Welcome everybody to BP’s First Quarter 2025 Results Call. We will 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 hand over to Murray for a few brief opening remarks.

Thanks Craig. Today marks the first quarter since we laid out our reset strategy. 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 we have successfully started our three major projects Cypre in Trinidad, Raven in fill in Egypt, and GTA in Mauritania and Senegal. That adds a 100 mbd of capacity on our targeted 250 mbd by 2027. 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; it was the best first quarter since 2020 on an underlying RCOP basis. Underlying pretax earnings met consensus. Gas and low carbon mist primarily due to a weak gas trading result but we saw a 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. We have taken a 1.5 billion intervention around cash flow for 2025. We continue to optimize our investment plans and have reduced CAPEX by $0.5 billion in 2025 down to $14.5 billion. Excluding the inorganic payment for bp Bunge organic CAPEX is now below $14 billion in 2025. And with 1.5 billion of completed or signed divestment agreements year-to-date we now expect 3 billion to 4 billion in divestments for 2025 with proceeds weighted to the second half. We are also making strong progress with a strong progress with a strategic review of Castrol with significant interest in the business. And we have made good progress in costs with underlying operating expenditure down 500 million quarter-on-quarter. We will 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 are focused on delivering at pace; that is what we need to keep building on quarter in and quarter out. Back to you, Craig.

Thanks, Murray. For those on the call, please limit yourself to two questions during the Q&A. We have many participants today, and we aim to conclude the call by 2 PM. The IR team is available for any follow-ups. So let's get started. I'll turn to the U.S. first. This morning, let's take the first question from Steve Richardson. Steve, good morning. It seems we don't have Steve. We'll continue in the U.S. and go to Doug Leggate at Wolfe. Doug, good morning. We can't hear you either, which suggests an audio issue. I’ll try to check the connection or switch to the UK. Let's try Josh Stone at UBS. We are experiencing audio problems during the Q&A. If everyone can hear me, please hold on while we work on fixing these issues. We're using this time efficiently while we wait for some emails. Please bear with us.

Buybacks, can you walk through the bridge here and how much of it relates to reinvent BP share option plans? I do understand sound may have come back as well. I do understand sound maybe back as well. So maybe if we deal with those first two questions?

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

Yeah, will do Murray. Thank you.

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 non-cash costs, should we consider this run rate for the rest of the year, or is there a one-off element? And the second question was on share count. It went up despite the 1.75 billion buyback. Can you walk through the bridge here and how much of it relates to reinvent BP share option plans, Kate?

Yeah, thank you, and hello, Biraj. Sorry, I can't hear your voice today, and apologies for these issues. In terms of the non-cash items going through the gas and low carbon energy segment, this quarter. Quarter-on-quarter, we've got about 200 million of higher non-cash items. So DD&A is higher. Obviously, we've got the starter per Raven infill, so that was delivered ahead of schedule, which was a great performance by the team. 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-off that you've seen going through 4Q versus 1Q. In terms of the DD&A rate going forwards, that's probably a decent run rate with regard to the startup of Raven. 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 think a lot of it 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.

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?

I can hear you, can you hear me?

And can you go ahead with your question Josh, thanks?

Yes. I'll go ahead, thanks Craig. And good afternoon Murray, good afternoon Kate. Murray, in the video you talked about a 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. Some discussion maybe on gas trading and costs would be helpful. But maybe if there's any other line items do you think we should be paying attention to that driving some of that mismatch in the first quarter? And then a second question for Kate. I noticed another issuance of hybrids of about $500 million 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.

