BP Q1 2025 (Q&A) Earnings Report

BP EPS Results

• Actual EPS: $0.53
• Consensus EPS: $0.56
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: $0.97

BP Revenue Results

• Actual Revenue: $46.91 billion
• Expected Revenue: $40.12 billion
• Beat/Miss: Beat by +$6.79 billion
• YoY Revenue Growth: -4.00%

BP Announcement Details

• Quarter: Q1 2025 (Q&A)
• Date: 4/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 8:00AM ET

BP, plc, once known as British Petroleum, is one of the world’s 7 oil & gas supermajors with operations spanning the globe. In terms of revenue, it ranks 4th on the list and the company is vertically integrated as well with operations in all segments of the oil and gas sector. Operations are currently underway in 80 countries around the world, the company can produce 3.7 million barrels of oil equivalents per day, and it lays claim to nearly 20 billion barrels in proven reserves. On the retail end of the business, the company operates more than 18,700 fuel stations and its largest segment is in the US.

The company was founded in 1908 with the purpose of exploring for and producing oil in the middle east. The company expanded into Alaska in 1959 and then accelerated its expansion when it merged with Amoco in 1998. Another merger with Burhman Castrol in 2000 created the company that is traded today.

BP, plc rebranded itself in 2000 giving new meaning to its name. The once British Petroleum is now “Beyond Petroleum” and focused on a major shift in its business. The company is working hard to move away from non-renewable carbon-based energy and into biofuels, solar, and wind. The company hopes to be net-zero in regard to carbon emissions and production by 2050 or earlier and is well on the way to doing so. Among the many avenues of advance are the build-out of solar and wind farms as well as the expansion of a major EV charging network. The network totaled more than 9,000 stations around the middle of 2022 and expansion was ramping in order to meet the goal of 100,000 EV stations before 2050.

BP (NYSE:BP) currently operates through 4 segments including Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. The company produces and trades in natural gas and oil liquids, offers biofuels, and operates wind and solar power generating facilities. The company also provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage, as part of its green agenda.

In addition, it produces and refines oil and gas for its downstream operations as well as invests in upstream, downstream, and alternative energy companies including advanced mobility. Advanced mobility is the future of transportation and includes technologies like EV, hybrid, and hydrogen fuel cells. To that end, the company is building 7 hydrogen production and storage hubs in key locations around the world. The company aims to produce blue and green hydrogen for the global transportation industry with production beginning in 2027. Blue hydrogen is hydrogen captured from the company’s natural gas deposits using a process that captures the waste carbon.

BP Q1 2025 (Q&A) Earnings Call Transcript

Key Takeaways

• BP achieved 96% refining availability and 95% upstream plant reliability in 1Q with three major project start-ups (SEEP, Raven Infill, GTA) adding 100 kbd toward its 250 kbd by 2027 goal, alongside six exploration discoveries including Namibia.
• Underlying pre-tax earnings met consensus overall, with the Customers & Products segment delivering its best first quarter since 2020, while Gas & Low Carbon lagged due to weak gas trading results.
• The company reduced 2025 CapEx by $0.5 bn to $14.5 bn (organic < $14 bn), implemented a $1.5 bn cash-flow intervention, and expects $3–4 bn of divestment proceeds this year, though net debt temporarily rose on working-capital build.
• BP drove £500 m of opex savings quarter-on-quarter and remains on track to deliver £4–5 bn of structural cost reductions by year-end.
• A strategic review of Castrol has been launched with significant interest, and the company completed or signed $1.5 bn of divestments in 1Q as it presses ahead with its reset strategy.

Presentation

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Welcome everybody to BP's First Quarter twenty twenty five Results Call. We'll be focusing today's call on the first quarter performance and the contents of the video that I hope many of you will have seen by now. Let me first though hand over to Murray for a few brief opening remarks.

[Murray Auchincloss, CEO & Director at BP]

Thanks, Craig. Today marks the first quarter since we laid out a reset strategy and we are delivering on our priorities at pace. We delivered strong operational performance in 1Q with over 96% refining availability and more than 95% upstream plant reliability supporting record operating efficiency. In upstream, have successfully started up three major projects, SEEP in Trinidad, Raven infill in Egypt and GTA in Mauritania and Senegal. That adds 100 MBD of capacity on our target of two fifty MBD by 2027.

[Murray Auchincloss, CEO & Director at BP]

We made six exploration discoveries, including in the Gulf Of America, Trinidad, Egypt and a significant discovery in Namibia. And our customers business delivered a strong quarter with the best first quarter since 2020 on an underlying RCOP basis. Underlying Greek pre tax earnings met consensus. Gas and low carbon missed primarily due to a weak gas trading result, but we saw strong performance from customers and products which beat consensus. We recognize and continue to monitor market volatility and are focused on what we can control.

[Murray Auchincloss, CEO & Director at BP]

We have taken a $1,500,000,000 intervention around cash flow for 2025. We continue to optimize our investment plans and have reduced CapEx by $05,000,000,000 in 2025 down to $14,500,000,000 Excluding the inorganic payment for BP Bunge, organic CapEx is now below $14,000,000,000 in 2025. And with $1,500,000,000 of completed or signed divestment agreements year to date, We now expect 3,000,000,000 to 4,000,000,000 in divestments for 2025 with proceeds weighted to the second half. We're also making strong progress with the strategic review of Castrol with significant interest in the business. And we have made good progress in costs with underlying operating expenditure down $500,000,000 quarter on quarter.

[Murray Auchincloss, CEO & Director at BP]

We'll provide more color on cost reductions at 2Q results. Finally, and as we guided in our trading statement, net debt rose in the quarter, primarily due to the working capital build. However, we expect the majority of that to unwind through the year in a flat price environment. In summary, operations are running well, creating a strong foundation with our financial results resilient. We have an ambitious growth plan that we're focused on delivering at pace.

[Murray Auchincloss, CEO & Director at BP]

That is what we need to keep building on quarter in and quarter out. Back to you, Greg.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Murray. And as usual for everybody on the call for Q and A, I'm going to ask you again, please limit yourself to two questions. We've got a number of people on the call today to get through. We will look to close the call by 2PM. And of course, the IR team is available for any follow-up.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

So with that, let's get started. I'm going go to The States, to start off, this morning, this afternoon, and we'll take the first question from Steve Richardson. Steve, good morning. Maybe we don't have Steve. So in which case, we'll stay in The States and we'll go to Doug Leggate at Wolfe.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Doug, good morning. Doug, we can't hear you either. Maybe the, connection Can I can Looks like we've got a bit of audio problems? What I'm going to try and do then, maybe there's a connection problem with The US, we'll maybe come back to The UK. Let's try Josh Stone at UBS.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Okay. We seem to be having some audio problems on the Q and A. If everybody on the line can hear me, if you can just hold as we try and rectify the problems. Just bear with us please. So I'll maybe wait for some emails so we're using the time efficiently.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Buybacks. Can you walk through the bridge here? And how much of it relates to reinvent BP share option plans? Do understand sound may have come back as well. I do understand sound may be back as well.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

So maybe if we deal with those first two questions.

