Q3 2024 BP PLC Earnings Call
Okay. Thank you everyone for joining Bp's third quarter of 2020 full results call as you'll be aware, we published the slides in script I'm video presentation, alongside our stock exchange announcement earlier today.
So before we start with Q&A, let me handle that tomorrow for a few opening remarks.
Speaker Change: Thanks, Frank and thanks, everyone for joining Kate and I on the call today too.
To briefly recap today's results.
Speaker Change: <unk> ran well this quarter year to date upstream production was around 3% up including links with liquids production up 5% plant reliability in the upstream was more than 95% and refining availability was more than 96% for the quarter.
Speaker Change: I'm really a cool statistic and our EV charging business, we are at 80% year on year growth and cumulatively. This year. We've now hit one terawatt hour of electrons sold to our customers around the globe.
Speaker Change: We now have 23 Kb Dia biogas supply online with eight plants commissioning in for Q1.
Speaker Change: Our performance has supported underlying profit of $2 3 billion in the quarter and on distributions, we announced another $1.75 billion share buyback and a dividend per ordinary share of eight cents.
Speaker Change: Unless you're gathering your thoughts and are preparing a slide deck.
Speaker Change: What do you think really needs to change in the current strategy is this.
Speaker Change: Changing the identity of P P or rather a sort of tweak around the edges, a little bit of capex, the capex that but but overall direction of the same so any comments that would be helpful.
Speaker Change: And then secondly, looking at the quarter. If you could just talk about the the liquids trading performance. It was particularly weak this quarter and I blew a hole in the downstream rounding so.
Speaker Change: And I know you don't like lifting the lid on all these businesses, but could you just maybe talk a little bit about whether specific weakness is coming from and why it was weak and cold shrink quarter is this a market related or were there particular things that a b piece specific and therefore can be can be addressed without rather easily. Thank you. Yeah. That's great. Thanks, Josh I'm on the strategy.
Speaker Change: Look as we've said for the past since February since I came in the direction of travel towards an IAC remains unchanged.
Speaker Change: We're a corporation that has an upstream business, a big customers business and obviously the trading business.
Speaker Change: And to Durably compete in the long term, we need to follow the patterns of our customers. So not only do we need to provide hydrocarbons, but we need to lighten the carbon footprint of those through time, bringing in electricity biogas biofuels et cetera. So the direction of travel for our business remain same what's different is we will be very very returns.
Speaker Change: Focus to making sure that the new businesses compete.
Speaker Change: On a competitive level, what the historic businesses for scarce capital and I think if you look back over the communications over the past few months, we've given you a strong indication of how we're high grading the business. We've talked about the renewables will be capital light, we've talked about focusing hydrogen down five to 10 projects, we've talked about three biofuels plants instead investing in.
Speaker Change: The upstream and Bungay, we focused our EV and convenience down to four material competent countries with our our scarce capital and continuing to focus on biogas at the same time today, you'll have seen in the video we provided that based on the success, we've had with our existing 18 billion barrels plus the F. I D is made.
Speaker Change: <unk> plus a new access we're making we now starting to see the strong a strong possibility to grow cash flow from the upstream through the decade.
Speaker Change: And so what you should hear us focused on as you'll hear is focused on cash flow generation and growth through the decade from a balance of the portfolio. Our continued commitment to transition, but with quality and returns top of mind as we do that and capital light models, where our where we don't I'm not sure that things can compete for capital.
Speaker Change: So that's that's the direction of travel, we'll obviously update our financial targets, we'll obviously update our aims and we we call it an update on our plans on purpose.
Speaker Change: We call it an update on our middle our midterm plans on purpose. So I hope that helps with the first one Josh and then on trading look overall trading for the year is on track for an average here that's what I'd say, sometimes profit occurs on the gas side, sometimes profit occurs in the oil side and it can move around quite a bit based on the volatility we see inside the market's been.
Speaker Change: Overall trading is on track for an average year this year in the oil business, which you're particularly talking about them. It was a weak quarter. It's the second week quarter in a row.
And if you take a look at.
Speaker Change: Any of the external measures on VIX for what we've seen in the oil side, you'll see that VIX risk is way way down.
Speaker Change: To the historically low levels right now there's lots of movement in the prompt but not much movement along the structure. So it's very difficult to find opportunities to trade and that's why you've seen some of the external publicly traded companies talk about their results in oil trading.
Speaker Change: <unk> and 'twenty twenty-five look I think on divestments, we set out a target back in 2020 to do 25 billion across the five years. We're on track for that I think the math is we've done about 20, so far that's been announced so we've got five quarters left to go to hit the twenty-five I should give you a pretty strong indication of what the waiting is between the years.
Speaker Change:
As the price and if the price environment softens divestments is a tool that we can use to bridge cashflow as as Capex. So that's how we think about it from.
Speaker Change: From a divestment perspective, and we continue to have lots of infrastructure positions that people are willing to pay a very strong multiples for we've got tail assets in the upstream like in Egypt, and Trinidad that other people would like to like to invest in as well. So we continue to have a strong hopper of opportunities that we're working through and we felt comfortable to bump the guidance in <unk>.
Speaker Change: <unk>, giving the completed or given the transactions that we signed and our anticipation of when they complete so we feel good on that side as far as acquisitions go on the transition growth engines. We're good now.
Speaker Change: It's time to now bed. These transactions in so we've done quite a few from EDF to GTECH Bungay the light source to our care to travel centers of America. It's now time to standardize them drive the synergies into these businesses and start to grow them in line with what we talked about to the market as we did the transactions.
Speaker Change: So so that's where we'll be focused on for the next 12 18 months as we really really drive that through on the upstream side. We are continuing to look at acquisitions generally their organic so farm ins and that type of stuff. So we'll continue to actively pursue those things.
Speaker Change: There's not as much competition internationally as in the past and so there are tremendous opportunities to do these things and we're looking forward to developing things like the Caribbean field in Azerbaijan that we recently agreed with SOCAR.
Speaker Change: And of course, the other the other opportunities, but that'll be that'll be lower key for now they won't there won't be big numbers they'll be more inside the organic space. So I hope that helps on the divestment on the acquisition side.
Speaker Change: Endeavour to caito no buybacks.
Brian: Thanks, Brian hijacking move.
Speaker Change: So we today have announced the buyback the three coupon 10, five and and reconfirmed the fourth quarter share buyback of 1.75. So that's that's following through on our commitments and when we finished executing that that will be 7 billion of the total for 2024.
Speaker Change: With regard to where we stand today balance sheet is strong.
Speaker Change: We are rated a plus by Fitch and a plus by Moody's and we're firmly within all our ratings.
Speaker Change: And as Mary has already said the business is operating well we've got operational growth through 2025 with regard to guidance. The 25 back in February this year. When we guided on 14 billion. We said that was around market conditions as they were at February and we also said that it's at least 80.
Speaker Change: A surplus so.
Speaker Change: If you wish you can rule of thumb that and you know we have flexibility in our capital frame if prices fall and beyond that we'll update you in February as we always would alongside our medium term plan update so well.