Yes, Josh, it’s great to hear from you. I appreciate your patience with the technical issues today. Regarding the conversion of earnings to cash flow, it's useful to examine EBITDA, which we continue to report. This quarter, the main problem we encountered was an increase in working capital, which we mentioned during Capital Markets Day and in the trading statement. We experienced a seasonal buildup in working capital as we prepared our refineries for the driving and flying seasons in the second, third, and fourth quarters. We anticipate that most of this working capital will reverse, and you'll begin to see that reflected for the remainder of the year, assuming stable pricing conditions. In terms of gas trading, we did indicate that gas trading was weak while oil trading performed at an average level. Remember, we target a 4% return on trading over a five-year period, and we maintain that goal this year as well. The trading environment in the first quarter was very volatile. The oil segment performed well to achieve average results, but the gas segment faced challenges due to recent regulatory changes in Europe. We expect to normalize our performance in gas moving forward, which should align with our average expectations. I hope that clarifies the cash flow conversion for you, and we remain optimistic about our plans to increase cash flow from 8 to 14 over the next three years. The team has had a solid operational start. Kate, I’ll pass it over to you for the next question.

Yes, thank you. I believe you also inquired about costs. Let me quickly address that. We are making significant strides with our $4 billion to $5 billion cost reduction initiative, building on the achievements we began in 2024, where we realized $800 million in structural cost reductions and $300 million in absolute reductions throughout the year. Quarter-on-quarter, our absolute cost base has already decreased by $500 million, which is positive progress. I'm sure we can discuss this in more detail in subsequent questions regarding our methods and future plans. Regarding hybrids, you are correct that we issued $500 million. This is essentially bridge financing while we explore bringing in a partner, Lightsource BP. This $500 million can be seen as temporary until early next year, with maturities in 2026. My overall approach to hybrids remains the same as what I shared during Capital Markets Day. I do not plan to increase the $12 billion group hybrids at all. As we approach each maturity window, the first being between June and September this year and the next in 2026, we will carefully consider our cash flows and the option to reduce the hybrid stack by up to 10% annually. We are limited to a cumulative maximum reduction of 25% set by the rating agencies, but we will evaluate this as we reach each maturity window.

Got it, thanks for the comments.

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

Yeah good morning and good afternoon. Hopefully, you can hear me this time.

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

Alright, success. I like it. 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?

Yes. Great. Roger, thanks very much. I'll take those. On BPX, our plans remain unchanged for now. We continue to think about investing $2.5 billion this year. I think we've got 9 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. 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, our Eagle Ford position are well positioned for that, very close to market, and very little differentials. So in time, we think we'll grow that gas position, the drilling inside that gas position. Right now, it's 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.

Thank you.

Thank you, Roger. We're going to stay in the U.S. Doug, I see you managed to rejoin, over to you, please.

Can you all hear me, okay?

Yes. Yes. We're good, Doug, all sorted.

Excellent. Okay. Good. I'm just glad it wasn't a screw-up 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 billion number. 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?

Yes, thank you, Doug. As you mentioned, we have very high-quality assets and transaction activity remains robust. We've already secured $1.5 billion in the first quarter, which is excellent. We're raising our disposal range to 3% to 4% due to the strong discussions we’re having regarding retail and refining opportunities. Additionally, we’ve launched Castrol, and I believe we have a solid plan in place. While I can't predict the exact risks, I'm confident we will achieve the $20 billion goal, as we have various options available to us. Since it’s still early in the year, I won’t provide guidance on exceeding that number just yet; we need to build a stronger track record and monitor progress closely. I'm optimistic, though, as we expect to hit this target, similar to our net debt goal. There's considerable interest in our assets, especially with interest rates decreasing in Europe, which is attracting investors seeking yield. Our process remains strong, and we feel positive about reaching the $20 billion target. We’re making good progress and gathering interest in Castrol as we continue moving forward. Thank you for your question.

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 BPX. I think in an EnerVest report the other day, seeing you guys got the better side of the deal, but Devon 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 2030? I'll leave it there, thank you.

