BP Plc (BP) has reported total revenues and other income of $367.05 billion for 2008, compared with the total revenues and other income of $291.4 billion in the previous year. It also reported a profit of $21.7 billion for 2008, compared with the profit of $21.2 billion in the previous year.

BP’s fourth-quarter replacement cost profit was $2,587 million, compared with $3,395 million a year ago, a decrease of 24% due largely to the significantly lower oil prices. For the full year, replacement cost profit was $25,593 million compared with $18,370 million a year ago, up 39%.

Non-operating items and fair value accounting effects for the fourth quarter had a net $18 million unfavorable impact compared to a net $1,132 million unfavorable impact for the fourth quarter of 2007. For the full years of 2008 and 2007, the respective amounts were $650 million unfavorable and $571 million unfavorable. The most significant non-operating items for the fourth quarter were, on a pre-tax basis, fair value gains on embedded derivatives, which amounted to $1,562 million, and a net charge of $1,460 million for impairments and gains and losses on the sale of businesses and fixed assets.

— Net cash provided by operating activities for the quarter and year was $5.6 billion and $38.1 billion compared with $4.3 billion and $24.7 billion respectively a year ago.

— The effective tax rate on replacement cost profit for the fourth quarter was 44% and for the year was 36%; a year ago, the rates were 38% and 33% respectively. The rate in the fourth quarter reflects the impact of a loss from jointly controlled entities and the impairment of an investment, neither of which generate a corresponding credit to the group tax charge. We expect the tax rate to be in the range of 36% to 39% during 2009.

— Net debt at the end of the quarter was $25.0 billion compared to $26.8 billion a year ago. The ratio of net debt to net debt plus equity was 21%, compared with 22% a year ago.

— Total capital expenditure and acquisitions was $7 billion for the quarter and $30.7 billion for the year. Capital expenditure, excluding acquisitions and asset exchanges and excluding the accounting for our transactions with Husky and Chesapeake, was $6.8 billion for the quarter and $21.7 billion for the year. Disposal proceeds were $229 million for the quarter and $929 million for the year.

— In 2009, we expect our capital expenditure, excluding acquisitions and asset exchanges, to be around $20-22 billion, broadly in line with 2008, and we expect disposal proceeds to be around $2-3 billion.

— With effect from January 1, 2008, replacement cost profit excludes inventory holding gains and losses net of tax. Comparative amounts have been amended to the new basis.

— Comparative for the third quarter has been corrected from 29.75 pence to 27.76 pence.

Exploration and Production:

The replacement cost profit before interest and tax for the fourth quarter and full year was $4,756 million and $38,308 million respectively, a decrease of 40% and an increase of 39% over the same periods of 2007.

The decrease in the fourth quarter is primarily due to lower realizations and lower earnings from equity accounted entities (primarily TNK-BP due to the effect of lagged tax reference prices, lower prices and impairment charges). This was partly offset by the impact of higher reported volumes, lower costs and a higher contribution from the gas marketing and trading business. For the full year, the increase primarily reflects higher realizations. In addition, the full-year result reflects a higher contribution from the gas marketing and trading business but was impacted by higher production taxes and higher depreciation.

The net non-operating gain of $244 million in the fourth quarter primarily comprises fair value gains on embedded derivatives partly offset by impairment charges primarily resulting from the current low price environment. The impairment charge for the quarter includes a $517 million write-down of our investment in Rosneft based on its quoted market price at the end of the year. For the full year, the net non-operating charge was $990 million with the most significant items being net impairment charges and net fair value losses on embedded derivatives, partly offset by the reversal of certain provisions. The corresponding periods in 2007 contained net non-operating losses of $654 million and net gains of $491 million respectively. Additionally, in the fourth quarter, fair value accounting effects had a favorable impact of $253 million compared with a favorable impact of $127 million a year ago. For the full year, the unfavorable effect was $282 million compared with a favorable effect of $48 million a year ago.

Reported production for the quarter was 3,945mboe/d, 1% higher than the fourth quarter of 2007. After adjusting for the impact of lower entitlement in our production-sharing agreements (PSAs), production was 4% higher than the fourth quarter of 2007.

Reported production for the full year was 3,838mboe/d, slightly higher than 2007. After adjusting for the effect of lower entitlement in our PSAs, production was 5% higher than 2007. This reflected strong performance from our existing assets, the continued ramp-up of production following the start-up of major projects in late 2007 and the start-up of a further nine major projects in 2008.

In December 2008, we successfully started production from the third and fourth wells at the Thunder Horse field with production now at around 200,000 barrels of oil equivalent per day, signaling the completion of commissioning and commencement of full operation.

During the quarter, we announced that BP and BG Group agreed to exchange a package of North Sea assets. BP has agreed to acquire BG Group’s interests in a number of Southern North Sea fields and BG Group has agreed to acquire BP’s interests in three Central North Sea fields. BG Group also agreed to acquire 32% of the Chevron-operated Erskine field from BP. The deal is subject to government, regulatory and co-venturer approvals and completion is expected in the second quarter of 2009.

Also during the quarter, BP signed a PSA for an offshore block on the east coast of India the block was offered in the seventh new exploration licensing policy by the government of India.

Our 2008 reserves replacement ratio, excluding acquisitions and disposals, is expected to be more than 100%.