A warm welcome to everyone joining us in person at our headquarters today and to those joining online and on the phones. I trust everyone has had a chance to watch the second quarter 2024 video presentation and read our stock exchange announcement, both of which were posted this morning on our website, bp.com. We heard the feedback that you appreciated this new format. For today, we're aiming to finish the call at 2 p.m. UK time. So with that let me hand over to Murray for some brief opening remarks.

Great. Thanks, Craig, and thanks to everyone for joining today. I'm in the room and I'm joined by Kate Thomson, CFO; Carol Howle, EVP, Trading and Shipping; and Emma Delaney, EVP Customers and Products, which luckily for me will provide me with the opportunity to pass all difficult questions to them today. To recap on today's results, our operations are running really well. 96% upstream plant reliability and 96% refining availability in the quarter. We generated strong operating cash flow of $8.1 billion, net debt reduced by $1.4 billion to $22.6 billion, and we remain confident in the opportunity and potential we have in growing the value of BP. This should be clear with today's 10% increase in our announced dividends, the $1.75 billion buyback in respect of our 2Q results, and our commitment to announce $3.5 billion of share buybacks for the second half of 2024. That's $1.75 billion to be announced each at 3Q and 4Q results. You'll have heard from our video some real examples of us in action delivering on our six priorities. We've accomplished an awful lot over the past six months. Of course, there's always more to do. And we have a clear focus on our drive to 2025, which we can control. We see a lot of opportunity ahead of us, and we're remaining pragmatic, flexible, focused on value. And we look forward to updating you on our medium-term plans in February next year. So Kate, Carol, Emma, and I are here to answer your questions. Can we ask each of you please to limit your questions to two, and I'll go ahead and start off here in the room. Irene, why don't we start with you, please.

Thank you. Irene Himona at Bernstein, and congratulations. My first question concerns progress towards the $2 billion operating cost reduction target you announced, particularly in the context of a 4% increase in unit upstream costs, which I see. My second question on transition engine EBITDA, which in the first half has halved year-on-year. I can see biofuels, convenience, renewables, they're all down. So it seems even if EV charging and hydrogen break even by year-end, the $3 billion to $4 billion next year looks a bit challenged. But that was my question.

Great. Thanks, Irene. I'll let Kate lead off on cost and maybe Emma you can amplify a bit and then I'll tackle the TGs and pass over to Carol and Emma as well. Go ahead, Kate.

Yes. Thanks, Irene. As I said back in April at our 1Q results, we're aiming to deliver $2 billion, and I said then, I'd like to exceed it, I'd like to be able to do it quicker. So since April, as you'd imagine, we've been in action right across the company in every business, in every function, underpinning that. So the three things that are on my mind. One, make sure that $2 billion is underpinned. Second, can we accelerate it? Can we deliver more? And then third, how do we make those savings sustainable? So that's where we've been over the last three months. And as you've seen today, we've now been able to get clear that we can deliver $0.5 billion of that cash cost saving in 2025. And we'll continue to update as we go. But back to where I was in April, I would hope we can do better in terms of the delivery, but also the pace. Just in terms of the unit production cost, that's just portfolio mix at the moment. We're on track for the sort of around $6 that we said we would be by the middle of 2025.

Great. And Emma, anything to add on cost, please?

Yes, to emphasize Kate's point, the costs are managed by the businesses. Over the past few months, we have incorporated these costs into our near-term plans for 2024 and 2025, which will also influence 2026. Most costs are integrated at the business unit level, while some are still managed centrally. As Murray mentioned, we are continuously refining the lower end of our cost portfolio. For example, in my segment, we are implementing self-service checkout at our retail convenience sites, which reduces labor costs that tend to rise each year, providing sustainable savings. On the digital front, we are consolidating multiple B2B self-service portals into a single backend, allowing for different user experiences while also achieving cost savings. Additionally, in procurement, we are collaborating in the US by combining efforts across TA, AMPM, Travel Centers of America, and Thorntons merchandising, which enhances our market scale. These are just a few examples of how we are focusing on cost efficiency.

Fantastic, thanks Emma. And then on the TGs, so last year we made around $1 billion of EBITDA. For the first half of this year we made about $0.5 billion. We've of course announced the acquisition of Bunge as well, which we expect to close in the fourth quarter. If you just pretend the run rate is the same, $500 million, 1H, $500 million, 2H, and you add Bunge into the mix, you're probably at almost $2 billion of EBITDA as a starting point headed into 2025. And then we remain on track to grow into the three to four range. We feel very comfortable with that. Emma, maybe you can talk about what we see in convenience and electrification, and Carol can talk about bio as well please. Go for it, Emma.

Sure, I'll start. Regarding convenience and electrification, we're on track to generate about $1.5 billion from both areas combined. Last year, EV charging incurred a loss of $300 million, but we expect to break even, contributing to that $1.5 billion. In terms of convenience, we achieved $500 million already in the first half of this year, which is an increase of $200 million compared to the first half of last year. We're actively addressing both revenue and costs. For revenue, our like-for-like sales are up, and our store conversions to strategic convenience sites have increased by 50 in this recent reporting period, leading to double-digit sales growth from those conversions. Additionally, we're innovating our product offerings; for example, we launched pizza in Thorntons, resulting in a 13% sales increase in the first month. We also introduced 13 SKUs of water, a top-selling road beverage, along with sweet items under the epic brands label. This is significant because consumers under pressure seek better value products, and these private labels provide higher margins for us. By sourcing directly from suppliers and curating top-selling products, we achieve higher profits while delivering value to consumers. As a result, we are now among the top five convenience store operators in the USA, with a robust pipeline of conversions in Europe, especially in Poland, while also continuing conversions in the UK and launching a major program in Germany.

