165 134 2,011 - 465 1,013 9,425
35,240 5,507 64,924 3,632 3,063 23,574 - 11,154 3,599 155,743
Accunulaled deprecialion 26,564 3,125 23,511 2,141 4,217 10,451 - 4,395 945 30,349
el capilalized cosls 3,676 2,332 36,413 1,541 3,351 13,123 - 6,759 2,654 75,399
The groups share ol equilyaccounled enlilies nel capilalized cosls al 31 Decenber 2003 was $13,393 nillion.
Cosls incurred lor lhe year ended 31 Decenber
b
Acquisilion ol properlies
c
Proved - - 1,374 2 - - - 136 - 1,512
Unproved 4 - 2,942 - - - - 41 - 2,937
4 - 4,316 2 - - - 177 - 4,499
Exploralion and appraisal cosls
d
137 - 362 33 90 333 12 269 49 2,290
Developnenl 907 695 4,914 309 763 2,966 - 359 349 11,767
Tolal cosls 1,043 695 10,092 344 353 3,304 12 1,305 393 13,556
The groups share ol equilyaccounled enlilies cosls incurred in 2003 was $3,259 nillion: in Fussia $1,921 nillion, Soulh Anerica $1,039 nillion, and
Fesl ol Asia $299 nillion.
Fesulls ol operalions lor lhe year ended 31 Decenber
Sales and olher operaling revenues
e
Third parlies 3,365 105 1,526 147 3,339 3,745 - 1,136 360 14,773
Sales belween businesses 4,374 1,416 22,094 1,237 2,605 6,022 - 11,249 1,171 50,163
3,239 1,521 23,620 1,334 5,944 9,767 - 12,435 2,031 64,941
Exploralion expendilure 121 1 305 32 30 213 14 140 26 332
Produclion cosls 1,357 150 3,002 239 429 375 13 435 62 6,667
Produclion laxes 503 - 2,603 2 353 - - 5,510 110 9,036
Olher cosls (incone
l
(23 (43 3,440 343 193 (122 196 2,064 226 6,274
Deprecialion, deplelion and anorlizalion 1,049 199 2,729 131 730 2,120 - 733 37 7,333
npairnenls and losses on
sale ol businesses and lxed assels - - 303 2 4 3 - 219 - 541
3,002 307 12,337 349 1,749 3,094 223 9,206 511 31,333
Proll (loss belore laxalion
g
5,237 1,214 11,233 535 4,195 6,673 (223 3,229 1,520 33,603
Allocable laxes 2,230 333 3,357 205 2,213 2,672 (36 934 513 13,576
Fesulls ol operalions 2,957 331 7,376 330 1,977 4,001 (192 2,245 1,007 20,032
The groups share ol equilyaccounled enlilies resulls ol operalions (including lhe groups share ol lolal TKBP resulls in 2003 was a proll ol
$2,793 nillion aller deducling inleresl ol $355 nillion, laxalion ol $1,217 nillion and ninorily inleresl ol $169 nillion.
Exploralion and Produclion segnenl replacenenl cosl proll belore inleresl and lax
Exploralion and produclion aclivilies
Subsidiaries (as above 5,237 1,214 11,233 535 4,195 6,673 (223 3,229 1,520 33,603
Equilyaccounled enlilies (1 - 1 40 304 (1 2,259 191 - 2,793
idslrean aclivilies
h i
743 16 490 673 274 112 - (272 (129 1,907
Tolal replacenenl cosl proll
belore inleresl and lax 5,979 1,230 11,724 1,243 4,773 6,734 2,031 3,143 1,391 33,303
a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines,
processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion, our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in lhe US, Canada,
UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe TransAlaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen pipeline, lhe Soulh
Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola. The groups share ol equily
accounled enlilies aclivilies are excluded lron lhe lables and included in lhe loolnoles, wilh lhe exceplion ol Abu Dhabi produclion laxes, which are included in lhe resulls ol operalions above.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes. Sales belween businesses and lhird parly sales have been anended in lhe US wilhoul nel ellecl lo lolal sales.
l
ncludes properly laxes, olher governnenl lake and lhe lair value loss on enbedded derivalives ol $102 nillion. The UK region includes a $499 nillion gain ollsel by corresponding charges prinarily in lhe
US, relaling lo lhe group sellinsurance progranne.
g
Excludes lhe unwinding ol lhe discounl on provisions and payables anounling lo $235 nillion which is included in lnance cosls in lhe group incone slalenenl.
h
ncludes a $517 nillion wriledown ol our inveslnenl in Fosnell based on ils quoled narkel price al lhe end ol lhe year.
i
idslrean aclivilies exclude invenlory holding gains and losses.
BP Annual Feporl and Forn 20F 2010 233
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves
nillion barrels
Crude oiI
a
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US
e
America Russia Asia
Subsidiaries
Al 1 January 2010
Developed 403 83 1,862 11 49 422 - 182 58 3,070
Undeveloped 291 184 1,211 1 56 454 - 334 57 2,588
694 267 3,073 12 105 876 - 516 115 5,658
Changes allribulable lo
Fevisions ol previous eslinales 20 3 (45) 1 (1) (62) - (62) - (146)
nproved recovery 100 9 133 - 17 14 - 145 3 421
Purchases ol reservesinplace - 33 6 - - - - 38 - 77
Discoveries and exlensions 31 1 80 - - 19 - - - 131
Produclion
b j
(50) (15) (211) (2) (19) (87) - (43) (12) (439)
Sales ol reservesinplace - - (117) (11) - (15) - - - (143)
101 31 (154) (12) (3) (131) - 78 (9) (99)
Al 31 Decenber 2010
c g
Developed 364 77 1,729 - 44 371 - 269 48 2,902
Undeveloped 431 221 1,190 - 58 374 - 325 58 2,657
795 298 2,919 - 102 745 - 594 106 5,559
Equilyaccounled enlilies (BP share
l
Al 1 January 2010
Developed - - - - 407 - 2,351 363 - 3,121
Undeveloped - - - - 405 9 1,198 120 - 1,732
- - - - 812 9 3,549 483 - 4,853
Changes allribulable lo
Fevisions ol previous eslinales - - - - 4 3 248 (20) - 235
nproved recovery - - - - 33 - 269 - - 302
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 1 - - - - 1
Produclion - - - - (35)
i k
- (313) (69) - (417)
Sales ol reservesinplace - - - - - - (3) - - (3)
- - - - 3 3 201 (89) - 118
Al 31 Decenber 2010
d
Developed - - - - 408 - 2,388 370 - 3,166
Undeveloped - - - - 407 12 1,362 24 - 1,805
- - - - 815
h
12 3,750 394 - 4,971
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2010
Developed 403 83 1,862 11 456 422 2,351 545 58 6,191
Undeveloped 291 184 1,211 1 461 463 1,198 454 57 4,320
694 267 3,073 12 917 885 3,549 999 115 10,511
Al 31 Decenber 2010
Developed 364 77 1,729 - 452 371 2,388 639 48 6,068
Undeveloped 431 221 1,190 - 465 386 1,362 349 58 4,462
795 298 2,919 - 917 757 3,750 988 106 10,530
a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and
lhe oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 29 lhousand barrels a day.
c
ncludes 643 nillion barrels ol CLs. Also includes 22 nillion barrels ol crude oil in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 13 nillion barrels ol CLs. Also includes 254 nillion barrels ol crude oil in respecl ol lhe 7.03' ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 73 nillion barrels upon which a nel prolls royally will be payable over lhe lile ol lhe leld under lhe lerns ol lhe BP Prudhoe Bay
Foyally Trusl.
l
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
g
ncludes 70 nillion barrels relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 6 nillion barrels in US, 30 nillion barrels in Soulh Anerica, and 34 nillion barrels in Fesl ol Asia.
h
ncludes 301 nillion barrels relaling lo assels held lor sale al 31 Decenber 2010.
i
ncludes 4 nillion barrels ol crude oil sold relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
j
ncludes 15 nillion barrels ol crude oil sold relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 2 nillion barrels in US, 6 nillion barrels in Soulh Anerica,
and 7 nillion barrels in Fesl ol Asia.
k
ncludes 35 nillion barrels ol crude oil sold relaling lo produclion lron assels held lor sale al 31 Decenber 2010.
234 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
billion cubic leel
NaturaI gas
a
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US America Russia Asia
Subsidiaries
Al 1 January 2010
Developed 1,602 49 9,583 716 3,177 1,107 - 1,579 3,219 21,032
Undeveloped 670 397 5,633 453 7,393 1,454 - 249 3,107 19,356
2,272 446 15,216 1,169 10,570 2,561 - 1,828 6,326 40,388
Changes allribulable lo
Fevisions ol previous eslinales (8) (5) (1,854) (11) 2 3 - (142) (191) (2,206)
nproved recovery 152 6 830 - 512 18 - 83 58 1,659
Purchases ol reservesinplace - 31 97 1 - - - 17 - 146
Discoveries and exlensions 26 - 739 9 19 1,378 - - - 2,171
Produclion
b i
(191) (8) (861) (77) (953) (229) - (228) (288) (2,835)
Sales ol reservesinplace (6) - (424) (1,033) - (51) - - - (1,514)
(27) 24 (1,473) (1,111) (420) 1,119 - (270) (421) (2,579)
Al 31 Decenber 2010
c l
Developed 1,416 40 9,495 58 3,575 1,329 - 1,290 3,563 20,766
Undeveloped 829 430 4,248 - 6,575 2,351 - 268 2,342 17,043
2,245 470 13,743 58 10,150 3,680 - 1,558 5,905 37,809
Equilyaccounled enlilies (BP share
e
Al 1 January 2010
Developed - - - - 1,252 - 1,703 80 - 3,035
Undeveloped - - - - 1,010 165 519 13 - 1,707
- - - - 2,262 165 2,222 93 - 4,742
Changes allribulable lo
Fevisions ol previous eslinales - - - - (141) 10 382 2 - 253
nproved recovery - - - - 291 - - 12 - 303
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 23 - - - - 23
Produclion
b
- - - - (168)
h j
- (244) (17) - (429)
Sales ol reservesinplace - - - - - - (1) - - (1)
- - - - 5 10 137 (3) - 149
Al 31 Decenber 2010
d
Developed - - - - 1,075 - 1,900 71 - 3,046
Undeveloped - - - - 1,192 175 459 19 - 1,845
- - - - 2,267
g
175 2,359 90 - 4,891
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2010
Developed 1,602 49 9,583 716 4,429 1,107 1,703 1,659 3,219 24,067
Undeveloped 670 397 5,633 453 8,403 1,619 519 262 3,107 21,063
2,272 446 15,216 1,169 12,832 2,726 2,222 1,921 6,326 45,130
Al 31 Decenber 2010
Developed 1,416 40 9,495 58 4,650 1,329 1,900 1,361 3,563 23,812
Undeveloped 829 430 4,248 - 7,767 2,526 459 287 2,342 18,888
2,245 470 13,743 58 12,417 3,855 2,359 1,648 5,905 42,700
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales
arrangenenls independenlly.
b
ncludes 204 billion cubic leel ol nalural gas consuned in operalions, 166 billion cubic leel in subsidiaries, 33 billion cubic leel in equilyaccounled enlilies and excludes 14 billion cubic leel ol produced
nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
c
ncludes 2,921 billion cubic leel ol nalural gas in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 137 billion cubic leel ol nalural gas in respecl ol lhe 5.39' ninorily inleresl in TKBP.
e
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
l
ncludes 740 billion cubic leel relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 153 billion cubic leel in US, 205 billion cubic leel in Soulh Anerica, and 377 billion cubic leel in
Fesl ol Asia.
g
ncludes 1,319 billion cubic leel relaling lo assels held lor sale al 31 Decenber 2010.
h
ncludes 12 billion cubic leel ol gas sales relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
i
ncludes 133 billion cubic leel ol gas (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 23 billion cubic leel in US,
27 billion cubic leel in Soulh Anerica, and 33 billion cubic leel in Fesl ol Asia.
j
ncludes 141 billion cubic leel ol gas (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010.