Speaker Change: We'll come back to you in February.
Jacob: Thanks Jacob.
Speaker Change: Super Thanks, Jack Mohr will go next to Irene homeowner Irene <unk> Bernstein.
Irene Bernstein: Thank you very much good afternoon, Maury you reiterated in the press release that in oil and gas you you see the potential to grow through the decade with a focus on value over volume I understand that volume is the result of a.
Irene Bernstein: Value driven decisions my question is.
Irene Bernstein: Looking at your upstream project pipeline.
Irene Bernstein: Would you say it is feasible that you may be able to grow.
Irene Bernstein: Alongside value.
Speaker Change: And then my second question to Kate I guess for the balance sheet, what would be the maximum level of net debt, which.
Speaker Change: You and the credit agencies see is as compatible with maintaining that a grade credit range. Please. Thank you.
Speaker Change: Great. Thanks Irene.
Speaker Change: I'll do the value versus volume, one and I'll hand, it over to Kate on the net debt.
Speaker Change:
Speaker Change: So look we've got 18 billion barrels in the Hopper that we talked about them last year in Denver with you.
Speaker Change: And we started to do some new access in the new F. Ids of we've talked about.
Speaker Change: I am completely focused on cash.
Speaker Change: Cash flow and returns inside those completely focused on that.
Speaker Change: And.
Speaker Change: We need to continue to churn our portfolio and focus our capital on the very best things, we get and so I am hesitant to give you a volume number.
Speaker Change: Because we continue to think about high grading.
Speaker Change: Hydrating the portfolio do we have the capacity to grow volume, yes, we have the capacity to grow volume.
Speaker Change: But I really don't want to focus on that and I really don't want to focus on that as an example, we've announced the divestment of Egypt and Trinidad at 75, K BD a production that upon completion will disappear and we continue to work other programs as well to think about divesting them with interesting partnerships et cetera.
Speaker Change: So we do have the capacity if that's what you're asking but a much much more focused on value and driving cash flow growth and returns out of the upstream that so that's the focus area.
Speaker Change: So over to you, yes, thanks, and Hello, Irene and so I understand why you ask about a maximum level of net debt target, but I'm going to keep going back to the way I think about financial resilience for our company and it's more than just about that it's about the ratio of your earnings to a level of that and I do think that's important is how how we run the company.
Speaker Change: Any with discipline them and I think it also make sure that we take the right investment decision. So if I look at Bungay for example, which we've announced the completion of that brings that level of debt with it but it also brings earnings and it's actually accretive to my metrics, which is why it's such a great deal. So I continue to monitor monitor this closely as you.
Speaker Change: Would expect me to do and at the moment, we have plenty of headroom. We continue to engage regularly with all of our rating agencies. So that they have the opportunity for fulfill and open conversations both with regard to how we're thinking about our financial frame and with regard to the strategy, but I'm not going to I'm not going to give you a maximum net debt and not because it.
Speaker Change: Its teeth too simplistic a way for me to think about resilience. So I hope that helps hiring.
Speaker Change: Thanks Irene.
Speaker Change: Thank you we're going to take the next question from barrage broke Atari at RBC barrage.
barrage: Hi, Thanks for taking my questions I had two on the the light source deal to one of the comments that coli around that was it looks like either all or part of the operating assets were called out as part of the deal into a new JV.
barrage: It wasn't I didn't see this in the original press release or the other clothing. One so could you just help me understand what's happening there I assume.
Speaker Change: Now as for this deal is is a call on interest rates. So if you're looking to flip those assets at some point why didn't you buy them all.
Speaker Change: Because you are taking on that bad debt and there's not much in terms of earnings contribution.
Speaker Change: And then the second question just on the financial framework you.
Speaker Change: You did get you gave two net debt numbers are around light source as part of the release, which suggests that the entity added something like 600 million pounds.
Speaker Change: Yeah.
Speaker Change: It seems quite aggressive and obviously, you're a guarantor of that debt for small business. So could you just help me understand how the financing costs of that business changes now you're taking full control for any any numbers around that would be helpful. As well. Thank you great. Thanks, Paresh I'll start off with a little bit of marketing on light sources.
Speaker Change: And talk about the carve out and then I'll pass on to Kate for the financial frame for light source.
Speaker Change: So look light sources, one of the top solar.
Speaker Change: Developers and battery deploy ours globally globally. They brought on 10, gigawatts so far to markets.
Speaker Change: They have a mature pipeline of 40 to 50, Gigawatts, you'll see advertising at 60, gigawatts, but the mature pipelines in the 40 to 50 range and they have three gigawatts of battery pipeline as well are they set up their first battery farm in Australia, and another one coming in the U K they have the capacity with the 13th.
Speaker Change: Hundred member team across 19 countries to develop three to five gigawatts for develop and flip and the returns on that looking back in history have been mid teens, and we would not expect that to change moving forward moving forward. It will be a developing foot model was summer retained equity.
Speaker Change: And at some moment in time will bring a partner in here as I said last quarter, probably within the next 12 to 18 months.
Speaker Change: We have an awful lot of inbound attention to coming in barrage to the entity itself. It's probably one of the more prized assets that we find across pension funds and strategic asset managers. So as we prepare ourselves for that I think will do just fine on it.
Speaker Change: As far as a light source P. P itself goes in the carve out.
Speaker Change: We decided with our existing corners to carve out the 2.5 gigawatts in the U S that was a purposeful decision as we went through this process.
Speaker Change: With interest rates. So high it was hard to agree a bid ask difference between us barrage.
Speaker Change: They were saying you need to pass for a real decline, we're saying now that doesn't make any sense. So we just went ahead and decided that we would carve it out and as interest rates come down in the U S. As you say at a very sensitive to interest rates as those interest rates come down in the U S and we can flip it to down the road and that 50% of that money will come back to us through light source P. P.
Speaker Change: And 50% will go to the other co owners.
Speaker Change: So that was the decision making point that was the reason that we went into the entity. We now see it as a tremendous vehicle for us to provide us with green electrons into carol's business, our head of trading business as well as our own portfolio as well as our marketing businesses. So we see it as a tremendous asset that we can repackage and help us an awful lot with in the future and.
Speaker Change: The carve out just made sense from the commercial negotiation that that's where we ended up with at caito virtue of on balance sheet.
Speaker Change: Yes, Hello barrage nice to nice to talk to you. So in terms of the the debt yeah. The there was an increase.
Speaker Change: Over the last few quarters as light source really funded the development of some new projects, which will monetize through the next couple of years as light source recycled capital and sell down of F. I D.
Speaker Change:
Speaker Change: In terms of the financing for light source post control, what we did in the third quarter was build up a level of cash inside inside BP to make sure that we were in a position to.
Speaker Change: To refinance their external debt, it's a much more cost effective way of financing them going forward and.
Speaker Change: Once we have light source completely within our control it will largely be self financing going forward through its developers let model I expect we will use them project finance the asset co level and there'll be a base level of working capital that goes in at the start but beyond that it's largely self financing.
