Q3 2021 BP PLC Earnings Presentation

<unk> resilient dividend is our first priority within the financial frame and for the third quarter BP has declared a dividend of 546 cents per ordinary share unchanged. Following a 4% increase announced with our second quarter results.

We have completed the $1 $4 billion share buyback from first half 2021 surplus cash flow.

And have today announced plans to buyback $125 billion of shares, which we expect to complete by the time of our fourth quarter results.

We are also seeing continued momentum across each of our strategic focus areas and I'll come back to talk about these and other highlights later in the presentation, but for now let me hand, you over to Murray.

Thanks Bernard.

Let's begin with the macro environment.

Oil prices have continued to increase with Brent rising 7% to average $74 in the third quarter moving above $80 in recent weeks.

This reflects the strong rebound in oil demand as the impact of Covid eases.

As well as the measured increases in OPEC plus supply.

As a result of inventories have reduced back towards pre pandemic levels.

As we look ahead to the end of the year, we expect oil prices to be supported by continued inventory drawdown with a potential for additional demand from gas to oil switching.

Gas markets were very strong in the quarter as well.

Henry hub averaged $4 30.

Up from $2 90 in the second quarter as capital discipline continue to limit U S gas production growth and Hurricane Ida led to production curtailments.

In international markets average MBP and J Cam prices rose by around 85% compared to the second quarter.

This reflects a tight LNG market driven by strong Asian demand growth.

<unk> supply outages depleted European gas storage and uncertainty of a Russian pipeline imports, we expect gas markets will remain tight during the period of peak winter demand.

Looking to refining the increase in industry refining margins were supported by Hurricane Ida related disruptions in early September.

In the third quarter, Bp's average RMM rose by 11% to $15 20.

This was mainly due to seasonal demand rebound.

Realized margins also benefited from wider North American heavy crude oil differentials.

In the fourth quarter industry refining margins are expected to be lower compared to the third quarter driven by seasonal demand.

Moving to results.

In the third quarter, we reported a <unk> loss of $2 5 billion.

After adjusting items of $6 3 billion, we reported an underlying replacement cost profit of $3 3 billion.

Compared to $2 8 billion last quarter.

Adjusting items included fair value accounting effects of $6 1 billion.

Primarily due to the exceptional increase in forward gas prices towards the end of the quarter.

Under Ifr S reported earnings include the Mark to market of hedges used to risk manage LNG contracts, but not the physical LNG contracts themselves.

This mismatch at the end of the third quarter is expected to unwind if prices decline and as cargoes are delivered.

The underlying result removes this mismatch consistent with how BP risk manages its LNG portfolio.

Turning to business group performance compared to the second quarter.

In gas and low carbon energy. The result benefited from higher gas realizations, and a strong gas marketing and trading results.

And oil production and operations. The result reflects higher liquids and gas realizations, but was impacted by the effect of hurricane Ida on our Gulf of Mexico production in the quarter.

And in customers and products the products business returned to profit driven by higher refining availability and throughput.

Enabling the capture of the stronger refining environment.

Partly offset by increased energy prices.

The result also benefited from a higher contribution from oil trading.

And the customers result was supported by higher retail and aviation volumes.

Strong convenience and fuel margin management offset.

Offset by higher wage costs and increased digital marketing investments.

For the third quarter BP has announced a dividend of 546.

Per ordinary share payable in the fourth quarter.

Turning to cash flow and the balance sheet.

Operating cash flow was $6 billion in the third quarter.

This included a working capital build of $1 $8 billion after adjusting for inventory holding gains and fair value accounting effects.

Capital expenditure was $2 9 billion.

And disposal proceeds were 300 million, bringing year to date receipts to $5 4 billion by the end of the third quarter we.

We now expect to realize disposal proceeds of around $6 billion to $7 billion by the end of 2021.

Reflecting the strong underlying cash flow delivery and after working capital movements third quarter surplus cash flow was $900 million.

With second quarter results BP announced the intention to buy back $1 4 billion of shares from surplus cash flow generated in the first half of 2021.

This program has been completed with 900 million executed during the third quarter.

Recognizing these factors net debt fell for the sixth consecutive quarter to reach $32 billion at the end of the third quarter and has now been reduced by 7 billion since the start of this year.

Our financial frame has established a clear set of principles and priorities for our uses of capital.

These remain unchanged with a resilient dividend our first priority.

Our second priority is to maintain a strong investment grade credit rating.

I am pleased with the progress we've made on debt reduction and we continue to plan to allocate 40% of 2021 surplus cash flow to further strengthen the balance sheet.

Despite the backdrop of higher commodity prices, we remain focused on capital discipline, and our third and fourth priorities for capital expenditure remain unchanged.

We continue to expect to spend around $13 billion in 2021.

Finally subject to maintaining a strong investment grade credit rating.

And considering the cumulative level of an outlook for surplus cash flow. The board remains committed to using 60% of 2021 surplus cash flow for share buybacks.

Recognizing third quarter surplus cash flow of $900 million.

And reflecting our confidence in the outlook.

<unk> intends to execute a further buyback of one point to $5 billion pre.

Prior to fourth quarter results.

And we expect to outline plans for the final tranche of buybacks from 2021 surplus cash flow.

With our fourth quarter results.

Based on Bp's current forecasts at around $60 per barrel, Brent and subject to the board's discretion each quarter, we continue to expect to be able to deliver a buyback of around $1 billion per quarter on average with upside at higher prices.

And to have capacity for an annual dividend increase of around 4% through 2025.

Taken together, we remain focused on delivering strong per share growth consistent with our proposition to shareholders.

Thanks, very much for listening Bernard back to you.

Thanks, Maury, so turning now to look at operational and strategic highlights.

And we continue to make disciplined progress underpinning our confidence in the targets, we laid out last year.

Looking first at hydrocarbons.

We are building, a higher quality and more resilient business.

Growing EBITDA from a smaller higher margin and price leverage portfolio, whilst at the same time reducing emissions.

In 2016, we first outlined an ambitious plan to grow production from new high margin major projects.

And with two major projects coming online in the third quarter.

Under horse South expansion phase two and matter Paul we have now hit our target of delivering 900000 barrels of oil equivalent per day by 2021.

This I hope you will agree is a fantastic achievement and a great example of us doing as we say.

Executing our strategy and building real momentum.

34 projects 11 countries over 250 million hours with more than 36 billion of capital expenditure net to BP and all executed on average on schedule and importantly around 15% below budget.

Why is this so important.

First these high margin barrels will help drive EBITDA growth as we high grade our portfolio.

And there is more to come in 2022, we plan to start up the high margin Mad Dog Phase two project in the Gulf of Mexico <unk>.

Further expanding our footprint in one of our core regions with substantial price leverage and.

And we expect to further drive margin and returns by prioritizing projects around existing infrastructure.

Second as we've discussed before our single operating model is allowing us to leverage these world class project execution capabilities across our existing business and into new areas.

And is also helping drive resilience across our operating assets, improving reliability lowering emissions and maximizing value.

Compared to the second quarter upstream plant reliability improve by around 1% to reach 95, 4% underpinned by strong performance in some newer major projects such as Raven in Egypt.

Refining availability was also higher up 2%.

We continue to expect further improvement towards our 2025 target of 96% for both reliability and availability.

And we are in action reducing emissions take.

Take <unk> as an example.

Through focused investments since acquiring the assets the team has cut Permian methane flaring intensity by over 90%.

Less than 1% by the end of the third quarter 2021.

These actions are key to our BPL strategy, helping improve the sustainability of our operations, while also yielding attractive returns.

And convenience and mobility, we aimed to nearly double EBITDA by 2030 from around $5 billion in 2019, and generate returns of 15% to 20% and we continued to make strong progress across our three focus areas.

First we are redefining our convenience offer.

Compared to the same quarter last year, we have increased the number of strategic convenient sites by 8%.

Our BP me customers, who typically spend twice as much as non app users have increased by around 50%.

And since 2019, our basket value is higher in key markets. For example, in the U K and in the U S. At Thorntons It has grown by more than 20%.

Together these factors have underpinned our record year to date convenience gross margin delivery.