BP Annual Feporl and Forn 20F 2010 235
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels
Bitumen
a
2010
Rest of
North
America TotaI
Equilyaccounled enlilies (BP share
Al 1 January 2010
Developed - -
Undeveloped - -
- -
Changes allribulable lo
Fevisions ol previous eslinales - -
nproved recovery - -
Purchases ol reservesinplace - -
Discoveries and exlensions 179 179
Produclion - -
Sales ol reservesinplace - -
179 179
Al 31 Decenber 2010
Developed - -
Undeveloped 179 179
179 179
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
236 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels ol oil equivalenl
TotaI hydrocarbons
a
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US
e
America Russia Asia
Subsidiaries
Al 1 January 2010
Developed 680 91 3,514 135 596 613 - 455 612 6,696
Undeveloped 406 253 2,183 79 1,331 704 - 376 593 5,925
1,086 344 5,697 214 1,927 1,317 - 831 1,205 12,621
Changes allribulable lo
Fevisions ol previous eslinales 18 2 (364) (2) (1) (61) - (87) (33) (528)
nproved recovery 126 10 276 - 105 17 - 160 13 707
Purchases ol reservesinplace - 38 22 - - - - 41 - 101
Discoveries and exlensions 36 1 207 2 4 257 - - - 507
Produclion
b l l
(83) (16) (359) (15) (183) (127) - (83) (61) (927)
Sales ol reservesinplace (1) - (190) (189) - (24) - - - (404)
96 35 (408) (204) (75) 62 - 31 (81) (544)
Al 31 Decenber 2010
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Developed 608 84 3,366 10 660 600 - 491 662 6,481
Undeveloped 574 295 1,923 - 1,192 779 - 371 462 5,596
1,182 379 5,289 10 1,852 1,379 - 862 1,124 12,077
Equilyaccounled enlilies (BP share
g
Al 1 January 2010
Developed - - - - 623 - 2,645 377 - 3,645
Undeveloped - - - - 580 37 1,287 122 - 2,026
- - - - 1,203 37 3,932 499 - 5,671
Changes allribulable lo
Fevisions ol previous eslinales - - - - (20) 6 314 (19) - 281
nproved recovery - - - - 83 - 269 2 - 354
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - 179 4 - - - - 183
Produclion
b l
- - - - (64)
k m
- (354) (73) - (491)
Sales ol reservesinplace - - - - - - (4) - - (4)
- - - 179 3 6 225 (90) - 323
Al 31 Decenber 2010
d
Developed - - - - 593 - 2,716 382 - 3,691
Undeveloped - - - 179 613 43 1,441 27 - 2,303
- - - 179 1,206
j
43 4,157 409 - 5,994
Tolal subsidiaries and equilyaccounled enlilies (BP share
h
Al 1 January 2010
Developed 680 91 3,514 135 1,219 613 2,645 832 612 10,341
Undeveloped 406 253 2,183 79 1,911 741 1,287 498 593 7,951
1,086 344 5,697 214 3,130 1,354 3,932 1,330 1,205 18,292
Al 31 Decenber 2010
Developed 608 84 3,366 10 1,253 600 2,716 873 662 10,172
Undeveloped 574 295 1,923 179 1,805 822 1,441 398 462 7,899
1,182 379 5,289 189 3,058 1,422 4,157 1,271 1,124 18,071
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 29 lhousand barrels ol oil equivalenl a day.
c
ncludes 643 nillion barrels ol CLs. Also includes 526 nillion barrels ol oil equivalenl in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 13 nillion barrels ol CLs. Also includes 273 nillion barrels ol oil equivalenl in respecl ol lhe ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 73 nillion barrels ol oil equivalenl upon which a nel prolls royally will be payable.
l
ncludes 35 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 23 nillion barrels ol oil equivalenl in subsidiaries, 7 nillion barrels ol oil equivalenl in equilyaccounled enlilies and
excludes 2 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
h
ncludes 1,311 nillion barrels ol oil equivalenl (197 nillion barrels ol oil equivalenl lor subsidiaries and 1,114 nillion barrels ol oil equivalenl lor equilyaccounled enlilies associaled wilh properlies currenlly
held lor sale where lhe disposal has nol yel been conpleled.
i
ncludes 197 nillion barrels ol oil equivalenl relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 34 nillion barrels ol oil equivalenl in US, 64 nillion barrels ol oil equivalenl in
Soulh Anerica, and 99 nillion barrels ol oil equivalenl in Fesl ol Asia.
j
ncludes 1,114 nillion barrels ol oil equivalenl relaling lo assels held lor sale al 31 Decenber 2010.
k
ncludes 6 nillion barrels ol oil equivalenl sold relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
l
ncludes 33 nillion barrels ol oil equivalenl (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 6 nillion barrels ol oil
equivalenl in US, 11 nillion barrels ol oil equivalenl in Soulh Anerica, and 21 nillion barrels ol oil equivalenl in Fesl ol Asia.
ncludes 59 nillion barrels ol oil equivalenl (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010.
BP Annual Feporl and Forn 20F 2010 237
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels
Crude oiI
a
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2009
Developed 410 31 1,717 11 47 464 - 195 56 2,931
Undeveloped 119 194 1,273 1 55 496 - 433 53 2,634
529 275 2,990 12 102 960 - 633 114 5,665
Changes allribulable lo
Fevisions ol previous eslinales 7 (1 165 2 13 (121 - (123 3 (55
nproved recovery 42 7 32 - 7 32 - 31 2 203
Purchases ol reservesinplace 1 - - - - - - 1 - 2
Discoveries and exlensions 134 - 73 - - 114 - - 7 373
Produclion
b
(61 (14 (237 (2 (22 (109 - (45 (11 (501
Sales ol reservesinplace (3 - - - - - - (26 - (34
165 (3 33 - 3 (34 - (167 1 (7
Al 31 Decenber 2009
c
Developed 403 33 1,362 11 49 422 - 132 53 3,070
Undeveloped 291 134 1,211 1 56 454 - 334 57 2,533
694 267 3,073 12 105 376 - 516 115 5,653
Equilyaccounled enlilies (BP share
l
Al 1 January 2009
Developed - - - - 399 - 2,227 499 - 3,125
Undeveloped - - - - 409 11 944 199 - 1,563
- - - - 303 11 3,171 693 - 4,633
Changes allribulable lo
Fevisions ol previous eslinales - - - - 2 (2 590 (23 - 562
nproved recovery - - - - 50 - 3 - - 53
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 3 - 37 - - 90
Produclion - - - - (37 - (307 (71 - (415
Sales ol reservesinplace - - - - (14 - - (116 - (130
- - - - 4 (2 373 (215 - 165
Al 31 Decenber 2009
d
Developed - - - - 407 - 2,351 363 - 3,121
Undeveloped - - - - 405 9 1,193 120 - 1,732
- - - - 312 9 3,549 433 - 4,353
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2009
Developed 410 31 1,717 11 446 464 2,227 694 56 6,106
Undeveloped 119 194 1,273 1 464 507 944 637 53 4,247
529 275 2,990 12 910 971 3,171 1,331 114 10,353
Al 31 Decenber 2009
Developed 403 33 1,362 11 456 422 2,351 545 53 6,191
Undeveloped 291 134 1,211 1 461 463 1,193 454 57 4,320
694 267 3,073 12 917 335 3,549 999 115 10,511
a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe
oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 26 lhousand barrels a day.
c
ncludes 319 nillion barrels ol CLs. Also includes 23 nillion barrels ol crude oil in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 20 nillion barrels ol CLs. Also includes 243 nillion barrels ol crude oil in respecl ol lhe 6.36' ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 63 nillion barrels upon which a nel prolls royally will be payable over lhe lile ol lhe leld under lhe lerns ol lhe BP Prudhoe Bay
Foyally Trusl.
l
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
233 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
billion cubic leel
NaturaI gas
a
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Subsidiaries
Al 1 January 2009
Developed 1,322 61 9,059 659 3,316 1,050 - 1,102 1,337 13,956
Undeveloped 532 402 5,473 463 7,434 1,332 - 1,303 4,000 21,049
2,404 463 14,532 1,127 10,750 2,432 - 2,410 5,337 40,005
Changes allribulable lo
Fevisions ol previous eslinales (114 (3 549 43 322 270 - (231 22 353
nproved recovery 34 - 550 5 322 49 - 32 75 1,117
Purchases ol reservesinplace 159 - - - - - - 31 - 190
Discoveries and exlensions 150 - 496 94 105 59 - - 531 1,435
Produclion
b
(243 (9 (907 (100 (929 (249 - (241 (139 (2,367
Sales ol reservesinplace (113 - (4 - - - - (223 - (345
(132 (17 634 42 (130 129 - (532 439 333
Al 31 Decenber 2009
c
Developed 1,602 49 9,533 716 3,177 1,107 - 1,579 3,219 21,032
Undeveloped 670 397 5,633 453 7,393 1,454 - 249 3,107 19,356
2,272 446 15,216 1,169 10,570 2,561 - 1,323 6,326 40,333
Equilyaccounled enlilies (BP share
e
Al 1 January 2009
Developed - - - - 1,493 - 1,560 176 - 3,234
Undeveloped - - - - 1,023 132 653 111 - 1,969
- - - - 2,521 132 2,213 237 - 5,203
Changes allribulable lo
Fevisions ol previous eslinales - - - - (26 (17 204 (19 - 142
nproved recovery - - - - 314 - 1 4 - 319
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 6 - 23 - - 29
Produclion
b
- - - - (165 - (219 (25 - (409
Sales ol reservesinplace - - - - (333 - - (154 - (542
- - - - (259 (17 9 (194 - (461
Al 31 Decenber 2009
d
Developed - - - - 1,252 - 1,703 30 - 3,035
Undeveloped - - - - 1,010 165 519 13 - 1,707
- - - - 2,262 165 2,222 93 - 4,742
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2009
Developed 1,322 61 9,059 659 4,314 1,050 1,560 1,273 1,337 22,190
Undeveloped 532 402 5,473 463 3,457 1,564 653 1,419 4,000 23,013
2,404 463 14,532 1,127 13,271 2,614 2,213 2,697 5,337 45,203
Al 31 Decenber 2009
Developed 1,602 49 9,533 716 4,429 1,107 1,703 1,659 3,219 24,067
Undeveloped 670 397 5,633 453 3,403 1,619 519 262 3,107 21,063
2,272 446 15,216 1,169 12,332 2,726 2,222 1,921 6,326 45,130
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
b
ncludes 195 billion cubic leel ol nalural gas consuned in operalions, 164 billion cubic leel in subsidiaries, 31 billion cubic leel in equilyaccounled enlilies and excludes 16 billion cubic leel ol produced
nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
c
ncludes 3,063 billion cubic leel ol nalural gas in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 131 billion cubic leel ol nalural gas in respecl ol lhe 5.79' ninorily inleresl in TKBP.
e
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
BP Annual Feporl and Forn 20F 2010 239
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels ol oil equivalenl
TotaI hydrocarbons
a
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2009
Developed 724 91 3,279 126 617 645 - 335 332 6,249
Undeveloped 219 264 2,217 31 1,337 734 - 714 747 6,313
943 355 5,496 207 1,954 1,379 - 1,099 1,129 12,562
Changes allribulable lo
Fevisions ol previous eslinales (13 (2 260 9 74 (74 - (163 7 93
nproved recovery 43 7 177 1 63 40 - 45 15 396
Purchases ol reservesinplace 23 - - - - - - 6 - 34
Discoveries and exlensions 210 - 153 17 13 124 - - 93 625
Produclion
b l
(102 (16 (393 (20 (132 (152 - (36 (44 (995
Sales ol reservesinplace (23 - (1 - - - - (65 - (94
143 (11 201 7 (27 (62 - (263 76 59
Al 31 Decenber 2009
c
Developed 630 91 3,514 135 596 613 - 455 612 6,696
Undeveloped 406 253 2,133 79 1,331 704 - 376 593 5,925
1,036 344 5,697 214 1,927 1,317 - 331 1,205 12,621
Equilyaccounled enlilies (BP share
g
Al 1 January 2009
Developed - - - - 653 - 2,495 529 - 3,632
Undeveloped - - - - 536 42 1,057 213 - 1,903
- - - - 1,244 42 3,552 747 - 5,535
Changes allribulable lo
Fevisions ol previous eslinales - - - - (2 (5 625 (32 - 536
nproved recovery - - - - 104 - 3 1 - 113
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 4 - 92 - - 96
Produclion
b l
- - - - (66 - (345 (75 - (436
Sales ol reservesinplace - - - - (31 - - (142 - (223
- - - - (41 (5 330 (243 - 36
Al 31 Decenber 2009
d
Developed - - - - 623 - 2,645 377 - 3,645
Undeveloped - - - - 530 37 1,237 122 - 2,026
- - - - 1,203 37 3,932 499 - 5,671
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2009
Developed 724 91 3,279 126 1,275 645 2,495 914 332 9,931
Undeveloped 219 264 2,217 31 1,923 776 1,057 932 747 3,216
943 355 5,496 207 3,193 1,421 3,552 1,346 1,129 13,147
Al 31 Decenber 2009
Developed 630 91 3,514 135 1,219 613 2,645 332 612 10,341
Undeveloped 406 253 2,133 79 1,911 741 1,237 493 593 7,951
1,036 344 5,697 214 3,130 1,354 3,932 1,330 1,205 13,292
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 26 lhousand barrels ol oil equivalenl a day.
c
ncludes 319 nillion barrels ol CLs. Also includes 552 nillion barrels ol oil equivalenl in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 20 nillion barrels ol CLs. Also includes 266 nillion barrels ol oil equivalenl in respecl ol lhe ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 63 nillion barrels ol oil equivalenl upon which a nel prolls royally will be payable.
