BP Alaska President Janet Weiss has offered additional financial information about the company’s 2016 income after a reported $85 million profit became part of the political debate over oil taxes this week.
In an email obtained by the Journal dated April 12, Weiss wrote that the $85 million profit earned BP (Exploration) Alaska Inc., and the $464 million it paid to the state, reflected only one portion of BP’s overall Alaska business in the company’s 2016 financial report published April 6.
“Unfortunately, the 20-F form only tells part of our BP Alaska business story which has caused some confusion and a number of questions that I want to help address,” Weiss wrote. “Let me be very clear, the BP Alaska Region did lose money (negative cash flow) in 2016 to the tune of about $1 million a day (a loss of $358 million for the year). And, the entire Region had a net income loss of $184 million.”
A BP spokesperson confirmed Weiss authored the email and said it was a personal message to several Alaska community leaders.
The $85 million profit relates specifically to its upstream business, but does not account for BP’s midstream business, which includes the Trans-Alaska Pipeline System, of which BP is part owner, and its marine shipping businesses, which are accounted for separately, according to Weiss.
The upstream, or North Slope, operations are parsed out in accordance with federal Security and Exchange Commission requirements related to the Prudhoe Bay Royalty Trust, which is traded on the New York Stock Exchange, she explained.
“The 20-F (SEC reporting form) is an income statement and does not reflect cash flow,” Weiss wrote. “It is based on what our finance folks call ‘accrual accounting’ which does not include ~$600 million of capital we invested in our Alaska business in 2016.
“Looking at only one piece of our business is like a restaurant only considering the cost of the food it buys and not taking into account the equipment need in the kitchen, transportation costs to get the food to your restaurant or the marketing needed to attract customers.
Weiss concluded, “It’s important to note that even in this low price environment, BP invested $1.8 billion in Alaska ($1.2 billion operating expense, and $600 million capital) in 2016. As a community leader, I wanted to provide you with the complete story directly from me.”
Reach Elwood Brehmer at email@example.com.