Q2 2026 BP PLC Earnings Call

August 4, 2026

Speaker #1: Welcome, everyone, to BP's second quarter, 2026 financial results call. I'm joined by Meg O'Neill, Chief Executive Officer, and Kate Thompson, Chief Financial Officer. We'll be focusing today's call on the second quarter performance and the contents of the video that I hope many of you will have seen by now.

Craig Marshall: Welcome everyone to BP's Q2 2026 financial results call. I am joined by Meg O'Neill, Chief Executive Officer, and Kate Thomson, Chief Financial Officer. We will be focusing today's call on the Q2 performance and the contents of the video that I hope many of you will have seen by now. Before we start with questions, let me hand over to Meg for a few opening remarks. Meg.

Speaker #1: Before we start with questions, though, let me hand over to Meg for a few opening remarks. Meg.

Speaker #2: Thanks, Craig. And thank you to everyone joining the call. I hope everyone will have seen our results today, and the video Kate and I recorded.

Meg O'Neill: Thanks, Craig, and thank you to everyone joining the call. I hope everyone will have seen our results today and the video Kate and I recorded. As such, I will keep my opening remarks brief so we can get to questions. Q2 was another good quarter financially as we continue to build momentum. Strong earnings and good cash conversion supported us with the further strengthening of the balance sheet. Net debt was down $3 billion quarter-on-quarter, and financial obligations are now down around $7 billion since Q1. You will have seen our outlook for the further significant progress we expect through the end of the year. We have also continued to take deliberate steps to simplify BP and our portfolio, including the announcements on the North Sea and Archaea and the completion of the Gelsenkirchen transaction. There are areas where our performance fell short.

Speaker #2: As such, I'll keep my opening remarks brief so we can get to questions. Q2 was another good quarter financially, as we continue to build momentum.

Speaker #2: Strong earnings and good cash conversion supported us with the further strengthening of the balance sheet. Net debt was down $3 billion quarter on quarter, and financial obligations are now down around $7 billion since the first quarter.

Speaker #2: And you will have seen our outlook for the further significant progress we expect through the end of the year. We have also continued to take deliberate steps to simplify BP and our portfolio, including the announcements on the North Sea and Arkea, and the completion of the Gelsenkirchen transaction.

Speaker #2: But there are areas where our performance fell short. Operationally, our plans didn't run as well as we expect. I want us focused on driving consistent operational performance, it is the foundation for everything we do, and we know we need to improve.

Meg O'Neill: Operationally, our plants didn't run as well as we expect. I want us focused on driving consistent operational performance. It is the foundation for everything we do, and we know we need to improve. We have more to do to turn cost reductions into bottom-line earnings improvement. BP has strong assets, deep capability, and real growth potential, and my focus is on turning that potential into stronger performance and greater shareholder value. That means continuing to strengthen the balance sheet, simplifying and high-grading the portfolio, investing with discipline, taking cost out of the system, and driving much sharper accountability across the company. I call this getting BP fit to grow, where every part of BP needs to earn its place, generating cash, improving returns, and strengthening the whole.

Speaker #2: And we have more to do to turn cost reductions into bottom-line earnings improvement. BP has strong assets, deep capability, and real growth potential. And my focus is on turning that potential into stronger performance and greater shareholder value.

Speaker #2: That means continuing to strengthen the balance sheet, simplifying and high-grading the portfolio, investing with discipline, taking costs out of the system, and driving much sharper accountability across the company.

Speaker #2: I call this getting BP fit to grow, where every part of BP needs to earn its place, generating cash, improving returns, and strengthening the whole.

Speaker #2: I believe BP can and will be a world-class integrated oil and gas company, with advantaged upstream positions, a resilient downstream business, and distinctive trading capability.

Meg O'Neill: I believe BP can and will be a world-class integrated oil and gas company with advantaged upstream positions, a resilient downstream business, and distinctive trading capability. That is what my leadership team and I are focused on, moving at pace, making the tough decisions, and building a more focused, competitive BP that delivers stronger outcomes. Back to you, Craig.

Speaker #2: That is what my leadership team and I are focused on: moving at pace, making the tough decisions, and building a more focused, competitive BP that delivers stronger outcomes.

Speaker #2: Back to you, Craig.

Speaker #1: Thanks, Meg. So, as everyone knows, and as per customary practice, I'm going to ask everybody to please limit themselves to one question per person, so that everyone gets a chance to ask.

Craig Marshall: Thanks, Meg. As everyone knows, and as per customary practice, I'm going to ask everybody to poll for one question, please, per person so that everyone gets a chance to ask. If we have the time, we can come back to a follow-up question. We are going to aim to wrap up the call in 45 minutes. On that note, I'm going to take the first question from Biraj Borkhataria to RBC. Biraj.

Speaker #1: If we have the time, we can come back to a follow-up question. And we are going to aim to wrap up the call in 45 minutes.

Speaker #1: So, on that note, I'm going to take the first question from Barrage Boquetaria to RBC. Barrage.

Biraj Borkhataria: Hi. Thanks for taking my question. Thank you for the detail in the slides today. Meg, you've made some comments around getting fitter to grow and building that platform for growth, and then the other comment was around competing in the right weight class. The question really is, what weight class do you think BP is in? Because if I look at the traditional super major peer group on key metrics, you're the smallest of the bunch, and many of them produce multiples of what you produce. Do you want to be in that weight class? Is that a fair assessment of where you want to be? Just some reflections on that would be helpful.

Speaker #3: Hi, thanks for taking my question. And thank you for the detail in the slides today. So, Meg, you've made some comments around getting fitter to grow.

Speaker #3: And building that platform for growth. And then the other comment was around competing in the right weight class. The question really is, what weight class do you think BP is in?

Speaker #3: Because if I look at the traditional super major peer group on key metrics, you're the smallest of the bunch, and many of them produced multiples of what you produce.

Speaker #3: So do you want to be in that weight class? And is that a fair assessment of where you want to be? Just some reflections on that would be helpful.

Speaker #2: Sure. Thanks, Barrage. Look, I think it's prudent for us not to try to label ourselves as a super major. And in fact, that's one of the things that I'm trying to reinforce with the comments around weight class.

Meg O'Neill: Sure. Thanks, Biraj. Look, I think it's prudent for us not to try to label ourselves as a super major. In fact, that's one of the things that I'm trying to reinforce with the comments around weight class. You look at our numbers. We produce about 2.2 million barrels oil equivalent a day. Our refining capacity is about 1.5 million barrels a day. Sizable on both fronts. The reality is, we need to make sure we're competing with players at our size, and we need to make sure in each part of the business, upstream, downstream, trading, that we are competing to win. We want to be in the best basins, but we can't be in every basin. We need to make sure we're focused, that we're making good decisions, that we're selective in our choices.

Speaker #2: If you look at our numbers, we produce about 2.2 million barrels of oil equivalent today. Our refining capacity is about 1.5 million barrels a day—so sizable on both fronts.

Speaker #2: But the reality is, we need to make sure we're competing with players our size, and we need to make sure that in each part of the business—upstream, downstream, trading—we are competing to win.

Speaker #2: We want to be in the best basins, but we can't be in every basin. So we need to make sure we're focused, that we're making good decisions, that we're selective in our choices. So for me, that's what it means when I say that we need to be getting fit and we need to be competing in our weight class.

Meg O'Neill: For me, that's what it means when I say that we need to be getting fit, and we need to be competing in our weight class.

Speaker #1: Thanks, Barrage. We're going to take the next question from Fergus Neeve at Rothschild. Fergus?

Craig Marshall: Thanks, Biraj. We're going to take the next question from Fergus Neve at Rothschild. Fergus.

Speaker #4: Yep. Hi, everyone. And thank you very much for taking my question. Just looking at the BPX results and data for 2Q26, it looks like another strong quarter.

Fergus Neve: Yep. Hi, everyone. Thank you very much for taking my question. Just looking at the BPX results and data for Q2 2026, it looks like another strong quarter, and H1 production looks to have grown close to 20% year on year in spite of sequentially lower gas prices. Could you just comment on some of the work you're doing in the US and perhaps on the plan for that business moving forward, particularly in terms of the new strategic priorities that you laid out today? Thanks.

Speaker #4: And one edge production looks to have grown close to 20% year on year. In spite of sequentially lower gas prices. Could you just comment on some of the work you're doing in the US and perhaps on the plans for that business moving forward, particularly in terms of the new strategic priorities that you laid out today?

Speaker #4: Thanks.

Speaker #2: Yeah, thanks, Fergus. BPX is really an important part of BP Group. I appreciate your attention to detail. So in the quarter production was 545,000 oil equivalent barrels per day.

Meg O'Neill: Yeah. Thanks, Fergus. BPX is really an important part of BP Group. Appreciate your attention to detail. In the quarter, production was 545,000 oil equivalent barrels per day. It is continuing to grow quarter on quarter. A couple of things that we like about the business. First off, we like the financial metrics. If you think about the portfolio chart we presented, when we look at BPX, it's got the ability to generate competitive returns, competitive cash flow. We've got significant growth potential with the resource base we have there. It is very much an integral part of the group. One thing that differentiates BPX from many of the other assets in our business is the ability to invest in short cycle projects.