Speaker Change: And maybe one other point to make while I'm talking about light source in that with regard to the acquired debt of circa three at the date of completion and the way. We think about this is that it is largely transitory I.
I think what we just said that there's plenty of inbound interest in this space.
Speaker Change: And I think we're going to have a lot of choice around timing and selection of partner in due course, as we choose to bring in a strategic partner for value and at that point in time, a significant a significant proportion of that 3 billion will be removed as a consequence of that transaction. So that's how to think about it.
Speaker Change: Great. Thank you Raj.
Speaker Change: All right, we'll go to Doug Leggate at Wolf, Doug Good morning early morning.
Doug Leggate: Well good morning, everyone. Thanks for taking my questions.
Doug Leggate: Mary Kate I Wonder if I could beat on a topic that you.
Doug Leggate: A couple of times on this call already which is the balance sheet I want to ask the question slightly differently.
Doug Leggate: Youre going to take and $3 7 billion of consolidated debt and although the credit indices don't care about it the equity market does.
Doug Leggate: You have an additional 13 plus billion of hybrid bonds.
Doug Leggate: So when you look at your capital structure of $50 billion of pro forma net debt equivalents in 83 billion of equity value I want to understand why when you think about capital allocation going forward in your strategic review, where the capital structure fits in the priority for use of free cash because buybacks clearly hasn't helped.
Speaker Change: Follow up is a there's a quick one on hybrid corn cost.
Speaker Change: As interest rates come down for the cash that you have in the balance sheet 34 billion. What is the actual cost of your hybrid bonds.
Speaker Change: Why would you maintain those as part of your capital structure, given the elevated cost of Oh that equivalent interest charge.
Speaker Change: Alright, great.
Speaker Change: Great. Thanks, Doug It looks like you're gonna make Kate work for money. So I'll pass the opacity discussions indicate too to give you. Some thoughts yeah. So look I appreciate that I appreciate the feedback and.
Speaker Change: Vermilions will come as a surprise given that they are previous conversations we've had and.
Speaker Change: Yeah, Yeah, I I have heard your point and Marianne I have spoken to an awful lot of our shareholders over the last few months I think we've talked to the vast majority of our long only and.
Speaker Change: With.
Speaker Change: The perspective that we get back from our shareholders is that they are supportive of they have the way we balance may financial frame, but at the moment, So I, hey, you'll you'll push on the balance sheet, but I think that the balance that we have struck at the moment feels right with regard to the hybrid I do view it as a permanent part of our capital structure.
Speaker Change: Very well aware of the limits the S&P person potential refinancing versus roll off year on year and cumulative and what I would say is we will step towards each maturity.
Speaker Change: Thoughtfully and with regard to the hybrid market them, what refinancing looks like.
Speaker Change: I'm not intending to breach the 10% per annum over the cumulative 25% I'm retiring of hybrid debt because of the change that that will create in terms of the way they're accounted for based on the balance sheet and from the rating agencies' perspective.
Speaker Change: And then just finally, one point I would make on cost is around 5 billion of our hybrid debt is currently fixed and most of that is fixed at a very competitive right. So.
In terms of current financing that the numbers actually stuck out for me, we will step towards each maturity as you would expect us to with Thornton cat with regard to how we might finance any maturities, whether they way, we refinanced them externally or whether we choose to use cash to refill and I would say, so and I understand your points.
Speaker Change: They all listen to and we are stepping through each of them carefully and thoughtfully as you would probably expect us to.
Speaker Change: Thanks again.
Speaker Change: Thanks, Doug we'll take the next question from Lydia reinforce at Barclays Lydia.
Lydia reinforce: Thanks, and good afternoon, two questions like I said, if I could just come back to the projects business because I think you talked about the.
Lydia: The trading side actually having it might've been much of a profit, but he talks about oil trading profit, but then also still close to half a billion dollars and I'm just confused as to why it's quite say big it is that representative of the underlying refining.
Lydia: And this sort of environment. So you should just haven't played that went up and then the second one.
Lydia: Especially I'd like to ask about costs I think.
Lydia: To come back to the cashless side of it.
Lydia: Catch up I think about kind of cash George if I look at the.
Speaker Change: The cash flow for the quarter with 5.4 billion extra working cap side, and then capex, even adjusting for the.
Speaker Change: [laughter], 30, which and the offshore wind payments, if any about 4 billion covering the dividend covering the buyback side I guess I call them.
Speaker Change: Many lives on of course, the cash that went with Capex, but I think that's why when I think about 2025 and I can't understand why the assets become stable, but especially I guess, what I'm getting at is the business delivering the cash flow that you think it should be at this point I'm not totally distinct costs when they feel that.
Speaker Change: Yep. Thanks, Thanks, Lydia let me.
Speaker Change: Let me try to answer these and then Kate can clean up anything that I Miss.
Speaker Change: I think overall cash flow for the business, we're quite happy with it.
For the vast majority of the business. So the upstream is performing very well the cash conversion inside the upstream strong. We're obviously highly levered to oil price. So theres nothing inside the upstream that I'm, particularly concerned about on the product side as you say it was a tough quarter in Europe for refining it was a tough.
Speaker Change: Warner and refining was in a loss and it was especially in Europe, very very difficult market as product got flooded in from multiple geographies into Europe. So that's what's unusual on the margin side relative to the RMM as very very depressed margins inside the continent, especially in Germany.
The refineries were all operating well, but we also had two birdie two pretty sizable tars and that in that time period as well. So it's not really an enduring level of cash flow that you can think about.
Speaker Change: Given given the tours of our ongoing you know Adam we started a turn widening as an example in the quarter. So I don't think I'd view, three Qs and during.
Speaker Change: I think as we look forward to 2024 on the product side.
Speaker Change: You would expect refining to turn back to a profit as we expect it to be a lower tar season, you would expect it back to a profit as.
Speaker Change: We hopefully don't have any outages like we had in the first quarter. We continue to work our business improvement plans to drive cost out of the business safely.
Speaker Change: We are reconfiguring Gelson kirchen that we've announced previously to the market, which will improve cost overtime and Excitingly. We are starting to make some headway on digital now with calendar and emphasis that will help the refining system over time they've done their ontology.
Speaker Change: And counter an emphasis can get interaction quite quickly so I think you'll see.
Speaker Change: The products business improve as we move through to next year, but it was a particularly hard time on refining margins in continental Europe, and especially in Germany in the corner as far as enduring cash flow as you look from 24 to 25, I think I'd go back to my opening points.
Speaker Change: We're performing relatively well in a in the year as we look forward, we have strong growth coming we have five new major projects in the upstream to come online.
Speaker Change: We have more LNG contracts coming online we have are the refineries getting back to more normal conditions and a lighter tar season, we have the start of the cost program starting to come through and you heard the confidence from Kate on that and of course as we look at our cash flow. We will of course be thinking about what's an appropriate capital level and what's an appropriate proceeds.
Speaker Change: Level to ensure that we are durably durably deliver them.