Next in Nextgen mobility, nearly half of our EV charging points are now either rapid our ultra fast.

Our utilization rates are increasing with elektron sales, 45% higher than last quarter.

And our digital charging solutions partnership with Daimler and BMW group completed in October.

This is expected to connect EV drivers across Europe to our network of charging points drive up utilization rates and increased footfall at our convenience stores.

And finally, we continue to expand in growth markets.

In the last few weeks <unk>, our Indian fuels and mobility joint venture with reliance opened their first mobility station, providing a fully integrated customer offer including high quality fuels EV charging points Taylor.

Tailored convenience offers including our while being cafe and Castro products and services.

The <unk> brand builds on our well established partnership in India further combining the knowledge expertise and experience of BP and reliance industries to create an unmatched and distinctive customer experience.

The existing network of 1400 reliance steel stations will be rebranded to <unk> in the coming months.

And in China, our record year to date underlying earnings were driven by the strength of our Castrol brand and our convenience and mobility businesses.

Finally, low carbon where we continue to build capability and scale with capital discipline and a focus on returns.

In renewables, we have growing confidence in our ability to develop 20 gigawatts to.

Net to BP by 2025.

First compared to the second quarter, our pipeline has grown by two gigawatts to 23, Gigawatts driven by continued growth in light source bp's projects portfolio.

And second light source BP has increased its growth target by 25%.

Now planning 25, Gigawatts developed too.

By 2025.

And hydrogen and <unk>, we are taking early steps to create a distinctive position aiming for a 10% share in core hydrogen markets by 2030.

Alongside projects in Australia, and Europe, we have made several recent announcements in the U K.

Last week BP was selected by Aberdeen City Council to develop build and operate the first scalable green hydrogen production hub in Scotland.

And earlier in October the U K government selected the east coast cluster as one of the first two <unk> projects in the country.

The successful bid was managed by the BP led northern endurance partnership, which will also develop the <unk> infrastructure.

BP also operates two further projects H two T side, and net zero T side power.

That are integrated with the east coast cluster and key to our hydrogen strategy.

And we were inaction elsewhere in September we announced a strategic partnership with Mazda and add knock in the UAE, where our BP has a substantial business and a long standing relationship.

Together, we plan to develop a range of low carbon energy projects for the U K and the UAE with a particular focus on hydrogen and Cc U S.

These examples demonstrate how we are leveraging mutually beneficial partnerships deep project experience and global reach across the energy sector to build scale and presence in low carbon.

So to briefly summarize I hope you'll agree that today's results tell a story of continued strong underlying financial performance and strategic progress.

We are driving value from our more resilient and focused hydrocarbons portfolio.

Leverage to the stronger price environment.

We continue to grow our established convenience and mobility businesses.

And we are investing with discipline and low carbon laying the foundation for our material business that can generate stable long term returns.

It is still early days of course, but the team is doing a great job and we believe the combination of financial delivery and strategic momentum presents a compelling investor proposition.

One that is purpose led and performance driven.

Is resilient to market cycles in the near term and is expected to grow sustainable value in the long term.

And that delivers returns for shareholders today and transforms BP for Tomorrow. This is what we mean by performing while transforming and it is what we are laser focused on them.

And with that Murray, Craig and I will be pleased to take any questions that you have.

If all that participants would like to ask a question. They may do so by pressing star one to cancel your question. Please press the hash all panicky. If you are listening on the web. Please submit your question using the web question facility.

Well, thanks again, everybody for joining us this quarter.

As usual please if.

If I can remind you just to restrict your questions to two so we get everybody to ask their questions over the next coming few minutes.

And I are obviously available after the call to follow up on any more detail. So on that note, let me turn to Jason Kenney at Santander for the first question Jason.

Yeah.

Thanks very much.

Hey, Larry So I.

I am struck by the number of strategic collaborations with BP about it particularly over the last couple of years I mean, there are some smaller ones like blueprint blue small you've got the obvious ones like <unk> and then the big one.

Sure <unk>.

And then there's things that Masdar I mean everything.

Or coming in chunks all companies just wondering what the BP of the future will look like and how much is the new energy businesses being directly driven by BP and how much is dependent on the correct alignment with the right players in the right technologies or the best scalable new value chains.

Any thoughts on that would be much appreciated.

And then specifically on.

The hydrocarbon positions like Angola, and Iraq, which you are looking to move that side at BP.

Could you maybe comment on.

<unk> carbon positions that may be right for being positioned in and independent.

Supportive operation.

Very good Jason good morning, and good to hear your voice.

Maybe I will take a little stab at the.

The partnerships and Mary can add if he wishes and I'll, let Mary talk a little bit about the hydrocarbons in what we're doing there.

Look I think it's.

<unk>.

It's really a couple of things in terms of partnerships and joint ventures, and so on the first is that.

The energy system of the future is more diversified its more complex it's more local.

And it lends itself to the need for.

Different skills to come together to help solve those problems.

And it sometimes means local partners like we have with Didi in China like we have with reliance with <unk>.

In India.

So I think one is the energy system of the future will encourage us to partner.

And the second thing I would say is that partnership.

And relationships are part of our DNA.

I think we are.

A company that have long seen partnerships as a strength as a sign of strength not necessarily.

A sign of weakness in the encouraging thing for US Jason is that not alone do we want to partner and in some cases need to partner.

But it is that other companies wish.

To partner with BP and you mentioned some of them, but I think it's incredible to see our investment in digital charging solutions in this quarter in Europe.

Opens up hundreds of thousands.

All the customers to BP and that's a joint venture with <unk>.

Daimler and BMW.

Getting us in that software so that customers.

Customers can be pointed to are charging stations as we build them out here in the U K and in Germany, we wouldn't be able to do what we're doing in China. We opened our 100 site in China and EV charging in the quarter were up eight fold year on year in terms of the number of charge points in China and I would just let you know that China Tucker.

Seven years to go to 5% of Evs in the marketplace and it took seven months to go from 5% to 10%. So Didi is an excellent partner for US there reliance in India, what we're doing with Mukesh ambani and his team on the natural gas side, we hope to be providing between 15% and.

90%.

Of India's natural gas over.

Over the next several years something that's massively important to that country's.

Transition and at the same time opening our first <unk> station. So partnerships are something that we love.

We have a great relationship and track record in them PAA in Argentina, Arco, VP, and Norway and I, just think its part of the future.

It's just part of what the energy system is going to need and it's something that we.

We are leaning into and I guess as I said not alone do we want to need partners, but it is encouraging to see that people want to partner with us Murray anything to add or hydrocarbons yup. Thanks, Brian Jason I guess, the only thing I'd add is if you look back in the 19, 70% 19 eighties, the historic upstream and downstream.

<unk> been seeing similar type of announcements.

BP merging together with other companies to develop.

The upstream and the downstream I just think we're back in that phase of building and so that is that as an entry in the cycle. We're in.

As far as as far as transactions et cetera, I, suppose Bernard and I over the past decade, we've done a couple of transactions with partners to create value there are always very value driven.

If I think back to Alaska, what we did with Health Corp. Northstar in Endicott created a partnership.

I think it's five years ago, we created the partnership with Aker BP in the share price on Aker BP is up quite substantially over that time period.

That's not bad is it.

So I think every 10 years or every 10 years. It looks like we can do two of these things.

And the next the next ones obviously Angola.

Working with our partner Eni, we see a great industrial synergy opportunity. There that we think can create a lot of value for partnerships. We're constantly looking for these things that are just very difficult to do and they're very difficult to Oman.

I'm not going to forecast any future ones, but we're always looking for ways to create value here for shareholders.

It looks like our hit rates hit rate is about to every 10 years, So Los Angeles.

It is all about unlocking value in it it's.

It's all about unlocking value and that's what we're trying to do with the portfolio and.

You should expect us to continue to.

Be laser focused on it and I think we can do a bit better than two every 10 years, but let's see so day by day. Thanks, Jason I think I just got my performance contract that was a little bit of feedback.

That's great. Thanks, Jason we'll take the next question from Christine Malek at J P. Morgan Christine.

Hi, good morning, Thanks, Craig.

Hi, Brian and Mark good to hear voices to two questions if I may.