Speaker #2: It is continuing to grow quarter on quarter. And one of the things—well, a couple of things—that we like about the business: first off, we like the financial metrics.

Speaker #2: So if you think about the portfolio chart we presented when we look at BPX, it's got the ability to generate competitive returns, competitive cash flow.

Speaker #2: We've got significant growth potential with the resource base we have there. So it is very much an integral part of the group. One thing that differentiates BPX from many of the other assets in our business is the ability to invest in short-cycle projects.

Speaker #2: So if I contrast it to a deepwater development in the Gulf of America, for example, those are the sorts of developments where you take an investment decision in one year, and it's four or five years before you get any revenue.

Meg O'Neill: If I contrast it to a deep water development in the Gulf of Mexico, for example, those are the sorts of developments where you take an investment decision in one year, and it's four or five years before you get any revenue. Whereas BPX, we're getting revenue very quickly after making those investment decisions. When we look across the group, the fact that we've got a combination of short cycle capital plus the long-dated investment opportunities, really does offer an advantage compared to other companies in our sector.

Speaker #2: Whereas BPX—we’re getting revenue very quickly after making those investment decisions. So, when we look across the group, the fact that we’ve got a combination of short-cycle capital plus the long-dated investment opportunities really does offer an advantage compared to other companies in our sector.

Speaker #1: Thanks, Fergus.

Craig Marshall: Thanks, Fergus.

Fergus Neve: Thank you.

Speaker #4: Thank you.

Speaker #1: We'll take the next question from Doug Leggett at Wolf. Doug, good morning.

Craig Marshall: We'll take the next question from Doug Leggate at Wolfe. Doug, good morning.

Speaker #5: Hi, good morning everyone. Good morning, Meg. Clearly, a very strong message this morning, but I wonder if I could just take the capital structure of the balance sheet, the hybrids, and wrap all that together with one very simple question, which is that the scale of the free cash flow—including disposals, including the working capital reversal—that you could potentially generate not just in 2026, the second half, but also in 2027, starts to put some fairly big questions over what you do with the capital structure, how low you take it.

Doug Leggate: Good morning, everyone. Good morning, Meg. Clearly a very strong message this morning, but I wonder if I could just hit the capital structure of the balance sheet, the hybrids, and wrap all that together with one very simple question, which is that the scale of the free cash flow, including disposals, including the working capital reversal, that you could potentially generate, not just in 2026, the H2, but also in 2027, starts to put some fairly big questions over what you do with the capital structure, how low you take it. Dare I tempt Kate to maybe answer this. Why do you need any hybrid bonds and worry about the credit rating? Because you could theoretically wipe them out. I'm just trying to think out the box, what do you do with the scale of the potential deleveraging capacity that you have going forward? Thanks.

Speaker #5: And there I tempt Kate to maybe answer this. Why do you need any hybrid bonds and worry about the credit rating? Because you could theoretically wipe them out.

Speaker #5: I'm just trying to think out the box. What do you do with the scale of the potential deleveraging capacity that you have going forward?

Speaker #5: Thanks.

Speaker #2: Yeah, well, Doug, let me just jump in, and then I'll let Kate weigh in. One of the things that I think is important to think about—and I'll frame for you how I think about the balance sheet question—is that we need to be thinking about our capital framework with a couple of goals.

Meg O'Neill: Well, Doug, let me just jump in, and then I'll let Kate weigh in. One of the things that I think is important to think about, and I'll frame for you how I think about the balance sheet question. We need to be thinking about our capital framework with a couple of goals. One simple one is we need to make sure we've got our investment-grade credit rating because that ensures we're able to do much of the business that we need to be able to do. We need to make sure that our balance, in terms of equity and debt, is one where we have more $ from cash flow that are going to shareholders than going to liability holders. One of the key areas of concern I have with the structure as it stands today is there's too much cash going to liability holders.

Speaker #2: One simple one is, we need to make sure we've got our investment-grade credit rating, because that ensures we're able to do much of the business that we need to be able to do.

Speaker #2: We need to make sure that our balance in terms of equity and debt is such that we have more dollars from cash flow going to shareholders than to liability holders.

Speaker #2: So one of the key areas of concern I have with the structure, as it stands today, is there's too much cash going to liability holders.

Speaker #2: The second concern I have with the structure, as it stands today, is our resilience in a low-price environment. So a lot of the focus we have on getting the balance sheet in shape is about making sure that we can get the frame right to return value to shareholders through the cycle and invest in the business through the cycle and be resilient in that low-price scenario.

Meg O'Neill: The second concern I have with the structure as it stands today is our resilience in a low price environment. A lot of the focus we have on getting the balance sheet in shape is about making sure that we can get the frame right to return value to shareholders through the cycle and invest in the business through the cycle and be resilient in that low price scenario. I'll let Kate speak to some of the specific choices we've made.

Speaker #2: I'll let Kate speak to some of the specific choices we've made.

Speaker #3: Thanks, Meg. And I agree with those comments, by the way. Hi, Doug. Thank you for your question. Yes, we have an opportunity to drive our leverage down materially, certainly through the second half of 2026, as you can see from the sort of $39 to $41 billion total financial obligations we're guiding to today in terms of the end of the year.

Kate Thomson: Thanks, Meg. I agree with those comments, by the way. Hi, Doug, thank you for your question. Yes, we have an opportunity to drive our leverage down materially, certainly through H2 2026, as you can see from the sort of 39 to 41 total financial obligations we're guiding to today in terms of the end of the year. Look, as I think about your specific question on hybrids, we've stated today there's a $1 billion of hybrids that will be naturally redeemed in Q3. We redeemed $2.9 billion in Q2 just gone, and there's another $1.4 that we already told you we're going to allow to move off the books when they redeem in Q2 next year. The most cost-effective way to remove hybrids is to wait until they mature.

Speaker #3: Look, as I think about your specific question on hybrids, we've stated today there's a billion dollars of hybrids that will be naturally redeemed in the third quarter.

Speaker #3: We redeemed 2.9 billion in 2Q just gone, and there's another 1.4 that we have already told you we're going to allow to move off the books when they redeem in 2Q next year.

Speaker #3: So the most cost-effective way to remove hybrids is to wait until they mature, buying them back in advance of that can be a very cost-effective approach and not necessarily the most value-accretive for shareholders.

Kate Thomson: Buying them back in advance of that can be a very cost-effective approach and not necessarily the most value accretive for shareholders. Right now we're clear on the forward trajectory with hybrids. For now, the balance beyond those two points I've mentioned remain part of our capital structure. I think it's important we look holistically across the entirety of our capital structure and make sure it is fit for what it is going to be required to do for BP for the long term. This is about creating the financial resilience of a company to support the growth that we have got in front of us that we want to be able to execute through cycle. That's how we think about it.

Speaker #3: So right now, we're clear on the forward trajectory with hybrids. For now, the balance beyond those two points I've mentioned remain part of our capital structure.

Speaker #3: But I think it's important we look holistically across the entirety of our capital structure and make sure it is fit for what it is we're going to be required to do for BP for the long term.

Speaker #3: This is about creating the financial resilience of a company to support the growth that we have in front of us, that we want to be able to execute through the cycle.

Speaker #3: That's how we think about it. And at some point, when we've got through the delivery of our first target, then we can come back and explain how we holistically think about our financial frame, how we think about rewards to shareholders, how we think about our capital, and how we think about our balance sheet.

Kate Thomson: At some point, when we've got through the delivery of our first target, we can come back and explain how we holistically think about our financial frame, how we think about rewards to shareholders, how we think about our capital, and how we think about our balance sheet. They all need to sit together cohesively as one frame.

Speaker #3: And they all need to sit together cohesively as one frame.

Speaker #1: Thanks, Doug. We'll take the next question from Josh Storn at UBS.

Craig Marshall: Thanks, Doug. We'll take the next question from Josh Stone at UBS.

Speaker #4: Yeah, thanks, Craig and good afternoon. Thanks also for the new disclosure you provided on the operating cost side, particularly on the variable costs, which I think is helpful.

Josh Stone: Yeah. Thanks, Craig, and good afternoon. Thanks also for the new disclosure you provided on the operating cost side, particularly on the variable costs, which I think is helpful. I wonder, have you been able to diagnose why the improvements you have made have not managed to flow through to the bottom line? You made a comment about that in your prepared remarks. When do you think is it reasonable for us to start seeing these operating cost changes actually, and the changes you're making to the organization actually flow through to the bottom line? Thanks.

Speaker #4: I wondered, have you been able to diagnose why the improvements you have made have not managed to flow through to the bottom line? You made a comment about that in your prepared remarks.

Speaker #4: And when do you think it is reasonable for us to start seeing these operating cost changes, and the changes you're making to the organization, actually flow through to the bottom line?

Speaker #4: Thanks.

Speaker #3: Thanks, Josh. I'll take that one. Yeah. Look, the teams are working really hard across the company to drive our cost base down to get us competitive as competitive as we can be.

Kate Thomson: Thanks, Josh. I'll take that one. Yeah. Look, the teams are working really hard across the company to drive our cost base down to get us competitive, as competitive as we can be. Frankly, it's not moving fast enough to be able to deliver that outcome all the way to the bottom line. That's what our shareholders care about. Structural cost reductions are interesting. When they're really important, they come all the way through to the bottom line. The disclosure that we're giving you today is line of sight to material reduction in our absolute cost base by the end of next year, getting to around $18 billion compared to $22 billion at 2025. There is going to be material improvement in our absolute cost base as we move through the next 18 months.

