Welcome, everyone, to BP's Second Quarter 2025 Results Call. Today, we will discuss our performance for the second quarter and the first half of the year, as well as the video that I hope many of you have already seen. I will now pass it over to Murray for some brief opening remarks.

Thanks, Craig. Hi, everyone. This has been another strong quarter for BP operationally and strategically. We're delivering our plan to grow the upstream and focus the downstream with reliability across both greater than 96%. Year-to-date, across the upstream, we've brought 5 new oil and gas major projects on stream, sanctioned 4 more and made 10 exploration discoveries, the best year for discoveries in recent memory, including the significant discovery in the Bumerangue Block in Brazil with lots of interest and commentary over the past 24 hours. Underlying earnings in our customers' business are up around 50% compared to a year ago and trading has delivered well quarter-on-quarter despite challenging conditions. Expected proceeds from completed or announced divestments have reached around $3 billion for the year, and we now have delivered around $1.7 billion of structural cost reductions since the start of our program in early 2024. We've also announced a dividend per ordinary share of $0.0832, an increase of 4%, and a further $750 million share buyback for the second quarter. We are 2 quarters into a 12-quarter plan. And while we're encouraged by our early progress, we know there is much, much more to do. Gordon and Emeka are also here with Kate and I today, so please feel free to ask any questions. There's certainly a lot going on in digital and technology and, of course, across all of the upstream. With that, over to Q&A, and Craig can get us started.

Thanks, Murray. We'll now take the first question from Michele Della Vigna at Goldman Sachs. Michele, please go ahead.

Congratulations on not just a strong quarter, but also what has been a very impressive discovery and a set of startups. I wanted to concentrate on those 2 if I may. On the Brazilian discovery, just wanted to understand from you how concerning is the CO2 content of the discovery. It's clearly giant, but we've seen in the past discoveries like Jupiter, for instance, with a lot of CO2 content that didn't get ultimately developed in Brazil. Just wanted to understand what your thinking is on that, even though clearly, it's very early in the appraisal of that discovery. And then on the start-ups, again, very exciting in Mexico, Trinidad, and Egypt, I’m wondering if you could perhaps give us a view of where you think production could be by the end of the year after we go through the potential hurricane season?

Great. Michele, thanks for the kind words. On exploration, we've had a fantastic year, the best in a decade, really the best in recent memory, with 10 commercial discoveries across the patch, including big discoveries in Namibia and now in Brazil. So we're very excited about that. Why don't I hand over to Gordon, who I think will have a lot of attention on this call to talk about Bumerangue and thoughts on production as well.

Hi, Michele. And hello, everyone. Good morning, good afternoon wherever you are. Thanks for the question, Michele. As you can imagine, we're pretty excited about this discovery. The petrotechnical community is very excited about this discovery. Just to set the scene before I specifically answer your question: Bumerangue is 400 kilometers offshore from Rio, a large structure, greater than 300 square kilometers. We drilled about 500 meters of Crest to derisk the drilling program. So we're off Crest. We encountered a column of confirmed hydrocarbon and that column is 500 meters. It's a high-quality pre-salt carbonate reservoir. So we're pretty excited by that. There was an elevated measure of CO2, of course, on the measurements we've made on the rig. I would emphasize that we've sent samples away to a certified lab. We do need full composition analysis to come back. However, we're pretty excited by it. Are we worried about elevated CO2? Not particularly, we need to find exactly what that level is, but the industry knows how to handle elevated levels of CO2. And we, as a company, have quite a bit of experience through various projects over many years of handling CO2. Of course, we need to understand it before we get to the full resource in place. However, not overly worried by CO2. If I can move on to your second question. We've now started up – we promised at Capital Markets Day 10 startups of major projects by 2027. We've now started up 5, including Argos Southwest extension, which started up on Monday. We've probably got one more this year, and then 4 next year. So from a ramp-up, we've brought on roughly 125,000 barrels per day of production, which, of course, was in our plan for the full year. So we're on plan with the ramp-up from these major projects. I think you'll see us sticking to the plan, maybe slightly ahead of plan through this year. We've had a good start to the year, strong production across the patch. We've got a few turnarounds in the second half of the year and weather, of course, in the Gulf of America. However, we think we're having a strong production year, which we would expect to continue.