[Murray Auchincloss, CEO & Director at BP]

Kate, why don't you lead off on those two? Apologies for the sound issues, team.

[Kate Thomson, CFO at BP p.l.c]

Yes, will do, Murray. Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Okay. We're being asked to repeat the two questions from Biraj. First one, trying to unpack the weakness in gas and low carbon. Beyond trading, what is driving the higher noncash costs? Should we consider this run rate for the rest of the year?

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Or is there a one off element? And the second question was on share count. It went up despite the £1,750,000,000 buyback. Can you walk through the bridge here? And how much of it relates to Reinvent BP share option plans?

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Kate?

[Kate Thomson, CFO at BP p.l.c]

Yes. Thank you, and hello, Biraj. Sorry, I can't hear your voice today, and apologies for these issues. In terms of the noncash items going through the Gas and Low Carbon Energy segment this quarter, Quarter on quarter, we've got about €200,000,000 of higher noncash items. So DD and A is higher.

[Kate Thomson, CFO at BP p.l.c]

Obviously, we've got the start up of Raven Infill, so that was delivered ahead of schedule, which is a great performance by the team. There were also some positive noncash items in 4Q, which we haven't obviously seen again in 1Q. They were unique to the fourth quarter. So in terms of the quarter on quarter delta, I think that's a little bit different because of the one offs that you've seen going through 4Q versus 1Q. In terms of the DD and A rate going forward, that's probably a decent run rate, with regard to the start up of Raven.

[Kate Thomson, CFO at BP p.l.c]

Turning to share count, the end of the quarter share count reduction was actually slightly down. In terms of the Reinvent, I can't break that out for you at this moment. As we've said before, the Reinvent options have a six year vesting period, and it's quite hard to forecast the extent and the timing of which that may impact our share count. I

[Kate Thomson, CFO at BP p.l.c]

think a lot of it

[Kate Thomson, CFO at BP p.l.c]

is going to be driven by human behavior with regard to what's going on in terms of the share price and other factors. What I can say is that, of course, we will continue to offset dilution related to employee share plans over time as we always have done. And so far, since 2021, we've reduced our total share count by about 22% and that remains our intent going forward to offset employee share plan impacts over time.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Kate. We are going to try the lines. So we'll take the question from Josh Stone at UBS. Now Josh, can you hear us?

[Joshua Stone, Head - European Energy & Equity Research at UBS Group]

I can hear you. Can you hear me?

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Can you go ahead with your question, Josh? Thanks.

[Joshua Stone, Head - European Energy & Equity Research at UBS Group]

Yes. I'll go ahead. Thanks, Craig. Good afternoon, Murray. Good afternoon, Kate.

[Joshua Stone, Head - European Energy & Equity Research at UBS Group]

Murray, in the video, you talked about very strong operational performance this quarter, and I think you should be commended for that. But when I look at your cash flow statement, that strong performance at least doesn't seem to be coming through yet. So maybe just expand a little bit on the difference between your production performance and your cash flow performance and what gives you some confidence that that can actually get better through this year? There's some discussion maybe on gas trading and costs would be helpful, but maybe if there's any other line items you think we should be paying attention to that's driving some of that mismatch in the first quarter. And then second question for Kate.

[Joshua Stone, Head - European Energy & Equity Research at UBS Group]

I noticed another issuance of hybrids of about 500,000,000 this quarter. It looks to be sort of light source, but just remind us how you're thinking about the hybrid balance this year and the timing of when you might start to redeem some of these bonds? Thanks.

[Murray Auchincloss, CEO & Director at BP]

Yes, Josh, nice to hear your voice. Thanks. Sorry for the technical difficulties this morning, this afternoon. As far as conversion from earnings into cash flow, it's helpful to look at EBITDA, and we continue to provide EBITDA data, so you can see that. I think the principal issue we have in the quarter is obviously a working capital build.

[Murray Auchincloss, CEO & Director at BP]

That's something we signaled to you both at Capital Markets Day and at the trading statement. We've had a seasonal build in working capital as we fill up our refineries ahead of the driving season and the flying season across 2Q, 3Q and 4Q. So we'd expect the majority of that working capital to unwind and you'd start to see that coming through the rest of the year assuming a flat price environment. As far as gas trading, yes, as signaled a weak gas trading, oil was average. You'll remember that we aim for a 4% return on a 4% earnings return on trading the five years and we have the same aim this year.

[Murray Auchincloss, CEO & Director at BP]

Very, very volatile trading circumstances in the first quarter. The oil side did well to hit average and then the gas side caught out a little bit on European regulation changes. And you should expect us to get back to normal on that in the future. You should expect average performance out of us on gas. So I hope that helps on cash flow conversion and we feel confident in our plans to grow cash flow from eight to 14% across the next three years.

[Murray Auchincloss, CEO & Director at BP]

And it's been a great operational start for the teams. Kate, over to you on the other question.

[Kate Thomson, CFO at BP p.l.c]

Yes, thank you. I think you also asked about costs, Josh. I think I counted three questions nested in there, but let me quickly talk about costs. So making incredible progress with regard to our 4,000,000,000 to £5,000,000,000 cost reduction program, very much building on the progress that we started in 2024, where we delivered 800,000,000 structural cost reductions and £300,000,000 of absolute reductions through the year. Quarter on quarter, we're already, dollars 500,000,000 lower in terms of our absolute cost base.

[Kate Thomson, CFO at BP p.l.c]

So that's good progress, and, we can talk more subsequent questions, I'm sure, in terms of how we're getting after this and what more we're going to deliver. Turning to hybrids, yes, you're correct. We did issue £500,000,000 This is really just bridge financing for us as we think about bringing in a partner in Lightsource BP. These are these this £500,000,000 of hybrids is only in place until the beginning of next year. They mature in 2026.

[Kate Thomson, CFO at BP p.l.c]

And and my my overall strategy with regard to hybrids remains completely unchanged from what I said at Capital Markets Day. I do not intend to grow the stack of the 12,000,000,000 group hybrids at all. And as we step towards each maturity window, we have the first one between June and September this year and the next one in 2026, then we'll be very thoughtful with regard to our cash flows and whether or not we want to take advantage of the ability to reduce that hybrid stack by up to 10% each year. Obviously, we're capped to a maximum of 25% reduction in a cumulative basis by the rating agencies, but we will think about that as and when we get to each maturity window, Josh.

[Joshua Stone, Head - European Energy & Equity Research at UBS Group]

Got it. Thanks for the comments.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Josh. We're going to go back to The U. S. Where we try to start. I just note Steve and Doug, you were on the call list.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

I don't see you there again. So if you want to try and dial in again, if you've got a question, please do. But I'm going to start with Roger Read at Wells Fargo. Roger?

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Yes. Good morning. Good afternoon. Hopefully, you can hear me this time.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Yes, we can, Roger. Thank you. Thanks for bearing with us.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

All

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

right. Success. I like it.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

So I'd just like to maybe start off BPX. We've had, obviously, commodity prices come down on the oil side. They've remained pretty favorable on the gas side. It's too soon after the late February Investor Day you announced big changes, but maybe just get a feel for how you're looking at it, how this fits within the range of expectations and what you would think about in terms of either increasing activity on the gas side like the Haynesville or pulling back at all in Eagle Ford or the Permian with oil closer to 60 here?

