BP p.l.c. Q2 FY2025 earnings call

• Exploration Success: Had a fantastic year with 10 commercial discoveries, including big ones in Namibia and Brazil. The Bumerangue discovery in Brazil is a large structure with high-quality pre-salt carbonate reservoir, though with elevated CO2 levels which are being analyzed.
• Project Startups: Started up 5 major projects with plans to start 1 more this year and 4 next year, ramping up production by roughly 125,000 barrels per day.
• Cost Reductions: Delivered around $1.7 billion of structural cost reductions since early 2024, with $900 million year-to-date, and targeting $4 billion to $5 billion over the 2027 timeline.
• Dividend and Share Buyback: Announced a dividend per ordinary share of $0.0832, an increase of 4%, and a further $750 million share buyback for the second quarter.
• Portfolio Review: Conducting a thorough review of the portfolio to drive absolute discipline and focus on value and returns, including reevaluating projects like green and blue hydrogen in Australia and the U.S.
• Digital and AI Initiatives: Working on a unified data platform across the company with Databricks and Palantir to reduce costs and improve data transmission, aiming to finish by mid-2026; also focusing on supply chain optimization and technology streamlining.

Upstream: Year-to-date, brought 5 new oil and gas major projects on stream, sanctioned 4 more, and made 10 exploration discoveries, including a significant one in the Bumerangue Block in Brazil. Underlying earnings in the customers' business are up around 50% compared to a year ago. Downstream: TravelCenters of America (TA) had tight diesel margins, but overall convenience mobility (C&M) had strong performance with broad-based growth across Americas, Europe, and Asia, with Q2 being the best on record for C&M in recent years.

• Expected proceeds from completed or announced divestments to reach around $3 billion for the year.
• Production from major projects is on plan with potential to be slightly ahead, expecting strong production through the year despite turnarounds and weather in the Gulf of America.
• Dividend increase and share buyback announced for the second quarter.
• Trading business expects continuing volatility in oil and gas markets, with inventories tight and OPEC+ actions, sanctions, and seasonal factors impacting conditions.

• CO2 Content in Discoveries: Uncertainty regarding the exact level of CO2 in the Bumerangue discovery in Brazil, though the industry knows how to handle elevated CO2 levels.
• Market Volatility: Volatility in oil and gas trading due to factors like OPEC+ actions, sanctions on Russia and Iran, inventory levels, and seasonal changes (e.g., heavy tar season in October).
• Refining Market Conditions: Tight diesel and gasoline margins, with inventories low relative to history and potential outages affecting trading conditions.
• Fiscal Uncertainty: Uncertainty in the North Sea fiscal situation which could impact portfolio decisions.

Q: Regarding the Brazilian discovery, how concerning is the CO2 content and what's the production trajectory from startups?

A: Not overly worried about elevated CO2 as the industry knows how to handle it, and samples are being analyzed; production from startups is on plan with potential to be slightly ahead through the year.

Q: On the thorough review of the portfolio, does it mean starting over and how does it relate to Castrol divestment?

A: The review is about staying within strategy and accelerating delivery, with Castrol divestment continuing as part of the $20 billion divestment program.

Q: What's the outlook for net debt and leases?

A: Net debt expected to slightly trend down with working capital unwind, but lease liability is affected by production drives and various moving parts like floating LNG in Mauritania and Senegal.

Q: How is the refining performance and outlook?

A: Refining availability at 96.4% in Q2, best since 2006, with tight markets expected to continue with low stocks and potential outages impacting conditions.