Speaker Change: Terribly deliver cash flow through the years. So that's that's how we're thinking about twenty-five strong underlying growth while in line with the 3% to 4%, we're talking about and we will flex capital and we will flex our proceeds as we need to ensure that we've got a drink cashflow for them for shareholders.
Speaker Change: Thank you.
Speaker Change: Okay. Thank you Lydia we'll take the next question from Peter low at Redburn Peter.
Peter Low: Yeah. Thanks.
Peter Low: First was just a clarification on the Capex guidance for this year, you've left it at around $68 billion.
Peter Low: But I think you've done about 12, and a half year to date and then you have a couple of acquisitions completed in the fourth quarter, because I think of a combined consideration of about $1 $3 billion and.
Peter Low: Given the organic run rate it feels like it perhaps can be above the 16 billion.
Speaker Change: I am missing there.
Speaker Change: And in that analysis.
Speaker Change: And then secondly at Teekay you suggested that are bought to market at current commodity forward curves would have about a 4 billion negative impact or no 2025 EBITDA guidance.
Given how commodity prices have developed since that.
Speaker Change: With that now be a bigger number or could you give any update on that thanks.
Speaker Change: Yeah, Peter I'm, not going to confuse the market by putting another set of numbers out on your second question, you've got our 46 to 49 and the price conditions prevailing in 2023, you've got what we said last quarter and you've got a rules of thumb. So I'll just allow you guys to use our rules of thumb, which worked pretty well to determine the cash flows next year and then I think caito on <unk>.
Speaker Change: Capex for our for 2024, please yeah.
Speaker Change: Hi, Pizza as you'd expect we test it quite hard at the end of the third quarter to check we're comfortable with our full year guidance, we are going to be around about 16 mm theres a level of deferred consideration associated with them. Some of the transactions that are completing that might be the missing piece in your jigsaw, but yeah, we will be around about 16 billion for the full year.
Okay. Thanks, Peter we will take the next question back to the U S from Roger read at Wells Fargo Roger.
Roger: Yeah. Thanks, good morning.
Roger:
Recognizing.
Roger: 2025 outlook is coming but just as a way to think about some of the questions here I think a lot of people focused on the balance sheet.
Roger: Your comments about you know value over volume in and ultimately it's about cash flow generation.
Roger: If we look at BP is call it ongoing capex level.
Speaker Change: As either a look back on cash from operations, our earnings power and we compare that to some of the peers BP It looks a little more capital intensive. So my question to you Murray is is there a you know.
Speaker Change: Cost issue that you think is inherent in BP is it that you know as you've laid out 12 to 18 months focusing on some of these you know energy transition and renewables areas.
Speaker Change: Integrating them and getting them to work right generating more cash like how do you look it at that particular item within the company and relative to peers Yep.
Speaker Change: Yep, Great Roger I always find it hard to compare to the American parents now they've done 50, and $60 billion acquisitions using stock.
Speaker Change: And if you normalize that we're way below them on capital investment so I find it very difficult to compare that that metric across companies.
Speaker Change: Given sometimes people you start to do things.
Speaker Change: Instead, I just look at ourselves and I think about our portfolio and how we drive growth I think.
Speaker Change: I think what I'd say is in the transition space.
Speaker Change: I'm starting to put.
More leveraged off balance sheet makes sense to drive these things forward, which starts to address some of your some of your question and that's something that we're thinking about as we particularly think about the renewables and the hydrogen Ccs space it might make sense to use other people's money to drive that to allow us to then get the off take et cetera. So that's.
Speaker Change: That's a constant consideration in our mind on a relative basis and then the only other thing is the nature of the nature of the portfolio we have a.
Speaker Change: In the upstream business you know we have we have an awful lot of great deepwater positions, especially in the Gulf of Mexico are they might be a little bit higher development costs in some of the some of the competitors, but boy do they throw off margin.
Speaker Change: And I think if you are few attenuate for that you get back to a similar position on the the upstream businesses. So I think it's I I understand the question, we are a bit heavier.
Speaker Change: And then some maybe the Europeans, who havent done the big stock transactions.
Speaker Change: It's a little bit of portfolio mix, and it's a little bit of thinking about how we structure and.
Speaker Change: In the renewable space as well.
Speaker Change: And we'll be we'll updating you on that in February thanks.
Speaker Change: Thanks for the question.
Speaker Change: Thanks, Roger we'll go next to Lucas Herrmann Exxon Lucas.
Lucas Herrmann: Yeah, Thanks, very much Craig and thanks for the option it's.
Lucas Herrmann: Just a couple of my my I was just wondering if you could talk around the transition growth engines more broadly in terms of momentum how things are progressing and the buildout and all KFC was relatively modest.
Speaker Change: Well certainly lower than the expectations, you initially set and Laurie.
Speaker Change: Suddenly I hear the comment about yeah.
Speaker Change: You can go all four terawatt, rather sales in EV charging, but again that seems relatively or just doesn't suggest that utilization rates are.
Speaker Change: We think dramatically and obviously one of the conscious of.
Speaker Change: Hello upon the older lower rates of building, an even more broadly.
Speaker Change: So just some comments there and then secondly, if I could just a reminder.
Speaker Change: The company opened its employees very kindly launch or I think it was 25000 pounds worth of equity per the 60000 or so employees back in 2000, 2001, which was kind of the.
Speaker Change: First on much of it was kind of best in 2025.
Where are we in terms of you know that process, obviously, you haven't busted as yet, but if you think about the equity that's associated with that but I wouldn't stand.
Speaker Change: Those were the two things.
Speaker Change: Lucas I'll, let us all that he talked about the aesop on transition growth engines and progress we're making.
Speaker Change: I'll I'll talk to the to that that you asked about EV.
Speaker Change: Despite many news articles you hear about EV adoption slowing they're still growing 20% across the core markets that we operate in so it may not be 30% and that people are seeing in previous years, but we still see across all of those are across all of those basins, 20% year on year increase in EV adoption. So it's very strong.
Speaker Change: In the four car markets that we're operating in the one Terawatts remember we've gone from 12.
Speaker Change: Excuse me 12 countries down to four with real concentration for our Capex through high grading Lucas.
Lucas Herrmann: Lucas So that's an awful lot of energy sales, 80% growth year on year.
Lucas Herrmann: And our.
Lucas Herrmann: Our charging time as.
Lucas Herrmann: A function of power. So the amounts there theyre in residents is way higher than we thought we're at 10% now we did not think we'd be at that level until 'twenty six 'twenty seven on a weighted basis. So we're seeing lots of cars and we're seeing lots of adoption and we're seeing very hard high charge levels and it's because of.
Lucas Herrmann: The great product that the team have put together is because of the great.
Lucas Herrmann: Partnerships that they've established you know the latest wanted to look at was prime in the United States with a fantastic thing to do to bring prime customers to the to the fast charging that I'm sure will continue to improve so I feel pretty good for EV and that we're on track for our targets that we set out for 2025 and on our K, a we talked about 15 plants. This year.