Yes. No impact to 650 kbd target for now. We really like the transaction. We got more production early on that's why it adds more value. And I think that's what you're referencing in the EnerVest 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 EnerVest and they benchmark us across all of our three basins, we are best in class on the NPV per dollar spent. And that's about getting more resources for the dollar we spent on a relative ratio. That applies in the Permian, that 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. But again, the benchmarking is showing that using the technology we do, mattered 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. 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 SNF the way that we think about it. I hope that helps, Doug.

It does, thanks a lot Murray.

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

Good afternoon. I have two questions. First, regarding the refining and trading side, I see that there’s about $30 million in operating profit, despite achieving 96% uptime. Even with a positive contribution from trading, this still implies that the refining business is losing money operationally. Is this a concern, and how quickly can you return to the expected performance? I believe this relates to cost management as well. Secondly, concerning the Head of Strategy role, what impact does the absence of this position have currently, and how do you ensure a swift response to changing circumstances? It seems that the shift back to your current operations didn't happen as quickly as it could have. How do you maintain that flexibility moving forward? Thank you.

Yes, Lydia, I think on the Head of Strategy role, we'll continue to have Head of Strategy, the person will just report to Kate. It 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 my 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. 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. Remember, 1Q in the U.S. was pretty difficult. There were quite a few storms in 1Q in the U.S. that drove that low demand. So we're starting to see the refining margin lift up now. We've obviously got Atlantic Basin refineries, 1.2 million 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, 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 2025 to 2027 and we're well on track with that. And I think we were just in an oversupply situation, both in 4Q and 1Q. And but that now seems to be starting to alleviate itself as 1.2 million a day capacity shuts down and demand starts to pick up as we move into driving season. I hope that helps with you.

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

Hi, good afternoon and thanks for taking my questions. Firstly, on CAPEX. The oil is about $5 a week now than the $70 brand you assumed in the CMD in February. You've turned 2025 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 12-month view, would you be able to reduce CAPEX further and if so, would you cut CAPEX proportionally across upstream and non-upstream businesses? And I guess related to that, I think that you exited the low-carbon transport business and you've also canceled another biofuel project. So relative to the CMD in February, that points to further downside to your transition CAPEX guidance? Thank you.

Yes, Kim, there are no changes to the overall guidance we provided at Capital Markets Day, which is set between $13 billion and $15 billion. We have reduced our capital from $15 billion to $14.5 billion, and this reduction is not specific to any one business; it's a broad adjustment. It reflects our focus on capital efficiency and some investment decisions, none of which were significantly impacted by the two you mentioned. Our approach is very much driven by returns, and we will prioritize actions that maximize those returns. If we face a decline in oil or gas prices over a 12-month horizon, we have considerable flexibility with our onshore rigs globally, allowing us to respond effectively. Additionally, we can adjust capital for C&M refining as needed throughout the business. We are being particularly cautious given the current macroeconomic conditions. We've cut capital by $500 million and expedited our divestment efforts, resulting in an additional $1.5 billion added to our cash flow for 2025, in case the macro situation worsens. We also have the option to reduce CAPEX by $2.5 billion across the group if prices decline further, which could pose risks to long-term growth. Although we aren’t taking that step right now, this $2.5 billion accounts for a potential $10 price drop. Lastly, if prices do fall significantly, history suggests we would start to experience notable deflation, which usually occurs rapidly. We’ve noticed a decrease in the U.S. rig market and the completions market, with the rig fleet down by 10%. There is also some softness in the offshore floating market, so we will need to monitor how the situation develops, but we are well-prepared for any scenario.

Thanks, Kim. We'll stay in the UK and go to Chris Kuplent at Bank of America. Chris?

