3Q21 Sea Part 1 of 1

Source Press Release
Company BP Plc.ENI S.p.A.Equinor ASAExxonMobilRosneftSOCAR 
Tags LNG & Gas Storage/Processing, Renewable Energy, Power, Refining & Marketing Activities, Hedging, Production/Development, Exploration, Upstream Activities, Capital Spending, Environment, Guidance, Financial & Operating Data, Strategy - Corporate
Date November 02, 2021
Reducing net debt, growing distributions, executing strategy 
Financial summary    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Profit (loss) for the period attributable to bp shareholders    (2,544)    3,116     (450)      5,239     (21,663)   
Inventory holding (gains) losses*, net of tax    (390)    (736)    (194)      (2,468)    2,734    
Replacement cost (RC) profit (loss)*    (2,934)    2,380     (644)      2,771     (18,929)   
Net (favourable) adverse impact of adjusting items*(a), net of tax    6,256     418     730       5,979     13,124    
Underlying RC profit (loss)*    3,322     2,798     86       8,750     (5,805)   
Operating cash flow*    5,976     5,411     5,204       17,496     9,893    
Capital expenditure*    (2,903)    (2,514)    (3,636)      (9,215)    (10,564)   
Divestment and other proceeds(b)    313     215     597       5,367     2,413    
Net issue (repurchase) of shares    (926)    (500)    -       (1,426)    (776)   
Net debt*(c)    31,971     32,706     40,379       31,971     40,379    
Announced dividend per ordinary share (cents per share)         5.46  5.46     5.25          16.17  21.00    
Underlying RC profit (loss) per ordinary share* (cents)    16.48     13.80     0.42       43.22     (28.72)   
Underlying RC profit (loss) per ADS* (dollars)    0.99     0.83     0.03       2.59     (1.72)   
• Strong underlying results and cash flow underpinning continued net debt reduction    • Further $1.25 billion buyback planned - delivering on commitment to distributions    • Six-year target for major project delivery completed on schedule and around 15% under-budget    • Continued momentum across strategic focus areas 
This has been another good quarter for bp - our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations. Rising commodity prices certainly helped, but I am most pleased that quarter by quarter, we're doing what we said we would - delivering significant cash to strengthen our finances, grow distributions to shareholders and invest in our strategic transformation. This is what we mean by performing while transforming. 
Bernard Looney Chief executive officer 
 

(a)    Prior to 2021 adjusting items were reported under two different headings - non-operating items and fair value accounting effects*. See page 30 for more information.

(b)    Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. Other proceeds were $675 million from the sale of a 49% interest in a controlled affiliate holding certain refined product and crude logistics assets onshore US in the nine months 2021, $481 million in relation to the sale of an interest in bp's UK retail property portfolio in the third quarter and nine months 2020 and also $455 million in relation to TANAP pipeline refinancing in the nine months 2020. There are no other proceeds in the third quarter 2021.

(c)     See Note 9 for more information.

RC profit (loss), underlying RC profit (loss) and net debt are non-GAAP measures. Inventory holding (gains) losses and adjusting items are non-GAAP adjustments.

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 35.

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  Highlights   
  Strong underlying results and cash flow underpins continued net debt reduction   
  •    Underlying replacement cost profit* was $3.3 billion, compared with $2.8 billion for the previous quarter. This result was driven by higher oil and gas realizations, higher refining availability and throughput enabling the capture of a stronger environment and a stronger gas marketing and trading result, partly offset by a higher underlying tax charge. •     Reported loss for the quarter was $2.5 billion, compared with a $3.1 billion profit for the second quarter 2021. This was driven by significant adverse fair value accounting effects* of $6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. This mismatch at the end of the third quarter is expected to unwind if prices decline and as the cargoes are delivered. The underlying result is adjusted to remove this mismatch. •     Operating cash flow* of $6.0 billion includes a working capital* build of $1.8 billion (after adjusting for inventory holding gains and fair value accounting effects). •     bp received $5.4 billion of divestment and other proceeds in the first nine months including $0.3 billion during the third quarter. bp now expects proceeds of $6-7 billion by the end of 2021. •     Net debt* fell to $32.0 billion at the end of the third quarter.   
  Further $1.25 billion share buyback planned - delivering on commitment to distributions   
  •     bp is committed to the disciplined execution of its financial frame with a resilient dividend the first priority. For the third quarter bp has announced a dividend of 5.46 cents per ordinary share payable in the fourth quarter - unchanged following the 4% increase announced with second quarter results. •     With second quarter results, bp announced an intention to execute a buyback of $1.4 billion from first half 2021 surplus cash flow* of $2.4 billion. This programme was completed on 1 November 2021 with $0.9 billion executed during the third quarter. •     Taking into account the cumulative level of and outlook for surplus cash flow and subject to maintaining a strong investment grade credit rating, the board remains committed to using 60% of 2021 surplus cash flow for share buybacks and plans to allocate the remaining 40% to continue strengthening the balance sheet. •     Recognizing third quarter surplus cash flow of $0.9 billion and reflecting confidence in the outlook bp intends to execute a further buyback of $1.25 billion prior to announcing its fourth quarter 2021 results. bp expects to outline plans for the final tranche of buybacks from 2021 surplus cash flow at the time of such results. •     On average, based on bp's current forecasts, at around $60 per barrel Brent and subject to the board's discretion each quarter, bp continues to expect to be able to deliver buybacks of around $1.0 billion per quarter and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025. •     The board will take into account factors including the cumulative level of and outlook for surplus cash flow, the cash balance point* and the maintenance of a strong investment grade credit rating in setting the dividend per ordinary share and the buyback each quarter.     
  Continued momentum across our strategic focus areas   
  •     In resilient and focused hydrocarbons, bp delivered its six-year programme of major project* execution, on average around 15% under-budget, hitting its target of bringing online 900 thousand barrels oil equivalent per day of new production by 2021. Six major projects have now come online in 2021, including two in the third quarter - Matapal, offshore Trinidad, under budget and ahead of its 2022 schedule, and Thunder Horse South Expansion Phase 2 in the Gulf of Mexico. •     Operational performance in resilient and focused hydrocarbons was robust. Relative to the second quarter, upstream* reported production rose by 4%, hydrocarbon plant reliability* increased to 95.4% and refining availability* increased to 95.6%. •     In convenience and mobility, bp delivered record year-to-date convenience gross margin*; strong growth in next-gen mobility, with 45% growth in electrons sold into EV charging compared to last quarter; and record year-to-date underlying earnings in China, a key growth market. •     In low carbon, confidence in bp's 2025 target of 20GW developed renewables to FID* has been strengthened with a further 2GW added to the renewables pipeline* and Lightsource bp's announcement of their increased 25GW development target for 2025.   
Underpinned by the disciplined execution of our financial frame, we have delivered another quarter of strong underlying earnings and cash flow. We are maintaining a resilient dividend, have reduced net debt for the sixth consecutive quarter, are demonstrating capital discipline and are delivering on our distribution commitment with a further $1.25 billion of share buybacks planned. 
 
Murray Auchincloss Chief financial officer 
 
The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 41. 

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Financial results

At 31 December 2020, the group's reportable segments were Upstream, Downstream and Rosneft. From the first quarter of 2021, the group's reportable segments are gas & low carbon energy, oil production & operations, customers & products, and Rosneft. Comparative information for 2020 has been restated to reflect the changes in reportable segments. For more information see note 1 Basis of preparation - Change in segmentation.

In addition to the highlights on page 2:

• Loss attributable to bp shareholders in the third quarter was $2,544 million with a profit of $5,239 million for the nine months compared with losses of $450 million and $21,663 million in the third quarter and nine months of 2020 respectively. Underlying replacement cost profits have improved as result of higher oil and gas prices and refining margins and strong trading results, with adjusting items* being the other significant driver of the movements in the loss/profit attributable to bp shareholders.

• Adjusting items in the third quarter and nine months were an adverse pre-tax impact of $6,416 million and $5,712 million respectively compared with an adverse pre-tax impact of $714 million and $16,644 million in the same periods of 2020. The third quarter and nine months 2021 charges were driven by adverse fair value accounting effects* of $6,101 million in the third quarter primarily arising from the exceptional increase in forward gas prices towards the end of the quarter. The 2020 nine months charge was primarily driven by net impairment charges of $12,912 million which were mainly recorded in the second quarter. Pre-tax net impairment reversals of $2,483 million are included in the nine months 2021 adjusting items total.

• Capital expenditure* in the third quarter and nine months was $2.9 billion and $9.2 billion respectively, compared with $3.6 billion and $10.6 billion in the same periods of 2020.

• At the end of the third quarter, net debt* was $32.0 billion, compared to $32.7 billion at the end of the second quarter 2021 and $40.4 billion at the end of the third quarter 2020.

• Operating cash flow* was $6.0 billion for the third quarter, and $17.5 billion for the nine months, compared with $5.2 billion and $9.9 billion for the same periods of 2020. Third quarter and nine months 2021 includes $0.1 billion and $0.8 billion respectively of cash flow relating to severance costs associated with the reinvent programme.

• The effective tax rate (ETR) on RC profit or loss* for the third quarter and nine months was -175% and 57% respectively, compared with -504% and 13% for the same periods in 2020. Excluding adjusting items*, the underlying ETR* for the third quarter and nine months was 35% and 31% respectively, compared with 64% and -10% for the same periods a year ago. The lower underlying ETR for the third quarter reflects changes in the geographical mix of profits. The underlying ETR for the nine months is higher than the same period a year ago due to the absence of the exploration write-offs with a limited deferred tax benefit and the reassessment of deferred tax asset recognition. ETR on RC profit or loss and underlying ETR are non-GAAP measures.

Analysis of RC profit (loss) before interest and tax and reconciliation to profit (loss) for the period

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
RC profit (loss) before interest and tax               
gas & low carbon energy    (4,135)    927     252       222     (6,430)   
oil production & operations    2,692     3,118     (156)      7,289     (14,649)   
customers & products    1,060     640     915       2,634     2,173    
Rosneft    868     643     (278)      1,874     (419)   
other businesses & corporate    (750)    (425)    (42)      (1,853)    (867)   
Consolidation adjustment - UPII*    (42)    (31)    34       (60)    166    
RC profit (loss) before interest and tax    (307)    4,872     725       10,106     (20,026)   
Finance costs and net finance expense relating to pensions and other post-retirement benefits    (688)    (687)    (808)      (2,104)    (2,389)   
Taxation on a RC basis    (1,740)    (1,567)    (418)      (4,561)    2,935    
Non-controlling interests    (199)    (238)    (143)      (670)    551    
RC profit (loss) attributable to bp shareholders*    (2,934)    2,380     (644)      2,771     (18,929)   
Inventory holding gains (losses)*    500     953     233       3,183     (3,563)   
Taxation (charge) credit on inventory holding gains and losses    (110)    (217)    (39)      (715)    829    
Profit (loss) for the period attributable to bp shareholders    (2,544)    3,116     (450)      5,239     (21,663)   

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Analysis of underlying RC profit (loss) before interest and tax

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Underlying RC profit (loss) before interest and tax               
gas & low carbon energy    1,807     1,240     502       5,317     535    
oil production & operations    2,461     2,242     367       6,268     (6,451)   
customers & products    1,158     827     636       2,641     2,962    
Rosneft    923     689     (177)      1,975     (255)   
other businesses & corporate    (373)    (305)    (121)      (848)    (773)   
Consolidation adjustment - UPII    (42)    (31)    34       (60)    166    
Underlying RC profit (loss) before interest and tax    5,934     4,662     1,241       15,293     (3,816)   
Finance costs and net finance expense relating to pensions and other post-retirement benefits    (513)    (485)    (610)      (1,579)    (1,955)   
Taxation on an underlying RC basis    (1,900)    (1,141)    (402)      (4,294)    (585)   
Non-controlling interests    (199)    (238)    (143)      (670)    551    
Underlying RC profit (loss) attributable to bp shareholders*    3,322     2,798     86       8,750     (5,805)   

Reconciliations of underlying RC profit attributable to bp shareholders to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 6-14 for the segments.