l
ncludes 34 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 29 nillion barrels ol oil equivalenl in subsidiaries, 5 nillion barrels ol oil equivalenl in equilyaccounled enlilies and excludes
3 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
240 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels
Crude oiI
a
2003
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2003
Developed 414 105 1,332 13 102 256 - 121 44 2,937
Undeveloped 123 169 1,265 1 202 350 - 372 73 2,555
537 274 3,147 14 304 606 - 493 117 5,492
Changes allribulable lo
Fevisions ol previous eslinales 16 (11 (212 1 7 264 - 194 5 264
nproved recovery 39 23 132 - 3 13 - 43 3 321
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - 64 - 5 173 - - - 242
Produclion
b
(63 (16 (191 (3 (23 (101 - (47 (11 (455
Sales ol reservesinplace - - - - (199 - - - - (199
(3 1 (157 (2 (202 354 - 190 (3 173
Al 31 Decenber 2003
c
Developed 410 31 1,717 11 47 464 - 195 56 2,931
Undeveloped 119 194 1,273 1 55 496 - 433 53 2,634
529 275 2,990 12 102 960 - 633 114 5,665
Equilyaccounled enlilies (BP share
l
Al 1 January 2003
Developed - - - - 323 - 2,094 574 - 2,996
Undeveloped - - - - 243 - 1,137 205 - 1,535
- - - - 571 - 3,231 779 - 4,531
Changes allribulable lo
Fevisions ol previous eslinales - - - - (3 11 217 (1 - 224
nproved recovery - - - - 62 - - - - 62
Purchases ol reservesinplace - - - - 199 - - - - 199
Discoveries and exlensions - - - - 13 - 26 - - 39
Produclion - - - - (34 - (302 (30 - (416
Sales ol reservesinplace - - - - - - (1 - - (1
- - - - 237 11 (60 (31 - 107
Al 31 Decenber 2003
d
Developed - - - - 399 - 2,227 499 - 3,125
Undeveloped - - - - 409 11 944 199 - 1,563
- - - - 303 11 3,171 693 - 4,633
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2003
Developed 414 105 1,332 13 430 256 2,094 695 44 5,933
Undeveloped 123 169 1,265 1 445 350 1,137 577 73 4,140
537 274 3,147 14 375 606 3,231 1,272 117 10,073
Al 31 Decenber 2003
Developed 410 31 1,717 11 446 464 2,227 694 56 6,106
Undeveloped 119 194 1,273 1 464 507 944 637 53 4,247
529 275 2,990 12 910 971 3,171 1,331 114 10,353
a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe
oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 19 lhousand barrels a day.
c
ncludes 307 nillion barrels ol CLs. Also includes 21 nillion barrels ol crude oil in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 36 nillion barrels ol CLs. Also includes 216 nillion barrels ol crude oil in respecl ol lhe 6.30' ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 54 nillion barrels upon which a nel prolls royally will be payable over lhe lile ol lhe leld under lhe lerns ol lhe BP Prudhoe Bay
Foyally Trusl.
l
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
BP Annual Feporl and Forn 20F 2010 241
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
billion cubic leel
NaturaI gas
a
2003
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Subsidiaries
Al 1 January 2003
Developed 2,049 63 10,670 603 3,075 990 - 1,270 1,135 19,360
Undeveloped 553 410 4,705 421 7,973 1,410 - 1,269 4,529 21,270
2,602 473 15,375 1,029 11,043 2,400 - 2,539 5,664 41,130
Changes allribulable lo
Fevisions ol previous eslinales 23 (3 (2,063 51 (456 142 - - 361 (1,950
nproved recovery 77 9 1,322 16 159 6 - 103 2 1,699
Purchases ol reservesinplace - - 133 - - - - - - 133
Discoveries and exlensions - - 549 125 943 32 - 37 - 1,741
Produclion
b
(293 (11 (334 (94 (946 (193 - (274 (140 (2,795
Sales ol reservesinplace - - - - (3 - - - - (3
(193 (10 (343 93 (293 32 - (129 223 (1,125
Al 31 Decenber 2003
c
Developed 1,322 61 9,059 659 3,316 1,050 - 1,102 1,337 13,956
Undeveloped 532 402 5,473 463 7,434 1,332 - 1,303 4,000 21,049
2,404 463 14,532 1,127 10,750 2,432 - 2,410 5,337 40,005
Equilyaccounled enlilies (BP share
e
Al 1 January 2003
Developed - - - - 1,473 - 303 137 - 2,473
Undeveloped - - - - 331 - 353 113 - 1,297
- - - - 2,309 - 1,161 300 - 3,770
Changes allribulable lo
Fevisions ol previous eslinales - - - - (96 132 1,273 (2 - 1,357
nproved recovery - - - - 301 - - 11 - 312
Purchases ol reservesinplace - - - - 3 - - - - 3
Discoveries and exlensions - - - - 192 - - - - 192
Produclion
b
- - - - (133 - (221 (22 - (431
Sales ol reservesinplace - - - - - - - - - -
- - - - 212 132 1,052 (13 - 1,433
Al 31 Decenber 2003
d
Developed - - - - 1,493 - 1,560 176 - 3,234
Undeveloped - - - - 1,023 132 653 111 - 1,969
- - - - 2,521 132 2,213 237 - 5,203
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2003
Developed 2,049 63 10,670 603 4,553 990 303 1,457 1,135 22,333
Undeveloped 553 410 4,705 421 3,304 1,410 353 1,332 4,529 22,567
2,602 473 15,375 1,029 13,357 2,400 1,161 2,339 5,664 44,900
Al 31 Decenber 2003
Developed 1,322 61 9,059 659 4,314 1,050 1,560 1,273 1,337 22,190
Undeveloped 532 402 5,473 463 3,457 1,564 653 1,419 4,000 23,013
2,404 463 14,532 1,127 13,271 2,614 2,213 2,697 5,337 45,203
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
b
ncludes 193 billion cubic leel ol nalural gas consuned in operalions, 149 billion cubic leel in subsidiaries, 44 billion cubic leel in equilyaccounled enlilies and excludes 17 billion cubic leel ol produced
nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
c
ncludes 3,103 billion cubic leel ol nalural gas in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 131 billion cubic leel ol nalural gas in respecl ol lhe 5.92' ninorily inleresl in TKBP.
e
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
242 BP Annual Feporl and Forn 20F 2010
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Movements in estimated net proved reserves DPOUJOVFE
nillion barrels ol oil equivalenl
TotaI hydrocarbons
a
2003
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2003
Developed 767 116 3,722 113 631 427 - 340 240 6,361
Undeveloped 219 239 2,077 74 1,576 593 - 591 353 6,222
936 355 5,799 192 2,207 1,020 - 931 1,093 12,533
Changes allribulable lo
Fevisions ol previous eslinales 20 (12 (569 10 (71 239 - 194 67 (72
nproved recovery 52 30 410 3 36 13 - 61 4 614
Purchases ol reservesinplace - - 32 - - - - - - 32
Discoveries and exlensions - - 153 22 163 137 - 7 - 542
Produclion
b l
(115 (13 (334 (20 (136 (135 - (94 (35 (937
Sales ol reservesinplace - - - - (200 - - - - (200
(43 - (303 15 (253 359 - 163 36 (21
Al 31 Decenber 2003
c
Developed 724 91 3,279 126 617 645 - 335 332 6,249
Undeveloped 219 264 2,217 31 1,337 734 - 714 747 6,313
943 355 5,496 207 1,954 1,379 - 1,099 1,129 12,562
Equilyaccounled enlilies (BP share
g
Al 1 January 2003
Developed - - - - 533 - 2,233 606 - 3,422
Undeveloped - - - - 336 - 1,199 224 - 1,309
- - - - 969 - 3,432 330 - 5,231
Changes allribulable lo
Fevisions ol previous eslinales - - - - (20 42 436 (1 - 457
nproved recovery - - - - 115 - - 2 - 117
Purchases ol reservesinplace - - - - 200 - - - - 200
Discoveries and exlensions - - - - 46 - 26 - - 72
Produclion
b l
- - - - (66 - (341 (34 - (491
Sales ol reservesinplace - - - - - - (1 - - (1
- - - - 275 42 120 (33 - 354
Al 31 Decenber 2003
d
Developed - - - - 653 - 2,495 529 - 3,632
Undeveloped - - - - 536 42 1,057 213 - 1,903
- - - - 1,244 42 3,552 747 - 5,535
Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2003
Developed 767 116 3,722 113 1,214 427 2,233 946 240 9,733
Undeveloped 219 239 2,077 74 1,962 593 1,199 315 353 3,031
936 355 5,799 192 3,176 1,020 3,432 1,761 1,093 17,314
Al 31 Decenber 2003
Developed 724 91 3,279 126 1,275 645 2,495 914 332 9,931
Undeveloped 219 264 2,217 31 1,923 776 1,057 932 747 3,216
943 355 5,496 207 3,193 1,421 3,552 1,346 1,129 13,147
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.
Excludes CLs lron processing planls in which an inleresl is held ol 29 lhousand barrels ol oil equivalenl a day.
c
ncludes 307 nillion barrels ol CLs. Also includes 557 nillion barrels ol oil equivalenl in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
ncludes 36 nillion barrels ol CLs. Also includes 239 nillion barrels ol oil equivalenl in respecl ol lhe ninorily inleresl in TKBP.
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 54 nillion barrels ol oil equivalenl upon which a nel prolls royally will be payable.
l
ncludes 33 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 25 nillion barrels ol oil equivalenl in subsidiaries, 3 nillion barrels ol oil equivalenl in equilyaccounled enlilies and
excludes 3 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
BP Annual Feporl and Forn 20F 2010 243
Supplenenlary inlornalion on oil and nalural gas (unaudiled
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves
The lollowing lables sel oul lhe slandardized neasure ol discounled lulure nel cash Hows, and changes lhere in, relaling lo crude oil and nalural gas
produclion lron lhe groups eslinaled proved reserves. This inlornalion is prepared in conpliance wilh FASB Oil and Cas Disclosures requirenenls.
Fulure nel cash Hows have been prepared on lhe basis ol cerlain assunplions which nay or nay nol be realized. These include lhe lining ol lulure
produclion, lhe eslinalion ol crude oil and nalural gas reserves and lhe applicalion ol average crude oil and nalural gas prices and exchange rales lron lhe
previous 12 nonlhs. Furlhernore, bolh proved reserves eslinales and produclion lorecasls are subjecl lo revision as lurlher lechnical inlornalion
becones available and econonic condilions change. BP caulions againsl relying on lhe inlornalion presenled because ol lhe highly arbilrary nalure ol lhe
assunplions on which il is based and ils lack ol conparabilily wilh lhe hislorical cosl inlornalion presenled in lhe lnancial slalenenls.
$ nillion
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US America Russia Asia
Al 31 Decenber 2010
Subsidiaries
Fulure cash inHows
a
73,100 25,800 264,800 200 29,300 70,800 - 52,500 42,300 558,800
Fulure produclion cosl
b
25,700 9,800 111,400 200 6,800 14,000 - 13,400 12,800 194,100
Fulure developnenl cosl
b
7,400 2,500 24,300 - 6,100 14,600 - 9,900 3,100 67,900
Fulure laxalion
c
19,900 8,100 41,900 - 8,200 14,100 - 7,000 6,200 105,400
Fulure nel cash Hows 20,100 5,400 87,200 - 8,200 28,100 - 22,200 20,200 191,400
10' annual discounl
d
9,800 2,300 45,500 - 3,300 11,900 - 8,200 10,300 91,300
Slandardized neasure ol discounled
lulure nel cash Hows
e
10,300 3,100 41,700 - 4,900 16,200 - 14,000 9,900 100,100
Equilyaccounled enlilies (BP share
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Fulure cash inHows
a
- - - 9,700 45,500 - 110,500 31,000 - 196,700
Fulure produclion cosl
b
- - - 4,500 19,200 - 80,900 26,500 - 131,100
Fulure developnenl cosl
b
- - - 2,000 4,300 - 11,000 2,800 - 20,100
Fulure laxalion
c
- - - 800 7,500 - 3,900 200 - 12,400
Fulure nel cash Hows - - - 2,400 14,500 - 14,700 1,500 - 33,100
10' annual discounl
d
- - - 2,400 8,700 - 6,100 700 - 17,900
Slandardized neasure ol discounled
nel cash Hows
g h
lulure - - - - 5,800 - 8,600 800 - 15,200
Tolal subsidiaries and equilyaccounled enlilies
Slandardized neasure ol discounled
lulure nel cash Hows
j
10,300 3,100 41,700 - 10,700 16,200 8,600 14,800 9,900 115,300
The lollowing are lhe principal sources ol change in lhe slandardized neasure ol discounled lulure nel cash Hows:
$ nillion
Equity-accounted TotaI subsidiaries and
Subsidiaries entities (BP share) equity-accounted entities
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (26,600) (4,900) (31,500)
Developnenl cosls lor lhe currenl year as eslinaled in previous year 10,400 2,000 12,400
Exlensions, discoveries and inproved recovery, less relaled cosls 9,600 1,600 11,200
el changes in prices and produclion cosl 52,800 1,900 54,700
Fevisions ol previous reserves eslinales (9,200) 200 (9,000)
el change in laxalion (13,400) (300) (13,700)
Fulure developnenl cosls (4,300) (1,400) (5,700)
el change in purchase and sales ol reservesinplace (1,500) - (1,500)
Addilion ol 10' annual discounl 7,500 1,500 9,000
Tolal change in lhe slandardized neasure during lhe year
i
25,300 600 25,900
a
The narker prices used were Brenl $79.02/bbl, Henry Hub $4.37/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on lhe conlinualion ol exisling econonic condilions. Fulure
deconnissioning cosls are included.
c
Taxalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
Fulure nel cash Hows lron oil and nalural gas produclion are discounled al 10' regardless ol lhe group assessnenl ol lhe risk associaled wilh ils producing aclivilies.
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $1,200 nillion.
l
T he slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol
lhose enlilies.
g
inorily inleresl in TKBP anounled lo $600 nillion.
h
o equilyaccounled lulure cash Hows in Alrica because proved reserves are received as a resull ol conlraclual arrangenenls, wilh no associaled cosls.
i
T olal change in lhe slandardized neasure during lhe year includes lhe ellecl ol exchange rale novenenls.
j
ncludes lulure nel cash Hows lor assels held lor sale al 31 Decenber 2010.