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

Great. I will begin with Kirkuk and then hand it over to Kate for your other question. The Iraqi government will publish the PSA at some point, but they have not done so yet. I need to be cautious in my remarks. I appreciate your understanding that I want to adhere to our agreements. You should consider this as an incorporated joint venture where we will bring in partners. Initially, there will be some CAPEX on our balance sheet, but eventually, it will transfer off balance sheet as we partner up. This will result in a capital-light investment in Iraq. The terms are significantly better than those in previous rounds, and we are now in the eighth round of pricing improvements since the first awards in 2027 and 2028. Some terms from this round have been published, so you can reference those various sources to see that we are doing at least as well as that. Publicly, I can share that at Rumaila, we initially had only the oil rights; now we also have the gas rights at a favorable gas price. I am incentivized to support the nation with natural gas supply, which they are encouraging us to explore. This opens up a different potential for profitability with Rumaila. Additionally, there is price upside in this PSA that wasn't available in previous rounds, making it quite profitable and cash flow positive relatively quickly. I can't reveal specific volume ramp-up numbers until the PSA is published. Once it is, I will be able to discuss this more comprehensively. This is regarding the 3 billion barrels in the 25-year agreement we established. We are also exploring additional opportunities beneath the existing five domes, with commitments to drill wells that could uncover resources beyond the 3 billion barrels, as we believe there is significant potential there. The source rock is very rich. We continue discussions about surrounding acreage to explore more opportunities. We consider this a strong investment, and when the PSA is published, refer to the last round for modeling until we have the new PSA. Now, I'll turn it over to you, Kate.

Hi Chris. Yes, so on Archaea, we moved it out of the customer and products segment and into the gas and low carbon energy segment. So where we have materiality, we have restated the 2024 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. In terms of progress, it did well last year, nine plants online. We've got three online already this year. I think we're expecting 8 million to 10 million and we still continue to expect Archaea to be free cash flow positive by 2026. So from our perspective, it's well on track.

Okay. Thanks, Chris.

Okay. Thank you, Kate.

Sorry, Chris, did you have a follow-up there?

All good. I'll circle back later, thank you very much, Craig.

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

Good 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? Thanks.

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

Thanks, Murray. 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 then in the previous year in terms of 1Q, largely driven by the composition of our profits. We tend to have higher taxed areas in our oil production and operations segment than we do in either our customer products or gas and low carbon energy. And that's what's driving the effective tax rate 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%.

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% in the past couple of years?

Yes, I 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.

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 I was wondering if you're doing the same this year, if you could talk about pricing you've locked in? Thanks.

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.

Okay, great.

Thanks Jason, no problem. We'll come back to the UK and take the next question from Martijn Rats at Morgan Stanley. Martijn.

I have two questions as well. I wanted to inquire about some line items that we don't frequently discuss, but they are quite significant for modeling earnings and balance sheet gearing. What can you tell us about the minority line, which seems to have increased over time? It’s somewhat challenging to understand what is included there, but any guidance on what to expect for this current quarter or the next few quarters would be appreciated. Additionally, regarding the adjusting items line, we typically assume that it will be zero going forward, but it's averaged a negative $1.7 billion per quarter over the last six quarters. This impacts our balance sheet modeling, so any insight into the future of that line item would be helpful. Moving on to a specific question about Kaskida, my understanding is that the platform for Kaskida is currently being constructed in Singapore. If that platform is imported into the United States, I assume there would be an import tariff. Could you confirm whether importing that platform is indeed subject to a tariff, and can you provide any information on how this might affect the overall economics of the Kaskida project?

Yes. Just to take Kaskida first; finished goods are not subject to tariff Martijn. 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, I'll let Kate tackle that one. Just on adjusting items, I can't really give you any guidance. There are 1 million 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. You can see it on Page 24 of the FCA. 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 were $21 billion 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'd 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. 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.

Yes. Thanks, Murray. Hi Martijn. 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 million, then those are $500 million adjusting our item relating to the extension of the EPL in the UK system. 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 pre-issued around $2.5 billion 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 2025 and 2026 as did our peers actually. And so as a consequence, the costs associated with the hybrids are up a bit. But 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 $1.2 billion, let's see when we get there. But unless and until we reduce that hybrid stack, the level of NCI income is going to remain fairly stable.