Thanks, Michele. We'll go next to Irene Himona at Bernstein. Irene?

Congratulations on the numbers. My first question also on the Brazilian discovery, if I may. Can you share the gas to oil ratio and talk about how you see timing for further drilling of this discovery, please? And then my second question on TA in Downstream. Murray, you stated somewhere that the results were not what you expect. Obviously, you don't disclose the details. So can you perhaps elaborate on some of the disappointing data points you're seeing and what – how you're tackling them?

Great. Thanks, Irene. I'll tackle the first one, and I’ll pass over to Gordon to talk about the second question on Brazil. I think on TravelCenters of America, maybe just to talk about M&C as a whole first. We've had a very good run in M&C now. For the first half of 2025 versus the first half of 2024, we're up about 50% in profitability across the two half-years. The second quarter in M&C was the best on record since we started talking about M&C back in 2012. So that's a fantastic result for our teams. The particular challenge that we have in TA is that we're seeing diesel margins across that business quite tight and not making as much on diesel as we would like. We think we're taking some actions to fix that, but that's a particular area of concentration for midstream trading and TA business to try to drive diesel margins to a better place and to get more customers into the business. So that's really the area of focus we have. But across the rest of M&C, very strong performance both capturing customers, capturing margins, driving costs out of the system, and I'm really proud of the result across the retail fleet, aviation, and Castrol, just a tremendous quarter for the team. So, congrats to the team. Gordon, over to you on Brazil.

Yes, thanks for the question. I think it's just too early to be precise on gas to oil ratios. We need to have that full composition analysis back from the labs. We took samples right across the column so we should get the different compositions at different depths in the column, and that will be very, very telling when we get these results back. So I won't speculate on the gas to oil ratio. In terms of timing, we're going to go through an appraisal program with agreement from the regulator, which will probably involve some drill stem testing to get some dynamic data. It would be great to get some dynamic data from this well as we plan the development scheme. But we will move at pace, Irene. If this turns out as good as we think it's going to be, we will absolutely move at pace.

Thank you, Irene. We'll go next to Lydia Rainforth at Barclays, please.

Two questions, if I could. Murray, in the stock exchange announcement, you do talk about a thorough review of the portfolio of further cost reviews. Can you just talk through about where else different to where you were 6 months ago and what you're seeing that gives you confidence that there is more value to come? And then, Kate, I mean, I said with, but clearly, you've done really well on the cost side. Perhaps Emeka and Gordon, could you go through some examples of where you're seeing some of those savings, particularly on the AI side? It does feel like upstream is really good and probably leading the pack here, but there's more to do downstream and corporate. I don't know if that's a fair analysis.

Super. Thanks, Lydia. Look, I think on the portfolio side first, and then I'll hand to Kate, and I'll ask Emeka to talk about the digital and AI side of things. On the portfolio, look, we've had a tremendous year for access inside the Upstream with Access in Azerbaijan, Iraq, Libya, Abu Dhabi, and India. So very excited about all that. You never really plan to have 10 exploration successes that are commercial. You just don't see that in history. And they're pretty big. Namibia is pretty big. And obviously, Brazil, as Gordon described is pretty big as well. So we constantly think about the portfolio. We're constantly churning the portfolio. We want to drive absolute discipline into this and be driven by value and returns more than anything else. It's time to take stock as Albert joins as a new chair and work together on this conundrum of lots of great opportunities, but you can only choose so many in life. So we're doing it live as we speak. If you look back across the past 3 to 6 months, we've dropped 3 rigs across the portfolio, as they are not competitive inside our capital frame. We have decided to shut down a program in Australia on green hydrogen. We've also shut down some programs in the U.S. on blue hydrogen and CCS. We constantly challenge ourselves to drive to the highest quality inside the portfolio. And now with the extreme success that we've seen inside the Upstream, it's the right moment in time to do that as well. Kate, over to you on cost, and Emeka?