Thanks, Emma.

EV?

EV, I think you said we break even and we feel comfortable with that right now.

Everything is moving in the right direction.

Happy to come back to that after if we like. And then Carol.

Okay. So I mean, I think first thing I'd say is on bio, because you did mention bio, so we recognize obviously globally in most markets is weaker. And I'll come to Arkea shortly, because that's one market where it isn't. But I would say on the bio side, we have seen lower transport tickets in Europe. We have also seen short-term oversupply. We've also seen some reduction in mandates, for example, Sweden, Finland. So you know, there is some regulatory uncertainty which has contributed to that. But we do also forecast that we're going to see margins improving through the end of 2025 and into 2026. That says we see mandates increasing in key markets like Germany and Netherlands and that's also as potentially there might be import duties placed onto biodiesel into Europe and also bioenergy is still needed to decarbonize the hard to abate sectors, such as transport. I think Emma can talk to the business side of that more so. But I'd say it's a recognition, but we do still see positive margins for the future. In our Arkea, I’d say this is a slightly different story D3 RINs are actually holding up very well at the moment. It's a combination of high mandates, it's a combination of low availability around cellulosic ethanol, it's also that the waiver credit there has been discontinued. So that's a positive pricing market, averaged about $3.19 in Q2. So why are we confident around Arkea? Well we're confident because we're also seeing an increase in demand in the transportation market. So it's up 14% first half of this year versus last year and we also see continuing growth as people use biogas to decarbonize, but we're also confident on the supply side. So we brought online four plants this first half of the year. So that's roughly around 4 million mmBtu’s of high margin RNG. And we've got two more in commissioning at the moment due to start up this week and a further two undergoing final commissioning due to start up in August. So we're making progress in bringing those plants up online. And just as a reminder, if Henry Hub were $3 an mmBtu, which I know is probably a little bit optimistic at the moment, but if it were and we were looking at placing our RNG into the transport market with RINs at $3, we can actually sell that RNG for 10 times more the value of Henry Hub. So that just gives you a sense still of the value in that portfolio. Now also what I would say is, we've learned a lot, commissioning times are reducing. Madora that took us around seven weeks, we're now at around seven to 10 days. So we are improving and getting those plants up and running more quickly. That's not to say that there are some headwinds, we've seen that across the market permitting interconnect delays, but we're confident about that delivery and we're still focused on delivering $800 million to $1 billion by 2030.

Thanks, Carol. Thanks, Emma. So we feel confident, Irene. One more question in the room then we'll go out to the phone lines. Biraj.

Thank you for taking my question. This is Biraj Borkhataria from RBC. My first question is about the balance sheet. The market has been worried about your debt levels in recent quarters. When I review the figures, I see that net interest is at 80% of your dividend, and your lease payments have increased by 40% over the past couple of years. While I understand the focus on EBITDA growth, there are valid reasons why that growth is not being reflected in free cash flow. Regarding the 80% surplus payout, could you explain why it still makes sense to maintain that? It seems quite restrictive instead of allocating more cash to the balance sheet. My second question is about employee share options and dilution. It appears there will be a significant amount due in the first quarter of 2025 from plans established a few years ago. In typical years, you have a buyback to counteract that dilution, but this amount seems quite large, and it's uncertain how it will play out. Can you clarify whether you plan to offset that amount in 2025, or when you mentioned addressing this over time last quarter, what exactly does "over time" refer to? Thank you.

Yes, I'll start by discussing the balance sheet and then pass it to Kate to address the question regarding shareholder options. It's essential to note that our primary focus is on credit rating rather than solely on net debt. Considering our current credit rating with both Fitch and Moody's, which is A+, we are in a strong position and do not plan to aim for a AA rating. This status provides us with the necessary flexibility for trading and ample resources for our objectives. Thus, we are comfortable with our current situation. We have made significant progress over time, and it makes sense to proceed with share buybacks, which we believe will enhance value for shareholders through both the buyback process and the accompanying dividends. Kate, do you have anything to add before we move on to discussions about employee schemes?

Maybe just a couple of points. I think that the share buybacks are part and parcel of our sector-leading distributions and the shareholders that we talk to are very supportive of that component of the financial frame. The balance sheet's in good shape. We've made tremendous progress since 2020 with reducing it by $29 billion in terms of debt. So it's there and it's strong so that it can tolerate fluctuations. So I think that's important alongside Murray's point, which is absolutely spot on with regard to financial resilience, where it being way more than just net debt. On the ESOP dilution, yes, we did decide to move to offsetting over time and that is where we are going to be. So a decent run rate last year, we offset $675 million of ESOP dilution through share buyback. So we'll continue to step through that. With regard to next year, yes, there are some options out there. I'm not going to predict at what point they start to be exercised, they have a six-year life. So we will continue to offset that over time and we'll step through it and can give you a little bit more detail as we get into that.

Hard to predict, isn't it? Yep, great. Thanks, Biraj. Why don't we go to the phone and I'll start with Paul Cheng on the phone, please.

Thank you. Good morning. I have two questions. First, regarding OP&P, the implied operating expenses seem a bit high. I believe there is a larger exploration charge off, but is there anything else we should be aware of? What is the exploration charge off for the quarter? The second question is for Murray. BPX, can you provide insight on how the activity levels in the second half will compare to the first half? The second quarter appears to have performed well, especially in liquids, which seem to be much higher. Any comments on that would be appreciated. Thank you.