Okay, thank you.

Thank you, Martijn. We'll go next to Michele Della Vigna at Goldman Sachs, Michele.

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, assuming 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 Kaskida 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? Thank you.

Michele, I'll take tariffs, and I'll hand over net debt 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. The aluminum and steel tariffs, we are not seeing any impact in our Lower 48 business, because we took a choice 18 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. Kate, over to you on the question on net debt.

Yes, hi Michele. I want to emphasize that our target for net debt is set between $14 billion and $18 billion by 2027. Murray mentioned this in his opening comments, and I believe it's important to reinforce. We are very confident in reaching this target, and that is our main focus. In terms of the trajectory through the rest of 2025, there are some significant factors at play. I estimate that we will see around $2.5 billion, or possibly a bit more, of working capital reversing. Additionally, if we achieve the upper end of our divestment proceeds target, we expect to bring in another $3.5 billion. There are several large components involved alongside our operational performance. I would like to take a moment to discuss how we plan to approach this debt target. In February, we mentioned that we would be ring-fencing the divestment proceeds from transactions involving Castrol and Lightsource. We have already initiated the process for Castrol, which has garnered significant interest as it's a well-established brand with a strong history of 125 years. The team has done an excellent job improving performance consistently each quarter. We expect to launch the process for Lightsource BP this quarter. The proceeds from both divestments will help us return our balance sheet to the $14 billion to $18 billion range, and we are very confident in achieving that.

Thanks very much. We'll take the next question from Matt Lofting at J.P. Morgan. Matt.

Thanks for taking 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 because over the last 12 months, BP generally turned the contributions in this sort of the average to weak range. And then optically on a headline basis, it seems to have coincided with moderated oil and product market. 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 million for Q1. Is there any frame you can share on how BP is thought about, the calibration of that $750 million for the full year, for example, where at the moment you think is most appropriate to be for 2025 within the 30% to 40% CFFO range? Thanks.

Yes. Great, Matt. I'll take the trading question and 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. 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 12 months. 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. Go ahead, Kate on buyback.

Yes, thanks, hello 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 $700 million to $750 million to $1 billion. 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. 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, will, 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. But we're not going to guide forward. We will update you at 2Q when we've stepped through that decision-making process.

Thanks guys.

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

Thank you, good afternoon. I had first of all a question on the $500 million cost reduction in Q1, which I thought was quite an impressive number. You said you will update us in Q2 on cost, but I just wanted to try and understand the type of cost savings we're talking about, where is it coming from, if you can perhaps give us just a couple of examples to understand? And then secondly, Kate, if I may go back to the adjusting items and the $539 million UK energy profits in Q1, that amount was greater than the full year 2024 amount. 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.

Hi Irene. I'll take the second question first. It's very straightforward. It's purely the tax affecting of the extension of the EPR 2030, 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 all been accounted for fully now. With regard to the $500 million cost reduction, yes, I'm in a similar place to you. I thought it was a good outcome. It's 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 progressing customer and products, I think they're doing very well, but also we're trimming costs, as I've said, across all business, but also at 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 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 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 do it manually. So we are in action enormously right across the company on that. And I look forward to updating in much more detail at the second quarter.

Thank you, Irene. We're going to turn to Lucas Herrmann next at BNP, Lucas.

Thank you very much. I have a couple of questions. Kate, regarding volumes in venture, I assume they are flowing now. Should we expect that you will receive around 1.5 million tons of LNG this year, and start including that in your numbers? Also, I have another point that may seem controversial, but it relates to trading. I believe that for BP, reestablishing confidence and trust, along with increased stability in quarterly results, is becoming increasingly important. I have no doubt about the strength of the trading business or your historical ability to generate solid average returns over time, even if not in the short term. As you mentioned, Murray, and as Kate pointed out, you have strong flows that should lead to a sustainable margin level, although it will vary by price. You also have a solid ability to optimize. Should this be a time for the organization to focus less on value trading and more on delivering a stream that is stable, consistent, and reduces volatility in quarterly results, which have fluctuated in recent quarters? Feel free to respond, Murray.

