BP NORGE AS. Annual Accounts 2010

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1 BP NORGE AS Annual Accounts 2010 BP NORGE AS INCOME STATEMENT NOK Notes Operating income Petroleum income Other income Total operating income Operating expenses Change in over-/under lifting of petroleum Transport expenses (oil/gas/ngl) Payroll expenses 4, Depreciation

2 Other operating expenses Total operating expenses Operating profit Financial income and expenses Interest received from group companies Other interest income Interest paid to group companies Other interest expenses Net foreign currency losses/gain Net financial items Ordinary profit before tax Taxes Profit for the year Allocated to dividend

3 BP NORGE AS BALANCE SHEET AS AT 31 DECEMBER NOK Notes Assets Fixed assets Long-term operating assets Exploration expenses Mineral rights Production plant and pipeline Production plant under construction Means of transport, machinery and fixtures Total fixed assets Current assets Stocks Receivables Under lifting of petroleum Accounts receivable from customers Accounts receivable from group companies Other receivables Bank deposits Total current assets Total assets BP NORGE AS BALANCE SHEET AS AT 31 DECEMBER NOK Notes Equity and liabilities Equity Contributed equity Share capital

4 Earned equity Other equity Total equity Liabilities Provisions for obligations Pension obligations Deferred taxation Provisions for removal and abandonment Total provisions for obligations Other long-term liabilities Debt to group companies Total other long-term liabilities Short-term liabilities Tax payable Public duties payable Dividend Debt to group companies Other short-term liabilities 13, Over lifting of petroleum Total short-term liabilities Total equity and liabilities Board of Directors, BP Norge AS Stavanger, 30. March 2011 Peter J. Mather (Chairman) R. L.F. Wiles C. I. Minos K. Ekroll O. Fjellså C. Birknes A. Kloster O. Henriksen

5 BP NORGE AS CASH FLOW STATEMENT Cash flow from operating activities Ordinary profit before taxes Taxes paid during the period Depreciation Removal and abandonment expenses Change in short-term receivables and stocks Change in short-term liabilities Change in other accrual items Actual decommissioning costs Net cash flow from operating activities Cash flow to investment activities Disbursements for acquisitions of fixed assets Net cash flow to investment activities Cash flow to financing activities Borrowing /(repayment) of long-term debt Dividend paid Net cash flow to financing activities Net change in cash and cash equivalents for the period Cash and cash equivalents, 1 January Cash and cash equivalents, 31 December

6 ACCOUNTING PRINCIPLES General The annual accounts of BP Norge AS have been prepared in accordance with Norwegian law, regulations for preparing annual accounts, and the generally accepted accounting principles in Norway. Sales revenue The sales of crude oil, gas and NGL are recognized at the delivery point. Exploration expenses/field development Exploration expenses are capitalized in accordance with the "successful" effort method. All expenses related to field development are capitalized. Stocks Consumables are charged against income on a current basis. Stocks of petroleum that have not exceeded the norm price are valued at nil. Over- and under lifting of petroleum Over- and under lifting of petroleum in relation to the company's interest in petroleum lifted from a field is valued at production cost. If the sales value is lower than the production value, than any under lifting is valued at the sales price. Gas loans Gas loans where there is a return obligation are assessed in accordance with the "sales method". Gas loaned out is valued at either production cost or sales value, whichever is the lower, and the gas borrowed is valued at the estimated future production cost of the company's own gas. Depreciation Depreciation of investments on the continental shelf are calculated in accordance with the unit of production method. This means that the depreciation is calculated based on the ratio between the produced volume in the individual years and the remaining reserve estimates for the individual fields. Proved reserves are used. Tangible fixed assets onshore are depreciated in accordance with the balance method. Removal/abandonment of wells The company makes provisions for the removal and abandonment of wells. Provisions for the current year are calculated in accordance with the unit of production method, based on net present value calculations. The total estimate (company's share) will be charged against income in the years prior to abandonment based on the production for the individual year. Research and development R&D costs are charged against income on a current basis. Foreign currency Income, expenses and the addition of fixed assets are accounted for at the current monthly accounting rate. Receivables and liabilities are converted at rate in effect as at 31 December Tax charge and deferred taxes on the balance sheet The profit and loss statement indicates the amount of the tax charge, which expresses the tax charge related to the financial result. Deferred taxes on the balance sheet is the tax calculated on net positive temporary differences between the financial and tax-related balance sheet values after the negative temporary differences have been offset. Full provisions are made in accordance with the debt method. The calculation of deferred taxes shall take into account future taxreducing items such as unutilized uplift. Deferred taxes have not been calculated on capitalized assets in connection with purchases where the compensation is an after-tax transaction. Pensions The company has pension plans that entitle employees on the Norwegian payroll to future pension benefits (benefit scheme). The net pension payment and calculated pension obligations are calculated in accordance with the Norwegian Accounting Standard. Actuarial gain/loss is amortized over remaining years of service (so-called corridor is not used). Joint licenses The company's share in joint licenses has been included under the respective items in the profit and loss statement and balance sheet. Cash flow statement The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term highly liquid placement with original maturities of three months or less.