244 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves DPOUJOVFE
$ nillion
2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Al 31 Decenber 2009
Subsidiaries
Fulure cash inHows
a
50,300 17,700 204,000 4,900 26,400 53,400 - 36,100 32,500 430,300
Fulure produclion cosl
b
20,000 3,000 91,300 2,700 6,700 12,000 - 9,200 11,000 160,900
Fulure developnenl cosl
b
5,000 2,500 24,900 1,000 5,600 12,200 - 6,400 3,100 60,700
Fulure laxalion
c
12,900 3,700 27,300 200 5,300 11,300 - 4,700 4,500 70,400
Fulure nel cash Hows 12,900 3,500 60,500 1,000 3,300 22,900 - 15,300 13,900 133,300
10' annual discounl
d
5,300 1,600 29,500 500 3,200 9,300 - 6,300 7,300 64,000
Slandardized neasure ol discounled
lulure nel cash Hows
e
7,100 1,900 31,000 500 5,100 13,100 - 9,500 6,600 74,300
Equilyaccounled enlilies (BP share
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Fulure cash inHows
a
- - - - 37,700 - 96,700 30,000 - 164,400
Fulure produclion cosl
b
- - - - 17,000 - 65,200 25,200 - 107,400
Fulure developnenl cosl
b
- - - - 4,000 - 10,200 3,100 - 17,300
Fulure laxalion
c
- - - - 5,200 - 4,300 100 - 9,600
Fulure nel cash Hows - - - - 11,500 - 17,000 1,600 - 30,100
10' annual discounl
d
- - - - 6,300 - 7,900 300 - 15,500
Slandardized neasure ol discounled
lulure nel cash Hows
g h
- - - - 4,700 - 9,100 300 - 14,600
Tolal subsidiaries and equilyaccounled enlilies
Slandardized neasure ol discounled
lulure nel cash Hows 7,100 1,900 31,000 500 9,300 13,100 9,100 10,300 6,600 39,400
The lollowing are lhe principal sources ol change in lhe slandardized neasure ol discounled lulure nel cash Hows:
$ nillion
Equilyaccounled Tolal subsidiaries and
Subsidiaries enlilies (BP share equilyaccounled enlilies
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (13,900 (3,400 (22,300
Developnenl cosls lor lhe currenl year as eslinaled in previous year 11,700 2,100 13,300
Exlensions, discoveries and inproved recovery, less relaled cosls 3,500 1,600 10,100
el changes in prices and produclion cosl 37,200 5,900 43,100
Fevisions ol previous reserves eslinales (4,300 (200 (4,500
el change in laxalion (10,600 (1,600 (12,200
Fulure developnenl cosls (600 900 300
el change in purchase and sales ol reservesinplace (100 (900 (1,000
Addilion ol 10' annual discounl 4,700 900 5,600
Tolal change in lhe slandardized neasure during lhe year
i
27,600 5,300 32,900
a
T he narker prices used were Brenl $59.91/bbl, Henry Hub $3.32/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on lhe conlinualion ol exisling econonic condilions. Fulure
deconnissioning cosls are included.
c
T axalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
Fulure nel cash Hows lron oil and nalural gas produclion are discounled al 10' regardless ol lhe group assessnenl ol lhe risk associaled wilh ils producing aclivilies.
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $1,300 nillion.
l
T he slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol lhose
enlilies.
g
inorily inleresl in TKBP anounled lo $600 nillion.
h
o equilyaccounled lulure cash Hows in Alrica because proved reserves are received as a resull ol conlraclual arrangenenls, wilh no associaled cosls.
i
T olal change in lhe slandardized neasure during lhe year includes lhe ellecl ol exchange rale novenenls.
BP Annual Feporl and Forn 20F 2010 245
Supplenenlary inlornalion on oil and nalural gas (unaudiled
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves DPOUJOVFE
$ nillion
2003
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Al 31 Decenber 2003
Subsidiaries
Fulure cash inHows
a
36,400 13,300 165,300 6,400 26,300 40,400 - 31,400 24,200 344,700
Fulure produclion cosl
b
13,100 6,300 30,400 2,700 7,200 11,600 - 11,300 10,700 143,300
Fulure developnenl cosl
b
3,300 2,900 25,600 1,300 7,200 10,900 - 7,500 3,200 61,900
Fulure laxalion
c
7,300 2,300 17,500 500 5,500 6,600 - 2,400 2,300 44,900
Fulure nel cash Hows 7,700 2,300 42,300 1,900 6,400 11,300 - 9,700 7,500 39,100
10' annual discounl
d
2,200 1,200 21,000 1,000 2,900 5,500 - 4,200 3,900 41,900
Slandardized neasure ol discounled
lulure nel cash Hows
e
5,500 1,100 21,300 900 3,500 5,300 - 5,500 3,600 47,200
Equilyaccounled enlilies (BP share
g
Slandardized neasure ol discounled
lulure nel cash Hows
h
- - - - 3,600 - 4,300 900 - 9,300
Tolal subsidiaries and equilyaccounled enlilies
Slandardized neasure ol discounled
lulure nel cash Hows
e
5,500 1,100 21,300 900 7,100 5,300 4,300 6,400 3,600 56,500
The lollowing are lhe principal sources ol change in lhe slandardized neasure ol discounled lulure nel cash Hows:
$ nillion
2003
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (43,600
Developnenl cosls lor lhe currenl year as eslinaled in previous year 9,400
Exlensions, discoveries and inproved recovery, less relaled cosls 4,400
el changes in prices and produclion cosl (146,300
Fevisions ol previous reserves eslinales 1,200
el change in laxalion 69,400
Fulure developnenl cosls (7,400
el change in purchase and sales ol reservesinplace (200
Addilion ol 10' annual discounl 14,600
Tolal change in lhe slandardized neasure during lhe year ol subsidiaries
l
(99,000
a
T he yearend narker prices used were 2003 Brenl $36.55/bbl, Henry Hub $5.63/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on yearend cosl levels and assune conlinualion ol exisling econonic
condilions. Fulure deconnissioning cosls are included.
c
Taxalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
Fulure nel cash Hows lron oil and nalural gas produclion are discounled al 10' regardless ol lhe group assessnenl ol lhe risk associaled wilh ils producing aclivilies.
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $900 nillion al 31 Decenber 2003.
l
T olal change in lhe slandardized neasure during lhe year includes lhe ellecl ol exchange rale novenenls.
g
The slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol lhose
enlilies.
h
inorily inleresl in TKBP anounled lo $300 nillion al 31 Decenber 2003.
246 BP Annual Feporl and Forn 20F 2010
Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OperationaI and statisticaI information
The lollowing lables presenl operalional and slalislical inlornalion relaled lo produclion, drilling, produclive wells and acreage. Figures include anounls
allribulable lo assels held lor sale.
Crude oiI and naturaI gas production
The lollowing lable shows crude oil and nalural gas produclion lor lhe years ended 31 Decenber 2010, 2009 and 2003.
Production for the year
a
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Subsidiaries
Crude oil
b
lhousand barrels per day
2010 137 40 594 7 54 246 - 119 32 1,229
2009 163 40 665 3 61 304 - 123 31 1,400
2003 173 43 533 9 66 277 - 123 29 1,263
alural gas
c
nillion cubic leel per day
2010 472 15 2,184 202 2,544 556 - 574 785 7,332
2009 613 16 2,316 263 2,492 621 - 610 514 7,450
2003 759 23 2,157 245 2,532 434 - 696 331 7,277
Equilyaccounled enlilies (BP share
Crude oil
b
lhousand barrels per day
2010 - - - - 98 - 856 191 - 1,145
2009 - - - - 101 - 340 194 - 1,135
2003 - - - - 92 - 326 220 - 1,133
alural gas
c
nillion cubic leel per day
2010 - - - - 399 - 640 30 - 1,069
2009 - - - - 392 - 601 42 - 1,035
2003 - - - - 454 - 564 39 - 1,057
a
Produclion excludes royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales
arrangenenls independenlly.
b
Crude oil includes nalural gas liquids and condensale.
c
alural gas produclion excludes gas consuned in operalions.
Productive oiI and gas weIIs and acreage
The lollowing lables show lhe nunber ol gross and nel produclive oil and nalural gas wells and lolal gross and nel developed and undeveloped oil and
nalural gas acreage in which lhe group and ils equilyaccounled enlilies had inleresls as al 31 Decenber 2010. A gross well or acre is one in which a
whole or lraclional working inleresl is owned, while lhe nunber ol nel wells or acres is lhe sun ol lhe whole or lraclional working inleresls in gross wells
or acres. Produclive wells are producing wells and wells capable ol produclion. Developed acreage is lhe acreage wilhin lhe boundary ol a leld, on which
developnenl wells have been drilled, which could produce lhe reserves, while undeveloped acres are lhose on which wells have nol been drilled or
conpleled lo a poinl lhal would pernil lhe produclion ol connercial quanlilies, whelher or nol such acres conlain proved reserves.
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
unber ol produclive wells al
31 Decenber 2010
Oil wells
a
- gross 251 84 2,709 7 3,705 596 20,235 1,889 13 29,489
- nel 130 32 1,121 3 2,063 454 9,081 424 2 13,310
Cas wells
b
- gross 281 - 23,041 366 498 106 63 639 68 25,062
- nel 138 - 12,581 285 167 42 31 284 13 13,541
a
ncludes approxinalely 3,939 gross (1,730 nel nulliple conplelion wells (nore lhan one lornalion producing inlo lhe sane well bore.
b
ncludes approxinalely 2,623 gross (1,673 nel nulliple conplelion wells. l one ol lhe nulliple conplelions in a well is an oil conplelion, lhe well is classiled as an oil well.
BP Annual Feporl and Forn 20F 2010 247
Supplenenlary inlornalion on oil and nalural gas (unaudiled
www.bp.con/downloads/oilandgasnole
Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Oil and nalural gas acreage al 31 Decenber 2010 Thousands ol acres
Developed - gross 346 65 6,920 198 1,738 497 2,282 2,434 162 14,642
- nel 189 21 4,184 157 471 195 885 935 35 7,072
Undeveloped
a
- gross 1,311 186 6,970 7,185 12,434 21,373 32,137 18,366 7,330 107,292
- nel 775 79 4,663 4,380 6,398 16,072 15,475 8,955 2,796 59,593
a
Undeveloped acreage includes leases and concessions.
Net oiI and gas weIIs compIeted or abandoned
The lollowing lable shows lhe nunber ol nel produclive and dry exploralory and developnenl oil and nalural gas wells conpleled or abandoned in lhe
years indicaled by lhe group and ils equilyaccounled enlilies. Produclive wells include wells in which hydrocarbons were encounlered and lhe drilling or
conplelion ol which, in lhe case ol exploralory wells, has been suspended pending lurlher drilling or evalualion. A dry well is one lound lo be incapable ol
producing hydrocarbons in sullcienl quanlilies lo juslily conplelion.
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
2010
Exploralory
Produclive - 0.2 39.3 - 1.3 1.2 10.5 2.8 0.3 55.6
Dry 0.7 - 0.3 - 0.9 1.4 4.0 - - 7.3
Developnenl
Produclive 6.4 1.2 260.0 31.7 105.7 18.9 364.3 53.3 - 841.5
Dry 1.7 - 0.5 - 1.2 2.7 - 2.4 - 8.5
2009
Exploralory
Produclive 0.1 - 47.2 - 3.0 4.5 7.0 5.3 0.6 67.7
Dry 0.2 - 4.2 - - 1.4 4.5 6.0 0.2 16.5
Developnenl
Produclive 9.3 1.5 403.3 17.9 135.4 20.3 293.0 45.3 1.6 929.1
Dry - - 3.3 - - 0.5 4.0 0.4 0.6 3.3
2003
Exploralory
Produclive 0.3 - 2.4 - 4.4 4.3 12.5 0.5 0.6 25.5
Dry - 0.5 0.9 0.1 0.4 2.6 23.0 0.5 0.4 23.4
Developnenl
Produclive 6.6 0.5 379.3 23.3 112.5 13.6 10.0 45.4 4.5 606.2
Dry 0.2 - 1.1 0.9 2.9 1.5 19.5 2.1 - 23.2
DriIIing and production activities in progress
The lollowing lable shows lhe nunber ol exploralory and developnenl oil and nalural gas wells in lhe process ol being drilled by lhe group and ils equily
accounled enlilies as ol 31 Decenber 2010. Suspended developnenl wells and longlern suspended exploralory wells are also included in lhe lable.
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Al 31 Decenber 2010
Exploralory
Cross 1.0 - 211.0 3.0 1.0 3.0 11.0 3.0 -
233.0
el 0.2 - 45.2 1.5 - 1.6 5.5 1.2 - 55.2
Developnenl
Cross 11.0 - 375.0 - 23.0 34.0 88.0 20.0 - 551.0
el 5.5 - 140.6 - 9.5 10.8 39.7 6.6 - 212.7
243 BP Annual Feporl and Forn 20F 2010
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The regislranl hereby cerliles lhal il neels all ol lhe requirenenls lor lling on Forn 20F and lhal il has duly caused and aulhorized lhe undersigned lo
sign lhis annual reporl on ils behall.
BP p.l.c.
(Fegislranl
/s/D.J. JACKSON
D.J. Jackson
Conpany Secrelary
Daled 2 arch 2011
BP Annual Feporl and Forn 20F 2010 249
250 BP Annual Feporl and Forn 20-F 2010
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Parent company nancial statements of BP p.l.c.
Statement of directors responsibilities in respect of the parent company
nancial statements
The directors are responsible for preparing the nancial statements in accordance with applicable United Kingdom law and United Kingdom generally
accepted accounting practice.
Company law requires the directors to prepare nancial statements for each nancial year that give a true and fair view of the state of affairs of the
company. In preparing these nancial statements, the directors are required:
To select suitable accounting policies and then apply them consistently.