Operating Metrics

Operating metrics    Nine months 2021    vs Nine months  2020 
Tier 1 and tier 2 process safety events*    49    -16 
Reported recordable injury frequency*    0.145    +15.4% 
Group production (mboe/d)(a)    3,269    -7.7% 
upstream* production (mboe/d) (excludes Rosneft segment)    2,180    -10.9% 
upstream unit production costs*(b) ($/boe)    6.96    +10.4% 
bp-operated hydrocarbon plant reliability*    94.3%    +0.5 
bp-operated refining availability*(a)    94.6%    -1.4 

(a)    See Operational updates on pages 6, 8 and 10.

(b)    Reflecting lower volumes and higher costs including phasing impacts.

Outlook & Guidance

Macro outlook

• Oil prices have continued to increase, and inventories have reduced back towards pre-pandemic levels. We expect oil prices to be supported by continued inventory draw-down, with the potential for additional demand from gas to oil switching.

• OPEC+ decision making on production levels continues to be a key factor in oil prices and market rebalancing.

• Gas markets were very strong in the quarter and we expect they will remain tight during the period of peak winter demand.

• In the fourth quarter industry refining margins are expected to be lower compared to the third quarter driven by seasonal demand.

4Q21 guidance

• Looking ahead, we expect fourth quarter reported upstream* production to be higher than the third quarter reflecting major project* ramp-up, mainly in gas regions, recovery from seasonal maintenance activity and continuing impacts from Hurricane Ida on our non-operated production in the US Gulf of Mexico. Within this, we expect production from both oil production & operations and gas & low carbon to be higher.

• In our customer businesses, we expect lower product demand due to seasonal impacts and continued base oil tightness and additive supply shortages in Castrol. In products, refining margins are expected to be lower in the fourth quarter driven by seasonal demand and we expect energy prices to remain under pressure and maintenance activity to remain high.

2021 Guidance

In addition to the guidance on page 2:

• We now expect divestment and other proceeds for the year of $6-7 billion. Our target of $25 billion of divestment and other proceeds between the second half of 2020 and 2025 is now underpinned by agreed or completed transactions of around $15.2 billion with over $10 billion of proceeds received.

• The underlying ETR* for 2021 is now expected to be below 35% but is sensitive to the impact that volatility in the current price environment may have on the geographical mix of the group's profits and losses.

• For full year 2021 we continue to expect reported upstream production to be lower than 2020 due to the impact of the ongoing divestment programme. However, we expect upstream underlying production* to be slightly higher than 2020 with the ramp-up of major projects, primarily in gas regions, partly offset by the impacts of reduced capital investment and decline in lower-margin gas assets.

• bp continues to expect capital expenditure*, including inorganic capital expenditure*, of around $13 billion in 2021.

• Depreciation, depletion and amortization is still expected to be at a similar level to 2020.

• Gulf of Mexico oil spill payments for the year are still expected to be around $1.5 billion pre-tax.

• The other businesses & corporate underlying annual charge is still expected to be in the range of $1.2-1.4 billion for 2021. The quarterly charges may vary from quarter to quarter.

COVID-19 Update

• bp's future financial performance, including cash flows and net debt, will be impacted by the extent and duration of the current market conditions and the effectiveness of the actions that it and others take, including its financial interventions. It is difficult to predict when all current supply and demand imbalances will be resolved and what the ultimate impact of COVID-19 will be.

• bp continues to take steps to protect and support its staff through the pandemic. Precautions in operations and offices together with enhanced support and guidance to staff continue with a focus on safety, health and hygiene, homeworking and mental health. Decisions on working practices and return to office based working are being taken with caution and in compliance with local and national guidelines and regulations.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 41. 

 gas & low carbon energy

Financial results

•      The replacement cost loss before interest and tax for the third quarter and profit for the nine months was $4,135 million and $222 million respectively, compared with a profit of $252 million and a loss of $6,430 million for the same periods in 2020. The third quarter and nine months included an adverse impact of net adjusting items* of $5,942 million and $5,095 million respectively, compared with an adverse impact of net adjusting items of $250 million and $6,965 million for the same periods in 2020.

•      After excluding adjusting items, the underlying replacement cost profit before interest and tax* for the third quarter and nine months was $1,807 million and $5,317 million respectively, compared with a profit of $502 million and $535 million for the same periods in 2020. Adjusting items* include adverse fair value accounting effects* of $5,808 million, primarily arising from the exceptional increase in forward gas prices towards the end of the quarter. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage forward LNG contracts, but not of the LNG contracts themselves. This mismatch at the end of the third quarter is expected to unwind if prices decline and as the cargoes are delivered. The underlying result is adjusted to remove this mismatch.

•      The underlying replacement cost profit for the third quarter, compared with the same period in 2020, reflects higher realizations, the higher depreciation, depletion and amortization charge, and the very strong trading result. For the nine months, compared with the same period in 2020, the underlying replacement cost profit mainly reflects higher realizations, the higher depreciation, depletion and amortization charge, lower exploration write-offs and the exceptional trading result.

Operational update

•      Reported production for the quarter and nine months were 889mboe/d and 891mboe/d respectively, higher than the same periods in 2020 due to growth in underlying production*, partly offset by the partial divestment in Oman. Underlying production was higher, mainly due to major project* start-ups, partially offset by base decline.

•      Renewables pipeline* at the end of the quarter was 23GW (bp net). The renewables pipeline grew by 2GW (bp net) in the quarter due to increases in Lightsource bp's (LSbp's) pipeline and 12.1GW (bp net) in the nine months, as a result of growth in LSbp and the acquisition of a 9GW development pipeline from 7X Energy.

Strategic progress

gas

•      On 20 September, bp Trinidad and Tobago announced that its Matapal subsea gas development safely achieved first gas seven months ahead of schedule and under budget.

•      On 16 September, Gas Natural Açu (GNA), a joint venture between bp, Prumo, Siemens and SPIC Brasil, announced the start of commercial operations at GNA I, a LNG to power thermoelectric plant located in Porto do Açu, Rio de Janeiro, Brazil. The project has a 1.3GW capacity.

•      On 6 September, bp Singapore announced its first carbon offset LNG cargo had been delivered to CPC Corporation, Taiwan, sourced from bp's LNG portfolio.

•      On 7 October, bp China signed a 10-year pipeline gas supply agreement with Shenzhen Gas. Starting in 2023, bp has agreed to provide up to 300,000 tonnes per year of pipeline gas. The supply will be re-gasified through Guangdong Dapeng LNG's receiving terminal, in which bp has a 30% stake.

low carbon energy

•      On 20 September, Lightsource bp announced its new global growth strategy of developing 25GW of solar projects by 2025.

•      On 16 September, bp announced a strategic partnership with ADNOC and  Masdar. Through this partnership we aim to jointly develop a range of low carbon energy projects, including the development of green and blue hydrogen hubs.

•      On 19 October, the East Coast Cluster was selected as one of the UK's first two carbon capture and storage projects by the UK government. The East Coast Cluster is enabled by the Northern Endurance Partnership - a collaboration between bp, Eni, Equinor, National Grid, Shell and Total, with bp as operator.

•      On 7 July, bp closed its transaction with US solar developer 7X Energy to acquire 9GW of solar development projects. Projects with a combined generating capacity of 2.2GW are expected to reach final investment decision (FID) by 2025, with further projects expected to progress by 2030.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Profit (loss) before interest and tax    (4,120)    931     259       263     (6,421)   
Inventory holding (gains) losses*    (15)    (4)    (7)      (41)    (9)   
RC profit (loss) before interest and tax    (4,135)    927     252       222     (6,430)   
Net (favourable) adverse impact of adjusting items    5,942     313     250       5,095     6,965    
Underlying RC profit (loss) before interest and tax    1,807     1,240     502       5,317     535    
Taxation on an underlying RC basis    (389)    (244)    (249)      (1,168)    (621)   
Underlying RC profit (loss) before interest    1,418     996     253       4,149     (86)   

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gas & low carbon energy (continued)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    1,230     1,115     746       3,199     2,736    
               
Exploration write-offs               
Exploration write-offs(a)    14     21     65       41     1,699    
               
Adjusted EBITDA*               
Total adjusted EBITDA    3,051     2,376     1,311       8,557     4,300    
               
Capital expenditure*               
gas    736     705     892       2,252     3,083    
low carbon energy(b)    336     42     43       1,452     55    
Total capital expenditure    1,072     747     935       3,704     3,138    

(a)    Third quarter and nine months 2020 include a write-off of $2 million and $670 million respectively, which have been classified within the 'other' category of adjusting items.

(b)    Nine months 2021 includes $712 million in respect of the remaining payment to Equinor for our investment in our strategic US offshore wind partnership and $326 million as a lease option fee deposit paid to The Crown Estate in connection with our participation in the UK Round 4 Offshore Wind Leasing together with our partner EnBW.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
Production (net of royalties)(c)               
Liquids* (mb/d)    109     109     92       110     96    
Natural gas (mmcf/d)    4,520     4,440     4,343       4,527     4,490    
Total hydrocarbons* (mboe/d)    889     875     841       891     870    
               
Average realizations*(d)               
Liquids ($/bbl)    66.39     61.69     37.77       61.11     35.41    
Natural gas ($/mcf)    5.26     4.14     2.99       4.44     3.21    
Total hydrocarbons* ($/boe)    34.91     28.97     19.64       30.21     20.55    

(c)     Includes bp's share of production of equity-accounted entities in the gas & low carbon energy segment.

(d)    Realizations are based on sales by consolidated subsidiaries only - this excludes equity-accounted entities.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
low carbon energy    2021  2021  2020    2021  2020 
               
Renewables (bp net, GW)               
Installed renewables capacity*    1.7     1.6     1.2       1.7     1.2    
               
Developed renewables to FID*(e)    3.6     3.5     3.1       3.6     3.1    
Renewables pipeline    23.3  21.2      23.3   
of which by geographical area:               
Renewables pipeline - Americas    16.8     15.3         16.8      
Renewables pipeline - Asia Pacific    1.1     0.8         1.1      
Renewables pipeline - Europe    5.2     5.1         5.2      
Renewables pipeline - Other    0.2     -         0.2      
of which by technology:               
Renewables pipeline - offshore wind    3.7     3.7         3.7      
Renewables pipeline - solar    19.6     17.5         19.6      
Total Developed renewables to FID and Renewables pipeline(e)    26.9     24.7         26.9      

(e)      An amendment of 0.2GW has been made to the amount presented for the second quarter 2021 (previously Developed renewables to FID 3.7GW.)

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oil production & operations

Financial results

•      The replacement cost profit before interest and tax for the third quarter and nine months was $2,692 million and $7,289 million respectively, compared with a loss of $156 million and $14,649 million for the same periods in 2020. The third quarter and nine months includes a favourable impact of net adjusting items* of $231 million and $1,021 million respectively, compared with an adverse impact of net adjusting items of $523 million and $8,198 million for the same periods in 2020.

•      After excluding adjusting items, the underlying replacement cost profit before interest and tax* for the third quarter and nine months was $2,461 million and $6,268 million respectively, compared with a profit of $367 million and a loss of $6,451 million for the same periods in 2020.

•      The underlying replacement cost profit for the third quarter, compared with the same period in 2020, primarily reflects higher liquids and gas realizations. For the nine months, compared with the same period in 2020, the underlying replacement cost profit mainly reflects higher liquids and gas realizations, significantly lower exploration write-offs, and lower volumes.

Operational update

•      Reported production for the quarter was 1,313mboe/d, 6.3% lower than the third quarter of 2020. This includes price impacts on PSA* and TSC* entitlement volumes and the impact of BPX Energy divestments. Underlying production* for the quarter was flat reflecting major project* ramp-up offset by impacts from reduced capital investment, decline and weather impacts in the US Gulf of Mexico.