[Murray Auchincloss, CEO & Director at BP]

Yes. Great, Roger. Thanks very much. I'll take those. On BPX, our plans remain unchanged for now.

[Murray Auchincloss, CEO & Director at BP]

We continue to think about investing $2,500,000,000 this year. I think we've got nine or 10 rigs active right now across the basins. We'll closely monitor this. If oil price stays low, of course, we'll moderate our plans and switch over into gas. But for now, we plan to keep it pretty tight.

[Murray Auchincloss, CEO & Director at BP]

Like you, I'm getting somewhat optimistic on gas pricing. The demand for natural gas is pretty high and production needs to flow and new drilling needs to start to help that production flow to fill up the LNG plants and to fill up the other demand that's coming through in The U. S. Our Haynesville position, Eagle Ford position are well positioned for that very close to markets and very little differentials. So in time, we think we'll grow that gas position, the drilling inside that gas position.

[Murray Auchincloss, CEO & Director at BP]

Right now is not quite the right time and we'll just keep this tightly under review as we watch what unfolds with the hydrocarbon pricing. Thanks, Roger.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Roger. We're to stay in The U. S. Doug, I see you managed to rejoin. Over to you, please.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

Can you all hear me okay?

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Yes, yes. We're good, Doug. All sorted.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

Excellent. Okay, good. I'm just glad it wasn't on a screw up

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

on my end. But anyway, Murray, I wonder if I could hit the disposal target. You've nudged it up a little bit for this year. Small, obviously, but you've got a big number out there. And it seems to us, at least when we kind of walk through the waterfall of the potential disposal candidates, it seems you could far exceed that $20,000,000,000 number.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

And I realize it's very early days, but I wonder if I could ask you to frame how you've risked that number in terms of is there an upside case and maybe put a range around what that might look like over time?

[Murray Auchincloss, CEO & Director at BP]

Yes, great. Doug, thanks very much. As you say, we have very high quality assets and transactions are not slowing down right now. Obviously, we've got €1,500,000,000 behind us in the first quarter, which is fantastic. We're operating our range to 3,000,000,000 to 4,000,000,000 based on the strength we see and the conversations on the retail positions that we're looking at as well as the refining position.

[Murray Auchincloss, CEO & Director at BP]

And obviously, we've launched Castrol as well. I feel it's a well underpinned plan. I can't give you its risk, we'll deliver the £20,000,000,000 We have lots of options around that. I think for now, given that we're only one quarter in, I wouldn't be guiding to upside. I think we just need to start to get more track record on that and see how the process goes.

[Murray Auchincloss, CEO & Director at BP]

But I'm very confident in it. It is a number that we will hit, much like the net debt target is a number we will hit. And there's lots of interest inside the assets that we see, especially as interest rates fall here in Europe. They may not be falling in The U. S.

[Murray Auchincloss, CEO & Director at BP]

Yet, but as interest rates fall in Europe, people are looking for yield and our assets are good for yield. So we continue with our strong process. We feel very good about the $20,000,000,000 number. We've got strong progress and strong interest inside cash flow and we keep moving forward. Doug, thanks for the question.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

Thanks, Murray. I wonder if I could risk a quick follow-up. It's also on BPX. A little selfishly, you recently dissolved the JV with Devon. There seems to be conflicting data out there as to what it means for VPX.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

I think Inveris had a report the other day seeing you guys got the better side of the deal, but Devin suggests that the capital costs come down dramatically with them operating. So I wonder if you could offer your perspective on that and whether it impacts the 650,000 barrel a day target in 02/1930. I'll leave it there. Thank you.

[Murray Auchincloss, CEO & Director at BP]

Yes. No impact to six fifty kbd target for now. We really like the transaction. We got more production early on. That's why it adds more value.

[Murray Auchincloss, CEO & Director at BP]

And I think that's what you're referencing in the Anarvis reports that has been put out. Now I think there's a different philosophy between ourselves and some companies on what you do in the Lower 48. Our focus is on creating as much NPV as we possibly can for the dollars we spend, whereas some operators simply focus on cost. That's not what we do. And again, if you look at EnerVas and they benchmark us across all of our three basins, we are best in class on NPV per dollar spent.

[Murray Auchincloss, CEO & Director at BP]

And that's about getting more resources for the dollar we spent on a relative ratio. That applies in the Permian, applies in the Haynesville and here in the Eagle Ford as well. I think the principal difference between the two companies is we believe in three strings to capture more resource. I think Devon believes in two strings to minimize cost. So they're right, they'll spend less on the wells, on the casing strings, etcetera.

[Murray Auchincloss, CEO & Director at BP]

But again, the benchmarking is showing that using the technology we do, matter pressure drilling, insulated drill pipe and drilling automation, our teams are keeping the costs relatively consistent. So I think benchmarking will tell over time who's right on this and it's very transparent under The U. S. System. But we remain confident given our track record that we've got a great team.

[Murray Auchincloss, CEO & Director at BP]

They're doing great work and we're very, very focused on value for dollars, not just dollars. So we love the deal and we look forward to seeing the results of it and we shall challenge ourselves on benchmarking to make sure that we continue to be the best in the basins in which we operate in the way that we think about it. Hope that helps, Doug.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

It does. Thanks a lot, Murray.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Doug. We're going to come back to The UK and we'll go to Lydia Rainforth at Barclays. Lydia?

[Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank]

Good afternoon. Two questions actually, On refining and trading side, if I think about that business, looking at the numbers, about €30,000,000 of operating profit despite what is 96% uptime. And assuming it's a positive contribution from Trading, it does still suggest that the Refining business is loss making even with that good number operationally. So I guess the question is, is that a concern and how quickly can you actually get that back to where it should be? And I suspect that will link in a little bit to the cost side.

[Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank]

And then the second one, just around the Head of Strategy role and what do you gain from not having that role in place now, and how do you make sure you respond quickly to changing circumstances? I think part of the criticism and so forth has been that the pivot back to what you're doing now didn't happen as quickly as it could have done. So just that idea of how do you make sure that you can pivot up that you can you're sense checking that kind of flexibility side of it? Thanks.

[Murray Auchincloss, CEO & Director at BP]

Yes, Lydia. I think on the Head of Strategy role, we'll continue to add as Head of Strategy, the person will just report into Kate. Will be much more tightly integrated into planning and actuals and that role continues to be very important. I'm just not choosing to have that role on leadership team. But Kate will ably be able to help us navigate all the twists and changes in the external world and the team will remain in place to help us with that.

[Murray Auchincloss, CEO & Director at BP]

I think on refining, what would I say? So 1Q, a difficult margin environment in the Midwest, where there was a surplus of gasoline, and obviously Whiting is a gasoline focused refinery. So that was very, very difficult pricing inside the Midwest. And then in Rotterdam as well, diesel oversupply, so the pricing inside Rotterdam was quite, quite difficult. We are seeing these things rebound as we move into turnaround season globally and as demand starts to pick up.