Speaker #3: But frankly, it's not moving fast enough to be able to deliver that outcome all the way to the bottom line. And that's what us, that's what our shareholders care about.

Speaker #3: Structural cost reductions that are interesting. When they're really important, they come all the way through to the bottom line. So the disclosure that we're giving you today is line of sight to the material reduction in our absolute cost base by the end of next year.

Speaker #3: Getting to around $18 billion, compared to $22 billion in 2025. So there is going to be material improvement in our absolute cost base as we move through the next 18 months.

Speaker #3: We need to apply a lot of urgency and a lot of focus to continue to push this through in every dimension of the business, because at the moment, what we're delivering is not enough to offset the headwinds that we've experienced in terms of inflation, the environment, foreign exchange, and activity choices.

Kate Thomson: We need to apply a lot of urgency and a lot of focus to continue to push this through in every dimension of the business, because at the moment, what we're delivering is not enough to offset the headwinds that we've experienced in terms of inflation, environment, foreign exchange, and activity choices. What really matters, beyond any target on structural cost reductions, is getting that to the bottom line. As we deliver 18 next year, just to be clear, we expect to have delivered $5.8 billion of structural cost reductions compared to the original target of $4 to 5 billion. What matters is what comes through to the bottom line in terms of earnings and cash flow.

Speaker #3: What really matters, beyond any target on structural cost reductions, is getting that to the bottom line. As we deliver 18 next year, just to be clear, we expect to have delivered 5.8 billion dollars of structural cost reductions compared to the original target of 4 to 5.

Speaker #3: But as I say, what matters is what comes through to the bottom line in terms of earnings and cash flow.

Speaker #2: Maybe, if I can build—so, one of the things that has struck me coming in: I do think we have momentum and a lot of the work on getting the organization designed and driving that accountability mindset, where we've got owners—business owners—who have the tools, capabilities, and people they need to drive the business, and we are simplifying the structure above that.

Meg O'Neill: Maybe if I can build. One of the things that has struck me coming in, I do think we have momentum and a lot of the work on getting the organization designed and driving that accountability mindset where we've got owners, business owners who have the tools and capabilities and people they need to drive the business, and we are simplifying the structure above that. That is part of the uplift or the cost reduction that we're going to see next year. We start to see those come through to the bottom line in 2027.

Speaker #2: That is part of the uplift in, or the cost reduction, that we're going to see next year. So we start to see those come through to the bottom line in 2027.

Speaker #1: Thanks, Josh. We'll take the next question from Jeffrey Labujon at TPH.

Craig Marshall: Thanks, Josh. We'll take the next question from Jeoffrey Lambujon at TPH.

Speaker #5: Good morning, good afternoon, and thank you for taking my question. Meg, you've been very clear today that every dollar of capital has to compete, and that growth has to be earned.

Jeoffrey Lambujon: Good morning, good afternoon, and thank you for taking my question. Meg, you've been very clear today that every dollar of capital has to compete and that growth has to be earned. I wanted to ask about this in the context of BPX specifically, if you could walk us through how you think about the Haynesville's competitiveness versus the oil basins, whether in the context of returns or the MAC or other factors you might highlight. Given the underlying growth potential from BPX overall, how you think about the Haynesville's contribution to that?

Speaker #5: So, I wanted to ask about this in the context of BPX specifically. If you could walk us through how you think about the Haynesville’s competitiveness versus the oil basins—whether in the context of returns or any macro or other factors you might highlight.

Speaker #5: And given the underlying growth potential from BPX overall, how you think about the Haynesville's contribution to that.

Speaker #2: Sure. Thanks, Jeffrey. Look, the Haynesville is really a significant position for us. I've been really impressed I've spent quite a bit of time with the teams, working BPX in the work that we've been doing to really drive excellence in our drilling and completions performance.

Meg O'Neill: Sure. Thanks, Jeoffrey. Look, the Haynesville is really a significant position for us. I've been really impressed. I've spent quite a bit of time with the teams working BPX, in the work that we've been doing to really drive excellence in our drilling and completions performance. We're really starting to see that come through to the bottom line. Maybe if I give you an example that brings that to life. The Q1 of this year, we set a new basin 24-hour initial production rate record at 81 million scf a day from a well with a 15,000 foot lateral. The production rates are staying high, which is even better, producing 63 million scf a day for over 80 days. Really accelerating the resource capture that we're able to get from the Haynesville.

Speaker #2: And we're really starting to see that come through to the bottom line. And maybe if I give you an example that brings that to life.

Speaker #2: So the first quarter of this year, we sent we set a new basin 24-hour initial production rate record at 81 million scuffs a day from a well with a 15,000-foot lateral.

Speaker #2: And the production rates are staying high, which is even better. So, producing 63 million scf a day for over 80 days—so really accelerating the resource capture that we're able to get from the Haynesville.

Speaker #2: Now, one of the things we always need to be mindful of is the cost environment—sorry, the price environment that we're seeing in the Haynesville.

Meg O'Neill: Now, one of the things we always need to be mindful of is the cost environment or the price, sorry, the price environment that we're seeing in the Haynesville. Always making trade-offs around where can we most effectively deploy those dollars within BPX. The Haynesville is gas, Eagle Ford has both gas and oil, and Permian is quite oily. It's something that we work closely with the team on to make sure that the decisions about where to deploy rigs are going to deliver the best overall value for BP as a group.

Speaker #2: And we're always making trade-offs around where we can most effectively deploy those dollars within BPX. The Haynesville is gas; Eagle Ford has both gas and oil; and the Permian is quite oily.

Speaker #2: So it's something that we work closely with the team on, to make sure that the decisions about where to deploy rigs are going to deliver the best overall value for BP as a group.

Speaker #1: Thanks, Jeffrey. We'll take the next question from Matt Lofting at JP Morgan.

Craig Marshall: Thanks, Jeoffrey. I will take the next question from Matt Lofting at J.P. Morgan.

Speaker #5: Thanks, Craig. And hi to everybody. Thanks for taking the questions. Meg, I wanted to ask you about the second of the five priorities that you outlined this morning in terms of simplifying the portfolio.

Matt Lofting: Thanks, Craig, and hi to everybody. Thanks for taking the questions. Meg, I wanted to ask you about the second of the five priorities that you outlined this morning in terms of simplifying the portfolio. I think you outlined earlier in the year changes in particular to the organizational structure. I noticed, though, in the prepared remarks, you're still sort of referencing a degree of complexity to BP's business. I wondered if you could share examples of where you see some of the next areas of major focus in terms of that priority set and how that sort of, in your mind, comes together in terms of more comprehensively streamlining BP's business as you look forward. Thank you.

Speaker #5: I think you outlined changes to the organizational structure earlier in the year. However, I noticed that in the prepared remarks, you're still referencing a certain degree of complexity.

Speaker #5: To BP's business. So I wondered if you could share examples of where you see some of the next areas of major focus in terms of that priority set and how that sort of in your mind comes together, in terms of more comprehensively streamlining BP's business as you look forward.

Speaker #5: Thank you.

Speaker #2: Yeah, thanks, Matt. Look, one of the reasons we included the portfolio chart in the presentation is to give you a flavor for how we're thinking about those portfolio decisions.

Meg O'Neill: Thanks, Matt. Look, one of the reasons we included the portfolio chart in the presentation is to give you a flavor for how we're thinking about those portfolio decisions. As I said in the remarks, we're not thinking about history or legacy attachment or emotion. We're just looking at the numbers. We're digging into, for each of the assets in our business, what's the track record on delivering free cash flow growth? What's the track record on delivering returns? Do the returns lift the group return on capital employed or pull them down? It's not just the two dimensions shown there. I'll also note that those two dimensions are historic. A business that we were investing in in that time period would score very low on free cash flow, but it doesn't reflect the potential of the business.

Speaker #2: And as I said in the remarks, we're not thinking about history or legacy attachment or emotion. We're just looking at the numbers. And we're digging into for each of the assets in our business, what's the track record on delivering free cash flow growth?

Speaker #2: What's the track record on delivering returns? Do the returns lift the group return on capital employed or pull them down? It's not just the two dimensions shown there, and I'll also note that those two dimensions are historic.

Speaker #2: So, a business that we were investing in during that time period would score very low on free cash flow, but it doesn't reflect the potential of the business.

Speaker #2: But we're taking a look at the numbers, and we're using those numbers to unemotionally guide our decisions around portfolio. As we look at the business, so we are spread we are spread relatively thin.

Meg O'Neill: We're taking a look at the numbers, we're using those numbers to unemotionally guide our decisions around portfolio. As we look at the business, we are spread relatively thin. I think we've got too many assets in BP today. When we look across the portfolio, there are assets where we'd say others will see more value and be able to deliver more value, we can sell those and achieve good value for our shareholders through that sort of transaction. That allows us to continue simplifying, streamlining, and focusing, in the organization that is above the asset. Hopefully that helps you understand how we're thinking about things. Nothing is sacred. Nothing is off the table. We're just going to have the same kind of rigorous discipline in looking across the business.