Great, thanks Paul. I'll lead off with BPX and I'll hand back to Kate. She might have answered most of your question already. On BPX, yes, the teams have made great progress there. I visited with them after our last set of results for a few days. And you're right, we brought on the third central gathering facility in the first quarter, and we started to fill that up. That's why we see the strong growth in liquids. In the second quarter, they are now working on the last one, which is really a compressor station, which will lower line pressure, which will draw more resource out of the ground, and that should come online sometime middle of next year. As far as activity set, generally we've described these in rig years. The difficulty with that is they're drilling so fast that they're able to drill the same number of wells with half the rigs. So they've just done incredible work on ranging well drilling and some TDS technology as well. It's hard to believe that they've been able to do that step change yet again. So, when you look at the rig count numbers that we provide with you, it's as if it's two times the rigs that existed two years ago if you measure it to that metric, given the productivity they've seen. Right now in the gas basins, obviously gas price is quite low. We've got tons of resource, 22 TcF of resource. And we've just moved down to minimal drilling inside the Haynesville. So we're down to one rig in the Haynesville, just keeping going. But we continue to focus on the oily side. So we'll continue to drill out the Permian and gradually fill that system up entirely. We'll probably hit peak production for liquids in the Permian around 2027, based on the last analysis I did. And the other very interesting thing that we talked about while I was there is, they're rethinking the Eagle Ford. So we have 500 wells there that have been producing for about a decade. They were fracked a decade ago. Obviously, fracking technology has moved on materially since then. So they've gone in and done 50 re-fracks. And the returns on these things are unbelievable. With the new technology on the fracks, you're getting all kinds of liquid production coming out of them. So we trialed 30. We now have 500 opportunities. The Gordon is working with them on to decide at what pace we fund those. And the last thing I'd say on the Eagle Ford is, they also started to down space, which is very counter to what you think of in some of these plays that maybe you don't down space, you're getting it through laterals. But what they found is, the couple of downspacing wells they've drilled have delivered 3,700 barrels of oil a day, which is way above POPs, even what we're seeing in some of the Permian acreage. So the Eagle Ford is opening back up to us, and it's this mantra that we always have to think about with resources is, once you think you're done on recovery factor, have another go at technology and see what happens. And that's what we're proving in the Eagle Ford. They used to talk about recovery factors of 7% to 10%. That might resonate with you for the Permian. They're now talking 30% recovery factors in the Eagle Ford from these re-fracs and from the down spacing. And of course, that's a question that will constantly challenge ourselves in the Permian as well. How can we completely change that? So what should you see? You should see us continue to focus on liquids with liquids growth. Gas production will decline with only one rig running in the Haynesville, but given where our prices are right now, that's fine. We'll take our hedges through profit and we'll see what happens with gas prices as we move through 2025 and 2026. Our sense is, it'll be more resilient, and if it's more resilient, we can lean in and we can produce an awful lot more natural gas. But we have tremendous flexibility in the portfolio, given all the resources we have there. Kate, back to you then on OpEx.

Yes, Paul, I have a few quick points. I believe I addressed the issue of unit production costs earlier. It primarily comes down to mix. I would just add that you shouldn't directly correlate that with what we discuss regarding cash costs, as there are several costs that are not included in the production cost figures. Therefore, there isn’t a direct connection between them. Additionally, we recorded an EWO of approximately $100 million in the second quarter, mainly associated with the Gulf of Mexico.

Great. Thank you, Kate. I'll take one more on the call, and then I'll come to the room, Michele Della Vigna at Goldman.

And really congratulations on the strong results and the industry-leading cash return to shareholders. Two questions, if I may. The first one is on LNG. You've run historically with more spot exposure than most of your peers, and you've monetized it through trading. I'm wondering with more and more supply coming on stream, especially potentially oversupplied market from 2026, 2027 whether you're looking for more brand linked long-term contracts. And if you can give us an idea of the split of your long-term exposure between spot and long term? And then secondly, I wanted to come back to the two biorefineries that you've decided for the moment not to proceed with. It makes perfect sense in terms of capital reallocation following the BP Bunge acquisition. But I was also wondering if there was anything that changed in your assumptions on policy or demand or cost of feedstock that influenced that decision. Thank you.

Great. Well, as Carol is in the room, she can have fun with LNG, a way you go, Carol.

Thank you, Murray. I won't provide a percentage of the Brent length, but I can share that we purchase and sell based on Henry Hub and Brent pricing. Our approach to portfolio management begins with securing the intrinsic margin, as we've built significant optionality over time. We then focus on trading and optimizing flows, re-routing cargoes to the best markets and highest pricing centers. For instance, about 50% of our supply is available for optimization between Asia and the Atlantic, and we expect this to increase to two-thirds by 2025. We utilize daily tools to assess rewiring opportunities, taking price feeds into account. This allows us to determine whether to adjust volumes or redirect supply based on price changes or operational movements. We continuously evaluate our portfolio to enhance BP's value. In terms of volumes, we recorded around 23 million tonnes last year, representing a 20% increase from 2022. Additionally, we had about 10 million tonnes from what we consider short-term and spot contracts, though for us, 'short-term' typically refers to a three to five-year timeframe, rather than purely spot transactions. Last year, the split was 23 million tonnes in long-term contracts and 10 million tonnes in short to medium-term contracts. Regarding long-term contracts, we recently signed an 11-year agreement with CoGas, which is strategically important to us, to supply up to 9.8 million tonnes. This is in addition to an existing long-term contract with them that spans over 20 years. We are actively pursuing long-term contracts while also keeping an eye on short-term market opportunities.