[Murray Auchincloss, CEO & Director at BP]

Remember 1Q in The U. S. Was pretty difficult. There were quite a few storms 1Q in The U. S.

[Murray Auchincloss, CEO & Director at BP]

That drove that low demand. So we're starting to see the refining's margin lift up now. We've obviously got Atlantic Basin refineries 1,200,000 a day shut in now. So we are seeing that start to lift up and we now think that we're above our planning basis for refining margins. But as always, these things are volatile.

[Murray Auchincloss, CEO & Director at BP]

We'll see what happens. At the same time that's happening, we continue with our efficiency and cost journey. We're obviously high grading the Gelsenkirchen refinery. We continue in those conversations with counterparts and we have a big cost program across refining that we laid out. Our overall aim is to improve the profitability of that business by $2 a barrel over the next few years from $25 to $27 and we're well on track with that.

[Murray Auchincloss, CEO & Director at BP]

And I think we were just in an oversupply situation both in 4Q and 1Q, but that now seems to be starting to alleviate itself as 1,200,000 a day capacity shuts down and demand starts to pick up as we move into driving season. Hope that helps, Lydia.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Lydia. We'll turn next to Kim Fustier to HSBC. Kim?

[Kim Fustier, Analyst at HSBC]

Hi, good afternoon, and thanks for taking my questions. Firstly, on CapEx. The the oil price is about $5 weaker now than the $70 Brent you assumed in the CMD in in February. You've turned 25 CapEx by about 3%, which seems like the right thing to do. I appreciate there's not much flexibility to reduce CapEx in the near term, but maybe on the twelve month view, would you be able to reduce CapEx further?

[Kim Fustier, Analyst at HSBC]

And if so, would you cut CapEx proportionally across upstream and non upstream businesses? And I guess related to that, I've seen that you exited the low carbon transport business, and you've also canceled another biofuels project. So relative to the CMD in February, does that point to further downside to your transition CapEx guidance?

[Murray Auchincloss, CEO & Director at BP]

Yes. I think, Kim, no change to the overall guidance that we provided at Capital Markets Day. We set a range of DKK13 billion to DKK15 billion. You've obviously seen us cut our capital from DKK15 billion down to DKK14.5 billion. That's across that's not in any specific business that I'd highlight.

[Murray Auchincloss, CEO & Director at BP]

It's across the patch. It's about capital efficiency that we see coming through as well as a few investment choices. None of the two that you mentioned were really impactful inside that capital frame. As far as how we think about this, we're very, very returns driven. We will be doing whatever makes the most sense for returns as we make these decisions.

[Murray Auchincloss, CEO & Director at BP]

In the event of an oil or gas price downside on a twelve month basis, we've got a lot of flexibility in our onshore rigs around the world. So we can obviously act on that basis. And of course, we can always trim C and M refining capital as we need it across the business as well. So I think what I'd say is we're being extra careful given what's going on with the macro environment. We've trimmed capital by 500,000,000 We've accelerated divestment proceeds.

[Murray Auchincloss, CEO & Director at BP]

So we've added 1 point billion to the cash flow of the corporation in 2025 in case the macro continues to turn worse. And we have optionality to reduce $2,500,000,000 of CapEx across the group in the event prices go lower. That would obviously challenge long term growth. So we're not doing that now, but we do have that $2,500,000,000 which equates to a further $10 of price downside. Of course, the last comment I'll make is in the event prices do start going that low, we'll start to see significant deflation based on what we've seen in past cycles and that tends to pass through quite, quite quickly.

[Murray Auchincloss, CEO & Director at BP]

We have seen softening in The U. S. Rig market and completions market now with the rig fleet down 10%. We're starting to see a bit of softness in the offshore floaters. So let's just see how this unfolds, but we're well prepared for any scenario.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Kim. Thank you, Kim. We'll stay in The UK and go to Chris Kuplent at Bank of America. Chris?

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Yes. Thank you very much, Craig. One for you, Kate. Could you walk us through a little bit the restatement and where Arkea has moved from? I remember at the time of the acquisition, this was meant to generate $500,000,000 plus of EBITDA this year, And I'm not sure what I can compare between your prior quarterly reports entirely tallied up.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

So that'd be helpful to understand the movements between downstream and low carbon. And then perhaps for you, Murray, you've now signed and published that Kirkuk agreement, but I'm still missing numerical details. Is there anything you can provide to us in terms of handrails, whether it's CapEx statistics, BOE or IRRs? Thank you.

[Murray Auchincloss, CEO & Director at BP]

Great. I'll start off with Kirkuk and then we'll hand over to Kate for your other question. The government of Iraq will publish the PSA at some moment in time is what we understand. They have not done so yet. So I have to be guarded in what I say, Chris.

[Murray Auchincloss, CEO & Director at BP]

I hope you understand that I don't want to break any of the break any of those agreements. I think the way you should think about this is this will be an incorporated joint venture where we bring partners into. There will be CapEx on balance sheet for a little bit, but then the CapEx will move off balance sheet as we bring those partners in. That's the first thing to say. So it will be a very capital light investment into Iraq.

[Murray Auchincloss, CEO & Director at BP]

The terms are much better than the previous rounds. Remember, we're on the eighth round now of price improvements since the first awards back in 2017 and 2028. And I think some of the terms from the eighth round have been published. So you can look at those inside the various different sources and you'll know that we're doing at least as well as that. The other things that are public that I can talk about is with Rommelo, we only had the oil rights.

[Murray Auchincloss, CEO & Director at BP]

Now we have both the oil rights and the gas rights, and it's a decent gas price. So we'll be very incentivized to help the nation with natural gas supplies, which they're encouraging us to look at. So that offers up an entirely different tranche of profitability relative to Rumela. And I think the other thing to say is that there's price upside inside this PSA that did not exist in the previous tranches as you look back across time. So it's pretty profitable.

[Murray Auchincloss, CEO & Director at BP]

It'll be cash flow positive quite quickly. Volume ramp up, I can't really disclose volume ramp and volume numbers until the PSA is published and hopefully that gets published and then I talk about this more wholesomely. That's just for the 3,000,000,000 barrels inside the twenty five year agreement we struck. We also continue to look at exploration optionality underneath the existing five domes. So that will be we have some commitments to drill some wells there that will open up new avenues beyond the 3,000,000,000 barrels.

[Murray Auchincloss, CEO & Director at BP]

And I'm sure there's lots of resource there as the source rock is very, very rich. And of course, we continue to conversations with them about the surrounding acreage as well and getting more exploration opportunities. So we think this is a great investment. And as we get that PSA published, I would look at the last round for now. And then when the new PSA is published, you should be able to model it pretty tightly, Chris.

[Murray Auchincloss, CEO & Director at BP]

Over to you, Kate.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

I appreciate that. Helpful. Thank you.

