Q2 2023 BP PLC Earnings Call
<unk> shareholder value.
We've now been in action for over three years, we set our direction in 'twenty 'twenty, we completed our restructuring in 2021 and since then we have been focused on delivery and on execution.
Let me highlight a few things if that's okay before I turn it over to Tim Murray.
First we delivered resilient operational and financial performance in the second quarter with good cash delivery.
During a period, where significant turnaround activity and weaker margins impacted our refining business the.
The underlying business continued to perform well and looking forward the outlook for the second half of the year, which I'm sure. We'll talk about remains strong and I'll talk a little bit more.
In a few moments about that.
Second we are progressing our strategy at pace.
We are investing in today's energy system, and not or something that you will hear repeatedly from us because it defines our strategy and not our strategy and not or we are investing with discipline across our five transition growth engines to help accelerate the energy transition.
This continued progress underpins our confidence in delivering our 2025 targets.
Third we are growing distributions for our shareholders today, we have announced a 10% increase in our quarterly dividend per ordinary share and a further $1 5 billion share buyback.
These decisions are consistent with our continued focus on disciplined delivery against our unchanged financial frame.
And they reflect the confidence in our performance.
The confidence in the outlook for cash flow and the progress that we have made in reducing reducing our share count.
And Murray will obviously return to this later.
Let me say a few more words about performance starting with the strong momentum in resilient hydrocarbons.
For the first half of 2023 BP operated upstream plant reliability was 95%.
And compared to the first half of 2022, our upstream production grew by over 3%.
While at the same time unit production costs fell 9%.
We had two project startups in the first half Mad dog phase two in the Gulf of Mexico, and K G D. Six M J in India.
Together they are expected to add around 90000 barrels a day of oil equivalent net production by 2025.
Two more startups are expected in the second half of this year Tango expansion, where start up is now actually in progress.
And Seagull and GTA phase one is now expected to start up during the first quarter of 2024.
All in all we remain confident in delivering around 200000 barrels a day of oil equivalent of high margin production from new projects by 2025.
N V. P X first half production was around 9% higher year on year.
And in the third quarter, we expect the startup of our central second central processing facility in the Permian.
Further derisking, our target of 30% to 40% production increase by 2025 relative to 2022.
Looking to the future in oil and gas we are strengthening our resource base.
In the Gulf of Mexico, We progressed, our Cascade a project to concept selection and are also evaluating options to progress the Tiber project.
Both of them are 100% BP both of them are in the Paleogene.
We also acquired 36 leases and the recent Gulf of Mexico lease sale and drilled a successful appraisal well in the southwest part of the Mad Dog field.
We continued building growth optionality in our global gas portfolio, including agreeing to acquire a further 27% interest in the browse project.
In LNG, we are growing supply or.
Our third party off takes have made good progress with 15 cargoes loaded from Carl and from Freeport, which is now back to full contractual offtake.
And with additional volumes expected from the startup of Tango train three we remain confident of delivering our 25 million tonnes per annum of supply in 2025 and.
And finally, we are upgrading our refining infrastructure, including successfully commissioning to improvement projects at Cherry point in the U S, which are expected to improve availability reduce costs and reduce emissions.
They say a picture is worth a.
1000, being Irish for a moment they say a picture is worth a thousand words and this one certainly does that and Maria and I saw this and we said we got to get this in the pack. This is our tango expansion project in Indonesia, and you can see the third train there right in the center of.
The photographs and it's a great example, we think of us delivering on our strategy.
What I like to call another shovel in the ground.
This major project adds a third LNG train and around $3 8 million tonnes per annum of producing capacity to the existing 7.6 million tonnes per annum facility construction.
Construction and commissioning of the project had been completed and as I said earlier startup is now in progress and the facility.
And it's an important delivery milestone contributing towards our target of 200000 barrels of oil equivalent per day of high margin production from new major projects and twenty-five and our LNG target of 25 million tons of supply per annum in 2025.
And having recently extended the production sharing contract.
In tango to 2055.
And with work underway to further grow our gas production and make tango one of the lowest carbon intensity LNG facilities, we're really excited for the future of this key asset.
Now turning to the progress significant progress I think we've made in building our five transition growth engines, what we call our T. G ease during the first half.
First to the growth in our convenience business in May we completed the acquisition of travel centers of America T. A adding a network of 288 sites strategically located on major highways across the United States.
And that gave me a map of this that I have on my desk and it really is phenomenal to look at because you see the extensive highway network in America and now we have data insights on virtually every one of them in 44 states.
And Ta is expected to almost double bp's global convenience gross margin and bring growth opportunities in four of our five transition growth engines and.
And in the first half excluding Ta we delivered record convenience gross margin with around 7% year on year growth. That's on top of I think I'm at 9% per annum over the previous three years.
In EV charging we're rapidly building scale and demonstrating emerging profitability.
For the first half energy sold rose by over two times Marine I say, it's actually close to three times at year on year supported by a 70%. So almost three times increase in power a 70% increase in the number of each fee charge points, which obviously means that utilization.
Is going up and in the second quarter, our JV with Didi in China, which is our largest market and our business in Germany, where both EBITDA positive.
And we recently sanctioned $500 million of investment in the United States over the next two to three years to begin infrastructure build out there, including at the sites that I just mentioned a T. A.
In bioenergy you guessed it we are growing in biofuels, we produce more than 10% growth year on year, and we continue to target final investment decisions on the first of our five biofuels projects by year end and in biogas, we continue to work on safely integrating archea energy into.
P.
We continue to grow our pipeline and hydrogen projects underpinned by new projects in the United States and in Oman. The pipeline has increased by 60% since the end of 2022 to reach 2.8 million tonnes per annum, well underway to delivering our target of doubling our pipeline by the end of the year.
And finally, we have strengthened our renewables and power pipeline growing our renewables pipeline to 43.6, Gigawatts net to BP and that includes our recent offshore Wind award in Germany. So let me say a little bit more about that one we have been awarded the rights to develop two off.
Sure wind projects in the recent German tender round, marking our entry into offshore wind in Continental Europe .
Now these two projects have a total potential generating capacity of four gigawatts and they grew our offshore wind pipeline globally to 9.3 Gigawatts net to BP.
Now importantly in Germany and in the region B P. We has a demand of around five to 10 Gigawatts just from our own operations of renewable power into 'twenty thirties, and that's as we scale up green hydrogen as we scale up biofuels production as we scale up EV charging and as we do.
Carbonize the two refineries that we have on the ground. There. So the first thing is we had a large green electricity demand ourselves.