•      Reported production for the nine months was 1,289mboe/d, 18.3% lower than the same period in 2020. This includes price impacts on PSA and TSC entitlement volumes and the impact of divestments in Alaska and BPX Energy. Underlying production for the nine months decreased by 6.1% mainly due to impacts from reduced capital investment and decline.

Strategic progress

•      On 28 September, bp announced the start-up of its Thunder Horse South Expansion Phase 2 project in the deepwater Gulf of Mexico (bp 75% operator, ExxonMobil 25%).

•      On 29 September, bp announced it has agreed to sell a 25% participating interest in the Shallow Water Absheron Peninsula (SWAP) exploration project in the Azerbaijan sector of the Caspian Sea to LUKOIL. Subject to approval, the transaction, with an effective date of 1 July 2021, is expected to complete in the fourth quarter of 2021, following which the participating interests will be: SOCAR Oil Affiliate 50%, bp operator 25% and LUKOIL 25%.

•      Furthermore, Yermak IJV (Rosneft 51%, bp 49%) secured access to two new license blocks, Khoshgortyeganskiy and Kharayeganskiy, in the established West Siberia basin.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Profit (loss) before interest and tax    2,691     3,112     (155)      7,297     (14,661)   
Inventory holding (gains) losses*    1     6     (1)      (8)    12    
RC profit (loss) before interest and tax    2,692     3,118     (156)      7,289     (14,649)   
Net (favourable) adverse impact of adjusting items    (231)    (876)    523       (1,021)    8,198    
Underlying RC profit (loss) before interest and tax    2,461     2,242     367       6,268     (6,451)   
Taxation on an underlying RC basis    (1,220)    (939)    (247)      (2,888)    345    
Underlying RC profit (loss) before interest    1,241     1,303     120       3,380     (6,106)   

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oil production & operations (continued)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    1,767     1,559     1,814       4,900     6,001    
               
Exploration write-offs               
Exploration write-offs(a)    16     8     (15)      80     8,067    
               
Adjusted EBITDA*               
Total adjusted EBITDA    4,244     3,809     2,166       11,248     6,316    
               
Capital expenditure*               
Total capital expenditure    1,099     1,148     1,117       3,566     4,696    

(a)    Nine months 2020 includes a write-off of $1,301 million which has been classified within the 'other' category of adjusting items.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
Production (net of royalties)(b)               
Liquids* (mb/d)    975     938     1,037       970     1,171    
Natural gas (mmcf/d)    1,961     1,786     2,115       1,853     2,365    
Total hydrocarbons* (mboe/d)    1,313     1,245     1,402       1,289     1,578    
               
Average realizations*(c)               
Liquids ($/bbl)    65.53     60.55     38.21       59.60     35.52    
Natural gas ($/mcf)    5.61     3.90     1.42       4.59     1.31    
Total hydrocarbons* ($/boe)    57.72     52.47     31.21       52.35     28.94    

(b)    Includes bp's share of production of equity-accounted entities in the oil production & operations segment.

(c)     Realizations are based on sales by consolidated subsidiaries only - this excludes equity-accounted entities.

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customers & products

Financial results 

•      The replacement cost profit before interest and tax for the third quarter and nine months was $1,060 million and $2,634 million respectively, compared with $915 million and $2,173 million for the same periods in 2020. The third quarter and nine months included an adverse impact of net adjusting items* of $98 million and $7 million respectively, compared with a favourable impact of net adjusting items of $279 million and an adverse impact of net adjusting items of $789 million for the same periods in 2020.

•      After excluding adjusting items, the underlying replacement cost profit before interest and tax* for the third quarter and nine months was $1,158 million and $2,641 million respectively, compared with $636 million and $2,962 million for the same periods in 2020.

•      The customers & products result for the third quarter reflects a materially stronger performance, nearly double that of last year, primarily driven by a stronger refining environment. The result for the nine months, reflects a stronger customers performance, more than offset by a lower trading result in products and absence of earnings from our divested petrochemicals business.

•      customers - convenience and mobility results, excluding Castrol, for the quarter and nine months demonstrated resilient performance, albeit with lower earnings than the same periods last year. These results were supported by higher volumes and resilient fuel margins despite rising crude prices, as well as strong convenience performance, with record year-to-date gross margin*. Costs for both periods were higher in support of the re-opening of some markets following COVID and increased digital and marketing expenditure underpinning our growth agenda. 

Castrol results in the quarter were lower than last year, with industry base oil prices more than doubling and severe lockdown restrictions in place across key Asian markets. For the nine months performance was strong, with volumes and earnings materially higher than the same period in 2020, and with China delivering record underlying earnings.

•      products - the products result for the quarter was materially stronger than last year, with higher results in both refining and trading. The result for the nine months was lower than last year due to an exceptionally strong trading performance in the second quarter of last year. In refining the result for the quarter and the nine months was stronger due to higher utilization, which enabled the capture of improved realized refining margins. This was partially offset by a higher level of turnaround and maintenance activity and increased energy prices.

Operational update

•      Utilization for the quarter was around 9 percentage points higher than the same period last year due to lower COVID related demand impacts. bp-operated refining availability* for the third quarter and nine months was 95.6% and 94.6% respectively, lower compared with 96.2% and 96.0% for the same periods last year, due to a higher level of maintenance activity.

Strategic progress

•      In support of our strategic agenda to redefine convenience, we have grown our strategic convenience sites* to 2,050 at the end of the third quarter. Additionally, we have:

◦     expanded our convenience partnership model with Albert Heijn, the leading supermarket chain in the Netherlands, with plans to roll out a new exclusive food-to-go offer to more than 100 retail sites by the end of next year;

◦     completed the transaction to take full ownership of the Thorntons business, positioning bp to be a leading convenience operator in the Midwest US.

•      In next-gen mobility, nearly half of our network is now either rapid or ultra-fast charging and in the quarter we delivered 45% growth in electrons sold compared to the prior quarter. In addition, in October, our investment with Daimler and BMW in Digital Charging Solutions completed.

•      In growth markets, our fuels and mobility joint venture in India with Reliance, Jio-bp, opened their first mobility station in October. The site has a fully-integrated customer offer, including high-quality additivised fuels, EV charging points, tailored convenience offers, as well as our Castrol products and services. Jio-bp also announced an agreement with EV demand partner, Swiggy, a leading food delivery company, to roll out a network of battery swap stations.

•      In Castrol, our market leading position in advanced e-fluids, Castrol ON, was further strengthened with more than two-thirds of the world's major vehicle manufacturers(a) having now approved Castrol ON products as part of their factory fill.

•      In refining:

◦     we announced plans to invest $270 million at the Cherry Point refinery in the US, to improve efficiency, reduce CO₂ emissions and increase its renewable diesel production capability;

◦     bp Castellón in Spain, was the first refinery in the world to receive accreditation from the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) for the production of sustainable fuel for aviation.

(a)    Based on LMCA data for top 20 selling OEMs (total new car sales) in 2019.

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customers & products (continued)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Profit (loss) before interest and tax    1,511     1,527     1,106       5,577     (1,273)   
Inventory holding (gains) losses*    (451)    (887)    (191)      (2,943)    3,446    
RC profit before interest and tax    1,060     640     915       2,634     2,173    
Net (favourable) adverse impact of adjusting items    98     187     (279)      7     789    
Underlying RC profit before interest and tax    1,158     827     636       2,641     2,962    
Of which:(a)               
customers - convenience & mobility    806     951     1,081       2,415     2,201    
Castrol - included in customers    231     265     326       830     556    
products - refining & trading    352     (124)    (533)      226     561    
petrochemicals    -     -     88       -     200    
Taxation on an underlying RC basis    (314)    (123)    (51)      (570)    (637)   
Underlying RC profit before interest    844     704     585       2,071     2,325    

(a)    A reconciliation to RC profit before interest and tax by business is provided on page 33.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Adjusted EBITDA*(b)               
customers - convenience & mobility    1,130     1,280     1,387       3,392     3,077    
Castrol - included in customers    267     304     364       944     675    
products - refining & trading    775     301     (98)      1,495     1,825    
petrochemicals    -     -     90       -     302    
    1,905     1,581     1,379       4,887     5,204    
               
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    747     754     743       2,246     2,242    
               
Capital expenditure*               
customers - convenience & mobility    301     255     1,266       872     1,756    
Castrol - included in customers    37     42     33       120     104    
products - refining & trading    296     264     244       776     702    
petrochemicals    -     -     9       -     87    
Total capital expenditure    597     519     1,519       1,648     2,545    

(b)    A reconciliation to RC profit before interest and tax by business is provided on page 33.

Retail(c)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
bp retail sites* - total (#)    20,350     20,300     20,550       20,350     20,550    
bp retail sites in growth markets*    2,650     2,700     2,700       2,650     2,700    
Strategic convenience sites*    2,050     2,000     1,900       2,050     1,900    

(c)     Reported to the nearest 50.

Marketing sales of refined products (mb/d)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
US    1,161     1,131     1,083       1,103     997    
Europe    968     838     849       838     830    
Rest of World    439     469     422       450     435    
    2,568     2,438     2,354       2,391     2,262    
Trading/supply sales of refined products(d)    425  415     435       392  432    
Total sales volume of refined products    2,993  2,853     2,789       2,783  2,694    

(d)    Comparative information for 2020 has been restated for the changes to net presentation of revenues and purchases relating to physically settled derivative contracts effective 1 January 2021. For more information see Note 1 basis of preparation - Voluntary change in accounting policy.

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customers & products (continued)

Refining marker margin*(a)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
bp average refining marker margin (RMM) ($/bbl)    15.2     13.7     6.2       12.6     7.0    
                         

(a)    In 2021 the RMM has been updated to reflect changes in bp's portfolio, and the update of crude reference for Mediterranean region. On this basis the third quarter and nine months 2020 RMM would be $6.4/bbl and $7.1/bbl respectively.

Refinery throughputs - operated refineries (mb/d)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
US    737     692     701       719     687    
Europe    804     763     699       771     750    
Rest of World    81     52     187       87     189    
Total refinery throughputs    1,622     1,507     1,587       1,577     1,626    
bp-operated refining availability* (%)    95.6     93.5     96.2       94.6     96.0    

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Rosneft

Financial results

•      The replacement cost (RC) profit before interest and tax for the third quarter and nine months was $868 million and $1,874 million respectively, compared with a loss of $278 million and $419 million for the same periods in 2020. The third quarter and nine months included an adverse impact of net adjusting items* of $55 million and $101 million respectively, compared with an adverse impact of net adjusting items of $101 million and $164 million for the same periods in 2020.

•      After excluding adjusting items, the underlying RC profit before interest and tax* for the third quarter and nine months was $923 million and $1,975 million respectively, compared with a loss of $177 million and $255 million for the same periods in 2020.

•      Compared with the same periods in 2020, the results for the third quarter and nine months primarily reflect higher oil prices and favourable foreign exchange effects.

•      The extraordinary general meeting held on 30 September adopted a resolution to pay interim dividends of 18.03 roubles per ordinary share which constitute 50% of Rosneft's IFRS net profit for the first half of 2021. bp expects to receive dividends of 34 billion roubles (net of withholding tax) in the fourth quarter.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021(a)  2021  2020    2021(a)  2020 
Profit (loss) before interest and tax(b)(c)    903     711     (244)      2,065     (533)   
Inventory holding (gains) losses*    (35)    (68)    (34)      (191)    114    
RC profit (loss) before interest and tax    868     643     (278)      1,874     (419)   
Net (favourable) adverse impact of adjusting items    55     46     101       101     164    
Underlying RC profit (loss) before interest and tax    923     689     (177)      1,975     (255)   
Taxation on an underlying RC basis    (93)    (68)    17       (196)    28    
Underlying RC profit (loss) before interest    830     621     (160)      1,779     (227)   
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021(a)  2021  2020    2021(a)  2020 
Production: Hydrocarbons (net of royalties, bp share)               
Liquids* (mb/d)    876     858     858       854     877    
Natural gas (mmcf/d)    1,418     1,374     1,260       1,363     1,261    
Total hydrocarbons* (mboe/d)    1,120     1,095     1,075       1,089     1,094    

(a)    The operational and financial information of the Rosneft segment for the third quarter and nine months is based on preliminary operational and financial results of  Rosneft for the three months and nine months ended 30 September 2021. Actual results may differ from these amounts. Amounts reported for the third quarter are based on bp's 22.03% average economic interest for the quarter (second quarter 2021 22.03% and third quarter 2020 21.96%).