[Kate Thomson, CFO at BP p.l.c]

Hi, Chris. Yes. So on Arkea, we moved it out of the Customer and Product segment and into the Gas and Low Carbon Energy segment. So where we have materiality, we have restated the twenty twenty four numbers to demonstrate the impact of that. And with regards to disclosure, we'll disclose annually in terms of EBITDA, as we said we would when we were talking about this back at the Capital Markets Day.

[Kate Thomson, CFO at BP p.l.c]

In terms of progress, it did well last year, plants online. We've got three online already this year. I think we're expecting eight to 10. And we still continue to expect Arkea to be free cash flow positive by 2026. So from our perspective, it's well on track.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Okay. Thanks, Chris.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Okay. Thank you, Kate. Sorry,

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Chris, did you have a follow-up there?

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

All good. I'll circle back later.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Thank you

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

very much, Craig.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

No problem. Thank you. We'll jump back to The U. S, Jason Gabelman at TD Cowen. Jason?

[Jason Gabelman, MD - Equity Research at TD Cowen]

Afternoon. Happy to be back on the call. I wanted to start on gas and low carbon energy. The tax rate was high across the company, but also in that segment. I was wondering if you could talk about what drove that and what your expectations are on the tax rate for that segment going forward and more broadly for the company?

[Jason Gabelman, MD - Equity Research at TD Cowen]

Thanks.

[Murray Auchincloss, CEO & Director at BP]

Yes. I'll let Kate as our Head of Tax talk about that.

[Kate Thomson, CFO at BP p.l.c]

Thanks, Barry. Yes. So the group tax rate, the effective tax rate for the first quarter was around 50%. That's higher than it was in the previous quarter and in previous year in terms of 1Q, largely driven by the composition of our profits. We tend to have higher tax areas in our Oil Production and Operations segment than we do in either our Customer Products or our Gas and Low Carbon Energy, and that's what's driving the effective tax rate.

[Kate Thomson, CFO at BP p.l.c]

For now, I think it's important to remind people that we haven't changed our guidance for the full year. We still currently expect our effective tax rate to be around 40%.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Okay. Can you say something specifically about Gas and Low Carbon Energy? It looks like 1Q tax rate for that segment was 47%. It's been around 30% the past couple of years.

[Kate Thomson, CFO at BP p.l.c]

Yes. Think we'll follow-up with you separately on that. We don't disclose tax rates by segment. So I'll let Craig and the IR team pick that up with you afterwards, if that's okay, Jason.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Okay. That's fine. And then my follow-up is just on gas hedging. And I believe you had a solid gas hedging program for the Lower 48 last year and was wondering if you're doing the same this year, if you could talk about pricing you've locked in? Thanks.

[Murray Auchincloss, CEO & Director at BP]

Yes, we won't be specific. It's a bit commercially sensitive right now. But I'll say the majority of the gas hedges are locked in for BPX. The majority of the production profile is locked in around $4 Jason. So that's what we've got roughly right now.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Great.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Jason. No problem. We'll come back to The UK and take the next question from Martin Ratz at Morgan Stanley. Martin?

[Martijn Rats, Analyst at Morgan Stanley]

Yes, thanks. I've got two as well. I wanted to ask about a few line items that we don't often talk about, but actually in terms of our ability to model earnings and balance sheet gearing are quite important. One is the line about the minorities, which seems to have sort of grown over time. And frankly, it's quite hard to know really sort of what's in there.

[Martijn Rats, Analyst at Morgan Stanley]

But any sort of indication, guidance, what the sort of minorities line could report is current quarter, is there an indication of what we can expect over the next couple of quarters? And also related to that, the line item sort of adjusting items, which we never talk about, and

[Martijn Rats, Analyst at Morgan Stanley]

on our

[Martijn Rats, Analyst at Morgan Stanley]

end, we always assume that it's zero going forward. But over the last six quarters, it's averaged negative €1,700,000,000 per quarter. And so in terms of modeling balance sheet gearing, this is actually it moves around things sort of quite a bit. To the extent that you can say anything about the line item adjusting items going forward,

[Martijn Rats, Analyst at Morgan Stanley]

perhaps not being zero, is

[Martijn Rats, Analyst at Morgan Stanley]

there anything you can sort of guide us there? I guess it would help us sort of modeling the balance sheet. Then next to these two accounting questions, I've got one specific question about Cascada. As in my understanding is that the platform for Cascada is under construction at the yard, I believe, in Singapore. If that platform is imported into The United States, I would suspect that there would need a tariff would need to be paid.

[Martijn Rats, Analyst at Morgan Stanley]

And but I wanted to ask if you could confirm that, indeed, like, importing that platform for that project is subject to an import tariff? And also, if you can say something about how that might impact the economics of the Cascadia project overall.

[Murray Auchincloss, CEO & Director at BP]

Yes. Just to take Cascadia First, finished goods are not subject to tariff, Martin. So I think I don't think that's a risk at this stage. So nothing we're particularly concerned about. On NCI, I think you're asking a question.

[Murray Auchincloss, CEO & Director at BP]

I'll let Kate tackle that one. Just on adjusting items, I can't really give you any guidance. There are 1,000,000 things that flow through there. Fair value accounting effects on hedges, on derivatives, etcetera, move through there. So it's quite a volatile set of accounting elements that go through it.

[Murray Auchincloss, CEO & Director at BP]

You can see it in on Page 24 of the SEA. I think if I tried to give you guidance on that, I'd just get it wrong. If you think back in history, what's happened there at one moment in time, there €21,000,000,000 of adjusting items in a particular quarter because of the moves on gas prices against the hedges that we had in our LNG trading book, and those eventually evaporated to zero over time. So I just encourage you to think about cash flow would be my suggestion because that page of adjusting items is very, very difficult to forecast. It has a lot to do with interest rates.

[Murray Auchincloss, CEO & Director at BP]

It has a lot to do with oil and gas pricing and the contracts we have in place. Generally, there will be offsets in the underlying business and it's more of an accounting issue than a cash flow or earnings perspective, which is why we provide the adjustments we do. Kate, over to you on NCI.

[Kate Thomson, CFO at BP p.l.c]

Yes. Thanks, Murray. Hi, Martin. The only other point I'd add on adjusting items is, of course, you get tax items flowing through that as well. And this quarter, the pretax adjusting items were about £400,000,000 then there was a £500,000,000 adjusting item relating to the extension of the EPL in The UK system.

[Kate Thomson, CFO at BP p.l.c]

So that also flows through. Turning to NCI. Yes, look, it tipped up a little bit in this quarter. A lot of that was really due to the fact that we preissued around $2,500,000,000 of hybrids in the fourth quarter. If you could recall back to that, I was explaining that we took advantage of pretty unusually good conditions to issue in advance of upcoming maturities through 'twenty '5 and 'twenty six, as did our peers actually.

[Kate Thomson, CFO at BP p.l.c]

And so as a consequence, the costs associated with the hybrids are up a bit. The bit you can't see is that we chose to take that cash and invest it. And so we are earning interest income on the other side of that, which largely offsets it. In terms of how that's going to look for the next few quarters, as you know, I've just said the first maturity window with regard to our hybrid stack doesn't open up until June. We have the opportunity if we choose to reduce by up to €1,200,000,000 Let's see when we get there.