Five to 10 Gigawatts at the same time the region is and we forecast it to be short of green electrons in that time period, and we expect this offshore wind capacity to one provide us secure access to the electrons we need into to do it cheaper than we can buy them on the market.
And as our focus is on securing access to the renewable power as opposed to full long term asset ownership, we will pursue a very capital light delivery approach, bringing in a partner through farm down around a point of final index and a financial investment decision.
And we expect of course to leverage the project would financing.
We're confident as you would expect very confident I would say in achieving 6% to 8% Unlevered returns and that's before integration benefits.
And we will hence enhance these returns further through integrating across the energy value chain, leveraging carl's trading and shipping business to optimize value and we believe our bid.
Benchmarked positively compared to other lease auctions acknowledging of course, the importance of the timing of payments and other factories like the delivery of the offshore grid connection and as a reminder, in I'm sure probably everyone. In this room already knows but as a reminder, the structure of the bid payments limit our financial exposure with 678 million euros.
Upfront and then that's 10% of the bid amount that's paid by the middle of next year and the remaining 90% starts when production starts in 2000, Thirty's and beyond and is paid over a 20 year period when the projects become operational and then in Germany. The grid connection as provided by the transmission systems operate.
With compensation to the developer for any grid delays. So we're delighted we're really excited about this when it's fully aligned with our integrated energy strategy. It's in a core market for BP, where we intend to continue to grow our business. So taken together across resilient hydrocarbons and the T. G E.
I Hope you will agree I hope you might agree that what you see from BP is evidence of our strategy and action underpinning the confidence we have in the operational and financial momentum, we expect through the rest of the year and as we work towards achieving our 2025 targets and with that enough for me, let me hand over to <unk>.
Sorry to take you through the second quarter results Murray Super Thanks, Bernard and good morning, everybody.
Let me start with our second quarter results.
We reported an underlying replacement cost profit of $2.6 million compared to $5 billion last quarter.
Compared to the first quarter and gas and low carbon energy. The result reflects an exceptional gas marketing and trading results, albeit lower than the first quarter and lower gas realizations.
And oil production operations. The result reflects lower realizations.
And then customer and products. The products result reflects a significantly lower realized refining margins, primarily due to middle distillate margins weaker middle distillate margins and narrower North American trade heavy differentials.
A significantly higher level of turnaround and maintenance activity, including a planned full site turnaround at Lincoln and a weak oil trading result.
The customer's result reflects stronger retail margins and seasonally higher volumes and a stronger convenience performance, partially offset by foreign exchange.
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Turning to cash flow operating cash flow was $6 $3 billion in the second quarter. This includes a working capital release of $100 million.
Capital expenditure was $4 3 billion, including inorganic expenditure net of adjustments of $1 1 billion related to the acquisition of travel centers of America.
During the quarter, we repurchased one 2.1 billion of shares and the 1.75 billion program announced with first quarter of 2023 results was completed on July 28.
In the second quarter BP surplus cash flow was an outflow of $300 million and at the end of the second quarter net debt was $23 $7 billion.
Moving to our disciplined financial frame, our five priorities and guidance remain unchanged.
We have today announced a dividend increase of 10% for the second quarter to 7.27 dividend per ordinary share.
The dividend remains our first priority and is underpinned by our cash balance point of $40 brands 11, RMM and $3 Henry hub.
We remain committed to maintaining a strong investment grade credit rating.
And we are targeting further progress within the a grade credit rating.
However, we have no intention to target a double a rating.
As a result of our strong surplus cash flow generation over the last four quarters, we have executed over $10 billion of buybacks and have reduced our issued share count capital by over 9%.
P. P remains committed to using 60% of 2023 surplus cash flow for share buybacks subject to maintaining a strong investment grade credit rating consistent with this we have announced a further $1 $5 billion share buyback to be completed prior to reporting third quarter results.
This dividend increase and our ongoing buyback program reflects the confidence we have in our performance and the outlook for cash flow and also reflects the progress we have made in reducing our share count.
Looking forward based on Bp's current forecasts at around $60 per barrel, Brent and subject to the board's discretion each quarter BP continues to expect to be able to deliver share buybacks of around 4 billion per annum at the lower end of the 14 to 18 billion capital expenditure range and have capacity for an annual increase in the dividend partners' share of around 4%.
In setting the dividend per ordinary share and buyback each quarter. The board continues to take into account factors, including the cumulative level and outlook for surplus cash flow, our cash balance point and the maintenance of a strong investment grade credit rating.
Finally, we're enhancing disclosure for our transition growth engines.
Starting this quarter, we will report Capex and EBITDA on a biannual basis for each of the five engines.
We expect to grow EBITDA from these businesses from around 700 million in the first half of 2023 to three to 4 billion in 2025, driven by bioenergy convenience and EV charging.
In bioenergy, we expect to deliver around 2 billion of EBITDA in 2025 compared to the first half of 2023 and Biofuels, we expect a double production in 2025 to around 50000 barrels per day, including growth in co processing at our existing refineries.
And then biogas, we expect a double production to 2025 to around 40000 barrels of oil equivalent per day underpinned by the delivery of the Arcana energy pipeline and growth in third party off takes.
In convenience, we are targeting $1 5 billion of EBITDA in 2025.
We expect ta to contribute around 800 million of EBITA by 2025, the majority from convenience.
We also expect to further expand our network of strategic convenient sites reach.
<unk> around 3000 by 2025 from around 2000 and 750 today.
And in EV charging we expect to be EBITDA positive by 2025, as we accelerate the rollout of rapid and ultrafast EV charging points and drive a material increase in energy sold.
This disclosure is an important part of our commitment to reinventing BP, providing greater transparency around the progress we are making as we invest and grow these businesses with that let me hand back to BARDA.
Yes.
Your section was quite long today Mary.
Slower and it's hard to keep up with you. Thanks Marie.
So let me wrap up and then we'll go to questions. So we are delivering resilient operational and financial performance and we see strong momentum through the second half of the year.
We're delivering our strategy at pace and with confidence in.
And importantly, we are delivering against our disciplined financial framework, including offering compelling distributions for shareholders.
This focus on delivery than it is absolute focus on delivery is serving us well and underpins our investor proposition to deliver long term shareholder value.
And finally, the BP team and myself and I are looking forward to hosting a number of you in Denver in early October where we'd like to share more with you about our strategy in action, particularly focused on the oil and gas business and on our biogas business and with that we will turn it over to.
Are you and go to questions. So.
It's where we start.
Well start with brush over here.
Okay.
Hi, there, it's perishable Qatari RBC good.
Good morning Brush morning, two questions. Please the first one just on the dividend nothing.