(b)    The Rosneft segment result includes equity-accounted earnings arising from bp's economic interest in  Rosneft as adjusted for accounting required under IFRS relating to bp's purchase of its interest in  Rosneft, and the amortization of the deferred gain relating to the divestment of bp's interest in TNK-BP.

(c)     bp's adjusted share of Rosneft's earnings after Rosneft's own finance costs, taxation and non-controlling interests is included in the bp group income statement within profit before interest and taxation. For each year-to-date period it is calculated by translating the amounts reported in Russian roubles into US dollars using the average exchange rate for the year to date.

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other businesses & corporate

Other businesses & corporate comprises our innovation & engineering business including bp ventures and Launchpad, regions, cities & solutions, our corporate activities & functions and any residual costs of the Gulf of Mexico oil spill.

Financial results

•      The replacement cost loss before interest and tax for the third quarter and nine months was $750 million and $1,853 million respectively, compared with $42 million and $867 million for the same periods in 2020. The third quarter and nine months included an adverse impact of net adjusting items* of $377 million and $1,005 million respectively, including $263 million and $637 million of adverse fair value accounting effects* respectively, compared with a favourable impact of net adjusting items of $79 million and an adverse impact of net adjusting items of $94 million, including $266 million and $225 million of favourable fair value accounting effects respectively, for the same periods in 2020.

•      After excluding adjusting items*, the underlying replacement cost loss before interest and tax* for the third quarter and nine months was $373 million and $848 million respectively, compared with $121 million and $773 million for the same periods in 2020, reflecting foreign exchange and employee cost impacts.

Strategic progress

•      bp and NYK Line signed a memorandum of understanding on 24 August to collaborate on future fuels and transportation solutions to help industrial sectors, including shipping, decarbonize.

•      On 2 September, bp Launchpad acquired Blueprint Power (Blueprint), a US-based company whose technology is focused on optimizing the power networks of buildings by connecting them to energy markets through cloud-based software. Blueprint's technology presents an opportunity to help decarbonize commercial real estate, help real estate owners meet their environmental goals and give them access to new revenue streams.

•      On 24 September, bp ventures led a $25 million investment round in all-electric ride hailing & EV charging start-up BluSmart. BluSmart is India's first and largest integrated EV ride-hailing and charging service. BluSmart intends to use the capital to expand its fleet of electric vehicles and charging stations in its home city of Delhi and into five additional Indian cities in the next two years.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Profit (loss) before interest and tax    (750)    (425)    (42)      (1,853)    (867)   
Inventory holding (gains) losses*    -     -     -       -     -    
RC profit (loss) before interest and tax    (750)    (425)    (42)      (1,853)    (867)   
Net (favourable) adverse impact of adjusting items(a)    377     120     (79)      1,005     94    
Underlying RC profit (loss) before interest and tax    (373)    (305)    (121)      (848)    (773)   
Taxation on an underlying RC basis    11     101     13       166     (18)   
Underlying RC profit (loss) before interest    (362)    (204)    (108)      (682)    (791)   

(a)    Includes fair value accounting effects relating to the hybrid bonds that were issued on 17 June 2020. See page 36 for more information.

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Financial statements

Group income statement

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
               
Sales and other operating revenues (Note 5)(a)    36,174     36,467     26,312       107,185     78,547    
Earnings from joint ventures - after interest and tax    197     (57)    73       300     (516)   
Earnings from associates - after interest and tax    1,103     856     (332)      2,560     (676)   
Interest and other income    158     82     183       322     430    
Gains on sale of businesses and fixed assets    235     250     27       1,590     117    
Total revenues and other income    37,867     37,598     26,263       111,957     77,902    
Purchases(a)    23,937     21,241     13,706       60,834     42,271    
Production and manufacturing expenses    6,026     6,562     5,073       19,446     16,383    
Production and similar taxes    354     295     140       902     467    
Depreciation, depletion and amortization (Note 6)    3,944     3,631     3,467       10,942     11,463    
Impairment and losses on sale of businesses and fixed assets (Note 3)    220     (2,937)    294       (2,344)    13,213    
Exploration expense    116     107     190       322     10,066    
Distribution and administration expenses    3,077     2,874     2,435       8,566     7,628    
Profit (loss) before interest and taxation    193     5,825     958       13,289     (23,589)   
Finance costs    693     682     800       2,098     2,366    
Net finance (income) expense relating to pensions and other post-retirement benefits    (5)    5     8       6     23    
Profit (loss) before taxation    (495)    5,138     150       11,185     (25,978)   
Taxation    1,850     1,784     457       5,276     (3,764)   
Profit (loss) for the period    (2,345)    3,354     (307)      5,909     (22,214)   
Attributable to               
BP shareholders    (2,544)    3,116     (450)      5,239     (21,663)   
Non-controlling interests    199     238     143       670     (551)   
    (2,345)    3,354     (307)      5,909     (22,214)   
               
Earnings per share (Note 7)               
Profit (loss) for the period attributable to BP shareholders               
Per ordinary share (cents)               
Basic    (12.63)    15.37     (2.22)      25.88     (107.15)   
Diluted    (12.63)    15.30     (2.22)      25.72     (107.15)   
Per ADS (dollars)               
Basic    (0.76)    0.92     (0.13)      1.55     (6.43)   
Diluted    (0.76)    0.92     (0.13)      1.54     (6.43)   

(a)    2020 numbers have been restated as a result of changes to the net presentation of revenues and purchases relating to physically settled derivative contracts effective 1 January 2021. For more information see Note 1 Basis of preparation - Voluntary change in accounting policy.

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Condensed group statement of comprehensive income

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
               
Profit (loss) for the period    (2,345)    3,354     (307)      5,909     (22,214)   
Other comprehensive income               
Items that may be reclassified subsequently to profit or loss               
Currency translation differences(a)    (599)    902     (166)      (302)    (3,437)   
Exchange (gains) losses on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets    -     -     -       -     4    
Cash flow hedges and costs of hedging    (398)    (207)    (90)      (667)    63    
Share of items relating to equity-accounted entities, net of tax    (3)    (68)    308       (60)    417    
Income tax relating to items that may be reclassified    80     8     (16)      89     64    
    (920)    635     36       (940)    (2,889)   
Items that will not be reclassified to profit or loss               
Remeasurements of the net pension and other post-retirement benefit liability or asset(b)    494     590     78       3,110     (163)   
Cash flow hedges that will subsequently be transferred to the balance sheet    (2)    1     8       1     (2)   
Income tax relating to items that will not be reclassified    (130)    (165)    (16)      (883)    (16)   
    362     426     70       2,228     (181)   
Other comprehensive income    (558)    1,061     106       1,288     (3,070)   
Total comprehensive income    (2,903)    4,415     (201)      7,197     (25,284)   
Attributable to               
BP shareholders    (3,084)    4,183     (364)      6,559     (24,723)   
Non-controlling interests    181     232     163       638     (561)   
    (2,903)    4,415     (201)      7,197     (25,284)   

(a)    Second quarter 2021 and nine months 2020 principally affected by movements in the Russian rouble against the US dollar.

(b)    See Note 1 - Basis of preparation - Pensions and other post-retirement benefits for further information.

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Condensed group statement of changes in equity

    bp shareholders'  Non-controlling interests  Total 
$ million    equity  Hybrid bonds  Other interest  equity 
At 1 January 2021    71,250     12,076     2,242     85,568    
           
Total comprehensive income    6,559     377     261     7,197    
Dividends    (3,236)    -     (245)    (3,481)   
Cash flow hedges transferred to the balance sheet, net of tax    (8)    -     -     (8)   
Repurchase of ordinary share capital    (1,897)    -     -     (1,897)   
Share-based payments, net of tax    407     -     -     407    
Share of equity-accounted entities' changes in equity, net of tax    558     -     -     558    
Issue of perpetual hybrid bonds(a)    (24)    883     -     859    
Payments on perpetual hybrid bonds    (7)    (431)    -     (438)   
Transactions involving non-controlling interests, net of tax    873     -     (372)    501    
At 30 September 2021    74,475     12,905     1,886     89,266    
           
    bp shareholders'  Non-controlling interests  Total 
$ million    equity  Hybrid bonds  Other interest  equity 
At 1 January 2020    98,412     -     2,296     100,708    
           
Total comprehensive income    (24,723)    133     (694)    (25,284)   
Dividends    (5,305)    -     (163)    (5,468)   
Cash flow hedges transferred to the balance sheet, net of tax    7     -     -     7    
Repurchase of ordinary share capital    (776)    -     -     (776)   
Share-based payments, net of tax    547     -     -     547    
Issue of perpetual hybrid bonds    (48)    11,909     -     11,861    
Payments on perpetual hybrid bonds    -     (27)    -     (27)   
Tax on issue of perpetual hybrid bonds    1     -     -     1    
Transactions involving non-controlling interests, net of tax    (160)    -     746     586    
At 30 September 2020    67,955     12,015     2,185     82,155    

(a)    See note 1 - Issuance of hybrid securities for further information.

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Group balance sheet

    30 September  31 December 
$ million    2021  2020 
Non-current assets       
Property, plant and equipment    114,458     114,836    
Goodwill    12,428     12,480    
Intangible assets    6,261     6,093    
Investments in joint ventures    9,777     8,362    
Investments in associates    21,359     18,975    
Other investments    2,396     2,746    
Fixed assets    166,679     163,492    
Loans    972     840    
Trade and other receivables    3,815     4,351    
Derivative financial instruments    7,203     9,755    
Prepayments    473     533    
Deferred tax assets    6,259     7,744    
Defined benefit pension plan surpluses    10,659     7,957    
    196,060     194,672    
Current assets       
Loans    478     458    
Inventories    25,232     16,873    
Trade and other receivables    25,327     17,948    
Derivative financial instruments    6,542     2,992    
Prepayments    1,479     1,269    
Current tax receivable    494     672    
Other investments    191     333    
Cash and cash equivalents    30,694     31,111    
    90,437     71,656    
Assets classified as held for sale (Note 2)    39     1,326    
    90,476     72,982    
Total assets    286,536     267,654    
Current liabilities       
Trade and other payables    49,406     36,014    
Derivative financial instruments    10,666     2,998    
Accruals    5,623     4,650    
Lease liabilities    1,762     1,933    
Finance debt    3,693     9,359    
Current tax payable    1,346     1,038    
Provisions    5,585     3,761    
    78,081     59,753    
Liabilities directly associated with assets classified as held for sale (Note 2)    31     46    
    78,112     59,799    
Non-current liabilities       
Other payables    10,603     12,112    
Derivative financial instruments    6,095     5,404    
Accruals    978     852    
Lease liabilities    6,866     7,329    
Finance debt    59,521     63,305    
Deferred tax liabilities    8,044     6,831    
Provisions    18,820     17,200    
Defined benefit pension plan and other post-retirement benefit plan deficits    8,231     9,254    
    119,158     122,287    
Total liabilities    197,270     182,086    
Net assets    89,266     85,568    
Equity       
BP shareholders' equity    74,475     71,250    
Non-controlling interests    14,791     14,318    
Total equity    89,266     85,568    

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Condensed group cash flow statement