[Kate Thomson, CFO at BP p.l.c]

But unless and until we reduce that hybrid stack, the level of NCI income is going to remain fairly stable.

[Martijn Rats, Analyst at Morgan Stanley]

Okay. Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Martin. We'll go next to Michele DellaVigna at Goldman Sachs. Michele?

[Michele Della Vigna, Managing Director at Goldman Sachs]

Thank you. Two questions, if I may. The first one is on net debt. I was wondering if you could give us perhaps some guidance of where you expected at the end of the year, flat pricing given the operating working capital reversal that you expect through the rest of the year? And then secondly, I wanted to ask you a broader question on tariffs beyond the Cascita platform, just whether there is any sensitivity that you guys have done on what could be the impact on your business from tariffs and if there is any part of it which is especially subject to it?

[Michele Della Vigna, Managing Director at Goldman Sachs]

Thank you.

[Murray Auchincloss, CEO & Director at BP]

Michele, I'll take tariffs and I'll hand over to Kate. I think on tariffs, look, so far, we haven't seen a material impact to the business. If you think about our American business, we import product from Canada to process in our refineries. That's now been exempted under The U. S.-Mexico Canada trade agreement.

[Murray Auchincloss, CEO & Director at BP]

The aluminum and steel tariffs, we're not seeing any impact in our Lower 48 business because we took a choice eighteen months ago to source all of that steel domestically, so we don't see much of an impact. And in the Gulf Of America, as we just talked about, there's some specialty steels that we import for drilling and casing, but it's very, very small and it's not going to have a material impact on the business. So I think as I think about The U. S. Operations themselves, there's just not much of an impact on tariff, Michele, at all.

[Murray Auchincloss, CEO & Director at BP]

Kate, over to you on the question on net debt.

[Kate Thomson, CFO at BP p.l.c]

Yes. Hi, Michele. I think the first thing I do want to say on net debt is that the target that we set out of the 14,000,000,000 to 18,000,000,000 by 2027, I know Murray said it in his opening comments, but I think it bears reinforcing. We're very confident in the delivery of that, and that's what we're really focused on. With regard to the trajectory through the rest of 2025, we've got some big moving parts on there.

[Kate Thomson, CFO at BP p.l.c]

So we've got about, as I look at it, around $2,500,000,000 perhaps a little bit more of the working capital will reverse. And if we hit the top of the new target on divestment proceeds, you've got around another $3,500,000,000 of proceeds coming in, from that source. So there's some big moving parts on top of the operational performance. So, I think I would like to just take a moment to just comment on the way that we're going to tackle on that debt target. If you remember in February, we talked about ring fencing divestment proceeds from transactions on Castrol and Lightsource.

[Kate Thomson, CFO at BP p.l.c]

We've launched the process on Castrol. We've got, as you might imagine, great interest in that asset. It's an iconic brand. It's been in place for one hundred and twenty five years, And the team are doing a fantastic job for the last few years improving their performance and delivery every single quarter. So that's looking strong, and we expect to launch a process on Lightsource BP this quarter.

[Kate Thomson, CFO at BP p.l.c]

So the proceeds from both of those go to bring our balance sheet back into the 14,000,000,000 to $18,000,000,000 range and we feel very confident of that.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks very much. We'll take the next question from Matt Lofting at JPMorgan. Matt?

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

Thanks for taking the questions. Two, if I could please. I wanted to specifically first ask you about trading. I think you talked about gas earlier, but I wanted to just ask on oil and liquid, I guess, over the last twelve months, BP has generally turned the contribution in this with the average to weak range. And then particularly on a headline basis, it seems to have coincided with moderated oil and product market.

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

So I wondered if you could just talk about whether there's any key market or spread characteristics that the company would want to see strengthen in order for the contribution of that business to follow suit. And then secondly, on the buyback and €750,000,000 for Q1, is

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

there any frame you can

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

share on how BP has thought about the calibration of that $750,000,000 for the full year, for example, where at that moment you think is most appropriate to be for 2025 within the 30% to 40% CFFO range? Thanks.

[Murray Auchincloss, CEO & Director at BP]

Yes, great, Matt. I'll take the trading question. I'll let Kate take the other question. I think on trading, look, as Carol talked about at our Capital Markets Day nine weeks ago, our trading is made up of three bits. There's the day to day business where we provide customers with energy that makes up about half of our profitability.

[Murray Auchincloss, CEO & Director at BP]

There's 25% about re diversions when disruptions occur. So 75% of both oil and gas really is all about that base level business that we continue to work away at. On top of that is trading in a speculative sense where we do tend to take time spread positions. I think on that particular bit, the things that make it easier or make it hard, I think headline driven events, political headline driven events make it quite difficult to trade. And that's what you saw if you look at the results of the trading houses over the past twelve months.

[Murray Auchincloss, CEO & Director at BP]

Some of them have outright exited the space as they've dealt with the headlines because they didn't have the physical flow that we have. And then you're just looking to take advantage of spreads over time, whether geographic spreads, time spreads, quality spreads, that's the space where our oil trading book tends to make money. If Matt, I'm afraid if I go any further than that, my traders will get angry with me. So I'll stop there and pass over to Kate.

[Murray Auchincloss, CEO & Director at BP]

Go ahead, Kate, on buyback.

[Kate Thomson, CFO at BP p.l.c]

Yes. Thanks, Barry. Matt. Yes, with regard to the 1Q share buyback, at the Capital Markets update, we suggested that the buyback for the first quarter was likely to be in the range of $750,000,000 to $1,000,000,000 As we think about the buyback each quarter as a Board, the first element of the thinking is the way we have now framed our approach to distributions in our new financial framework. We have said that the total of the resilient dividend and the share buyback over time will be around 30% to 40% of operating cash flow.

[Kate Thomson, CFO at BP p.l.c]

That's over time. It's not a mechanical quarter in, quarter out calculation. It's a frame for the Board to use as a guardrail in terms of how it thinks about it. And we've also said it's a mechanism to share excess cash. At each Board decision, as we step through the quarters, we'll, of course, take into consideration what's going on in performance as well as the frame of 30% to 40% of ops cash, but also current volatility, outlook medium term across the range of the commodities that drive our cash flow.

[Kate Thomson, CFO at BP p.l.c]

But we're not going to guide forward. We will update you at 2Q when we step through that decision making process.

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

Thanks, Beth.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you, Matt. We'll take the next question from Irene Hamona, Bernstein. Irene?

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

Thank you. Good afternoon. I had, first of all, a question on the $500,000,000 cost reduction in Q1, which I thought was quite an impressive number. You said you will update us in Q2 on costs, but I just wanted to try and understand the type of cost saving we're talking about. Where is it coming from?

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

If you can perhaps give us just a couple of examples to understand. And then secondly, Katie, if I may go back to the adjusting items and the $539,000,000 U. K. Energy profits levy in Q1. That amount was greater than the full year 24,000,000 amount.

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

So should we treat this as a one off Q1 event? Or is there more to come later this year on this UK energy profits levy, please? Thank you.

