BP Q4 2025 BP PLC Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 BP PLC Earnings Call
Gordon Birrell: 2025 was a strong year for project execution. As we started 7 major projects out of the 10 we expect to bring online between 2025 and 2027. Five of these were ahead of schedule, and we've now started up around 150 of the 250,000 barrels of oil equivalent per day net peak production that we expect to have online by 2027. This includes projects such as GTA in Mauritania and Senegal, Cypre in Trinidad, and Murlach in the North Sea. Delivering major projects takes focus and drive. We've encountered and overcome some challenges in some of our projects along the way, and I'm extremely proud that according to the most recent IPA benchmarks, we rank best in class overall. We rank best in class overall for our projects starting up and staying up.
Gordon Birrell: 2025 was a strong year for project execution. As we started seven major projects out of the 10 we expect to bring online between 2025 and 2027. Five of these were ahead of schedule, and we've now started up around 150 of the 250,000 barrels of oil equivalent per day net peak production that we expect to have online by 2027.
We started seven major projects out of the 10, we expect to bring online between 2025 and 2027.
Five of these were ahead of schedule.
And we've now started up around 150 of the 250000 barrels of oil equivalent per day net peak production that we expect to have online by 2027.
Gordon Birrell: This includes projects such as GTA in Mauritania and Senegal, Cypre in Trinidad, and Murlach in the North Sea. Delivering major projects takes focus and drive. We've encountered and overcome some challenges in some of our projects along the way, and I'm extremely proud that according to the most recent IPA benchmarks, we rank best in class overall. We rank best in class overall for our projects starting up and staying up.
This includes projects such as GTE in Mauritania, and Senegal sit in Trinidad and mudlark in the North Sea.
Delivering major projects takes focus and drive we've encountered and overcome some challenge challenges in some of our projects along the way and I'm extremely proud that according to the most recent IPA benchmarks were ranked best in class overall.
We're ranked best in class overall for our projects starting up and staying up.
Furthermore of the wells that we drill many as part of major projects around three quarters are in the top or second quartile.
Gordon Birrell: Furthermore, of the wells that we drill, many as part of major projects, around three quarters are in the top or second quartile. As mentioned by Carol, based on provisional data, our operational emissions in 2025 were 37% less than in 2019, a reduction well in excess of our target of 20%. Our methane intensity, again based on provisional data, fell to 0.04% thanks to improved operational performance, significantly below our 2025 target of 0.2%. You also heard from Carol that we had record plant reliability in 2025 of over 96%. We also had wells reliability of almost 98%. We saw strong base delivery, decline management, and turnaround execution with standout examples including ACG in Azerbaijan and Argos in the Gulf of Mexico. This helped to keep our managed base decline comfortably within the 3% to 5% range.
Gordon Birrell: Furthermore, of the wells that we drill, many as part of major projects, around three quarters are in the top or second quartile. As mentioned by Carol, based on provisional data, our operational emissions in 2025 were 37% less than in 2019, a reduction well in excess of our target of 20%. Our methane intensity, again based on provisional data, fell to 0.04% thanks to improved operational performance, significantly below our 2025 target of 0.2%.
I've mentioned by Carl based on Provisional data, our operational emissions in 2025 were 37% less than in 2019.
A reduction well in excess of our target of 20%.
Our methane intensity again based on provisional data fell 2.04%. Thanks to improved operational performance significantly below our 2025 target of <unk>, 2%.
Gordon Birrell: You also heard from Carol that we had record plant reliability in 2025 of over 96%. We also had wells reliability of almost 98%. We saw strong base delivery, decline management, and turnaround execution with standout examples including ACG in Azerbaijan and Argos in the Gulf of Mexico. This helped to keep our managed base decline comfortably within the 3% to 5% range.
You also heard from cargo that we had record plant reliability in 2025.
Over 96%, we also had well reliability of almost 98%, which we saw strong base delivery the claim management and turnaround execution with standout examples, including ECG and other bejon and Argos in the Gulf of America.
This helped to keep our managed base decline comfortably within the 3% to 5% range.
This level of operational delivery is a direct result of the years of investment we've made in world class capability on cutting edge technology.
Gordon Birrell: This level of operational delivery is a direct result of the years of investment we've made in world-class capability and cutting-edge technology. This has been a key differentiator for us, and we're not standing still. We're expanding the use of dynamic digital twins, AI, and automation across the business. This includes real-time reservoir wells and facilities monitoring and optimization. These have played a key role in helping to increase BP operated production on average by around 2% every year for the last five years, while also protecting on average around 4% more from going offline. The delivery of these elements enabled us to beat our 2025 production plan. Furthermore, 2026 production, excluding divestments, is now expected to be around 2.3 million barrels of oil equivalent per day, broadly flat compared to 2025. This is an increase compared to the outlook we gave you this time last year.
Gordon Birrell: This level of operational delivery is a direct result of the years of investment we've made in world-class capability and cutting-edge technology. This has been a key differentiator for us, and we're not standing still. We're expanding the use of dynamic digital twins, AI, and automation across the business. This includes real-time reservoir wells and facilities monitoring and optimization.
This has been a key differentiator for us and we're not standing still we're expanding the use of dynamic digital twins, AI and automation across the business.
This includes real time reservoir wells and facilities monitoring and optimization.
These are played a key role in helping to increase BP operated production on average by around 2% every year for the last five years, while also protecting on average around 4% more from going offline.
Gordon Birrell: These have played a key role in helping to increase BP operated production on average by around 2% every year for the last five years, while also protecting on average around 4% more from going offline. The delivery of these elements enabled us to beat our 2025 production plan. Furthermore, 2026 production, excluding divestments, is now expected to be around 2.3 million barrels of oil equivalent per day, broadly flat compared to 2025. This is an increase compared to the outlook we gave you this time last year.
Okay.
The delivery of these elements enable us to beat our 2025 production plant.
Furthermore, 2026 production, excluding divestments is now expected to be around $2 3 million barrels of oil equivalent per day broadly flat compared to 2025. This is an increase compared to the outlook. We gave you this time last year.
We're also working hard to strengthen our reserve base.
Gordon Birrell: We're also working hard to strengthen our resource base. Twelve months ago, we set a target to achieve 100% reserve replacement ratio by the end of 2027, or said another way, that we'll book around the same amount of proven reserves that we've produced. We're making good progress towards that target. As a result of the strong operational delivery and project execution that I just described, in addition to some benefit from higher prices, we have increased our 2025 organic reserve replacement ratio to 90%. We have a high-quality pipeline of major projects due online between 2028 and 2030, including Kaskida and Tiber, Guadalupe in the Gulf of Mexico, Shah Deniz compression in Azerbaijan, and Tangguh UCC in Indonesia. These four projects alone are expected to add another 250,000 barrels of oil equivalent per day of higher margin net peak production.
Gordon Birrell: We're also working hard to strengthen our resource base. Twelve months ago, we set a target to achieve 100% reserve replacement ratio by the end of 2027, or said another way, that we'll book around the same amount of proven reserves that we've produced. We're making good progress towards that target. As a result of the strong operational delivery and project execution that I just described, in addition to some benefit from higher prices, we have increased our 2025 organic reserve replacement ratio to 90%.
12 months ago, we set a target to achieve 100% reserve replacement ratio by the end of 2027 or said another way that we will book around the same amount of proof of proven reserves that we produced.
We're making good progress towards that target as a result of the strong operational delivery and project execution that I. Just described in addition to some benefit from higher prices. We have increased our 2025 organic reserve replacement ratio to 90%.
Gordon Birrell: We have a high-quality pipeline of major projects due online between 2028 and 2030, including Kaskida and Tiber, Guadalupe in the Gulf of Mexico, Shah Deniz compression in Azerbaijan, and Tangguh UCC in Indonesia. These four projects alone are expected to add another 250,000 barrels of oil equivalent per day of higher margin net peak production.
We have a high quality pipeline of major projects do online between 2028, and 2030, including Koskela and Tiber Guadalupe in the Gulf of America shut.
Shadiness compression and other bejon in Tonga UCC in Indonesia.
These four projects alone are expected to add another.
250000 barrels of oil equivalent per day of high higher margin net peak production.
And I'm, particularly proud of our exceptional year for exploration with 12 discoveries in 2025, including in the Gulf of America, Namibia and of course, Brazil.
Gordon Birrell: And I'm particularly proud of our exceptional year for exploration with 12 discoveries in 2025, including in the Gulf of Mexico, Namibia, and of course, Brazil. People ask me what's behind our exploration success. My response is that it is a blend of a deeply experienced exploration team and the application of advanced technology. We have examples where the combination of seismic technology with high-powered computing and advanced algorithms has enabled us to light up the subsurface by creating images with unprecedented clarity. Our capability and technology have also been important factors in being selected to help governments develop their discovered resources, such as in Kirkuk in Iraq and Karabakh in Azerbaijan. This combination of our exploration success and discovered resource access is enabling us to reduce to reload our resource hopper. And others are also acknowledging the progress we've made to strengthen our resource base.
Gordon Birrell: And I'm particularly proud of our exceptional year for exploration with 12 discoveries in 2025, including in the Gulf of Mexico, Namibia, and of course, Brazil. People ask me what's behind our exploration success. My response is that it is a blend of a deeply experienced exploration team and the application of advanced technology. We have examples where the combination of seismic technology with high-powered computing and advanced algorithms has enabled us to light up the subsurface by creating images with unprecedented clarity.
People ask me, what's behind our exploration success.
My response is that it is a blend of a deeply experienced exploration team and the application of advanced technology.
We have examples where the combination of seismic technology with high powered computing and advanced algorithms has enabled us to light up the subsurface by creating images with unprecedented clarity.
Gordon Birrell: Our capability and technology have also been important factors in being selected to help governments develop their discovered resources, such as in Kirkuk in Iraq and Karabakh in Azerbaijan. This combination of our exploration success and discovered resource access is enabling us to reduce to reload our resource hopper. And others are also acknowledging the progress we've made to strengthen our resource base.
Our capability and technology have also been important factors in being selected to help governments develop their discovered resources such as in Kirkuk in Iraq and Cordoba in Azerbaijan.
This combination of our exploration success undiscovered resource access is enabling us to reduce to reload our resort hopper.
And others are also acknowledging the progress we've made to strengthen our reserve base.
When benchmark using woodmac data, we now have the second longest remaining resource life of the majors.
Gordon Birrell: When benchmarked using Woodmark data, we now have the second longest remaining resource life of the majors. In summary, we believe that our deep resource base is a real competitive advantage. It creates what we call quality through choice. It provides the potential for long-term organic growth and, combined with disciplined investment criteria, enables us to progress the most value accretive options with the highest returns. Along with our high-quality assets, outstanding capability, and advanced technology, we believe this is distinctive and a key differentiator supporting the BP investment case. I'd like to finish by providing an update on the exciting Bumerangue discovery in Brazil, our largest find in the last 25 years. We're making good progress. The in-situ analysis is materially complete, and our initial estimate is that there is around 8 billion barrels of liquids in place, split roughly 50% oil and 50% condensate.
Gordon Birrell: When benchmarked using Woodmark data, we now have the second longest remaining resource life of the majors. In summary, we believe that our deep resource base is a real competitive advantage. It creates what we call quality through choice. It provides the potential for long-term organic growth and, combined with disciplined investment criteria, enables us to progress the most value accretive options with the highest returns.
In summary, we believe that our deep resource base is a real competitive advantage. It creates what we call quality through choice.
It provides the potential for long term organic growth and combined with disciplined investment criteria enables us to progress the most value accretive options with the highest returns.
Gordon Birrell: Along with our high-quality assets, outstanding capability, and advanced technology, we believe this is distinctive and a key differentiator supporting the BP investment case. I'd like to finish by providing an update on the exciting Bumerangue discovery in Brazil, our largest find in the last 25 years. We're making good progress. The in-situ analysis is materially complete, and our initial estimate is that there is around 8 billion barrels of liquids in place, split roughly 50% oil and 50% condensate.
Along with our high quality assets outstanding capability and advanced technology. We believe this is distinctive and a key differentiator supporting the BP investment case.
Okay.
I'd like to finish by providing an update on the exciting Boomerang E discovery in Brazil, our largest find in the last 25 years.
We're making good progress the insert your analysis is materially complete under our initial estimate is that there is around 8 billion barrels of liquids in place split roughly 50% oil and 50% condensate.
As is normal at this stage there is a wide range of uncertainty around this estimate.
Gordon Birrell: As is normal at this stage, there is a wide range of uncertainty around this estimate. We've appointed senior leadership and are currently working on design concepts, including the potential for an early production system. We're also putting plans in place for an appraisal program, which we expect to start around the end of the year. This will use Transocean's Deepwater Mykonos rig following the drilling of our Tupinambá exploration prospect in a neighboring block. This will provide us with data from locations across the reservoir to enable us to describe the fluid characteristics and resource potential. As you can see, we're in action with confidence, and our excitement in this huge opportunity is growing. With that, I'll hand back to Carol.
Gordon Birrell: As is normal at this stage, there is a wide range of uncertainty around this estimate. We've appointed senior leadership and are currently working on design concepts, including the potential for an early production system. We're also putting plans in place for an appraisal program, which we expect to start around the end of the year.
We've appointed senior leadership and are currently working on design concepts, including the potential for an early production system.
We're also putting plans in place for an appraisal program, which we expect to start around the end of the year.
Gordon Birrell: This will use Transocean's Deepwater Mykonos rig following the drilling of our Tupinambá exploration prospect in a neighboring block. This will provide us with data from locations across the reservoir to enable us to describe the fluid characteristics and resource potential. As you can see, we're in action with confidence, and our excitement in this huge opportunity is growing. With that, I'll hand back to Carol.
This will use it transitions deepwater mykonos rig following the drilling of our coupon number exploration prospect in a neighboring block.
This will provide us with data from locations across the reservoir to enable us to describe the fluid characteristics and resource potential.
As you can see what an option with confidence under excitement in this huge opportunity is growing.
With that I'll hand back to Carl.
Okay.
Thanks, Gordon and yes, a lot of great progress in the upstream and it was also a strong year for the downstream having delivered a significant step up in performance.
Carol Howle: Thanks, Gordon. And yes, a lot of great progress in the upstream. And it was also a strong year for the downstream, having delivered a significant step up in performance. We continue to optimize our cost base safely with around $1.6 billion of structural cost reductions delivered to date. And customers delivered their highest underlying earnings since 2019, with all businesses growing year-over-year. And our approach to investments in our refineries and midstream has created the ability for us to consistently run the kit above 96% and capture that margin. And we're also progressing our business improvement plan at TA, and the commercial integration of our BP Bioenergy acquisition is now complete.
Carol Howle: Thanks, Gordon. And yes, a lot of great progress in the upstream. And it was also a strong year for the downstream, having delivered a significant step up in performance. We continue to optimize our cost base safely with around $1.6 billion of structural cost reductions delivered to date. And customers delivered their highest underlying earnings since 2019, with all businesses growing year-over-year.
We continue to optimize our cost base safely with around $1 6 billion of structural cost reductions delivered to date and customers delivered their highest underlying earnings since 2019 with all businesses growing year on year.
Carol Howle: And our approach to investments in our refineries and midstream has created the ability for us to consistently run the kit above 96% and capture that margin. And we're also progressing our business improvement plan at TA, and the commercial integration of our BP Bioenergy acquisition is now complete.
And our approach to investments in our refineries and midstream has created the ability for us to consistently running kits about 96% and capture that margin and we're also progressing a business improvement plan at Ta and the integration of our BP Bioenergy acquisition is now complete.
We're also in action to focus our portfolio on a leading integrated businesses, having announced the sale of Castro completed the sale of Netherlands retail and we continue to progress the intended sale of our refinery Coulson caching and Australia retail as well.
Carol Howle: We're also in action to focus our portfolio on our leading integrated businesses, having announced the sale of Castrol, completed the sale of Netherlands Retail, and we continue to progress the intended sale of our refinery, Gelsenkirchen, and Austria Retail as well. So let me just close now before we turn to questions for the next 45 minutes or so. We've reflected today on where we've come from as a company and the really good progress we've made in 2025. We know we need to accelerate delivery in every dimension of our reset strategy. We're resolute on what our focus needs to be for BP. We need to build on a good year and operate well consistently, quarter in, quarter out.
Carol Howle: We're also in action to focus our portfolio on our leading integrated businesses, having announced the sale of Castrol, completed the sale of Netherlands Retail, and we continue to progress the intended sale of our refinery, Gelsenkirchen, and Austria Retail as well. So let me just close now before we turn to questions for the next 45 minutes or so.
So let me just close now before we turn to questions for the next 45 minutes or so.
Carol Howle: We've reflected today on where we've come from as a company and the really good progress we've made in 2025. We know we need to accelerate delivery in every dimension of our reset strategy. We're resolute on what our focus needs to be for BP. We need to build on a good year and operate well consistently, quarter in, quarter out.
We've reflected today on where we've come from as a company.
And the good progress we've made in 2025, and we know we need to accelerate delivery in every dimension of our reset strategy and we're resolute on Las.
Focus needs to be for they pay we need to build on a good year and operate well consistently quarter in quarter out we.
Carol Howle: We need to accelerate the strengthening of the balance sheet, which includes taking the decision to suspend the buyback and delivering the $20 billion of the divestment program. Our discipline on capital allocation is key, and we must continue to simplify our portfolio. We've made progress in addressing that in 2025, and it will remain a central focus for us going forward. We've also made good progress on our cost base, and we're in action to take our businesses and functions to top quartile by the end of 2027. And all of this must be in service of materially improving cash flow, returns, and value for our shareholders. And as we look ahead, we have a portfolio of world-class assets and the richest set of organic opportunities for growth that we've had in many years.
Carol Howle: We need to accelerate the strengthening of the balance sheet, which includes taking the decision to suspend the buyback and delivering the $20 billion of the divestment program. Our discipline on capital allocation is key, and we must continue to simplify our portfolio. We've made progress in addressing that in 2025, and it will remain a central focus for us going forward.
We need to accelerate the strengthening of the balance sheet, which includes taking the decision to suspend the buyback and delivering the $20 billion of the divestment program.
Our discipline on capital allocation is key and we must continue to simplify our portfolio.
We've made progress in addressing that in 2025, and it will remain a central focus for us going forward.
Carol Howle: We've also made good progress on our cost base, and we're in action to take our businesses and functions to top quartile by the end of 2027. And all of this must be in service of materially improving cash flow, returns, and value for our shareholders. And as we look ahead, we have a portfolio of world-class assets and the richest set of organic opportunities for growth that we've had in many years.