Speaker #2: I think we've got too many assets in BP today. And when we look across the portfolio, there are assets where we'd say others will see more value and be able to deliver more value.

Speaker #2: And we can sell those, and achieve good value for our shareholders through that sort of transaction. That then allows us to continue simplifying, streamlining, and focusing in the organization that is above the asset.

Speaker #2: So hopefully that helps you understand how we're thinking about things. Nothing is sacred. Nothing is off the table. So we're just going to have the same kind of rigorous discipline in looking across the business.

Speaker #1: Thanks, Matt. We'll take the next question from Nashanki at Barclays.

Craig Marshall: Thanks, Matt. We'll take the next question from Naisheng Cui at Barclays.

Speaker #6: Hi, good afternoon. Thanks for taking my question. Looking at the first pages of your appendix slides, you had three major FIDs in 2025, but nothing so far in 2026.

Naisheng Cui: Hi. Good afternoon. Thanks for taking my question. Looking at the first pages of your appendix slides, you had three major FIDs in 2025, nothing so far in 2026. I wonder if you could provide some color on any major FID expectations for the next 12 to 18 months, please. Could you also give us an update on Bumerangue, please? Thank you.

Speaker #6: I wonder if you could provide some color on any major FID expectations for the next 12 to 18 months, please. And could you also give us an update on Bumerangi, please?

Speaker #6: Thank you.

Speaker #2: Well, thanks for the question, Nashank. Let me start with your second question first. So, Bumerangi—I think we've talked about this a bit before, but very significant discovery in 2025.

Meg O'Neill: Well, thanks for the question, Naisheng. Let me start with your second question first. Bumerangue, I think we've talked about this a bit before, but very significant discovery in 2025. 8 billion barrels liquids in place. That's always a good starting point. Having a fair amount of oil always gives you kind of one of the core ingredients we need to be successful in our business. We are getting ready to do an appraisal campaign, which will start either late this year or early next year. We'll be getting more data. It's going to be really important in that appraisal campaign to get dynamic data. What we have right now is a static characterization of the reservoir, which is all very positive. It's a very thick column. It's got gas condensate, as well as an oil leg.

Speaker #2: Eight billion barrels of liquids in place. So that's always a good starting point—having a fair amount of oil always gives you one of the core ingredients we need to be successful in our business.

Speaker #2: We are getting ready to do an appraisal campaign, which will start either late this year or early next year. So we'll be getting more data.

Speaker #2: It's going to be really important in that appraisal campaign to get dynamic data. What we have right now is a static characterization of the reservoir, which is all very positive.

Speaker #2: It's a very thick column. It's got gas condensate. As well as an oil leg. But we need to understand how fluids will flow through this reservoir.

Meg O'Neill: We need to understand how fluids will flow through this reservoir. That's important data that we'll be gathering early next year. When we look to other FIDs, you're right. This is a quiet year. Last year was certainly a big year. Team is very focused on ensuring we've got competitive opportunities to deploy capital. When I look at the slate today, not expecting anything major to hit FID this year.

Speaker #2: So that's important data that we'll be gathering early next year. When we look to other FIDs, you're right, this is a quiet year. Last year was certainly a big year.

Speaker #2: The team is very focused on ensuring we've got competitive opportunities to deploy capital. When I look at the slate today, I'm not expecting anything major to hit FID this year.

Craig Marshall: Thanks, Naisheng. We'll take the next question. Actually, I'm going to move online. I know a number of people are already starting their summer vacation. There's a question from Kim Fustier at HSBC. Upstream plant reliability fell to 92.4% due to some operational issues in the North Sea and Indonesia, and refining availability dropped to 94.7%. Can you discuss specifically what went wrong operationally this quarter in both upstream and downstream, and what are you doing to address these issues?

Speaker #1: Thanks, Nashank. We'll take the next question. Actually, I'm going to move online. I know a number of people are already starting their summer vacation.

Speaker #1: There's a question from Kim Foustie at HSBC. Upstream plant reliability fell to 92.4% due to some operational issues in the North Sea and Indonesia.

Speaker #1: And refining availability dropped to 94.7%. Can you discuss specifically what went wrong operationally this quarter in both upstream and downstream, and what are you doing to address these issues?

Meg O'Neill: Great question, Kim. Look, it's been a disappointment. After four or five quarters of what I would call really quite strong reliability in both upstream and downstream, we have seen a drop-off. North Sea, it was a couple of different issues. One at the Glen Lyon FPSO that took that facility offline for a couple of months, then some trips in ETAP. Indonesia, we had a turnaround that ended up being extended and had some operational issues when we were trying to restart. In refining, we had a third-party event at the Whiting Refinery that caused a bit of downtime in April. Look, those are each of the individual events. What I think is important for us to do is to step back from the individual events. We need to, of course, do deep investigations to understand the specifics of what happened.

Speaker #2: Yeah, great question, Kim. And look, it's been a disappointment. After four or five quarters of what I would call really quite strong reliability in both upstream and downstream, we have seen a drop-off.

Speaker #2: North Sea, it was a couple of different issues. One at the Glenline FPSO that took that facility offline for a couple of months. And then some trips in ETAP.

Speaker #2: In Indonesia, we had a turnaround that ended up being extended and experienced some operational issues when we were trying to restart. In refining, we also had a third-party event at the Whiting refinery that caused a bit of downtime in April.

Speaker #2: Look, those are each of the individual events. What I think is important for us to do is to step back from the individual events.

Speaker #2: We need to, of course, do deep investigations to understand the specifics of what happened. But more importantly, we need to step back and ask ourselves, do we have the right framework for our teams all around the world to deliver strong operational performance?

Meg O'Neill: More importantly, we need to step back and ask ourselves, do we have the right framework for our teams all around the world to deliver strong operational performance? That's what we're doing, making sure we've got our arms around it. There are some areas of improvement that we have identified already, the teams are getting after those, both in the refining space as well as the upstream space.

Speaker #2: And so that's what we're doing—making sure we've got our arms around it. There are some areas of improvement that we have identified already, and the teams are getting after those, both in the refining space as well as the upstream space.

Craig Marshall: Thanks, Meg. I'm going to stay online with the next two questions. I'll maybe take the first one, which comes from Alejandro Vigil. Thank you, team. If possible, a question to Meg about her views about biofuels as part of the portfolio. Is it core? Does it have similar characteristics to biogas? Could it be a potential divestment? I think, Meg, you've probably answered in terms of reflections on how we hold the portfolio choices that we're making. I think equally wouldn't be commenting on any potential divestments down the line, maybe over to you on that.

Speaker #1: Thanks, Meg. I'm going to stay online with the next two questions. I'll maybe take the first one which comes from Alejandro Vigil. Thank you, team.

Speaker #1: If possible, could we have a question for Meg about her views on biofuels as part of the portfolio? Is it core? Does it have similar characteristics to biogas?

Speaker #1: And could it be a potential divestment? I think, Meg, you've probably answered in terms of reflections on how we hold the portfolio choices that we're making.

Speaker #1: I think, equally, I wouldn't be commenting on a potential divestment down the line, but maybe over to you.

Meg O'Neill: Yeah. Look, let me maybe frame in a bigger way how we think about some of these bio opportunities, I'll start with some of the successes. We actually do quite a bit of work on biofuels in the US. We trade quite a bit of biofuels. We blend biofuels. When you look at the performance of the downstream and trading business or customers and products business, particularly the US, we've got some real shining examples for how this can be a value uplift for BP. It's a value uplift in a capital light manner, that's perhaps one of the attributes that differentiates it from the Archaea business, where we've gone in in a capital intense manner.

Speaker #2: Yeah, look, let me maybe frame in a bigger way how we think about some of these bio opportunities. And I'll start with some of the successes.

Speaker #2: So we actually do quite a bit of work on biofuels in the US. We trade quite a bit of biofuels. We blend biofuels. So when you look at the performance of the downstream and trading business or customers and products business, particularly the US, we've got some real shining examples for how this can be a value uplift for BP.

Speaker #2: It's a value uplift in a capital-light manner, and that's perhaps one of the attributes that differentiates it from the Arkea business, where we've gone in in a capital-intense manner.

Meg O'Neill: Our team still trades quite a bit of biogas in the US, the question that we've been asking ourselves and the conclusion we've come to is actually we can access some of those lower carbon molecules in a manner that takes less of BP's capital. There are other companies that are quite interested. I know we announced today the intention to divest Archaea. Part of why we announced that is we've got interest. Again, if there's somebody who sees an opportunity to create additional value, who will invest in that business, who will build on the foundation because our team has made really good progress in improving the profitability of that business, that will be a good outcome. As Craig said, other more material divestments, we'll be looking at the portfolio through the lens I described, we'll announce those as the time is appropriate.

Speaker #2: Our team still trades quite a bit of biogas in the US. But the question that we've been asking ourselves, and the conclusion we've come to, is actually that we can access some of those lower-carbon molecules in a manner that takes less of BP's capital.

Speaker #2: There are other companies that are quite interested. I know we announced today the intention to divest Arkea. Part of why we announced that is we've got interest.

Speaker #2: So again, if there's somebody who sees an opportunity to create additional value, who will invest in that business, who will build on the foundation, because our team has made really good progress in improving the profitability of that business, then that will be a good outcome.