Activism in the space regarding the breakup closely confused when they rise.

In the U S Europe.

Europe now I wont say his thoughts on the case, we'll call that hopefully won't.

Won't call the renewables businesses.

So understand partnership JV in the industrial logic of that.

Going Jason's question, but I just wanted to what extent can that stage.

Within our separate business and we continue just as a partner.

D P U K.

She loves vehicles and that the second question was on your <unk> Guide, it's interesting benchmark with GSO guide on your future outlook and see if a phone to what extent is that based on the operational execution outlook versus your belief.

On the macro pricing to be worth just just.

So on the latter point as well in terms of AUC.

Steel price in the next few years.

Ultimately, what's driving your increased confidence okay very good.

I'll, let Marie Christian take the second question around CSR and I'll see if I can.

Your first question and good also to hear your voice thanks for being on the call.

Look I think the first thing that I would say in the matter of.

This con this question around breakup and so on is that.

We're not hearing that calls from our investors. So I think that's the first and foremost.

<unk>.

We're not hearing that from investors today.

Why I think.

Our strategy I think is clear I think it is increasingly clear.

As we as people get more comfortable with it I think our financial framework is clear I think our investor proposition is clear.

And I actually think if I may say I think it's working.

Third quarter in a row of good strong results the balance sheet strengthening sixth quarter in a role of net debt coming down we're generating cash I think.

I hope Youll have seen I think we're a cash machine at these types of prices and we are investing in the transition with disciplined step by step.

From what we see.

<unk> shareholders increasingly.

Like what were doing so were encouraged we chose the name of our strategy last year before these conversations.

For a reason and it's called an integrated energy company and we chose that name because we believe deeply in the premise of being an integrated energy company being the way to not alone help the world transition, but importantly to create value from that transition and the reason, we say that Christian is too.

Fold number one.

We need cash flow to invest into the transition and our existing businesses generate enormous cash flow as you guys have done the math bettered naidu adjusting for working capital were close to $8 billion of operating cash in this quarter.

When I look at some renewable companies out there.

Some of them are struggling to fund their growth.

That's not a problem that a company that has an integrated energy company will have and it's not a problem that we have and the second thing that I would say.

Is if I take a country like the United Kingdom.

What are their company.

Can take natural gas build a power station captured a carbon take it offshore stored underground what are their company can take and build offshore wind build.

Build a hydrogen facility on the back of it take that electricity and put it into the largest charging network.

In Britain.

At the same time sign a deal with Daimler to explore the potential for hydrogen trucking infrastructure in the U K sign a deal in Aberdeen to look at hydrogen for public transport and at the same time have a trading business that can help customers hedge and plan and have predictable and reliable sources of energy. So.

As the energy transition.

Comes clearly more complex I think in People's minds, I think the role for a company like BP becomes clearer and clearer by the day. So we believe Christian long story short that we are better together and and.

I think as we deliver each and every day and as we deliver each and every quarter and we want to be pretty boring and predictable and reliable performing while transforming as what youll continue to hear from US I think that proposition. We will continue to strengthen so let me just leave it at that Murray.

Yeah on the Tsi question Christian I think you are asking about our financial frame.

So what we've said dividend first priority has the capacity to grow by 4% per annum, assuming $60 through 2025.

Second priority is to reduce our net debt third third party invest in that transition and sustaining capex on our historic hydrocarbons business.

And then surplus cash at least 60% through share buybacks.

And obviously for 2021, we've said, 60% buybacks, 40% to debt reduction to protect the balance sheet.

As as we guided on the share buybacks. We just said at 60, that's not a forecast of the future oil price. That's just an assumption of what the oil price was and we said that we could do around 1 billion a quarter amount to 2025 at $60 oil. So it's not our belief in what the oil price will be it's just a helpful. Guideline for you the sell side.

And for our shareholders to understand what our capacity is of course, if oil prices higher or lower than that those by that buyback potential can can increase obviously, if oil prices higher and that's what you've seen happen with the with our third quarter results and the announcement of the $1 5 billion of buybacks on an oil price itself I think we've got a constructive outlook on.

The oil price.

Demands up above 100 million a day again, we're not back to pre Covid levels. We think we'll be there somewhere around somewhere in Nextera. We think we'll be back to pre COVID-19 levels and of course, some OPEC plus is doing a good job managing the balance.

So we remain constructive on oil price and.

It doesn't really relate to the 16 Thats just a useful assumption for you to model our business.

Thank you.

Thanks, Christine will.

We will take the next question from Mikael <unk> Goldman Sachs Kelly.

Thank you very much for your time at two questions. If I may the first one is about cost inflation and delays in offshore wind the oil and gas industry has tremendous experience on delays bottlenecks cost overruns and you can read with you into a new business I was wondering why.

What can you do differently from your competitors to be able to manage better <unk>, which seems to be rising in offshore activity for the first time in the last decade and then my second question is about electric mobility and I was wondering if there are some key matrix youre looking at in terms of.

Alright, thank <unk> penetration of utilization of your charging points that really are key to achieve profitability in this rising in growing business. Thank you.

Forgive me Kelly, Thank you and good morning, I might ask Marie to talk a little bit about cost inflation and he has the supply chain function within his remit, but also capability and things that we have but Marie will talk about that on electric vehicles.

I have to say it's.

One of the areas that.

I think both Marty and I are most excited about I think Emma and Richard Bartlett and the team are doing.

A fantastic job in this space for us.

What are the things that we we look at I mean, the real driver here is utilization rates and utilization rates.

Are going up and up and up.

We sold 45% more electrons in the third quarter than.

Then we did in the second quarter.

And that's because yes, we're growing infrastructure and importantly, we're growing.

Our rapid and ultrafast infrastructure, which is our focus 50% of <unk> pulse now as rapid are our ultra fast.

And that means that we're getting more electrons through the system more kilowatt hours through the system. So.

That's the key 45% increase in electrons people talk a lot about the number of charging points quite frankly, we need to talk about the number of electrons sold and I think we felt we sold 40 gigawatt hours of electricity or electrons in the third quarter. So that's the key.

We're seeing this happen right around the world I think it's really really encouraging.

And in China as I said, we've opened our 100th site.

That's an eightfold increase now.

Year on year, So that's going very very well in Germany, we signed a deal with Burger King to put charging points in.

There are sites that will drive utilization in.

In Europe, we signed a deal with digital charging solutions to drive utilization.

In India, we've opened our first <unk> retail site, which has EV charging on it we bought into Blue Smart with which is India's all electric ride hail or so you can see here a system that is coming together.

And I haven't talked about fleets and our deal with Uber here in London, If you have time to ever visit our Park Lane.

Charging station, where we have dedicated Uber.

Charging points. So the key in all of this is <unk>.

Utilization the key here is electricity sales.

And of course to do that we got to have the right locations, which we do 90% of people in Germany, and the UK live within 20 minutes of a BP retail site. That's number one number two we got to have fast charging because people do want to make sure that they can get a charge quickly.

Number three we got to have a good digital offer which.

Which we have and we will continue to improve number four we got to have a safe and secure location for people to charge, which we do at our sites and number five we got to have a strong convenience offer so that people can grab that cup of coffee or that sandwich, while they're charging up and Thats what were doing Hammersmith is the busiest charging.

Site in Britain 7400 transactions in the third quarter alone that shows us the future that shows us what's possible ever drive by the Hammersmith site here in London, and you will see car charging points pretty much full so it's a pretty cool business. We're excited about it it's the.

One part of the transition that I think is going faster.

Than predicted and you can expect us to be all in on making that a very significant part of the company's future Murray.

Great.

I think on offshore wind in the supply chain.

I think the sector starting to see some inflation inside steel no surprise, given what's happened with Covid.

And about every two months I sit down with the our team on offshore wind to continue to learn and see what's happening. So the last time I said that was a month ago and the big Chokepoint actually is offshore installation on offshore logistics.

Now the funny bit is that's the exact same thing that that I'd talked about other teams with on the oil and gas side. So you know the way that we'll manage this it looks to me like about 60% to 70% of the supply chain overlaps between offshore wind in offshore oil and gas.