To make judgements and estimates that are reasonable and prudent.
To state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the nancial
statements.
To prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The
directors are also responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the nancial position of the
company and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as dened by Section 418(3) of the
Companies Act 2006) of which the companys auditors are unaware, and the directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that the companys auditors are aware of that information.
The parent company nancial statements of BP p.l.c. on pages PC1 PC16 do not form part of BPs Annual Report on Form 20-F as led with the SEC.
BP Annual Report and Form 20-F 2010 PC1
Parenl conpany lnancial slalenenls ol BP p.l.c.
ndependenl audilors reporl lo lhe nenbers ol BP p.l.c.
ve have audiled lhe parenl conpany lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 which conprise lhe conpany balance sheel,
lhe conpany cash How slalenenl, lhe conpany slalenenl ol lolal recognized gains and losses and lhe relaled noles 1 lo 14. The lnancial reporling
lranework lhal has been applied in lheir preparalion is applicable law and Uniled Kingdon accounling slandards (Uniled Kingdon generally accepled
accounling praclice.
This reporl is nade solely lo lhe conpanys nenbers, as a body, in accordance wilh Chapler 3 ol Parl 16 ol lhe Conpanies Acl 2006. Our audil
work has been underlaken so lhal we nighl slale lo lhe conpanys nenbers lhose nallers we are required lo slale lo lhen in an audilors reporl and
lor no olher purpose. To lhe lullesl exlenl pernilled by law, we do nol accepl or assune responsibilily lo anyone olher lhan lhe conpany and lhe
conpanys nenbers as a body, lor our audil work, lor lhis reporl, or lor lhe opinions we have lorned.
Respective responsibiIities of directors and auditors
As explained nore lully in lhe Slalenenl ol direclors responsibililies in respecl ol lhe parenl conpany lnancial slalenenls sel oul on page PC1, lhe
direclors are responsible lor lhe preparalion ol lhe parenl conpany lnancial slalenenls and lor being salisled lhal lhey give a lrue and lair view. Our
responsibilily is lo audil lhe parenl conpany lnancial slalenenls in accordance wilh applicable law and nlernalional Slandards on Audiling (UK and
reland. Those slandards require us lo conply wilh lhe Audiling Praclices Boards Elhical Slandards lor Audilors.
Scope of the audit of the hnanciaI statements
An audil involves oblaining evidence aboul lhe anounls and disclosures in lhe lnancial slalenenls sullcienl lo give reasonable assurance lhal lhe
lnancial slalenenls are lree lron nalerial nisslalenenl, whelher caused by lraud or error. This includes an assessnenl ol: whelher lhe accounling
policies are appropriale lo lhe parenl conpanys circunslances and have been consislenlly applied and adequalely disclosed, lhe reasonableness ol
signilcanl accounling eslinales nade by lhe direclors, and lhe overall presenlalion ol lhe lnancial slalenenls.
Opinion on hnanciaI statements
n our opinion lhe parenl conpany lnancial slalenenls:
give a lrue and lair view ol lhe slale ol lhe conpanys allairs as al 31 Decenber 2010,
have been properly prepared in accordance wilh Uniled Kingdon generally accepled accounling praclice, and
have been prepared in accordance wilh lhe requirenenls ol lhe Conpanies Acl 2006.
Opinion on other matters prescribed by the Companies Act 2006
n our opinion:
lhe parl ol lhe Direclors renuneralion reporl lo be audiled has been properly prepared in accordance wilh lhe Conpanies Acl 2006, and
lhe inlornalion given in lhe Direclors Feporl lor lhe lnancial year lor which lhe parenl conpany lnancial slalenenls are prepared is consislenl wilh
lhe parenl conpany lnancial slalenenls.
Matters on which we are required to report by exception
ve have nolhing lo reporl in respecl ol lhe lollowing nallers where lhe Conpanies Acl 2006 requires us lo reporl lo you il, in our opinion:
adequale accounling records have nol been kepl by lhe parenl conpany, or relurns adequale lor our audil have nol been received lron branches nol
visiled by us, or
lhe parenl conpany lnancial slalenenls and lhe parl ol lhe Direclors renuneralion reporl lo be audiled are nol in agreenenl wilh lhe accounling
records and relurns, or
cerlain disclosures ol direclors renuneralion speciled by law are nol nade, or
we have nol received all lhe inlornalion and explanalions we require lor our audil.
Other matter
ve have reporled separalely on lhe consolidaled lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010. Thal reporl includes an
enphasis ol naller on lhe signilcanl uncerlainly over provisions and conlingencies relaled lo lhe Cull ol exico oil spill.
Ernst & Young LLP
Allisler vilson (Senior slalulory audilor
lor and on behall ol Ernsl & Young LLP, Slalulory Audilor
London
2 arch 2011
The nainlenance and inlegrily ol lhe BP p.l.c. websile are lhe responsibilily ol lhe direclors, lhe work carried oul by lhe audilors does nol involve consideralion ol lhese nallers and, accordingly, lhe
audilors accepl no responsibilily lor any changes lhal nay have occurred lo lhe lnancial slalenenls since lhey were inilially presenled on lhe websile.
Legislalion in lhe Uniled Kingdon governing lhe preparalion and disseninalion ol lnancial slalenenls nay diller lron legislalion in olher jurisdiclions.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC2 BP Annual Feporl and Forn 20F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
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Conpany balance sheel
Al 31 Decenber $ nillion
ole 2010 2009
Fixed assels
nveslnenls
Subsidiary underlakings 3 122,649 93,063
Associaled underlakings 3 2
Tolal lxed assels 122,651 93,065
Currenl assels
Deblors - anounls lalling due:
vilhin one year 4 14,444 30,709
Aller nore lhan one year 4 38 1,173
Delerred laxalion 2 70 130
Cash al bank and in hand 4 23
14,556 32,045
Credilors - anounls lalling due wilhin one year 5 2,385 2,401
el currenl assels 12,171 29,644
Tolal assels less currenl liabililies 134,822 122,709
Credilors - anounls lalling due aller nore lhan one year 5 4,293 4,323
el assels excluding pension plan surplus 130,529 113,331
Delned benell pension plan surplus 6 1,537 912
Delned benell pension plan delcil 6 (147) (120
el assels 131,919 119,173
Fepresenled by
Capilal and reserves
Calledup share capilal 7 5,183 5,179
Share preniun accounl 3 9,987 9,347
Capilal redenplion reserve 3 1,072 1,072
erger reserve 3 26,509 26,509
Own shares 3 (126) (214
Treasury shares 3 (21,085) (21,303
Sharebased paynenl reserve 3 1,585 1,519
Proll and loss accounl 3 108,794 96,564
131,919 119,173
The lnancial slalenenls on pages PC3PC16 were approved and signed by lhe chairnan and group chiel execulive on 2 arch 2011 having been duly
aulhorized lo do so by lhe board ol direclors:
C-H Svanberg Chairnan
R W DudIey Croup Chiel Execulive
2
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC3
Parent company nancial statements of BP p.l.c.
Company cash ow statement
For the year ended 31 December $ million
Note 2010 2009 2008
Net cash (outow) inow from operating activities 9 17,231 (20,773) (4,399)
Servicing of nance and returns on investments
Interest received 175 137 167
Interest paid (31) (26) (167)
Dividends received 14,739 35,187 17,066
Net cash inow from servicing of nance and returns on investments 14,883 35,298 17,066
Tax paid (3) (11) (2)
Capital expenditure and nancial investment
Payments for xed assets investments (29,636) (4,236)
Proceeds from sale of xed assets investments 311 9
Net cash outow for capital expenditure and nancial investment (29,325) (4,227)
Equity dividends paid (2,627) (10,483) (10,342)
Net cash (outow) inow before nancing 159 (196) 2,323
Financing
Other share-based payment movements (183) 213 358
Repurchase of ordinary share capital (2,914)
Net cash inow (outow) from nancing (183) 213 (2,556)
Increase (decrease) in cash 9 (24) 17 (233)
Company statement of total recognized gains and losses
For the year ended 31 December $ million
Note 2010 2009 2008
Prot for the year 14,776 34,524 17,715
Currency translation differences (45) 104 (710)
Actuarial gain (loss) relating to pensions 6 457 (585) (5,122)
Tax on actuarial (gain) loss relating to pensions 2 (123) 164 1,434
Total recognized gains and losses relating to the year 15,065 34,207 13,317
The parent company nancial statements of BP p.l.c. on pages PC1 PC16 do not form part of BPs Annual Report on Form 20-F as led with the SEC.
PC4 BP Annual Report and Form 20-F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
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oles on lnancial slalenenls
1. Accounling policies
Accounting standards
These lnancial slalenenls are prepared in accordance wilh applicable UK accounling slandards.
Accounting convention
The lnancial slalenenls are prepared under lhe hislorical cosl convenlion.
Foreign currency transactions
Funclional currency is lhe currency ol lhe prinary econonic environnenl in which an enlily operales and is nornally lhe currency in which lhe enlily
prinarily generales and expends cash. Transaclions in loreign currencies are inilially recorded in lhe lunclional currency by applying lhe rale ol exchange
ruling al lhe dale ol lhe lransaclion. onelary assels and liabililies denoninaled in loreign currencies are relranslaled inlo lhe lunclional currency al lhe
rale ol exchange ruling al lhe balance sheel dale. Any resulling exchange dillerences are included in proll lor lhe year. Exchange adjuslnenls arising
when lhe opening nel assels and lhe prolls lor lhe year relained by nonUS dollar lunclional currency branches are lranslaled inlo US dollars are laken lo
a separale conponenl ol equily and reporled in lhe slalenenl ol lolal recognized gains and losses.
Investments
nveslnenls in subsidiaries and associaled underlakings are recorded al cosl. The conpany assesses inveslnenls lor inpairnenl whenever evenls or
changes in circunslances indicale lhal lhe carrying value ol an inveslnenl nay nol be recoverable. l any such indicalion ol inpairnenl exisls, lhe
conpany nakes an eslinale ol ils recoverable anounl. vhere lhe carrying anounl ol an inveslnenl exceeds ils recoverable anounl, lhe inveslnenl is
considered inpaired and is wrillen down lo ils recoverable anounl.
Share-based payments
Equilysellled lransaclions
The cosl ol equilysellled lransaclions wilh enployees is neasured by relerence lo lhe lair value al lhe dale al which equily inslrunenls are granled and
is recognized as an expense over lhe vesling period, which ends on lhe dale on which lhe relevanl enployees becone lully enlilled lo lhe award. Fair
value is delernined by using an appropriale valualion nodel. n valuing equilysellled lransaclions, no accounl is laken ol any vesling condilions, olher
lhan condilions linked lo lhe price ol lhe shares ol lhe conpany (narkel condilions. onvesling condilions, such as lhe condilion lhal enployees
conlribule lo a savingsrelaled plan, are laken inlo accounl in lhe granldale lair value, and lailure lo neel a nonvesling condilion is lrealed as a
cancellalion, where lhis is wilhin lhe conlrol ol lhe enployee.
o expense is recognized lor awards lhal do nol ullinalely vesl, excepl lor awards where vesling is condilional upon a narkel condilion, which are
lrealed as vesling irrespeclive ol whelher or nol lhe narkel condilion is salisled, provided lhal all olher perlornance condilions are salisled.
Al each balance sheel dale belore vesling, lhe cunulalive expense is calculaled, represenling lhe exlenl lo which lhe vesling period has expired
and nanagenenls besl eslinale ol lhe achievenenl or olherwise ol nonnarkel condilions and lhe nunber ol equily inslrunenls lhal will ullinalely
vesl or, in lhe case ol an inslrunenl subjecl lo a narkel condilion, be lrealed as vesling as described above. The novenenl in cunulalive expense since
lhe previous balance sheel dale is recognized in lhe incone slalenenl, wilh a corresponding enlry in equily.
vhen lhe lerns ol an equilysellled award are nodiled or a new award is designaled as replacing a cancelled or sellled award, lhe cosl based on
lhe original award lerns conlinues lo be recognized over lhe original vesling period. n addilion, an expense is recognized over lhe renainder ol lhe new
vesling period lor lhe increnenlal lair value ol any nodilcalion, based on lhe dillerence belween lhe lair value ol lhe original award and lhe lair value ol
lhe nodiled award, bolh as neasured on lhe dale ol lhe nodilcalion. o reduclion is recognized il lhis dillerence is negalive.
vhen an equilysellled award is cancelled, il is lrealed as il il had vesled on lhe dale ol cancellalion and any cosl nol yel recognized in lhe incone
slalenenl lor lhe award is expensed innedialely.
Cashsellled lransaclions
The cosl ol cashsellled lransaclions is neasured al lair value and recognized as an expense over lhe vesling period, wilh a corresponding liabilily
recognized on lhe balance sheel.
Pensions
The cosl ol providing benells under lhe delned benell plans is delernined separalely lor each plan using lhe projecled unil credil nelhod, which
allribules enlillenenl lo benells lo lhe currenl period (lo delernine currenl service cosl and lo lhe currenl and prior periods (lo delernine lhe presenl
value ol lhe delned benell obligalion. Pasl service cosls are recognized innedialely when lhe conpany becones connilled lo a change in pension plan
design. vhen a selllenenl (elininaling all obligalions lor benells already accrued or a curlailnenl (reducing lulure obligalions as a resull ol a nalerial
reduclion in lhe schene nenbership or a reduclion in lulure enlillenenl occurs, lhe obligalion and relaled plan assels are reneasured using currenl
acluarial assunplions and lhe resullanl gain or loss is recognized in lhe incone slalenenl during lhe period in which lhe selllenenl or curlailnenl occurs.