Yes. Thank you, Lydia. Good to see you. Your description of our cost progress is doing brilliantly well. I think I might describe it as decent progress. And why do I say that? I say that because there's a lot more to do. We set out the $4 billion to $5 billion target in May last year against the $22.6 million and delivering $1.7 billion of structural cost reductions to date is pretty good progress. As you look at what we're doing quarter-on-quarter, you can see we do now have some momentum, which is great. I want to keep seeing this driving all the way down to the bottom line. We've reduced absolute costs by about $0.5 billion. So, as I say, good progress, but there is more to do. As I think about the $4 billion to $5 billion, internally, we've always held that that's taking ourselves across most of our businesses and functions to top quartile. We have to keep challenging, as you've heard me say before, I want to accelerate and exceed that wherever we can. It’s only right that we should be challenging ourselves to see how much further we can go, can we hit best-in-class in certain parts of our portfolio and understand what it takes to do that. So as I say, I'm pleased with the progress to date, but there's more to do. Emeka?

Yes, I will address three quick points: technology, supply chain, and data. In terms of technology, we are working on reducing costs through digitization and by decreasing our number of contractors and staff within the technology department. As we cut our costs, we are also focusing on streamlining our applications and limiting our partnerships to a select group of top-tier technology partners. Concerning supply chain, we are prioritizing areas where we can achieve cost savings. The total resource management project, known as the Cape Program, focuses on our third-party contractors. We have already exited 3,200 contractors and plan to exit another 1,200, while continuing to optimize this process with our Palantir system. We are integrating it with our ERP system and other tracking systems on our offshore platforms. We are scrutinizing invoices to prevent contract value leakage and ensure we are paying the correct amounts for our work, utilizing AI throughout this process. Lastly, regarding data, we currently manage around 100,000 data pipelines across BP, which is costly and hampers the effective use of AI for growth and cost reduction. We are collaborating with Databricks and Palantir to create a unified data platform that will reduce costs and improve data transmission by consolidating those 100,000 pipelines into one. Typically, this project could take up to five years, but we plan to complete it by the middle of next year. These are some of the initiatives we are undertaking to manage costs across the company.

Thanks, Emeka. When we talk to our partners about how far we're going on data management, I think the answer is cutting edge.

Cutting edge is right.

Cutting edge globally. We're really looking forward to it. As we've said in the past, we're looking forward to taking all the hard work we've done with Palantir in the upstream into the downstream as well. We can update you on that if anybody wants to ask. Craig, back to you.

Super. Thanks, Lydia. We're going to jump to the phones for a couple of questions now. So I'll take the first question from Gui Levy at Morgan Stanley.

The first one, just going back to Bumerangue. The Brazilian oil agency a couple of years ago at the time of the bid round published some studies pointing to a potential of 2 billion BOE of oil in place. Do you recognize this number? Is that sort of the level that you have in mind at the moment? And then the second one, just if you can provide us an update on the disposal process of Castrol, at what stage are we at the moment? Any specific expectations in terms of timing and anything that you can possibly share with us in terms of valuation at this point? That would be great.

Just to clarify your first question on Brazil: Is there a number that you're referencing? We couldn't understand what number you said.

Yes. There was a number in a specific report from the oil agency of 2 billion BOE of oil in place. But admittedly, I'm not sure if that number has been updated or if that's something that you have in mind at the moment.

Thanks, Gui. Gordon, why don't you take the first one and I'll take the second one.

Yes. Thanks, Gui. I don't recognize the 2 billion barrels. Again, I would just emphasize the scale of the structure, 300 kilometers square with a 500-meter column, and that's off Crest. So that 2 billion doesn't resonate with me to be specific.

And we've declared that it's the largest discovery in 25 years dating back to Kashagan and Shah Deniz, I think were the analogies that we put together. So that should help you understand it a little bit. I think on Castrol, look, I'm not going to say much. It's a commercial process. There's a lot of interest in it, and we're moving at pace. It's a complicated business, operates in 120 countries, but there's a lot of interest in it, and we will update you when we can. We will transact for value. Craig, back to you.

Thanks, Murray. Okay. We'll stay on the phones and take the next question from Matt Lofting at JPMorgan. Matt?