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Operating activities               
Profit (loss) before taxation    (495)    5,138     150       11,185     (25,978)   
Adjustments to reconcile profit (loss) before taxation to net cash provided by operating activities               
Depreciation, depletion and amortization and exploration expenditure written off    3,976     3,659     3,517       11,063     21,229    
Impairment and (gain) loss on sale of businesses and fixed assets    (15)    (3,187)    267       (3,934)    13,096    
Earnings from equity-accounted entities, less dividends received    (784)    (539)    1,018       (1,956)    2,383    
Net charge for interest and other finance expense, less net interest paid    63     300     60       392     214    
Share-based payments    219     228     199       401     544    
Net operating charge for pensions and other post-retirement benefits, less contributions and benefit payments for unfunded plans    (80)    (371)    (46)      (471)    (100)   
Net charge for provisions, less payments    666     1,172     293       2,740     (131)   
Movements in inventories and other current and non-current assets and liabilities    3,850     26     556       1,083     630    
Income taxes paid    (1,424)    (1,015)    (810)      (3,007)    (1,994)   
Net cash provided by operating activities    5,976     5,411     5,204       17,496     9,893    
Investing activities               
Expenditure on property, plant and equipment, intangible and other assets    (2,647)    (2,435)    (2,577)      (8,115)    (9,384)   
Acquisitions, net of cash acquired    (53)    -     (10)      (54)    (27)   
Investment in joint ventures    (70)    (47)    (12)      (859)    (38)   
Investment in associates    (133)    (32)    (1,037)      (187)    (1,115)   
Total cash capital expenditure    (2,903)    (2,514)    (3,636)      (9,215)    (10,564)   
Proceeds from disposal of fixed assets    (19)    93     32       625     52    
Proceeds from disposal of businesses, net of cash disposed    332     122     84       4,067     1,425    
Proceeds from loan repayments    33     67     50       161     656    
Cash provided from investing activities    346     282     166       4,853     2,133    
Net cash used in investing activities    (2,557)    (2,232)    (3,470)      (4,362)    (8,431)   
Financing activities               
Net issue (repurchase) of shares (Note 7)    (926)    (500)    -       (1,426)    (776)   
Lease liability payments    (506)    (514)    (578)      (1,580)    (1,811)   
Proceeds from long-term financing    2,398     1,985     2,587       6,339     12,117    
Repayments of long-term financing    (6,745)    (67)    (4,307)      (13,841)    (8,988)   
Net increase (decrease) in short-term debt    (81)    (33)    (2,630)      108     (328)   
Issue of perpetual hybrid bonds(a)    859     -     -       859     11,861    
Payments on perpetual hybrid bonds    (55)    (328)    (27)      (438)    (27)   
Payments relating to transactions involving non-controlling interests (Other interest)    (560)    -     -       (560)    (8)   
Receipts relating to transactions involving non-controlling interests (Other interest)    -     3     483       671     492    
Dividends paid - BP shareholders    (1,101)    (1,062)    (1,060)      (3,227)    (5,281)   
 - non-controlling interests    (87)    (107)    (58)      (245)    (163)   
Net cash provided by (used in) financing activities    (6,804)    (623)    (5,590)      (13,340)    7,088    
Currency translation differences relating to cash and cash equivalents    (177)    24     268       (211)    43    
Increase (decrease) in cash and cash equivalents    (3,562)    2,580     (3,588)      (417)    8,593    
Cash and cash equivalents at beginning of period    34,256     31,676     34,653       31,111     22,472    
Cash and cash equivalents at end of period(b)    30,694     34,256     31,065       30,694     31,065    

(a)     See note 1 - Issuance of hybrid securities for further information.

(b)     Third quarter and nine months 2020 includes $316 million of cash and cash equivalents classified as assets held for sale in the group balance sheet.

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Notes

Note 1. Basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 'Interim Financial Reporting'.

The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December 2020 included in BP Annual Report and Form 20-F 2020.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial statements. The ongoing impact of COVID-19 and the current economic environment has been considered as part of the going concern assessment. Forecast liquidity has been assessed under a number of stressed scenarios to support this assertion. Reverse stress tests indicated that the group will continue to operate as a going concern for at least 12 months from the date of approval of the interim financial statements even if the Brent price fell to zero.

bp prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of 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 UK Companies Act 2006 as applicable to companies reporting under international accounting standards. As a result of the UK's withdrawal from the EU, with effect from 1 January 2021, the consolidated financial statements are also prepared in accordance with IFRS as adopted by the UK. IFRS as adopted by the UK does not differ from IFRS as adopted by the EU. IFRS as adopted by the EU and UK differ in certain respects from IFRS as issued by the IASB. The differences have no impact on the group's consolidated financial statements for the periods presented.

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP Annual Report and Form 20-F 2021 which are the same as those used in preparing BP Annual Report and Form 20-F 2020 with the exception of the changes described in the 'Updates to significant accounting policies' section below. There are no other new or amended standards or interpretations adopted from 1 January 2021 onwards that have a significant impact on the financial information.

Considerations in respect of COVID-19 and the current economic environment

bp's significant accounting judgements and estimates were disclosed in BP Annual Report and Form 20-F 2020. These have been subsequently considered at the end of each quarter to determine if any changes were required to those judgements and estimates as a result of current market conditions. The conditions also result in the valuation of certain assets and liabilities remaining subject to more uncertainty, including those set out below.

Impairment testing assumptions

The group's price assumption for Brent oil was revised during the second quarter. The assumption up to 2030 was increased to reflect near-term supply constraints whereas the long-term assumption was decreased reaching $55 per barrel by 2040 and $45 per barrel by 2050 (in real 2020 terms) as bp's management expects an acceleration of the pace of transition to a lower carbon economy. The price assumption for Henry Hub gas were unchanged from those disclosed in BP Annual Report and Form 20-F 2020. A summary of the group's price assumptions, in real 2020 terms, is provided below:

      4Q21  2025  2030  2040  2050 
Brent oil ($/bbl)      60  60  60  55  45 
Henry Hub gas ($/mmBtu)      3.00  3.00  3.00  3.00  2.75 

The group has identified upstream oil and gas properties with carrying amounts totalling approximately $30 billion where the headroom, based on the most recent impairment tests performed, was less than or equal to 20% of the carrying value. A change in price or other assumptions within the next financial year may result in a recoverable amount of one or more of these assets above or below the current carrying amount and therefore there is a significant risk of impairment reversals or charges in that period.

The discount rates used in value-in-use impairment testing as disclosed in BP Annual Report and Form 20-F 2020, are unchanged.

Provisions

The nominal risk-free discount rate applied to provisions is reviewed on a quarterly basis. The discount rate applied to the group's provisions remains at 2.0% (31 December 2020 2.5%).

Pensions and other post-retirement benefits

The group's defined benefit pension plans are reviewed quarterly to determine any changes to the fair value of the plan assets or present value of the defined benefit obligations. As a result of the review during the third quarter of 2021, the group's total net defined benefit pension plan surplus as at 30 September 2021 is $2.4 billion, compared to a surplus of $2.0 billion and a deficit of $1.3 billion at 30 June 2021 and 31 December 2020 respectively.

The movement for the nine months principally reflects net actuarial gains reported in other comprehensive income arising from increases in the UK, US and Eurozone discount rates and positive asset performance, partly offset by increases in inflation rates. Also reflected in the nine months is a reduction in the liability of the UK funded final salary pension plan which was closed to future accrual on 30 June 2021. A curtailment gain of $0.3 billion was recognized in the income statement in the second quarter. For active members of the scheme at 30 June 2021, benefits payable are now linked to salary as at that date rather than to salary on retirement. The current environment is likely to continue to affect the values of the plan assets and obligations resulting in potential volatility in the amount of the net defined benefit pension plan surplus/deficit recognized.

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Note 1. Basis of preparation (continued)

Impairment of financial assets measured at amortized cost

The estimate of the loss allowance recognized on financial assets measured at amortized cost using an expected credit loss approach was determined not to be a significant accounting estimate in preparing BP Annual Report and Form 20-F 2020. Expected credit loss allowances are, however, reviewed and updated quarterly. Allowances are recognized on assets where there is evidence that the asset is credit-impaired and on a forward-looking expected credit loss basis for assets that are not credit-impaired. The current economic environment and future credit risk outlook have been considered in updating the estimate of loss allowances with no significant impact in the quarter.

The group continues to believe that the calculation of expected credit loss allowances is not a significant accounting estimate. The group continues to apply its credit policy as disclosed in BP Annual Report and Form 20-F 2020 - Financial statements - Note 29 Financial instruments and financial risk factors - credit risk.

Other accounting judgements and estimates

All other significant accounting judgements and estimates disclosed in BP Annual Report and Form 20-F 2020 remain applicable and no new significant accounting judgements or estimates have been identified specifically arising from the impact of COVID-19.

Issuance of hybrid securities

During the quarter, a group subsidiary issued perpetual subordinated hybrid capital securities of $0.9 billion. The proceeds from this issuance were specifically earmarked to fund a forward purchase and leaseback of an under-construction floating, production, storage, and offloading vessel (FPSO) to be used on one of the group's major projects.

As the group has the unconditional right to defer interest and principal indefinitely, they are classified as equity instruments and reported within non-controlling interests in the condensed consolidated financial statements.

Updates to significant accounting policies

Change in accounting policy - Interest Rate Benchmark Reform - Phase II

Financial authorities have announced the timing of interest rate benchmark transitions with market discussions continuing around benchmark application. The replacement of key interest rate benchmarks such as the London Inter-bank Offered Rate (LIBOR) with alternative benchmarks in the US, UK, EU and other territories is expected at the end of 2021 for most benchmarks, with remaining USD tenors expected to cease in 2023. bp is primarily exposed to USD LIBORs that will be available until June 2023.

Amendments to IFRS 9 'Financial instruments', IFRS 16 'Leases' and other IFRSs were issued by the IASB in August 2020 to provide practical expedients and reliefs when changes are made to contractual cash flows or hedging relationships because of the transition from Inter-bank Offered Rates to alternative risk-free rates. bp adopted these amendments from 1 January 2021 and they will be applied prospectively.

bp has set up an internal working group on interest rate benchmark reform to monitor market developments and manage the transition to alternative benchmark rates. The impacts on contracts and arrangements that are linked to existing interest rate benchmarks, for example, borrowings, leases and derivative contracts have been assessed and transition plans are being developed. bp is also participating on external committees and task forces dedicated to interest rate benchmark reform.

Change in segmentation

During the first quarter of 2021, the group's reportable segments were changed consistent with a change in the way that resources are allocated and performance is assessed by the chief operating decision maker, who for bp is the group chief executive, from that date. From the first quarter of 2021, the group's reportable segments are gas & low carbon energy, oil production & operations, customers & products, and Rosneft. At 31 December 2020, the group's reportable segments were Upstream, Downstream and Rosneft.

Gas & low carbon energy comprises regions with upstream businesses that predominantly produce natural gas, gas marketing and trading activities and the group's renewables businesses, including biofuels, solar and wind. Gas producing regions were previously in the Upstream segment. The group's renewables businesses were previously part of 'Other businesses and corporate'.

Oil production & operations comprises regions with upstream activities that predominantly produce crude oil. These activities were previously in the Upstream segment.

Customers & products comprises the group's customer-focused businesses, spanning convenience and mobility, which includes fuels retail and next-gen offers such as electrification, as well as aviation, midstream, and Castrol lubricants. It also includes our oil products businesses, refining & trading. The petrochemicals business will also be reported in restated comparative information as part of the customers and products segment up to its sale in December 2020. The customers & products segment is, therefore, substantially unchanged from the former Downstream segment with the exception of the Petrochemicals disposal.

The Rosneft segment is unchanged and continues to include equity-accounted earnings from the group's investment in  Rosneft.

The segment measure of profit or loss continues to be replacement cost profit or loss before interest and tax, which reflects the replacement cost of supplies by excluding from profit or loss before interest and tax inventory holding gains and losses. See Note 4 for further information.

Comparative information for 2020 has been restated in Notes 4, 5 and 6 to reflect the changes in reportable segments.