The inleresl elenenl ol lhe delned benell cosl represenls lhe change in presenl value ol schene obligalions resulling lron lhe passage ol line,
and is delernined by applying lhe discounl rale lo lhe opening presenl value ol lhe benell obligalion, laking inlo accounl nalerial changes in lhe
obligalion during lhe year. The expecled relurn on plan assels is based on an assessnenl nade al lhe beginning ol lhe year ol longlern narkel relurns
on plan assels, adjusled lor lhe ellecl on lhe lair value ol plan assels ol conlribulions received and benells paid during lhe year. The dillerence belween
lhe expecled relurn on plan assels and lhe inleresl cosl is recognized in lhe incone slalenenl as olher lnance incone or expense.
Acluarial gains and losses are recognized in lull wilhin lhe slalenenl ol lolal recognized gains and losses in lhe year in which lhey occur.
The delned benell pension plan surplus or delcil in lhe balance sheel conprises lhe lolal lor each plan ol lhe presenl value ol lhe delned
benell obligalion (using a discounl rale based on high qualily corporale bonds, less lhe lair value ol plan assels oul ol which lhe obligalions are lo be
sellled direclly. Fair value is based on narkel price inlornalion and, in lhe case ol quoled securilies, is lhe published bid price. The surplus or delcil, nel ol
laxalion lhereon, is presenled separalely above lhe lolal lor nel assels on lhe lace ol lhe balance sheel.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC5
Parenl conpany lnancial slalenenls ol BP p.l.c.
1. Accounling policies conlinued
Deferred taxation
Delerred lax is recognized in respecl ol all lining dillerences lhal have originaled bul nol reversed al lhe balance sheel dale where lransaclions or evenls
have occurred al lhal dale lhal will resull in an obligalion lo pay nore, or a righl lo pay less, lax in lhe lulure.
Delerred lax assels are recognized only lo lhe exlenl lhal il is considered nore likely lhan nol lhal lhere will be suilable laxable prolls lron which
lhe underlying lining dillerences can be deducled.
Delerred lax is neasured on an undiscounled basis al lhe lax rales lhal are expecled lo apply in lhe periods in which lining dillerences reverse,
based on lax rales and laws enacled or subslanlively enacled al lhe balance sheel dale.
Use of estimates
The preparalion ol accounls in conlornily wilh generally accepled accounling praclice requires nanagenenl lo nake eslinales and assunplions lhal
allecl lhe reporled anounls ol assels and liabililies al lhe dale ol lhe accounls and lhe reporled anounls ol revenues and expenses during lhe reporling
period. Aclual oulcones could diller lron lhese eslinales.
2. Taxalion
$ nillion
Tax incIuded in the statement of totaI recognized gains and Iosses 2010 2009 2003
Delerred lax
Originalion and reversal ol lining dillerences in lhe currenl year 123 (164 (1,434
This conprises:
Acluarial (loss gain relaling lo pensions and olher poslrelirenenl benells 123 (164 (1,434
Deferred tax
Delerred lax liabilily
Pensions 480 279 399
Delerred lax assel
Olher laxable lining dillerences 70 130 77
el delerred lax liabilily 410 149 322
Analysis ol novenenls during lhe year
Al 1 January 149 322 1,335
Exchange adjuslnenls 45 47 (276
Charge (credil lor lhe year on ordinary aclivilies 93 (56 147
Charge (credil lor lhe year in lhe slalenenl ol lolal recognized gains and losses 123 (164 (1,434
Al 31 Decenber 410 149 322
3. Fixed assels - inveslnenls
$ nillion
Subsidiary Associated
undertakings undertakings
Shares Shares Loans TotaI
Cosl
Al 1 January 2010 93,137 2 2 93,141
Addilions
a
29,637 - - 29,637
Disposals (51) - - (51)
Al 31 Decenber 2010 122,723 2 2 122,727
Anounls provided
Al 1 January 2010 74 - 2 76
Al 31 Decenber 2010 74 - 2 76
Cosl
Al 1 January 2009 39,045 2 2 39,049
Adjuslnenls (116 - - (116
Addilions 4,203 - - 4,203
Al 31 Decenber 2009 93,137 2 2 93,141
Anounls provided
Al 1 January 2009 74 - 2 76
Al 31 Decenber 2009 74 - 2 76
el book anounl
Al 31 Decenber 2010 122,649 2 - 122,651
Al 31 Decenber 2009 93,063 2 - 93,065
a
ncludes $29,375 nillion relaled lo an equily injeclion in BP nlernalional Lld.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC6 BP Annual Feporl and Forn 20F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
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3. Fixed assels - inveslnenls conlinued
The nore inporlanl subsidiary underlakings ol lhe conpany al 31 Decenber 2010 and lhe percenlage holding ol ordinary share capilal (lo lhe nearesl
whole nunber are sel oul below. The principal counlry ol operalion is generally indicaled by lhe conpanys counlry ol incorporalion or by ils nane.
A conplele lisl ol inveslnenls in subsidiary underlakings, joinl venlures and associaled underlakings will be allached lo lhe conpanys annual relurn
nade lo lhe Fegislrar ol Conpanies.
Counlry ol
Subsidiary underlakings ' incorporalion Principal aclivilies
nlernalional
BP Clobal nveslnenls 100 England & vales nveslnenl holding
BP nlernalional 100 England & vales nlegraled oil operalions
BP Holdings orlh Anerica 100 England & vales nveslnenl holding
BP Corporale Holdings 100 England & vales nveslnenl holding
Burnah Caslrol 100 Scolland Lubricanls
The carrying value ol BP nlernalional Lld in lhe accounls ol lhe conpany al 31 Decenber 2010 was $59.63 billion (2009 $30.25 billion and 2003
$30.25 billion.
4. Deblors
$ nillion
2010 2009
Within After vilhin Aller
1 year 1 year 1 year 1 year
Croup underlakings 14,440 38 30,704 1,150
Olher 4 - 5 23
14,444 38 30,709 1,173
The carrying anounls ol deblors approxinale lheir lair value.
5. Credilors
$ nillion
2010 2009
Within After vilhin Aller
1 year 1 year 1 year 1 year
Croup underlakings 2,343 4,258 2,343 4,236
Accruals and delerred incone 23 35 27 74
Dividends 1 - 1 -
Olher 18 - 30 13
2,385 4,293 2,401 4,323
The carrying anounls ol credilors approxinale lheir lair value.
The nalurily prolle ol lhe lnancial liabililies included in lhe balance sheel al 31 Decenber is shown in lhe lable below. These anounls are included
wilhin Credilors - anounls lalling due aller nore lhan one year, and are denoninaled in US dollars.
Anounls lalling due aller one year include $4,236 nillion payable lo a group underlaking. This anounl is subjecl lo inleresl payable quarlerly al
LBOF plus 55 basis poinls.
$ nillion
2010 2009
Due wilhin
1 lo 2 years 41 33
2 lo 5 years 16 51
ore lhan 5 years 4,236 4,244
4,293 4,323
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC7
Parent company nancial statements of BP p.l.c.
6. Pensions
The primary pension arrangement in the UK is a funded nal salary pension plan under which retired employees draw the majority of their benet as an
annuity. With effect from 1 April 2010, BP closed its UK plan to new joiners other than some of those joining the North Sea SPU. The plan remains open
to ongoing accrual for those employees who had joined BP on or before 31 March 2010. The majority of new joiners have the option to join a dened
contribution plan.
The obligation and cost of providing the pension benets is assessed annually using the projected unit credit method. The date of the most recent
actuarial review was 31 December 2010. The principal plans are subject to a formal actuarial valuation every three years in the UK. The most recent formal
actuarial valuation of the main UK pension plan was as at 31 December 2008.
The material nancial assumptions used for estimating the benet obligations of the plans are set out below. The assumptions used to evaluate
accrued pension at 31 December in any year are used to determine pension expense for the following year, that is, the assumptions at 31 December
2010 are used to determine the pension liabilities at that date and the pension cost for 2011.
Financial assumptions 2010 2009 2008
Expected long-term rate of return 7.3 7.4 7.5
Discount rate for plan liabilities 5.5 5.8 6.3
Rate of increase in salaries 5.4 5.3 4.9
Rate of increase for pensions in payment 3.5 3.4 3.0
Rate of increase in deferred pensions 3.5 3.4 3.0
Ination 3.5 3.4 3.0
%
Our discount rate assumption is based on third-party AA corporate bond indices and we use yields that reect the maturity prole of the expected benet
payments. The ination rate assumption is based on the difference between the yields on index-linked and xed-interest long-term government bonds. The
ination assumptions are used to determine the rate of increase for pensions in payment and the rate of increase in deferred pensions.
Our assumption for the rate of increase in salaries is based on our ination assumption plus an allowance for expected long-term real salary
growth. This includes allowance for promotion-related salary growth of 0.4%. In addition to the nancial assumptions, we regularly review the
demographic and mortality assumptions. The mortality assumptions reect best practice in the UK, and have been chosen with regard to the latest
available published tables adjusted where appropriate to reect the experience of the group and an extrapolation of past longevity improvements into
the future.
Years
Mortality assumptions 2010 2009 2008
Life expectancy at age 60 for a male currently aged 60 26.1 26.0 25.9
Life expectancy at age 60 for a male currently aged 40 29.1 29.0 28.9
Life expectancy at age 60 for a female currently aged 60 28.7 28.6 28.5
Life expectancy at age 60 for a female currently aged 40 31.6 31.5 31.4
The market values of the various categories of asset held by the pension plan at 31 December are set out below.
The market value of pension assets at the end of 2010 is higher when compared with 2009 due to an increase in the market value of investments
when expressed in their local currencies and partially offset by a decrease in value that arises from changes in exchange rates (decreasing the reported
value of investments when expressed in US dollars). Movements in the value of plan assets during the year are shown in detail below.
$ million
2010 2009 2008
Expected Expected Expected
long-term long-term long-term
rate of Market rate of Market rate of Market
return value return value return value
% $ million % $ million % $ million
Equities 8.0 17,703 8.0 16,148 8.0 13,106
Bonds 5.1 3,128 5.4 2,989 6.3 2,610
Property 6.5 1,412 6.5 1,221 6.5 932
Cash 1.4 369 1.1 595 2.9 282
7.3 22,612 7.4 20,953 7.5 16,930
Present value of plan liabilities 20,742 19,882 15,414
Surplus in the plan 1,870 1,071 1,516
The parent company nancial statements of BP p.l.c. on pages PC1 PC16 do not form part of BPs Annual Report on Form 20-F as led with the SEC.
PC8 BP Annual Report and Form 20-F 2010
Parent company nancial statements of BP p.l.c.
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6. Pensions continued
$ million
2010 2009 2008
Analysis of the amount charged to operating prot
Current service cost
a
381 300 434
Past service cost 7
Settlement, curtailment and special termination benets 21 34 29
Total operating charge 402 334 470
Analysis of the amount credited (charged) to other nance income
Expected return on pension plan assets 1,486 1,339 1,969
Interest on pension plan liabilities (1,098) (1,029) (1,146)
Other nance income 388 310 823
Analysis of the amount recognized in the statement of total recognized gains and losses
Actual return less expected return on pension plan assets 1,479 1,634 (6,533)
Change in assumptions underlying the present value of the plan liabilities (1,034) (2,073) 1,476
Experience gains (losses) arising on the plan liabilities 12 (146) (65)
Actuarial (loss) gain recognized in statement of total recognized gains
and losses 457 (585) (5,122)
2010 2009
Movements in benet obligation during the year
Benet obligation at 1 January 19,882 15,414
Exchange adjustment (775) 1,756
Current service cost
a
381 300
Interest cost 1,098 1,029
Special termination benets
b
21 34
Contributions by plan participants
c
38 36
Benet payments (funded plans)
d
(879) (902)
Benet payments (unfunded plans)
d
(3) (4)
Disposals (43)
Actuarial loss on obligation 1,022 2,219
Benet obligation at 31 December 20,742 19,882
Movements in fair value of plan assets during the year
Fair value of plan assets at 1 January 20,953 16,930
Exchange adjustment (819) 1,907
Expected return on plan assets
a e
1,486 1,339
Contributions by plan participants
c
38 36
Contributions by employers (funded plans) 397
Benet payments (funded plans) (879) (902)
Disposals (43)
Actuarial gain on plan assets
e
1,479 1,634
Fair value of plan assets at 31 December
f
22,612 20,953
Surplus at 31 December
1,870 1,071
a
The costs of managing the funds investments are treated as being part of the investment return, the costs of administering our pensions plan benets are included in current service cost.
b
The charge for special termination benets represents the increased liability arising as a result of early retirements occurring as part of restructuring programmes.
c
The contributions by plan participants are mostly comprised of contributions made under salary sacrice with effect from January 2010.
d
The benet payments amount shown above comprises $867 million benets plus $15 million of plan expenses incurred in the administration of the benet.
e
The actual return on plan assets is made up of the sum of the expected return on plan assets and the actuarial gain on plan assets as disclosed above.
f
Reects $22,516 million of assets held in the BP Pension Fund (2009 $20,895 million) and $68 million held in the BP Global Pension Trust (2009 $58 million), with $28 million representing the companys
share of the Merchant Navy Ofcers Pension Fund (2009 nil).
The parent company nancial statements of BP p.l.c. on pages PC1 PC16 do not form part of BPs Annual Report on Form 20-F as led with the SEC.