Two, if I could, please. First, I just wanted to follow up on the earlier comments you made around the further cost review specifically, I think you referred in the press release this morning to targeting sort of best-in-class. I wondered if you could just expand on how you think about defining best-in-class in the context of the moving parts in the industry, technology and the evolution there and also the fact that cost and fiscal regimes tend to vary across geographies? And then second, I just wanted to ask you about trading. Performance seemed good in the second quarter versus wider industry comps. What's your outlook from here regarding the broader conditions for trading and optimization when you look through to the sort of second half of the year? If you were to continue to see, let's say, a moderated baseline, as we've seen at times in the first half of the year, is Q2 seen within the company as a good approximate baseline?

Super. I'll take trading, Kate, if you want to talk about best-in-class, please. Look, I think on trading, first, an average quarter for the gas business and a strong quarter for the oil trading business. As we look out to conditions moving forward, I think the things I'd say on the oil RPT side is that inventories from a physical basis are quite tight. So there's likely to be a fair bit of volatility in the event that there are outages occurring. That's probably true through the third quarter and into the start of the fourth quarter. In the fourth quarter on the oil side, we see more production coming online from outside of OPEC, and trading conditions will highly depend upon what OPEC+ does, what happens with sanctions on Russia, what happens with sanctions on Iran. So I would expect continuing volatility in that space on diesel and gasoline, we move into a heavy tar season in October as well. So that should provide conditions for volatility. I think on the gas side, from our perspective, we trade optionality. That's how we've designed the gas books. So we don't necessarily try to link to a particular index. We don't try to do point-to-point sales. Instead, we look for opportunities to arbitrage between price differences on the spot or across time. It feels in a market where natural gas becomes oversupplied as you move into late '26, '27 that we're well positioned to be able to arbitrage between these things. So what you should expect moving forward is as we've guided in the past, which is presumably 4% returns for the corporation from trading assume it's half oil, assume it's half gas, and assume it's ratable across each quarter. It won't be right in any one quarter, but it durably is what we have done over the past 4.5 years. So thank you for that question, Matt. Over to you, Kate, on the cost and best-in-class.

Matt, I'll maybe start with the areas of the group that are slightly easier to benchmark and understand and I would put into that category the sort of central functions like finance, like people and culture, like technology. I think we've got a pretty good sense of where we probably stack up against our peer group with regard to that. Customers are similar. I think it's fairly straightforward to benchmark. As we step through the refining and the upstream part of the portfolio, that is where it gets more complicated. With refining, we have been using Solomon benchmarking very regularly, and as I said, we're waiting for the updated benchmarks to come in over the summer to get a sense of where we stack up across our refining portfolio versus our peer group. With the upstream, we go basin by basin because to your point, you need to understand the construct of the businesses inside your basin, and you can't just look at the unit production cost. It needs to consider various component parts, whether it's PSAs or tax and royalties; it's going down to a basin level so you can understand within that basin how you're tracking against your peer group. That's the piece of work that we're going to get into at pace as we get these data points in over the summer. As we get a sense of where there are gaps versus what we consider to be best in class, we’ll update you as we go. The only other thing worth remembering is we've been pretty clear that the $4 billion to $5 billion of structural cost reductions doesn't take into consideration any transactions with regard to Castrol and Gelsenkirchen. So, as and when we reach a conclusion on those two transactions, we'll update the market on those two elements and how that would impact the $4 billion to $5 billion cost target as well.

Thanks, Kate. Thank you, Matt. We'll come back to teams, and I'll let it do my hard work. We'll start with the first hand up, which is Josh Stone, Josh at UBS, please.

Yes. Two questions, please. If I could follow up on trading, clearly, a very good performance of oil trading this quarter, and it goes against some of the trends we've seen elsewhere in the market. You made some comments in the press around shortening the duration of trades. So I was hoping you could elaborate on this and speak to if there are any other drivers that are resulting in the sort of relative strength you're seeing versus some others, whether that's access to data or appetite to take on risk? Any comments there would be helpful. And then secondly, on impairments, there was another lump of impairments this quarter, about $1.2 billion. You've given us the divisions, but are you able to elaborate on which assets are actually driving these impairments?