The 10% bump today, so we had quite a nice surprise for investors.
I guess when I spoke to Craig's warning you reference in relation to the 9% share count reduction in the last year and I guess, you've got you have two sources of growth for the dividend per share of one is how many shares you're buying back and the other is the underlying growth in the business. So as Mary you mentioned that the balance point. So should we expect you to reveal dividend going forward, it's twice a year in though.
Shifting separately or is it an annual review going forwards with.
With those two items put together.
And then second question is on the credit rating.
Which you've reiterated your intentions to move up one notch.
Hey, I was wondering if this has any bearing on the working capital release, you expect is obviously one of the advantage of the stronger credit rating is yeah, less collateral as youre hedging gas oil and so on.
But that what you're referring to for a second half issue and in early 2024, if you.
Is the current guidance.
Got.
It is a credit rating upgrade embedded in the current guidance. So would you expect a material change if you were to get cutting rates go on top of what you've already said thank you.
Very good barrage just to clarify on the credit rating. We didn't say we were going up a notch today, we're saying we're not targeting double a we want to make continued progress in the <unk> roofing. So theres no upgrade to our expectations around that other than to clarify that we are not seeking a double a rating Murray.
Maybe I'll make some comments at the end, but dividend twice yearly review and unequivocally, yes, I think braskem morning.
I think the way to think about it is look back in history, obviously, the board reviews, the dividend each and every quarter. It makes our dividend decision each and every quarter. So I can't guide on forward forward thinking, but all I can do is reflect on the last the last moves we've made so if you rewind back to the second quarter of 2022, we increased the dividend 10% that was pre.
Merrily related to share count reduction, but also the ongoing strength of the underlying delivery of the business fast forward to February of 2023, we increased capital guidance and transmission growth engines and capital guidance and signed.
The upstream as well and with that came additional earnings.
That 10% dividend increase was based on our forecast of future cash flows and the strength we saw in the underlying business all within a balance point of 40 and 11 three.
Fast forward to today, we've had a 9% share count reduction over the past 12 months that easily enables a 10% dividend increase without changing the absolute level of the dividend of.
Of course as burner, just talked about there was incredible strength in the underlying business itself with Mad dog doing very well new projects coming online BP X growing et cetera. So we have both great performance and we got the share count reduction that we're reflecting in this 10-K decision.
Looking forward the board reviews, the dividend each and every quarter. It makes decisions. It will take into account, where we are in the balance point, where we see the future outlook over the next few years and of course share count reduction, but it's a decision every quarter I can't guide on I can't guide on anything different from that as.
As far as the credit rating, that's our second priority is managing the balance sheet.
Obviously, we're on a minus positive outlook right now with S&P.
We continue to think about an upgrade over time, but that's really a decision for S&P to make not for us to make we believe our metrics are in very good shape. We believe they are above their hurdles of cash cover ratio to receive that upgrade and we'll keep working with S&P to try to explain our business and ensure we get that upgrade as we disclosed today.
We would like further progress on the a range, but we're not we're not chasing a double a rating that is inefficient from a balance sheet perspective in our mind and inefficient for shareholders. So hopefully that helps answer that question Brian .
The working capital is so if you think about cash outflow.
An inflow for the year in the first half of the year, obviously, we've had a working capital build and that's primarily related to the deepwater horizon as we look out at surplus cash flow for the rest of the air We've got an awful lot of confidence in the second half of the year you just need to go through the couple of slides that Bernard talked about of 3% underlying growth in the oil and gas business B P X up man.
Mad dog.
Online and ramping up fast Seagull will come on soon tango will come on soon.
And so on so there's quite a bit of momentum inside the underlying business, which generates high cash flows at.
At the same time, we have a release from the LNG that we hedged out last year. This is all the merchant LNG that our trading business managers and we have been forecasting a release of $5 billion of cash flow starting in <unk> through the next four quarters. So we have a deficit of 10 working capital in the first half of this year, we will have a big release in working capital in the second.
Half of the year and extending into into next year as well and very strong underlying performance and that gives us the confidence to something south of buyback level or anything like that.
And going through all the list of things that are exciting in the second half of the year from a growth perspective.
We of course had point 9 billion of divestments in the first half of the year, we're still guiding to two to three full year and of course, we had the Gulf of Mexico payment in the second quarter, which will not be present in the second half of the year. So.
No guidance there at all are there then the outlook for cash flows and performance.
In the second half of the year for those of you who are trying to do surplus cash calculations and all of this stuff that Ari does and all of you guys do so hopefully that's helpful. So where are we going next Lydia.
And then Irene I think and then maybe we'll go to a question online maybe and then we'll go to the side of the room. So Lydia. Thanks, then it it's lithium vein system Barclays I have two questions. If I could the first one on the cost side that you came to you and I'll see if I looked at the data the PZ anyone that can be at the large caps this actually nicely cheese costs upstream.
The last 12 months.
And so can you just don't see what's driving that and taking the downstream if you're already starting to see that digitalization benefit neither.
Yeah.
The second question and maybe I think I need some help and you can interpret that however, you want and then in terms of the buyback 1.75 billion last quarter. St 1.5 billion. This quarter, but you've always said, we'll look forward to look back and say that 1.5.
Can you just tell me how did you get to that number because again is that whilst you are expecting a stronger second half is it less only you were thinking about three months ago.
Very good very good do you want to go with the second one first Murray, yes sure.
So when we assess the level of buyback.
Our long term guidance is at least 60% will be surplus will be distributed to shareholders through our buyback for 2023 in particular, we'd got at that 60%. So in the quarter. When the board is assessing the level of buyback we think about what we've done in the past 1.75 as you said in the second and the first quarter a one.
At 1.5 announced this quarter. So we've done 3.25 billion so far this year.
We then look at the full year 2023 based on what we see for underlying growth in the business the release of working capital et cetera, et cetera, and we're thinking about a 60%.
Buyback for shareholders for the year and I think if I think if you do the math you can figure out at the pricing that we saw in the first half of the year. If you have that pricing repeat in the second half of the year you can just calculate with a 60% surpluses and it'll be relatively close to the buybacks. We've done in the first half of the year.
The last comment I'd make is anchor yourself. Please to our guidance, which is 4 billion of buybacks at $60 and use our rule of thumbs to our rules of thumb to calculate what that buyback can be in the future. If you recalculate. The first half of the year, you'll get darn near Bang on what we've announced for Bang for for for a buyer.
Backs in the first half of the year based on 78 or $79 brands for the first half of the year. So we've tried to we're very focused on.