It's a rough estimate and the typical way we manage these things as big long term frame agreements on scale. So so far despite input prices rising we've been able to use our frame agreements to offset that inflation on the oil and gas and I would expect as we move through offshore wind will bring those two things together and manage that inflation.

And the other things we do is we have big programs of activity. So in the offshore U K will have subsea teams will have subsea programs will have pipeline programs in the upstream and we will be sharing the logistics and the less vessels across both both the offshore wind and <unk> and.

And the historical oil and gas positions, so theres quite a bit of overlap. We know we know all the things that we do to manage this inflation, we're pretty decent at at managing capital in this space I think you heard Bernard talk about our project delivery over the past five years.

We targeted to spend $42 billion, we spent 15% less than that across 35 major projects across a very busy time period.

And that exact same team has now moved into offshore wind will move into onshore RCC U S onshore hydrogen and we look forward to taking all those lessons that we built up over time in the upstream into.

Into the downstream and into low carbon so I think yes, we're seeing a little bit of inflation in that space, but I think we'll be able to use than everything we've learned from from upstream oil and gas and our leverage with the supply chain to manage this risk.

Thanks, Marty just one fun fact on electrification before we let me Kelly go It took China 11 years to go from zero to 5% EV penetration it took them.

Seven months to go from 5% to 10%.

<unk> penetration, it's incredible and someone just said that we doubled the elektron sold in Germany quarter on quarter. So this is a fast moving business and we're well positioned and if you wanted to measure returns. The general Stat. We hold is if you get 10% utilization on our fast charger, you'll make a 10% return that's just the pure electrons and sell.

Of course this is not just about the electrons is about the convenience as well and when somebody goes to charge their car they spend probably eight minutes as opposed to four minutes and hopefully they come in and they got a nice nice couple, while being coffee and a sandwich and.

That will certainly enhance those returns.

Utilization of the Hammersmith is definitely above 10%.

We don't have Hammersmith everywhere, but it is a sign of the future I think.

Great. Thanks Me Kelly.

Super Thanks, Mcnealy I will take the next question from OS Clint at Bernstein OS.

Oh, hi, good morning, Thank you very much everyone.

India GL BP, then you station, which you've mentioned a couple of times. This morning, I have to admit when I read that I saw a lot of the word free I saw free.

Active fuel within the standard feel I saw free oil change et cetera et cetera. So I just wanted Steve tell me. Please what matzo revenue model or what's the or actually where is the margin is it I'm not sure of our retail margins are in India, but is it bulk standard fuel is it.

The EV charging you just talked about.

Refreshments or things like battery charging or is it just be great to flesh out.

How this all comes together is there any cross subsidize.

Subsidization, that's taking place.

And then secondly, secondly, please.

I mean, there is obviously still some concern out in the markets about youre shrinking upstream and it's pretty amazing to see just how low your exploration write offs are this year basically zero, but could you just talk about your base decline rate at this point in the year and how it's comparing to your expectations. Please. Thank you.

Great.

Meru, maybe help me on decline rates I'll say something on the 40% and then India look I think.

We're at the very early days this is our first <unk>.

<unk> site.

The existing 1400 reliance sites will be rebranded over the coming.

Months.

The.

Margin here is a margin that crosses.

All the way from margin on fuel to margin on convenience to margin on charging I mean, it is a it is a complete.

Customer capture strategy, so to speak and I think the numbers here in the U K now, our climbing and climbing and where.

We're seeing in the U K that I think we used to say over 50%.

Of customers that visit a BP retail site in the UK by fuel only or don't buy any fuel sorry that number has risen to I think between 60 and 70%. So consumer habits are changing basket sizes are increasing here in the U K, we see basket sizes have risen 20% with pre pandemic. So it is a it.

As an integrated offer.

I may use that word than in terms of free.

Think of it as customer capture.

People made a lot of Gilles issuing free mobile phones today I think they have 400 million users on their platform. So customers matter, we invest in customers, we want to attract and secure customers and we will do that in India as Geo did incredibly successfully.

With their mobile network and it's fantastic actually for this venture to be called G. OBP, given the footprint and reputation that that mobile network has in terms of the 40%.

I think a couple of things I would say and we will talk more about this at our <unk> results in.

In February a 40% reduction in production does not equate as you know to a 40% reduction in cash flow or anything but this is all about a high grading of our portfolio. This is a value optimization strategy pure and pure.

We intend to grow earnings through the middle of this decade, despite shrinking our volumes by 20%.

We take cost out.

We make sure that we're focused on the highest margin barrels. So we tried to unit margin per barrel up and Youll see us continue to do that through the decade. I think this is increasingly understood as a strategy that's focused on optimizing value that's focused on value and I think.

Is absolutely the thing that we need to be doing it allows us to really focus our capital.

It allows us to make sure that our exploration strategy as you pointed out is focused on infrastructure near existing assets. It's all of those things that I think is 100% focused on how do we create the maximum value from these hydrocarbon assets that we have so mark anything to add.

Just on the base decline on that type of stuff, so plant reliability Gordon and the team had a very good quarter 95, 4% I think year to date reliability. So very good performance on the facilities themselves, which forms a part of the base. We guide US as you know to 3% to 5% decline. We don't have an annual number yet we still got another 60 day.

As to go but I suspect.

As usual, we'll do better than that as my guess the places where we have base decline is.

Gas basins, you can see bps because of the lack of capital investment.

Last year.

<unk> base decline in Trinidad.

We've had some nice decline as well the rest of the the rest of the business is holding up super well and I.

I suspect at year end, when we report back to you will be at the lower end of that range, if not slightly below it so three to five <unk>.

Yes.

Super Thank you.

<unk> will take the next question from Irene homeowner at Society Generale.

Thank you very much good morning.

My first question Bernard Congratulations on delivering the 900, Abd new projects new barrels, which she said two five years ago.

At the time, you had said that at 50 or 55 done the brand these barrels.

One such higher margin in today's environment 885 done a branch.

Give us a sense of.

How superior the margins on those new barrels compared with legacy. Please and my second question on gas trading which at this quarter you described as strong.

As the press had mentioned recently figure of $500 million.

Is that realistic ash, how should we think about it is the 2% attachment to group bracci from trading which you provided before still valid in this environment. Thank you.

And good morning, and I'll, let Marty take the gas trading question and I will.

Take the question on the 900000.

Thank you for acknowledging that.

Are the congratulations Don go to me.

It goes to our organization, who I hope some of them are listening and they have done an extraordinary job and I Hope you don't mind me boasting about them for a moment, but this has really been an incredible achievement. This is 34 major projects across 11 separate countries delivered 436 billion.

In dollars net to BP, that's 15% under budget and on schedule. It is a pretty extraordinary.

Set of outcomes and of course, it speaks to a couple of things one that we like to do what we say so when we tell you something we intend to deliver on it and secondly project management and project management is escape capability that doesn't know oil.

Oil and gas as a boundary and what I mean by that is project management is applicable to.

Building hydrogen facility or building in offshore wind facility as it is to building.

Oil and gas facilities. So thanks for acknowledging it in terms of margins.

I think marine I would say that it was 35%.

A higher margin than the existing portfolio and I think today, we would say that at these prices that 35%.

Margin Delta is.

It's about what it would be at these prices as well so that margin uplift remains intact and of course is one of the reasons why.

We can grow cash flow grow EBITDA, while reducing production as we focus on those high quality barrels. So that 900000 much of it is on much of it is coming on Mad dog Phase two comes on.

Next year in the Gulf of Mexico.

Quite frankly coming online into an incredibly strong oil price environment and you will see that.

In the cash flows of the company marine gas trading hiring.

Nice to hear your voice.

So just thinking back to last year, when we guided on.

Trading, we said that trading enhances the returns of BPA by around 2% to 3% no.

No change to that guidance, we will update you in the new year.

Any different thoughts on that perspective, but no change so far.

In the third quarter, Yes, there was some press speculation around a number of we don't talk about speculation and we don't disclose those numbers it.

It was a strong quarter for gas trading you can see that in gas and low carbon.

But I must say the realizations were very strong as well in the quarter and production was very strong as well. So I think the team inside gas and low carbon had a had a great quarter for production and a great quarter for realizations. It was a strong quarter for gas trading as well.