Speaker #2: As Craig said, other more material divestments, we'll be looking at the portfolio through the lens I described and we'll announce those as the time is appropriate.

Craig Marshall: Thanks, Meg. Maybe the last one online, then we'll come back to the phones is from Ahmed Ben Salem at ODDO BHF. Meg, you repeatedly describe BP's goal as becoming a simpler, stronger, and more valuable company. Three years from now, what are the three metrics that would convince you that this transformation has been successful?

Speaker #1: Thanks, Meg. And then maybe the last one online, and then we'll come back to the phones from Ahmed Ben Salem at Odoo. You repeat, Meg, you repeatedly describe BP's goal as becoming a simpler, stronger, and more valuable company.

Speaker #1: Three years from now, what are the three metrics that would convince you that this transformation has been successful?

Meg O'Neill: Look, there's a couple of things, Ahmed, thanks for the question. There's some really basics in terms of operational performance. We need to be stronger on the safety front, continue to have that strong, consistent, reliable performance in our base assets. At the end of the day, the most important metric for are we more valuable is are we growing total shareholder return? That's through share price appreciation and dividends, cash distribution. At the end of the day, we'll be looking at TSR.

Speaker #2: Look, there are a couple of things, Ahmed, and thanks for the question. There are some real basics in terms of operational performance. We need to be stronger on the safety front and continue to have that strong, consistent, reliable performance in our base assets.

Speaker #2: At the end of the day, the most important metric for whether we are more valuable is: are we growing total shareholder return? And that's through share price appreciation and dividend cash distribution.

Speaker #2: So at the end of the day, we'll be looking at TSR.

Craig Marshall: Thanks, Meg. Okay, back to the phones. We'll take the next question from Mark Wilson at Jefferies.

Speaker #1: Thanks, Meg. Okay, back to the phones. We'll take the next question from Mark Wilson at Jefferies.

Mark Wilson: Thank you. I'd like to ask Meg regarding the UK sale process generated such a lot of commentary, much of which speaks to BP's exit. Your release speaks, obviously, to a process to market, there's obviously various different models that can come out of a marketing process. My question is whether there are indeed multiple outcomes in that process, including, but not exclusive to, satellite models. I note in connection to that, you show in your slide pack 10 major startups from 2025 to 2027, but seven from equity accounted associates, including Aker BP and Azul. Maybe that tells the stories of potential benefits of such models. Thank you.

Speaker #3: Thank you. I'd like to ask Meg regarding the UK sale process generated such a lot of commentary. Much of which speaks to BP's exit, your release speaks obviously to a process to market, and there's obviously various different models that can come out of a marketing process.

Speaker #3: So my question is whether there are indeed multiple outcomes in that process, including, but not exclusive to, satellite models. I note, in connection to that, you show in your slide pack 10 major startups and 25 to 27.

Speaker #3: But seven from equity accounted associates, including Aker BP and Azul. So maybe that tells a story. A potential benefits of such models. Thank you.

Meg O'Neill: Look, with North Sea, this has been very carefully considered. We've had a number of inbounds as I've said, that was a bit of the catalyst for launching a process. We've kicked the tires on a variety of models, at the end of the day, we need to ask ourselves, where do we want to focus our precious leadership time? Where do we want to focus our precious dollars? Our intention is to market for a full divestment. Kate, did you want to talk about the projects?

Speaker #2: Well, look, with North Sea, this has been very carefully considered. And we've had a number of inbounds as I've said. And that was a bit of the catalyst for launching a process.

Speaker #2: We've kicked the tires on a variety of models, but at the end of the day, we need to ask ourselves, where do we want to focus our precious leadership time?

Speaker #2: Where do we want to focus our precious dollars? And so, our intention is to market for a full divestment. Kate, did you want to talk about the projects?

Kate Thomson: Yeah, I was just trying to do the math to match yours, Mark. I can see three out of the projects that have started up have been in joint ventures. We've had two, I think, in Azul and one in Aker so far. Let us pick that up offline and make sure we're looking at the same data as you.

Speaker #4: Yeah, I was just trying to do the math to match yours, Mark. So I can see three out of the projects that have started up have been in joint ventures.

Speaker #4: So we've had two, I think, in Azul and one in Aker so far. But let us pick that up offline and make sure we're looking at the same data as you.

Craig Marshall: Okay, Mark, thanks for your question. I think the seven projects we can certainly come back to you on there. They are the joint venture projects that sit alongside the 10 BP-operated projects. Let's follow up on that. We'll take the next question from Lucas Herrmann at BNP. Lucas.

Speaker #1: Okay, Mark, thanks for your question. I think the seven projects we can certainly come back to you on. They are the joint venture projects that sit alongside the 10 BP-operated projects.

Speaker #1: But let's follow up on that. We'll take the next question from Lucas Herman at BMP. Lucas.

Lucas Herrmann: Yeah. Thanks very much, Craig, thanks Kate and Meg for the opportunity. Briefly, just trading in gas. I think we're looking at a market which is relatively high priced in terms of international pricing, where we're seeing good volatility, which tends to favor trading businesses, indeed, we saw that very strongly in 2022. Not criticizing an average result for the quarter, I am perhaps surprised that the business, given your competence, has not done better. Any comments there, are there any comments you'd care to make on the outlook as we go into Q3, whether you have potentially more flexibility or the market may be more conducive to delivering a return that is above the average we've seen in the last few quarters? Thanks very much.

Speaker #5: Yeah, thanks very much, Craig. And thanks, Kate and Meg, for the opportunity. Briefly, just trading in gas, I mean, I think we're looking at a market which is relatively high priced in terms of international pricing.

Speaker #5: We're seeing good volatility, which tends to favor trading businesses. Historically, we've talked about the ability to redirect cargo and take advantage of this, and indeed we saw that very strongly in 2022.

Speaker #5: I'm not criticizing an average result for the quarter, but I am perhaps surprised that the business, given your competence, has not done better. Any comments there?

Speaker #5: And are there any comments you'd care to make on the outlook as we go into the third quarter and whether you have potentially more flexibility or the market may be more conducive to delivering a return that is above the average we've seen the last few quarters?

Speaker #5: Thanks very much.

Kate Thomson: Thank you, Lucas. Hi, I'll pick that one up. Gas averaged the last two quarters. I think the gas trading business has done pretty well. When you look at the level of volatility comparatively in oil and products versus gas, I would say that gas has been much more benign than oil and products. In Q1, we saw quite a lot of volatility, certainly in January, that allowed us to capture value. The European/international gas price has started to move around more recently. I would've said that sort of the results for the year so far in terms of gas are not out of line. The LNG bench has done a good job of capturing value trading around physical flows and optimization of those, as you know.

Speaker #4: Yeah, thank you, Lucas. Hi, I'll pick that one up. Yeah, gas averaged the last two quarters. I think the gas trading business has done pretty well.

Speaker #4: When you look at the level of volatility comparatively in oil and products versus gas, I would say that gas has been much more benign than oil and products.

Speaker #4: So, in one queue, we saw quite a lot of volatility, certainly in January, that allowed us to capture value. And the European, stroke international, gas price has started to move around more recently.

Speaker #4: So I would have said that, sort of, the results for the year so far in terms of gas are not out of line. The LNG venture has done a good job of capturing value, trading around physical flows and optimization of those, as you know.

Kate Thomson: The contrast is stark with what's been going on in the products and in the crude markets, where the volatility I would describe as pretty wicked, and it's been a very tough environment for our traders to trade through, and I think they've done a good job of capturing value within a carefully managed risk framework. I'm never gonna guide forward on trading, as you know. I would just remind you that over six years now, we've added 4% uplift to the group earnings on average capital employed from trading, and that has been through benign and volatile years. Your guess is as good as mine in terms of what volatility from here is going to look like. I suspect we will see more volatility in the space of international and European gas, given where storage and European gas looks like it's at currently compared to five-year averages.

Speaker #4: The contrast is stark with what's been going on in the products and in the crude markets where the volatility I would describe as pretty wicked and it's been a very tough environment for our traders to trade through.

Speaker #4: And I think they've done a good job of capturing value within a carefully managed risk framework. I'm never going to guide forward on trading, as you know.

Speaker #4: But I would just remind you that over six years now, we've added 4% uplift to the group earnings on average capital employed from trading.

Speaker #4: And that has been through benign and volatile years. Your guess is as good as mine in terms of what volatility from here is going to look like.

Speaker #4: I suspect we will see more volatility in the space of international and European gas given where storage in European gas looks like it's at currently compared to five-year averages.

Kate Thomson: I think, let's see.

Speaker #4: But I think let's see.

Craig Marshall: Thanks, Kate. Thank you, Lucas. We'll take the next question from Chris Kuplent at Bank of America. Chris.

Speaker #1: Thanks, Kate. Thank you, Lucas. We'll take the next question from Chris Coupland at Bank of America. Chris.

Chris Kuplent: Thank you very much. Meg, I've got a question for you. Thanks for your laying out the five priorities. I noticed that they're very inward-focused, getting the performance up to speed. What can you tell us already at this point, and apologies if you think that's unfair, to sort of say to shareholders, "Look, this is the landing point in terms of returns to shareholders." Maybe you want to frame it as CFFO payout, or some sort of indication how you're thinking around restarting the buybacks or giving shareholders more than the 4% minimum DPS increase. Thank you.