Maintaining our dividend and maintaining the balance sheet and therefore, the buyback does move up and down with price, but we've given you guardrails to estimate what it was a very very carefully so I hope that helps.
Great and on cost.
I think we should be transparent I think there is an element of the portfolio are in those numbers, but that's part of the cost the cost game. So to speak. So we are very pleased that we're driving production up and driving unit production costs down.
We're actually beginning to see deflation now, particularly in places like BP X, where we're seeing some costs down 20%.
Across the World, we're seeing things like steel costs coming down some of the raw material costs coming down.
Labor is is an area, where we do see inflation right across the world and that is.
Unchanged and when we do our best to offset that with some of the productivity improvements that.
You alluded to and we are seeing some sector as being particularly tight and you will have seen beta Nord being given an extra three years and that's just a a slave to returns a slave to capital discipline that market is quite hot I guess at the moment and we see a lot of price increases there and.
We're not going to develop that project until we can meet the returns thresholds that we've set out so we'll come back to that when the market.
As a little calmer and we continue to see tremendous benefits from.
Digitization, probably not yet in the downstream. It is still early days I think a lot of that is ahead of us as we've seen in the upstream. It is a journey, but I was with Murray's.
Murray's control team during the week and Hudson Hutchinson. She was telling me about a new closed process, where we've taken out 70 or 80% of the steps in a closed process, which is you know.
Extraordinary numbers achieved through automation through Digitization Gordon is beginning now and we're moving.
<unk> rose to India, where we believe we can get.
Incredible quality engineering done and.
And do it at a lower cost so we are big.
Beginning of that journey and I think that's a journey is going to ramp up materially. We will also look at that and our offshore wind space not just in our upstream space. So.
We remain.
Excited about the journey ahead of us in productivity, not just digital but digital for sure and Leon is here and you can talk to her about that but also things like the India conversation and we will continue to push our teams quite hard to make sure that we offset inflation with ongoing synergies the <unk>.
Procurement organization that you run Marie I think he is bringing some real benefits as well. So we are going to stay the course on remaining cost disciplined we will make sure that safety remains the number one priority. There is no need to compromise on that and we won't but anything you'd like to add yes, I think just as a little AI is all.
The talk these days and and are hungry business center over the past three years.
We've digitized 2000 jobs and that's some pretty extensive work in time restructuring at a data realigning our process and then allowing automation.
So it's something we're able to absorb 2000, new jobs coming in from the rest of the business or from expansion and then reduce job. So labor labor stays relatively constant, but you were able to eliminate 2000 jobs just through that simple digitization, we've done over the past three years and our passion remains for this and we see it as a huge opportunity moving forward. We are not short of opportunity in this space, we're going to keep going.
Irene and then we'll go to Paul on the phone.
I can honestly say, there's you're out and you recently got involved in the eastern Mediterranean and I Wonder if you can talk a little bit about the.
The objectives of division, what do you wish to achieve that.
And second question on refining, leaving aside the margin environment, which was pool for everybody and let me say very heavy maintenance crew tenant, which impacts not only stupid, but don't see your costs I Wonder if you can help us understand.
The cost in terms of you know I could go on all the yield maintenance these quota which was unusually heavy thank you.
Very good on.
On the eastern Mediterranean I think it's at a very very macro level. It's about the development of natural gas, that's a close to markets, including close to Europe . So.
That's at the very biggest level, that's what we're trying to do there we.
Ben in Abu Dhabi for over 60 years, they wished to.
To expand our business internationally given the successful partnership that we've had with them over that period of time I think we were a natural partner for.
For them to try to do this.
With in this part of the World on top of that of course, we have a.
A large position in Egypt. So if you look in the region at what we've got in Egypt, what we will have.
And in the East Med Cup.
Coupled with Abu Dhabi ambitions.
We're very excited about the development going forward of Leviathan.
We're excited about further development potential exploration over the years ahead. So this gives us a real anchor in the eastern Mediterranean and Theres a lot of synergies across the countries that are involved there and I think it's a natural extension of our partnership and it's one that I think we hope that we can grow.
Overtime this huge demand for gas both in the region and in Europe , and I think we'll look back on this as being.
A very very key move for us and we'll give further update on the progress around that transaction later in the year and on refining Marie May wish to add specifically on cost. If you look at I looked at the difference between the first quarter.
In the second quarter on cost you can explain the difference between <unk>.
<unk> and <unk> are roughly half.
Half of it is margin degradation, both in terms of diesel cracks and an M D.
W. Ti WCS spread and then of the remaining half the majority of it is around.
The planned maintenance and a little bit of it is associated with oil trading and of course the.
The explanation of the maintenance includes not just the outage time, but also the costs incurred in that Maria anything you've got nothing to add okay. I must have done okay on that would be great. So okay alright. Thank.
Thank you Irene will go to Paul Cheng, where it's a very early I think we're apollo's so Paul good morning.
Good morning, Ben.
Two question Pizza hut on the offshore wind in the ease in Wall Street Journal article talking about how challenging the economic has become especially looked like in the Gulf of Mexico.
Simple all play to maybe including you guys. He is looking for some renegotiation on pricing.
You come in on that and also with that talking about whether you see the offshore wind economics, especially in North America, and it become a far more difficult because of the cost inflation.
And secondly that.
You don't have a sort of a unique cause that adjustment a couple of quarters ago on the on.
On the strategy and maybe that backup eat more pizza.
Traditionally what we've seen in hydrocarbon visits.
But you're still looking for a jump off 25 to 10 by 2030.
And I think it does look like the only demand may not peak.
Until post 2030, so from that standpoint, that's been mixed sense, both BP to food at the bank and perhaps that are seeking to have a planned production dropped 25% by 2030. Thank you well. Thank you. Thank you for your questions I'll have a go and Mario will correct ad and.
<unk> is appropriate so on the second one first.
So very clearly our strategy is what we call in and not our strategy. We are investing in today's energy system and not or we are investing and accelerating the energy transition, we're not making a choice between one or the other we believe the world needs both and we believe our shareholders are best served by us investing in both so it's an and.
Not our strategy and in February of this year, we leaned into that strategy by.
By saying that we would invest an additional $8 billion into our resilient hydrocarbons business and an extra $8 billion into our transition growth business in terms of oil and gas production, you'll actually have seen that we grew oil and gas production in the first half of this year and we you will see also that we've improved our <unk>.
Look for oil and gas production this year from slightly declining to now expecting it to be flat.
Year on year, if you look at underlying oil and gas production will actually grow production through the middle of the decade and it will be relatively flat through the end of the decade. The 25% is simply what we're achieving through high grading our production through portfolio management, there were certain barrels within our portfolio that quite frankly are probably <unk>.