We've also made good progress on our cost base and we're in actions takeout businesses and functions to top quartile by the end of 2027.
And all of this must be in service of materially improving cash flow and returns and value for our shareholders.
And as we look ahead, we have a portfolio of world class assets and the richest set of organic opportunities for growth that we've had in many years.
Carol Howle: The board and the leadership team are aligned around our goal to become a simpler, stronger, and more valuable company and, in turn, grow shareholder returns. We're in action. We do have more to do, and we can and will do better for our shareholders. With that, let's go to Q&A.
Carol Howle: The board and the leadership team are aligned around our goal to become a simpler, stronger, and more valuable company and, in turn, grow shareholder returns. We're in action. We do have more to do, and we can and will do better for our shareholders. With that, let's go to Q&A.
The board and the leadership team are aligned are aligned around our goal to become a simpler stronger and more valuable company and in turn grow shareholder returns.
We're in action, we do have more to do and we can and will do better for our shareholders.
With that go to Q&A.
Okay.
Okay Super Thank you Carol and thanks, everybody for listening to our remarks, what we're going to do is as usual take one question. Please from those in the room and those online.
Craig Marshall: Okay, super. Thank you, Carol. And thanks, everybody, for listening to our remarks. What we're going to do is, as usual, take one question, please, from those in the room and those online. We'll certainly come back to everybody if there's time and an extra question, I can assure you. And we will aim to finish by around 2:30PM UK time here. So Michele, you were quick off the mark there. So we'll turn to you first. And if I can just ask everybody to say their name and the company they're with, please. Thank you.
Craig Marshall: Okay, super. Thank you, Carol. And thanks, everybody, for listening to our remarks. What we're going to do is, as usual, take one question, please, from those in the room and those online. We'll certainly come back to everybody if there's time and an extra question, I can assure you. And we will aim to finish by around 2:30PM UK time here. So Michele, you were quick off the mark there. So we'll turn to you first. And if I can just ask everybody to say their name and the company they're with, please. Thank you.
Certainly come back to everybody if there's a time and an extra question I can assure you and we will aim to finish by around 230 U K time here. So Mikael you were quick off the Mark there. So we'll turn to you first and if I can just ask everybody to say their name and the company. There was please thank you.
Micaela Lavinia from Goldman Sachs. Thank you very much for the wealth of information provided today I wanted to come back to the finance cost I think it's very helpful to look at all of the different.
Michele Della Vigna: Michele della Vigna from Goldman Sachs, thank you very much for the wealth of information provided today. I wanted to come back to the finance costs. I think it's very helpful to look at all of the different sources of debt and to lay out the $15 billion reduction. I was wondering, what does it mean in terms of reduction in actually the finance costs by 2027? How much could we expect that to go down by then?
Michele Della Vigna: Michele della Vigna from Goldman Sachs, thank you very much for the wealth of information provided today. I wanted to come back to the finance costs. I think it's very helpful to look at all of the different sources of debt and to lay out the $15 billion reduction. I was wondering, what does it mean in terms of reduction in actually the finance costs by 2027? How much could we expect that to go down by then?
Sources of debt and to lay out the $15 billion reduction I was wondering what does it mean in terms of reduction in actually defined as cost by 2027, how much could we expect it to go down by then.
Yeah. Thank you for the question the KLA and I understand why you're asking that.
Carol Howle: Yeah, thank you for the question, Michaela. And I understand, of course, why you're asking that. What we've tried to do today is be utterly transparent on the totality of the financial obligations that we are managing. And I think it underlines the imperative to do something now to really strengthen our balance sheet and make a step change in the pace at which we do that in service of growing free cash flow. There are a couple of elements that it's worth just calling out. So the Deepwater Horizon obligation, that is a payment that we will make each year. This year it's $1.6 billion. Next year it's $1.2 billion. And then it's materially complete by the end of 2032. And then we turn pretty much to hybrids and debt. We've got a net debt target of $14 to $18 billion. That is our first priority.
Carol Howle: Yeah, thank you for the question, Michaela. And I understand, of course, why you're asking that. What we've tried to do today is be utterly transparent on the totality of the financial obligations that we are managing. And I think it underlines the imperative to do something now to really strengthen our balance sheet and make a step change in the pace at which we do that in service of growing free cash flow.
What we've tried to take days be utterly transparent on the totality of the financial obligations that we are managing them and I think it underlines the imperative to do something now to really strengthen our balance sheet and make a step change in the pace at which we do that and service of growing free cash flow.
Carol Howle: There are a couple of elements that it's worth just calling out. So the Deepwater Horizon obligation, that is a payment that we will make each year. This year it's $1.6 billion. Next year it's $1.2 billion. And then it's materially complete by the end of 2032. And then we turn pretty much to hybrids and debt. We've got a net debt target of $14 to $18 billion. That is our first priority.
A couple of elements that.
It's worth just calling out it said that the deepwater horizon obligation that that is a payment that we will make each year.
The series $1 6 billion next year at some point turn and it's materially complete by the end of 2032.
And then we turn pretty much to hybrids and debt.
And we've got a net debt target of 14 to 18, not as a first priority.
Carol Howle: We are determined to deliver that. We've got a line of sight to it now. We will, of course, be stepping through that as we go through the year and we get proceeds in. I'm very cognizant of the S&P limitations on hybrid, the 10% in any one year up to a cumulative of 25%. Having said all of that, I think it's incumbent on us, as we have excess cash, to make the very best economic decisions in terms of how we deploy that. You can do the rule of thumb based on what you can see our current financing costs are today to have a sense of what a $15 billion total reduction could look like by 2027. The actual reduction will obviously depend on the choices that we make as we deploy that excess cash.
Carol Howle: We are determined to deliver that. We've got a line of sight to it now. We will, of course, be stepping through that as we go through the year and we get proceeds in. I'm very cognizant of the S&P limitations on hybrid, the 10% in any one year up to a cumulative of 25%. Having said all of that, I think it's incumbent on us, as we have excess cash, to make the very best economic decisions in terms of how we deploy that.
And we are determined to deliver that we've got line of sight to it now and we will of course be stepping through that as we as we go through the air and we get proceeds.
I'm very cognizant of the S&P limitations on hybrid.
10% in any one year up to a cumulative of 25% having said all of that I think it's incumbent on us as we have excess cash to make the very best economic decisions in terms of how we deploy that.
Carol Howle: You can do the rule of thumb based on what you can see our current financing costs are today to have a sense of what a $15 billion total reduction could look like by 2027. The actual reduction will obviously depend on the choices that we make as we deploy that excess cash. But this is ultimately about materially changing the total financial obligations we are servicing and, as a consequence, drive higher free cash flow and position us strongly to have the best opportunity to develop the set of organic options that we have ahead of us, which are unique.
You can do the rule of thumb based on what you can see our current financing costs are today to have a sense of what a 15 billion total reduction could look like by 2027. The actual reduction will obviously depend on the choices that we make as we deploy that excess cash, but this is ultimately about materially changing the total financial obligations.
Carol Howle: But this is ultimately about materially changing the total financial obligations we are servicing and, as a consequence, drive higher free cash flow and position us strongly to have the best opportunity to develop the set of organic options that we have ahead of us, which are unique.
We also have a thing and as a consequence drive higher free cash flow and position us strongly to have the best opportunity to develop disruptive organic options that we have ahead of us which are unique.
Yeah.
Craig Marshall: Thank you, Michaela. We'll go to Martijn Rats just in the second row there, please, Martijn.
Craig Marshall: Thank you, Michaela. We'll go to Martijn Rats just in the second row there, please, Martijn.
Thank you materially we'll go to Martin rats, just in the second quarter. This is Martin.
Hi, Hello, It's Martijn rats of Morgan Stanley I wanted to ask a question about the dividend.
Gordon Birrell: Yeah, hi. Hello. It's Martijn Rats at Morgan Stanley. I want to sort of ask a quick question about the dividend. The guidance for growth and dividend per share is still 4%+. But when the buyback was still there, you could say, well, a good couple of points of that actually does come from the share reduction, share counter reduction, from the buyback. So in many ways, there is a little bit of an underlying upgrade in the outlook for the total dividend burden of the company. And I was wondering if there's sort of the fact that you removed the buyback but kept the dividend growth, is there also a signal in there that there is confidence in the long run?
Martijn Rats: Yeah, hi. Hello. It's Martijn Rats at Morgan Stanley. I want to sort of ask a quick question about the dividend. The guidance for growth and dividend per share is still 4%+. But when the buyback was still there, you could say, well, a good couple of points of that actually does come from the share reduction, share counter reduction, from the buyback.
The guidance for growth in dividend per share still.
The 4% plus.
But when the buyback was still there you could say well like a good couple of points of that actually does come from the share reduction share count reduction from the buyback. So in many ways. There was a little bit of an underlying upgrade in the outlook for the total dividend bearer, though the company and I was wondering if there is a sort of a the fact that you removed to buyback, but kept the dividend growth.
Martijn Rats: So in many ways, there is a little bit of an underlying upgrade in the outlook for the total dividend burden of the company. And I was wondering if there's sort of the fact that you removed the buyback but kept the dividend growth, is there also a signal in there that there is confidence in the long run? Is that something that I'm interpreting correctly here, as in you could also have said, look, most of the dividend growth actually just comes from the buyback, share count reduction. But despite that, we are keeping the dividend growth on track.
Is there also a signal there that there is confidence in the long run and as that.
Gordon Birrell: Is that something that I'm interpreting correctly here, as in you could also have said, look, most of the dividend growth actually just comes from the buyback, share count reduction. But despite that, we are keeping the dividend growth on track.
Is that something you like I'm interpreting correctly here as in like because you could also said look most of the dividend growth actually just come from the buyback share count reduction.
But despite that we are keeping the dividend growth on track.
Yeah, I mean mathematically you could reach the conclusion, you've outlined Martin I completely agree with you I think it's really important we have a progressive dividend and we've been very clear I mean, a year ago, that's a 4% increase per annum and the board is comfortable we want to retain that that's the first priority in our financial frame beyond that it's about building back the balance sheet and then.
Carol Howle: Yeah, I mean, mathematically, you could reach the conclusion you've outlined, Martin. I completely agree with you. I think it's really important we have a progressive dividend. We've been really clear only a year ago that that's a 4% increase per annum. The board is comfortable. We want to retain that. That's the first priority in our financial frame. Beyond that, it's about building back the balance sheet and then investing for growth. Yes, the flywheel for share counter reduction has changed with the decision around the suspension of the buyback. I think one of the things that Meghan and I will need to step through when she comes in in April is contemplate what sort of balance sheet we want that is in support of the growth options that we have ahead of us. We'll need to step through that.
Carol Howle: Yeah, I mean, mathematically, you could reach the conclusion you've outlined, Martin. I completely agree with you. I think it's really important we have a progressive dividend. We've been really clear only a year ago that that's a 4% increase per annum. The board is comfortable. We want to retain that. That's the first priority in our financial frame. Beyond that, it's about building back the balance sheet and then investing for growth.
Investing for growth.
Carol Howle: Yes, the flywheel for share counter reduction has changed with the decision around the suspension of the buyback. I think one of the things that Meghan and I will need to step through when she comes in in April is contemplate what sort of balance sheet we want that is in support of the growth options that we have ahead of us. We'll need to step through that.
Yes, the flywheel for share count reduction has changed with the decision around the the suspension of the buyback, but I think.
One of the things that Mike and I will need to step through when she comes in in April.
Contemplate what sort of balance sheet, we want that is in support of the growth options that we have ahead of us and we will need to step through that.
Carol Howle: But for now, the financial frame is clear. The only thing we are altering is we are suspending the buybacks and putting all of that excess cash against strengthening our balance sheet. The dividend, the 4% growth per annum, is exactly what we want to maintain right now.
Carol Howle: But for now, the financial frame is clear. The only thing we are altering is we are suspending the buybacks and putting all of that excess cash against strengthening our balance sheet. The dividend, the 4% growth per annum, is exactly what we want to maintain right now.
But for now the financial frame is clear the only thing we're altering his way of suspending the buybacks and putting all of that excess kashagan and strengthening our balance sheet. The dividend the 4% growth per annum is exactly what we want to maintain right now.
I'm going to go over to this side, Chris Coupland. Please.
Craig Marshall: I'm going to come over to this side. Christopher Kuplent, please.
Craig Marshall: I'm going to come over to this side. Christopher Kuplent, please.
Yeah.
Chris Coupland Bank of America.
Gordon Birrell: Christopher Kuplent, Bank of America. Got another one for you, Kate. You showed the performance in 2025, in most respects, was well ahead of targets you laid out 12 months ago. So I wonder whether you could talk us through the decision-making tree, why, in the end, you decided to suspend the buyback.
Christopher Kuplent: Christopher Kuplent, Bank of America. Got another one for you, Kate. You showed the performance in 2025, in most respects, was well ahead of targets you laid out 12 months ago. So I wonder whether you could talk us through the decision-making tree, why, in the end, you decided to suspend the buyback.
Another one for you Kate.
You know you you showed the performance in 2025 in most respects was well ahead of targets you laid out to 12 months ago. So I wonder whether you could talk us through the decision making tree.
Why in the end you decided to suspend the buyback.
I don't know that it's as complicated as a tray actually Chris I think this is just strong financial discipline.
Carol Howle: I don't know that it's as complicated as a tree, actually, Chris. I think this is just strong financial discipline. Over the last year, we've created a materially different hopper of options in terms of future earnings growth. Now the right decision to take is to strengthen our balance sheet to give us the foundation from which we will access that. It will also create a degree of choice over how much of that we continue to hold as working interests. You know that we have significant growth opportunities in the Paleogene in Brazil. There's others in Namibia. We currently hold Paleogene in Brazil 100%. At some point, we can make choices around how much we may want to dilute. The strength of the balance sheet that we have will allow us to make choices that are positioned to enable us to capture maximum shareholder value.
Carol Howle: I don't know that it's as complicated as a tree, actually, Chris. I think this is just strong financial discipline. Over the last year, we've created a materially different hopper of options in terms of future earnings growth. Now the right decision to take is to strengthen our balance sheet to give us the foundation from which we will access that.
Over the last year, we've created a materially different hopper options in terms of future earnings growth.
And now the right decision to take is to strengthen our balance sheet to give us the foundation from which we will access that in it.
Carol Howle: It will also create a degree of choice over how much of that we continue to hold as working interests. You know that we have significant growth opportunities in the Paleogene in Brazil. There's others in Namibia. We currently hold Paleogene in Brazil 100%. At some point, we can make choices around how much we may want to dilute.
We'll also create a degree of choice say about how much of that we continue to hold as working interest you know that we have significant growth opportunities in the Paleogene in Brazil, there's others in Namibia, We currently hold Paleogene in Brazil, 100% and at some point, we can make choices around how much we may want to dilate.
Carol Howle: The strength of the balance sheet that we have will allow us to make choices that are positioned to enable us to capture maximum shareholder value. So I don't think it's as complicated as a decision tree on the balance sheet. This is just about the right decision now to take an action that materially increases the pace at which we strengthen our balance sheet, gives us that foundation for the future.
The strength of the balance sheet that we have will allow us to make choices that are positioned to enable us to capture maximum shareholder value. So I don't think it's as complicated as the decision tree on the balance sheet. This is just about the right decision now to take an action that materially increases the pace at which we strengthened our balance sheet gives us the foundation for the future.
Carol Howle: So I don't think it's as complicated as a decision tree on the balance sheet. This is just about the right decision now to take an action that materially increases the pace at which we strengthen our balance sheet, gives us that foundation for the future.
Yeah.
Okay I'll stay on this sides Josh.
Craig Marshall: OK, I'll stay on this side. Josh.
Craig Marshall: OK, I'll stay on this side. Josh.
Okay.
Thank you Hi, It's Josh Center from UBS, I'm talking really come back to the use of cash if that's okay.
Joshua Stone: Thank you. Hi, it's Josh Stone here from UBS. I'm afraid I'm going to come back to the use of cash, if that's OK. I think you've taken a very brave decision to suspend the buyback. I think ultimately the right decision for the reasons you've laid out. One thing that's not very clear, though, is at what point would you feel more comfortable to reinstate a buyback program? Is it the case of having to wait for a new CEO to sort of decide that leverage level? Do you have some views yourself of at what point the leverage level would be appropriate for BP to be able to buy back its own stock?
Joshua Stone: Thank you. Hi, it's Josh Stone here from UBS. I'm afraid I'm going to come back to the use of cash, if that's OK. I think you've taken a very brave decision to suspend the buyback. I think ultimately the right decision for the reasons you've laid out. One thing that's not very clear, though, is at what point would you feel more comfortable to reinstate a buyback program? Is it the case of having to wait for a new CEO to sort of decide that leverage level? Do you have some views yourself of at what point the leverage level would be appropriate for BP to be able to buy back its own stock?
I think you've taken a very brave decision to suspend the buyback and I think ultimately the right decision for the reasons you've laid out one thing it was not very clear though.
Where at what point would you feel more comfortable to reinstate our buyback program is it a case of having to wait for a new CEO to so decided that leverage level do you have some views yourself of what what point the leverage level would be appropriate for BP to be able to buy back its own stock.
Thanks, Josh I'm sure at some point someone's going to ask a question of Caroline Gordon here on the panel as well.
Carol Howle: Thanks, Josh. I'm sure at some point someone's going to ask a question of Carol and Gordon here on the panel as well. When will we reinstate? You can see from the sort of pro forma impact of the remaining divestment proceeds what we think that the order of magnitude could be as we deliver the remaining $20 billion over the next couple of years. So I think there's an opportunity to deliver a materially stronger balance sheet. I'm probably going to repeat myself a couple of times this afternoon. So please bear with me. I think it's really important that Meghan and I have the space with Gordon and the team to go through the hopper of options that we've got in terms of our growth looking ahead. We've got an incredibly powerful set of organic growth that we've created through the drill bit.
Carol Howle: Thanks, Josh. I'm sure at some point someone's going to ask a question of Carol and Gordon here on the panel as well. When will we reinstate? You can see from the sort of pro forma impact of the remaining divestment proceeds what we think that the order of magnitude could be as we deliver the remaining $20 billion over the next couple of years.
We reinstate them.
You can see from the sort of pro forma impacts of the the remaining divestment proceeds, but we think that they order of magnitude could be as we deliver the remaining $20 billion over the next couple of years I think there's an opportunity to deliver a materially stronger balance sheet.
