SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
dated July 15, 1999
BP AMOCO P.L.C.
(Translation of registrant's name into English)
BRITANNIC HOUSE, 1 FINSBURY CIRCUS, LONDON, EC2M 7BA, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F x/ Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No x/
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THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
PROXY STATEMENT/PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-4
(FILE NO. 333-10588) OF BP AMOCO p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-9790) OF BP AMOCO p.l.c., THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO.
33-39075) OF BP AMERICA INC. AND BP AMOCO p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-20338) OF BP AMERICA INC. AND BP
AMOCO p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3
(FILE NO. 33-29102) OF THE STANDARD OIL COMPANY AND BP AMOCO p.l.c., THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
33-21868) OF BP AMOCO p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION
STATEMENT ON FORM S-8 (FILE NO. 333-9020) OF BP AMOCO p.l.c., THE PROSPECTUS
INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-9798) OF BP
AMOCO p.l.c., AND THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM
S-8 (FILE NO. 333-79399) OF BP AMOCO p.l.c., AND TO BE A PART THEREOF FROM THE
DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY
DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
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The following documents (bearing the exhibit numbers listed below) are furnished
herewith and made part of this Report pursuant to the General Instructions for
Form 6-K.
Exhibits
1. Press Release, dated July 15, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP AMOCO P.L.C.
(Registrant)
Dated: July 15, 1999 By: /s/ GILLIAN E. YOUNG
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GILLIAN E. YOUNG
Assistant Secretary
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Exhibit 1
FOR IMMEDIATE RELEASE
JULY 15, 1999
16/99
BP AMOCO TO SELL $10 BILLION OF ASSETS AND BOOST
GROWTH CAPEX TO $26 BILLION OVER THREE YEARS
BP Amoco today announced that it plans to lop $4 billion off its annual costs
worldwide, to sell assets of $10 billion and to boost capital spending to a
total of $26 billion over the three years to the end of 2001.
Unveiling new three-year targets for the merged group to financial analysts in
London, chief executive Sir John Browne said these actions were aimed at adding
up to six percentage points to BP Amoco's return on capital by the end of the
period.
"Clearly, absolute profit levels will be determined by actual trading
conditions," Browne said. "But this very significant improvement in underlying
performance is a target we now believe we can deliver."
Browne told analysts that the integration of BP and Amoco was now essentially
complete, with synergies from the merger likely to be running at the promised
annual rate of $2 billion before the end of 1999, over a year ahead of schedule.
Following six months of intensive work since the merger closed in December, new
targets were also now in place for the first three years of the new company,
including this year, designed to take BP Amoco on a powerful growth curve into
the next century. Outlining four of the principal targets, Browne said:
"FIRST, we will continue to improve the efficiency of our operations, with a
target to cut our costs by some $4 billion by the end of 2001, a reduction of
more than 20 per cent from our 1998 base. We also intend to high-grade the
portfolio with $10 billion of disposals.
"SECOND, we plan to invest for growth. Based on mid-cycle assumptions, we aim to
spend some $26 billion over the three years to end-2001, with our capital
employed growing in total by between two and five per cent.
"THIRD, we aim to maintain our gearing within a band of around 25 per cent to 30
per cent and to maintain our dividend policy of paying out 50 per cent of
underlying mid-cycle earnings.
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"FOURTH, we intend to enhance our returns on capital employed by between five
percentage points at the bottom of the cycle and six percentage points at
mid-cycle when we would have the additional help of extra volumes."
Highlighting key points from the three-hour presentation to analysts by BP
Amoco's executive management team -- deputy chief executive Rodney Chase,
Exploration chief executive Richard Olver, Oil chief executive Doug Ford and
Chemicals chief executive Bryan Sanderson - Browne disclosed that the company
had made major new oil discoveries in the Gulf of Mexico and offshore Angola.
"Our Crazy Horse well indicates a discovery of at least one billion barrels, the
biggest-ever find in the Gulf of Mexico. BP Amoco holds a 75 per cent interest
in the area concerned and we have more wells to drill. Our net volumes in the
Gulf now total some three billion barrels and we could see production there rise
to 800,000 barrels a day over the next decade.
"Our Plutonio well offshore Angola is another major discovery and we have a 50
per cent stake. This brings our net Angolan volumes to around a billion
barrels."
Browne said that, with these and other discoveries not yet booked, "BP Amoco has
sufficient resources available not only to grow production but to continue to
replace that growing production for at least the next ten years".
Rationalisation of the production portfolio would keep upstream output broadly
level between now and the end of 2001, he said.
"But beyond that, there is strong growth potential for oil production,
particularly from the Gulf of Mexico, from Angola and from other contributors,
including the Caspian, and production could be rising by as much as eight per
cent a year later in the first decade of the next century."
In gas, where the company has set up a separate marketing and power business,
Browne said existing assets in the UK North Sea, Australia's North West Shelf
and North America could sustain production of some 4.5 billion cubic feet a day
over the next ten years. But with additional growing gas interests in areas such
as Trinidad and Algeria, and growing consumer demand for cleaner fuels, he
expected gas output to increase steadily over the same period.