Speaker #5: Yeah, thank you very much. Meg, I've got a question for you. Thanks for your laying out the five priorities. I noticed that they're very inward focused, getting the performance up to speed.

Speaker #5: What can you tell us already at this point, and apologies if you think that's unfair, to sort of say to shareholders, look, this is the landing point in terms of returns to shareholders maybe you want to frame it as CFFO payout or some sort of indication how you're thinking around restarting the buybacks or giving shareholders more than the 4% minimum DPS increase.

Speaker #5: Thank you.

Meg O'Neill: Look, thanks, Chris. Look, it's an important question, and we know it's one that our shareholders are keenly interested in. Kate and I are doing a tremendous amount of work on the financial frame to make sure we've got laser-like clarity on what a good frame for BP at this point in time looks like. Again, we need to make sure the balance sheet is positioned well. We need to understand the financial liabilities that we want to carry. The goal, of course, is for us to be able to invest and reward shareholders through the cycle. We fully understand that shareholders are keen to have increasing TSR, and we're fully committed to that, we've got work to do on the balance sheet. $40 billion of total liabilities is still too much.

Speaker #2: Yeah, look, thanks, Chris. It's an important question, and we know it's one that our shareholders are keenly interested in. Kate and I are doing a tremendous amount of work on the financial frame.

Speaker #2: To make sure we've got laser-like clarity on what a good frame for BP at this point in time looks like. Again, we need to make sure the balance sheet is positioned well.

Speaker #2: We need to understand the financial liabilities that we want to carry, and the goal, of course, is for us to be able to invest and reward shareholders through the cycle.

Speaker #2: We fully understand that shareholders are keen to see increasing TSR, and we're fully committed to that. However, we've got work to do on the balance sheet.

Speaker #2: $40 billion of total liabilities is still too much. We are still not going to be able to offer that resilience through the cycle that we need to be able to.

Meg O'Neill: We are still not going to be able to offer that resilience through the cycle that we need to be able to. We've got a bit of work to do. We know the market is very interested in hearing this, as soon as we've got our views ready, we will be communicating with you.

Speaker #2: So we've got a bit of work to do. We know the market is very interested in hearing this. And as soon as we've got our views ready, we will be communicating with you.

Craig Marshall: Thanks, Chris. We'll turn to the US and take the next question from Jason Gabelman at TD Cowen. Jason.

Speaker #1: Thanks, Chris. We'll turn to the US and take the next question from Jason Gabelman at TD Cowen. Jason.

Jason Gabelman: Yeah. Hey, thanks for taking my questions. Wanted to ask about the increase in capital expenditures for this year. Seems like CapEx moved higher, but there wasn't any associated increase in production levels or downstream levels or nothing we could really discern. Wondering what you're getting for that higher CapEx, and if you think CapEx could trend higher over the next few years as you look to strengthen the earnings potential of the company. Thanks.

Speaker #6: Yeah, hey, thanks for taking my questions. Wanted to ask about the increase in capital expenditures. For this year, seems like CapEx moved higher, but there wasn't any associated increase in production levels or downstream levels or nothing we could really discern.

Speaker #6: So, I’m wondering what you're getting for that higher CapEx, and if you think CapEx could trend higher over the next few years as you look to strengthen the earnings potential of the company.

Speaker #6: Thanks.

Kate Thomson: Yeah. Look, that's pretty straightforward, Jason. If you look at the CapEx guidance for the full year, you'll note that the H2 run rate is higher than the H1. When we had built the plan last year and when we initially put out guidance, we were assuming a farm down of some of our Paleogene assets. We've deferred that because we want to make sure we're getting good value for BP shareholders on assets that are going to be part of our portfolio for the next 30 years.

Speaker #2: Yeah, look, that's pretty straightforward, Jason. So if you look at the CapEx guidance for the full year, you'll note that the second-half run rate is higher than the first half.

Speaker #2: When we built the plan last year and when we initially put out guidance, we were assuming a farm-down of some of our Paleogene assets.

Speaker #2: And we've deferred that because we want to make sure we're getting good value for BP shareholders on assets that are going to be part of our portfolio for the next 30 years.

Meg O'Neill: We're being extremely disciplined in our divestment processes to get that fair value. That means we're picking up more of the capital onto our books. Net-net, it is the right decision for our shareholders.

Speaker #2: So, we're being extremely disciplined in our divestment, which means we're picking up more of the capital onto our books. But, net-net, it is the right decision for our shareholders.

Kate Thomson: Could I just add one comment as well? I think you also asked Jason whether we should expect CapEx to trend up going forwards. I think that there's no reason that I can see right now for CapEx to be trending up. It's part of a disciplined approach. Every dollar of capital we spend has to compete, and we want to maintain a really tight control over the capital we're spending in our company. I see no reason for it to go up.

Speaker #4: Could I use that one comment as well? I think you also asked Jason on whether we should expect CapEx to trend up going forwards.

Speaker #4: I think that there's no reason that I can see right now for CapEx to be trending up. It's part of a disciplined approach. Every dollar we capital we spend has to compete.

Speaker #4: And we want to maintain really tight control over the capital we're spending in our company. I see no reason for it to go up.

Craig Marshall: Thanks, Kate. Thank you, Meg. We'll take the next question from Henry Tarr at Berenberg. Henry.

Speaker #1: Thanks, Kate. Thank you, Meg. We'll take the next question from Henry Tarr at Berenberg. Henry?

Henry Tarr: Hi. Thanks for taking my questions. The first one was just on the Ginger gas field. As you ramp that up, I guess Shell are also ramping up capacity in the region, how much capacity does Atlantic LNG have for additional volumes? When might utilization there sort of pick up and how material could it be? Just the second question. I think you talked about sort of delaying farm downs, perhaps you alluded to that in the last question. If you could talk maybe more about the environment today for selling some of these assets, in terms of whether the volatility is having an impact, et cetera, that would be great. Thank you.

Speaker #6: Hi, and thanks for taking my questions. The first one was just on the Ginger gas field. As you ramp that up—and I guess Shell are also ramping up capacity in the region—how much capacity does Atlantic LNG have for additional volumes?

Speaker #6: And when might utilization there sort of pick up and how material could it be? And then just the second question, I think you talked about sort of delaying farm downs.

Speaker #6: And perhaps you alluded to that in the last question, but if you could, maybe talk more about the environment today for selling some of these assets—in terms of whether the volatility is having an impact, et cetera?

Speaker #6: That would be great. Thank you.

Craig Marshall: Henry, we'll take your first question because I'm going to be disciplined here. If we have time, we'll come back to your second one or IR can follow up, maybe the first question on Ginger gas field.

Speaker #1: Henry, we'll take your first question because I'm going to be disciplined here and if we have time, we'll come back to your second one or IARC and follow up.

Speaker #1: But maybe the first question on Ginger gas field.

Kate Thomson: That's a gas field that's due to start up, as I believe, in 2027. That's not online today.

Speaker #2: That's a gas field that's due to startup as I believe in 2027. So that's not online today. No, but there's plenty of capacity in the plant for ginger and plenty of capacity for the other assets that are under development.

Meg O'Neill: No, but there's plenty of capacity in the plant for Ginger and plenty of capacity for the other assets that are under development. Look, if we get to a point where ALNG is stretched, I think that'll be a good problem to have, but that's not a problem that's confronting us at this point in time.

Speaker #2: Look, if we get to a point where ALNG is stretched, I think that'll be a good problem to have, but that's not a problem that's confronting us at this point in time.

Craig Marshall: Thanks, Henry. You can repoll or we'll come back to you if we have time. I'll take the next question from Maurizio Carulli at Quilter. Maurizio.

Speaker #1: Thanks, Henry. You can read, Paul, or we'll come back to you if we have time. We'll take the next question from Maritzio Carulli at Quilter.

Speaker #1: Maritzio.

Maurizio Carulli: Thank you very much for taking my question. First of all, congratulations for the positive results and for Meg's update on the strategic priorities that BP is implementing. I've read the text this morning with great interest and frankly pleasure as well. I have one question, if I may. Can we have an update on the process for the selection of the new chair? For what you can say, of course, at this very early stage. Thank you.

Speaker #7: Thank you very much for taking my question. First of all, congratulations for the positive results. And for Meg's update on the strategic priorities that BP is implementing.

Speaker #7: I've read the text this morning with great interest, and frankly, some pressure as well. I have one question, if I may: can we have an update on the process for the selection of the new chair?

Speaker #7: For what you can say, of course, at this very early stage. And thank you.

Meg O'Neill: Yeah. Well, thank you, Maurizio, glad you found the update constructive as you think about BP. Look, the chair selection process is underway. I'm not going to provide running commentary. There'll be a point in time where the board will have an announcement to make, yeah, we'll just encourage you all to be patient. Maybe the important point to make, though, Maurizio, is there is no doubt the board is in place. They've been very clear in supporting the strategic priorities that we've laid out in the Q2. There's tremendous clarity with the 90,000 employees in BP on the direction of travel. We are getting after it.

