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

“This is a very strong fourth quarter result. It reflects thecontinuing underlying improvement in our businesses — and thestronger crude price — despite the adverse environment in thedownstream businesses.

“…..U.S. current [natural gas] prices seem to bewell-supported by the fundamentals. Strong economic growth and theexpansion of gas-fired power-generating capacity in the U.S. areunderpinning demand,” Browne told financial analysts in London.

U.S. gas production was 2,303 MMcf/d in the fourth quarter of1999, down from 2,459 MMcf/d in the fourth quarter of 1998.

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

“In terms of both costs and returns at the group level, andmargins in the upstream business, we’re already deliveringsector-leading results. We promised to reduce costs by $4 billionby the end of 2001 and we’ve already delivered about $2.1 billionof that in 1999. Total headcount reductions of 18,000 exceeded ouroriginal expectations.

“We suggested in July that we would increase our return by some5 to 6 percentage points by the end of 2001. In fact we’ve alreadyachieved 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 committedto spending some $24 billion to $26 billion over the three-yearperiod to the end of 2001. In 1999 we spent some $7 billion.”

Capital expenditure for 1999 was $7.3 billion, down 29% from1998, reflecting increased focus in the capital program, thecompany said. Divestment proceeds amounted to $2.4 billion.

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

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

“In gas and power, the agenda for 2000 is about securing marketsto underpin our production growth — in the Atlantic market and inthe Far East.”

Joe Fisher, Houston

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