[Kate Thomson, CFO at BP p.l.c]

Irene, I'll take the second question first. It's very straightforward. It's purely the tax affecting of the extension of the EPI to 02/1930, which was substantively enacted in the first quarter. You therefore have to take the full adjustment at that point in time, so you shouldn't think that, that is recurring. It's been accounted for fully now.

[Kate Thomson, CFO at BP p.l.c]

With regard to the €500,000,000 cost reduction, yes, I'm in a similar place to you. I thought it was a good outcome. It was reflective of the fact that we have the teams in action at pace right across the company. And in particular, I think for 1Q, I'd call out progress in customer and products. I think they're doing very well.

[Kate Thomson, CFO at BP p.l.c]

But also, we're trimming costs, as I've said, across all business, but also in all of the sort of corporate head office functions as well, and we're making good progress. One of the things that we've talked about in the past is our focus on taking out, third party and supply chain, and we we have around 3,000 contractors that have now left BP. We're now going through the next 3,400 contractors role by role, and we're able to use some technology with the help of Palantir that that allows us to go through that exercise and create data led decision making, as I say, role by role on those contractors and move at a pace that we just couldn't doing it manually. So, we're in action enormously right across the company on that and I look forward to updating in much more detail at the second quarter.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

It's great. Thanks very much. You, Irene. We're going to turn to Lucas Herman next at BNP. Lucas?

[Lucas Herrmann, Analyst at BNP Paribas]

Thanks very much and a couple if I might. Murray Kate, volumes from Venture now, I presume that they're flowing. Can you give the should we assume that you're going to receive broadly 1,000,000 half tonnes of LNG this year and start incorporating that, obviously, in numbers? Just any observations there. And I'm going to ask this one.

[Lucas Herrmann, Analyst at BNP Paribas]

I think it's probably going to be seen by you as a statement of heresy almost, but when it relates to trading, I mean, strikes me that for BP and for reestablishment of confidence and trust, you know, increased stability, whatever, within quarterly numbers is is of increasing importance. I don't doubt for a moment the competence or the scale of the trading business and your ability historically to generate healthy average returns across an extended period, if not within a short period. But as you say, Murray, and as Carol highlighted, I mean, had fantastic flows, which should lead to or which obviously drive a sustainable level of margin, albeit it will obviously vary depending on price. And then you have a solid ability to optimize. Is this not a point in time where perhaps the organization should think less about value trading and think, you know, just just more about trying to deliver a stream that is more stable, more consistent, and, drives less volatility in the quarterly numbers as it tended to be the way over the last several quarters?

[Lucas Herrmann, Analyst at BNP Paribas]

You're welcome to shoot me, Murray.

[Murray Auchincloss, CEO & Director at BP]

Lucas, I'm trying to think about how to answer your second question. I'll answer the first one, which is quite easy, which is Ventures. Yes, is flowing and started flowing in mid April. And we've got two MTPA at capacity at Venture offtake. And I think I'll stop describing anything on Venture beyond that on Venture Global.

[Murray Auchincloss, CEO & Director at BP]

On trading, look, the trading benches are incentivized to make as much money as they possibly can. And they take views based on the risk that is out there. If I told them stabilize your income, it really wouldn't be a trading organization. It would be a marketing flow organization and you'd lose an awful lot of edge inside the commercial delivery that we see. So I kind of understand the question, but all trading organizations across the world are highly incentivized to drive as much profit as they can as opposed to partial profit.

[Murray Auchincloss, CEO & Director at BP]

And I understand the volatility points you're making. And all I'd encourage everyone to think about is that you should not look at this on a quarter by quarter basis, nor should you look at on a bench by bench basis. You should think of it in an annual cycle and a multiyear cycle. We have earned 4% over the past five years. It has been about half gas, it has been about half oil.

[Murray Auchincloss, CEO & Director at BP]

And of course, you should divide that in four as you estimate it. And we're continuing to have a strong track record of delivering that 4% no matter what the macro environment conditions are. So I think that's my response, Lucas. Thank you for the challenge.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Lucas. We'll go next to Henry Tarr at Berenberg. Henry?

[Henry Tarr, Director - Co-Head of Energy & Environment Research at Barenberg]

Hi there, Craig. Hi, everybody. Thanks for taking my question. I guess, we some positive news in Namibia over the last few days with Azul. What are your plans from here Namibia, I guess?

[Henry Tarr, Director - Co-Head of Energy & Environment Research at Barenberg]

And would you be interested in getting more exposure to the region if the right opportunity came up? Thanks.

[Murray Auchincloss, CEO & Director at BP]

Great. Thanks, Henry. Yes, it was a significant discovery that our partner, Rhino led. We operate through the Azul joint venture, a fifty-fifty joint venture with Eni. We're very pleased with the well.

[Murray Auchincloss, CEO & Director at BP]

It was a significant discovery. They did an extended well test on it and obviously produced 10 kbd of light sweet oil as they did that. We're currently evaluating the results from the drill stem test and thinking about what the next steps forwards are with our partners. I think it's premature to say anything more than that other than we're very pleased with it. As far as would we do more in Namibia, we're always looking for interesting exploration acreage around the world and it's possible.

[Murray Auchincloss, CEO & Director at BP]

But right now I think we're pretty happy with the position we have and the block we have and we'll update you in due course on that over time, Henry. Thank you.

[Henry Tarr, Director - Co-Head of Energy & Environment Research at Barenberg]

That's great. Thanks.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Henry. We'll take the next question from Giacomo Romeo at Jefferies.

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

You. Two questions remaining, maybe for more or

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

less

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

clarification. Marie, when you talked about the 2,500,000,000.0 reduction potential for CapEx, I'm just trying to understand what you're thinking there in terms of what level of prices would trigger such a reduction? Should we say expect that to be more linearly if prices go down? Or there's a particular level you have in mind that where you would see an acceleration? Second question is on gas and low carbon.

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

I appreciate the color on cost. If I look, though, at the EBITDA, I still find it quite low compared to what I guess through

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

the model. Just trying to

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

understand around the contribution from LNG trading, whether there was that was in fact positive this quarter or is there any chance you had actually a negative contribution to the EBITDA this quarter?

[Murray Auchincloss, CEO & Director at BP]

Thanks, Giacomo. No, we didn't have a loss. It was a weak quarter though, a weak quarter as you signal. On CapEx flexibility, look, we've made a decision to trim 500 based on the macroeconomic environment. Let's wait and see what happens over the coming weeks.

[Murray Auchincloss, CEO & Director at BP]

There are some OPEC meetings. We'll have to see how the negotiations between The U. S. And Iran unfold and we'll have to see how the tariffs unfold as well and what that does to overall demand. We will stay right on top of this, making the decisions we need to make.

[Murray Auchincloss, CEO & Director at BP]

We have lots of flexibility with the 2.5 that we talked about. Of course, it will demand decisions on different parts of the business. So we're not just an oil company. We have oil, we have natural gas, we have service stations that we fund, etcetera. And so we'll be thinking about the different macro environments into each of those if we are to make those decisions.