We don't provide numbers, obviously and.

The numbers in the past, we're not going to comment on.

Thank you very much thanks Ari.

Thanks, Irene will tend to the U S. For the next couple of questions I think first one from Paul Cheng of Scotia.

Thank you good morning.

But you mentioned about.

In the <unk>.

You'd be charging business ortho utilization can you share with us what is the.

Utilization in the major operating regions for you at this point and what is Youre talking over the next couple of years and also do you have a number on.

That thesis.

The EBITDA contribution.

Contribution in the quarter you can cut.

Yeah, you can share.

The second question quick one do you have an estimate what is the.

Either.

Production in Taiwan and Mexico.

Uh huh.

Impact when they did that.

And also with that.

Yes.

Your one of your peers that sold the Permian North and say, that's because lack of economy of scale or at least one of the reason so want to see how you guys view your P. P. A.

Thank you.

Paul Thank you.

Think on.

I'll ask mark to comment on the Goldman <unk> favorite.

Probably favor two subjects.

Amongst many.

And in terms of utilization rates were not giving utilization rates by region. Yet I think the reality is that they're sitting today, probably on average below 10% and.

There is.

We're concentrating on on probably three key markets with two markets today and want to come over time to three key markets being China, Europe and the U S.

U S will probably be more of a fleet story.

CDU is is on the go charging which where we think the majority of the gross margin pool exists and China will be a combination of fleet and undergo utilization rates today are below.

10% on average I would say.

But they're only going one direction.

There is no doubt about that in our mind in some of the numbers that I have just given about the pace of growth.

<unk> penetration in China is just one example, but you see it all throughout the world. So they're going to go up and as they grow up the business becomes more profitable we're not.

Providing.

On a charging basis, just yet I think we're providing a lot of transparency some people would say too many metrics.

But no doubt as that material as that business becomes more material over time, you can expect us to to start talking about that but that's not for today Marie to Gordon Hurricanes in bps, yes.

Paul.

Bright and early in the morning for you apologize for that.

On the gum the impact in the quarter was about 60 Mbd I'll, let you do your calculations on what that is I think there's about a 15% royalty rate in the U S offshore and operating costs are pretty low sub sub six a barrel. So I'll, let you do the calculations on what that gets to.

Rather than provide number.

And then on the Permian and be PX, we're very happy with our <unk> position, it's doing much better than we hoped when we acquired it.

Costs are well ahead of what we expected.

Drilling efficiency is well ahead of what we expected reservoirs are showing up in the bone springs that we hadn't anticipated at the time. So I think operationally all things were very very happy with.

As you can see from our disclosure on the website. They are back to growth now as we invest more capital into them and we're gradually ramping up from about $1 billion. This year, it will probably ramp up to a billion and a half next year. The program inside the Permian will focus on building out the infrastructure to make sure that there's.

No flaring our methane.

Going into the atmosphere as we go into the next leg of drilling in the Permian. We think that's extremely important for not only the environment, but also for profitability.

And obviously, we're drilling in the Haynesville and Eagle for all the Eagle Ford as well, we will take a big dividend out of the business. This year and we anticipate continuing to take dividends out of it.

On a growing basis, probably by the time, we get through the ramp up in Capex will probably take at least $1 billion a year in dividend from that business and that's what's super important to us is making sure that we gradually grow this but at the same time, we can we can get a dividend back that pays pays back the yeah. The price we paid for the year for the assets. So very happy with it remains a core better.

The portfolio, both from reducing emissions, reducing firing reducing methane.

And driving profitability and driving cash flow for shareholders.

Thanks, Paul Thank you.

Thanks, Paul we'll take the next question from Jason <unk> at Cowen.

Okay.

Hey, good afternoon, thanks for taking my questions.

I wanted to ask the first one on the convenience of mobility business you've highlighted.

A lot of growth.

And kind of strategic initiatives within that business that are going as planned I can't help but notice that adjusted EBITDA was kind of down quarter over quarter and year over year. Despite all of this progress and seemingly moving.

Moving forward on your EV slash convenience store strategy. So can you just.

Help us understand what's.

Going on versus.

Those other periods and then my second question just on.

Capex moving forward given the rise.

In oil and gas prices you mentioned.

You're going to ramp up bps trend a little bit next year can you just talk about.

If there's other opportunities within the portfolio to ramp up short cycle spend if that something youre looking to do and and what that does for your capex outlook in 2022.

Jason Thanks, very much good to hear your voice as well and I'll just hit the two of them quickly and Marie jump in and help me.

On capital, we will update our capital guidance to the market for 2022 in February at our fourth quarter results.

You know that were running around $13 billion for this year and you'll note that our guidance over this period is 14% to $16 billion.

What I can tell you about February is that we will not be changing our capital guidance of $14 billion to $16 billion.

But quite exactly where we'll come in within that.

We will update you on that in February.

We'll remain disciplined.

We won't be overreacting to.

A particular <unk>.

<unk> on the day this will be very very disciplined capital framework and as I said it will be unchanged from the guidance that we have issued on convenience and mobility.

You are quite right to point that out on the third quarter.

I would remind people that that business has had a record year to date. So the nine months year to date.

Have been a record.

Castro, obviously has been hit by a couple of things.

Oil prices being much higher there's usually a lag there and that will flow through over time as we pass some of those prices on to consumers.

And there's one thing that covers both customer lender convenience business. So that's cast roll on our convenience business, we're investing a little bit more on advertising we have seen a few.

Increases in staff costs and the thing that's common across Kestrel and convenience is some of the Lockdowns in Asia.

Clearly had a bit of an impact so nothing structural there and just draw people's attention to.

Record nine months year to date in and that's what we're focused on Maria anything to add on either subject perfect. Thanks. Okay. Thank you that was feedback for me from Murray, which I'll take thanks Marie.

Thanks, very much Jason.

Okay. Thanks, Jason we'll take the next question from Jon Rigby UBS. Please.

Thanks, Craig Hi, guys.

Two questions first if you're able just to speak a little more about the structure of the gas hedges what it is youre doing there and are.

Are you hedging just your much in gas volumes overall.

Produce of equity production volumes.

I guess that has an impact on whether you see price leverage are not in the underlying.

The second question I guess just to step back a second.

Conventional wisdom.

This sort of transition is that you move from.

Yeah.

I don't know if had been talking about is probably this is the peaks and troughs on returns, but yes.

Supposedly high return oil and gas activity to slightly lower return renewable and power activity, but the renewable empower activity is lower risk, but if you sort of measure risk is volatility.

Is that strictly true is it likely to be true for the next four or five years as we go through this transition phase because it seems to me. If you look at power markets energy markets gas markets witnessed the hedging movements youre seeing in Yo Yo gas activity is that it doesn't look to me like a particularly low risk or stable market at the most.

So just interested in your comments around that thanks.

Very good John So let me have a little go out your second question on Marie will more intelligently speak to gas hedging and so on and he'll probably also.

The pilot on the <unk>.

On the transition question that you asked that's a very good question.

That one I mean would you say a couple of things.

Number one and probably most importantly.

I see the characterization in some media of BP is moving from oil to renewables.

And that's not actually the case.

Yes, we're focusing our oil and gas portfolio over the next decade in a volume sense. We actually believe we will create more value, but we are doing that in a volume sense.

Yes, we are building our renewables business, but we've always said, we're not building a renewables business just for renewables, we're building our renewables business to be part of an integrated.

Energy value chain that goes all the way from the production of energy into and some cases people's cars in terms of electrons or into hydrogen are into whatever it is that you wish to do with it.

So.

The first point is important which is this is not an oil to renewable story.

Focusing of oil, it's a doubling of convenience, including EV charging $5 to $10 billion and it's an investment in renewables, but not just renewables for renewables sake investing until the low carbon.

Energy value chain and.

In terms of your characterization of returns.

I would think that I would say a couple of things.

One is of course traditionally some of our investments.

Investments in hydrocarbons have been very profitable and just like others in industry not all of them are exactly high returns. So I would just say that too they are volatile and.

Open to the vagaries of the environment as we saw with negative prices last year and three our investors valuing the cash flows from those businesses and the way that they used to and of course that's.