Browne said BP Amoco would continue to plan on the basis of a low oil price,
progressively driving down supply costs to ensure that the group was robust at
$11 a barrel.
"Since 1989 we've reduced our supply costs by five per cent a year in real
terms. Our objective is now to reduce those costs by a further $2 a barrel by
the end of 2001, bringing Amoco costs down to the BP level but also continuing
to reduce the BP level itself.
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"With production of around one billion barrels of oil a year, a $2 reduction
would mean an improvement of some $2 billion. In contrast to downstream cost
reductions, which are partially competed away, upstream cost reductions tend to
go straight to the bottom line."
Browne said capital spending for BP Amoco this year would be around $7 billion
and disposals some $2 billion.
Of the $4 billion cost reduction target for the three years to end-2001, he said
he expected some $2.2 billion to come from the upstream business, $1.4 billion
from refining and marketing and $400 million from petrochemicals.
Of the planned $10 billion disposals, some $4 billion would come from
exploration and production, including the company's Canadian oil interests which
were already on the market and its 64 per cent stake in Altura Energy, an oil
and gas producer in Texas and New Mexico.
Over $3 billion would come from the sale of downstream assets, with the biggest
single element from refining where Browne said the group had made a strategic
decision to reduce its global coverage significantly.
Browne said: "With worldwide refining capacity continuing to grow faster than
demand, our expectation is that the global refining margin will average little
more than $1 a barrel over the medium term.
"Our aim, therefore, is to reduce our refining coverage by around a third, which
means that the ratio between our own refining supply and the volumes we market
will fall to between 60 and 70 per cent from today's level of 90 per cent."
Browne said the first disposal would be the 250,000 barrels-a-day Alliance
Refinery in Louisiana.
Chemicals disposals over the three-year period were expected to total some $2.5
billion, as the group exited low margin, low growth activities. "In chemicals,
we aim to add value by focusing our manufacturing predominantly on 'ideal' sites
such as Grangemouth in Scotland where we can integrate our activities with our
own hydrocarbon base and minimise the production of lower value byproducts,"
Browne said.
"Creating a limited network of manufacturing sites, many integrated with
upstream and downstream assets, will reduce fixed and variable costs per tonne.
In total we expect unit costs in our chemical business to fall by 25 per cent
over the three-year period.
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"Our aim is to have an overall chemicals portfolio biased to products such as
polypropylene which are growing faster than the chemicals sector average, and to
growing markets such as Korea, Malaysia and China."
Browne said that after the $10 billion of divestments, the group expected to see
gas production growing consistently by some five per cent a year, oil production
flat to rising slightly for three years and then growing by eight per cent a
year, marketing sales growing by some five per cent a year and chemicals sales
by six per cent a year.
Browne told analysts that all the new targets excluded any potential benefit
from the pending merger with ARCO. "While ARCO will represent only 15 per cent
of the total market capitalisation of BP Amoco, it will strengthen the
portfolio, particularly in gas and the US downstream. It will also give us great
new opportunities in Alaska and further potential for future growth in Asia.
"As we said when we announced the transaction in April, we expect to realise $1
billion of pre-tax cost-savings from synergies in the first two years. The
transaction is now being examined by the relevant authorities and we aim to
close the deal later this year."
Browne disclosed that the company will hold an EGM to seek the approval of BP
Amoco shareholders to the ARCO merger on September 1.
"That meeting will also be asked to approve one other step. To improve the
liquidity of the market in our shares and to bring us into line with our peers
in the US, we intend to seek shareholder approval for a share split - creating
one new share for each existing share and, consequently, one new ADR for each
existing ADR."
In conclusion, Browne said: "In the six months since the merger with Amoco, it
is clear that we have made enormous strides in creating a new company. We have
integrated two corporations, enhancing the best of both, realising synergies and
savings, achieving a new scale and reach.
"Ours is now an organisation of high motivation, distinctive assets, clear goals
and focused performance - all contributing to formidable growth in shareholder
value."
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document contains certain forward-looking statements with respect to the
financial condition, results of operations and business of BP Amoco and certain
of the plans and objectives of BP Amoco with respect to these items. In
particular, among other statements, certain statements with regard to management
aims and objectives, financial performance targets, planned expansion, capital
investment or growth, expected or targeted cost savings, expected or targeted
production volume, capacity or rate, the date at which or period in which a
project, action or target is
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scheduled or expected to be completed or achieved, and statements with regard to
past or future trends in market prices, costs, results of operations, margins
and overall market trends, are all forward- looking in nature. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements,
including the specific factors identified in the discussions accompanying such
forward-looking statements; future levels of industry product supply, demand and
pricing; political stability and economic growth in relevant areas of the world;
the ability of BP Amoco to integrate combined or acquired businesses
successfully and in the time frames contemplated; development and use of new
technology and successful partnering; the actions of competitors, natural
disasters and other changes to business conditions; and other factors discussed
elsewhere in this document and in BP Amoco's other reports and statements filed
with the Securities and Exchange Commission.
-- ENDS --
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