Speaker #2: Yeah, well, thank you, Maritzio. And glad you found the update constructive as you think about BP. Look, the chair selection process is underway. And I'm not going to provide running commentary.

Speaker #2: So there'll be a point in time where the board will have an announcement to make and yeah, we'll just encourage you all to be patient.

Speaker #2: Maybe the important point to make though, Maritzio, is there is no doubt the board is in place. They've been very clear in supporting the strategic priorities that we've laid out in the two Q.

Speaker #2: There's a tremendous clarity with the 90,000 employees in BP on the direction of travel. So, we are getting after it.

Craig Marshall: Thanks, Maurizio. Appreciate your comments. We will take the next question from Bertrand Hodee at Kepler. Bertrand.

Speaker #1: Thanks, Maritzio. Appreciate your comments. We'll take the next question from Bertrand Audi at Kepler. Bertrand?

Bertrand Hodée: Yes. Hello. Thank you for taking my question. I had a question on the farm down process in the Paleogene in the US. I understand from your comments that this is a key in your portfolio, that is an asset you are going to have for the next 30 years, as you mentioned earlier. Have you seen interest first? What has made you defer the farm down process? Is it just a question of price or choosing the right partner? I wanted to know also if it is just around Kaskida, Tiber, Guadalupe, or the whole Paleogene acreage you are looking for a partner.

Speaker #5: Yes, hello. Thank you for taking my question. The question on the farm down process, in the paleogene in the US, I understand from your comments that this is a key in your portfolios that is an asset you're going to have for the next 30 years.

Speaker #5: As you mentioned earlier, have you seen interest first? And what has made you defer as a farm-down process? Is it just a question of price, or choosing the right partner?

Speaker #5: And I wanted to know also if it's just around Casquita, Tyberg, Waterloop, or the whole Paleogene acreage you are looking for a partner.

Meg O'Neill: Yeah. Thanks, Bertrand. Look, maybe to describe how I think about these things. The Paleogene is a very significant asset for BP. The two developments we have sanctioned, Kaskida and Tiber, Guadalupe, will commercialize over 500,000 barrels of oil. We need to be really deliberate in who we bring in. We want to make sure we get the right partner at the right price. Again, if I think about the Gulf of Mexico, the Miocene developments back in the 1990s, those were very material capital investments for BP. They are investments that are paying the bills today. Again, we just need to make sure we are being disciplined and bringing a partner in who can add value to the development and is willing to pay appropriate consideration up front, and we will be patient.

Meg O'Neill: Yeah. Thanks, Bertrand. Look, maybe to describe how I think about these things. The Paleogene is a very significant asset for BP. The two developments we have sanctioned, Kaskida and Tiber, Guadalupe, will commercialize over 500,000 bbl of oil. We need to be really deliberate in who we bring in. We want to make sure we get the right partner at the right price. Again, if I think about the Gulf of Mexico, the Miocene developments back in the 1990s, those were very material capital investments for BP. They are investments that are paying the bills today. Again, we just need to make sure we are being disciplined and bringing a partner in who can add value to the development and is willing to pay appropriate consideration up front, and we will be patient.

Speaker #2: Yeah, thanks, Bertrand. Look, maybe to describe how I think about these things, the paleogene is a very significant asset for BP. The two developments we've sanctioned, so Casquita and Tyberg Guadalupe, will commercialize over 500,000 barrels of oil.

Speaker #2: And so we need to be really deliberate in who we bring in. We want to make sure we get the right partner, at the right price.

Speaker #2: Again, this is if I think about the Gulf of Mexico, the major developments back in the 1990s—those were very material capital investments for BP.

Speaker #2: But they're investments that are paying the bills today. So again, we just need to make sure we're being disciplined and bringing in a partner who can add value to the developments and is willing to pay appropriate consideration upfront.

Speaker #2: And we'll be patient.

Craig Marshall: Thanks, Meg. We are going to take the next question from Stephen Richardson at Evercore. Good morning, Steve.

Craig Marshall: Thanks, Meg. We are going to take the next question from Steve Richardson at Evercore. Good morning, Steve.

Speaker #1: Thanks, Meg. We're going to take the next question from Steve Richardson at Evercore. Good morning, Steve.

Stephen Richardson: Hi. Thanks for taking the question. Meg, I was curious, there was a statement in the SEA about writing off too much value. I wonder if you could talk a little bit about that. Ideally, there's really two ways to address it, right? There's making sure that the new projects you're sanctioning are durable at a low price, you've also got a portfolio review going on. I suspect that you're testing assets down to lower prices, and you've mentioned that. Could you talk a little bit about how you're evaluating the existing portfolio and your expectation of when you'll be able to confidently say that the portfolio that's under you and the assets that are on the balance sheet are durable at a lower price, and we can stop that cycle of writing off?

Steve Richardson: Hi. Thanks for taking the question. Meg, I was curious, there was a statement in the SEA about writing off too much value. I wonder if you could talk a little bit about that. Ideally, there's really two ways to address it, right? There's making sure that the new projects you're sanctioning are durable at a low price, you've also got a portfolio review going on. I suspect that you're testing assets down to lower prices, and you've mentioned that. Could you talk a little bit about how you're evaluating the existing portfolio and your expectation of when you'll be able to confidently say that the portfolio that's under you and the assets that are on the balance sheet are durable at a lower price, and we can stop that cycle of writing off?

Speaker #6: Hi, thanks for taking the question. Meg, I was curious the there was a statement in the SEA about writing off too much value. I wonder if you could talk a little bit about that, about and ideally there's really two ways to address it, right?

Speaker #6: There's making sure that the new projects you're sanctioning are durable at a low price, but you've also got a portfolio review going on. And I suspect that you're testing assets down to lower prices, and you've mentioned that.

Speaker #6: So could you talk a little bit about how you're evaluating the existing portfolio and your expectation of when you'll be able to sort of confidently say that the portfolio that's under you and the assets that are on the balance sheet are durable at a lower price and we can stop that cycle of writing off?

Meg O'Neill: Yeah. It's a great question, Steve. Look, if we look back over the history, we have had too many impairments. The reality is those are shareholder dollars that were not used effectively, really wasted. We need to start by being upfront and acknowledging that we have made some decisions in the past that did not deliver the outcomes we expected. You have the commitments from Kate and myself and the leadership team to really strengthen decision-making, strengthen how we look at opportunities, and to make sure that we are protecting shareholder value. Your comment around new projects must be durable, that is absolutely how we're thinking about our future investment decisions. Now that said, we still have a bit of work to do as we look at the portfolio. A number of transactions have already been announced.

Speaker #2: Yeah, it's a great question, Steve. Look, if we look back over the history, we have had too many impairments and the reality is those are shareholder dollars that were not used effectively.

Speaker #2: Really wasted. And we need to start by being upfront and acknowledging that we have made some decisions in the past that did not deliver the outcomes we expected.

Speaker #2: And you have the commitments from Kate and myself and the leadership team to really strengthen decision making. Strengthen how we look at opportunities to make sure that we are protecting shareholder value.

Speaker #2: So your comment around new projects must be durable—that is absolutely how we're thinking about our future investment decisions. That said, we still have a bit of work to do as we look at the portfolio.

Speaker #2: A number of transactions have already been announced. We're in the process of working to complete the Kestrel transaction later this year, for example. So it's going to take us a bit of time but I would also assure you that we are moving with pace on the low hanging fruit.

Meg O'Neill: We're in the process of working to complete the Castrol transaction later this year, for example. It's going to take us a bit of time, I would also assure you that we are moving with pace on the low-hanging fruit. There are clearly some assets that do not form part of our long-term business, and I think are transactable, and I think are transactable at fair value. I think in the hands of new owners, they will continue to generate value. We'll be very focused on maximizing value for our shareholders as we go through this process.

Speaker #2: There are clearly some assets that do not form part of our long-term business. And I think are transactable, and I think are transactable at fair value, and I think in the hands of new owners, they will continue to generate value.

Speaker #2: So we will be very focused on maximizing value for our shareholders as we go through this process.

Craig Marshall: Thanks, Steve. I think we've got time for probably two more questions. We have one pooled. Coming back to Biraj at RBC, one more for whoever wants to take it.

Speaker #1: Thanks, Steve. I think we've got time for probably two more questions. We have one polled coming back to Berage at RBC and then one more for whoever wants to take it.

Biraj Borkhataria: Hi there. Thanks for getting back to me. Just a quick one, which is probably for Kate, and it is on Lightsource. Are you able to say what the sort of total balance sheet obligations are associated with Lightsource at the moment? I saw the comment around $1 billion of hybrids related to a subsidiary. I was not sure if that was related to that. I had a figure in mind of about $3 billion of debt related to that business. Is that in the right ballpark? Thank you.

Speaker #6: Hi there. Thanks for getting back to me. Just a quick one which is probably for Kate and it's on light source. Are you able to say what the sort of total balance sheet obligations are associated with light source at the moment?

Speaker #6: I saw the comment around $1 billion of hybrids related to a subsidiary. I wasn’t sure if that was related to that. I had a figure in mind of about $3 billion of debt related to that business.

Speaker #6: So, is that in the right ballpark? Thank you.