7 NOTES TO THE ACCOUNTS Note 1. The company In 2010 the company has had production from Valhall (ownership interest 35.95%), Ula (ownership interest 80%), Hod (ownership interest 37.5%), Tambar (ownership interest 55%), Tambar East (ownership interest 46,2%) and Draugen (ownership interest 18.36%). With the exception of Draugen the company is operator for all these fields. In 2010 the company have increased its owner share in Valhall with 7.86% (from 28.09% to 35.95%) and for Hod with 12.5% (from 25% to 37.5%) as from The acquisition date was with effect from and all income and expenses during the interim period is charged against fixed assets. Note 2. Petroleum income Crude oil Wet gas Gas Total NOK Thousand bbls NOK Thousand bbls NOK Thousand SM3 NOK Ula Tambar* Draugen Valhall Hod Elimination Total * Includes Tambar East Elimination applies to gas that the Tambar field sells to the Ula field for injection. Note 3. Other Income Freight and tariffs Other income Total other income Note 4. Payroll expenses, number of employees, remuneration, loans to employees, etc. Payroll expenses (gross figures): in million NOK Payroll expenses Pension expenses Employer's contribution Total Average number of employees Payroll expenses have been allocated to the different activities. Parts of these costs have been recharged to our partners in the different production licenses. Remuneration, leading personnel: in million NOK Man. Dir. Board Payroll expenses/board remuneration 6,8 0,1

8 NOTES TO THE ACCOUNTS The salary paid to the Managing Director includes share options/bonus which vary from year to year. Loans to employees amounted to NOK as at 31 December Managing Director and members of the Board had no loans as at 31 December Auditor fees was in 2010 NOK (ex. VAT) and was in its whole related to audit services. Note 5. Other operating expenses Removal and abandonment Taxes to the State Insurance Other operating expenses Total other operating expenses Note 6. Tax Deferred taxes are calculated on the temporary differences between the financial and tax-related values at the end of the year. Specification of basis for deferred taxes: Fixed assets Other Basis for corporate tax finans Unutilized uplift Basis for special tax % corporate tax % special tax Total deferred taxes Tax payable on the balance sheet: Tax payable on profit for the year Payable tax, acquisition petroleum licences Advance payment of taxes Expected refund of paid taxes Total tax payable The tax charge for the year is calculated as follows: Tax payable on profit for the year Correction, previous years Change, deferred tax * Tax charge Reconciliation from nominal to actual tax rate: Pre-tax profit Marginal tax (78%) Other permanent differences

9 NOTES TO THE ACCOUNTS New uplift Finance cost 28% Adjustments for previous years Tax charge *Deferred tax expense in 2010 includes 108 million kroner recorded against the asset cost. Note 7. Fixed assets Historical Additions Acquisition Disposals Accumulated Current year's Balance sheet cost depreciation depreciation value NOK Ulna, excl. Revaluation Ula revaluation Tambar Draugen Valhall Hod Pipeline Total production plant Prod. plant under construction Machinery/fixtures/vehicles Exploration costs ( ) Mineral rights Total fixed assets Fixed assets onshore are depreciated according to the balance method or the length of the property rental period. Note 8. Bank deposit Bank deposits per is NOK 4 million. Negative balance of the consolidated bank equal million kroner is for fiscal year 2010 reclassified as current liabilities to group companies. Note 9. Equity development NOK Share capital Other equity Total Equity 1 Jan Profit for the year Allocated to dividend Equity 31 Dec The share capital consists of shares with a par value of NOK The shareholders are BP Global Investments Ltd. which owns 480 shares and Amoco Norway Oil Company which owns 520 shares. Note 10. Pensions BP has fulfilled most of its pension obligations through payment to a Norwegian life insurance company. The pension plan encompasses 832 pensioners and employees from the age of 20. The company's retirement age is 65 for offshore employees and 67 for onshore employees. The actual value of the pension funds and net present value of the pension obligations are as follows at the balance sheet date: NOK NOK 1 000