Speaker Change: Even or up in online and operating HR flowing natural gas through them and working out pipelines spec with the midstream providers that they flow into so you know they're up and they're operating we just need to get we just need to adapt to the separation to make sure the separations working effectively to get the molecules to flow.
Speaker Change: Now, we will probably hit the 15 and the stunning been about this Lucas is the largest number of plants that anybody else in the sector has brought online as two or three so were a standout inside the sector. At this 15 that I think creates the case for an awful lot more business moving forward. So I feel quite good actually about RK.
Speaker Change: Here as well I think on the biofuel side, our margins remain suppressed are in are in Europe.
Speaker Change: I don't think that's a surprise to anyone they're good in Brazil.
Speaker Change: Very good in Brazil are there okay ish in the U S, but suppressed in Europe would be the other thing that I'd call out right now so I think pretty decent progress Lucas to be honest.
Lucas Herrmann: Yeah Okay.
Speaker Change: Onto Aesop's Luca so you're right that there was a mixture of options in shares granted a number of years ago and I've asked in the middle of March next year and the cost of it is going to vary depending on share price really eight plus employee behavior say history would tell us that.
Speaker Change: Round about 15% of employees would exercise options as they vest in the first couple of weeks or so, but it's very much going to depend I imagined him environment and and that behavior pattern in terms of what the impact is on us.
Speaker Change: We're still a couple of quarters away from seeing actualize. So I suggest we will give you greater clarity in due course will offset.
Speaker Change: Dilution associated with that over time as we have said a number of times before and the last comment I would make is that the accounting is pretty unusual with regard to these these auctions and shall I say, if you're super interested we can take you through that offline at some point in the early part of 'twenty two.
Speaker Change: Five.
Speaker Change: Thanks Lucas.
Speaker Change: Okay. Thanks, Lucas, we'll take the next question from Chris Coupland Bank of America, Chris.
Chris Coupland: Yeah, Thanks, very much Craig.
Chris Coupland: Two quick Glen quick questions for me please.
Chris Coupland: We were hearing a totality of as you talk about having a task force to look at a way to be listed in the U S and be included in disease I was just going to ask again.
Chris Coupland: You have such a task force in house, it seems like your asset footprint.
Chris Coupland: A more natural candidates have to talk to at least look into.
Speaker Change: And the second question goes back to a question that's been a number of times and Kate Ah apologies, but you've based your 7 billion buyback Ah in February.
Speaker Change: Macro conditions at the time, but also an 80% payout ratio.
Speaker Change: We've now got nine months into the year.
On my numbers suggest that surplus cashflow that it's based on is below 2 billion nine month and can you confirm that number roughly at least given that you are not disclosing it.
Speaker Change: And why continue with $1 75 in the fourth quarter when it doesn't look very likely even with a slight pickup and disposal proceeds that you're going to get them closer to 9 billion, which I guess.
Speaker Change: Is on an annual basis, what you would require for about 80% payout to be.
Speaker Change: He held thank you.
Speaker Change: Great. Thanks, Chris I'll, let I'll, let Kate I'm, all the math on that one I'm not sure. We're following the math, we might be doing to do that one offline, but well, let we'll let her answer you are on.
Speaker Change: Non U S. Now we're not focused on the U S. This thing that is not on our agenda. Thanks for the question Chris.
And Kate over to you on the the surplus calc.
Speaker Change: Yes, I am.
Kate: I don't really want to start guiding forward on what all surpluses at the end of 'twenty 'twenty four we said 80% of surplus over time. We've also said that in our view of the balance sheet is strong enough to tolerate quarter on quarter movements, which is why we very deliberately moved away from a.
Kate: A quarter calculation at a time on surplus numbers in that quarter. It was creating an awful lot of volatility with regard to why continue with the seven mm.
Kate: And all of you had the 3.5 that we said we were committed to announce thing back in July is exactly that its a commitment and we were confident that the balance sheet can tolerate those payments and as a consequence, we did not want to do anything about that commitment. We're following through on it and that's how we think about it.
Speaker Change: Thank you Kate.
Chris Coupland: Thanks, Chris we'll take the next question back in the U S from Ryan toward at Piper Orion.
Ryan toward: Okay. Thanks.
Speaker Change: Maybe the first one on natural gas I guess, specifically U S natural gas prices that didn't go after.
Speaker Change: After them.
Speaker Change: Earlier excitement.
Speaker Change: In the earlier part of this year natural gas prices in the U S remained pretty meaningful headline Henry hub, particularly in loss basis differential.
Speaker Change:
Speaker Change: For specific to I guess.
Speaker Change: How do you think about U S that gas prices and specific to a couple of your operations here in the U S.
Speaker Change: What does it mean for how do you think about where the haynesville fits from an activity level point of view in there.
Speaker Change: And is there anything you can do in places like the Permian.
Speaker Change: To specifically improve but it feels like perpetually week dynamic there at a pricing point of view.
Speaker Change: And then second question is on the exploration front can you maybe talk about.
Speaker Change: Are you are you still spending the right amount of money in.
Speaker Change: And the exploration program right now and is there anything that.
Speaker Change: I see on the horizon as you look at our.
Speaker Change: Future opportunity Yep, Great Ryan I'll take both of those are on exploration more drill about 30 wells a year right now.
Speaker Change: I don't you know I don't I don't know should it be 32, or 33, or 26 or 27, I dunno should it be vastly different than that probably not.
Speaker Change: Lease bonuses or very small these days as opposed to a past history drilling efficiencies are much much better than it has been so I think I think for.
I think we're in the realm of stuff, that's a fine from an activity level perspective.
Speaker Change: What's interesting coming up on exploration with an explorer is a father I can't decide if I go optimistic or.
Speaker Change: Or if I do my pessimistic thing, but you know what I'm what I, what my father would want me to say on the optimism for exploration.
Speaker Change: We've got some interesting stuff, obviously going down and the Rhino block in Namibia that'll start up soon.
Speaker Change: I think Claudio has talked about that with Eni as well our partner in Israel, whose drilling with us now.
Speaker Change: That looks interesting that's a we think it's on the right trend, but let's see we've got a couple more wells going down in Brazil that are in pretty Hot Hot basin.
Speaker Change: Let's see it's in the right. It's in the right postcode we.
We had a very good skippy on Cabo free of a while ago that will be appraising that'll be interesting and let's see how part of cargoes, which is the next big big well in Brazil as well.
Speaker Change: And then the Paleogene is really interesting to you guys will appraise the west bumping them. There are some really really big bright spots, we've got a new seismic that we've done cutting edge seismic below salt that we've done the look really really big so, let's let's let the drill but do that that's a little bit further out that's twenty-six one more we'll get after those ones. So I think no.
Speaker Change: <unk>, Brazil, and gone with pretty interesting, but I'm happy with the overall level of activity Ryan.
Speaker Change: On.
Speaker Change: Natural gas yeah I think.
Speaker Change: If I start at a high level I'm pretty optimistic on natural gas prices through the decade.
Speaker Change: The nations producing about 100 Bcf a day right now, obviously 15 Bcf a day of.
And he needs to come on to fill the liquefaction plants.