Carol Howle: So I think there's an opportunity to deliver a materially stronger balance sheet. I'm probably going to repeat myself a couple of times this afternoon. So please bear with me. I think it's really important that Meghan and I have the space with Gordon and the team to go through the hopper of options that we've got in terms of our growth looking ahead. We've got an incredibly powerful set of organic growth that we've created through the drill bit.
I'm, probably going to repeat myself a couple of times in South Dade. So please bear with me.
I think it's really important Megan I had the space with Gordon and the team to go through the Hopper of options that we've got in terms of our growth looking ahead, we've got an incredibly powerful set of organic growth that we've created through the drill bit that's more value accretive then going and buying barrels and.
Carol Howle: So it's more value accretive than going and buying barrels. And we need to consider those and think about how they rank and which ones we're investing what order of priority. Once we're clear on that, then I think we can decide what sort of balance sheet we need to support that. And I think it's important that we have the time and space to do that. For now, what we're focused on is delivering the net debt target, the $14 to $18 billion. And once we have delivered that, then I think we'll be in a position to update you. But I'm not going to suggest when that may or may not occur right now. We've got plenty of things to step through.
Carol Howle: So it's more value accretive than going and buying barrels. And we need to consider those and think about how they rank and which ones we're investing what order of priority. Once we're clear on that, then I think we can decide what sort of balance sheet we need to support that. And I think it's important that we have the time and space to do that.
And we need to consider there isn't and think about how they rank them, which ones were investing more order priority once we're clear on that.
And I think we can decide what sort of balance sheet, we need to support that and I think it's important that we have the time and space to do that for now what we're focused on is delivering the net debt target the $14 billion to $18 billion.
Carol Howle: For now, what we're focused on is delivering the net debt target, the $14 to $18 billion. And once we have delivered that, then I think we'll be in a position to update you. But I'm not going to suggest when that may or may not occur right now. We've got plenty of things to step through.
Once we have de Levered that then I think we'll be in a position to update you, but I'm not going to suggest we're not may or may not occur right now we've got plenty of things to stat sorry.
Go back over the side Doug.
Craig Marshall: Go back over this side. Doug.
Craig Marshall: Go back over this side. Doug.
Okay.
Thank you as I think folks are float the financial question case of it so I will turn the Gordon if I may.
Lucas Herrmann: Thank you. I think folks have flogged the financial question, Kate, a bit. So I will turn to Gordon, if I may. Gordon, you gave a few hints on Bumerangue, obviously. I wonder if I could ask you just to give us a few more hints. The recoverable number is pretty critical to the outlook for Bumerangue. You've talked about high-quality rock. Rule of thumb, I would say 40%. Could you give us an idea of what you're thinking? And what working interests would you be prepared to go forward with an early production system? I'm sorry, it's Doug Leggate from Wolfe.
Doug Leggate: Thank you. I think folks have flogged the financial question, Kate, a bit. So I will turn to Gordon, if I may. Gordon, you gave a few hints on Bumerangue, obviously. I wonder if I could ask you just to give us a few more hints. The recoverable number is pretty critical to the outlook for Bumerangue. You've talked about high-quality rock. Rule of thumb, I would say 40%. Could you give us an idea of what you're thinking? And what working interests would you be prepared to go forward with an early production system? I'm sorry, it's Doug Leggate from Wolfe.
Gordon you gave a few hints on Boomerang you obviously.
Wonder if I could ask you just figure.
It was a few more heads.
The Ah <unk>.
Recoverable number it's pretty critical to.
The outlook for Boomerang, you you've talked about high quality rock.
<unk>.
Rule of thumb, obviously, 40% could you give us an idea of what you're thinking and what working interest would you be prepared to go forward with an early production system I'm, sorry, it's Doug Leggett from Wolfe.
Gordon Birrell: Yeah, hi, Doug. Thanks for the question. Let me take the equity question first. It's early days. We're in no rush to take a partner. When we do take a partner, it will be the right partner for value and the right partner who can bring something to the table to help us develop this field. We're not putting out a recoverable number right now because I'd like to understand a bit more across the reservoir, what the variability is across the reservoir, if nothing else, before we put any more numbers. I remain excited by it. There's nothing I see that has diminished my excitement about this field at 100%, 8 billion barrels and good terms to develop on. So we're going to do the appraisal program early next year. That will enable us to lock down a development concept at that point in time.
Gordon Birrell: Yeah, hi, Doug. Thanks for the question. Let me take the equity question first. It's early days. We're in no rush to take a partner. When we do take a partner, it will be the right partner for value and the right partner who can bring something to the table to help us develop this field. We're not putting out a recoverable number right now because I'd like to understand a bit more across the reservoir, what the variability is across the reservoir, if nothing else, before we put any more numbers. I remain excited by it. There's nothing I see that has diminished my excitement about this field at 100%, 8 billion barrels and good terms to develop on. So we're going to do the appraisal program early next year. That will enable us to lock down a development concept at that point in time.
Thanks. Thanks for the question, let me take the equity question first we're in no. It's early days, but in no rush to take a partner when we do take a partner it'll be the right partner for value and the right partner, who can bring something to the table to help us.
Help us develop this field.
We're not we're not putting a recoverable number right now because I'd like to understand a bit more across the reservoir for the variability is across the reservoir if nothing else before.
Number two I remain excited by I, there's nothing I see that has diminished my excitement about this field, 100% 8 billion borrowers and good terms to develop on.
So we're going to we're going to do the appraisal program early next year that will enable us to lock down a development concept at that point in time, but just as a reminder of what we did this.
Gordon Birrell: But just as a reminder of what we did put out there last year that should take you a long way to figure things out, Doug, would be 1,000 meters of hydrocarbon column, 900 condensate, 100 oil. And we did say the gradient across the rock was consistent, which would tell you it's well connected in the vertical sense. And we told you it's 300 square kilometers. So there's a reasonable amount of data out there. And there's reasonable analogs out there, I would say. But we're not going to put a recoverable number out until we reduce that uncertainty range down to something that we're more comfortable with. Well, it could be a wide range. I'm comfortable for the moment at 100. We'll find the right partner. And we'll come down. But it's material for our company. And it really is, and the terms are good.
Gordon Birrell: But just as a reminder of what we did put out there last year that should take you a long way to figure things out, Doug, would be 1,000 meters of hydrocarbon column, 900 condensate, 100 oil. And we did say the gradient across the rock was consistent, which would tell you it's well connected in the vertical sense. And we told you it's 300 square kilometers. So there's a reasonable amount of data out there. And there's reasonable analogs out there, I would say. But we're not going to put a recoverable number out until we reduce that uncertainty range down to something that we're more comfortable with. Well, it could be a wide range. I'm comfortable for the moment at 100. We'll find the right partner. And we'll come down. But it's material for our company. And it really is, and the terms are good.
The last year that should take you a long way to figure things out Doug would be a thousand metres of hydrocarbon column 900, condensate 100 oil and we did see the gradient across the across the rock was consistent which would tell you is well connected.
In the vertical sense.
And we told you 300 kilometers square so there's a reasonable amount of data out there and they're reasonable analogs out there I would say, but we're not going to a recoverable number until we get a little reducer uncertainty range down to something that we're more comfortable with.
Oh Wow.
It could be a wide range.
I'm comfortable for the moment at 100.
We'll find the right partner and will come down but it's.
As material for our company on them.
It really is in the terms are a good so you know we.
Gordon Birrell: So we'll retain a very significant proportion of this field.
Gordon Birrell: So we'll retain a very significant proportion of this field.
We will retain a very significant proportion of this field.
Doug Lydia.
Craig Marshall: Thank you, Doug. Lydia.
Craig Marshall: Thank you, Doug. Lydia.
Thanks, Lydia <unk> from Barclays I'm going to come back to capital discipline.
Kate Thomson: Thanks. It's Lydia Rainforth from Barclays. I'm going to come back to capital and discipline. What's different this time? And the board have talked about needing more rigor, more diligence. Kate, you referenced that there have been write-downs and impairments. And you're all very compelling at that. There's lots of opportunities. But has anything changed in that capital allocation process? What's different? How do investors trust that you're going to make the right decisions going forward?
Lydia Rainforth: Thanks. It's Lydia Rainforth from Barclays. I'm going to come back to capital and discipline. What's different this time? And the board have talked about needing more rigor, more diligence. Kate, you referenced that there have been write-downs and impairments. And you're all very compelling at that. There's lots of opportunities. But has anything changed in that capital allocation process? What's different? How do investors trust that you're going to make the right decisions going forward?
What's different this time and we took the board talks about needing more vague add more diligence ku veterans that are have been write downs and impairments and use that you're all very compelling at that there's lots of opportunities, but how would you has anything changed in that capital allocation process, what's different houses investors' trust that you're going to make the right decisions.
Ford.
I think that let me, let me start on that and see whether you wanted to jump in KSA.
Carol Howle: I think that, let me start on that and see whether you want to jump in, Kate. So there has been a real cultural shift in cost and discipline in BP. And I think you'll have seen that from the results from 2025 in terms of the progress around cost reductions. I think also capital productivity. And Gordon can give some great examples around that productivity, efficiency gains that we're seeing on the production side. I think we know that every dollar has to compete within the portfolio. We're very much focused on that. We're only going to be investing in the very best of opportunities. It's what we are holding ourselves to account on. So everything needs to compete. And that's why we made some very difficult portfolio decisions last year. And we'll continue to review the portfolio and make those right commercial decisions going forward.
Carol Howle: I think that, let me start on that and see whether you want to jump in, Kate. So there has been a real cultural shift in cost and discipline in BP. And I think you'll have seen that from the results from 2025 in terms of the progress around cost reductions. I think also capital productivity. And Gordon can give some great examples around that productivity, efficiency gains that we're seeing on the production side. I think we know that every dollar has to compete within the portfolio. We're very much focused on that. We're only going to be investing in the very best of opportunities. It's what we are holding ourselves to account on. So everything needs to compete. And that's why we made some very difficult portfolio decisions last year. And we'll continue to review the portfolio and make those right commercial decisions going forward.
There has been a real cultural shift in cost and discipline in base pay and I think he would have seen that from the results from 2025 in terms of the progress around cost reductions.
Think also capital productivity and Gordon can give some great examples around that that productivity efficiency gains that were saying on the production side.
We know that every dollar has to compete within the portfolio with very much focused on that we're only going to be investing in the very best of opportunities. It's what we are holding ourselves to account on so everything needs to compete and that's why we made some very difficult portfolio decisions last year, and we will continue to refuse it.
Portfolio and make those right commercial decisions going forward.
Carol Howle: I guess the only other thing I think I absolutely agree with you, Carol, is as a leadership team, we know how important this is. It's got a huge degree of focus. And we know we need to get this right. You've seen a significant structural shift from us in terms of strategy. We know that we went too far, too fast a number of years ago. But as we take investment decisions today, we are focused very hard on interrogating the level of confidence that we've got on the returns, testing hard the downside risk as we take every single investment decision. And I think, in time, that will show up with less impairments. Of course, you're always going to have impairments that are driven by environment around you. I hold those slightly differently to impairments that you could argue are a consequence of capital allocation.
Kate Thomson: I guess the only other thing I think I absolutely agree with you, Carol, is as a leadership team, we know how important this is. It's got a huge degree of focus. And we know we need to get this right. You've seen a significant structural shift from us in terms of strategy. We know that we went too far, too fast a number of years ago. But as we take investment decisions today, we are focused very hard on interrogating the level of confidence that we've got on the returns, testing hard the downside risk as we take every single investment decision. And I think, in time, that will show up with less impairments. Of course, you're always going to have impairments that are driven by environment around you. I hold those slightly differently to impairments that you could argue are a consequence of capital allocation.
I guess the only other thing I think I, absolutely agree with you and Carol is.
As a leadership team we know how important this is it's got a huge degree of focus and we know we need to get this right you say in a significant structural shift sometimes the strategy. We know that we went too far too fast a number of years ago.
But at least take investment decisions today, we are focused very hard on interrogating the level of confidence that we've got on the returns.
Thing hard the downside risk as we take every single investment decision and I think.
And time will show up with with less impairments of course, you're always going to have impairments driven blind bar environment around you I hope they slightly differently to the impairments that you could argue are a consequence of capital allocation, but the impairments that we've taken in for Q are a direct consequence of a deliberate decision to tie.
Carol Howle: But the impairments that we've taken in Q4 are a direct consequence of a deliberate decision to tighten the capital that we're deploying and the pace at which we're deploying it to maximize returns and shareholder value in terms of cash flow.
Kate Thomson: But the impairments that we've taken in Q4 are a direct consequence of a deliberate decision to tighten the capital that we're deploying and the pace at which we're deploying it to maximize returns and shareholder value in terms of cash flow.
Eitan the capital that we're deploying and the pace at which we're deploying it to maximize returns and shareholder value in terms of cash flow.
Or do you want to talk capital efficiency.
Craig Marshall: Gordon, do you want to talk capital efficiency briefly?
Craig Marshall: Gordon, do you want to talk capital efficiency briefly?
Gordon Birrell: Yeah, just a plug for the teams out there doing it every day. I mean, some tremendous real examples of capital productivity in Azerbaijan and ACG and Atlantis were drilling these long undulating horizontal wells with geosteering. So a significant reduction in $ per foot of rock contacted in BPX in our lower 48 business, 20% improvement in completion time, 9% improvement in drilling time. So in lower 48, we can unlock the same amount of resources in a year using 8 rigs that used to take us 10 rigs. So that's real capital productivity coming through, which means there's less capital required to hit our targets, means we can allocate capital elsewhere. So the capital productivity drive that we've been on for a number of years is starting to come through to the bottom line in terms of activity.
Gordon Birrell: Yeah, just a plug for the teams out there doing it every day. I mean, some tremendous real examples of capital productivity in Azerbaijan and ACG and Atlantis were drilling these long undulating horizontal wells with geosteering. So a significant reduction in $ per foot of rock contacted in BPX in our lower 48 business, 20% improvement in completion time, 9% improvement in drilling time. So in lower 48, we can unlock the same amount of resources in a year using 8 rigs that used to take us 10 rigs. So that's real capital productivity coming through, which means there's less capital required to hit our targets, means we can allocate capital elsewhere. So the capital productivity drive that we've been on for a number of years is starting to come through to the bottom line in terms of activity.
Just a plug for the teams out there doing it every day I mean, some tremendous reworked examples of capital productivity in Azerbaijan and ECG and Atlantis. We're drilling these long undulating horizontal wells with Geo steering so a significant reduction in dollar per tonne of rock contacted.
In BP X and our lower 48 business, a 20% improvement in completion time, 9% improvement in drilling times and lower 48, we can unlock the same amount of resources and a year using eight rigs that used to take US 10 rigs. So that's real capital productivity coming through which means there's less capital rich.
Quiet to hit our targets means we can allocate capital elsewhere. So the capital productivity drive that we've been on for a number of years is starting to come through to the bottom line in terms of activity.
Craig Marshall: Thank you. I'm going to go to the phone. I'm going to go to this side of the room. Paul Cheng at Scotia, Paul, can you hear us?
Craig Marshall: Thank you. I'm going to go to the phone. I'm going to go to this side of the room. Paul Cheng at Scotia, Paul, can you hear us?
Thank you I'm going to go to the phone and then I'll go to the side of the room.
Paul Cheng Scotia, Paula can you hear us.
Hi.
Paul Cheng: Hi. Good morning, or good afternoon your time. Thank you. If I could key on the $5.5 to 6.5 billion on the cost reduction target increase, how much is that related to the sale of the cash flow interest? And also, when you look at, say, cumulatively, you're talking about $2.8 billion of the saving, can you break down between portfolio impact and the actual cost saving? Thank you.
Paul Cheng: Hi. Good morning, or good afternoon your time. Thank you. If I could key on the $5.5 to 6.5 billion on the cost reduction target increase, how much is that related to the sale of the cash flow interest? And also, when you look at, say, cumulatively, you're talking about $2.8 billion of the saving, can you break down between portfolio impact and the actual cost saving? Thank you.
Good morning, or good afternoon time, thank you.
If I could the K on the five five to $6 5 billion once the cost reductions how can you increase how much is that will lead to the sale of the kestrel interests and also when you look at.
Let's say accumulated you're talking about to spin off the saving can you breakdown between portfolio impact and the actual cost savings. Thank you.
Carol Howle: Yeah, hi, Paul. Thank you for your question. In terms of the change in the target, we've added $1.5 billion onto the $4 to 5 billion just to reflect the transactional cash flow. So hopefully, that's fairly straightforward. With regard to the $2.8 billion that we've delivered to date, rather, you may remember when we set this target out there, we talked about probably around half of the savings coming from our supply chain and our third-party optimization. That's exactly the analysis that I've looked at in terms of that $2.8 billion. Half of it has come from supply chain and third-party. And then of the remaining half, it's pretty evenly split, actually, between organizational optimization and portfolio. So that's the way to hold the $2.8 billion delivery so far.
Carol Howle: Yeah, hi, Paul. Thank you for your question. In terms of the change in the target, we've added $1.5 billion onto the $4 to 5 billion just to reflect the transactional cash flow. So hopefully, that's fairly straightforward. With regard to the $2.8 billion that we've delivered to date, rather, you may remember when we set this target out there, we talked about probably around half of the savings coming from our supply chain and our third-party optimization. That's exactly the analysis that I've looked at in terms of that $2.8 billion. Half of it has come from supply chain and third-party. And then of the remaining half, it's pretty evenly split, actually, between organizational optimization and portfolio. So that's the way to hold the $2.8 billion delivery so far.
Yeah, Hi, Paul. Thank you for your question in terms of the change in the target we've added $1 $5 billion I'm onto the four to five just to reflect the transactional Castro. So hopefully that's fairly straightforward with regard to the two eight that we've delivered today to date, rather you may remember when we set that.
This target out there, we talked about probably around half that they savings coming from our supply chain and our third party optimization. That's exactly the analysis that I've looked at in terms of that half of it has come from supply chain and third party and then of the remaining half it's pretty evenly split actually between organizational optimization.
Ization of portfolio, so that that's the way to hold the 2.8 deliveries so far.
Thanks, Paul.
Craig Marshall: Thanks, Paul.
Craig Marshall: Thanks, Paul.
Gordon Birrell: Thank you.
Gordon Birrell: Thank you.
Craig Marshall: Over this side. Alex.
Craig Marshall: Over this side. Alex.
The sides.
Alex.
Okay.
Okay.
Yeah.
Okay.
Hello, Thank you.