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Note 1. Basis of preparation (continued)

Voluntary change in accounting policy - Net presentation of revenues and purchases relating to physically settled derivative contracts

bp routinely enters into transactions for the sale and purchase of commodities that are physically settled and meet the definition of a derivative financial instrument. These contracts are within the scope of IFRS 9 and as such, prior to settlement, changes in the fair value of these derivative contracts are presented as gains and losses within other operating revenues. The group previously presented revenues and purchases for such contracts on a gross basis in the income statement upon physical settlement.

These transactions have historically represented a substantial portion of the revenues and purchases reported in the group's consolidated financial statements.

The change in strategic direction of the group supported by organisational changes to implement the strategy from 1 January 2021, resulted in the group determining that the revenue and corresponding purchases relating to such transactions should be presented net, as gains or losses within other operating revenues, from that date.

Additionally the group's trading activity has continued to evolve over time from one of capturing third-party physical trades to provide flow assurance to one with increasing levels of optimisation, taking advantage of price volatility and fluctuations in demand and supply, which will continue under the new strategy, further supporting the change in presentation. The new presentation provides reliable and more relevant information for users of the accounts as the group's revenue recognition is more closely aligned with its assessment of 'Scope 3' emissions from its products, its 'Net Zero' ambition and how management monitors and manages performance of such contracts. Comparative information for sales and other operating revenues and purchases for 2020 has been restated as shown in the table below. There is no significant impact on comparative information for profit before income and tax or earnings per share.

In addition, as disclosed in the group's 2020 financial statements, in 2020 revenues from physically settled derivative contracts were reclassified as other operating revenues and were no longer presented together with revenues from contracts with customers. In these financial statements certain other similar contracts have been reclassified as other operating revenues and then been subject to net presentation as described above. Comparative information for natural gas, LNG and NGLs, and non-oil products and other revenue from contracts with customers in Note 5 has been amended to align with current period presentation as shown in the table below.

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Note 1. Basis of preparation (continued)

    Third  Third    Nine  Nine   
    quarter  quarter    months  months   
    2020  2020  Impact of net  2020  2020  Impact of net 
$ million      Restated  presentation(a)    Restated  presentation(a) 
Sales and other operating revenues (Note 5)         
gas & low carbon energy    4,141     3,518     (623)    14,376     12,270     (2,106)   
oil production & operations    3,998     3,998     -     13,133     13,133     -    
customers & products    40,256     22,940     (17,316)    121,461     66,537     (54,924)   
other businesses & corporate    383     383     -     1,262     1,262     -    
    48,778     30,839     (17,939)    150,232     93,202     (57,030)   
Less: sales and other revenues between segments               
gas & low carbon energy    254     254     -     2,092     2,092     -    
oil production & operations    3,726     3,726     -     12,097     12,097     -    
customers & products    124     124     -     (328)    (328)    -    
other businesses & corporate    423     423     -     794     794     -    
    4,527     4,527     -     14,655     14,655     -    
External sales and other operating revenues               
gas & low carbon energy    3,887     3,264     (623)    12,284     10,178     (2,106)   
oil production & operations    272     272     -     1,037     1,037     -    
customers & products    40,132     22,816     (17,316)    121,789     66,865     (54,924)   
other businesses & corporate    (40)    (40)    -     467     467     -    
Total sales and other operating revenues    44,251     26,312     (17,939)    135,577     78,547     (57,030)   
Sales and other operating revenues include the following in relation to revenues from contracts with customers:               
Crude oil    1,366     1,366     -     3,863     3,863     -    
Oil products    16,642     16,642     -     47,348     47,348     -    
Natural gas, LNG and NGLs    2,844     1,443     (1,401)    9,474     6,693     (2,781)   
Non-oil products and other revenues from contracts with customers    2,624     2,580     (44)    7,232     7,149     (83)   
Revenues from contracts with customers    23,476     22,031     (1,445)    67,917     65,053     (2,864)   
Other operating revenues    20,775     4,281     (16,494)    67,660     13,494     (54,166)   
Total sales and other operating revenues    44,251     26,312     (17,939)    135,577     78,547     (57,030)   

(a)      Total purchases for the third quarter and nine months 2020 have been re-stated by the equal and opposite amount as total sales and other operating revenues.

Note 2. Non-current assets held for sale 

The carrying amount of assets classified as held for sale at 30 September 2021 is $39 million, with associated liabilities of $31 million.

At 31 December 2020 the balance consists primarily of a 20% participating interest from BP's 60% participating interest in Block 61 in Oman, which is reported in the gas & low carbon energy segment. As announced on 1 February 2021, BP agreed to sell this interest to PTT Exploration and Production Public Company Limited (PTTEP) of Thailand for a total consideration of up to $2.6 billion, subject to final adjustments. On 28 March, a royal decree was published approving the sale and $2.4 billion was received in March 2021.

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Note 3. Impairment and losses on sale of businesses and fixed assets(a)

Impairment charges net of losses on sale of businesses and fixed assets for the third quarter were $220 million and impairment reversals net of losses on sale of businesses and fixed assets for the nine months 2021 were $2,344 million respectively (charges of $294 million and $13,213 million for the comparative periods in 2020) and include net impairment charges for the third quarter of 2021 of $256 million and net impairment reversals for the nine months 2021 of $2,488 million (charges of $278 million and $12,924 million for the comparative periods in 2020). 

gas & low carbon energy segment

In the gas & low carbon energy segment there was a net impairment charge of $197 million for the third quarter and a net impairment reversal of $951 million for the nine months 2021 (charges of $76 million and $6,188 million for the comparative periods in 2020).

Impairment reversals for the nine months 2021 mainly relate to producing assets and principally arose as a result of changes to the group's oil and gas price assumptions. They include amounts in Azerbaijan, India and Trinidad. The recoverable amounts of the cash generating units within these businesses were based on value-in-use calculations.

oil production & operations segment

In the oil production & operations segment there was a net impairment charge of $5 million for the third quarter and a net impairment reversal of $1,652 million for the nine months 2021 (charges of $197 million and $5,989 million for the comparative periods in 2020).

Impairment reversals for the nine months 2021 mainly relate to producing assets and principally arose as a result of changes to the group's oil and gas price assumptions. They include amounts in BPX Energy and the North Sea. The recoverable amounts of the cash generating units within these businesses were based on value-in-use calculations.

(a) All disclosures are pre-tax.

Note 4. Analysis of replacement cost profit (loss) before interest and tax and reconciliation to profit (loss) before taxation(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
gas & low carbon energy    (4,135)    927     252       222     (6,430)   
oil production & operations    2,692     3,118     (156)      7,289     (14,649)   
customers & products    1,060     640     915       2,634     2,173    
Rosneft    868     643     (278)      1,874     (419)   
other businesses & corporate    (750)    (425)    (42)      (1,853)    (867)   
    (265)    4,903     691       10,166     (20,192)   
Consolidation adjustment - UPII*    (42)    (31)    34       (60)    166    
RC profit (loss) before interest and tax*    (307)    4,872     725       10,106     (20,026)   
Inventory holding gains (losses)*               
gas & low carbon energy    15     4     7       41     9    
oil production & operations    (1)    (6)    1       8     (12)   
customers & products    451     887     191       2,943     (3,446)   
Rosneft (net of tax)    35     68     34       191     (114)   
Profit (loss) before interest and tax    193     5,825     958       13,289     (23,589)   
Finance costs    693     682     800       2,098     2,366    
Net finance expense/(income) relating to pensions and other post-retirement benefits    (5)    5     8       6     23    
Profit (loss) before taxation    (495)    5,138     150       11,185     (25,978)   
               
RC profit (loss) before interest and tax*               
US    1,964     955     105       4,826     (3,995)   
Non-US    (2,271)    3,917     620       5,280     (16,031)   
    (307)    4,872     725       10,106     (20,026)   

(a)    Comparative information for 2020 has been restated to reflect the changes in reportable segments. For more information see Note 1 basis of preparation - Change in segmentation.

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Note 5. Sales and other operating revenues(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
By segment               
gas & low carbon energy    2,554     5,739     3,518       16,295     12,270    
oil production & operations    6,285     5,597     3,998       17,037     13,133    
customers & products    34,382     31,160     22,940       92,649     66,537    
other businesses & corporate    423     381     383       1,240     1,262    
    43,644     42,877     30,839       127,221     93,202    
               
Less: sales and other operating revenues between segments               
gas & low carbon energy    1,269     1,063     254       3,364     2,092    
oil production & operations    5,423     4,928     3,726       15,206     12,097    
customers & products    354     112     124       576     (328)   
other businesses & corporate    424     307     423       890     794    
    7,470     6,410     4,527       20,036     14,655    
               
External sales and other operating revenues               
gas & low carbon energy    1,285     4,676     3,264       12,931     10,178    
oil production & operations    862     669     272       1,831     1,037    
customers & products    34,028     31,048     22,816       92,073     66,865    
other businesses & corporate    (1)    74     (40)      350     467    
Total sales and other operating revenues    36,174     36,467     26,312       107,185     78,547    
               
By geographical area               
US    15,372     15,305     8,319       45,168     25,516    
Non-US    28,578     29,700     22,583       85,161     66,361    
    43,950     45,005     30,902       130,329     91,877    
Less: sales and other operating revenues between areas    7,776     8,538     4,590       23,144     13,330    
    36,174     36,467     26,312       107,185     78,547    
               
Revenues from contracts with customers               
Sales and other operating revenues include the following in relation to revenues from contracts with customers:               
Crude oil    2,292     1,291     1,366       4,917     3,863    
Oil products    27,699     24,651     16,642       71,628     47,348    
Natural gas, LNG and NGLs(b)    4,458     4,273     1,443       12,912     6,693    
Non-oil products and other revenues from contracts with customers(b)    2,275     1,603     2,580       5,276     7,149    
Revenue from contracts with customers    36,724     31,818     22,031       94,733     65,053    
Other operating revenues(c)    (550)    4,649     4,281       12,452     13,494    
Total sales and other operating revenues    36,174     36,467     26,312       107,185     78,547    

(a)    Comparative information for 2020 has been restated for the changes in reportable segments and also for the changes to net presentation of revenues and purchases relating to physically settled derivative contracts effective 1 January 2021. For more information see Note 1 Basis of preparation - Voluntary change in accounting policy and Change in segmentation.

(b)    Comparative information has been amended for certain contracts that have been reclassified to other operating revenues and restated to reflect the net presentation described in Note 1 Basis of preparation - Voluntary change in accounting policy.

(c)     Principally relates to commodity derivative transactions.

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Note 6. Depreciation, depletion and amortization(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Total depreciation, depletion and amortization by segment               
gas & low carbon energy    1,230     1,115     746       3,199     2,736    
oil production & operations    1,767     1,559     1,814       4,900     6,001    
customers & products    747     754     743       2,246     2,242    
other businesses & corporate    200     203     164       597     484    
    3,944     3,631     3,467       10,942     11,463    
Total depreciation, depletion and amortization by geographical area               
US    1,206     1,161     1,191       3,488     4,020    
Non-US    2,738     2,470     2,276       7,454     7,443    
    3,944     3,631     3,467       10,942     11,463    

(a)    Comparative information for 2020 has been restated to reflect the changes in reportable segments. For more information see Note 1 basis of preparation - Change in segmentation.

Note 7. Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit (loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. During the third quarter 2021 221 million of ordinary shares were repurchased for cancellation for a total cost of $926 million, including transaction costs of $5 million, as part of the share buyback programme announced on 27 April 2021. This brings the total number of shares repurchased in the nine months to 336 million for a total cost of $1,426 million. The number of shares in issue is reduced when shares are repurchased.

The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.