Happening less and less and therefore.

As we transition and this will happen over this decade as we transitioned from a hydrocarbon only company to a more diversified company I do think some of those cash flows while still having some volatility you're correct, but I think they are in some ways less volatile I think that they are in many ways more valued.

By investors and therefore, I think it creates a better.

An investor proposition so.

Two big points. It is not an oil to renewable story. It is a focusing of hydrocarbons, it's a doubling of convenience and mobility and it's a renewables as part of our low carbon energy chain number one and we believe we can amplify returns in that latter part and number two some of what you characterize is correct, but I think there are attributes to the cash flows from this new <unk>.

<unk> these new businesses that make for a compelling investor proposition barring anything you'd add on that and gas hedging I think the only thing to add Bernard on the on.

On the volatility of returns if you invest in a wind program or a hydrogen plant etcetera, and your underpinned by a PPA or a contract for difference by a nation. That's a fairly stable set of cash flows.

If your merchants.

Taking merchant risk on power, obviously, that's much more volatile than natural gas you know all about the trading windows John.

The companies that win in the future are the people, who can manage risk really well inside that system and that can counter balanced natural gas and electricity. They generally tend to be priced off the same basis. So as we saw in the first quarter in the United States as we're saying in the third quarter here in Europe companies that can manage gas electricity interchange.

Can do really well and of course, that's what we do really well with our 20 years of history. In this particular business. So it is more volatile, but we risk manage well and you can see that in our results day by day this year.

I think on gas hedging you've got a John we don't hedge our equity gas that's something that our shareholders.

On LNG et cetera, I'm joined the upsides and downsides, we don't hedge that is a principle on the merchant.

Equity margins, yes, we do hedge those sales contracts remember what we're trying to do is buy a cargo lock that price in the sell the cargo lock that price in and make a margin on that and then we'll make superior margins when disruptions occur and we can redirect cargos, that's really the principal of our LNG business, it's very ratable and growing over time.

From 15 to 20 to 25 M. Tpa. So that's a very ratable business and we do we derisk had the hedge those sales contracts, which is what you are seeing showing up an FAA hope that helps John.

Yeah, and just to confirm you would expect that as a reverse over the next two to three quarters one to two quarters.

At Oh, sorry, burner number looking who wants to answer it.

Yes.

The FDA will revert reverses cargos get delivered and of course, a lot of those get delivered over the next 369 months and it could reverse if gas prices fall as well so it's dependent on price and dependent on timing of delivery of cargos, but nothing on towards where we're happy with direction of travel right now and we're happy with the direction of the business.

Thank you our favorite accuracy, so I thought I'd go with Murray.

Thanks, John.

Thank you John will take the next question from Chris Coupland Bank of America, Chris.

Yes. Thank you.

Marty one for you I just wanted to better understand the question quite formula you're applying in terms of paying out buybacks.

You've published nine months and <unk> results for your definition of surplus free cash flow and I'm not sure I can square the circle here to put the $1 $2 5 billion announcement into context. So it would be helpful. How much of your lets say confidence or outlook towards Q4 is embedded here or whether you are thinking about this.

As a year to date coal with or without the $500 million that you've bought back during the first half. So please help me.

I'm, a little confused and.

If I may a second question to bundle bundle <unk> response to the Aker BP share price performance earlier on and I just wanted to understand obviously dividends there are growing as well, but the dividend return you're getting from that its still below your own dividend yield at what stage does aker BP become purely financial investment rather than a strategic one.

Thank you.

Very good Chris good morning.

I will.

Let Marty take.

The former question, which which you may be.

<unk>, but I hope positively surprised on Aker BP.

It is a strategic investment as well as being a financial investment I think are both occar.

And BP would argue that we are a strong partnership we are very much.

Involved Marty sits on.

The board is does Kate.

They are very actively involved in.

Helping to make.

That company better and stronger bringing.

Bringing capability in from BP as and when we can that might be helpful and quite frankly learning from what <unk> is doing as well because they're doing some fantastic stuff, particularly on the digital front. So it is more than a financial investment.

We like that investment very much we see strong future into investment and that's what you should expect from that business going forward.

Chris's question on the buyback Formula Yes, good morning, Chris.

So just a few grounding principles here.

We've said that when we set the level of buybacks, we will not only look at surplus we've accumulated to date, but we will also look at the outlook for for the future.

Additionally, we've guided that at $60, we should be able to do around $1 billion a quarter out to 2025. So those are the two principal.

Guiding principles you should think about as we do these things it's not just a formula if you go to the formula inside the third quarter you saw our surplus cash flow. If you applied 60% to the nine hundreds of surplus cash flow that would be a $540 million buyback addresses maybe the math that you're thinking about and we've obviously done 1.25. The reason that we've done more.

As confidence.

Confidence in plants operating efficiently, we're up to 95% new projects ramping up we've got a lot more projects coming in there for accelerated from 'twenty two into 'twenty, one and we've got more coming in 'twenty, two, especially argo's Mad dog two facility in the Gulf of Mexico.

We have much higher earnings from Rosneft coming through that has a much higher dividend in the future than it has had in the past the oil environment in the natural gas pricing environment is very strong and of course, we had a big build in working capital that will reverse over time. So overall, we feel.

A lot of confidence in the underlying performance of the business the macro is strong and supportive.

And we've also signaled.

Additional divestments are through the rest of the year. So we think all of those things mean that we shouldn't lean in a little bit to 1.25 billion of additional buybacks and we'll update you in the fourth quarter results with what will do for the final installment for 2021, where we have said that 60% will be for share buybacks and 40% will be for <unk>.

Debt reduction I hope that helps Chris.

Great. Thank you the left confused.

Good great and I think we've always said that we would like it.

To be within reason are relatively ratable.

A buyback program and that's what where we're trying to achieve here and I think there are also questions. Chris from some people that said well why shouldn't it be a little bit bigger and of course, we're also making sure that we continue to.

Focus on our balance sheet, which is hugely important to us.

Six quarter in a row of driving net debt down so.

It's a pretty strong place I think for us to be but thanks for your question.

Thank you thanks.

Thanks, Chris we'll take the next question from Lydia reinforce at Barclays Lydia.

Thanks, Greg and good morning, and I like what you said about the investments I think there it day by day and.

Two questions, if I could and I am going to come back to this carbon management energy as a service strategic partnership, but how do we think about how you might returns are nice and maybe it's just me, but it does seem that we define as a way to looking at hesitate to just being asset base now as I say the idea of valuing customers and.

Sort of returns you might make them out I still think isn't particularly class he made a mistake.

And then on the second one on the idea that the Capex then it normalizes that 14th $16 billion. At this point have you thought about whether that guidance and short cycle upstream oil instead, they renewables like Halloween business, but it does seem like you've got quite a lot of opportunities that maybe that would be how do we get.

Good context.

Lithia, Thanks, and thanks for the question I'll, let Maria have a go at the sort of value chain question and I think he is he's done a good job in the past of describing how in many ways, we're creating a value chain here, which is a low carbon.

Most electron based.

Value chain as opposed to a hydrocarbon molecule based.

<unk> Chan and high return shift around but he will answer that in his own way I think on Capex I'm afraid I will just leave it as a relatively short answer without wanting to be evasive because I don't want to do that with you, but I think let's just wait until February and it's only a few months away, who just got Christmas to get through in the meantime, but we'll give you an update early too early.

Fab on that but we're not short of opportunity both on the hydrocarbon side and on the.

Low carbon and indeed on the convenience and mobility side is.

You have seen and will continue to see in electrification as you saw with our Thorntons acquisitions. So.

It's great to have options, it's great to have choice and it's great to be discipline, because it means that we should only be doing the very best stuff, but rather than speculate right now and mislead you.

I'll leave it to February to give you an update if that's okay and Murray.

Yeah.

So Lydia the way that I think about this is we're trying to create these integrated energy chains for.

For the future like we did with natural gas in the past. So if you just went to the U K.

And painted the picture of that.

We're saying that in offshore wind, while making 8% to 10% return levered.

That offshore wind electrons will be put into probably a mixture of a contract for difference with the government and then merchant positions that we will take risk on ourselves those electrons will go into green hydrogen plants, I assume whether that be the Aberdeen, when we've announced now or hopefully something we announce and T side in the future.