BP Annual Report and Form 20-F 2010 PC9
Parenl conpany lnancial slalenenls ol BP p.l.c.
6. Pensions conlinued
$ nillion
2010 2009
Fepresenled by
Assel recognized 2,069 1,234
Liabilily recognized (199) (163
1,870 1,071
The surplus (delcil nay be analysed belween lunded and unlunded plans as lollows
Funded 2,064 1,231
Unlunded (194) (160
1,870 1,071
The delned benell obligalion nay be analysed belween lunded and unlunded plans as lollows
Funded
a
(20,548) (19,722
Unlunded (194) (160
(20,742) (19,332
a
FeHecls $20,443 nillion ol liabililies ol lhe BP Pension Fund (2009 $19,661 nillion, $67 nillion ol liabililies ol lhe BP Clobal Pension Trusl (2009 $61 nillion and $33 nillion ol liabililies represenling lhe
conpanys share ol lhe erchanl avy Ollcers Pension Fund (2009 nil.
$ nillion
2010 2009
Feconcilialion ol plan surplus lo balance sheel
Surplus al 31 Decenber 1,870 1,071
Delerred lax (480) (279
1,390 792
Fepresenled by
Assel recognized on balance sheel 1,537 912
Liabilily recognized on balance sheel (147) (120
1,390 792
The aggregale level ol enployer conlribulions inlo lhe BP Pension Fund in 2011 is expecled lo be $404 nillion.
$ nillion
2010 2009 2003 2007 2006
Hislory ol surplus and ol experience gains and losses
Benell obligalion al 31 Decenber 20,742 19,332 15,414 22,146 21,507
Fair value ol plan assels al 31 Decenber 22,612 20,953 16,930 29,411 27,169
Surplus 1,870 1,071 1,516 7,265 5,662
Experience gains (losses on plan liabililies
Anounl ($ nillion 12 (146 (65 (155 (211
Percenlage ol benell obligalion 0% (1' 0' (1' (1'
Aclual relurn less expecled relurn on pension plan assels
Anounl ($ nillion 1,479 1,634 (6,533 404 1,252
Percenlage ol plan assels 7% 3' (39' 1' 5'
Acluarial (loss gain recognized in slalenenl ol lolal recognized gains and losses
Anounl ($ nillion 457 (535 (5,122 693 1,120
Percenlage ol benell obligalion 2% (3' (33' 3' 6'
Cunulalive anounl recognized in slalenenl ol lolal recognized gains and losses (1,235) (1,692 (1,107 4,015 3,317
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC10 BP Annual Feporl and Forn 20F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
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7. Calledup share capilal
The allolled, calledup and lully paid share capilal al 31 Decenber was as lollows:
2010 2009
Shares Shares
ssued (thousand) $ miIIion (lhousand $ nillion
3' cunulalive lrsl prelerence shares ol 1 each 7,233 12 7,233 12
9' cunulalive second prelerence shares ol 1 each 5,473 9 5,473 9
21 21
Ordinary shares ol 25 cenls each
Al 1 January 20,629,665 5,158 20,613,453 5,155
ssue ol new shares lor enployee share schenes 17,495 4 11,207 3
31 Decenber 20,647,160 5,162 20,629,665 5,153
5,183 5,179
Aulhorized
3' cunulalive lrsl prelerence shares ol 1 each 7,250 12 7,250 12
9' cunulalive second prelerence shares ol 1 each 5,500 9 5,500 9
Ordinary shares ol 25 cenls each 36,000,000 9,000 36,000,000 9,000
Voling on subslanlive resolulions labled al a general neeling is on a poll. On a poll, shareholders presenl in person or by proxy have lwo voles lor every 5
in noninal anounl ol lhe lrsl and second prelerence shares held and one vole lor every ordinary share held. On a showolhands vole on olher resolulions
(procedural nallers al a general neeling, shareholders presenl in person or by proxy have one vole each.
n lhe evenl ol lhe winding up ol lhe conpany, prelerence shareholders would be enlilled lo a sun equal lo lhe capilal paid up on lhe prelerence
shares plus an anounl in respecl ol accrued and unpaid dividends and a preniun equal lo lhe higher ol (i 10' ol lhe capilal paid up on lhe prelerence
shares and (ii lhe excess ol lhe average narkel price ol such shares on lhe London Slock Exchange during lhe previous six nonlhs over par value.
Repurchase of ordinary share capitaI
The conpany did nol purchase any ordinary shares in 2010 (2009 no ordinary shares were purchased and 2003 269,757,133 ordinary shares were
purchased lor lolal consideralion ol $2,914 nillion ol which all were lor cancellalion. Al 31 Decenber 2010, 1,350,693,774 shares ol noninal value
$462 nillion were held in lreasury (2009 1,369,777,323 shares ol noninal value $467 nillion and 2003 1,333,151,157 shares ol noninal value
$472 nillion. There were no lransaclion cosls lor share purchases in 2010 (2009 nil and 2003 $16 nillion.
3. Capilal and reserves
$ nillion
Share CapitaI Share-based Proht
Share premium redemption Merger Own Treasury payment and Ioss
capitaI account reserve reserve shares shares reserve account TotaI
Al 1 January 2010 5,179 9,847 1,072 26,509 (214) (21,303) 1,519 96,564 119,173
Currency lranslalion dillerences - - - - - - - (45) (45)
Acluarial gain on pensions
(nel ol lax - - - - - - - 276 276
Sharebased paynenls 4 140 - - 88 218 66 (150) 366
Proll lor lhe year - - - - - - - 14,776 14,776
Dividends - - - - - - - (2,627) (2,627)
Al 31 Decenber 2010 5,183 9,987 1,072 26,509 (126) (21,085) 1,585 108,794 131,919
$ nillion
Share Capilal Sharebased Proll
Share preniun redenplion erger Own Treasury paynenl and loss
capilal accounl reserve reserve shares shares reserve accounl Tolal
Al 1 January 2009 5,176 9,763 1,072 26,509 (326 (21,513 1,271 72,340 94,792
Currency lranslalion dillerences - - - - - - - 104 104
Acluarial loss on pensions
(nel ol lax - - - - - - - (421 (421
Sharebased paynenls 3 34 - - 112 210 243 - 657
Proll lor lhe year - - - - - - - 34,524 34,524
Dividends - - - - - - - (10,433 (10,433
Al 31 Decenber 2009 5,179 9,347 1,072 26,509 (214 (21,303 1,519 96,564 119,173
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC11
Parenl conpany lnancial slalenenls ol BP p.l.c.
3. Capilal and reserves conlinued
As a consolidaled incone slalenenl is presenled lor lhe group, a separale incone slalenenl lor lhe parenl conpany is nol required lo be published.
The proll and loss accounl reserve includes $24,107 nillion (2009 $24,107 nillion and 2003 $24,107 nillion, lhe dislribulion ol which is liniled by
slalulory or olher reslriclions.
The conpany does nol accounl lor dividends unlil lhey are paid. The lnancial slalenenls lor lhe year ended 31 Decenber 2010 do nol
reHecl lhe dividend announced on 1 February 2011 and payable in arch 2011, lhis will be lrealed as an approprialion ol proll in lhe year ended
31 Decenber 2011.
Managing capitaI
The conpany delnes capilal as lhe lolal equily ol lhe conpany. The conpanys approach lo nanaging capilal is sel oul in ils lnancial lranework
which was revised during 2010, wilh lhe objeclive ol nainlaining a capilal slruclure lhal allows lhe conpany lo execule ils slralegy and is resilienl lo
inherenl volalilily. During 2010, lhe conpany did nol repurchase any ol ils own shares.
9. Cash How
$ nillion
2010 2009 2003
Feconcilialion ol nel cash How lo novenenl ol lunds
ncrease (decrease in cash (24) 17 (233
ovenenl ol lunds (24) 17 (233
el cash al 1 January 28 11 244
el cash al 31 Decenber 4 23 11
oles on cash How slalenenl
(a Feconcilialion ol operaling proll lo nel cash (oulHow inHow lron operaling aclivilies 2010 2009 2003
Operaling proll 14,514 34,195 17,211
el operaling charge lor pensions and olher poslrelirenenl benells, less conlribulions 2 321 461
Dividends, inleresl and olher incone (15,188) (35,139 (17,239
Sharebased paynenls 549 444 446
(ncrease decrease in deblors 17,405 (24,534 (5,271
ncrease (decrease in credilors (51) 4,040 (7
el cash inHow (oulHow lron operaling aclivilies 17,231 (20,773 (4,399
$ nillion
At
1 January Cash 31 December
(b Analysis ol novenenls ol lunds 2010 ow 2010
Cash al bank 28 (24) 4
10. Conlingenl liabililies
The parenl conpany has issued guaranlees under which anounls oulslanding al 31 Decenber 2010 were $36,777 nillion (2009 $30,153 nillion and 2003
$30,063 nillion, ol which $36,747 nillion (2009 $30,126 nillion and 2003 $30,003 nillion relaled lo guaranlees in respecl ol subsidiary underlakings,
including $36,006 nillion (2009 $29,335 nillion and 2003 $29,267 nillion in respecl ol borrowings by subsidiary underlakings and $30 nillion
(2009 $32 nillion and 2003 $55 nillion in respecl ol liabililies ol olher lhird parlies.
At
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC12 BP Annual Feporl and Forn 20F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
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11. Sharebased paynenls
Effect of share-based payment transactions on the company's resuIt and hnanciaI position
$ nillion
2010 2009 2003
Tolal expense recognized lor equilysellled sharebased paynenl lransaclions 577 506 524
Tolal expense (credil recognized lor cashsellled sharebased paynenl lransaclions (1) 15 (16
Tolal expense recognized lor sharebased paynenl lransaclions 576 521 503
Closing balance ol liabilily lor cashsellled sharebased paynenl lransaclions 16 32 21
Tolal inlrinsic value lor vesled cashsellled sharebased paynenls 1 7 2
For ease ol presenlalion, oplion and share holdings delailed in lhe lables wilhin lhis nole are slaled as UK ordinary share equivalenls in US dollars. US
enployees are granled Anerican Deposilary Shares (ADSs or oplions over lhe conpanys ADSs (one ADS is equivalenl lo six ordinary shares. The
sharebased paynenl plans lhal exisled during lhe year are delailed below. All plans are ongoing unless olherwise slaled.
PIans for executive directors
Execulive Direclors ncenlive Plan (EDP - share elenenl
An equilysellled incenlive plan lor execulive direclors wilh a lhreeyear perlornance period. For share plan perlornance periods 20032010 lhe award ol
shares is delernined by conparing BPs lolal shareholder relurn (TSF againsl lhe olher oil najors (Exxonobil, Shell, Tolal and Chevron. For lhe
perlornance period 20092011 lhe award ol shares is delernined 50' on TSF versus a conpelilor group ol oil najors (which in lhis period also included
ConocoPhillips and 50' on a balanced scorecard (BSC ol lhree underlying perlornance neasures versus lhe sane conpelilor group. For lhe period
20102012 lhe award ol shares is delernined one lhird on TSF versus a conpelilor group ol oil najors (idenlical lo lhe 20092011 plan group and lwo
lhirds on a BSC ol lhree underlying perlornance indicalors. Aller lhe perlornance period, lhe shares lhal vesl (nel ol lax are lhen subjecl lo a lhreeyear
relenlion period. The direclors renuneralion reporl on pages 112 lo 121 includes lull delails ol lhe plan.
Execulive Direclors ncenlive Plan (EDP - delerred nalching share elenenl
Following lhe renewal ol lhe EDP al lhe 2010 Annual Ceneral eeling, a delerred nalching share elenenl is in place requiring a nandalory one lhird ol
direclors annual bonus lo be delerred inlo shares lor lhree years. The shares are nalched by lhe conpany on a onelorone basis. Vesling ol bolh delerred
and nalching shares is conlingenl on an assessnenl ol salely and environnenlal suslainabilily over lhe lhreeyear delerral period and a direclor nay
volunlarily deler an addilional one lhird ol bonus inlo shares on lhe sane lerns.
Execulive Direclors ncenlive Plan (EDP - share oplion elenenl
An equilysellled share oplion plan lor execulive direclors lhal pernils oplions lo be granled al an exercise price no lower lhan lhe narkel price ol a share
on lhe dale lhal lhe oplion is granled. The oplions are exercisable up lo lhe sevenlh anniversary ol lhe granl dale and lhe lasl granls were nade in 2004.
Fron 2005 onwards lhe renuneralion connillees policy is nol lo nake lurlher granls ol share oplions lo execulive direclors.
PIans for senior empIoyees
The group operales a nunber ol equilysellled share plans under which share unils are granled lo ils senior leaders and cerlain enployees. These plans
lypically have a lhreeyear perlornance or reslricled period during which lhe unils accrue nel nolional dividends which are lrealed as having been
reinvesled. Leaving enploynenl during lhe lhreeyear period will nornally preclude lhe conversion ol unils inlo shares, bul special arrangenenls apply
where lhe parlicipanl leaves lor a qualilying reason.
Cranls are sellled in cash where parlicipanls are localed in a counlry whose regulalory environnenl prohibils lhe holding ol BP shares.
Performance unit pIans
The nunber ol unils granled is nade by relerence lo level ol seniorily ol lhe enployees. The nunber ol unils converled lo shares is delernined by relerence
lo perlornance neasures over lhe lhreeyear perlornance period. The nain perlornance neasure used is BPs TSF conpared againsl lhe olher oil najors. n
addilion, lree cash How (FCF is used as a perlornance neasure lor one ol lhe perlornance plans. Plans included in lhis calegory are lhe Conpelilive
Perlornance Plan (CPP, lhe ediun Tern Perlornance Plan (TPP and, in parl, lhe Perlornance Share Plan (PSP.