Alejandro Daza: Hello. Thank you. Alejandro Daza from Santander. My question is about the remaining divestments you have until the end of 2027, which are the priorities in terms of assets you want to sell in terms of the sectors, probably more on the downstream? Or you are counting on the farm down or some of the discoveries in 2025 for this target? You can elaborate on that. Thank you.
Alejandro Daza: Hello. Thank you. Alejandro Daza from Santander. My question is about the remaining divestments you have until the end of 2027, which are the priorities in terms of assets you want to sell in terms of the sectors, probably more on the downstream? Or you are counting on the farm down or some of the discoveries in 2025 for this target? You can elaborate on that. Thank you.
Sundance There my question is about the the remaining divestments you have until the end of her 27, which are the priorities in terms of assets you want to so those are the sectors now probably more in the downstream or counting on the on the farm down on some of the of the discoveries in 'twenty five.
For these targets.
So you can elaborate on that thank you.
Carol Howle: So when we look at the portfolio, I mean, we're very much looking at it with regard to the best returns for BP. Where could others see more value in certain assets than we do? And so we're looking at that as well. So we're looking across the whole portfolio, across upstream and downstream, and also into the low-carbon business. At the moment, we do have under process the Gelsenkirchen refinery. We're looking at Austria retail. As you know, we've also got interested parties for Lightsource bp. So that will also be an area that we're looking at. And there are certain areas that we'll consider whether we farm down on them. I don't think there's a contingent decision. We don't need to. It's a question of what's the right decision for BP, for example, in our position in the Paleogene.
Carol Howle: So when we look at the portfolio, I mean, we're very much looking at it with regard to the best returns for BP. Where could others see more value in certain assets than we do? And so we're looking at that as well. So we're looking across the whole portfolio, across upstream and downstream, and also into the low-carbon business. At the moment, we do have under process the Gelsenkirchen refinery. We're looking at Austria retail. As you know, we've also got interested parties for Lightsource bp. So that will also be an area that we're looking at. And there are certain areas that we'll consider whether we farm down on them. I don't think there's a contingent decision. We don't need to. It's a question of what's the right decision for BP, for example, in our position in the Paleogene.
So when we look at the portfolio I mean, we were very much looking at it with regards to the best returns for BP, where could others see more value in certain assets and then we do and so we're looking at that as well.
So we're looking across the whole portfolio across upstream and downstream and and also into <unk>.
The low carbon business at the moment, we do have under process the gas and cashew refinery, we're looking in Austria.
Kyle.
As you know we've also got interested parties for a light source. They pay so that will also be an area that we're looking at and their assertion areas that we'll consider whether we farmed down on them I don't think there's a contingent decision we take need to it's a question of.
What's the right decision to be pay for example in our position in the Paleogene.
Carol Howle: So we're looking at each specific piece in the portfolio in terms of its value add to bp from a strategic perspective, the value for us, the value for our shareholders. Then we're weighing it up on that basis. Did I miss any, Kate? No. I mean, we'll update you as we go. We've got a really good hopper in terms of depth and breadth of quality on assets. We have plenty of choice. We aren't in a rush. You can see we've said for this year, $3 to 4 on top of cash flow. It's a typical level of just ongoing high grading of our portfolio of assets. We won't guide in advance where that's likely to come from. We will make those value-based decisions as we step through them.
Carol Howle: So we're looking at each specific piece in the portfolio in terms of its value add to bp from a strategic perspective, the value for us, the value for our shareholders. Then we're weighing it up on that basis. Did I miss any, Kate? No. I mean, we'll update you as we go. We've got a really good hopper in terms of depth and breadth of quality on assets. We have plenty of choice. We aren't in a rush. You can see we've said for this year, $3 to 4 on top of cash flow. It's a typical level of just ongoing high grading of our portfolio of assets. We won't guide in advance where that's likely to come from. We will make those value-based decisions as we step through them.
We're looking at each specific piece in our portfolio in terms of its value add to be pay from a strategic perspective, the value for us value for our shareholders.
Turning it off on that basis.
Did I Miss any K no I mean, we will update you as go away.
I I really get help her in terms of depth and breadth of quality.
So we have plenty of choice some way on and Eros you can see we said for this year three to four on top of Castro.
A typical level of just ongoing high grading of our portfolio of assets, we weren't garden advanced where that's likely to come from it will make us value based decisions as we step through them.
Okay. Thank you one more question yes.
Craig Marshall: OK, thank you. One more question. Yes.
Craig Marshall: OK, thank you. One more question. Yes.
Yes.
Thank you Hello, It's Mark Wilson from Jefferies.
Lucas Herrmann: Thank you. Hello. It's Mark Wilson from Jefferies. It's a really interesting setup because by 2027, when you've got your balance sheet down, you should have a concept development for Bumerangue. So Bumerangue clearly looms large in your future. I'd like to ask, firstly, does this just outweigh all the others? You've got 12 total exploration discoveries. So just give us a pecking order there. And early 2027 comes up very quickly. Are you telling us you would be happy to appraise this through 2027 at 100% working interest? Thank you.
Mark Wilson: Thank you. Hello. It's Mark Wilson from Jefferies. It's a really interesting setup because by 2027, when you've got your balance sheet down, you should have a concept development for Bumerangue. So Bumerangue clearly looms large in your future. I'd like to ask, firstly, does this just outweigh all the others? You've got 12 total exploration discoveries. So just give us a pecking order there. And early 2027 comes up very quickly. Are you telling us you would be happy to appraise this through 2027 at 100% working interest? Thank you.
Really interesting setup because by 2027, when you've got your balance sheet down.
Couldnt have a concept development for boomerang so.
Boomerang clearly looms large.
In your future.
I'd like to ask Firstly does this just outweigh all the others you've got 12 of the 12 total exploration discoveries. So just give us a pecking order.
There.
And in early 'twenty seven comes up very quickly are you telling US you would be happy to appraisal through 27 out of 100% working interest. Thank you.
Let me.
Gordon Birrell: Let me just comment on the quality of our hopper. If you look at the Wood Mackenzie benchmarking, they are using their own, not using our numbers, using their methodology. They give us 23 years of production at the current production level. That's the longevity we've created in the company through accessing discovered and developed barrels like Karabakh, like Kirkuk, as well as through the drill bit with Namibia, with what we've done in Egypt, what we've done in Trinidad, and what we've done in Bumerangue. So we have a very rich hopper of opportunities. So I won't give you a rank order. But clearly, Bumerangue has the potential to be very, very material for our company. And Brazil is a country we know well. We've operated there for many, many years in different types of businesses there. Namibia is very exciting. Of course, the discoveries are under the Azule brands.
Gordon Birrell: Let me just comment on the quality of our hopper. If you look at the Wood Mackenzie benchmarking, they are using their own, not using our numbers, using their methodology. They give us 23 years of production at the current production level. That's the longevity we've created in the company through accessing discovered and developed barrels like Karabakh, like Kirkuk, as well as through the drill bit with Namibia, with what we've done in Egypt, what we've done in Trinidad, and what we've done in Bumerangue. So we have a very rich hopper of opportunities. So I won't give you a rank order. But clearly, Bumerangue has the potential to be very, very material for our company. And Brazil is a country we know well. We've operated there for many, many years in different types of businesses there. Namibia is very exciting. Of course, the discoveries are under the Azule brands.
Just comment on the quality of our hopper.
If you.
Look at the Woodmac benchmarking they are using they are not using our numbers using their methodology. They gave US 23 years of production at the current production level. That's the longevity, we've created in the company through accessing.
Discovered undeveloped borrowers like cut a box like or coke as well as through the drove it with the Namibia with what we've done in Egypt, what we've done in Trinidad and what we've done in Boomeranging. So we have a very rich hopper of opportunities. So I won't give you a wrong corridor, but clearly boomerang a has the potential to be very very material for our company.
On Brazil.
Brazil is a country, we know well we've operated there for many many years it in different <unk> different types of businesses there.
Namibia is very exciting of course, the discoveries are under their zoo bronze but the.
Gordon Birrell: But we've drilled 3 wells there, 3 exploration wells in block 85 and 2 discoveries, 2 nice discoveries, liquids, good quality rock, good quality fluids. So I would expect them to come to the fore rather quickly. And then we have our ongoing program in Trinidad, which we like as well. So there have been a number of discoveries in Trinidad that will push close to the front of the queue, I think. And then, of course, in Azerbaijan, we've got Karabakh, which is discovered and developed that we also are working hard on to make that into an economic investment. So I wouldn't put any rank order on them. They will all compete on the day based on their economics. They won't all get funded, for sure. And we'll back to quality through choice, as I mentioned earlier.
Gordon Birrell: But we've drilled 3 wells there, 3 exploration wells in block 85 and 2 discoveries, 2 nice discoveries, liquids, good quality rock, good quality fluids. So I would expect them to come to the fore rather quickly. And then we have our ongoing program in Trinidad, which we like as well. So there have been a number of discoveries in Trinidad that will push close to the front of the queue, I think. And then, of course, in Azerbaijan, we've got Karabakh, which is discovered and developed that we also are working hard on to make that into an economic investment. So I wouldn't put any rank order on them. They will all compete on the day based on their economics. They won't all get funded, for sure. And we'll back to quality through choice, as I mentioned earlier.
We've drilled three wells three exploration wells in block 85, and 222 discoveries to nice discoveries liquids good quality rock good quality fluid. So I would expect them to come to the fore.
Rather quickly and then we have ongoing program in <unk> in Trinidad, which we like as well so theres been a number of discoveries in Florida that will that will push close to the front of the queue. I think and then of course in Azerbaijan, We've got Carter bar.
Which is discovered undeveloped that we also.
We are working hard on to make that into an economic investment so the.
Any any rank order on them they won't compete on the day based on the economics. They won't all get funded for sure and we will back to quality through choice as I mentioned earlier. Your question about would we would we go through the full appraisal phase as 100% BP and we could.
Gordon Birrell: Your question about would we go through the full appraisal phase as 100% BP, we could. If we have a partner before then that would add value to BP, then, of course, we would take a partner. So I'm not 100% committing to it. But as I mentioned earlier, we're in no rush to take a partner. It has to be for value here.
Gordon Birrell: Your question about would we go through the full appraisal phase as 100% BP, we could. If we have a partner before then that would add value to BP, then, of course, we would take a partner. So I'm not 100% committing to it. But as I mentioned earlier, we're in no rush to take a partner. It has to be for value here.
We have a partner before then that would add value to BP. Then of course, we would take a partner and so I'm not 100% committing to it but we're as I've mentioned earlier, we're in no rush to take a partner it has to be for value here.
Thanks, Mark for your question well go over to the sides barrage.
Craig Marshall: Thanks, Mark, for your question. We'll go over to this side, Biraj.
Craig Marshall: Thanks, Mark, for your question. We'll go over to this side, Biraj.
Hi, Thanks for taking my question spiritual Qatari obviously.
Biraj Borkhataria: Hi. Thanks for taking my question. It's Biraj Borkhataria, RBC. One of the things I was struggling with in the morning was reconciling the net debt target, which was unchanged with the buyback cut. You're obviously cutting CapEx as well. You're cutting OpEx as well. So just trying to understand the moving parts there. I know you're going to potentially redeem some of the hybrids. So that will put upward pressure on that number. But a couple of other moving pieces, has your view on the ability to sell Lightsource bp changed? Because I don't know how much equity value is there. But there's obviously a lot of debt associated with that. And secondly, could you just rationalize why you did a partial sell down for cash flow rather than the whole thing, which I think was part of the original plan? Thank you.
Biraj Borkhataria: Hi. Thanks for taking my question. It's Biraj Borkhataria, RBC. One of the things I was struggling with in the morning was reconciling the net debt target, which was unchanged with the buyback cut. You're obviously cutting CapEx as well. You're cutting OpEx as well. So just trying to understand the moving parts there. I know you're going to potentially redeem some of the hybrids. So that will put upward pressure on that number. But a couple of other moving pieces, has your view on the ability to sell Lightsource bp changed? Because I don't know how much equity value is there. But there's obviously a lot of debt associated with that. And secondly, could you just rationalize why you did a partial sell down for cash flow rather than the whole thing, which I think was part of the original plan? Thank you.
One of the things I'm struggling with the morning was reconciling the net debt target, which was unchanged with the buyback Cup.
You're obviously cutting capex Israeli cutting opex as well so just trying to understand the moving parts there I know you're going to potentially redeem.
Redeem some of the hybrid so they'll put upward pressure on that number but couple of other moving pieces.
Has your view on the ability to sell lifestyles change because it's not.
Economic equity value is there, but there's obviously a lot of debt associated with that.
And secondly could you just rationalize why you did a partial sell down for Castro rosin, the whole thing, which I think was part of the original plan. Thank.
Thank you.
How long question Humphrey.
Carol Howle: Is that one question or three? That's all right. I'll lay off, Biraj. So I think your first, maybe it was an observation as opposed to a question, which is the net debt target hasn't changed. No, it hasn't. I'd like to deliver the target. And then we'll see. I'll just take the opportunity while I'm talking about that target again just to make it clear that is not an automatic trigger for us to reinstate the buyback. We need to take a holistic view of the balance sheet. We need to set ourselves up for the growth that we've got. And I think it's appropriate that we think about that very carefully before we start talking about it. Having said that, of course, we understand the share buyback is a tool for returning excess cash to shareholders.
Carol Howle: Is that one question or three? That's all right. I'll lay off, Biraj. So I think your first, maybe it was an observation as opposed to a question, which is the net debt target hasn't changed. No, it hasn't. I'd like to deliver the target. And then we'll see. I'll just take the opportunity while I'm talking about that target again just to make it clear that is not an automatic trigger for us to reinstate the buyback. We need to take a holistic view of the balance sheet. We need to set ourselves up for the growth that we've got. And I think it's appropriate that we think about that very carefully before we start talking about it. Having said that, of course, we understand the share buyback is a tool for returning excess cash to shareholders.
So I think it was your first it maybe it was an observation as opposed to a question, which is the net debt target hasn't changed it hasn't I'd like to deliver the target and then we will say I'll just take the opportunity while I'm talking about that Targa again, just to make it clear that is not an automatic trigger frustrating state the buyback.
And we need to take a holistic view of the balance sheet, we need to set ourselves up for the growth that we've got and I think it's appropriate that we think about that very carefully before we start talking about it having said that of course, we understand the share buyback as a tool.
For returning excess cash to shareholders and we do need to think hard about the balance between investing for growth and returning to shareholders fan out the imperative is strengthening our balance sheet and we're absolutely clear on that and.
Carol Howle: We do need to think hard about the balance between investing for growth and returning to shareholders. For now, the imperative is strengthening that balance sheet. And we're utterly clear on that. A couple of things that also came through on some of the earlier questions in the room were around, is the change in buyback something around confidence? There's something that I heard earlier on in the room. And you're asking a question around confidence in Lightsource. But I think one of the things that's important to iterate right now is you can see from the results we've printed today that, actually, our underlying performance is incredibly strong. So this is not a lack of confidence. If anything, I'm more confident in the delivery against our plan than I was a year ago when I stood up here. This is around creating the right strength.
Carol Howle: We do need to think hard about the balance between investing for growth and returning to shareholders. For now, the imperative is strengthening that balance sheet. And we're utterly clear on that. A couple of things that also came through on some of the earlier questions in the room were around, is the change in buyback something around confidence? There's something that I heard earlier on in the room. And you're asking a question around confidence in Lightsource. But I think one of the things that's important to iterate right now is you can see from the results we've printed today that, actually, our underlying performance is incredibly strong. So this is not a lack of confidence. If anything, I'm more confident in the delivery against our plan than I was a year ago when I stood up here. This is around creating the right strength.
A couple of things that I'm also that came through on some of the earlier questions.
In the room are around them.
Is the is the change in buyback something around confidence and that's something that I had earlier on in the room and you're asking a question around confidence and light source, but I think one of the things that's important right now as you can see from the results. We've printed today that actually our underlying performance is incredibly strong.
So this is not a lack of confidence if anything I'm more confident in the delivery against our plan and then I was at a year ago. When I stood up here. This is this is around creating the right strength in on like a light source I think Carol mentioned, just a couple of minutes ago. We've got a number of interested parties, who are looking very hard at light, it's not something we're working through that and of course.
Carol Howle: And on Lightsource bp, I think Carol mentioned it just a couple of moments ago. We've got a number of interested parties who are looking very hard at Lightsource bp, and we're working through that. And of course, we'll only transact for value. But right now, we're moving through that process. But there's no need to rush. And then on Castrol, we took our time to completely evaluate what a transaction around Castrol could look like. It's a great asset. It's a great business with real future ahead of it in terms of earnings growth. And we came to the conclusion that the transaction that we signed with Stonepeak just before Christmas was the right transaction to do. It is a good value decision, a good value transaction, EV of $10.1 billion.
Carol Howle: And on Lightsource bp, I think Carol mentioned it just a couple of moments ago. We've got a number of interested parties who are looking very hard at Lightsource bp, and we're working through that. And of course, we'll only transact for value. But right now, we're moving through that process. But there's no need to rush. And then on Castrol, we took our time to completely evaluate what a transaction around Castrol could look like. It's a great asset. It's a great business with real future ahead of it in terms of earnings growth. And we came to the conclusion that the transaction that we signed with Stonepeak just before Christmas was the right transaction to do. It is a good value decision, a good value transaction, EV of $10.1 billion.
Any transact for value, but right now we're moving through that process and there's no need to rush.
And then on Castro, we took our time to completely evaluate what a transaction around capital could look like it's a great asset it's a great business with a real future ahead of it in terms of earnings growth and we came to the conclusion that the transaction that we signed with time paid just before Christmas was the right.
Transaction today. It is a good value decision that's good value transaction ebay, a $10 1 billion and it gives us good multiple thing eight six times EBITDA, which is at least as good as if not better than other precedent transactions and on top of that the retention of the 35% gives us.
Carol Howle: And it gives us good multiples, I think 8.6x EV EBITDA, which is at least as good as, if not better, than other precedent transactions. And on top of that, the retention of the 35% gives us the opportunity to share in the future upside. So I think it's a good transaction for us and for shareholders. And it materially de-risks that $6 billion against our balance sheet, which is really important.
Carol Howle: And it gives us good multiples, I think 8.6x EV EBITDA, which is at least as good as, if not better, than other precedent transactions. And on top of that, the retention of the 35% gives us the opportunity to share in the future upside. So I think it's a good transaction for us and for shareholders. And it materially de-risks that $6 billion against our balance sheet, which is really important.