Thank you, Carol. We are quite distinct from our competitors, with a different perspective that emphasizes flexibility. Regarding biorefining, it has become obvious over time that many are establishing biorefineries through methods like co-processing or hydrocracking, which won't be in short supply. Consequently, there will be plenty of steel available. We believe we need to construct up to three different plants this decade, however, they haven't been approved yet, so we still must proceed through our approval process. This capacity will suffice for our aviation and trading fleets. Conversely, we see value upstream, which led us to redirect limited capital towards acquiring Bunge. This acquisition enhances our biofuels and bioethanol position in Brazil's domestic market and presents substantial opportunities to boost yields and enhance plant performance, as they can be modernized with minimal investment. Our scientists in San Diego are exploring various enzymes that may increase yields and produce different products. Additionally, Carol has the chance to trade from Brazil, historically a strong market for us, to the West Coast of the United States or Europe, optimizing trading flows. We believe that focusing upstream on initiatives like Carinata with new seeds is where we should invest our limited capital, as it will yield the most value and create lasting value. This approach does not alter our views on pricing or mandates; rather, it reflects the reality that many plants have been built, allowing us to utilize their capabilities instead of constructing new ones, which is far more capital-efficient for our shareholders. Thank you for the question, Michele, and we'll now turn to Lydia.

Thank you. And it's Lydia Rainforth from Barclays. And hopefully you'll forget a direct question, Murray. But the idea being simpler, more focused, higher value. The idea of how focused are you really on that drive to 2025? And part of the reason I ask that is things like Bunge, there is an opportunity cost to doing it. You could have taken that and you've then got Bunge TA to incorporate everything else to do. So actually, how focused is it really on that drive to 2025? And then secondly, on the EBITDA numbers for 2025, I know you flagged the kind of potential price impacts if we were in an excellent forward curve environment. What would that mean for cash returns at this stage?

Yes. Okay. I'll ask Kate to answer the cash question. I think it's a relatively straightforward question. On simpler and focus, look, when we laid out six months ago when I became CEO, we laid out six priorities. Obviously, safety, obviously, drive to 2025 are big parts of that, including the cost agenda that Kate talked about earlier. But what we said is, we really now need to focus our efforts and focusing on the things that we're going to build this decade that will set the shape for 2030, and that's what we're focused on. And so you've heard us talk about focusing inside Emma's business and EV, we're focused on four core markets for EV, China where we're number one, Germany number one, U.K. number one or two and building out the West Coast of the U.S. right now. So we're very, very focused in EV now than we've had over the past couple of years. In biofuels, focusing down the number of plants we're pursuing and there is tremendous countercyclical pricing opportunity with Bunge to create real long-term flows like we have in Arkea, that's the benefit of these renewable oilfield or gas fields. They've got long, long flow and long, long RP associated with them, which is quite valuable. And we said today hydrogen, we're focusing hydrogen down. We'd chase 30 different opportunities in the past. We're now thinking about what can we actually construct and get going and that's where we focused it down where we think we'll sanction around five to 10 and build five to 10 this decade with the first two being in Castellon in Spain building green electrolyzer at Castellon that will help us make SAF in Castellon and decrease the carbon intensity of the refinery and the same in Lingen. Castellon with our partner, Ibedrola, Lingen, it's 100% owned. It will create 100 megawatts of green hydrogen to go into local, both for SAF and local demand. And of course, the IPCEI funding that's coming from the European market for these things makes these very attractive with high returns. So I think Lydia, geographic focus is concentrating and concentrating and concentrating. You'll see more of that. So we're concentrating down to fewer markets that are aligned with the movement that we're taking as moving from an IOC to IEC. And we're picking those very best markets with the very best opportunities that give us integrated trading value or optionality outside it. So I feel as if we are concentrating and I'd invite you each quarter to ask that as you see the announcements we make and watch how we concentrate. I won't preannounce any other moves. Kate over to you.

It certainly seems like our focus is internal, which is probably a fair assessment. If you examine the effect on EBITDA, a typical portion of that will contribute to cash flow. Our cash conversion has been improving each quarter for the last year, but that's about all we can provide as guidance. Regarding your next question about the 14, we'll provide an update in February 2025. We've shifted to a schedule of updating twice a year regarding share buybacks and have pre-announced through February 2025. As a Board, we'll consider the facts and circumstances at that time, but we emphasize that at least 80% of our surplus will go towards buybacks.

Thank you, Lydia. Next question in the room. Peter?

Thanks. Peter Low from Redburn Atlantic. Yes, the first was just on the Paleogene following kind of the sanction of Kaskida, would you look to farm down your position there at some point? And what will be the optimum time in the development to do that? And the second was just on oil production and operations, just on the results. I think you mentioned again that there were some price lag effects in the GoM and the UAE. Are you able to just quantify the approximate impact of that in the quarter? Thanks.

Kate, do you want to do price lag and then I'll do a Paleogene.

Yes. I think it was in the trading statement. I think we quantified it as between $100 million and $200 million. Don't think of price lag impact as a direct correlation to things like working capital, which does reverse. So price lag and the degree to which it reverses in subsequent quarters depends on the pattern of prices in that quarter and also the two areas where we get the price lag in the U.S. and in the UAE. And the outcome that you saw is a combination of fact there was some reversal from the first quarter, but also in the first quarter, we had a read-through from the price lag impact in the fourth quarter of last year.

