BP p.l.c. Q1 FY2025 earnings call

• Operational: Delivered strong operational performance with over 96% refining availability and more than 95% upstream plant reliability. • Projects: Successfully launched three major projects and made six exploration discoveries. • Customer's Business: Had a strong quarter, the best first quarter since 2020 on underlying RCOP basis. • Cash Flow and CAPEX: Took a 1.5 billion intervention on cash flow for 2025, reduced CAPEX by $0.5 billion in 2025 to $14.5 billion, with organic CAPEX below $14 billion. • Divestments: $1.5 billion of divestment agreements completed or signed year-to-date, expecting 3 billion to 4 billion in divestments for 2025 with proceeds weighted to the second half. • Castrol: Undergoing a strategic review with significant interest in the business. • Costs: Underlying operating expenditure decreased by 500 million quarter-on-quarter.

In upstream, BP achieved over 96% refining availability and more than 95% upstream plant reliability. They successfully started three major projects (Cypre in Trinidad, Raven in Egypt, and GTA in Mauritania and Senegal) adding 100 mbd of capacity towards the targeted 250 mbd by 2027 and made six exploration discoveries. The customer’s business had a strong quarter, being the best first quarter since 2020 on an underlying RCOP basis. Gas and low carbon had a weak gas trading result but customers and products performed strongly. Revenue contribution details: No specific absolute revenue figures and percentage breakdown provided in detail, but upstream operations, customer's business, and products segments are key components.

• CAPEX: Trimmed CAPEX by $0.5 billion in 2025 to $14.5 billion, with organic CAPEX below $14 billion. • Divestments: Anticipate 3 billion to 4 billion in divestments for 2025 with proceeds weighted to the second half. • Net Debt: Expect the majority of the working capital build to unwind throughout the year in a flat price environment. • Debt Target: Aim for net debt of $14 billion to $18 billion by 2027. • Distributions: Resilient dividend and share buyback will amount to around 30% to 40% of operating cash flow over time.

• Market Volatility: Recognize and monitor market volatility. • Tariffs: As of now, no material impact on the business, but potential impact if tariffs change. • Commodity Price Fluctuations: Can affect CAPEX, trading, and overall financial performance. • FX Volatility: Influences OB&C charges and overall financial results.

Q: Elaborate on the weakness in gas and low carbon, excluding trading, what's driving higher non-cash costs and whether it's a one-off or a run rate.

A: Quarter-on-quarter, there was about 200 million of higher non-cash items due to an increase in DD&A, with a one-off factor related to the startup of the Raven infill in the fourth quarter compared to the first quarter. The DD&A rate is likely to be a reasonable run rate going forward.

Q: Share count increased despite a 1.75 billion buyback, how much is related to the reinvent BP share option plans.

A: The end-of-quarter share count reduction was slightly down. Reinvent options have a six-year vesting period, making it difficult to forecast the impact. However, there is an intent to offset employee share plan impacts over time, with the total share count having been reduced by about 22% since 2021.

Q: Explain the difference between production performance and cash flow performance and the confidence that it will improve.

A: The main issue is the working capital build, which is a seasonal build, and it is expected that the majority of it will unwind throughout the year in a flat price environment. Gas trading had a weak quarter, but it is expected to return to average performance.

Q: Discuss the hybrid balance and the timing of redeeming bonds.

A: $500 million of hybrids were issued as bridge financing and mature in 2026. There is no intention to grow the hybrid stack, and redemption will be carefully considered at maturity windows, with the possibility of up to 10% reduction each year capped at 25% cumulatively.

Q: How do commodity price changes impact BPX plans.

A: Plans remain unchanged for now, but will be moderated and shifted to gas if oil price remains low, with close monitoring of hydrocarbon pricing.

Q: Talk about the disposal target and the upside case.

A: The disposal range is being increased to 3% to 4% based on strong conversations, and there is confidence in hitting the $20 billion target, with significant interest in the assets.

Q: Impact of dissolving the JV with Devon on BPX and the 650,000 barrel a day target.

A: There is no impact on the 650 kbd target, the transaction adds value, with a focus on NPV per dollar spent and being best in class on NPV per dollar spent.

Q: Concerns about refining margin and its recovery.

A: There was a difficult margin environment in the Midwest and Rotterdam due to oversupply, but it is starting to rebound with turnaround season and increasing demand, now above the planning basis for refining margins.

Q: CAPEX guidance and the impact of oil price decline.

A: No change to the overall CAPEX guidance range of $13 billion to $15 billion, with $500 million trimmed from CAPEX, and $2.5 billion of CAPEX flexibility in case of oil or gas price downside.

Q: Restatement of Archaea and details of the Kirkuk agreement.

A: Archaea was moved out of the customer and products segment into the gas and low carbon energy segment, with restated 2024 numbers. The Kirkuk agreement details are guarded as the PSA has not been published yet, but terms are better than previous rounds and it is expected to be cash flow positive quickly once the PSA is published.

Q: Gas and low carbon energy tax rate and gas hedging.

A: The group effective tax rate was around 50% in the first quarter due to profit composition, expecting a full-year effective tax rate of around 40%. Gas hedges for BPX are mostly locked in around $4, but specific details are commercially sensitive.

Q: Minorities and adjusting items.

A: Adjusting items are difficult to forecast with many accounting elements. NCI tipped up in the quarter due to pre-issued hybrids, but interest income from investing offsets part of it.

Q: Impact of tariffs on the business.

A: So far, no material impact on the business, with the U.S.-Mexico-Canada trade agreement exempting product import and steel sourced domestically to avoid tariffs.

Q: Trading business and stability of quarterly numbers.

A: Trading benches are incentivized to make money, and one should look at annual and multiyear cycles as the business has earned 4% over the past five years.

Q: BPX plans in Namibia and exposure to the region.

A: There was a significant discovery in Namibia, with evaluation of results ongoing. BP is always looking for interesting exploration acreage in the region but is currently pleased with the existing position.

Q: CAPEX reduction potential and gas and low carbon EBITDA.

A: There is $2.5 billion of CAPEX flexibility, and gas and low carbon EBITDA was not negative, with a weak quarter but not a loss.

Q: Downhole commingling and OB&C charges.

A: Mainly related to the Paleogene, with production in the decade ahead. OB&C charges are affected by FX and hybrid swaps, making it hard to predict.

Q: Balance between buyback and CAPEX and EVNCI charges.

A: Resilient dividend is a priority, followed by balance sheet, then CAPEX, with share buyback being for excess cash. EVNCI charges include hybrid and other elements, and interest income affects OB&C but full-year guidance is hard to predict.