Great. Thanks, Josh. I think on trading, without giving away commercial advantage, I'd just say on the oil trading side, they shortened the duration. Normally, you trade 3, 6, 9 months in duration for time spreads, et cetera, but there's a lot of path risk around that when there’s macro volatility and headline volatility. So you move to shorter duration trades to manage that risk, and that's what the teams were doing through April and May. I think I’ll stop there for giving up any commercial advantage beyond that and pass it over to Kate on the question on impairments.

Yes. Josh. Thanks for the question. Yes, we have taken a number of impairments across the businesses this quarter. I think the first thing I'd say is that we're never happy to impair assets, it was capital ones. We're very cognizant of that, which is why Murray and I are driving so hard on improving and increasing our capital productivity in every part of the business. Maybe a couple to call out, which may be helpful in the customer and products space. We impair assets where we are working through a sales process. There’s an accounting approach that we have to take based on the value that we expect to see versus the value at which we hold those assets. We took decisions, as Murray referenced a little bit earlier on the call with regard to hydrogen and biofuels down in Australia. We’ve taken an impairment on that; that’s all about quality of choice and making the right decisions for us as a company moving forward as we execute on our strategy. The only other one that's probably worth highlighting is in the gas and low carbon space where we've taken a further impairment with regard to M&S. We're lifting cargoes into our trading organization from that business now, and that's where we see significant future value coming. We've now loaded finished loading our seventh cargo so far this year as it continues to ramp up. So M&S is performing well now. It started up and is ramping up. That’s probably as much as it’s worth sharing with you regarding impairments, but it remains an area of focus for us, Josh, please be clear on that.

Thank you, Josh. I'm going to just jump quickly to the web. We've got a question from I think Alejandro Vigil at Santander. Alejandro, you've got 3 questions. I think 2 of them have been covered, but I'll take the last question and read it out, probably one for you, Kate. What are our expectations of net debt by the end of the year?

Yes. Thank you, Alejandro. Fair question. Net debt was down $1 billion this quarter versus Q1, which is good to see, a lot of moving parts. You can see there's been a sizable working capital build through the first half. We end the first half at a total working capital build of $4.7 billion. If you think back to Q1, we had $3.4 billion of working capital build. I said the majority of that we should expect to reverse through the remainder of the year. We saw about $600 million of that reverse in Q2, but it was more than offset by other moving parts. You’ll recall the Deepwater Horizon payment we make every Q2. There are also the first half in payments regarding assets held for sale. If they were not held for sale, they would be accounted for as capital, but we’re forced to account for them as working capital due to accounting rules. There’ve been about $200 million of decommissioning payments as well in the first half. So as I look at all of that, the reason I’m stepping you through that is there's about $2 billion of permanent working capital build to date with regard to the group. Looking forward, my best estimate of the level of reversal still to come through the third and fourth quarter is between $1.5 billion and $2 billion. Other moving parts that we've been clear about are the $1.2 billion of redemption of hybrid that we will redeem in Q3. Then there's operational performance and price which will move around. I'd say if you see flat prices, all these other moving parts and the level of working capital unwind I just stepped through, my expectation is that we should see net debt continue to slightly trend down towards the back end of the year. I hope that's helpful.

Thank you, Kate. Okay, back to Teams, and we'll take the next question from Ryan Todd at Piper Sandler. Ryan?

Good. Perhaps one more on exploration. Congratulations on the great results year-to-date concerning discoveries. Maybe you can talk about how your approach to exploration has changed at all? Or is it just increased allocation of resources and good luck? Outside of Brazil, what have you seen that excites you the most? Then maybe a second question on much better refining performance this quarter operationally and in terms of margins. Can you maybe talk through what’s gone well and how you think about the refining environment into the back half of this year and then into 2026?

Great. I think regarding the refining environment, I'll pass it over to Gordon, and then you can move on to exploration and technology with Emeka. So, on refining, the current environment is relatively tight. Diesel and gasoline margins, as well as jet stocks, are quite low compared to historical levels. The new capacities from Daspokas and Dangote have been offset by refinery closures worldwide, including the recent shutdown of the California refinery and others. Instead of seeing an increase in capacity in the non-Chinese refining sector, it's essentially flat, while overall energy demand continues to grow by 1%. Therefore, the situation is fairly tight. We anticipate that as we continue through the driving season, all refineries will be operating well. Afterward, we expect conditions to become tight again as we enter the tar season. I would mention that this tightness is likely to extend into 2026, particularly if we see continued increasing demand for products without anticipated refinery expansions. I won't make forecasts beyond the early days of 2026. This is the outlook for the refining markets as we see it today. Gordon, I'll pass it to you for refining performance.