Yes. Yes, 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, it is flowing. It started flowing in mid-April. And we've got 2 MTPA capacity at venture offtake. And I think I'll stop describing anything on venture beyond that, on Venture Global. 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 a partial profit. And I understand the volatility point 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, in a multiyear cycle. We have earned 4% over the past five years. It has been about half gas, it has been about half oil. And of course, you should divide that in four, as you estimated. 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.

Thank you.

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

Hi there, Craig. Hi everybody, thanks for taking my question. I guess with some positive news in Namibia over the last few days with Azul, what are your plans from here in Namibia, I guess, and would you be interested in getting more exposure to the region if the right opportunity came up? Thanks.

Great. Thanks, Henry. Yes, it was a significant discovery that our partner Rhino led when we operate through the Azul joint venture, a 50-50 joint venture with ENI. We're very pleased with the well; 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. 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.

That’s great. Thanks.

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

Thank you, we have two questions left. Murray, when you mentioned the potential $2.5 billion reduction in CAPEX, could you clarify what price levels would trigger that reduction? Should we expect this to happen in a linear fashion as prices decline, or is there a specific price point you have in mind that would lead to a more rapid reduction? My second question relates to gas and low carbon. I appreciate your insights on costs. However, when I examine the EBITDA, it appears quite low compared to my model projections. I’m trying to understand the contribution from LNG trading. Was that positive this quarter, or is there a possibility that it had a negative impact on EBITDA this quarter?

Thanks, Giacomo. No, we didn't have a loss. It was a weak quarter though, 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. 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. 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 were to make those decisions. But a first step of $500 million 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.

Thank you.

Thank you. We will take the last two questions from the final individuals. First, Paul Cheng at Scotia, go ahead, Paul.

Thank you. Two questions, please. Murray, in the Gulf of America, U.S. just have a new rule, the downhole commingling. Can you give us some idea that what this new rule, do you see the most opportunity set in your portfolio and how big are those? Second question is that if indeed the commodity markets 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 would you balance between the two? Thank you.

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

Yes, hi Paul. The financial framework we established in February along with our reset strategy was quite clear regarding our priorities. First and foremost, we are committed to maintaining a resilient dividend, which we have stated will increase by 4% annually as a minimum. The next priority is strengthening our balance sheet, and we are determined to meet our target of $14 billion to $18 billion by 2027. Following that, we focus on capital expenditures, and our financial framework has been designed to allow for flexibility while ensuring we can achieve our four main objectives. We have considerable flexibility in capital expenditures within the $13 billion to $15 billion range. Additionally, we plan to share excess cash with shareholders, and we have included share buybacks in this financial framework as part of our overall distributions, which aim to be around 30% to 40% of operating cash flow over time. I hope this clarifies our approach to prioritization. We will protect our balance sheet, and currently, our Board is focused on operating cash flow and utilizing share buybacks to return excess cash to shareholders, and we'll evaluate this on a quarterly basis.

And Paul, on downhole commingling, I suppose it's really targeted at the Paleogene, where we do see the differential pressures. Obviously, Cascade 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. 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.

Thank you.

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

Thank you for taking my questions. I have a quick clarification or modeling inquiry and I'm happy to follow up later. I believe Martijn mentioned the EVNCI charges, which I assume are partly related to the hybrid and possibly other factors. Regarding your comment about higher interest rates, I assume that would lead to a lower OB&C charge for the year. Given that, I'm curious why the 2025 guidance is still set at $1 billion. Thank you.

So 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&C, yes. So the interest income, yes, you're correct, is reported inside OB&C. We don't split it out. But the other very big component that moves OB&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&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. 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.

Thank 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. 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.