We're off in someone else's hands and that's what this is about it is about a high grading of our portfolio. It is about portfolio optimization.
But you should expect to see as I said underlying growth through the middle of the decade and flattish growth at.
Through the end of the decade, and that's where we get.
Our strategy, that's where we provide the security that the world needs at the same time, providing the cash flows that we need for our business. So that's one thing I would say on that.
And then on offshore wind.
Clearly inflation has impacted our offshore wind projects and in an area where.
The ppas or not.
Inflation linked or index linked and where we don't see an integration benefit perfect per Se then obviously those.
Those projects are challenged and that's the case in the east coast of the United States, but I can tell you categorically is that our returns thresholds are sacrosanct, meaning we will not develop projects that don't meet our returns threshold, which is why we are in the midst of renegotiating those PPA contracts in the east.
Coast with our partner Ecuador.
And added to that I would say that it is points to why our strategy going forward is to do offshore wind only where we see an integration benefit I E. We don't want to generate electrons just for elektron sake, Arthur ultimately put into a 20 year PPA.
We want to generate electrons, where we can do something with the electron add value to the elektron like we do today within oil and gas molecule. So our expectation is that we do offshore wind just as you've seen in Germany, where there is a direct integrated linked to our business, where we can take the elektron, we can high grade it converted into a molecule converted.
Into a power in somebody's car give it to our trading business whatever that's the evolution of the offshore wind strategy.
And it is in part based on the learnings of the last two or three years Maria anything to add on either no perfect. Okay.
Alright excellent.
Paul Thank you, we'll go to Oswald over here.
Okay. Thank you very much yeah, maybe just going back to natural gas or sorry, LNG you spoke about new meds.
And I'd knock relationship I'm curious could you just give you a participation in the AD Nook LNG expansion in United Arab Emirates, but.
Well you know more related to that is the browse again, maybe you can elaborate on the strategy for taking on the rest of browse that used to have a very big capex number attached to it.
In terms of landed costs that might be at the high end relative to somewhere like the United Arab Emirates. So maybe just frame that LNG asset selection process and then secondly.
Permian.
One of your peers talked about applying technology potentially doubling recovery factors in the Permian over time I wanted to get your thoughts on.
And what you think you can do with your Permian asset as well. Thank you all.
Thank you Anne Marie maybe wants to talk he loves the Permian, So let's talk a little bit about that and then I think on the I don't know what we've said publicly about our Abu Dhabi LNG.
Nothing let's librarian add gas. So we are in a gas we've been in that gas forever.
Yes, they are expanding but we can't comment other than that and browse I mean again very simple level always think of it as a very big option. This is a very very material gas resource.
That is very very close to a market that's going to be short of gas for decades to come so at the very macro level. This was a very low cost.
<unk> that we have created here.
We believe that there's great potential the numbers, we'll have to work. The returns we'll have to work. That's what we're working on which is doing a fantastic job as operator and leading on that.
But you got to look at it and say big Big gas close to infrastructure close to market got to make sense at some level, let's see if we can make the numbers work and that's what we're working on and if we can there'll be a project there and if we can't meet our returns threshold we want.
So that's what I would say about that Permian or anything you want to add on the browse one.
I'm just just on the LNG portfolio itself, we have a number of very large gas basins to take forward in the second half of the decade.
We will talk about this more in Denver browse 14, Tcf is enormous it's cost of supply is if you look at woodmac is below U S exports.
So it's more competitive than you might think we have amassed we have oman expansion Abu Dhabi potential expansion twenty-two.
Twenty-two tcs in the Haynesville and Eagle Ford to develop so we have a wide swath of an it admin.
Born Trinidad more in Azerbaijan, So, there's lots and lots of gas opportunity inside the resource portfolio.
And we'll just be very returns driven and choose the right ones to drive forward. So I think it's okay to load up with options for free basically.
On the on the Permian.
You'll see some fabulous benchmarking from Dave Lawler, when we go visit the Permian and you might find always see Fabulous benchmark and you might look at him.
You might actually find out that we're number one in the basin on development on a frac spread langton in EUR per well you might you might say that in the benchmarking you might look yourself ahead of time, So Dave's got a very very positive outlook. There. We've obviously got the first our first central gathering station flying Grand Slam Bingo should come up online hopefully.
Head of our visit there that'll be great news, two or three more to develop over time.
Very very low emissions.
Circulated water electric drive rigs and electric drive Frac spreads just incredible stuff that first certified as natural gas I think yeah stuff I never would've jumped about as a kid growing up in the oil and gas patch in Calgary.
So it's a it's an amazing story and they are driving technology at the leading edge on Frac and recovery and I think you'll find from the benchmarking work they do that repeat in the pants off everybody, but lets wait for let's wait for Denver too to understand that but we continue to see great promise moving forward and Dave will give you a great a great description of that great excellent. Another reason.
Come to Denver Lucas.
Thanks, very much Ben thanks for much more.
Lucas Herman at BNP Paribas.
Couple if I might the first.
I just wonder if you could talk about okay. Our integration there've been some management changes, which given the initial statements one could argue with slightly surprising and other ways of probably not but just progress on Korea, particularly build out not least as waste management companies also seem to be more active in this space and trying to grab the opportunity.
And secondly, just commentary around my adult discovery and the tie back to uncle. So maybe you can give any indication as a presumed that just will allow you to remain at plateau for an extended period, but just scale and opportunity. Thanks, Bob Yeah. No. Thanks, Lucas I'm I think I'm Mad dog phase two a little later than we had expected now its online it seems to be doing.
Very well four wells online I think Gordon assist this weekend and I won't get too ahead of myself stuff that are more to come here in the next couple of months. So that's that's looking good.
And your your card I mean, you answered the question quite rightly, which as you know there will come a point in time when that field like the mall is on decline we want to make sure that we keep the facility for the best way to do that is to is to drill nearby we've drilled nearby we found something we feel pretty good about it and that will likely be I don't know three five well tie back in.
In the in the fullness of time that will have as you would expect Fabulous economics. So that's on that.
On our care.
I think the most important thing there is sarli sites is now in leading that business Sarli ran our Gulf of Mexico business. Many of you will have met her she ran it successfully for many years she's one of our most trusted leaders and.
You know as I.
As I remind people and as we remind each other this is BP BP business.
RK is no longer our kids, it's it's BP and we wanted to be run by by our people, making sure that we've got the right standards in there that we've got the right culture being built and to make sure that we leverage our company properly and accelerating delivery and therefore, it makes sense that we.