For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Results for the period               
Profit (loss) for the period attributable to bp shareholders    (2,544)    3,116     (450)      5,239     (21,663)   
Less: preference dividend    1     -     -       2     1    
Profit (loss) attributable to bp ordinary shareholders    (2,545)    3,116     (450)      5,237     (21,664)   
               
Number of shares (thousand)(a)(b)               
Basic weighted average number of shares outstanding    20,150,186     20,272,111     20,251,199       20,239,365     20,217,559    
ADS equivalent(c)    3,358,364     3,378,685     3,375,199       3,373,228     3,369,593    
               
Weighted average number of shares outstanding used to calculate diluted earnings per share    20,150,186     20,366,731     20,251,199       20,359,280     20,217,559    
ADS equivalent(c)    3,358,364     3,394,455     3,375,199       3,393,213     3,369,593    
               
Shares in issue at period-end    20,008,900     20,224,314     20,254,417       20,008,900     20,254,417    
ADS equivalent(c)    3,334,816     3,370,719     3,375,736       3,334,816     3,375,736    

(a)      Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.

(b)     If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share. The numbers of potentially issuable shares that have been excluded from the calculation for the third quarter 2021, third quarter 2020 and nine months 2020 are 123,543 thousand (ADS equivalent 20,591 thousand), 81,097 thousand (ADS equivalent 13,516 thousand) and 94,302 thousand (ADS equivalent 15,717 thousand) respectively.

(c)      One ADS is equivalent to six ordinary shares.

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Note 8. Dividends

Dividends payable

BP today announced an interim dividend of 5.46 cents per ordinary share which is expected to be paid on 17 December 2021 to ordinary shareholders and American Depositary Share (ADS) holders on the register on 12 November 2021. The ex-dividend date will be 10 November 2021 for ADS holders and 11 November 2021 for ordinary shareholders. The corresponding amount in sterling is due to be announced on 7 December 2021, calculated based on the average of the market exchange rates over three dealing days between 1 December 2021 and 3 December 2021. Holders of ADSs are expected to receive $0.3276 per ADS (less applicable fees). The board has decided not to offer a scrip dividend alternative in respect of the third quarter 2021 dividend. Ordinary shareholders and ADS holders (subject to certain exceptions) will be able to participate in a dividend reinvestment programme. Details of the third quarter dividend and timetable are available at bp.com/dividends and further details of the dividend reinvestment programmes are available at bp.com/drip.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
Dividends paid per ordinary share               
cents    5.460     5.250     5.250       15.960     26.250    
pence    3.953     3.712     4.043       11.433     20.541    
Dividends paid per ADS (cents)    32.76     31.50     31.50       95.76     157.50    

Note 9. Net debt

Net debt*    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Finance debt(a)(b)    63,214     68,247     72,828       63,214     72,828    
Fair value (asset) liability of hedges related to finance debt(c)    (549)    (1,285)    (1,384)      (549)    (1,384)   
    62,665     66,962     71,444       62,665     71,444    
Less: cash and cash equivalents(b)    30,694     34,256     31,065       30,694     31,065    
Net debt(d)    31,971     32,706     40,379       31,971     40,379    
Total equity    89,266     93,232     82,155       89,266     82,155    
Gearing*    26.4%  26.0%  33.0%    26.4%  33.0% 

(a)      The fair value of finance debt at 30 September 2021 was $65,316 million (30 June 2021 $70,589 million, 30 September 2020 $75,338 million).

(b)     Third quarter and nine months 2020 include $316 million of cash and $19 million of finance debt included in assets and liabilities held for

sale in the group balance sheet.

(c)      Derivative financial instruments entered into for the purpose of managing interest rate and foreign currency exchange risk associated with net debt with a fair value liability position of $151 million at 30 September 2021 (second quarter 2021 liability of $308 million and third quarter 2020 liability of $372 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.

(d)     Net debt does not include accrued interest, which is reported within other receivables and other payables on the balance sheet and for which the associated cash flows are presented as operating cash flows in the group cash flow statement.

As part of actively managing its debt portfolio, in the third quarter the group bought back $4.2 billion equivalent of finance debt (second quarter 2021 $nil; third quarter 2020 $4.0 billion) consisting of $2.4 billion of USD bonds in July 2021, and a further $1.8 billion equivalent in September 2021 comprising $1.4 billion euro and sterling bonds and $0.4 billion other USD debt. Year to date the group has bought back a total of $8.1 billion equivalent of finance debt ($4.0 billion for the comparative period in 2020). Derivatives associated with debt bought back in each of these periods were also terminated. There was no significant impact on net debt or gearing as a result of these transactions.

Note 10. Inventory valuation

A provision of $129 million was held against hydrocarbon inventories at 30 September 2021 ($17 million at 30 June 2021 and $544 million at 30 September 2020) to write them down to their net realizable value. As a result of the changes in strategic direction of the group and the evolution of the trading strategy set out in Note 1, from 1 January, certain inventory, totalling $12.8 billion as at 30 September 2021 ($11.0 billion as at 30 June 2021), is now treated as trading inventory and is valued at fair value whereas the equivalent inventory was previously valued at the lower of cost or net realisable value in prior periods.

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Note 11. Statutory accounts

The financial information shown in this publication, which was approved by the Board of Directors on 1 November 2021, is unaudited and does not constitute statutory financial statements. Audited financial information will be published in BP Annual Report and Form 20-F 2021. BP Annual Report and Form 20-F 2020 has been filed with the Registrar of Companies in England and Wales. The report of the auditor on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.

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Additional information

Capital expenditure*(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Capital expenditure               
Organic capital expenditure*    2,850     2,511     2,512       8,267     9,085    
Inorganic capital expenditure*(b)(c)    53     3     1,124       948     1,479    
    2,903     2,514     3,636       9,215     10,564    
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Capital expenditure by segment               
gas & low carbon energy(b)    1,072     747     935       3,704     3,138    
oil production & operations    1,099     1,148     1,117       3,566     4,696    
customers & products    597     519     1,519       1,648     2,545    
other businesses & corporate    135     100     65       297     185    
    2,903     2,514     3,636       9,215     10,564    
Capital expenditure by geographical area               
US    1,176     890     741       3,553     3,177    
Non-US    1,727     1,624     2,895       5,662     7,387    
    2,903     2,514     3,636       9,215     10,564    

(a)    Comparative information for 2020 has been restated to reflect the changes in reportable segments. For more information see Note 1 Basis of preparation - Change in segmentation.

(b)    Nine months 2021 includes the final payment of $712 million in respect of the strategic partnership with Equinor.

(c)     Third quarter and nine months 2020 include $1 billion relating to an investment in a 49% interest in the group's Indian fuels and mobility venture with Reliance industries. Nine months 2020 also includes amounts relating to the 25-year extension to our ACG production-sharing agreement* in Azerbaijan.

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Adjusting items*(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
gas & low carbon energy               
Gains on sale of businesses and fixed assets(b)    -     -     -       1,034     -    
Impairment and losses on sale of businesses and fixed assets(c)    (197)    1,270     (83)      950     (6,197)   
Environmental and other provisions    -     -     -       -     -    
Restructuring, integration and rationalization costs(d)    -     (21)    (36)      (29)    (40)   
Fair value accounting effects(e)(f)    (5,808)    (1,311)    (217)      (6,872)    (61)   
Other(g)    63     (251)    86       (178)    (667)   
    (5,942)    (313)    (250)      (5,095)    (6,965)   
oil production & operations               
Gains on sale of businesses and fixed assets    261     216     9       645     103    
Impairment and losses on sale of businesses and fixed assets(c)    33     1,751     (191)      1,575     (6,182)   
Environmental and other provisions(h)    (68)    (776)    (9)      (909)    (22)   
Restructuring, integration and rationalization costs(d)    4     (90)    (129)      (90)    (153)   
Fair value accounting effects    -     -     -       -     -    
Other(g)(i)    1     (225)    (203)      (200)    (1,944)   
    231     876     (523)      1,021     (8,198)   
customers & products               
Gains on sale of businesses and fixed assets    (25)    8     16       (114)    10    
Impairment and losses on sale of businesses and fixed assets    (58)    (35)    (20)      (136)    (823)   
Environmental and other provisions    (1)    (8)    -       (9)    -    
Restructuring, integration and rationalization costs(d)    16     (10)    (142)      (35)    (111)   
Fair value accounting effects(f)    (30)    (139)    425       290     135    
Other    -     (3)    -       (3)    -    
    (98)    (187)    279       (7)    (789)   
Rosneft               
Other    (55)    (46)    (101)      (101)    (164)   
    (55)    (46)    (101)      (101)    (164)   
other businesses & corporate               
Gains on sale of businesses and fixed assets    -     -     2       -     4    
Impairment and losses on sale of businesses and fixed assets    1     (50)    -       (50)    -    
Environmental and other provisions    (65)    (72)    (32)      (137)    (55)   
Restructuring, integration and rationalization costs(d)    (12)    (74)    (155)      (111)    (201)   
Gulf of Mexico oil spill    (17)    (18)    (63)      (46)    (115)   
Fair value accounting effects(f)    (263)    73     266       (637)    225    
Other    (21)    21     61       (24)    48    
    (377)    (120)    79       (1,005)    (94)   
Total before interest and taxation    (6,241)    210     (516)      (5,187)    (16,210)   
Finance costs(j)(k)    (175)    (202)    (198)      (525)    (434)   
Total before taxation    (6,416)    8     (714)      (5,712)    (16,644)   
Taxation credit (charge) on adjusting items    193     (396)    (101)      (191)    3,686    
Taxation - impact of foreign exchange(l)    (33)    (30)    85       (76)    (166)   
Total taxation on adjusting items    160     (426)    (16)      (267)    3,520    
Total after taxation for period    (6,256)    (418)    (730)      (5,979)    (13,124)   

(a)      Prior to 2021 adjusting items were reported under two different headings - non-operating items and fair value accounting effects. Comparative information for 2020 has been restated to reflect the changes in reportable segments. For more information see Note 1 Basis of preparation - Change in segmentation.

(b)     Nine months 2021 relates to a gain from the divestment of a 20% stake in Oman Block 61.

(c)      See Note 3 for further information.

(d)     All periods in 2021 include recognized provisions for restructuring costs associated with the reinvent programme that was formalized in 2020.

(e)      Under IFRS bp marks-to-market the derivative financial instruments used to risk-manage LNG contracts, but does not mark-to-market the physical LNG contracts themselves, resulting in a mismatch in accounting treatment. The fair value accounting effect removes this mismatch, and the underlying result reflects how bp risk-manages its LNG contracts.

(f)       For further information, including the nature of fair value accounting effects reported in each segment, see page 36.

(g)      Nine months 2020 includes the exploration write-off of $670 million in gas and low carbon energy relating to fair value ascribed to certain licences as part of the accounting at the time of acquisition of gas & low carbon assets in India and the impairment of certain intangible assets in Mauritania and Senegal and $1,301 million in oil production & operations relating to fair value ascribed to certain licences as part of the accounting at the time of acquisition of oil production & operations assets in Brazil and the Gulf of Mexico.

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(h)     Second quarter and nine months 2021 include adjustments relating to the change in discount rate on retained decommissioning provisions and the recognition of a decommissioning provision in relation to certain assets previously sold to a third party where the decommissioning obligation transferred may revert to bp due to the financial condition of the current owner.

(i)       Nine months 2021 includes a $415 million charge relating to a remeasurement of deferred tax balances in our equity-accounted entity in Argentina following income tax rate changes partially offset by impairment reversals in equity-accounted entities.

(j)       All periods presented include the unwinding of discounting effects relating to Gulf of Mexico oil spill payables and the income statement impact associated with the buyback of finance debt. See Note 9 for further information.

(k)     From first quarter 2021 bp is presenting temporary valuation differences associated with the group's interest rate and foreign currency exchange risk management of finance debt as an adjusting item within finance costs. In 2020 these amounts were presented within production and manufacturing expenses and as an 'other' adjusting item in the other business & corporate segment. Relevant amounts in the comparative periods presented were not material.

(l)       bp is presenting certain foreign exchange effects on tax as adjusting items. These amounts represent the impact of: (i) foreign exchange on deferred tax balances arising from the conversion of local currency tax base amounts into functional currency, and (ii) taxable gains and losses from the retranslation of US dollar-denominated intra-group loans to local currency.