On Paleogene, if you'll allow me to wax eloquent about the Paleogene for a minute. 10 billion barrels of discovered resource in the basin, that's now been highly developed by other companies. It's time for us to catch up with that. We've used an industry standard solution for Kaskida, it will produce 80 kbd. It will be less than $5 billion. It will drill six wells in the East bump. That's all that we're putting into that sanction case, delivering at least 275 million barrels. When I listen to Gordon's team, we might do quite a bit better than that. The reason we might do quite a bit better than that is, we have 1,000 feet of pay and the average across the rest of the Paleogene is 500 feet of pay. So it's an enormous, enormous column of oil. And we'll be doing a seven frac completion inside those. So let's see if we get 2.75 or something much higher over time. It will be hopefully followed by Tiber, 12 months later, mid next year, we think we'll be sanctioning Tiber. It will pretty much be a photocopy of Kaskida as well for capital productivity. And at the same time, we're doing that, we'll be appraising the West bump at Kaskida. And hopefully, that will just tie back and flow into East Kaskida over time. And we've got a couple of exploration wells to the East and West of Kaskida and some more stuff near Guadalupe and Tiber as well. So it's a very, very, very strong resource base. We've got some derisking to do with appraisal wells and exploration wells that are very sensible to do, given the high-quality seismic that we've shot. And obviously, to your point, Peter, we have a 100% working interest there. I think for now, we're going to start Kaskida, get it going. We will appraise these wells. We'll drill the exploration well, see what we have. And in probably 12 to 18 months' time ask me that question again. And I'll think about how much of the resource we've appraised and got under our thumb to think about what we do. Do we bring in a partner or not? Kaskida alone will be a 5% increase in operating cash flow when it comes in at a group level, 5% alone, and Tiber will follow that as well. So it will be an interesting choice to ask me 12 or 18 months away. Thank you. Did everybody like the Kaskida pitch? Is that okay? Sorry for waxing eloquent, those of you on the web. Next question to the web and then we'll come back to the room, Roger Read, please. Hey, Roger, can you hear us?

Can you hear me?

Yes, I can hear you, Roger.

Okay. Sorry, something with my headset. So apologies for the speaker here if it creates a problem. Can we just take a quick ride down the political aisle. You just had an election and a change in government in the U.K. We've got an election coming up in the U.S. Anything in particular you're seeing locally or looking at over here in the U.S. that we should be thinking about?

I think my hope, Roger, from all these elections as we can speed up the pace of moving forward, whether that be in the oil and gas space or in the transition space. Permitting grid connections build-outs have been an incredible drag, no matter what geography you sit inside in the West. The East is different. It's very fast in the East, but in the West, whether that's Europe, the U.K. or the United States. I'm hopeful that whoever comes in, in the elections can help us with that because it's a definite drag on returns and cash flow for the corporations. And I'm very much looking forward to seeing the pace of that pick up. And as you know, we're happy to work with whichever governments come in, in any nation. We've been around for 115 years working with all sides and all kinds of countries. So as long as you stay aligned with the country, you're paying your taxes, you're investing in your people, you're developing research and you're a good corporate citizen. I think we're happy to work with any political affiliation in the world. Do you have a second question, Roger?

Yes, I do. As we think about and I don't mean this at all to criticize the cash returns you're doing now. But as you've laid out, pretty good path here to greater cash flows as we go towards the end of the decade. What's the right way for us to think about what are some of the maybe stair-step events or other catalysts for what would make you confident to continue increasing cash payouts to shareholders on share repos, whichever?

Yes, when considering our current financial situation and how we communicate it, we have a buyback and dividend system that has enabled at least three 10% buybacks in the past. While this is not guidance for the future, it does provide insight into our thought process. In terms of underlying performance, we aim for 3% to 4% growth in EBITDA. Since capital expenditures are relatively stable and working capital remains consistent throughout cycles, you should anticipate a similar 3% to 4% increase in cash flow moving forward. This projection is based on two main factors: first, our push for cost efficiencies, with a target of $2 billion by the end of 2026, and potentially more as technology evolves, which gives me optimism. Second, as a construction company, we are moving forward with a significant number of construction projects. Six months ago, I mentioned that we have 32 projects that need to be approved for progress. We have processed 12 of them, sanctioned five, and rejected seven. The five projects, alongside our efforts with Bunge and initiatives in Arkea, illustrate a continuous wave of construction that we believe will not only counterbalance base declines in our business but also enhance our overall cash flows by 3% to 4% annually. Therefore, I encourage you to monitor our construction progress, especially as the latter part of the decade appears to be well-supported by multiple factors. We are also pursuing various innovative strategies in growth areas and unconventional sectors to accelerate growth even sooner. Thank you for the question, Roger. I'll take another one from the web before returning to the room. Ryan Todd, please.

Great, thanks. I have a couple of questions related to gas. Considering your global gas business and the insights you provided earlier about trading, some competitors have mentioned that gas trading appears to be at the lower end of the typical return range for the next couple of years due to market dynamics. Looking ahead at your business over the next few years, including your trading portfolio, global supply and demand dynamics, and the potential impact on pricing volatility, how do you view your gas trading business? Do you anticipate being able to continue growing it in the next couple of years? Are there any broader dynamics that could lead to returns being lower in that range? Also, can you provide an update on the timing of Tortue and the first gas and first cargoes?