Put our own management in there so to speak start he's going to do a great job in Denver, There I said, she will come and present on the early days of what that looks like we've got how many sites to build out 80 to 80 sites to build out over the next several years, we remain confident of our 500 million dollar EBITDA target.
From that business by 2025, I think the EPA recently that some updates on their health.
Allocation mechanism or whatever it is that has strengthened.
Strengthened RIN pricing.
In that business. So the fundamentals remain very very strong.
Great resource base, albeit in landfills that would otherwise be damaging the environment.
Great opportunity for us to capture that build out these facilities over the next several years.
Optimize them.
Hugely through Karl's business on the trading side does it go into power does it go into transportation.
<unk>, where can we create the most value we're looking at capturing carbon.
At the sites now and take advantage of the irate captured a carbon at those facilities, we might also capture the carbon and take it to.
Our refinery and make <unk> out of it because its biogenic carbon again the list goes on so we just are really really excited I'm delighted that star lease in there she's got our arms around the business. We reviewed it with her and Gordon a couple of weeks ago, and Carol and we're feeling really really good about it and but it's early days and.
There's plenty of work to be done in building out these sites isn't straightforward and it's not technically complex, but its local and so on and so forth, but we're feeling pretty good about that business right now.
Anything to add.
Yeah.
And you'll see us do more of getting our management and on day one as we go forward, we're doing that on Ta for example, right now.
Where else.
I'm sorry.
Sure.
Yes.
Thanks very much.
Murray, you, you've mentioned, Mauritania, and Senegal, and you list of gas basins. So.
What needs to happen to progress further development.
And then secondly, the burner colleague at outside about politics of Alaska about German politics with storm that you referenced in Germany that you.
The future market is going to be short of green electrons that has a price implication.
Do you think politicians understand that this is probably not deflationary.
And.
I guess more importantly are you happy sanctioning development on that basis given that.
And the last year or so politicians in Europe , we've been pretty happy to cap and tax we industry.
Or something that they think there shouldn't be affordable.
Yeah, I mean on certainly won't comment on German politics or no.
Even less about that and I knew about U K politics. So.
I.
I won't go there, but I think the fundamentals are strong for what we're trying to do in Germany, Alastair I think.
And let's not come out of this necessarily just from a climate standpoint, because that's where the conversation goes and can people afford this and is it inflationary and so on so forth.
What Germany is doing with its ambitions that it has around offshore wind in its ambitions that it has around hydrogen how much it will develop at home and how much. It will import yes of course, it's influenced by climate change, but it's actually driven probably most today by energy security.
It's what the country needs and the only way that the country is going to diversify its gonna find it very difficult to do solar.
In Germany, the politics of that are probably difficult as any populated country will understand and it will look to places like offshore wind to not just supply green electrons, but to supply electrons period.
So our view is that.
There is of course, a price to be paid here.
In many ways, we're having to build a new energy system.
And that's unquestionably got a cost, but as we look at it and as we look at what our business is doing in Germany.
Then I think this is a very very good investment for us we feel very confident in the outlook you can look at any of the forward curves you can look at your outlook for carbon prices you can look at your outlook for natural gas prices you can look at your outlook for demand for electrons period, all of which factor into the economics of this decision as well as the cost.
The build as well as the premium that we've paid and our view is that on balance this will end up being a very good use.
Of our capital limited as we will make it and we will limit to capital. This will be very very capital light, but we will have a need and we believe will supply that need cheaper.
And more securely by doing it ourselves then we would if we have to do it in the marketplace.
Mauritania and Senegal, Yeah, what was the question on Mauritania Senegal.
Yeah.
Yes so.
Phase one continues we're looking forward to getting that online next year.
First quarter of next year.
We just really need to come together with some agree the concept the engineering concept with our partners and the government and then agree Chevron.
Where the rent goes and how the LNG is priced.
So it's a it's an ongoing conversation right now we're really really focused on getting getting phase one up and we'll see over time, what what pace the development of phase two takes.
And we remain confident that theres lots of gas resource there and we just have to work through the technical decision on the curb commercial sharing of Brent.
It's not a lack of gas resource no.
Behind Lucas here.
Henry.
Henri Henri Henri you prefer.
I have always fine Okay call me, Bernard or Bernard I don't I don't Margaret.
Go for it.
Does it go from UBS two questions here. The first one just going back to the depression guidance for the year, you expect it to be higher year on year, which be working better than expected here and then secondly, just thank you for the enhanced disclosures for the transition growth engines.
Just switching perhaps on EV charging was he needs to be done to make it even in the first half of the year I can you, perhaps talk about where she's a trajectory here.
The beauty of our east, perhaps depending on different markets. Thank you very good.
Take the EV charging one maybe and production Murray what's caused you to have more confidence in your production outlook for the year in oil and gas I think oil and gas question on EV charging we've got three main markets in an emerging fourth market. So we've got China, Europe and the U K.
UK is part of Europe , but you understand my my point so China.
U K and the emerging one is the United States.
So in place.
Places like Spain for example, where our was recently we have a partnership with a petroleum I think we've committed 1 billion euros.
This decade to build that out that partnership that charging network out between the two of us at.
Germany, we're number two in fast charging Emma and and and Germany. Today, we weren't number one we must have slipped and number two I think we'll be back to number one I hope sometime in.
In the future, but we're there or thereabouts is the largest and then where we're building a very.
A resilient network here in Britain in China.
It's.
That market is definitely electrifying I think it's either 30 or 40% of new vehicles R. R. E V. Today that are being bought in the market. There is no question, what China is doing and we're seeing it and utilization rates and if the utilization rates that are then driving the fact that China. Today is EBITDA positive. The same is true in Germany.
Where we are seeing not really a slowdown in.
The purchasing of these cars the utilization is on the up and therefore, a Germany is also EBITDA positive today, it's obviously a growth business, we have to invest but we do expect.
What is a negative EBITA business today to turn into a positive business by 2025, we did as I said in the script.
Announced that now that we have the land in America, we announced that we sanctioned a.
Half a billion dollars with Emma to build out our charging network in the United States.
That's over the next two to three years and then we'll go beyond that we'll take advantage of the Ta network of course and start putting charges down there.
But this hurts partnership where we are building giga hubs and this is where we can charge a 100 cars at one time at major airports like Houston hobby.
It really began to take off so U S is quite exciting for us and you'll have seen.
The price.
The price changes that are happening in America on the new EV part purchases, which are made.
Making the purchase of an EV vehicle more and more attractive and as I always say, there's an F 150 electric which I think they increased the price of buy 14 or 15% because the demand is so high for it which is quite extraordinary. So this is an exciting business for us we are feeling good about it we're learning a lot about the business.