The opportunities share in future upside I'd say I think it's a good transaction for us and for shareholders and it materially de risked that's X billion dollars against our balance sheet, which is really important.
Thanks barrage.
Craig Marshall: Thanks, Biraj. We'll stay on this side. Irene.
Craig Marshall: Thanks, Biraj. We'll stay on this side. Irene.
We will stay on this side Irene.
Thank you Irene Humana has been sustained and Carl I wanted to ask a question not as interim CEO, but he's head of trading.
Irene Himona: Thank you, Irene Himona, Bernstein. Carol, I wanted to ask you a question, not as interim CEO, but as head of trading. When you were adding to the portfolio things like Archaea, biogas, and Lightsource renewables, you had expressed the sort of vision that by enhancing or adding more tradable products, the return from trading would thereby improve. And today, you disclosed a 4% enhancement to Group ROACE from trading, which, to me, sounds sort of top end of the range you had given before. It used to be 2 to 4 or 3 to 4. So I wanted to ask, is this 4% over the last 6 years legacy oil and gas? Or have these businesses, which actually you impaired today, have they made any contribution to that profitability of trading? Thank you.
Irene Himona: Thank you, Irene Himona, Bernstein. Carol, I wanted to ask you a question, not as interim CEO, but as head of trading. When you were adding to the portfolio things like Archaea, biogas, and Lightsource renewables, you had expressed the sort of vision that by enhancing or adding more tradable products, the return from trading would thereby improve. And today, you disclosed a 4% enhancement to Group ROACE from trading, which, to me, sounds sort of top end of the range you had given before. It used to be 2 to 4 or 3 to 4. So I wanted to ask, is this 4% over the last 6 years legacy oil and gas? Or have these businesses, which actually you impaired today, have they made any contribution to that profitability of trading? Thank you.
And when you are adding to the portfolio things like our care biogas and light shows renewables you had expressed a showed a vision that by enhancing or adding more tradable product.
They returned from trading would thereby improve and today you disclosed a 4% and huntsman to group of Archie from trading which to me sounds sort of top end of the range you had given before it used to be two to four or three to four so I wanted to ask is this 4% over the last six years.
Legacy oil and gas or have these businesses, which actually you impair today have they made any contribution.
To that profitability of trading okay.
Say, thank you for the question Irene and so we have de Levered as you said, 4% from supply trading and shipping for the six year and arrived and what I would just call out there is that that's been through a number of commodity cycles. It through lots of different volatility set so.
Carol Howle: So thank you for the question, Irene. So we have delivered, as you said, 4% from supply trading and shipping for the sixth year in a row. And what I would just call out there is that that's been through a number of commodity cycles. It's through lots of different volatility sets. So what we have is a really competitively advantaged team who look at our BP business from the asset base. So I think we sort of said before, we look at what can we optimize and deliver from the asset base. That's around 2%. We look at around 1% from optimization and 1% from value trading. So within that, we do work, for example, with Archaea around routes to market and around the different types of channels, whether that's into utilities or into transport. So we support that.
Carol Howle: So thank you for the question, Irene. So we have delivered, as you said, 4% from supply trading and shipping for the sixth year in a row. And what I would just call out there is that that's been through a number of commodity cycles. It's through lots of different volatility sets. So what we have is a really competitively advantaged team who look at our BP business from the asset base. So I think we sort of said before, we look at what can we optimize and deliver from the asset base. That's around 2%. We look at around 1% from optimization and 1% from value trading. So within that, we do work, for example, with Archaea around routes to market and around the different types of channels, whether that's into utilities or into transport. So we support that.
What we have is a really competitive advantage chain, who look at IBP business from the asset base I think we've said before we look at what can we optimize and deliver from the asset base. That's around 2%, we look at around 1% from optimization and 1% from value trading so within that we do what.
For example, with our care around routes to market and around the different types of channels, whether that's into utilities or into transport. So we support that.
Carol Howle: We've also supported working with refineries and with our oil and gas business, as you say. I think what we've seen is a real sort of change in, one, the BP portfolio. We've got such a rich set of opportunities at higher sort of levels of return, which means we need to make really difficult choices. So that's what you will have seen in Q4 around the Archaea impairment, for example. We're making difficult choices in terms of where we're putting our CapEx going forward because we see returns elsewhere. I would say we don't guide forward on the 4%. But I would say I think the capability and the experience within the team has meant that we can deliver that through a number of different opportunity sets. And we optimize the assets that BP has. And we will continue to do that going forward.
Carol Howle: We've also supported working with refineries and with our oil and gas business, as you say. I think what we've seen is a real sort of change in, one, the BP portfolio. We've got such a rich set of opportunities at higher sort of levels of return, which means we need to make really difficult choices. So that's what you will have seen in Q4 around the Archaea impairment, for example. We're making difficult choices in terms of where we're putting our CapEx going forward because we see returns elsewhere. I would say we don't guide forward on the 4%. But I would say I think the capability and the experience within the team has meant that we can deliver that through a number of different opportunity sets. And we optimize the assets that BP has. And we will continue to do that going forward.
We've also supported our.
Working with refineries and without oil and gas business as you say I think what we say in Israel's a change in one the BP portfolio, we've got such a rich set of opportunities at Hyatt sort of levels of return, which means we need to make really difficult choices. So that's what you would have seen in <unk>.
Q4 around the RKO impairment for example, we're making difficult choices in terms of where we're placing our capex going forward because we see returns elsewhere I would say, we don't guide forward on.
The 4%.
But I would say I think the capability and the experience within the team has meant that we can deliver that through a number of different opportunity sets and we optimize the assets that <unk> has and will continue to do that going forward.
Okay. Thanks, Irene we don't have any.
Craig Marshall: OK, thanks, Irene. We don't have any further questions online. So we'll stay in the room. Is that Alastair Syme?
Craig Marshall: OK, thanks, Irene. We don't have any further questions online. So we'll stay in the room. Is that Alastair Syme?
Further questions online so stay in the room.
Is that all time.
Alright, Alastair Syme at Citi emotional Hamas missile.
Lucas Herrmann: All right. Alastair Syme. I'm not sure who I'm asking this to. Can I ask about the Mona project? I appreciate it's under JERA Nex. But the decision to go forward on that development to leave Morgan, what's the sort of the timeline? And how should we think about the financials, given that you didn't get anything under the AR7 auction?
Alastair Syme: All right. Alastair Syme. I'm not sure who I'm asking this to. Can I ask about the Mona project? I appreciate it's under JERA Nex. But the decision to go forward on that development to leave Morgan, what's the sort of the timeline? And how should we think about the financials, given that you didn't get anything under the AR7 auction?
Can I ask about the the Mone <unk> project I appreciate it's on the BP Zero next but the decision to go forward on that development to leave Morgan.
You to watch the sort of the timeline and how should we think about the financials given that you didn't.
Getting into the off seven auction.
Carol Howle: So I want to say that that is a JV discussion. So in terms of that decision to move forward with Mona, so I mean, I think it is a question for the JV. One thing I would say is, from our perspective, we're not looking at any increase or update in terms of what we said previously with regard to capital allocation to that JV. So that just remains consistent from what we've said previously, in case that was behind the question.
Carol Howle: So I want to say that that is a JV discussion. So in terms of that decision to move forward with Mona, so I mean, I think it is a question for the JV. One thing I would say is, from our perspective, we're not looking at any increase or update in terms of what we said previously with regard to capital allocation to that JV. So that just remains consistent from what we've said previously, in case that was behind the question.
So I would say that that is a JV discussion.
So in terms of that decision to move forward with none of them. So I mean I think it is a question for the JV One thing I would say as you know from Apple's perspective, we're not looking at any increase or update in terms of what we said previously with regard to capital allocation to that JV. So that just remains consistent from what we've said previously.
In case that was behind the question.
Craig Marshall: Thanks, Alastair. No questions on this side. We're going round two then. Lydia at the front, please.
Craig Marshall: Thanks, Alastair. No questions on this side. We're going round two then. Lydia at the front, please.
Thanks Alastair.
Sure.
I no questions on this side I'm going to round two than linear at the front. Please.
Thanks is lydian again from Barclays I haven't asked a question about technology and AI and in particular is one of my favorite topics that and when you think about sort of what you can achieve on the progress <unk> made in AI and it wasn't just because they'll be recovery rates, etc.
Irene Himona: Thanks. It's Lydia again from Barclays. I haven't asked a question about technology and AI, in particular. It's one of my favorite topics. But when you think about sort of what you can achieve, the progress that is made on AI, and it won't just be cost. It'll be recovery rates, et cetera. Can you just share your thoughts on the agentic AI side?
Lydia Rainforth: Thanks. It's Lydia again from Barclays. I haven't asked a question about technology and AI, in particular. It's one of my favorite topics. But when you think about sort of what you can achieve, the progress that is made on AI, and it won't just be cost. It'll be recovery rates, et cetera. Can you just share your thoughts on the agentic AI side?
Cause can you just first just share your thoughts on the agenda II side.
Gordon Birrell: Yep. Let me have a go at that. One of the things I'm particularly excited about is what we call Wells Advisor. So BP's been drilling wells for well over 100 years. So you can imagine the amount of learning, data, and knowledge that we have in our system. And that's a variety of systems. So we've now created an AI system where our well site leaders, the people on the rig who are making day-to-day decisions, facing problems, problem solving, they can access all that data through Wells Advisor, which is using AI as a platform. So there's huge benefits of that. The other one that we're doing right now, again, in the wells, I've got examples in every discipline. But I like the wells ones, I have to say.
Gordon Birrell: Yep. Let me have a go at that. One of the things I'm particularly excited about is what we call Wells Advisor. So BP's been drilling wells for well over 100 years. So you can imagine the amount of learning, data, and knowledge that we have in our system. And that's a variety of systems. So we've now created an AI system where our well site leaders, the people on the rig who are making day-to-day decisions, facing problems, problem solving, they can access all that data through Wells Advisor, which is using AI as a platform. So there's huge benefits of that. The other one that we're doing right now, again, in the wells, I've got examples in every discipline. But I like the wells ones, I have to say.
Let me have a good that the.
One of the things I'm, particularly excited about is what we call wells advisor. So VP has been drilling wells for well over 100 years. So you can imagine the amount of learnings data knowledge that we have in our system and that's a variety of systems. So we've now created an AI system, where well site leaders the people on the rig.
We will be making day to day decisions facing problems problem solving they can access all of that data.
Through wealth advisor, which is a which is using AI.
As a platform so it isn't a huge benefits of the the other one that we're doing right now again in the wells I've got examples in every discipline, but I like the wells ones I have to say the.
Gordon Birrell: The kick detection, we monitor all our wells with an extra pair of eyes now from monitoring centers in Houston and in Sunbury. We've put AI algorithms in place that will catch small kicks, tiny kicks that the human may not detect on the rig floor. We're picking them up using AI. With 90% success rate, we can detect small kicks within roughly a minute. That allows us to react before it becomes a problem, before you have to shut down drilling, before you have to shut the well and circulate out that pressure. It allows you to react with weight on bit and mud weight. It just allows the drilling to happen more smoothly. So there's lots of examples where we're doing that across every technical discipline in my shop with Emeka and his team's help, of course, with their digital expertise, their AI expertise.
Gordon Birrell: The kick detection, we monitor all our wells with an extra pair of eyes now from monitoring centers in Houston and in Sunbury. We've put AI algorithms in place that will catch small kicks, tiny kicks that the human may not detect on the rig floor. We're picking them up using AI. With 90% success rate, we can detect small kicks within roughly a minute. That allows us to react before it becomes a problem, before you have to shut down drilling, before you have to shut the well and circulate out that pressure. It allows you to react with weight on bit and mud weight. It just allows the drilling to happen more smoothly. So there's lots of examples where we're doing that across every technical discipline in my shop with Emeka and his team's help, of course, with their digital expertise, their AI expertise.
It kicked detection you know, we we monitor all our wells with a with an extra pair of eyes no for monitoring centers in Houston and in Sunbury.
And we've put AI algorithms in place that will help small kicks tiny kicks at the human may not detect on the rig floor, we're picking them up using AI and with 90% success rate, we can detect and small kicks within roughly a minute and that allows us to react before it becomes a <unk>.
Problem before you have to shut down drilling.
All you have to shut the well in and certainly that pressure. It allows you to react with the weight on bit and mud weight.
And it just allows the drilling to Hoffman and more smoothly. So there's lots of examples where we're doing that across every technical discipline in my shop with Michael and his team's help of course with a digital expertise that AIA expertise and so I think every function across the company has examples like that.
Gordon Birrell: So I think every function across the company has examples like that, Lydia.
Gordon Birrell: So I think every function across the company has examples like that, Lydia.
Super Great, we'll go and stay on the site, who definitely of the keenest.
Craig Marshall: Super great. We'll stay on this side, who definitely are the keenest, with Lucas there, please.
Craig Marshall: Super great. We'll stay on this side, who definitely are the keenest, with Lucas there, please.
With Lucas there please.
Thanks, very much Craig it's lucasfilm from BNP.
Lucas Herrmann: Thanks very much, Craig. It's Lucas Herrmann from BNP. One perhaps, well, for you, Carol, or you, well, Gordon equally. I'm listening to what you're saying. And there's a very rightful targeting of balance sheet, et cetera, and search to improve the balance sheet. And in doing that, obviously, you're taking away from equity holders in the near term. And you're asking them to stay with you. And you're not giving equity holders a date whereby they might expect to see greater distributions from the company in line with many of your peers. So effectively, I'm sitting here. And I'm thinking, well, what's the investment case around this stock? And increasingly, it comes back to, obviously, improvement, much of which, though, you've already stated and indicated. But it comes back to what you're trying to emphasize, I think, is growth.
Lucas Herrmann: Thanks very much, Craig. It's Lucas Herrmann from BNP. One perhaps, well, for you, Carol, or you, well, Gordon equally. I'm listening to what you're saying. And there's a very rightful targeting of balance sheet, et cetera, and search to improve the balance sheet. And in doing that, obviously, you're taking away from equity holders in the near term. And you're asking them to stay with you. And you're not giving equity holders a date whereby they might expect to see greater distributions from the company in line with many of your peers. So effectively, I'm sitting here. And I'm thinking, well, what's the investment case around this stock? And increasingly, it comes back to, obviously, improvement, much of which, though, you've already stated and indicated. But it comes back to what you're trying to emphasize, I think, is growth.
One parent well.
So you can roll or U K, well Gordon equally it's I'm listening to what you're saying and there's a very rightful.
Targeting a balance sheets et cetera, and search to improve the balance sheet.
And in doing that obviously, you're taking away from equity holders in the near term and you're asking them to stay with you and you are not giving equity holders of data whereby they might expect to see greater distributions from the company in line with many of your peers, so effectively I'm sitting here and I'm thinking well, what's the investment case around the stock.
And the increase.
Increasingly it comes back to obviously improvement much of which though you've already station indicated when it comes back to what you're trying to emphasize I think it is gross.
Lucas Herrmann: OK, if I'm going to believe in growth and the growth opportunity of your portfolio, what should I expect in terms of the continued release from you, demonstration from you around your opportunity set, and why it is that I should accord a higher multiple, effectively, to this stock and your business going forwards, given that in the context of immediate return, I'm not expecting very much over the course of the next 2 to 3 years, given the way you've defined and thought about balance sheet? I think there is a question in there somewhere. It's asking you, effectively, please tell me what the investment case for BP is, whether that's an appropriate definition. But more importantly, is how do you see the investment case for BP? Or should we just be waiting for Meg to arrive? I know you've got your own views.
And okay, if I'm going to believe in growth on.
Lucas Herrmann: OK, if I'm going to believe in growth and the growth opportunity of your portfolio, what should I expect in terms of the continued release from you, demonstration from you around your opportunity set, and why it is that I should accord a higher multiple, effectively, to this stock and your business going forwards, given that in the context of immediate return, I'm not expecting very much over the course of the next 2 to 3 years, given the way you've defined and thought about balance sheet? I think there is a question in there somewhere. It's asking you, effectively, please tell me what the investment case for BP is, whether that's an appropriate definition. But more importantly, is how do you see the investment case for BP? Or should we just be waiting for Meg to arrive? I know you've got your own views.
On the growth opportunities of your portfolio, what should I expect in terms of the continued release from you demonstration from you around your opportunity set.
It is but I should accord, Ohio multiple effectively to the stock.
Your business going forward given that in the context of immediate return I'm Rudy.
I'm not expecting very much over the course of the next two to three years given the way you've defined the thoughts about balance sheet. I think there is a question in there somewhere exhaust you effectively. Please tell me what the investment case with BP is whether that's an appropriate definition, but more importantly, how do you see the investment case with BP or should be.
Just be waiting for Meg to arrive.
And I know you've put your own views, but.
Lucas Herrmann: But at that point, you formulate as a group. So I'm not trying to insult anyone. I'm just trying to understand.
Lucas Herrmann: But at that point, you formulate as a group. So I'm not trying to insult anyone. I'm just trying to understand.
At that point, you're fully utilized as a group.
So I'm not trying to insult anybody I'm, just trying to understand that and I completely understand and let me just start on that last night, because I think what is clear is that the board and the leadership team. We're very clear that the strategic direction is right in terms of what we laid out in February.
Carol Howle: No, no, completely understand. And look, let me just start on that last bit because I think what is clear, the board and the leadership team, we're very clear that the strategic direction is right in terms of what we laid out in February. So we are focused on delivering that. We're focused on delivering the primary targets. We know that there's more opportunity there. And that is a good thing because we know that there is more that we can deliver. So we're focused on improving performance, improving competitiveness, and, of course, doing all of that safely. So very much focused on that. We're in action. That doesn't change when Meg comes because that is our strategic direction. And I'll let Gordon speak sort of more deeply to the hopper.
Carol Howle: No, no, completely understand. And look, let me just start on that last bit because I think what is clear, the board and the leadership team, we're very clear that the strategic direction is right in terms of what we laid out in February. So we are focused on delivering that. We're focused on delivering the primary targets. We know that there's more opportunity there. And that is a good thing because we know that there is more that we can deliver. So we're focused on improving performance, improving competitiveness, and, of course, doing all of that safely. So very much focused on that. We're in action. That doesn't change when Meg comes because that is our strategic direction. And I'll let Gordon speak sort of more deeply to the hopper.
And so we are focused on delivering that we're focused on delivering the primary targets. We know that there's more opportunity there and that is a good thing because we know that there is more that we can deliver so we're focused on improving performance improving competitiveness and of course doing all of that Safeway. So very much focused on that we're in action.