Yes. Tortue, and then over to Carol on Tortue, we continue to make good progress. We got the FPSO into the harbor. I think Gordon, you were out there recently. And now we're just hooking together all the equipment, and we'll have to start to flow gas relatively soon. I think we'll start flowing gas into the systems. We obviously need to leak test, make sure everything is okay from the journeys across the world to get together. And once we've got the leak testing done, then you'll move into starting the refrigeration units inside the LNG, and then you can start to build up cargoes. We would look to introduce first gas into the system to start all the pressure testing, etc., over the next three or four months, I think, would be a comfortable place to say. So that's what we can say on Tortue. I'll just say to the teams in the field who are listening, stay safe guys, no matter what safety is all we care about. Carol, let's see how you negotiate your performance contract.

Thank you. First, I want to highlight that, from a trading and shipping standpoint, we've maintained consistency in our delivery. On average, we've achieved about a 4% increase in the group's return on average capital employed over the last four years, navigating various cycles and conditions. Approximately half of this is attributed to oil and gas. Additionally, we've historically taken a countercyclical approach on the gas side, securing long-term contracts during market low points, resulting in valuable agreements. Our strong strategic relationships have allowed us to sell into both Eastern markets and others. As a top-tier energy trader, we plan to keep investing in our platform to enhance and sustain our competitive edge. This includes focusing on access to infrastructure for both oil and gas markets. For instance, we were leaders in entering the LNG downstream sector in China with our Guangdong joint venture. We'll keep seeking opportunities to support, develop, and expand that portfolio moving forward. While I’m not providing future guidance, I remain confident that our team will consistently perform at the historical levels we've achieved.

Yes. And we've said since 2020, we've averaged 4% incremental return on ROACE on the overall group capital employed, and there's no reason to think despite dampened volatility that we wouldn't be able to continue to do that, as Carol baked in some fabulous contracts over time. Great questions. Back in the room now.

Thanks, Murray. Can I ask a couple of questions? One about refining and downstream, and the other about capital allocation towards renewable power businesses. In terms of refining downstream, I feel uncertain about the actual earnings potential of that business. A significant part of this is due to the downtime you've experienced. Turnarounds have been a major focus this year and last year. Can you provide us with a clearer idea of what you believe the underlying earnings power of the refining assets is in a normalized price environment or at your RMM? Additionally, with the margin environment looking tougher going forward, you've mentioned in the past that margins may shift from Emma’s businesses back to the refining business. How much do you anticipate may shift back? That's one question. The second question is regarding your remarks at the beginning of 2023, where you mentioned the allocation of approximately $60 billion towards transition growth engines by 2030. I know you will provide an update next year, but do you still believe that $25 billion to $30 billion of that will be allocated towards hydrogen, solar, and offshore wind power? Is that still a realistic figure, or do you think you might allocate it elsewhere or not at all? That's it.

Great. Thanks, Lucas. Emma, do you want to tackle the refining and margin shift question? I'll tackle a second.

Yes, thank you, Lucas. On the refining side, our main priority is maintaining safe operational performance. This quarter, our availability was 96.4%, and four of our refineries operated at 96.5%. For context, last year, our full-year refining performance was 96.1%, marking a record since 2005. We always prioritize running our facilities safely, and then we focus on optimizing commercial value. We don’t report refining separately as it's included in our product reporting, but we collaborate closely with Carol's team in oil trading, products, and midstream operations. After ensuring safety, our next goal is to enhance commercial value, which fluctuates throughout the chain from customers to products. Looking back at 2022 and 2023, we've observed higher refining margins compared to historical averages, with 27 RMM in 2022 and 2023 versus 15 from 2015 to 2021. There has been considerable volatility in refining, making it challenging to provide future guidance. However, we try to give insights each quarter as volatility has been quite pronounced. In the second quarter of 2024, our RMM reflects the typical configurations of refineries in a specific region, blended together. Our advantageous refinery setup is weighted more towards distillate, approximately 60%. This quarter, we experienced a significant decline in distillate margins, particularly diesel, while gasoline margins rose, impacting our refining financial performance this quarter. Predicting future trends remains difficult.

The oil capacity numbers are impressive. However, I'm somewhat uncertain about how much equipment will actually be available and the extent to which more equipment can be obtained to optimize and generate profit in 2025 compared to the past two years. It's a significant challenge. Additionally, regarding TARs, I assume the cost of a TAR is capitalized instead of being reflected in the P&L. Is that accurate?

Yes. Regarding the TARs, we provide guidance on them and this year we've indicated that they will be concentrated in the second half and the fourth quarter. On the portfolio front, we have been refining our focus for a while now, keeping six refineries. We also mentioned that we will be deliberately reducing capacity by about a third starting in 2025. I'm willing to discuss throughput capacity and availability further, but I believe we have shared sufficient information on availability from quarter to quarter.