Lots of opportunities to optimize.
You may have met Robyn Beavers at some point Bluepoint power company that we bought a couple of years ago, that's focused on.
Residential power our power in buildings, and how to manage power and buildings and how to optimize it they're actually helping the E V people, where to place the chargers and and and and that software in that inside of the market and the knowledge can make a huge difference and the EBITDA profile of a charging location and we think that their help alone has.
<unk>.
Made us a couple of hundred million dollars of EBITDA in that business in the United States alone as it comes online over the next several years. So we're learning a lot. We're excited about it and right now China, Germany, where we're seeing the highest utilization very EBITDA positive and by 'twenty five we expect the entire business to be EBITDA positive production Murray Yep.
We upgraded our production outlook for 2023 as you noticed.
And that's really congratulate all follow Lucas as example in congratulating Gordon again.
Congratulations to Gordon again for a great performance inside BP Axa and great performance inside the Gulf of Mexico. So as the two principal places that are well ahead of where we thought they would be mad.
Mad Dog is producing from four wells 70000 barrels a day, that's a stunning performance from the reservoir that makes US really excited he told me I Couldnt say that no it's public it's.
Public data after the fact, I said you Couldnt I'll say the sequence of new wells coming online.
Because we don't want pressure on the team spent time, Neil just a fabulous fabulous performance out of the lower half lower 48 and out of the Gulf of Mexico, which has encouraged us to upgrade our guidance for there. So I'm very pleased with that and thank you Gordon.
And while the tango as late as probably a little earlier than we had.
Anticipated for those of you interested in and big pipelines, which we count ourselves there was a 48 inch pipe there and Ah 60, Mg 88 inch eight inch pipeline.
Can you imagine and 80 inch yes, 74, and an 80 interesting neighborhood's extraordinary.
Thank you a question back here please.
Peter.
Hi, Thanks, Yes piece Lyphomed done. So my first one was just on the financial framework.
You talk about kind of 40% of access Casper gang to the balance sheet, but actually kind of net debts increased over the past year. Despite the strong commodity price environment.
Kind of based on your guidance should we think that now begins to come down as we look to the 12 months ahead.
And then the second one was just on <unk> at the gas realizations were a little bit weak in my might've expected and it's not just reflective of kind of the weaker kind of spot price environment or was there anything else going on that thanks, great memory.
OPO gas a little bit weaker than you expect 50% down as opposed to 35% on the marker. That's just the lag on MVP.
The U K prices lagged in BP and that's what that's what's driving that difference it will reverse itself over time.
IRA can help you with and if that doesn't make sense, but that's the reason for that one.
As a second priority inside the inside the framework is to reduce net debt, yes, we've been reducing that debt I think 14 quarters in a row, we've been reducing that debt. Yes. It goes up this quarter why did it go up this quarter, obviously, we had our deepwater horizon payment and then we had T E, which is the $1 1 billion of capital and the assumed debt.
We got with it so it's an increase of $1 6 billion for Ta that's not a bad thing Ta comes with 800 of EBITDA, that's accretive to rating. So we shouldn't necessarily just obsess about not that what's important for the rating as cash cover ratio and Ta. Although it drove not that up is really good for the writing as it's accretive and we like that it gives us diversification.
And it gives us accretion on the rating. So we think that's very positive as we move forward no change for 2023, a 60 40 and you've heard how we're thinking about surplus in the second half of the year I would expect 40% of that surplus to go to the balance sheet to continue strong thing and as well dependent of course on what the oil prices.
Hope that helps great. Thanks, Mary Martin and patiently waiting here from who's over here Jim next.
Yeah, Hi Lo.
Two questions one.
I'm sure Maury may not actually answer this but I'm going to ask is nonetheless, if you if I wanted to ask if you could reflect on the weakish will trading results because if you look at the oil markets in the second quarter, all the things that did not work well.
Our working particularly well into third quarter. So.
So I was wondering if you could tell us a little bit about like it is a bit of a tumbler every quarter or can we just sort of expected weak quarters and strong quarters and weak words is a strong word I sort of should alternate each other.
I would be quite interested in that.
Uh huh.
And secondly on koskela out so of course, if quite a interesting project given that it sort of sort of come back. After many years I was wondering if there are any milestones that we should be looking out for and sort of the time frames that are associated with this project great. Thank you Martin so rather than marine not answered why don't I not answer it.
So.
I don't think volatility is a cyclical on a quarterly basis, it's driven by more than the calendar. So.
Yeah, I think we'll say nothing more than it was a weak second quarter, it's probably I think the one thing that you can say as you look forward in the world in general and it applies to.
The energy markets, particularly and therefore, it will have an influence.
On trading overtime is that.
The energy transition is complex and therefore complexity will.
We will likely lead to volatility and as everybody knows volatility as is.
Constructive for a trading business, so I won't comment on third.
Third quarter volatility I don't think you're incorrect, but we'll leave it at that and koskela.
Yeah, we were just saying this morning, we discovered in 2006.
It's a big big resource a lot of oil in place and.
The question was how to recover it economically.
It's a good story I think of the company retaining an option.
And we retained that option over many many years.
At the same time as us doing that the industry has moved forward 20, K rigs have been built Aaron operation people have been successful with not just the technical aspects of the developments, but also increasing the learning around how these reservoirs for juice and both of those things are encouraging.
For us so we're encouraged by what we see others do.
We feel that its time has come it has entered a concept select unusually it's 100% BP.
And our job now and the team is focused on our.
Working through that optimization and getting us to a project that we can develop that economic and that's what we're focused on doing and at the same time as we're doing that.
We're focused.
On Tiber, which is at an earlier stage in the thinking so to speak but if cask EDA enters the frame Theres No reason why Tiber wouldn't also entered a frame. So just watch this space over the coming.
Quarters, as we get more.
Engineering definition cost definition around the concept but.
This is one that should see.
F I D. If it will in the next two to three years I would think so that's how I would think about it.
Kim.
Christians joined us at the back I think.
Thank you and just on the Newmar deal first of all and I understand the adenoma side of the transaction and it is still it's still being worked out but I was just wondering what was taking so long to finalize the deal and secondly, I wanted to hear your thoughts on the attractiveness of the U K as an investment destination for upstream and low carbon in light of recent.
<unk> suggested the change to the U K energy pulses Levy and the announcement of new licensing rounds and government support for Ccs.
Great.
So what is taking so long these things just take some time and we're working through the process I don't think there's anything that's of.
<unk> note.
We're involved in a public company and it takes time to go through the necessary processes. So it's not a signal of something amiss. So to speak. It's just that these things take time and the intent remains very clear from all parties I think too.