Speaker Change: And then the Hyperscale is are driving crazy demand into natural gas right now.
Speaker Change: Could you know we could see something like another 10 Bcf a day of demand by the end of the decade hard to hard to predict right now, but crazy crazy demand coming out for Baseload. So we see very high demand for natural gas as we move through the decade, which makes us incredibly optimistic about our 22 Tcf of natural gas that just sits there waiting for.
Speaker Change: For a price response.
Speaker Change: For now we have low levels of activity in the Haynesville and the Eagle Ford on the dry gas side as we wait for a pop in price.
Speaker Change: If that if that price pop comes we'll we'll structure something and start to drill into those basins, but for now that hasnt happened.
Speaker Change: We think price response will come as as the LNG becomes more real.
Speaker Change: And then on basis differentials, Haynesville and Eagle Ford, where okay. We're direct market there our trading organization.
Speaker Change: Make sure that we have lots of capacity in that space. So that's okay. Obviously, the Permian is a challenge for everybody we've.
Speaker Change: We've got the new pipeline, that's coming online Matterhorn, I think that will put two and a half Bcf a day of capacity, we think that helps for awhile.
Speaker Change: But it probably it probably feels up after a while so I think the.
Speaker Change: We feel okay about the Eagle Ford and Haynesville and heartfelt.
Speaker Change: Where we've got <unk>.
Speaker Change: 22, Ts, which is great. The Permian will remain a challenge, which I think was your point Ryan I hope that helps.
Speaker Change: Okay. Thanks, Ryan, we'll turn next to Alastair Syme at Citi Alastair.
Alastair Syme: Thanks, Craig two quick ones, so on cash taxes to Kate we're living.
Alastair Syme: Quite a bit ahead of P&L tax if you can maybe just explain.
Alastair Syme: What's going on and how you would seek to guide us going forward.
Alastair Syme: And then you tomorrow.
Alastair Syme: Mario.
Alastair Syme: The arguments we always see model was you could help us with a strong corporate level relationships and transactions.
Alastair Syme: Can you just imagine the Hyperscale is there I mean, who seems pretty high prices.
Alastair Syme: You know people are willing to pay for you to learn.
Alastair Syme: Capacity here, but are you you.
Speaker Change: You seem to say disconnect with what sort of deals you were able to put together with our with customers.
Speaker Change: Yeah, I'll, let I'll, let Kate hit the cash tax first and then I'll come to the Hyperscale. My question, Yeah, Hi, Hi, Alice So yeah I think the main reason you're seeing cash tax who's run a little bit ahead of where you might have expected is the ETR is on prices, which are lower this year than they were last year. So that's probably.
Flowing through you're always going to get a level of movement and geographical mix things move around with regard to deferred tax asset recognition quarter on quarter as well.
Speaker Change: And say that that's basically it in terms of moving parts, there's nothing anything more to call out there.
Speaker Change: So higher prices last year higher prices last yes, I'm sure you pay the higher you pay the high prices a year later.
Speaker Change: In the third quarter as well was installment payments.
Speaker Change: So it's typically higher he was always heard quotes.
Speaker Change: Right, Yeah, and we flagged that yeah, great to at least two people with tax history in there their life answering jacks questions Andrew.
Speaker Change: Dangerous isn't it.
Speaker Change: The back to the Hyperscale or conversation.
Speaker Change:
Speaker Change: Look we're in conversations with all of them.
Speaker Change: They are obviously looking for energy.
Speaker Change: They would like it to be is de carbonized as possible, we're working with that we're working with them on that the lead place in the World right now is the United States, where they're moving fast other places aren't moving as fast I think that's a yet observation.
Speaker Change: I think we'll start to see the Hyperscale is really start to move in the U K and Europe and other parts of the world a little bit later than the United States. If you will.
Speaker Change: The main competitive and AI, you'll have to do that and I think everyone wants to maintain competition in the AI space.
Speaker Change: So I think if you're a integrated energy company. This is the right time for you if you've got the ability to bundle natural gas with solar with wind.
Speaker Change: If you're able to create hedging shapes for them et cetera.
Speaker Change: You're an ideal shop, so there'll be some companies that they go to they cant provide the lower carbon stuff because they can't do it there'll be many companies, we can't do a global reach.
So that's why you know I am quite excited about the future for the business and why I'm committed to continuing to transition it because our customers and clearly hyperscale or is it going to be one of the bigger customers moving forward for energy need baseload reliable.
Speaker Change: Reliable energy that will decarbonize over time, that's how it seems like it's a rising.
Speaker Change: And I think there are only two or three companies in the world that will actually be able to provide that at scale across multiple countries.
Speaker Change: So we've done some deals that are quiet and overtime. We may publicize some of these but it's a very very interesting space Alastair so thanks for asking about it.
Speaker Change: Okay. Thanks, Alastair our next question from Ken Fish da HSBC Kim.
Hi, good afternoon. Thanks for taking my questions. Firstly I wanted to ask about Capex I know you'll guide on 2025 Capex in February but I think you mentioned earlier the Catholic as a tool that you can flex.
Speaker Change: I was wondering in it in a $70 oil price environment could you say, whether anything changes in your capital program relative to lets say $80, Brent price environment, and if so where that flexibility would come from.
Speaker Change: Would you lean more on short cycle Orange juice that bid or are there any projects that would make the cut.
Speaker Change: And secondly on divestments lately.
Speaker Change: And it seems to be the majority of the assets sold are up for sale are in midstream in renewables and so the top pipeline, that's winding down light source D. P. A wind assets is it fair to say, there's more focus on midstream and renewables asset sale, rather than an upstream and if so where does that where does that leave your target of 200000 barrels a day.
Speaker Change: Stream divestments.
Speaker Change: Yep, great Ken Thanks, very much for thanks, very much for the questions I don't think you'd flex anything between 70 80 on the upstream we.
Speaker Change: We don't we don't run our hurdle rates at $80, that's just upside for us.
Speaker Change: I think as you think about twenty-five then and capital flexibility.
Speaker Change: If you need capital flexibility.
Speaker Change: You've obviously got the option to do things lighter capital by bringing in partners.
Speaker Change: That's an option that you always have we will continue to push the pipelines for D. Capitalization, that's something that was quite hard in 'twenty. One 'twenty two 'twenty three companies just weren't willing to do that.
Speaker Change: They are back at it now and for funds or back at it and looking for those types of assets. So that gives us an opportunity to decapitalize and awful lot of pipelines that we have inside the business. Some of them are quite aggressive there, they're saying can we do capitalize your compressors for you can we decapitalize your wells for you and that's not something we will do but it shows you assign.
Speaker Change: Of the scale of capital that's available to Decapitalize. The portfolio. So it's something that gives you confidence that if you need to and you want to and you see the right multiples you can start to flex that asset base as well we have had divestment. Some that we've announced recently so we've got Egypt, and Trinidad and those take 75 K B D. A.
Speaker Change: Of that 200, and we continue to work couple more options that I'd like to high grade out as.
Speaker Change: Time as well.