Or they'll go into things like pulse fast charging.

So it's clear we feel pretty comfortable we got to hit the 10% Levered and the offshore wind.

Some people may doubt that fine, but we feel comfortable with that for now in hydrogen I suspect the returns will be higher the risk is quite a bit higher.

So the operational risk is tougher so.

So we anticipate higher returns in that space, but it's early so it's hard to forecast what those will be.

And then on fast charging I would expect similar returns on fast charging that we get from fuel and fuel. We've always said would be 15% to 20% Unlevered returns that's our long history at it and I don't see any reason why fast charging won't be at least that the reason is that you will probably make the same amount on electrons that you do on fuel the rash.

<unk> time at the convenient site will be much higher with charging than it was with fuel.

Probably make more money on convenience there so I think that 15% to 20% return in that space feels good.

And then the magic in between the energy as a service whether that's to fleets et cetera linear I think the thing that we've tried to paint is that our trading business and history has added two to three percentage points to overall returns of BP.

The 100 billion of capital employed and I can't see any reason that we won't make that amount of money in the future as we have in the past and that those those 2% to 3% returns include 20 years of experience with us in North America, with our North American gas and power business, where we built up to be the third or fourth largest powertrain as well as the largest.

Natural gas trader in the United States. So we have strong history in this place and I think as you look at that and you meld that together, you'll get to a business that return somewhere in the 12% to 14% range. That's the best I can see right now.

<unk>.

You know I can't see why that won't be the case in the future as it has been in the past I hope that helps Lydia.

Okay.

Okay. Thanks, Lydia we'll take the next question from Lucas Herrmann at Exxon Lucas.

Alright, thanks, very much good morning, gentlemen.

Chocolate if I might.

Finally, I just want to switch to the gas trading business and profitability, along with whether you'd be kind enough to give us some indication of the volume of LNG did you take into your portfolio on the volume of LNG that your communities.

To deliver to customers and then effect as a consequence, the masses and therefore, what your exposure in Europe to tune in to your own trading.

On a quarterly or on an annual basis.

And then if I could just extend that to you must have very good visibility on how the trading business as you define it to normal portfolio business is likely to perform in the fourth quarter, given where prices have been can you give us any indication.

Of your peers.

To the extent to which we will see this benefit continue at least into the fourth quarter, if not the first quarter of next year.

And secondly can I just come on too.

Divestments in the six to 7 billion target.

A little bit lost on what you'd actually said in the second quarter I know, we started the year at four to 6 billion.

Clearly higher now.

Well, it's driven the improvement and associated with that can you make any comments on Angola on where that process is at the present time. Thanks Maury.

Hey, Lucas good morning.

Craig's, telling us we need to speed up on our answers here, which I think is right I will just do divestments very quickly.

We've done five four year to date, we did $300 million of proceeds in the third quarter, we guided at five to six we're working on some stuff that will push that number to between six and seven.

I can't tell you specifically, what they are but obviously, we have a relatively high degree of confidence.

And that will get to that place so without getting into specifics that staff and on Angola.

I think it's going well.

Well and we'll have that closed and up and running next year.

Strong support from the government in country, which sees this as a.

A very good thing of combining two strong operators to strong infrastructure positions in the country.

Getting good support a natural thing to do to improve efficiency.

In our sector in Angola that needs.

We all need to improve and so so far so good and we'll we'll close that early next year and kept that machine up and running and we're excited about it Murray on trading on trading the long term portfolio. Lucas. So, we're saying 20 M. Tpa right now under long term contract that's about eight of equity in 12 of merchant.

I think we've disclosed that before and nothing changed there as far as what the volumes of LNG or in a day I can't keep up with that that's a decision by the trading organization on each and every day, obviously remain we remain positive on natural gas pricing and.

I would just expect an average quarter every quarter and we will update you on what it actually turns out to be I would hesitate to guide otherwise, but theres nothing undue like losses unwinding, our gains unwinding or anything like that Lucas I would just assume average and that's the safe place to be and you've seen we've had a strong track record of managing volatility this year I'm sure.

Carroll and the team will continue to manage that well.

I'm sorry.

There are no restrictions pumps think about taking cash out if I can go to from a transaction of this nature beyond obviously the need to finance the JV itself.

No I mean thats.

This business may well raise some some debt.

As joint ventures, and entities like that would do and.

And any debt.

That is raised as is cash that is available to the partners.

The restrictions on our covenants because I saw you're asking me nics are the same questions, but we've got the same answers as he does.

Thankfully.

Thanks Lucas.

Thanks, Lucas we'll take the next question from Martijn rats at Morgan Stanley Martin.

Yeah, Hi, good morning.

Two if I may.

The statements mentioned, a short comment about additive supply shortages and kestrel.

Supply chain bottlenecks are a huge topic sort of across the economy. So I thought there was a quite interesting and I was just wondering if you could elaborate a little bit on like what is exactly.

Sort of at play here.

A fact that you mentioned is probably means it has some materiality for the fourth quarter.

And therefore can you talk a little bit about sort of sort of what this means and how long does get lost in the second question that I wanted to ask is exactly what you just sort of reply.

Applied to them in terms of Lucas's question in terms of the partnership.

<unk> with Eni in defense it.

Well one of the attractions of a structure like that would be that a.

A company like that could raise debt in its own right and I was wondering if you already have some experience or some read on.

On the appetite.

As for banks to lend to an entity like that.

Yes, it's it looks to me like you know sort of broadly bank lending to pure play oil companies is under some degree of strange. So I was wondering if there was already some indication and sort of how that is how that is playing out with an entity like that.

Good morning, Martin Mario will take the financing question on Kestrel, I think I wouldn't read too much into it as and this is going to be a fourth quarter issue and that's why we're highlighting in the third quarter I think there are issues around the world in terms of supply chains in general and.

No surprise that we're seeing a little bit of that in <unk>.

The broader thing in <unk> is that we have a very very strong improvement plan.

I think that's what we're focused on yes, we have seen.

Bit of dislocation.

Of demand and supply and Thats around the refinery run cuts that's around the storm in Texas, but.

The real focus in Castrol is on improving the business, we think that that business can do.

Do much better.

We have a plan to do that and as you watch it over the coming quarters, and particularly over the coming couple of years Youll see that so.

We think that the effects that we just highlighted in the third quarter will probably be the peak in the third quarter of that specific effect.

But let's wait and see until the fourth quarter, hopefully that helps and on raising debt.

Raising debt and peer place you could look at Aker BP, if you'd like they have absolutely no problem raising debt.

Both in Europe, and the United States.

The rates are very attractive, they're writing is very attractive so.

We obviously have experience in that entity, which is a public entity. So you can go and see what that looks like.

The Angola, it's early in the process.

We haven't completed the daily yet so we haven't got to final agreement with Eni and that will hopefully happen. This year and then of course the government has to ratify in the meantime, we are talking to banks about that but it's too early to talk externally about how that's going but I think the proof of Aker bp's relatively straightforward that they can raise funds.

Okay wonderful. Thank you. Thanks, Martin we'll take the next question from better Eschbach, Qatari or to RPC barrage.

Hi, there thanks for taking my question.

One specific one which one thematic but on the specific question in your surplus cash flow definition, as a 560 million charge relating to <unk>.

Transactions involving Noncontrolling interest I'm, just wondering what that was.

And then second question, just taking a step back and thinking about.

Growth in LNG going forward in the context of absolute emissions reduction targets.

As new LNG liquefaction capacity at your portfolio, because obviously the scope one two metrics. So you can be quite high.

The inference from that and should we expect your LNG portfolio to be.

Moving towards more offtake activity versus equity production going forward. Thank you.

Paresh, Thank you and good morning.

Mario will take the Noncontrolling interest question on LNG and emissions in general we should not use emissions reduction as a proxy for no new investments into hydrocarbon projects. So you will continue to see this company invest in.

Hydrocarbon projects sanction new ones, including LNG projects as we high grade the portfolio and a value sense. So we will deliver on our targets of reducing production, but that does not mean that there won't be new investment including.