Yes. I want to revisit a point we made in a previous quarter, Lucas. We anticipate that refining turnaround activities will become less intense starting in 2025, following a significant number of tours in 2022, 2023, and 2024, as we caught up after the COVID period when mobilizing personnel was challenging. We expect a decrease in turnaround activity from 2025 onward as a result of this catch-up. Regarding capacity, you can observe where we're currently operating. The actual utilization hinges on supply and demand for products. Currently, diesel is slightly oversupplied while gasoline levels are about average. We'll see how the driving season impacts these figures; typically, stock levels decrease during this time. It's also noteworthy that we haven't seen any weather-related disruptions in North America or Europe that would affect the refineries, though we've had some in Asia and the Middle East. These factors will influence future margins and earning potential. There have also been about 600 thousand barrels per day of announced shutdowns in the third-party market that haven't taken place yet. In regions like Europe, the U.K., and the U.S., we expect to see that capacity shrink by approximately $80 million a day as these shutdowns occur, resulting in reduced product flow and increased transfer margins. Overall, my conclusion is that capacity is tight due to the continual reduction in refining capacity in the West and ongoing volatile weather events, which suggests we will experience significant margin volatility in refining for the foreseeable future. Our earnings capacity will depend on our performance in this regard. Regarding your question on capital allocation, that's likely a more relevant discussion for February. At this moment, I can say that we are pleased with our offshore wind portfolio, which is currently focused on building out 10 gigawatts while minimizing capital expenditure. Our priority is on the electrons. We plan to leverage this as much as possible and involve partners to enhance electron flows within our business. Regarding Lightsource BP, in which we are acquiring a 50% stake, we have made some adjustments and are satisfied with the optimizations. We will explore bringing in partners for this venture soon, ensuring minimal capital intensity for us. In terms of hydrogen, we are assessing our plans for five to ten plants, having already approved two projects in Castellon and Lingen. We have significant decisions pending for NetZero Teeside in the U.K. and the Integrated Energy Hub in Cunane, Australia, among others that require careful consideration. These forthcoming capital decisions will shape our capital strategy for the decade, and I don't want to speculate on that now. I hope that answers your questions, Lucas. Is there another question from the room, Martijn?

Hi. Hello, it's Martijn Rats for Morgan Stanley. I've got two questions, if I may. First of all, on the previous call, there was a question about the production profile in the second half of the decade due towards 2030 and what that could look like. And I remember you mentioning at the time said, well, we have 32 possible FIDs ahead. And what we decide on those will determine how that looks like. I fully recognize you haven't done all 32 by now, but you've done 12, and you seem to have some strong ideas about Tiber and a few others. So perhaps some clarity is emerging of what the production profile could look like in the second half of the decade and not to preempt yet another question that it shifted to February. But could you say something about the production profile in the second half of the decade? The other one I wanted to ask is about impairments. BP is not alone in this, but the impairments continue to run at very high levels. And every quarter we go noncash, but it was cash ones. And impairments, they're not great. Can you say anything about what the outlook is for further impairment charges over the quarters and possibly years ahead?

Great. Kate, I’ll let you discuss impairments. As for the production profile, we've reviewed twelve different sanctions, approving five and rejecting seven. Among those approved, we have three in the upstream: Atlantis DC1, Ruwais, and Kaskida. Tiber shows promise, but we need to navigate the supply chain first to ensure that. While I can't make any predictions about Tiber, I feel positive about it for now. We've made progress, but there’s still much more to tackle in the 32-program. My focus is not really on production but on cash flow and returns. I aim to maximize upstream cash flow growth throughout the decade, meeting or exceeding our return expectations. We anticipate cash flow will grow to 25% and then stabilize, and I am hopeful we can surpass that target. I'm not certain what the production will look like, but I believe we can achieve better outcomes given the quality of our portfolio. We'll see how that unfolds, Martijn. That’s all I can share for now. And yes, we'll provide an update in February. Kate, over to you for impairments.

Yes. So at 2Q, a chunk of the impairments were due to refining. And we've made previous announcements with regard to how we're seeking to optimize the Galfan Korkan and in particular, reducing the capacity there by a third. We said in the trading statement, it would be $1 billion to $2 billion post tax, we're being in the middle of that, impairments came in at $1.5 billion. The other point to just comment on with regard to refining is, we as a function of the accounting rules, which push you to be prudent, we took onerous contract provisions in the second quarter. Those are calculated at a point in time before you have any option to commercially negotiate the outcome. So I would expect we'll do an awful lot better than that. And I give Emma a stretch target now that we see that entirely reversing as we step through it, because currently it's noncash cost, that truly is noncash cost. With regard to impairments going forward, it's a function of business decisions that we make in plans and environment. So I'm not going to start predicting what that's going to look like, but I take your point.

It's a bit challenging with IFRS, as it effectively reduces your asset values based on your price and discount rate. If your discount rate goes up, you incur impairments, and if it goes down, you can recover some value. Additionally, if your price perspectives fluctuate, adjustments are necessary. I prefer to view it as a form of accelerated depreciation since it compels us to depreciate sooner than we might otherwise do, which is due to the rules. That's something to consider, Martijn, as you analyze it. Let's move on to the next question, Alastair.

I have a question for Emma regarding the marketing business. Can you provide insights on what you're observing globally in terms of same-store sales, especially how it divides between foot traffic and basket size, particularly in the U.S., considering you previously indicated signs of consumer recession there?

In the marketing business, we generated $4.5 billion last year and are targeting $7 billion across four key growth areas. The first area focuses on enhancing performance and convenience. We experienced a 6% margin growth in the first half of this year compared to the same period last year. Regarding your question about the composition of our growth, which includes like-for-like performance versus store renovations, it varies by market. In the U.S., approximately one-third of growth comes from like-for-like sales and two-thirds from store renovations. Each market's contribution is influenced by ongoing store renovation programs, such as those currently happening in Poland. Therefore, performance and convenience will play a significant role in our marketing business growth for 2024 and 2025. For our base business, Castrol has achieved six quarters of growth momentum, and we recorded a record quarter in aviation this year. Additionally, the cost-saving program I mentioned earlier will continue to drive growth in our base operations. I also talked about electric vehicles and Bunge's contribution in this area. Overall, I believe we are well-positioned in the marketing business, which encompasses around 20,000 retail locations. We focus on enhancing both top-line and bottom-line performance while actively managing our diverse portfolio, which includes various B2B businesses.

