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BP Amoco Touts 4Q Results

BP Amoco Touts 4Q Results

BP Amoco released what it called strong fourth quarter 1999 results, and CEO John Browne had favorable remarks regarding future natural gas prices.

"This is a very strong fourth quarter result. It reflects the continuing underlying improvement in our businesses --- and the stronger crude price --- despite the adverse environment in the downstream businesses.

".....U.S. current [natural gas] prices seem to be well-supported by the fundamentals. Strong economic growth and the expansion of gas-fired power-generating capacity in the U.S. are underpinning demand," Browne told financial analysts in London.

U.S. gas production was 2,303 MMcf/d in the fourth quarter of 1999, down from 2,459 MMcf/d in the fourth quarter of 1998.

Replacement cost profit before exceptional items was $2,123 million in the fourth quarter after adjusting for special charges of $439 million. The quarter's adjusted result was up 145% from a year ago. The improvement reflects performance improvements and a net benefit from the trading environment. The year's adjusted result improved 40% over 1998. Exploration and production replacement cost operating profit after adjusting for special charges of $43 million was a record $2,676 million, reflecting a doubling of the oil price and cost reductions. The year's adjusted result was up 102%.

"In terms of both costs and returns at the group level, and margins in the upstream business, we're already delivering sector-leading results. We promised to reduce costs by $4 billion by the end of 2001 and we've already delivered about $2.1 billion of that in 1999. Total headcount reductions of 18,000 exceeded our original expectations.

"We suggested in July that we would increase our return by some 5 to 6 percentage points by the end of 2001. In fact we've already achieved a 3 percentage point improvement, in a third of the time, and we've improved clean earnings per ordinary share by 39 percent --- from 23 cents to 32 cents.

"In terms of investment, excluding acquisitions, we're committed to spending some $24 billion to $26 billion over the three-year period to the end of 2001. In 1999 we spent some $7 billion."

Capital expenditure for 1999 was $7.3 billion, down 29% from 1998, reflecting increased focus in the capital program, the company said. Divestment proceeds amounted to $2.4 billion.

Browne said the company would be seeking shareholder approval for a stock buyback at its general meeting.

BP Amoco replaced 110% of production by adding 1,170 million Boe to reserves at a finding cost of $1.02/barrel - which is a 25% improvement over the previous year. The company also added some 2.5 billion barrels of newly discovered resources not yet booked. Over half of these are in the Gulf of Mexico, Angola and the Caspian.

"In gas and power, the agenda for 2000 is about securing markets to underpin our production growth --- in the Atlantic market and in the Far East."

Joe Fisher, Houston

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