That doesn't change when they comes in because that is our strategic direction in terms of that and I'll, let Gordon and speak sort of more deeply to the hopper, but we do have and the team has created the best set of opportunities from an upstream exploration access perspective that we see.
Carol Howle: But we do have, and the team has created, the best set of opportunities from an upstream exploration and access perspective that we've seen for a long time. So there is a lot of opportunity set there. As Kate said, it's created at the drill bit. We're not looking at going and buying expensive barrels in order to increase our reserves or to look at the sort of resilience and lengths of those reserves. So we believe we've got a differentiated portfolio versus our competitors. And our challenge is deciding how we access it, what's the best value for our shareholders, and delivering the returns and making sure that we actually deliver on the major project execution success that we've seen previously. We brought these projects online last year, 5 ahead of schedule. That is significant capability.
Carol Howle: But we do have, and the team has created, the best set of opportunities from an upstream exploration and access perspective that we've seen for a long time. So there is a lot of opportunity set there. As Kate said, it's created at the drill bit. We're not looking at going and buying expensive barrels in order to increase our reserves or to look at the sort of resilience and lengths of those reserves. So we believe we've got a differentiated portfolio versus our competitors. And our challenge is deciding how we access it, what's the best value for our shareholders, and delivering the returns and making sure that we actually deliver on the major project execution success that we've seen previously. We brought these projects online last year, 5 ahead of schedule. That is significant capability.
Seen sir.
Long time, so there is a lot of opportunity set there as Kate said, it's created at the drill that we're not looking at going and buying expensive barrels in order to increase our reserves or to look at.
Is that the sort of resilience and length of those reserves. So we believe we've got a differentiated portfolio.
Versus our competitors and our challenge is deciding how we access it what's the best value for our shareholders and delivering the returns and making sure that we actually deliver on and the major project execution success that we've seen previously we brought these projects online law.
Last year five ahead of schedule that is significant capability as Gordon says IPA benchmarking best in class for bringing projects up and keeping them up. So these are all things from a forward profile perspective that you can look to and from day paid delivery, but Gordon do you want to know thank you.
Carol Howle: As Gordon says, IPA benchmarking, best in class for bringing projects up and keeping them up. So these are all things from a forward profile perspective that you can look to from BP delivery. But Gordon, do you want to?
Carol Howle: As Gordon says, IPA benchmarking, best in class for bringing projects up and keeping them up. So these are all things from a forward profile perspective that you can look to from BP delivery. But Gordon, do you want to?
Lucas Herrmann: No, thank you. I'll just emphasize a couple of things. Lucas, we'd offer you reasons to believe short term, medium term, long term. Short term, the base is strong. What's online today, we're managing decline within that 3% to 5%. The infill program that we have, that short term barrels that pays the bills, strong, rigs running very efficiently, 70% of the wells that we drill are first and second quartile. So short term, you've got an efficient machine that's bringing resource forward into production, into cash. Medium term, I would say you've got BPX growing to 650,000 barrels per day of high quality production, average returns across BPX at the moment, 45% IRR at $65 WTI, $3.50 Henry Hub. And then the Paleogene comes on in 2029 through 2030 and will ramp up. So that's a medium term. We've got strong medium term.
Gordon Birrell: No, thank you. I'll just emphasize a couple of things. Lucas, we'd offer you reasons to believe short term, medium term, long term. Short term, the base is strong. What's online today, we're managing decline within that 3% to 5%. The infill program that we have, that short term barrels that pays the bills, strong, rigs running very efficiently, 70% of the wells that we drill are first and second quartile. So short term, you've got an efficient machine that's bringing resource forward into production, into cash. Medium term, I would say you've got BPX growing to 650,000 barrels per day of high quality production, average returns across BPX at the moment, 45% IRR at $65 WTI, $3.50 Henry Hub. And then the Paleogene comes on in 2029 through 2030 and will ramp up. So that's a medium term. We've got strong medium term.
I'll just emphasize a couple of things and Lucas.
For you to believe short term medium term long term short term the base a strong what's online today, we're managing decline within that 3% to 5%. The infill program that we're half that short term borrowers that pays the bills strong rigs running very efficiently and you have 70% of the wells that we drill are part of the same.
Quarter for short term you were inefficient machine.
This is this bringing resorts for bringing resource forward into production into kosh medium term I would say you've got BP X growing to 650000 barrels per day of high quality and production average returns across bps at the moment, 45% IRR at $65 <unk>.
T I, a $3 50, Henry hub and then the Paleogene comes on in 29 through 30 and will ramp up. So that's immediate term ago strong medium term and then longer term you've got when I see longer term early twenties thirties I hope.
Lucas Herrmann: Then longer term, you've got when I say longer term, early 2030s, I hope, we'll bring on Bumerangue. The azure fields will start coming on in Namibia. There's more to go in Angola. And there'll be much more Paleogene to come on as well. We've got 10 billion barrels of oil in place in the Paleogene. The first two projects, Kaskida, Tiber, Guadalupe, are only developing about 600 million. So there's a huge amount of running room in the Paleogene longer term. So there's a short term case, medium term case, and long term case that I believe are reasons to believe.
Gordon Birrell: Then longer term, you've got when I say longer term, early 2030s, I hope, we'll bring on Bumerangue. The azure fields will start coming on in Namibia. There's more to go in Angola. And there'll be much more Paleogene to come on as well. We've got 10 billion barrels of oil in place in the Paleogene. The first two projects, Kaskida, Tiber, Guadalupe, are only developing about 600 million. So there's a huge amount of running room in the Paleogene longer term. So there's a short term case, medium term case, and long term case that I believe are reasons to believe.
We'll bring on Boomerang Xu.
The zoo fields will start coming on and in Oh.
Maybe Ah Ah Theres more to go in Angola, and it'll be much more appealing Jim to come on as well, but with 10 billion barrels of oil in place in the Paleogene. The first projects Koskela Tiber Guadalupe are only developing about 600 million. So there's a huge amount of running room in the pillaging longer term. So short term case medium term case.
And long term case that I believe are reasons to believe.
Okay.
Craig Marshall: Thanks, Lucas. I'd just come back to what we said earlier, the simpler, stronger, more valuable BP. The simpler piece is the action we're taking on the portfolio. These are the right decisions to simplify the portfolio. It creates optionality. The stronger piece, which is about the cost we're taking out of the system, the opportunity there that we've got, and also around really focusing that portfolio and the optionality that I think Gordon talks about. And ultimately, that more valuable BP is the piece around what can we do in combination as we try to drive that simplification and strengthening the company. So I think that real focusing, discipline is something. Of course, we run the company not just for the next week, the next quarter. These are around long term value optimization decisions. And I think we feel like they're the right things to be taking.
Craig Marshall: Thanks, Lucas. I'd just come back to what we said earlier, the simpler, stronger, more valuable BP. The simpler piece is the action we're taking on the portfolio. These are the right decisions to simplify the portfolio. It creates optionality. The stronger piece, which is about the cost we're taking out of the system, the opportunity there that we've got, and also around really focusing that portfolio and the optionality that I think Gordon talks about. And ultimately, that more valuable BP is the piece around what can we do in combination as we try to drive that simplification and strengthening the company. So I think that real focusing, discipline is something. Of course, we run the company not just for the next week, the next quarter. These are around long term value optimization decisions. And I think we feel like they're the right things to be taking.
Thanks, Lucas and I've just come back to what we said earlier you know the simpler stronger more valuable be paid the simpler pieces. The action we've taken on the portfolio. These are the right decisions to simplify the portfolio. It creates optionality the stronger piece, which is about the costs were taken out of the system. The opportunity there that we've got and also <unk>.
Around really focusing that portfolio optionality that I think Gordon talks about and ultimately that more valuable BP is the piece around what can we do in combination as we try to drive that simplification and strengthen the company. So I think that real focusing discipline is something and of course, we run the company.
<unk> not just for the next week the next quarter or these are around long term value optimization decisions and I think we.
We feel like they're the right things to be taking so I think come back to that simpler stronger more valuable piece.
Craig Marshall: So, I think, come back to that simpler, stronger, more valuable piece. Yes, Kim, sorry, I had a question from you.
Craig Marshall: So, I think, come back to that simpler, stronger, more valuable piece. Yes, Kim, sorry, I had a question from you.
Maybe yes, Kim sorry another.
Question from you.
Yes.
Thank you Kim first Jay from HSBC, just sent a revival of interest in the Mena region from ice season of course D. P was sort of early in this trend I Wonder if you could give us an update on early resource Act access and early stage activity in places like Libya, Iraq Kuwait.
Kate Thomson: Thank you. Kim Fustier from HSBC. There's been a revival of interest in the MENA region from IOCs. And of course, BP was sort of early in this trend. I wonder if you could give us an update on early resource access and early stage activity in places like Libya, Iraq, Kuwait. And also maybe just a word about your exploration plans in the Gulf of Mexico, where I think you accessed a lot of acreage in the recent licensing round.
Kim Fustier: Thank you. Kim Fustier from HSBC. There's been a revival of interest in the MENA region from IOCs. And of course, BP was sort of early in this trend. I wonder if you could give us an update on early resource access and early stage activity in places like Libya, Iraq, Kuwait. And also maybe just a word about your exploration plans in the Gulf of Mexico, where I think you accessed a lot of acreage in the recent licensing round.
And also maybe just a word about your exploration plans in the Gulf of Mexico, where I think he asked a lot of acreage and the recent licensing round.
Lucas Herrmann: Yeah, let me just go to the Middle East first, Kim. So there is actually an exploration well we're drilling right now, Matsola, offshore Libya, that our exploration team is very excited by. It's probably the most watched exploration well in the industry right now. We spotted the well in January. It's a relatively short well. So we'll know the result of that one relatively quickly. And then, of course, in Iraq, we've been in Rumaila for many years. And that's been a tremendous success story. We've managed to hold production flat in Rumaila for many, many years. That led us to be invited into Kirkuk. Within the contract area, 3 billion barrels oil in place. In the bigger area, likely to be 20 billion barrels in place. So huge resources there. So we've made huge progress.
Gordon Birrell: Yeah, let me just go to the Middle East first, Kim. So there is actually an exploration well we're drilling right now, Matsola, offshore Libya, that our exploration team is very excited by. It's probably the most watched exploration well in the industry right now. We spotted the well in January. It's a relatively short well. So we'll know the result of that one relatively quickly. And then, of course, in Iraq, we've been in Rumaila for many years. And that's been a tremendous success story. We've managed to hold production flat in Rumaila for many, many years. That led us to be invited into Kirkuk. Within the contract area, 3 billion barrels oil in place. In the bigger area, likely to be 20 billion barrels in place. So huge resources there. So we've made huge progress.
Yeah, Let me let me just go to.
The middle East for Kim. So there is also an exploration well, we're drilling right no mazzulla offshore Libya that our exploration team is very excited by itself is probably the most watched exploration well in the industry right know, we spud the well in January is a relatively short well. So we will know the result of that one are relatively rare.
Tivoli quickly and then of course in Iraq, we've been in Rumaila for many years now it's been a tremendous success story with minus the whole production slots.
And in Rumaila for many many years.
That led us to be invited into care Cook within the contract area and 3 billion barrels.
Oil in place and the bigger area likely to be 20 billion barrels in place so a huge resources there.
We are so we've made huge progress and of course, the Abu Dhabi and the P. Five investment program that we've been putting our dollars into along with the partners onshore Abu Dhabi issue is showing up in terms of growth as well so huge amount of growth in our portfolio in the middle East.
Lucas Herrmann: And of course, Abu Dhabi, the P5 investment program that we've been putting our dollars into, along with the partners onshore Abu Dhabi, is showing up in terms of growth as well. So huge amount of growth in our portfolio in the Middle East. Gulf of Mexico exploration program, it's part of reloading the hopper. So our exploration hopper, we've been around the world and actively, like many, many companies, actively reloading our hopper. The Gulf of Mexico, of course, an area that we know very well, been there for many years. And we've reloaded some in the Mesozoic, but mainly in the Paleogene. So that's created even more running room. The next exploration well in the Paleogene will be Conifer, which we'll spud later this year, which could be quite an exciting tie back to Kaskida eventually. So again, that creates longevity on that Paleogene opportunity that we have.
Gordon Birrell: And of course, Abu Dhabi, the P5 investment program that we've been putting our dollars into, along with the partners onshore Abu Dhabi, is showing up in terms of growth as well. So huge amount of growth in our portfolio in the Middle East. Gulf of Mexico exploration program, it's part of reloading the hopper. So our exploration hopper, we've been around the world and actively, like many, many companies, actively reloading our hopper. The Gulf of Mexico, of course, an area that we know very well, been there for many years. And we've reloaded some in the Mesozoic, but mainly in the Paleogene. So that's created even more running room. The next exploration well in the Paleogene will be Conifer, which we'll spud later this year, which could be quite an exciting tie back to Kaskida eventually. So again, that creates longevity on that Paleogene opportunity that we have.
Of our mineral exploration program as part of reloading the Hopper slowed exploration Hopper, we've been around the world and actively like many many companies active actively reloading.
Our hopper the Gulf of America of course, an area that we know very well been there for many years and we've reloaded some in the Miocene, but mainly in the Paleogene.
So that's created even more running room. The next exploration well in the Paleogene will be conifer, which will spud later this year, which could be quite an exciting tie back to koskela. Eventually so again quite creates longevity or not paleogene and opportunity that we have so there's lots of running room in the Gulf of America.
Lucas Herrmann: So there's lots of running room in the Gulf of Mexico, a lot in the Paleogene, still some in the Miocene that we've been producing from historically for many, many years.
Gordon Birrell: So there's lots of running room in the Gulf of Mexico, a lot in the Paleogene, still some in the Miocene that we've been producing from historically for many, many years.
A lot in the field and still some in the Miocene that we've been producing from historically for many many years.
Okay, we'll move over to this side a minute Joe.
Craig Marshall: OK, we'll move over to this side, Maurizio.
Craig Marshall: OK, we'll move over to this side, Maurizio.
And Mohit structurally from Quilter Cheviot investment management.
Paul Cheng: Maurizio Carulli from Quilter Cheviot Investment Management. First of all, well done for having cut the buyback. It was the right thing to do. And probably you even managed to do at the right time. The question is, past year, there were three important new appointments at board level. Albert Manifold as the new chair, and the former CFO of Shell, and the former CEO of Devon with strong oil experience. It's possible, for what you can say, to get a sense of how these changes are filtered through the senior management day-to-day business. And ideally, if it is possible to get an answer from each of you three.
Maurizio Carulli: Maurizio Carulli from Quilter Cheviot Investment Management. First of all, well done for having cut the buyback. It was the right thing to do. And probably you even managed to do at the right time. The question is, past year, there were three important new appointments at board level. Albert Manifold as the new chair, and the former CFO of Shell, and the former CEO of Devon with strong oil experience. It's possible, for what you can say, to get a sense of how these changes are filtered through the senior management day-to-day business. And ideally, if it is possible to get an answer from each of you three.
Well done for having cut.
Cut to the buyback it was that I think could be and probably you even manage to do what the right time.
Question <unk>.
You pass theater that we're free important appointment to at board level.
Albert manifold does video chat and the former CFO of shell and therefore see your of Dave on Oh, We've got you know strong.
All you experience it is possible for what you can say it's to get a sense of how these changes are fielded filter free the senior management.
A big Big business and <unk>.
Really if you're supposed to should move to get an answer from each of your fleet.
[laughter] checking out high let so am I mean, the first thing I'd say is yeah. Albert is a non executive chairman. So he is responsible for oversight of our delivery and our strategic direction and we as the leadership team in NCI was when that comes in.
Carol Howle: Checking our homework. So I mean, the first thing I'd say is Albert is our non-executive chairman. So he's responsible for oversight of our delivery and our strategic direction. And we, as the leadership team and CEO, when Meg comes in, are responsible for the day-to-day running of the company. So we do have many interactions, as you can manage, with the board on that basis in terms of sharing with them progress against strategic milestones. And in particular, the delivery that we've been talking about here. We talk about also where we are on portfolio and where we believe that we need to get to and why. And we also share with them competitor insights. We share with them benchmarking, how we're looking to continuously improve what we're doing. So having that composition of the board means that we have people who've been in the industry.
Carol Howle: Checking our homework. So I mean, the first thing I'd say is Albert is our non-executive chairman. So he's responsible for oversight of our delivery and our strategic direction. And we, as the leadership team and CEO, when Meg comes in, are responsible for the day-to-day running of the company. So we do have many interactions, as you can manage, with the board on that basis in terms of sharing with them progress against strategic milestones. And in particular, the delivery that we've been talking about here. We talk about also where we are on portfolio and where we believe that we need to get to and why. And we also share with them competitor insights. We share with them benchmarking, how we're looking to continuously improve what we're doing. So having that composition of the board means that we have people who've been in the industry.
Are responsible for the day to day running of the company.
So we do have many interactions as you can manage with board on that basis incentive sharing with our progress against strategic milestones and in particular the delivery that we've been talking about here. We talk about also where we are on portfolio and where we believe that we need to get to and why.
And we also shared with them competitor insights, we've shared with them benchmarking, how we're looking to continuously improve what we're doing so having that composition of the board means that we have people who've been in the industry. We have people who are outside of the industry challenges in different ways as well from a technology perspective, and I think that just helps us generate.
Carol Howle: We have people who are outside of the industry who challenge us in different ways as well from a technology perspective. And I think that just helps us generate more ideation and thinking. And we challenge ourselves from that perspective. So the intent there is to make even better decisions with the use of that capability set. How do you feel about it, Kate?
Carol Howle: We have people who are outside of the industry who challenge us in different ways as well from a technology perspective. And I think that just helps us generate more ideation and thinking. And we challenge ourselves from that perspective. So the intent there is to make even better decisions with the use of that capability set. How do you feel about it, Kate?
And you know more ideation, and thinking and we challenge ourselves from that perspective. So the intent there is to make even better decisions with the use of that capability set.
How do you feel about it.
Sure that's three questions in one but 10.
Kate Thomson: Sure, that's three questions in one. But look, I've been on the board now for two years. And my reflections are during that time, I think the conversations in the boardroom have got better and better. Albert coming in as chairman, he's been incredibly supportive. He brings a different style. And that freshness is great. And I think we welcome it. It's great to have a different set of eyes coming in to ask questions. And it's really important in any area of any business that you have a freshness coming in and an ability to look at from the outside and ask the right questions. So I welcome that. I particularly welcome the number of ex-CFOs I have around me. That's a real treat. And then I think the addition of David Hager, as you know, deep upstream experience, particularly on the onshore.