[Murray Auchincloss, CEO & Director at BP]

But a first step of $500,000,000 and no plans to make further cuts at this stage, but we will remain tightly attuned to the marketplace and ensure that we can meet our targets for 2027. Thank you, Giacomo.

[Giacomo Romeo, Energy Analyst at Jefferies & Company Inc]

Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thanks, Giacomo. We are going to make time to take the last two questions or sorry, the last two individuals with questions. So first of all, Paul Cheng at Scotia. Paul?

[Paul Cheng, Analyst at Scotiabank]

All right. Thank you. Two questions, please. Barry, in the Gulf Of America, U. S.

[Paul Cheng, Analyst at Scotiabank]

Just have a new rule, the downhole commingling. Can you give us some idea that where this new rule do you see the most opportunities set in your portfolio and how big are those? Second question is that, if indeed the commodity market become more challenging, how you contemplate or that the decision process between reducing your CapEx, which you certainly could, but how about further reducing your buyback? I mean, how is your balance between the two? Thank you.

[Murray Auchincloss, CEO & Director at BP]

Go ahead, Kate, on the balance between buyback and CapEx and then I'll take the question on Gulf Of America.

[Kate Thomson, CFO at BP p.l.c]

Yes, we'll do. Thanks and hi, Paul. So the financial frame that we set out in February alongside our reset strategy, I think was pretty clear in terms of how we think of the order of priority inside our financial frame. The first one, we're very clear, is a resilient dividend, and we said that you should expect a 4% increase a year, and that's a floor. After that, balance sheet is our next priority.

[Kate Thomson, CFO at BP p.l.c]

We are categoric in the delivery of this $14,000,000,000 to $18,000,000,000 target by 2027. After that, we look at CapEx, and we have designed the financial frame in totality to be able to be flexible, but yet ensure we can deliver on our four primary targets. We have a lot of flex in CapEx, that 13,000,000,000 to $15,000,000,000 range. And then we share excess cash with shareholders and that's where we have positioned the share buyback in this financial frame as part of our total distributions, which are over time at around 30% to 40% of operating cash flow. So I hope that helps you think how and understand how we think about the prioritization.

[Kate Thomson, CFO at BP p.l.c]

We are going to protect our balance sheet. And yes, the anchor point for us at the moment as the Board is thinking about the operating cash flow, and using share buybacks as a mechanism to return excess cash to shareholders, but we'll step through that quarter by quarter.

[Paul Cheng, Analyst at Scotiabank]

Kate, can I ask that to clarify? If that means that even in a lower oil price environment, you're still going to pay out about 30 to 40% but not below that range? Because I thought 30% to 40% is just half ish throughout the cycles, right? So if you were in particular looking at one cycle, should we have a payout lower than 30%?

[Kate Thomson, CFO at BP p.l.c]

But 30% to 40% is over time. And of course, our operating cash flow will move up and down with price, but we're not looking at it in a particular quarter as we step towards the decision as a Board at the end of each quarter, we'll take into account what's going on inside the company, how we performed in the quarter. But also, as I said earlier, the sort of medium term outlook of the prices that drive our cash flow is not just oil, it's also gas and it's refining margin and we'll take into consideration all of that as we make our decisions each quarter. But we've been pretty clear, we're not going to be guiding forward on share buyback.

[Murray Auchincloss, CEO & Director at BP]

Okay. And Paul on downhole commingling, I suppose it's really targeted at the Paleogene where we do see the differential pressures. Obviously, CASTINA will be our first development on that. So it's going to take a bit of time. We don't see as much potential right now inside the Miocene, but it's early and we're continuing to test that right now.

[Murray Auchincloss, CEO & Director at BP]

So it's mainly for us right now a Paleogene question and obviously the Paleogene production comes later in the decade for us. Thanks for the question, Paul.

[Paul Cheng, Analyst at Scotiabank]

Thank you.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Okay. Thanks, Paul. We've got the last question. Biraj, you helped us out with virtual ones at the start. Maybe we can hear your voice now.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

You've hung on to the end.

[Biraj Borkhataria, Global Head, Energy Transition Research at RBC Capital Markets]

Hi there. Thanks for taking my question. Just one quick clarification, it's all a modeling thing and happy to follow-up after. But just a comment, I think Martin asked about the NCI charges. And I guess part of that is a hybrid and part of that, I'm assuming, is the selling of things like TANAP and TAP.

[Biraj Borkhataria, Global Head, Energy Transition Research at RBC Capital Markets]

But just just the comment, Kate, you made around the flip side of that, the higher interest, presumably, that would result in a lower o b and c charge for the year. I'm just wondering in that context why the 2025 guide was still, you know, €1,000,000,000 So

[Kate Thomson, CFO at BP p.l.c]

Biraj, the short answer is you're correct on both. Yes, the NCI is made up of both the charges associated with the hybrid bonds, but also dividends that we pay out of BP subsidiaries where there's a level of the equity held by others and things like divestments around pipelines fall into that category, as well. Sorry, could you remind me of the second question? OB and C, yes. So the interest income, yes, you're correct, is reported inside OB and C.

[Kate Thomson, CFO at BP p.l.c]

We don't split it out, but but the other very big component that moves, OB and C around is FX and in particular, movements on various components, including hybrid swaps. So you'll see quite a lot of FX volatility. That's the primary element that's driven the quarter on quarter change inside OB and C. I can't predict where FX is going to go for now. What I look at is my underlying, spend and my underlying expectation with regard to costs and income going through the year.

[Kate Thomson, CFO at BP p.l.c]

And at the moment, the guidance feels about right. But, we'll, of course, review that when we get to the second quarter and we look again at the full year.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

You. Thanks Biraj and thank you Kate. Thank you Murray. We're going to close the call there. We've managed to get through all the questions.

[Craig Marshall, Senior VP & Head of Investor Relations at BP]

Thank you for raising them. And I'd just like to thank you again for the patience at the start of the call. We'll certainly be looking into what happened there, very unusual. So I think we'll close the call on that note. And on behalf of Murray, Kate and myself, thanks very much for listening and for your interest in BP's results today.

Participants

Executives

• Craig Marshall, Senior VP & Head of Investor Relations
• Murray Auchincloss, CEO & Director
• Kate Thomson, CFO

Analysts

• Joshua Stone, Head - European Energy & Equity Research at UBS Group
• Roger Read, Senior Energy Analyst at Wells Fargo Securities
• Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research
• Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank
• Kim Fustier, Analyst at HSBC
• Christopher Kuplent, Analyst at Bank of America Merrill Lynch
• Jason Gabelman, MD - Equity Research at TD Cowen
• Martijn Rats, Analyst at Morgan Stanley
• Michele Della Vigna, Managing Director at Goldman Sachs
• Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan
• Irene Himona, Managing Director - Oil & Gas at Bernstein
• Lucas Herrmann, Analyst at BNP Paribas
• Henry Tarr, Director - Co-Head of Energy & Environment Research at Barenberg
• Giacomo Romeo, Energy Analyst at Jefferies & Company Inc
• Paul Cheng, Analyst at Scotiabank
• Biraj Borkhataria, Global Head, Energy Transition Research at RBC Capital Markets