Close this transaction and then on the U K I think let me just say.
Generically, what I would say and what Ive said this morning to some of the media.
We're supportive of.
Any policies are directions, which acknowledged that the world needs a rapid transition.
And it needs an orderly transition.
And for us that means in and not our strategy for us in the U K that means investing.
In the North sea and investing in the transition and that's what we're doing we probably probably have the most diverse energy strategy of any company probably in Britain.
We're involved in oil and gas today, we're drilling we're on a five well campaign I think west of Shetlands.
Today, that's drilling we're bringing on seagull.
Later this year and we'll continue to look at licenses and investment decisions. There based on the information that we have it at the time and at the same time that we're doing that.
Light source be peers developing solar projects in fact, I think they developed the biggest solar project in the U K as far as I know them.
We're in offshore wind in the U K on the Irish Sea, and which is looking good by the way and also in Scotland, where in Green and Blue hydrogen at T side, we're in net zero power or low carbon power at T side. We're in Ccs were building out an EV charging infrastructure here in Britain focused on fast charging.
Which is going very well I was at our Hammersmith site.
With the team a few weeks ago utilization levels record utilization there.
So we're active and we're importing LNG into the country. So we're active right across the spectrum and that should give you a sense of how we see Britain as a place to invest we're going to invest up to 18 billion pounds in Britain this decade and.
Of course every decision is taken.
On the basis of the facts known to us at that time.
But that's probably all I'll say on that.
Christian did you Wanna question, and then I think we're it's cusimano from JP Morgan.
Most of my questions have been answer, but I sort of want to come both two questions. One on the capital frame and this is no one's ever going to complain about a dividend increase so things thanks for that but I sort of.
Yeah. It sounds to me that there's a lot of them.
Upside through both your projects.
The reversals and trading.
So I just wanted to stand more just conceptually the logic of raising the dividend when.
You could have just put more back into my into buybacks.
The third time, you've raised the dividend in the last 12 months.
And yes, even though the share count, but the mass doesn't square out entirely.
So I kind of want to understand why you didn't just fully.
And maybe this is a question you chose a cheap you clearly more constructive on the macro outlook Sue.
Why not put it all in buybacks. So it's going to start to complain about a challenge in the capital frame. It's more just things just if you could share some of that logic. If the shares are cheap if you will in terms of where they are today and the second question is just.
Just trying to pick your brain around.
Where where would you if you sat down and sort of challenge yourself round, where could you be wrong when the macro whether it's refining caspar prices will.
Ooh, how would you frame on a scale of one to 10, where you'll probably most bullish across your portfolio, whether it's oil prices refining I just wanted to stand to what extent are you being pro cyclical across different parts of the business and thinking about your outlook on the medium term.
Thanks.
Christian I'll, let Mary take the first question I mean, nothing on the on the second question.
We all have.
Views on the outlook for.
Different products streams and of course, the reality is we never quite know I can create.
A very strong case for oil why would I do that I think everybody is talking about.
Global economic growth and what's happening there everybody's talking about what's happening in China, and yet, we probably will see well in excess or in excess of 2 million barrels a day of demand growth in oil this year.
And we expect that to continue into next year, maybe not at the $2 million, but certainly well in excess of $1 million.
So you look at that you look at the fact that OPEC plus remains.
Exceptionally disciplined if not increasingly disciplined and show no sign of changing that Tac and I guess in discipline. You also look at.
The U S, where I think the rig count has fallen to the lowest level now since February of last year down by I think 20, 20% I think oil rigs down 12 gas rigs down 12% oil gas rigs down more.
So I can create there.
A situation, where you described the outlook for oil prices to be a strong over the coming months and years. We of course know that there are numerous uncertainties and we go for it on plan.
On that basis, and that's why we run the company on the basis of a $40 oil price a $3 Henry hub price and an $11 or a man and we have no intention of moving away from running the company on that basis, because we believe that's the prudent and right way to run the company and if oil prices and refining margins in gas or higher.
Then so be it we want to make sure that we take full advantage of that and Marie will talk to how we allocate that.
The surplus cash gas you would go through a similar story.
Europe , you'd say better position than last.
Of course storage levels mean, we're in a much better position than we were last winter does that mean that we're out of the woods you can't say that why not because there was a lot of demand destruction last winter, maybe 20% to 25% in industry and what happens to that this does that remain does it return we don't quite know.
The weather.
Which we all see so there are many things that are uncertain there.
I think the one thing that you can expect through all of these product streams is probably a lot of volatility probably more so than we have experienced in history, but you may wish to add to that Murray and obviously then the conversation about why not more buybacks. Yeah. I guess, we're just the only thing I'd add is we we.
We run the company for a low breakeven and then we'll take the upside.
So we run it on the balance point of $40, when we sanction projects of $60 $3. Henry hub. So we run it very prudently and then upside is upside I think is the only thing that I'm on the capital frame dividend versus buyback I think the hint is in the ordering so the hint is in 12345. Our first priority is the dividend we have the capacity to grow at 4% per annum.
And above all else, we want that dividend to be resilient at 40, 11, and three and we will continue to increase that over time, while we can keep that balance point.
Alive, and well and healthy and the events the macro turns against us but.
That is our first priority and that gives you a hint of how we think about how we think about dividend versus buyback through the frame. Obviously, we had the channel. We've we've retired $9 to nine 2% of our share count over the past 12 months, 10% is a bit higher obviously performance as you can hear.
We're performing really really well Afghans updating the production guidance in 2023 is a huge sign of confidence to do that halfway through the year. So I. Just think we have an awful lot of confidence in the business moving forward, we'll focus on that 40 of 11 three balance point as we approach the dividend and it is the first priority for for shareholder distributions.
Great excellent. Thank you Christian and any other questions.
And we have no questions online.
Online and we Didnt, Greg anything else from you.
And you didn't write me a close so I'll have to AD lib so.
Thank you all very very much.
I think.
You know, we just say that we continue to focus on.
On delivery the company is very focused now on 2025.
We have what we call a drive to twenty-five we're very clear on what our numbers are what our targets are for 2025, we fully expect to.
To deliver on those we've got 10 quarters.
Hugely important to us so it's head down inside the company, we're executing simply on the plan that we have laid out nothing more nothing less.
Really proud of the team many of the leadership or in the room here today, but the team throughout BP very grateful to them for everything that they do we thank you for your interest in our company. We hope you get a break over the holidays.
We're certainly hoping to get a break over the August period, and let's leave it at that so thanks, everybody. Thanks for taking the time to join US I appreciate it.
Yeah.