Kate Thomson: Sure, that's three questions in one. But look, I've been on the board now for two years. And my reflections are during that time, I think the conversations in the boardroom have got better and better. Albert coming in as chairman, he's been incredibly supportive. He brings a different style. And that freshness is great. And I think we welcome it. It's great to have a different set of eyes coming in to ask questions. And it's really important in any area of any business that you have a freshness coming in and an ability to look at from the outside and ask the right questions. So I welcome that. I particularly welcome the number of ex-CFOs I have around me. That's a real treat. And then I think the addition of David Hager, as you know, deep upstream experience, particularly on the onshore.
Yeah.
I've been on the board and ask T is and my reflections on during that time I think the conversations in the boardroom has got better and better.
Albert coming in as chairman he's been incredibly supportive I brings a different style and that that that freshness is great and I think we will come out it's great to have a different set of eyes coming in to ask questions on it it's really important in any area of any business that you have a freshness coming in and then the.
Looking from the outside in and ask the right question, sorry, I, well cannot I, particularly welcome minimal, Quebec Cfos I have around May I pass and that's a real trade and then I think the addition of Dave Hager as you know the upstream experienced particularly on the onshore.
Kate Thomson: Again, we have retirements that will continue to roll through as a board. And it's important that the board is thinking ahead of those to make sure that the succession is smooth. And that's a lot of what you've also seen happening in the boardroom. But I think the board are incredibly supportive of management. I think we have really good quality conversations and debates. It's not just a monologue and presentation. It's a conversation, which I think is incredibly helpful.
Kate Thomson: Again, we have retirements that will continue to roll through as a board. And it's important that the board is thinking ahead of those to make sure that the succession is smooth. And that's a lot of what you've also seen happening in the boardroom. But I think the board are incredibly supportive of management. I think we have really good quality conversations and debates. It's not just a monologue and presentation. It's a conversation, which I think is incredibly helpful.
Again, we have we have retirements that will continue to roll through as the board and it's important that the borders.
Thinking ahead of that is to make sure that the succession is smooth and that's a lot of what you hope they stay and happening in the boardroom, but I think the board are incredibly supportive of management I think we have a really good quality conversations and debate, it's not just a a a a monologue and presentation. That's a conversation, which I think is incredibly helpful.
But if you just I'll give you a very brief answer I found Dave Hager and Simon Henry a tremendous challenge Theyre very experienced oil and gas people of course their ability to Charlie's William Linton myself in the matter of oil and gas investments performance is actually tremendous now we'd call out melody miles as well <unk> been around a few.
Lucas Herrmann: Yeah, Maurizio, I'll give you a very brief answer. I found David Hager and Simon Henry a tremendous challenge. They're very experienced oil and gas people, of course. Their ability to challenge William Lin and myself in the matter of oil and gas investment performance is actually tremendous. Now, we'd call out Melody Meyer as well. Melody's been around a few years. And her challenge on safety, frankly, has made us a better company. And then, of course, Albert is value driven. And we like that.
Gordon Birrell: Yeah, Maurizio, I'll give you a very brief answer. I found David Hager and Simon Henry a tremendous challenge. They're very experienced oil and gas people, of course. Their ability to challenge William Lin and myself in the matter of oil and gas investment performance is actually tremendous. Now, we'd call out Melody Meyer as well. Melody's been around a few years. And her challenge on safety, frankly, has made us a better company. And then, of course, Albert is value driven. And we like that.
And her challenge on safety frankly has made US a better company and then of course Alba is volume driven and we like that.
Alejandro Daza: Thank you.
Maurizio Carulli: Thank you.
Thank you.
Craig Marshall: Thanks, Maurizio. Yes, Josh. And then we'll come back to the phone.
Craig Marshall: Thanks, Maurizio. Yes, Josh. And then we'll come back to the phone.
Thanks Ritu.
Yes, Josh and then we'll come back to the phone.
Thank you Josh Stone again from UBS I wanted to ask you about your integrated model because in the past and it was challenged you Matt you've always said lots of value and trading we weren't sort of entertain splitting up parts of the business.
Biraj Borkhataria: Thank you. Josh Stone again from UBS. I wanted to ask you about your integrated model. Because in the past, when anyone's challenged you on that, you've always said lots of value in trading. We won't sort of entertain splitting up parts of the business. But yeah, if we look at the last sort of year, it feels like there's been an awful lot of oil and gas or sort of satellite ventures set up off sort of the consolidated parent. And you yourselves have done similar things. I think about your offshore wind venture. It sounds like you're doing a similar thing on Lightsource bp, maybe also on Kirkuk. So when you think about the potential for maybe doing more transactions like this and to unlock value particularly from your oil and gas business, in particular, I'm thinking about bpx. Because you talked about some particularly attractive returns there.
Joshua Stone: Thank you. Josh Stone again from UBS. I wanted to ask you about your integrated model. Because in the past, when anyone's challenged you on that, you've always said lots of value in trading. We won't sort of entertain splitting up parts of the business. But yeah, if we look at the last sort of year, it feels like there's been an awful lot of oil and gas or sort of satellite ventures set up off sort of the consolidated parent. And you yourselves have done similar things. I think about your offshore wind venture. It sounds like you're doing a similar thing on Lightsource bp, maybe also on Kirkuk. So when you think about the potential for maybe doing more transactions like this and to unlock value particularly from your oil and gas business, in particular, I'm thinking about bpx. Because you talked about some particularly attractive returns there.
But if we look at the last four years or so there's been an awful lot of oil and gas so sort of satellite potentially set up of sort of the controllers parents and you yourselves have done similar things with when we think about your offshore wind venture it sounds like youre into a similar thing with lights with B P. Maybe it was on car Kirk So when you think about.
The potential for maybe doing more transactions like this since Trump unlock value from your particular in oil and gas business actually but in particular I'm talking about <unk>, because you talked about some particularly attractive returns where is your view still but if you actually saw better on the consolidated business, where actually it could just be one where there's more of a strategic value.
Biraj Borkhataria: Is your view still that BPX is far better on the consolidated business? Or actually, could this be one where there's a lot of strategic value as an independent company? Thanks.
Joshua Stone: Is your view still that BPX is far better on the consolidated business? Or actually, could this be one where there's a lot of strategic value as an independent company? Thanks.
Independent company.
And I think all I'll cover that and then add something on the trading side and then if I'll pass it to Goldman. So I mean, I think first thing to say is you know P. P. Access is a core part of Bay pay it's got a great production forecast rates at the end of the decade I'll I'll, let Gordon talk to that and it's also a great show of onshore expertise that we share across the rest of <unk>.
Carol Howle: I mean, I think I'll come at it and add something on the trading side. And then I'll pass it to Gordon. So I mean, I think first thing we'd say is BPX is a core part of BP. It's got a great production forecast through to the end of the decade. I'll let Gordon talk to that. And it's also a great store of onshore expertise that we share across the rest of BP. So that would be difficult to replicate. In terms of decisions around do we keep it for integrated value or not, the key thing there is what is the best value for BP? So if we do believe that actually it's better value, somebody else will value that position more. And we can actually utilize the proceeds from that into a different opportunity that we value more.
Carol Howle: I mean, I think I'll come at it and add something on the trading side. And then I'll pass it to Gordon. So I mean, I think first thing we'd say is BPX is a core part of BP. It's got a great production forecast through to the end of the decade. I'll let Gordon talk to that. And it's also a great store of onshore expertise that we share across the rest of BP. So that would be difficult to replicate. In terms of decisions around do we keep it for integrated value or not, the key thing there is what is the best value for BP? So if we do believe that actually it's better value, somebody else will value that position more. And we can actually utilize the proceeds from that into a different opportunity that we value more.
<unk> pay so that would be difficult to replicate in terms of decisions around do we keep it for integrated value not the key thing. There is what is the best value for PDP. So if we do believe that actually it's better value somebody else will value that position more and we can actually utilize the proceeds from that into a different opportunity.
City that we value more.
Carol Howle: Even if there is trading value associated with it, we will make the right decision for BP on that basis. Now, that doesn't mean, of course, from the trading perspective, we don't try and negotiate in terms of what those terms are or whether we can keep access in any way, shape, or form for the better value, the additive value. But it's all about, is this the right thing for BP to do strategically? Are we going to get fair market value proceeds in? Can we use those proceeds elsewhere more wisely for something that creates a better opportunity? And does it deliver better value for shareholders? If the answer's yes, if my trading team are listening, then the answer is that's what we'll do. Gordon?
Carol Howle: Even if there is trading value associated with it, we will make the right decision for BP on that basis. Now, that doesn't mean, of course, from the trading perspective, we don't try and negotiate in terms of what those terms are or whether we can keep access in any way, shape, or form for the better value, the additive value. But it's all about, is this the right thing for BP to do strategically? Are we going to get fair market value proceeds in? Can we use those proceeds elsewhere more wisely for something that creates a better opportunity? And does it deliver better value for shareholders? If the answer's yes, if my trading team are listening, then the answer is that's what we'll do. Gordon?
Even if there is trading value associated with it we will make you know make the right decision for BP on that basis now that doesn't mean of course from the trading perspective, we don't try and negotiate in terms of what lies in a terms are or whether we can keep access in any way shape or form for the better value the additive value, but its all about.
Is this the right things that they pay today strategically are we going to get them in a fair market value proceeds and can we use those proceeds elsewhere more why say for something that creates a better opportunity and deliver better value for shareholders. If the answer is yes.
If my trading team are listening then the answer is that's what we'll do.
Yeah, and I would just start just since it's a great question, but bps 7 billion barrels of oil and gas equivalent in place 33 zero Tcf of gas 15, yet to develop it as a core part of BP and that is the integration volume, which I'll finish on but this is such a core part of it.
Lucas Herrmann: Yeah, and I would just add, Josh, it's a great question. But BPX, 7 billion barrels of oil and gas equivalent in place, certified 3.0 TCF of gas, 15 yet to develop. It's a core part of BP. And there is the integration value, which I'll finish on. But it is such a core part of BP. And the performance in the last two years has just come on leaps and bounds. And maybe two metrics that I haven't mentioned already. The NPV per acre that we have is the highest with either 1, 2, or 3 in the three basins that we operate in: the Permian, the Delaware side of the Permian, the Eagle Ford, or the Haynesville, where numbers 1, 2, and 3 are NPV per section. We're first quartile in reserves per foot drilled across the three basins that we're drilling.
Gordon Birrell: Yeah, and I would just add, Josh, it's a great question. But BPX, 7 billion barrels of oil and gas equivalent in place, certified 3.0 TCF of gas, 15 yet to develop. It's a core part of BP. And there is the integration value, which I'll finish on. But it is such a core part of BP. And the performance in the last two years has just come on leaps and bounds. And maybe two metrics that I haven't mentioned already. The NPV per acre that we have is the highest with either 1, 2, or 3 in the three basins that we operate in: the Permian, the Delaware side of the Permian, the Eagle Ford, or the Haynesville, where numbers 1, 2, and 3 are NPV per section. We're first quartile in reserves per foot drilled across the three basins that we're drilling.
And the performance in the last two years has just come on leaps and bounds on cities, maybe two metrics that I have mentioned already the NPV per acre that we have is the highest but either one two or three and the three basins that we operate in the Permian the Delaware.
The Permian the Eagle Ford or the Haynesville, where number one two and three year NPV per section.
First quartile.
Reservist per foot drilled in the across the three basins that we're drilling and most recently in the last six months.
Lucas Herrmann: Most recently, in the last six months, we've been knocking out the park in terms of reserves and production per well from East Texas in the Haynesville. So it's a core part of our company. Performance has improved. It's a key part of our growth. And the team in Denver worked hand in glove with Carol's team to maximize the value that we get from the production. So we like having it in the portfolio. And no intention to sell it off at this point.
Gordon Birrell: Most recently, in the last six months, we've been knocking out the park in terms of reserves and production per well from East Texas in the Haynesville. So it's a core part of our company. Performance has improved. It's a key part of our growth. And the team in Denver worked hand in glove with Carol's team to maximize the value that we get from the production. So we like having it in the portfolio. And no intention to sell it off at this point.
We've been knocking out of the park in terms of.
Reserves on production per well from East, Texas, and the Haynesville. So it's a core part of our company performance has improved as a key part of our growth and the team in Denver work hand in glove with Carlos team to maximize the value that we get from the production. So we like having it in the portfolio.
And no intention to sell off at this point.
Thanks, Gordon will go to the phone.
Craig Marshall: Thanks, Gordon. We'll go to the phone follow-up question with Paul Cheng. Paul.
Craig Marshall: Thanks, Gordon. We'll go to the phone follow-up question with Paul Cheng. Paul.
Follow up question with Paul Cheng Paul.
Thank you Paul Cheng Scotiabank.
Irene Himona: Thank you. Paul Cheng, Scotiabank. Carol, I mean, there's a little bit of the other side of the question of what Josh just asked. On one hand, I think you guys were saying that you want to create a simpler and streamlined operation of BP. And on the other hand, from time to time, that you have formed joint venture, whether it's in Angola, in Norway, and now that after the sales of Castrol, and I think we all have seen from history, joint venture maybe is great in day one. But over time, become very difficult to manage and complicated the operation and your decision making. And so how do you balance the two objectives?
Paul Cheng: Thank you. Paul Cheng, Scotiabank. Carol, I mean, there's a little bit of the other side of the question of what Josh just asked. On one hand, I think you guys were saying that you want to create a simpler and streamlined operation of BP. And on the other hand, from time to time, that you have formed joint venture, whether it's in Angola, in Norway, and now that after the sales of Castrol, and I think we all have seen from history, joint venture maybe is great in day one. But over time, become very difficult to manage and complicated the operation and your decision making. And so how do you balance the two objectives?
I mean, there's no.
You paid off the other side of the question of what George just sauce.
On one hand, I think you guys were saying that you want to create a simply on steam though your operational B P.
And on the other hand that from time to time that you would have formed joint venture.
What they use in Angola, and Norway and now after the sales of cultural and I think we all have.
You have seen from history joint venture may be as great in day, one, but over time become very difficult to manage and complicated the operation and your decision making.
So how you balance the two.
Two our objective.
So I think Paul let me start and then I'll pass it to the same so we balance that in terms of what we think is going to create the best societies that they pay.
Carol Howle: So I think, Paul, let me start. And then I'll pass it to the team. So we balance it in terms of what do we think is going to create the best value for BP? What's the best opportunity in the market? And then how can we execute it in the most efficient way? And we've got a number of these JVs that we've participated in. And we've learned a lot as well from the JVs that we've participated in over the years. Some of that has been how to improve, or where we need to reduce complexity, or indeed where we've been able to bring learnings into BP and also improve ourselves from that. But the key is around, it's a value conversation that we have. And we will always look to try and minimize complexity, and improve safety and the operational reliability around them.
Carol Howle: So I think, Paul, let me start. And then I'll pass it to the team. So we balance it in terms of what do we think is going to create the best value for BP? What's the best opportunity in the market? And then how can we execute it in the most efficient way? And we've got a number of these JVs that we've participated in. And we've learned a lot as well from the JVs that we've participated in over the years. Some of that has been how to improve, or where we need to reduce complexity, or indeed where we've been able to bring learnings into BP and also improve ourselves from that. But the key is around, it's a value conversation that we have. And we will always look to try and minimize complexity, and improve safety and the operational reliability around them.
What's the best opportunity in the market and then how can we execute it in the most efficient way and you know we've got a number of these JV that we've participated in and we've learned a lot as well from the JV that we've participated in over the years. Some of that has been how to improve them or where we need to reduce complexity or indeed.
Where we've been able to bring learnings into base pay and also improve ourselves from that but the key is around it's a value and conversation that we have and we will always look to try and minimize complexity and improve safety and and the operational reliability around them, but we do have a lot of experience in the.
Carol Howle: But we do have a lot of experience in the area, both for JVs that we are no longer in, but also the ones that we're deeply embedded in today.
Carol Howle: But we do have a lot of experience in the area, both for JVs that we are no longer in, but also the ones that we're deeply embedded in today.
Both the JV is that we are no longer in but also the ones that where we think the embedded in today can maybe if I add a couple of other thoughts Paul.
Kate Thomson: Can maybe if I add a couple of other thoughts, Paul. I think the philosophy of being simple is good. And I think complexity can slow you down. And it can make you expensive. And neither are particularly helpful when you're trying to create maximum value. But there are times where you can create unique opportunities to create value through a marriage of assets and partners. And I'd call out Aker BP and Azule, actually. Because I think what you've had there is you've had a symbiosis occur where you've had the right partner with the right marriage of assets put together to create a differential value proposition. It doesn't occur everywhere. But where those circumstances exist, then I think it's appropriate to contemplate stepping into that complexity to create the incremental value. And we see something very similar with Kestrel.
Kate Thomson: Can maybe if I add a couple of other thoughts, Paul. I think the philosophy of being simple is good. And I think complexity can slow you down. And it can make you expensive. And neither are particularly helpful when you're trying to create maximum value. But there are times where you can create unique opportunities to create value through a marriage of assets and partners. And I'd call out Aker BP and Azule, actually. Because I think what you've had there is you've had a symbiosis occur where you've had the right partner with the right marriage of assets put together to create a differential value proposition. It doesn't occur everywhere. But where those circumstances exist, then I think it's appropriate to contemplate stepping into that complexity to create the incremental value. And we see something very similar with Kestrel.
I think that the the philosophy of things simple is good and I think complexity can slow you down and it can make you expense seven neither a particularly helpful. When you're trying to create maximum value, but there are times, where you can create.
And unique opportunities to create value through a marriage of assets and partners and I would I'd call are current as it will actually because I think what you've had there as you've had a symbiosis, okay, where you've had the right. The right marriage of assets put together to create a differential value proposition.
It doesn't kind of everywhere, but where those circumstances exist and I think it's appropriate to contemplate stepping into that complexity to create the incremental value and we see something very similar with Castro as we looked across the entire range of different options, we have on Castro.
Kate Thomson: As we looked across the entire range of different options we had on Kestrel, the transaction that we signed just for Christmas was the transaction that would deliver the most value for us as a company. And I think that's important that we always have that philosophy as our very, very core as we contemplate different structures. But I don't think you can ever rule them out. It's about creating the most value. And that will come down to facts and circumstances.