10 NOTES TO THE ACCOUNTS Value of pension funds Net present value of vested pension obligations, incl future salary increases Unamortized loss Over funding pension obligation Employer's national insurance contributions Total over funding pension obligation Pension costs Pension costs for the year are as follows: NOK NOK Net value of current year's pension benefit earned Interest cost of accrued pension obligation Anticipated return on pension funds Total Employer's national insurance contributions Settlement/Curtailment Total pension cost for the year Parts of the pension costs are recharged to partners in licenses where the company is operator. The following financial and actuarial assumptions have been made: Discount rate 4,60 % 5,40 % Anticipated return on pension funds 5,40 % 5,40 % Annual expected salary increases 4,10 % 4,10 % National insurance basic amount adjustment 3,80 % 3,80 % Pension adjustment 2,30 % 3,80 % Early retirement pensions (gross figures before recharging to partners) BP has an early retirement obligation to former employees. At 31 December 2010, this obligation was calculated to be NOK (NOK 1 000). The company's share of the total pension obligation and early retirement obligation, including insurance, is calculated to be NOK (NOK 1 000). Occupational pension The company is required to have an occupational pension scheme in accordance with the Norwegian law on required occupational pension ("lov om obligatorisk tjenestepensjon"). The company`s pension scheme meets the requirements of that law. Note 11. Long-term liabilities Intercompany debt The loan is in Norwegian kroner, and interest is calculated according to standard Norwegian market conditions. Note 12. Removal and abandonment of wells Pursuant to the conditions of the licenses in which the company participates, the State may demand that the installations are surrendered free of charge upon the cessation of production or when the license period expires. If this right is not exercised, the State can order the licensees to remove the installations. There is a great deal of uncertainty associated with the cost estimates for any future removal of installations. The company makes provisions for future removal taking into account factors such as the probability, time aspects and cost estimates for the relevant offshore installations.

11 NOTES TO THE ACCOUNTS The discounted removal and abandonment obligation is estimated at (NOK 1 000) of which (NOK 1 000) has been allocated at 31 December Note 13. Restructuring costs Obligation caused by restucturing in 1999 and 2003 were expensed at the time of restructuring. The obligations are related to early retirement. The obligatitions will decrease as they are paid. Total restructuring allocations in the balance sheet were NOK 22 million at the end of Note 14. Other short-term liabilities Creditors and other expence accruals Accrued holiday pay Total other short-term liabilities Note 15. Other information Drilling obligations As of 31 December 2010 BP has no commitment to the authorities to participate in drilling of exploration wells. Lease obligations BP has lease agreements for rigs, vessels, commercial buildings and other operating assets. The terms of the agreements are from one to eight years, and the total obligations as at 31 December 2010 are NOK million. CO2 tax 1 January 1991 the authorities introduced a tax on the emission of environmentally harmful gases in connection with oil production (CO2 tax). The total tax paid by the company was NOK 86 million for Guaranties As at 31 December 2010, BP has a guarantee commitment to Stavanger kommune on withholding tax. At the end of 2010 the guarantee amounts to NOK 60 million. Other obligations The company has a guarantee which is issued by an associated company to Gassco as an assurance for future transportation obligations. The guarantee is NOK 189 millions Norwegian kroner. Note 16. Oil, NGL and gas reserves Estimated remaining reserves (BP Norge AS' share) million barrels oil equivalents Oil, NGL, gas Reserves are produced over the field life. The concession periods extends from 2010 to The reserves are calculated on deterministic basis and wells/facilities programs. When estimating remaining reserves, an extention of the concession period is assumed if necessary.

BP NORGE AS. Annual Accounts 2010

What did the oil and gas industry have?

What year did the annual Accounts begin?

What is the name of the company that oil is produced?