Speaker Change: They're either entities that don't earn much money for the production or they're not an efficient use of capital for us. So we'll continue to think about doing that so you know the 200 is kind of okay. For now 75 done maybe even a little bit more if I think about some other ones that we've done in the past so I feel on track for that so lots of flexibility in capex, depending on what.
It happens with the environment flexi.
Speaker Change: Flexibility in the upstream is very very high we're in a period, where we're finishing off major projects, we're only starting up new ones. So the vast majority of our capital is going into drilling and you can we have all kinds of flexibilities and those contracts if we needed to use them. So I hope I hope came that helps with a range of questions.
Speaker Change: Yeah.
Speaker Change: Thanks, Kim we'll go next to Martin rats at Morgan Stanley Martin.
Martin: Yes, Hi, Hello, I also have two if I may 1st of all I wanted to ask if you could elaborate a bit about the project you mentioned in Cook Cook.
Martin: In Iraqi projects have a long history of being famously low margin him.
Martin: But look at the same time, you know that.
Martin: From some time ago in my eye and I was wondering.
Martin: Where you see the sort of the level of profitability in the project that you did you say.
Speaker Change: Richard you mentioned, where that could sort of yes is that sort of at a different level of margin and then the other one I wanted to ask goes back to the balance sheet financial framework and also I'm looking forward to what might be to the buyback in 2025 for remains a key issue for all of us of course and that is this.
Speaker Change: We add back the debt that you will be consolidated from Banca and light source.
Speaker Change: And then I look at the level of gearing that that implies that it takes the gearing back to the level of say early 2021 and in early 2021, the guidance for the body works, where 60% of surplus cash flow, which at the time at least I interpret that as being in recognition that the other 40% plus kind of needed for balance sheet gearing.
Speaker Change: And so.
Speaker Change: So I was kind of wondering if 80% of surplus cash flow is indeed did a sort of indication that we should assume.
For the buybacks in next year or we used to where you know given where the balance sheet is once the additional debt as consolidated whether we may actually need to start thinking about.
Speaker Change: Sort of a payout out of surplus cash flow that is a bit more reminiscent from a few years ago.
Great marching I'll, let I'll, let Kate Kate answer that went on and frame, which of course remains consistent since 2020 and will remain so.
Speaker Change: In the meantime, I'll I'll talk about car Cook very exciting opportunity for us five dooms five dooms full of oil 20 billion barrels yet to produce that's not in place that's yet to produce 20 billion.
Speaker Change: Plus saturated rock nearby that offers a tremendous opportunity for oil and natural gas.
Speaker Change: The Iraqi terms of change magnificently since 17, 18 years ago that that you might be remind remind remembering Martin I think you can go on woodmac and see the latest rounds, it's called round eight and you can see what those terms look like and they are they.
Speaker Change: They are competitive with most of the other countries in which we operate now N. P. S. Any structure, so there or where we're happy to move forward with that and we see it as a tremendous opportunity to grow our short cycle oil in the middle East and some of the lowest cost supplier in the world.
Speaker Change: Over the U K ton don't Ya. Thanks, Thanks, Marian and high High Mountain, Yes, I know.
If I go back to February of this year when we.
Speaker Change: Updated our guidance to 80% of surplus and to be clear our guidance is unchanged. Currently we went there because of the degree of progress we've made in reducing our level of debt and the balance sheet through 'twenty, two and 23.
If you just bear with me just for a minute I just asked that P through exactly why I'm comfortable with the balance sheet. Today. So it was at the end of the third quarter, we've thought about that desktop, let's say 24 and a half.
Speaker Change: We sat around $1 billion of divestment proceeds were delayed by four days, so I take that off and if you look at all cumulative working capital build on our balance sheet. Since 2019, it's around about 13 nine of that is deepwater horizon. Two if that is decommissioning and that leaves me with around about 2 billion.
Speaker Change: <unk> build that is left to reverse over time.
So when I take all of that into consideration and I think about my net debt at the end of the TQ, it's probably permanently around about the 21 and a half level.
Yes, we will be consolidating that from light silsbee peep it as if it would he said the majority of that is transitory as we bring in that strategic partner at the right time for the right value that will be removed to say I. Just wanted to step piece are you how I'm thinking about the balance sheet and why I feel comfortable saying that it's strong and we're comfortable with.
Speaker Change: It sits right now so I hope that's helpful.
Speaker Change: Thanks Martin.
Speaker Change: Getting close to time here, we've got three remaining questioners. So the first one Matt Lofting at JP Morgan.
Matt Lofting: Yeah. Thanks for squeezing in the questions two quick ones. Please first Dave if we just come back to the comments around cash flow generation, obviously, you see it can be.
Matt Lofting: If I used a lumpy quarter by quarter I, just wonder if if you take a step back and look at nine months delivery compared to Bp's internal expectations.
Matt Lofting: Beginning of this year.
Matt Lofting: Do you see underlying cash generation year to date, and how you to the grade at the start of the year.
Speaker Change: And then second Mary I think he talked earlier about trading year to date being on track to be averages hearing that corresponds broadly therefore to the 4% return contribution that you've talked about in the past can you share a sense of how that compares to the contribution of that business was making in 'twenty two.
Speaker Change: 23, and how Congress that you all you can sustain this year's level was 25 plus on the forward strip conditions. Thanks.
Speaker Change: Yep.
Speaker Change: Thank you, Matt I think on trading yes, we are we've had an average of 4% over time since our 2000 22020, sorry, I'm I'm I was having a elder moment there.
Speaker Change: This year, we're on track for the 4% I feel very comfortable with that are.
Speaker Change: We were up around 6% and heights, so were 2% below that but four percentage, we're delivering now and you know.
Speaker Change: You may be wondering is 4% durable, especially if the world were to turn to lower volatility.
Speaker Change: And my answer to that is absolutely in the reason that I say, absolutely as we're building a series of businesses around our historic trading business, which gives us much more optionality and flow and trading businesses make money from equity Optionality merchant Optionality inflow, that's where they make their money so building out power businesses.
Speaker Change: Through the E D F and G Tech acquisition building of biogas from R. K, a building out of Biofuels positioning bungay that will allow us to arbitrage bio ethanol to the west coast of the U S and Europe.
Speaker Change: These steps, we're taking to build out these peripheral businesses, where our customers want to lower carbon energy allow us to durably make this 4% and you know if carol if listening I'd, probably say grow overtime as well even without even without volatility. So maybe a way to think about it is that <unk>.
Speaker Change: Dream volatility that you saw the past couple of years gave us a 200 basis points, but we feel very confident in the 4% durability of trading moving forward given that we're building out the businesses as far as the as far as the grading goes for my leadership team performance. This year I'd say the <unk>.
Speaker Change: Upstream pardon performing exactly as we'd hoped.
Speaker Change: Production is about on plan costs are coming in on plan projects are coming in on plan. So.
Speaker Change: So I feel very good about that refinery is operating very very well accepted.
Speaker Change: Except for the first quarter, where we had a we had a problem and whiting and that's I'm not.