Kate Thomson: As we looked across the entire range of different options we had on Kestrel, the transaction that we signed just for Christmas was the transaction that would deliver the most value for us as a company. And I think that's important that we always have that philosophy as our very, very core as we contemplate different structures. But I don't think you can ever rule them out. It's about creating the most value. And that will come down to facts and circumstances.
The transaction that we signed just feel Christmas was they they transaction that would deliver the most value for us as a company and I think that's important that we always have that philosophy is all very very cool as we contemplate different structures, but is there anything you can ever rolled them out it's about creating the most value and that will come down facts and circumstances.
Thanks, Karen will come back to the room question that back with maps.
Craig Marshall: Thanks, Kate. We'll come back to the room. Question at the back with Matt.
Craig Marshall: Thanks, Kate. We'll come back to the room. Question at the back with Matt.
Yeah.
Thanks, Matt Lofting J P. M. Just to follow up on the cost reduction program to progress through the 2.9 billion in the last two years has been really good and so it looks like the.
Biraj Borkhataria: Thanks. Matt Lofting, JPM. Just to follow up on the cost reduction program, the progress through the $2.8 billion the last two years has been really good and swift. Looks like, I guess, the target ex-Kestrel implies that the run rate slows over the next two years. I just wondered what's holding you back from being more ambitious and raising that target at this point?
Alejandro Daza: Thanks. Matt Lofting, JPM. Just to follow up on the cost reduction program, the progress through the $2.8 billion the last two years has been really good and swift. Looks like, I guess, the target ex-Kestrel implies that the run rate slows over the next two years. I just wondered what's holding you back from being more ambitious and raising that target at this point?
Yes.
Good ex castrol them implies that the run rate slows over the next two years I just wondered.
What's holding you back from being more ambitious in raising that target at this point.
Oh, yes, why tiny.
Kate Thomson: Shall I take that one?
Kate Thomson: Shall I take that one?
Carol Howle: Yes.
Carol Howle: Yes.
Kate Thomson: Why don't you? Look, we've delivered really well so far against the 4 to 5, 2.8, so well over halfway there. Honestly, on cost, I don't think you're ever done. I mean, ultimately, why are you focused on your cost base? It's to make you the most efficient company and the most competitive company you can be amongst your peer group. That has to be why you're doing this in order to drive incremental cash flow. And we talked about AI earlier. I think a lot of the areas of the company; we are looking hard at AI, both in terms of cost reductions, but also increased productivity. And I think we're just at the early stages of truly understanding what it's going to unlock. I think there are so many opportunities there that we don't yet contemplate.
Kate Thomson: Why don't you? Look, we've delivered really well so far against the 4 to 5, 2.8, so well over halfway there. Honestly, on cost, I don't think you're ever done. I mean, ultimately, why are you focused on your cost base? It's to make you the most efficient company and the most competitive company you can be amongst your peer group. That has to be why you're doing this in order to drive incremental cash flow. And we talked about AI earlier. I think a lot of the areas of the company; we are looking hard at AI, both in terms of cost reductions, but also increased productivity. And I think we're just at the early stages of truly understanding what it's going to unlock. I think there are so many opportunities there that we don't yet contemplate.
And we have wait to live it very well so far again, the fourth five mm 2.8 say well over half way there.
Honestly on cost side anything you're ever done I mean, ultimately why why are you focused on your cost basis to make to them.
The most efficient company in the most competitive company you can be amongst your peer group that has to be why youre doing this in order to drive incremental cash flow.
And we talked about earlier I think a lot of the areas of the company. We are looking hard at both in terms of cost reductions, but also increased productivity and I think we're just at the early stages of truly understanding what it's going to unlock I think there are so many opportunities there that we don't yet contemplate with regard.
Kate Thomson: With regard to upgrading targets, I think there's far more value to be gained by actually demonstrating what we're delivering rather than continually upgrading targets. So measure us on what we do as opposed to the targets that we've put out. And I think you can hear we are really, really focused on this area of efficiency and competitiveness. And we will keep going. We will continue to strive. Our competitors are not standing still. And neither are we.
Kate Thomson: With regard to upgrading targets, I think there's far more value to be gained by actually demonstrating what we're delivering rather than continually upgrading targets. So measure us on what we do as opposed to the targets that we've put out. And I think you can hear we are really, really focused on this area of efficiency and competitiveness. And we will keep going. We will continue to strive. Our competitors are not standing still. And neither are we.
Upgrading targets I think there's far more value to be gained by actually demonstrating what we're delivering rather than continually upgrading targets. They measure us on what we do as opposed to the targets that we've put out and I think you can hear we are really really focused on this on this area of efficiency and competitiveness.
And we will keep going and we will continue to drive our competitors are not standing still.
Right.
Thank you.
Craig Marshall: Thank you. Take one more question from Doug. Then Chris will come to you.
Craig Marshall: Thank you. Take one more question from Doug. Then Chris will come to you.
Take one more question from Doug.
Chris will come to you.
Yeah.
Thank you Kate I'm going to come back to you if I may the.
Biraj Borkhataria: Thank you. Kate, I'm going to come back to you, if I may. Listening to the questions in the room, there still seems, maybe that's a US versus European thing. I'm not sure. But there still seems to be a perception that cash returns and value return are the same thing. And they're obviously not. You have $158 billion enterprise value if we take the capital structure as it sits, as it was at the end of 2025. You've talked about taking that down to $143. That's 2027. Where do you see the optimal capital structure? How do you want to express it as the $7 billion versus the $5 billion of debt holders versus shareholders? Or maybe even in break-even terms, where do you see the optimal capital structure by 2030?
[Analyst]: Thank you. Kate, I'm going to come back to you, if I may. Listening to the questions in the room, there still seems, maybe that's a US versus European thing. I'm not sure. But there still seems to be a perception that cash returns and value return are the same thing. And they're obviously not. You have $158 billion enterprise value if we take the capital structure as it sits, as it was at the end of 2025. You've talked about taking that down to $143. That's 2027. Where do you see the optimal capital structure? How do you want to express it as the $7 billion versus the $5 billion of debt holders versus shareholders? Or maybe even in break-even terms, where do you see the optimal capital structure by 2030?
Listening to the questions in the room, there still seems maybe it's a U S versus European saying I'm not sure, but the soon to be a perception that cash returns and value return at the same thing and they're obviously not.
You have $158 billion enterprise value, if we take the capital structure as it sits.
It was in the 25, you've talked about taking that down to 143.
Post 2027, where do you see the optimal capital structure. However, you want to express it as the 7 billion versus the $5 billion.
Debtholders roche's shareholders or maybe even in brief breakeven terms, where do you see the optimal capital structure by 2030.
Kate Thomson: I think, Doug, that's a work in progress. This is the bit that I feel we need to spend quite a lot of time reflecting on in consideration of how we want to step into these growth options we have ahead of us. I think it's the right question to ask. Come back and ask me again in six months when I've had time to go through all of this with Meg. Prejudging where we should get together as a leadership team once Meg is in role, I think, would be inappropriate. I think there's a moment in time as we, as a new leadership team, come together and take a really good look at where we're taking our company in the next five years and debate that with the board. And then when we're ready, we'll be able to update that. It's absolutely the right question to ask.
Kate Thomson: I think, Doug, that's a work in progress. This is the bit that I feel we need to spend quite a lot of time reflecting on in consideration of how we want to step into these growth options we have ahead of us. I think it's the right question to ask. Come back and ask me again in six months when I've had time to go through all of this with Meg. Prejudging where we should get together as a leadership team once Meg is in role, I think, would be inappropriate. I think there's a moment in time as we, as a new leadership team, come together and take a really good look at where we're taking our company in the next five years and debate that with the board. And then when we're ready, we'll be able to update that. It's absolutely the right question to ask.
I think I think that's it.
A work in progress. This is the best that I feel we need to spend quite a lot of time, reflecting on and.
And consideration of how we want to.
Step into these growth options. We have ahead of us and I think it's the right question to ask come back and ask me again in six months and I've had time to go through all of that said Mangala Prejudging, where we should get together as a leadership team. Once my guess in row I think it would be inappropriate I think Ah Ah moment in time as we as the lead new leadership team.
Together and take a really good look at why we're taking our company in the next five years.
And debate that with the board and then when we're ready we'll be able to update that it's absolutely. The right question to ask and just didn't have a great honesty, Ryan actually still working through that.
Kate Thomson: I just don't have a great answer for you right now, because we're still working through that.
Kate Thomson: I just don't have a great answer for you right now, because we're still working through that.
Thanks, Doug and we're going to take two last questions one from Chris and then one at the back.
Craig Marshall: Thanks, Doug. We're going to take two last questions, one from Chris and then one at the back.
Craig Marshall: Thanks, Doug. We're going to take two last questions, one from Chris and then one at the back.
Christopher Kuplent: Thank you. It's Chris Cooper, again from Bank of America. Mine might be quick. Kate, I realize you've added the $1.5 billion Kestrel leaving your OpEx into your targets. What about your free cash flow target for 2027? It looks like Kestrel did amazingly well this year, running at about a $700 million number or so in terms of free cash flow. Where are you in terms of how much free cash flow you've sold so far? $5 billion achieved in 2025 plus $6 billion announced. And do you therefore feel those are still free cash flow-wise rounding errors before you have to update us on your 2027 free cash flow targets?
Christopher Kuplent: Thank you. It's Chris Cooper, again from Bank of America. Mine might be quick. Kate, I realize you've added the $1.5 billion Kestrel leaving your OpEx into your targets. What about your free cash flow target for 2027? It looks like Kestrel did amazingly well this year, running at about a $700 million number or so in terms of free cash flow. Where are you in terms of how much free cash flow you've sold so far? $5 billion achieved in 2025 plus $6 billion announced. And do you therefore feel those are still free cash flow-wise rounding errors before you have to update us on your 2027 free cash flow targets?
Chris Cooper and again from Bank of America might might be quick kicked I realize you've added the $1 5 billion casserole, leaving your opex into your targets.
What about your free cash flow target for 2027.
It looks like Castro did amazingly well this year running at about 700 million number also in terms of free cash flow.
Where are you in terms of how much free cash flow you've sold so far.
5 billion achieved in 'twenty, five plus 6 billion announced.
And do you therefore feel those are still free cash flow wise rounding errors before you have to update us on your 2027 and free cash flow targets. Yeah. Let me give you a quick answer and maybe we can we can come back to that with the IR team offline Chris.
Kate Thomson: Yeah, let me give you a quick answer. Maybe we can come back to that with the IR team offline, Chris. As I look at the free cash flow targets, of course, they were excluding any divestment on Kestrel. Of course, what we've got is we're taking operating cash flow out from the divestment. But of course, we're also reducing CAPEX. But on the other side, I'm reducing my finance costs. So as I look at the totality of that, it's probably in the order of $200 million. But we have a range around our free cash flow generation. I'm still very confident of us delivering the targets. I see no need to change that right now when I contemplate the impact of the transaction. But we can take you through the bridge if that's helpful.
Kate Thomson: Yeah, let me give you a quick answer. Maybe we can come back to that with the IR team offline, Chris. As I look at the free cash flow targets, of course, they were excluding any divestment on Kestrel. Of course, what we've got is we're taking operating cash flow out from the divestment. But of course, we're also reducing CAPEX. But on the other side, I'm reducing my finance costs. So as I look at the totality of that, it's probably in the order of $200 million. But we have a range around our free cash flow generation. I'm still very confident of us delivering the targets. I see no need to change that right now when I contemplate the impact of the transaction. But we can take you through the bridge if that's helpful.
As I look at the free cash flow targets of course, they were excluding any divestment on Castro.
So what we've got is we're taking operating cash flow out from the divestment, but of course, they're all say, but do you think capex, but on the other side I'm, reducing my finance costs. So if I look at the totality of that probably in the order of a couple of hundred million, but we have a range around around our free cash flow generation I'm still very confident of delivering the targets I see no need to change.
Right now when I contemplate the impact of the transaction, but we can take you through the branch if that's helpful.
Great. Thanks, Chris and final question at the back there.
Craig Marshall: Great. Thanks, Chris. Final question at the back there.
Craig Marshall: Great. Thanks, Chris. Final question at the back there.
Lucas Herrmann: Thanks. It's Henry Tarr at Berenberg. Thanks for squeezing me in. As I look at the developments ahead of you, as you get to 2027, it looks like there's potentially a lot that could come on with Bumerangue and the Paleogene and elsewhere. Is that going to be possible within the current CAPEX frame? And then as you sort of look at those developments and you're going through the process now as to how you're going to sort of ramp them up, how are you going to try and keep costs sort of under control and manage these developments? Are you going to approach them in a certain way to try and minimize the potential for any cost overruns, etc.?
Henry Tarr: Thanks. It's Henry Tarr at Berenberg. Thanks for squeezing me in. As I look at the developments ahead of you, as you get to 2027, it looks like there's potentially a lot that could come on with Bumerangue and the Paleogene and elsewhere. Is that going to be possible within the current CAPEX frame? And then as you sort of look at those developments and you're going through the process now as to how you're going to sort of ramp them up, how are you going to try and keep costs sort of under control and manage these developments? Are you going to approach them in a certain way to try and minimize the potential for any cost overruns, etc.?
Thanks, It's Henry Tarr of Bahrenburg, Thanks for squeezing me in.
As I look at the developments ahead of you get to 2027, it looks like there's potentially a law that could come on with bema ranking in the Paleogene and elsewhere.
Is that going to be possible within the current capex frame.
And then as you sort of look at those developments and you're going through the process now as to how you're going to sort of wrap them up.
How are you going to try and keep costs sort of under control and manage these developments so you're going to approach the minutes in a certain way to try and minimize the.
With the potential for any cost overruns et cetera.
Shall I take the capital frame first go for it and then let me talk about developments in cost.
Kate Thomson: Shall I take the capital frame first, Gordon?
Kate Thomson: Shall I take the capital frame first, Gordon?
Lucas Herrmann: Go for it. Yeah.
Lucas Herrmann: Go for it. Yeah.
Kate Thomson: And then let you talk about developments and costs?
Kate Thomson: And then let you talk about developments and costs?
Lucas Herrmann: Yeah.
Lucas Herrmann: Yeah.
Gordon and William Challenge Me Todd regularly.
Kate Thomson: Gordon and William challenge me hard regularly on competing for capital inside the frame. As you know, we've got a lot of choice there. We're very comfortable with regard to our 13 to 15 frame for the next two years as we step through the initial phases of the understanding and then progression of these opportunities. No need to change that. We'll update beyond that when we're ready. But Gordon, in terms of cost control?
Kate Thomson: Gordon and William challenge me hard regularly on competing for capital inside the frame. As you know, we've got a lot of choice there. We're very comfortable with regard to our 13 to 15 frame for the next two years as we step through the initial phases of the understanding and then progression of these opportunities. No need to change that. We'll update beyond that when we're ready. But Gordon, in terms of cost control?
Competing for capital inside the frame as you know we've got a lot of a lot of choice there.
We're very comfortable with regard to 13 to 15 frame for the next two years as we step through the initial phases of this.
Understanding and then progression of these opportunities and I need to change that and well update beyond that when we're ready to go there in terms of cost control, yeah, and just to add on Capex. The you know the pill is fully funded within our capital frame that we have both projects or if I did.
Lucas Herrmann: Yeah. And just to add on CapEx, the Paleogene is fully funded within our capital frame that we have, both projects at FID, Tiber, Guadalupe, so fully funded. The big spend on Bumerangue really doesn't kick in until closer to FID, depending on whether we do an early production scheme or not. And we'll just need to make choices around that. In terms of cost, I think this is where technology and AI comes in, that the platform or the FPSO of tomorrow won't look like the one of the past. And our most recent platform that we brought online, the Azeri Central East in Azerbaijan, fully controlled from onshore, so much less staff offshore, easier shifts on people, less people exposed to hazards. So I think that's the future. And that will keep costs down. So it's application of technology, continuing to work the supply chain.
Gordon Birrell: Yeah. And just to add on CapEx, the Paleogene is fully funded within our capital frame that we have, both projects at FID, Tiber, Guadalupe, so fully funded. The big spend on Bumerangue really doesn't kick in until closer to FID, depending on whether we do an early production scheme or not. And we'll just need to make choices around that. In terms of cost, I think this is where technology and AI comes in, that the platform or the FPSO of tomorrow won't look like the one of the past. And our most recent platform that we brought online, the Azeri Central East in Azerbaijan, fully controlled from onshore, so much less staff offshore, easier shifts on people, less people exposed to hazards. So I think that's the future. And that will keep costs down. So it's application of technology, continuing to work the supply chain.
Husky.
Tiber Guadalupe so fully funded the big spend on Boomerang, it really doesn't kick in until closer to F. I D and depending on whether we do an early production scheme or not and we just need to make choices and around in terms of cost I think this is where technology and here it comes in.
The platform or the F. P. S O of Tomorrow won't look like the one of the past in our most recent platform that we brought online absent GTA and in Azerbaijan, The Azeri Central East surely we can.
Troll from onshore so much less staff off shore.
Easier shifts on people with less people exposed to the hazards. So yeah, I think that's the future and that will keep cost down so its application of technology.
To work the supply chain, that's always going to be a feature of upstream were huge amount of our spend in opex is in the supply chain and so I see lots of opportunity. So we ought to keep costs under control as we grow the company.
Lucas Herrmann: That's always going to be a feature of upstream where a huge amount of our spend and OpEx is in the supply chain. So I see lots of opportunity, actually, to keep costs under control as we grow the company.
Gordon Birrell: That's always going to be a feature of upstream where a huge amount of our spend and OpEx is in the supply chain. So I see lots of opportunity, actually, to keep costs under control as we grow the company.
Super Thanks Gordon.
Craig Marshall: Super. Thanks, Gordon. I think what we'll do is we'll close the Q&A on that note. A big thanks, as ever, to everybody for their questions in the room and for those online. We do look forward to meeting with many of you in the coming weeks and coming months. And on behalf of Carol, Kate, and Gordon, our thanks again.
Craig Marshall: Super. Thanks, Gordon. I think what we'll do is we'll close the Q&A on that note. A big thanks, as ever, to everybody for their questions in the room and for those online. We do look forward to meeting with many of you in the coming weeks and coming months. And on behalf of Carol, Kate, and Gordon, our thanks again.
I think what we'll do is we'll close the Q&A on that note.
Thanks as ever to everybody for their questions in the room and for those online.
We do look forward to meeting with many of you in the coming weeks in coming months and on behalf of Carol Kate and Gordon. Thanks again.