Feslricled share unil plans
Share unil granls under BPs reslricled plans lypically lake inlo accounl lhe enployees perlornance in eilher lhe currenl or lhe prior year, lrack record ol
delivery, business and leadership skills and longlern polenlial. One reslricled share unil plan used in special circunslances lor senior enployees, such as
recruilnenl and relenlion, nornally has no perlornance condilions. Plans included in lhis calegory are lhe Execulive Perlornance Plan (EPP, lhe
Feslricled Share Plan (FSP, lhe Delerred Annual Bonus Plan (DAB and, in parl, lhe Perlornance Share Plan (PSP.
BP Share Oplion Plan (BPSOP
Share oplions wilh an exercise price equivalenl lo lhe narkel price ol a share innedialely preceding lhe dale ol granl were granled lo parlicipanls
annually unlil 2006. There were no perlornance condilions and lhe oplions are exercisable belween lhe lhird and lenlh anniversaries ol lhe granl dale.
Savings and matching pIans
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase ol shares
al a lxed price delernined when lhe oplion is granled. This price is usually sel al a 20' discounl lo lhe narkel price al lhe line ol granl. The oplion nusl be
exercised wilhin six nonlhs ol nalurily ol lhe savings conlracl, olherwise il lapses. The plan is run in lhe UK and oplions are granled annually, usually in
June. Parlicipanls leaving lor a qualilying reason have six nonlhs in which lo use lheir savings lo exercise lheir oplions on a proraled basis.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC13
Parenl conpany lnancial slalenenls ol BP p.l.c.
11. Sharebased paynenls conlinued
BP Sharealch Plans
These are nalching share plans under which BP nalches enployees own conlribulions ol shares up lo a predelernined linil. The plans are run in lhe UK
and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly basis wilh shares being held in lrusl lor lve years belore lhey can be released lree ol
any incone lax and nalional insurance liabilily. n olher counlries lhe plan is run on an annual basis wilh shares being held in lrusl lor lhree years. The plan
is operaled on a cash basis in lhose counlries where lhere are regulalory reslriclions prevenling lhe holding ol BP shares. vhen lhe enployee leaves BP
all shares nusl be renoved lron lrusl and unils under lhe plan operaled on a cash basis nusl be encashed.
Local plans
n sone counlries BP provides local schene benells, lhe rules and qualilcalions lor which vary according lo local circunslances.
EmpIoyee Share Ownership PIans (ESOPs)
ESOPs have been eslablished lo acquire BP shares lo salisly any awards nade lo parlicipanls under lhe BP share plans as required. The ESOPs have waived
lheir righls lo dividends on shares held lor lulure awards and are lunded by lhe group. Unlil such line as lhe conpanys own shares held by lhe ESOP lrusls
vesl uncondilionally lo enployees, lhe anounl paid lor lhose shares is deducled in arriving al shareholders equily (see ole 3. Assels and liabililies ol lhe
ESOPs are recognized as assels and liabililies ol lhe group.
Al 31 Decenber 2010 lhe ESOPs held 11,477,253 shares (2009 13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure awards, which
had a narkel value ol $32 nillion (2009 $174 nillion and 2003 $220 nillion.
Share option transactions
Delails ol share oplion lransaclions lor lhe year under lhe share oplion plans are as lollows:
2010 2009 2003
Weighted veighled veighled
Number average unber average unber average
of exercise price ol exercise price ol exercise price
options $ oplions $ oplions $
Oulslanding al 1 January 295,895,357 8.73 326,254,599 3.70 353,094,243 3.51
Cranled 10,420,287 6.08 9,679,336 6.55 3,062,399 3.96
Forleiled (9,499,661) 7.88 (5,954,325 3.31 (2,502,734 3.50
Exercised (31,839,034) 7.97 (21,293,371 7.53 (37,277,395 6.97
Expired (1,670,227) 8.71 (12,790,332 3.01 (121,364 7.00
Oulslanding al 31 Decenber 263,306,722 8.75 295,395,357 3.73 326,254,599 3.70
Exercisable al 31 Decenber 242,530,635 8.90 274,635,063 3.30 260,173,933 3.22
The weighled average share price al lhe dale ol exercise was $9.54 (2009 $9.10 and 2003 $10.37. For lhe oplions oulslanding al 31 Decenber 2010, lhe
exercise price ranges and weighled average renaining conlraclual lives are shown below.
Options outstanding Options exercisabIe
Weighted Weighted Weighted
Number average average Number average
of remaining Iife exercise price of exercise price
Fange ol exercise prices shares years $ shares $
$6.09 - $7.53 54,821,144 2.68 6.36 39,231,453 6.40
$7.54 - $3.99 115,187,261 1.71 8.19 112,551,834 8.17
$9.00 - $10.45 21,827,393 3.54 9.88 19,276,424 9.98
$10.46 - $11.92 71,470,924 4.81 11.14 71,470,924 11.14
263,306,722 2.90 8.75 242,530,635 8.90
Fair vaIues and associated detaiIs for options and shares granted
2010 2009 2003
ShareSave ShareSave ShareSave ShareSave ShareSave ShareSave
3 year 5 year 3 year 5 year 3 year 5 year
Oplion pricing nodel used BinomiaI BinomiaI Binonial Binonial Binonial Binonial
veighled average lair value $0.06 $0.08 $1.07 $1.07 $1.32 $1.74
veighled average share price $4.58 $4.58 $7.37 $7.37 $11.26 $11.26
veighled average exercise price $5.90 $5.90 $6.92 $6.92 $9.70 $9.70
Expecled volalilily 22% 23% 32' 32' 23' 23'
Oplion lile 3.5 years 5.5 years 3.5 years 5.5 years 3.5 years 5.5 years
Expecled dividends 8.40% 8.40% 7.40' 7.40' 4.60' 4.60'
Fisk lree inleresl rale 1.25% 2.00% 3.00' 3.75' 5.00' 5.00'
Expecled exercise behaviour 100% year 4 100% year 6 100' year 4 100' year 6 100' year 4 100' year 6
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC14 BP Annual Feporl and Forn 20F 2010
Parenl conpany lnancial slalenenls ol BP p.l.c.
F
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i
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11. Sharebased paynenls conlinued
The group uses a valualion nodel lo delernine lhe lair value ol oplions granled. The nodel uses lhe inplied volalilily ol ordinary share price lor lhe quarler
wilhin which lhe granl dale ol lhe relevanl plan lalls. The lair value is adjusled lor lhe expecled rales ol early cancellalion. anagenenl is responsible lor
all inpuls and assunplions in relalion lo lhe nodel, including lhe delerninalion ol expecled volalilily.
EDIP- EDIP-
Shares granled in 2010 CPP EPP TSR BSC RSP DAB PSP
unber ol equily inslrunenls granled (nillion 1.3 7.6 1.2 2.5 21.4 24.5 16.0
veighled average lair value $19.81 $9.43 $4.42 $8.94 $6.78 $9.43 $9.43
Fair value neasurenenl basis Monte Market Monte Market Market Market Market
CarIo vaIue CarIo vaIue vaIue vaIue vaIue
EDP EDP
Shares granled in 2009 CPP EPP TSF BSC FSP DAB PSP
unber ol equily inslrunenls granled (nillion 1.4 7.6 2.1 2.1 2.4 33.9 16.5
veighled average lair value $9.76 $6.56 $2.74 $7.27 $3.76 $6.56 $3.32
Fair value neasurenenl basis onle arkel onle arkel arkel arkel onle
Carlo value Carlo value value value Carlo
TPP TPP EDP EDP
Shares granled in 2003 TSF FCF TSF FET
a
FSP DAB PSP
unber ol equily inslrunenls granled (nillion 9.1 9.1 2.6 0.5 7.7 5.3 16.7
veighled average lair value $5.07 $10.34 $4.55 $11.13 $3.33 $10.34 $12.39
Fair value neasurenenl basis onle arkel onle arkel arkel arkel onle
Carlo value Carlo value value value Carlo
a
EDP - relenlion elenenl.
The group used a onle Carlo sinulalion lo delernine lhe lair value ol lhe TSF elenenl ol lhe 2010, 2009 and 2003 CPP, TPP and EDP plans, and in
2009 and 2003 lor lhe PSP plan. n accordance wilh lhe rules ol lhe plans lhe nodel sinulales BPs TSF and conpares il againsl our principal slralegic
conpelilors over lhe lhreeyear period ol lhe plans. The nodel lakes inlo accounl lhe hisloric dividends, share price volalililies and covariances ol BP and
each conparalor conpany lo produce a predicled dislribulion ol relalive share perlornance. This is applied lo lhe reward crileria lo give an expecled value
ol lhe TSF elenenl.
Accounling expense does nol necessarily represenl lhe aclual value ol sharebased paynenls nade lo recipienls, which are delernined by lhe
renuneralion connillee according lo eslablished crileria.
12. Audilors renuneralion
Fees payable lo lhe conpanys audilor lor lhe audil ol lhe conpanys accounls were $17 nillion (2009 $13 nillion and 2003 $16 nillion.
Fenuneralion receivable by lhe conpanys audilor lor lhe supply ol olher services lo lhe conpany is nol presenled in lhe parenl conpany lnancial
slalenenls as lhis inlornalion is provided in lhe consolidaled lnancial slalenenls.
13. Direclors renuneralion
$ nillion
Fenuneralion ol direclors 2010 2009 2003
Tolal lor all direclors
Enolunenls 15 19 19
Cains nade on lhe exercise ol share oplions 2 2 1
Anounls awarded under incenlive schenes 4 2 -
EmoIuments
These anounls conprise lees paid lo lhe nonexeculive chairnan and lhe nonexeculive direclors and, lor execulive direclors, salary and benells earned
during lhe relevanl lnancial year, plus bonuses awarded lor lhe year. Also included was conpensalion lor loss ol ollce, ol $3 nillion in 2010, (2009 nil and
2003 $1 nillion.
Pension contributions
During 2010 lhree execulive direclors parlicipaled in a nonconlribulory pension schene eslablished lor UK slall by a separale lrusl lund lo which
conlribulions are nade by BP based on acluarial advice. Two US execulive direclors parlicipaled in lhe US BP Felirenenl Accunulalion Plan during 2010.
Ofhce faciIities for former chairmen and deputy chairmen
l is cuslonary lor lhe conpany lo nake available lo lorner chairnen and depuly chairnen, who were previously enployed execulives, lhe use ol ollce
and basic secrelarial lacililies lollowing lheir relirenenl. The cosl involved in doing so is nol signilcanl.
Further information
Full delails ol individual direclors renuneralion are given in lhe direclors renuneralion reporl on pages 112 lo 121.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
BP Annual Feporl and Forn 20F 2010 PC15
Parenl conpany lnancial slalenenls ol BP p.l.c.
14. Posl balance sheel evenls
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany whereby BP will receive approxinalely 9.5' ol Fosnells
shares in exchange lor BP issuing new ordinary shares lo Fosnell, resulling in Fosnell holding 5' ol BPs ordinary voling shares. The aggregale value ol
lhe shares in BP lo be issued lo Fosnell is approxinalely $7.3 billion (as al close ol lrading in London on 14 January 2011. BP has agreed lo issue
933,694,633 ordinary shares lo Fosnell, Fosnell has agreed lo lransler 1,010,153,003 ordinary shares lo BP. Conplelion ol lhe lransaclion is subjecl lo
lhe oulcone ol lhe courl applicalion relerred lo in lhe paragraph below, and relaled pending arbilral proceedings. Aller conplelion, BPs increased
inveslnenl in Fosnell will conlinue lo be recognized as an availablelorsale lnancial assel. During lhe period lron enlering inlo lhe agreenenl unlil
conplelion, lhe agreenenl represenls a derivalive lnancial inslrunenl and changes in ils lair value will be recognized in BPs incone slalenenl in 2011.
An applicalion was broughl in lhe English High Courl on 1 February 2011 by Alla Pelroleun Holdings Liniled (APH and OCP Venlures Liniled
(OCP againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled. APH is a conpany owned by Alpha Croup. APH and OCP each own 25' ol
TKBP, in which BP also has a 50' shareholding. This applicalion alleges breach ol lhe shareholders agreenenl on lhe parl ol BP and seeks an inlerin
injunclion reslraining BP lron laking sleps lo conclude, inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell Oil Conpany relaling
lo oil and gas exploralion, produclion, relning and narkeling in Fussia. Those lransaclions include lhe issue or lransler ol shares belween Fosnell Oil
Conpany and any BP group conpany. The courl granled an inlerin order reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell
lransaclions pending an expediled UCTFAL arbilralion procedure in accordance wilh lhe shareholders agreenenl belween lhe parlies. The arbilralion
has connenced and lhe injunclion has been exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo nallers in dispule belween lhe
parlies on a lnal basis during lhe week connencing 7 arch 2011. The expediled hearing will decide, anong olher nallers, whelher lhe injunclion will
be exlended beyond 11 arch 2011.
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC16 BP Annual Feporl and Forn 20F 2010
Information for shareholders
Reports and publications
BPs reports and publications are available to view online
or download from www.bp.com/annualreport.
Summary Review 2010
Read a summary of our nancial
and operating performance in
BP Summary Review 2010 in
print or online.
www.bp.com/summaryreview
Sustainability Review
Read the summary
BP Sustainability Review
2010 in print or read more
online from late March 2011.
www.bp.com/sustainability
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