Speaker Change: Not entirely their fault given external circumstances, but the whiting outage in <unk> would probably be the 1.1 point for the year that that scores is down the rest of the rest of the year. We've been doing just fine and we're on track for I feel on track for the 3% to 4% underlying growth, we talked about and look for.
Speaker Change: For it to beating that as we move into 'twenty five I hope that helps Matt.
Irene Bernstein: Okay. Thanks, Mike we'll take the next question from Paul Cheng of Scotia, Paul.
Paul Cheng: Thank you.
Paul Cheng: Two quick question.
Paul Cheng: Mary can you give an update about G. T. A face one LNG project, we still are.
Paul Cheng: On schedule for the by the end of the year or early first quarter startup.
Paul Cheng: On the first gas and secondly that I think it's okay on the 2 billion dollar cost reduction by the end of 2026.
Speaker Change: Can you just give us an idea that how does that break down between the organic cost reduction and cost reduction related to office space.
Speaker Change: Thank you.
Speaker Change: Great Paul Fantastic on GTA, we've continued to make good progress all the equipments in the field now [noise] during the quarter, we brought in an LNG vessel to unload LNG into the actual LNG facility itself and that's allowed us to pre commission. The LNG, that's gone very well so congratulations to the team for delivering on that.
Speaker Change: Not a not a straightforward operation the next milestone we.
Speaker Change: We continue through punch lists et cetera, but the next big milestone is we will be introducing natural gas from the wellheads into the floating F. P. S O offshore and then into the pipelines that go to that go to the LNG plant.
Speaker Change: I'm happy with progress I don't want to put any pressure on the teams what they need to focus on is safely. Starting this up that will be whatever is remembered in time as I say startup.
Speaker Change: But I feel like we're making good progress Paul will update you and update you next time, we talk to U K.
Speaker Change: Kate over to the over to the cost savings and how much is organic versus inorganic yeah. Thanks, Mary when we first set out they they cost efficiency I'm back in February we talked about four areas four leaf is where we would be driving cost cost efficiency through one of those was our portfolio. So as a rule of thumb.
Speaker Change: Probably not a bad about guide so the 25%, but we'll we'll give you a better idea of delivery as we get to the fourth quarter and my my my expectation in February will be to explain this is by business, how we're doing and what we're actually delivering so the other thing I would like to say today is that hopefully.
Speaker Change: You've seen that we've.
Speaker Change: Line of sight now to in excess of $500 million in 2025, if you remember what I've said on previous calls is that I. Firstly want them underpinned then I want to do what we can to accelerate and exceed and then thirdly, how do we sustain this and that continues to be the lens through which we're driving this whole area.
Speaker Change: Our area of work and the teams are making tremendous progress as you can see we're working a lot of options track record at every other company that tries to do this would say you need a hopper of options that are significantly in excess of your delivery say right now we feel very comfortable about <unk> 2 billion in 2026.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks, very much Paul I'm afraid you to time, we're going to take our final question and that's from Berkshire annuity at Kepler and for anybody remaining on the call with questions. We will follow up with you. Thank you.
Speaker Change: Bertrand.
Yes. Thanks, Greg two question if I may the first one is on Oh Paleogene opportunities. So if you sanction a guest guida.
Bertrand: This year, you will sanction Oh, you want to sanction Tiber next year, and and I've seen a sort of project booking up called the Guadalupe I remember it was a discovery announced that.
A few years back how should we think about Guadalupe is it's a it's a potential new hub or is it.
Speaker Change #101: Is it a tie back opportunities to cask EDA or a type of and the second question is on the corporate division.
Speaker Change #102: What should be done with Oakwood number in Q3 was a positive.
Speaker Change #102: Contribution from Ob and she can do you can you just explain.
Speaker Change #102: The rationale behind it.
Speaker Change #103: Great Bertrand I'll, let I'll, let K to describe that one.
Speaker Change #104: On the Paleogene Havent that thank you for your memory, that's fantastic you remember Guadalupe.
Speaker Change #105: You might remember he learned as well if you were if you were really stretching back in time, we have the Guadalupe discovery. It's there we have not made a decision yet on it.
Speaker Change #105: To be honest, if it's a tie back to diver or it's a stand alone. We have a couple of wells going down across 25, and 26 that will help us decide what we do first we have the appraisal well on the west bump on cask ETA. So when we say we're sanctioning cascadia would mean, the east bump of Cascadia with six wells.
And then the Westbury West bump will drill an appraisal well and that will determine what we do without one in our minds right now it's a tie back.
Speaker Change #105: But you know it depends on how that goes certainly it will be a tie back I don't think it'll be standalone, but let's see how the appraisal well goes. We then have the big exploration prospect that I talk about that is to the west of that that will be drilled and that will really determine what we do with the region if that comes in.
Speaker Change #105: And with a similar size to Tiber too.
Speaker Change #105: Cascadia, you'll have to think about a standalone there or if it's dry which is possible. Then we'll have to make this decision on on Oh go out of loop as well. So I think I think the roundabout answer to that is were cleared cask EDA and were underway getting into construction now it looks like we'll see.
Speaker Change #105: <unk> Tiber I feel very confident about that Guadalupe as an option appraisal as an option and then the next exploration well is an option. We've also shot seismic and we're seeing other bright spots.
Speaker Change #105: But theres just a lot of resource there we've.
Speaker Change #105: We've made two where we're on the verge of making two infrastructure decisions with two vessels.
Speaker Change #105: I hope, there's a third one there, but it's a bit too early to say, we need to do more appraisal and on some exploration drilling.
Speaker Change #106: Hope that helps share thoughts Bertrand and over to you Kate Yeah. Thanks can I say, let me just quickly clear up on the other business and corporate.
Speaker Change #107: It's an area of the results that can move around quite a lot quarter on quarter in terms of three key you may remember earlier in the call I talked about is deliberate rebuilding cash through the third quarter getting ready to repay the financing for lights off the light silsbee piece of it we could finance it internally, it's a it's a lot more efficiently.
Speaker Change #107: I am doing it so we had a greater level of interest income in the third quarter as a consequence of that and then the other big component was favorable FX movement on a weaker dollar that's really all that's going on but it does move around a bit I know, it's tricky yeah, great. Thanks Kate.
Speaker Change #107: Craig with with that we'll call it to an end and I'll just make a few closing statements.
Speaker Change #108: Thank you for all of your questions and for listening another quarter Brazilian operations, and I hope, you'll agree significant process and driving focus and efficiencies into the business.
Speaker Change #108: The actions, we were taking create real change in BP and we're staying focused on what we control growing the underlying performance of the business, we have great assets, great team and great opportunities to grow returns and value.
Speaker Change #108: Firmly believe we are only one of a few companies that can deliver a unique integrated energy solutions for countries companies and customers alike, and I have deep conviction that the actions, we're taking will grow the value of BP. We're very much looking forward to providing an update on our medium term plans when we broadcast from New York in February.
Speaker Change #108: Thanks, everyone for your questions and for joining the call Bye bye.