Kate Thomson: Hi, Biraj. Yeah. If you go back to when we completed the acquisition of the remaining 50% of Lightsource, which was Q4 2024, at that point, we disclosed that we were acquiring debt of around $3 billion. You will recall it was Lightsource, but also the completion of BP Bioenergie. Having said that, the majority of it was Lightsource. I think the way to hold this, because I guess what you are pushing at is what is the impact on our financial obligations at the point at which we transact on Lightsource? I think we just need to wait until we have signed a transaction. Until we get to that point, we do not have full clarity on what is the shape of the transaction, and therefore, what is the impact on our BP financial obligations and debt.

Speaker #2: Hi, Berage. Yeah. So, if you go back to when we completed the acquisition of the remaining 50% of Lightsource, which was Q4 '24, at that point, we disclosed that we were acquiring debt of around $3 billion.

Speaker #2: You'll recall it was light source but also the completion of BP BioEnergia. Having said that, the majority of it was light source. I think the way to hold this because I guess what you're pushing out is what is the impact on our financial obligations at the point at which we transact on light source?

Speaker #2: And I think we just need to wait until we have signed a transaction. Until we get to that point, we don't have full clarity on what is the shape of the transaction, and therefore what is the impact on our BP financial obligations and debt.

Meg O'Neill: I think if you can just be patient, we will update you as we reach that point.

Speaker #2: So I think if you can just be patient, we'll update you as we reach that point.

Craig Marshall: Thanks, Kate. Thanks, Biraj. I am going to take one last question, even though four have since pooled. At top of the list is back to Fergus Neve, please. Then Mark, Chris, and Nitin, we can come back to you.

Speaker #1: Thanks, Kate. Thanks, Berage. I am going to take one last question even though four have since polled and the top of the list is back to Fergus Niamh, please.

Speaker #1: And then Mark, Chris, and Nitin, we can come back to you.

Fergus Neve: Brilliant. Thank you very much for coming back to me. I really appreciate that. I just wanted to follow up on one of the earlier comments about asset sales and the extent to which the portfolio has too many assets in it at the moment. I wondered whether that points to potential of kind of going beyond the $20 billion target that you have set by the end of 2027, not necessarily by the end of 2027, but into the future. Just on that, have you got any update on how you are tracking against that target at the moment, particularly considering the slight reduction in the divestment proceeds guidance for the full year this year? Thanks.

Speaker #6: Brilliant. Thank you very much for coming back to me; I really appreciate that. I just wanted to follow up on one of the earlier comments about asset sales and the extent to which the portfolio has too many assets in it at the moment.

Speaker #6: I wondered whether that points to potential of kind of going beyond the 20 billion target that you have set by the end of 27, not necessarily by the end of 27, but into the future.

Speaker #6: And just on that, have you got any update on how you are tracking against that target at the moment, particularly considering the slight reduction in the divestment proceeds guidance for the full year this year?

Speaker #6: Thanks.

Meg O'Neill: Let me take that one, Fergus. Thank you. Look, firstly, how are we tracking? We delivered $5.3 billion last year in terms of proceeds. We're guiding on 8 to 9 this year. What I would say, to be really clear, is we've never held the $20 billion as a key target of ours. It was put into the market to demonstrate one main lever that we could utilize to drive our deleveraging and increase our financial resilience. I'm far more focused on getting our balance sheet to where it needs to be than the number of divestments we make. Every divestment choice, as you've heard us say today, has to be completely value-driven. We're not selling assets at any price to hit a divestment target. I think that makes no sense to our shareholders. That is the way to hold it.

Kate Thomson: Let me take that one, Fergus. Thank you. Look, firstly, how are we tracking? We delivered $5.3 billion last year in terms of proceeds. We're guiding on eight to nine this year. What I would say, to be really clear, is we've never held the $20 billion as a key target of ours. It was put into the market to demonstrate one main lever that we could utilize to drive our deleveraging and increase our financial resilience. I'm far more focused on getting our balance sheet to where it needs to be than the number of divestments we make. Every divestment choice, as you've heard us say today, has to be completely value-driven. We're not selling assets at any price to hit a divestment target. I think that makes no sense to our shareholders. That is the way to hold it.

Speaker #2: Let me take that one Fergus. Thank you. Look, firstly, how are we tracking? So we delivered 5.3 billion last year in terms of proceeds.

Speaker #2: We're guiding on 8 to 9 this year. What I would say to be really clear is we've never held the 20 billion as a key target of ours.

Speaker #2: It was put into the market to demonstrate one main lever that we could utilize to drive our deleveraging and increase our financial resilience. I'm far more focused on getting our balance sheet to where it needs to be than the number of divestments we make.

Speaker #2: And every divestment choice, as you've heard us say today, has to be completely value driven. We're not selling assets at any price to hit a divestment target.

Speaker #2: I think that makes no sense to our shareholders. So that is the way to hold it. We will update on proceeds as we go, but what we are totally focused on is getting that balance sheet in shape as opposed to hitting a number on divestments.

Meg O'Neill: We will update on proceeds as we go, what we are totally focused on is getting that balance sheet in shape as opposed to hitting a number on divestments. By the end of this year, we should be at about $16. $15, $16.

Kate Thomson: We will update on proceeds as we go, what we are totally focused on is getting that balance sheet in shape as opposed to hitting a number on divestments. By the end of this year, we should be at about $16. $15, $16.

Speaker #2: But by the end of this year, we should be at about 16. 15, 16.

Craig Marshall: Yeah. Thank you, Kate. I'm actually going to correct myself. I am going to take a final question from Nitin Kumar at Mizuho. Nitin, I know you've just initiated coverage on BP. Thank you. We will take that as the final question.

Speaker #1: Yeah. Thank you, Kate. I'm actually going to correct myself. I am going to take a final question from Nitin Kumar at Mitsuo. Nitin, I know you've just initiated coverage on BP.

Speaker #1: Thank you. We will take that as the final question.

Nitin Kumar: Great. Thank you. I'm still new to the story, but Meg, I just wanted to ask you, thanks for laying out the strategic priorities. You've talked a lot about asset divestments and pruning the portfolio, but as you have come to know the company from the inside, are there areas that we should expect to see more investment? Are there other businesses where you can play offense, given the capabilities of the company?

Speaker #6: Great. Thank you. And yes, so I'm still new to the story, but Meg, I just wanted to ask you thanks for laying out the strategy, the strategic priorities.

Speaker #6: You've talked a lot about asset divestments and pruning the portfolio, but as you have come to know the company from the inside, are there areas that we should expect to see more investment or are there other businesses where you can play offense given the capabilities of the company?

Meg O'Neill: Outstanding question, Nitin. I'll take you back to the theme of the five priorities, which is about getting fit to grow. We do have growth opportunities. We do have places we can invest capital in a profitable manner that delivers strong, resilient shareholder returns. The US is probably the top country on the list, both with the offshore and the Paleogene and onshore in BPX. I'd be remiss if I didn't also acknowledge that the downstream in the US, the downstream and trading business combined, is also quite a profitable business. There are opportunities. We've got the Middle East. The Kirkuk development, for example, is another asset that has growth potential. Bumerangue in Brazil. There's a number of quite significant assets, particularly in the upstream, where we have that growth potential.

Speaker #2: Outstanding question, Nitin. And I'll take you back to the theme of the five priorities, which is about getting fit to grow. So, we do have growth opportunities.

Speaker #2: We do have places we can invest capital in a profitable manner that delivers strong resilient shareholder returns. The US is probably the top country on the list both with the offshore and the paleogene.

Speaker #2: And onshore and BPX. I'd be remiss if I didn't also acknowledge that, in the US, the downstream and trading business combined is also quite a profitable business.

Speaker #2: So there are opportunities. We've got the Middle East. The Kirkuk development, for example, is another asset that has growth potential. And then Búzios in Brazil.

Speaker #2: So there's a number of quite significant assets, particularly in the upstream where we have that growth potential. And the focus for us is make sure that we're getting the company in sufficient shape, again, it's that get fit so that we can, deliver that growth over the coming years.

Meg O'Neill: The focus for us is make sure that we're getting the company in sufficient shape. Again, it's that get fit, so that we can deliver that growth over the coming years.

Craig Marshall: Thanks, Meg, and thank you, Nitin. Look forward to talking to you further in the coming months. I think that's us at time for today's call. Thanks so much to everybody for dialing in. Maybe Meg, if I can hand back to you for any final comments before we close.

Speaker #1: Thanks, Meg. And thank you, Nitin. Look forward to talking to you further in the coming months. I think that's us at time. For today's call, thanks so much to everybody for dialing in.

Speaker #1: Maybe Meg, if I can hand back to you for any final comments before we close.

Meg O'Neill: Excellent. Well, thank you, Craig. Thanks everyone for your questions and for your interest in BP. I look forward to seeing a number of our investors over the coming days and meeting more of you over the H2 of the year. We do have a very important H2 ahead of us at BP. One that I want to assure you the whole team is focused on delivering. We look forward to updating you as we go. Thank you.

Speaker #2: Excellent. Well, thank you, Craig. And thanks, everyone, for your questions and for your interest in BP. I look forward to seeing a number of our investors over the coming days and meeting more of you over the second half of the year.

Speaker #2: We do have a very important second half ahead of us at BP. And one that I want to assure you the whole team is focused on delivering.

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