Net debt including leases

Net debt including leases*    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Net debt    31,971     32,706     40,379       31,971     40,379    
Lease liabilities    8,628     8,863     9,282       8,628     9,282    
Net partner (receivable) payable for leases entered into on behalf of joint operations    111     109     (41)      111     (41)   
Net debt including leases    40,710     41,678     49,620       40,710     49,620    
Total equity    89,266     93,232     82,155       89,266     82,155    
Gearing including leases*    31.3%  30.9%  37.7%    31.3%  37.7% 

Gulf of Mexico oil spill

    30 September  31 December 
$ million    2021  2020 
Gulf of Mexico oil spill payables and provisions    (10,329)    (11,436)   
Of which - current    (1,272)    (1,444)   
       
Deferred tax asset    4,016     5,471    

During the second quarter pre-tax payments of $1,199 million were made relating to the 2016 consent decree and settlement agreement with the United States and the five Gulf coast states. Payables and provisions presented in the table above reflect the latest estimate for the remaining costs associated with the Gulf of Mexico oil spill. Where amounts have been provided on an estimated basis, the amounts ultimately payable may differ from the amounts provided and the timing of payments is uncertain. Further information relating to the Gulf of Mexico oil spill, including information on the nature and expected timing of payments relating to provisions and other payables, is provided in BP Annual Report and Form 20-F 2020 - Financial statements - Notes 7, 9, 20, 22, 23, 29, and 33.

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Working capital* reconciliation(a)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
Movements in inventories and other current and non-current assets and liabilities as per condensed group cash flow statement(b)    3,850     26     556       1,083     630    
Adjusted for inventory holding gains (losses)* (Note 4 excluding Rosneft   465     885     199       2,992     (3,449)   
Adjusted for fair value accounting effects    (6,101)    (1,377)    474       (7,219)    299    
Working capital release (build) after adjusting for net inventory gains (losses) and fair value accounting effects    (1,786)    (466)    1,229       (3,144)    (2,520)   

(a)      Commencing with second quarter 2021 results fair value accounting effects have been included in the working capital reconciliation. For further information see Glossary page 40.

(b)    The movement in working capital includes outflows relating to the Gulf of Mexico oil spill on a pre-tax basis of $37 million and $1,375 million in the third quarter and nine months of 2021 respectively. For the same periods in 2020 the amount was an outflow of $180 million and $1,670 million respectively. Net cash outflows relating to the Gulf of Mexico oil spill in 2021 and 2020 include payments made under the 2016 consent decree and settlement agreement with the United States and the five Gulf coast states.

Surplus cash flow* reconciliation

    Third  Nine 
    quarter  months 
$ million    2021  2021 
Sources:       
Net cash provided by operating activities    5,976     17,496    
Cash provided from investing activities    346     4,853    
Receipts relating to transactions involving non-controlling interests    -     671    
Cash inflow    6,322     23,020    
       
Uses:       
Lease liability payments    (506)    (1,580)   
Payments on perpetual hybrid bonds    (55)    (438)   
Dividends paid - BP shareholders    (1,101)    (3,227)   
- non-controlling interests    (87)    (245)   
Total capital expenditure*    (2,903)    (9,215)   
Net repurchase of shares relating to employee share schemes    -     (500)   
Payments relating to transactions involving non-controlling interests    (560)    (560)   
Currency translation differences relating to cash and cash equivalents    (177)    (211)   
Cash outflow    (5,389)    (15,976)   
       
Cash used to meet net debt target    -     (3,729)   
       
Surplus cash flow    933     3,315    

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Reconciliation of customers & products RC profit before interest and tax* to underlying RC profit before interest and tax to adjusted EBITDA* by business

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2021  2021  2020    2021  2020 
RC profit before interest and tax for customers & products    1,060     640     915       2,634     2,173    
Less: Adjusting items gains (charges)    (98)    (187)    279       (7)    (789)   
Underlying RC profit before interest and tax for customers & products    1,158     827     636       2,641     2,962    
By business:               
customers - convenience & mobility    806     951     1,081       2,415     2,201    
Castrol - included in customers    231     265     326       830     556    
products - refining & trading    352     (124)    (533)      226     561    
petrochemicals    -     -     88       -     200    
               
Add back: Depreciation, depletion and amortization    747     754     743       2,246     2,242    
By business:               
customers - convenience & mobility    324     329     306       977     876    
Castrol - included in customers    36     39     38       114     119    
products - refining & trading    423     425     435       1,269     1,264    
petrochemicals    -     -     2       -     102    
               
Adjusted EBITDA for customers & products    1,905     1,581     1,379       4,887     5,204    
By business:               
customers - convenience & mobility    1,130     1,280     1,387       3,392     3,077    
Castrol - included in customers    267     304     364       944     675    
products - refining & trading    775     301     (98)      1,495     1,825    
petrochemicals    -     -     90       -     302    

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Realizations* and marker prices

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
Average realizations(a)               
Liquids* ($/bbl)               
US    59.87     53.64     31.74       52.92     33.24    
Europe    74.02     69.19     43.52       67.79     41.35    
Rest of World    68.67     64.44     41.46       63.51     36.13    
BP Average    65.63     60.69     38.17       59.78     35.51    
Natural gas ($/mcf)               
US    3.51     3.03     1.29       3.33     1.19    
Europe    17.07     8.94     2.34       10.96     2.22    
Rest of World    5.26     4.13     2.99       4.44     3.21    
BP Average    5.35     4.08     2.56       4.48     2.65    
Total hydrocarbons* ($/boe)               
US    45.39     41.14     22.04       41.24     23.01    
Europe    81.99     63.85     36.14       66.51     34.34    
Rest of World    45.13     40.27     27.40       40.45     26.19    
BP Average    47.57     41.84     26.42       42.37     25.68    
Average oil marker prices ($/bbl)               
Brent    73.51     68.97     42.94       67.92     41.06    
West Texas Intermediate    70.54     66.19     40.91       65.06     38.12    
Western Canadian Select    56.95     53.10     31.62       52.06     27.54    
Alaska North Slope    72.66     68.58     42.75       67.53     41.32    
Mars    69.09     66.01     42.01       64.67     39.18    
Urals (NWE - cif)    70.63     66.69     42.83       65.60     40.83    
Average natural gas marker prices               
Henry Hub gas price(b) ($/mmBtu)    4.02     2.83     1.98       3.19     1.88    
UK Gas - National Balancing Point (p/therm)    118.81     64.79     21.06       78.38     19.69    
               

(a)    Based on sales of consolidated subsidiaries only - this excludes equity-accounted entities.

(b)    Henry Hub First of Month Index.

Exchange rates

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2021  2021  2020    2021  2020 
$/£ average rate for the period    1.38     1.40     1.29       1.39     1.27    
$/£ period-end rate    1.34     1.38     1.28       1.34     1.28    
               
$/€ average rate for the period    1.18     1.21     1.17       1.20     1.12    
$/€ period-end rate    1.16     1.19     1.17       1.16     1.17    
               
$/AUD average rate for the period    0.73     0.77     0.71       0.76     0.67    
$/AUD period-end rate    0.72     0.75     0.71       0.72     0.71    
               
Rouble/$ average rate for the period    73.52     74.20     73.74       74.04     71.00    
Rouble/$ period-end rate    72.78     72.70     77.57       72.78     77.57    

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Legal proceedings

For a full discussion of the group's material legal proceedings, see pages 226-227 of bp Annual Report and Form 20-F 2020.

Glossary

Non-GAAP measures are provided for investors because they are closely tracked by management to evaluate bp's operating performance and to make financial, strategic and operating decisions. Non-GAAP measures are sometimes referred to as alternative performance measures.

New metrics have been introduced in 2021 to provide transparency against key strategic value drivers.

Adjusted EBITDA is a non-GAAP measure presented for bp's operating segments and is defined as replacement cost (RC) profit before interest and tax, excluding net adjusting items*, adding back depreciation, depletion and amortization and exploration write-offs (net of adjusting items). Adjusted EBITDA by business is a further analysis of adjusted EBITDA for the customers & products businesses. bp believes it is helpful to disclose adjusted EBITDA by operating segment and by business because it reflects how the segments measure underlying business delivery. The nearest equivalent measure on an IFRS basis for the segment is RC profit or loss before interest and tax, which is bp's measure of profit or loss that is required to be disclosed for each operating segment under IFRS.

Adjusting items are items that bp discloses separately because it considers such disclosures to be meaningful and relevant to investors. They are items that management considers to be important to period-on-period analysis of the group's results and are disclosed in order to enable investors to better understand and evaluate the group's reported financial performance. Adjusting items include gains and losses on the sale of businesses and fixed assets, impairments, environmental and other provisions, restructuring, integration and rationalization costs, fair value accounting effects, costs relating to the Gulf of Mexico oil spill and other items. Adjusting items within equity-accounted earnings are reported net of incremental income tax reported by the equity-accounted entity. Adjusting items are used as a reconciling adjustment to derive underlying RC profit or loss and related underlying measures which are non-GAAP measures. An analysis of adjusting items by segment and type is shown on page 30. Prior to 2021 adjusting items were reported under two different headings - non-operating items and fair value accounting effects.

Capital expenditure is total cash capital expenditure as stated in the condensed group cash flow statement. Capital expenditure for the operating segments and customers & products businesses is presented on the same basis.

Cash balance point is defined as the implied Brent oil price for the quarter that would cause the sum of operating cash flow excluding Gulf of Mexico oil spill payments (assuming actual refining marker margins and Henry Hub gas prices for the quarter) and proceeds from loan repayments to equate to the sum of total cash capital expenditure, lease liability payments, dividend paid, and payments on perpetual hybrid bonds.

Consolidation adjustment - UPII is unrealized profit in inventory arising on inter-segment transactions.

Convenience gross margin is a non-GAAP measure. Convenience gross margin is calculated as RC profit before interest and tax for the customers & products segment, excluding RC profit before interest and tax for the refining & trading and petrochemicals businesses, and adjusting items* (as defined above) for the convenience & mobility business to derive underlying RC profit before interest and tax for the convenience & mobility business; subtracting underlying RC profit before interest and tax for the Castrol business; adding back depreciation, depletion and amortization, production and manufacturing, distribution and administration expenses for convenience & mobility (excluding Castrol); subtracting earnings from equity-accounted entities in the convenience & mobility business (excluding Castrol) and gross margin for the retail fuels, next-gen, aviation, B2B and midstream businesses.

Convenience gross margin growth at constant foreign exchange is a non-GAAP measure. This metric requires a calculation of the comparative convenience gross margin ($ million) at current period foreign exchange rates (constant foreign exchange) and compares the current period value with the restated comparative period value, which results in the growth % at constant foreign exchange rates. bp believes the convenience gross margin and growth at constant foreign exchange are useful measures because these measures may help investors to understand and evaluate, in the same way as management, our progress against our strategic objectives of redefining convenience. The nearest GAAP measure to convenience gross margin is RC profit before interest and tax for the customer & products segment.

Developed renewables to final investment decision (FID) - Total generating capacity for assets developed to FID by all entities where bp has an equity share (proportionate to equity share). If asset is subsequently sold bp will continue to record capacity as developed to FID. If bp equity share increases developed capacity to FID will increase proportionately to share increase for any assets where bp held equity at the point of FID.

Divestment proceeds are disposal proceeds as per the condensed group cash flow statement.

Effective tax rate (ETR) on replacement cost (RC) profit or loss is a non-GAAP measure. The ETR on RC profit or loss is calculated by dividing taxation on a RC basis by RC profit or loss before tax. Taxation on a RC basis for the group is calculated as taxation as stated on the group income statement adjusted for taxation on inventory holding gains and losses. Information on RC profit or loss is provided below. bp believes it is helpful to disclose the ETR on RC profit or loss because this measure excludes the impact of price changes on the replacement of inventories and allows for more meaningful comparisons between reporting periods. Taxation on a RC basis and ETR on RC profit or loss are non-GAAP measures. The nearest equivalent measure on an IFRS basis is the ETR on profit or loss for the period.

Source: EvaluateEnergy® ©2022 EvaluateEnergy Ltd