In LNG as we will as you are seeing in in West Africa with US today, So hopefully that helps their marine noncontrolling interests and $60 million yeah. Good good catch barrage.

It's primarily the purchase of Thorntons.

Buying out our partner Arclight Theyre, 100% interest there's some other stuff in there too.

For Thorntons, we haven't advertised on that one very much on this call. It established us as the leading convenience market marketer in the Midwest, We take over 208 stores fully now 3000 employees blending plants and transport systems. It allows us to integrate the back office with an P M as well as supply logistics and trading.

And we can streamline all the product offers that we have for.

Those are we haven't really talked about it much but EBITDA growth has been 20% per year from 2018 to 2020 inside Thorntons. It is a tremendous business and we're super Super excited to take it over a 100% and expanded in the United States.

It is a growth machine.

Just just on that point is there anything else.

Of a similar vein thats already been agreed that would impact that number.

In terms of acquisitions.

Yeah, Yeah, the things that pop up.

Okay. Thank you thanks.

Thanks barrage, we'll take the next question from Bertrand Dougherty at Kepler Bertrand.

Yes.

Thanks for taking my question I in fact, I have just one left.

We've talked a lot about LNG and.

It's not that that's a bad gas pipe and I'm thinking about chat Denise phase II.

Can you update us on the <unk>.

How much gas is flowing to you up.

And how should we think about the evolution of your.

Natural gas price realization is when I look at your disclosure.

Obviously, there is Europe gas price realization, but that does not include.

Shut it needs I guess, because natural gas price realization are based on the origin.

And not a destination.

Should we think of that.

You have exposure to.

Strong UPN natural gas price going forward, especially through shedding.

Thank you.

Very good I'll, let Marie topping.

Up until this one or tailored as one.

But I think shut it first of all Chinese is doing.

Very very well.

So we just had what we call third gas are the startup of another cluster of gas in in that business.

I think we're doing about 10 Bcf a day of exports into Europe from what I understand and I think.

We had a good quarter.

Which are the needs guests coming into Europe.

I think 40% of the Shire, Denise gas flows to Europe, So I think.

It's a strong business of course, we've always said in the past that our gas business is split about a third of it is.

Hub business more of a Henry hub type business, a third of it is.

Domestic business like we have in Oman.

Third of it is.

Is and LNG.

Type business. So it is a more balanced portfolio Murray anything you wish to add on.

On <unk> question, yes.

Yes Bertrand.

So shall Denise.

Provides power domestically to three natural gas in Azerbaijan about 20% from memory about 40% into Turkey, and 40% into Europe.

Europe, we get the netback straight back to two Azerbaijan and interestingly.

The Turkish prices are about that back with Europe as well, so it's enjoying pretty nice profits in the second third quarter sorry.

Much higher than we ever would have forecast when we sanction that project and that's why we like these big infrastructure projects that you have.

Tons of upside Optionality.

While also providing Europe with much needed gas.

So yeah.

Thanks, Mark I want to thank you very much. Thanks, Bertrand I will take the next question from James Hubbard Deutsche Bank James.

Yeah, Hi, good morning, Thank you.

Two high level questions I guess since I think well my detailed questions answered one is.

Only super fast charging of ultrafast charging in the UK are you able to benefit at all from the government funding amounts for that about a.

A year or year and a half ago.

They aim at 2 billion funds to aid the Rollouts of motorway of neighborhood ultrafast charging so do you get the benefit from that at all.

And secondly.

What will be.

The theme of Green energy and the exciting strategy and that Youre undertaking and where the industry is going I can see how that would be very attractive to graduates, but when it comes to oil.

How are you finding it.

In terms of attracting the top talent the talent that you want to manage what is it going to remain a very large oil producing business for years to come I see doesn't know it.

The signing bonus on your website for graduate so I'm wondering how are you facing that particular challenges is it an issue at all or not thank you.

Very much for the question.

On the charging infrastructure in the U K.

The majority of the government funding is going for a broader infrastructure projects and what we mean by that is.

There are a lot of things that need to be done to upgrade the grid and the transmission systems and the connection so if you're a fleet provider and you want to put.

Put in a number of charging points near your factory or near one of your debt pose that spread of cost can get quite high and Thats, where I think a lot of the government funding is focused we tend to be able to do our own investments on our own basis, and so that's what I would say to that on graduates.

Did you get a sign on bonus Mary.

When you do asset graduate as a graduate yeah. Yeah, you did okay, alright, I don't think I did but Murphy's was worth it and it's a very good question.

And the reality is that we're not struggling to attract people and actually Oh.

Obviously, there are people, who still want to join the hydrocarbon business.

It's a great business that we have but I think they also want to join a company that has more than a hydrocarbon strategy and that has a broader strategy and that they see that they can.

He worked for a company that has a bigger role into transition and be overtime. They think they can think about if they want to evolving their careers. So that they have more career choices. So.

Today, I, certainly don't hear any noise inside the company of us struggling to attract graduates into our hydrocarbons business.

I would say anything but and in terms of recruitment more generally one of the things I'm. Most pleased about in the last.

12 months is the number of senior executives that we manage over 20 now to bring into the company.

And I can almost guarantee that not one of them would have joined if we had kept a hydrocarbon only strategy. So great to see is attracting talent and being a place that people want to come and work as evidenced by and the adoption ramp joining us from <unk>. She could've probably worked for any.

Renewable company in the World and she chose to come and work for BP, which I'm incredibly grateful to her for and our job is to live up to that so back to you Craig.

Thanks Bernard.

We will take the last two questions and thanks for being patient first of all from Pizza low at Redburn Peter.

Hi, Thanks, just one more corporate structure sort of a breakout the other transactions have youll payers are looking at to try and unlock value. That's it let's take a minority stake in the renewables businesses is that something you would ever look at all the drawbacks you see it going down that route. Thanks, Peter Thank you and good morning.

I think we just keep coming back to the.

The integrated energy company.

That's what we're focused on we believe in the integration, we believe in BP being better together and I think as every quarter passes.

I think that story personally gets stronger.

We give you evidence and delivery and Thats delivery and the cash flows of today's business and Thats delivery in terms of investing in the new businesses for tomorrow. So there are loads and loads of things out there that one could do our job is to focus on what we've got focus on execution of that and I hope Peter that.

That youre seeing that in today's results and I hope, you'll see it and we have every plan on showing it in the quarters to come.

Thank you.

Thanks, Peter and the final question from Henry Tarr at Ehrenberg.

Thanks, guys for squeezing me in and good to hear your voices I'm a very quick question just on the LNG.

I guess on the Trinidad.

Project, there have been some issues there.

Temporary.

Slightly more structural and then in terms of the future growth prospects how are you thinking about.

Tar and then further phases at Tanzania, and Torchy. Thank you.

Very good Peter.

Nothing structural in Trinidad Murray future in Qatar in Tanzania.

Talk to we don't participate in Tanzania, Eric attire.

That's not something that we participate in.

Talk to where we're going well with phase, one and where we're taking a look at the phase two and trying to come to agreement with partners.

Government on our own engineers on what's right thing to do so.

Ah stay tuned thanks, Peter Thanks for your patient is Craig for anything else.

Over to you burn it very good very good thanks, everybody. Thanks, Murray Thanks, Craig Thanks to the team.

Thank you all for the questions.

I hope you.

Would agree it's been another.

Good quarter were focused on the day job, what we control executing the strategy and it's a sort of a day by day week by week quarter by quarter job I think the team here at BP. If you don't mind me, saying is doing an awesome job and I think there's a bit of a track record coming through now.

We're confident in the cash generation of the company.

<unk> prices it really is a cash machine and we remain absolutely committed to our buybacks in our guidance for 2021. So look we're just staying the course and as I've said in a boring sort of way, we're sticking to our mantra of performing while transforming we feel that it works for US we feel that it works for our <unk>.

Investors and we feel that with each passing day in quarter as long as we continue to deliver which is what our job is.

Hopefully you are seeing that we do we think we're in pretty good shape. So thanks for the time and if we don't talk to you in the meantime have a great great quarter holidays move be in touch in 2022, even though I'm sure we'll talk in the meantime, thanks, everybody take care.

Yeah.