Amazing, we're number five in convenience in the United States who would have thought.

Thank you. First one is on your 2025 targets again. And I think Emma, you referred to 2022, 2023 as remarkable years in many respects in terms of achieved refining margins. So I wonder, can you add a little bit more subtlety around what I thought was a very subtle change already suggesting that these EBITDA targets are to be achieved at 2023 prices. And I recall that they used to be based on mid-cycle assumptions way back in 2021 when we didn't have RMMs above 20% and yet they were above 20% in both 2023 as well as in H1. And if I extrapolate H1 earnings, I kind of struggle to get to that EBITDA figure even if I give you full credit for these EV and low carbon growth numbers coming through. So I wonder what you can talk to us through about that. I thought quite subtle change in underlying assumptions behind these 2025 targets. And then just a follow-up for you, Kate, on the net working capital. Is it appropriate to think about the Q2 as a $1.5 billion roughly reversal because the headline of $500 million or so includes the Gulf of Mexico spill payment? And are you confident that the remainder of the Q1 build is going to reverse in Q3? Or what more color can you give us around that? Thank you.

Yes, let me address that first. We had a capital build of $2.4 billion in working capital during the first quarter. About $1.5 billion of that has returned this quarter, leaving us with roughly $1 billion still to come back. As I mentioned earlier, we anticipate a net working capital release in the third quarter. Therefore, based on our current forecast, I expect that net debt will decrease in the third quarter before accounting for acquisitions that will include any acquired debt. Regarding our earlier discussions, we were clear about building from 2023 delivery towards meeting our 2025 targets. At these prices and with the growth opportunities we can see in our underlying business, that’s how we aim to reach the $46 million to $49 million range. I encourage you to connect back to that. Additionally, when the original slide was presented, there was a footnote regarding our planning assumptions from 2021. Craig, perhaps you can discuss that with Chris after the call.

Good. Yes, Josh?

Thank you. This is Josh Stone from UBS. First, I want to discuss the decision to fully consolidate Bunge and Lightsource BP, as it appears that some companies in the sector are opting to separate those businesses while you have chosen to fully integrate them into the BP balance sheet. Can you explain the advantages of having these businesses as part of BP instead of as independent entities? My second question is about surplus cash flow and buybacks. In the first half of the year, surplus cash flow has not met the levels of your buybacks. It seems you may have been utilizing debt to fund the buyback. You've decided to keep the buyback amount steady, despite the positive outlook you've mentioned. Could you outline some of the key factors contributing to the anticipated improvement in surplus cash flow? Are you relying solely on the second half of this year for this, or is there also an expectation of growth in 2025 to support the buyback? Thank you.

Sure. I'll start with Lightsource BP. We had a partner when we initially took it off the balance sheet back in 2017 who was a fantastic entrepreneur and helped us grow the business to develop 4 to 5 gigawatts per year. However, they reached a point where they wanted to cash out. It was the right time for us to take complete control. This is an excellent opportunity to help Carol expand her business, as many customers globally are looking for natural gas along with clean power to decarbonize their energy systems. The demand from hyperscalers is increasing significantly. Thus, taking full control of Lightsource BP makes a lot of sense given the strong demand for energy right now and the push from countries to transition. Once we have established that control and restructured the portfolio according to our customers' needs, we will consider bringing in a passive partner. They have a different cost of capital than we do, which should allow us to take advantage of price arbitrage over time.

We have been involved in the joint venture with Bunge since 2019 and have gained a solid understanding of its operational performance metrics. We recognized an opportunity to increase our stake from 50% to 100%. This decision allows us to access two major sources of value that were previously not accessible as a 50% partner. The first source is the potential to integrate with Carol's trading business, which is crucial for maximizing value. The second is applying our scientific methods and techniques from refining, such as automated control systems, to enhance mill uptime. These improvements are challenging to implement in a 50-50 joint venture. In the near term, we see immediate sources of value and considerable long-term opportunities, especially in biogas. We plan to utilize waste from the mills with a relatively small investment to create biogas, which can be used in our large vehicle fleet of 1,500 units, or sold to the grid. This is another major opportunity that is difficult to pursue with differing goals in a joint venture. Additionally, there is potential for future developments in next-generation ethanol. Overall, we see both short-term value and substantial medium- to long-term investment opportunities on the horizon.

So our decisions are driven by how do we create the maximum value for shareholders. That's how we drive, and that's the two examples in that case. Keith, over to you on the other question?

Yes. Thanks, Murry. Doug, hi, nice to hear your voice. We've already had one debate with regard to share buybacks versus debt. I'm sure we'll have others by the sound of it. Look, I think I said earlier on the call, the investors that we talked to, they like the balance of the financial frame as we've currently got it structured. As I said, it's sector-leading distributions. And the balance sheet is in good shape. It is strong. We have brought it down a significant amount since 2020. And the flywheel that the share buybacks give us to be able to continually increase dividends, as you've seen in the last three years we have done 10% each of the second quarters. It creates a flywheel for that and the increasing earnings per share. So for now, we're comfortable with where that sits, and we like the balance, and so do our investors.

Great. Thanks very much, everybody. Thanks for listening. Sorry, we overran a bit, and I hope everybody has a nice one. Take care.