Yes. Thank you for the question, Ryan. I'm very pleased with the refining availability. We've just delivered the quarter at 96.4% availability, which is the best quarter we've had since 2006. We've just delivered the first half of the year at 96.3%, which is the best first half since we started recording this metric. The refineries are actually running really well right now. What's gone well: I think the vulnerability management. We've taken a process that we've run in the upstream for many years and implementing – it's not finished implementing it in refining. We manage our vulnerabilities, which basically means we intervene before a piece of kit falls over before it trips to prevent it tripping, just keeps it online longer. We’ve got centralized maintenance, centralized towers where common processes are being deployed. We’re starting the process of digitization in the refinery. All that adds up to a more systematic and controlled refining portfolio, which shows up as better availability. If I could transition, Ryan, into exploration, the success, I think a couple of things I would highlight. One, we are data-led, so it’s not just luck. Working with Emeka's team, the quality of seismic and the lighting up of the subsurface on seismic images we get now is quite remarkable, and that derisks exploration drilling. To some degree, I'll never – you'll never completely derisk exploration drilling, but to some degree, being data-led and using good-quality seismic, using AI algorithms to light up the rock in a way we never could before has made a difference. The exploration team has a mission. Their mission is to fill up our hopper with great resources that we can then bring forward to invest in as major projects. The one thing we're not doing is just throwing money at it. It's quality through choice. We haven't increased our exploration budget very much in the last 12 months. We’re forcing the teams to select only the very best opportunities we have, the most material, and those that we think are going to come in. There are many things that excite me outside Brazil in the exploration world; I could just highlight West Africa and particularly Angola and Namibia, where, of course, we invest under the Azule joint venture with Eni. We recently had a discovery in Namibia with Capricornus well, and there are more to come there. We just studied the next well called Volans in Namibia. Under the Azule brand, we had a discovery in Gajajeira in Block 114, pretty close to shore, very developable. So West Africa remains an exciting area for us in terms of exploration.

Okay. What I'll add is that in seismic, we are one of the leaders in seismic technology. We have been for many years, and we're continuing to invest to build on that lead. Some of the investments we're looking at are both investments in compute and investments in the seismic algorithms. These two things go together. On the compute side, what we have done is we have quadrupled the capacity of our high-performance computing center. This has allowed us to increase the speed at which we can do our processing by about 5x to 10x; some steps actually increased by 50x. What all of this does put together is it helps the subsurface teams to increase the speed at which they can build a hopper; it helps to better exploit the resources we have right now. It aids the teams in building quality through choice, as Gordon is talking about. We’re using a lot of this in partnership with NVIDIA and with the deep technical expertise our teams have built over time. This is some of the contribution I think I would add from seismic from the technology perspective.

Super guys. It’s a bit of a long answer to a complicated question, but I’d round it off, Todd, by saying we got fantastic petrotechnical capability. It has always been strong and remains strong, and we’re really proud of the results. So well done guys. Craig?

Thanks, Ryan. We'll move next to Peter Low at Redburn. Peter?

Perhaps just on BPX, there was a step-up in production this quarter, and you've now brought online your fourth and final delivery center in the Permian. What should we expect for the production trajectory from here for that business? And then the second question was just to go back to convenience mobility. As you say, it's particularly strong results. I think it was the strongest for quite some time. It sounds like that's not coming from TA. So can you perhaps elaborate on where that improvement is coming from?

Yes. Great. I'll let Gordon think about BPX while I answer C&M. C&M's performance is very broad-based. We've seen exceptionally strong results across C&M Americas, C&M Europe, C&M Asia. So it's coming from all the convenience and mobility businesses there. That’s tight cost control, management of product, and managing margin effectively. We're near record levels of profitability in aviation. You can also see the eight great quarters in a row for Castrol. I think the last thing to say is the midstream and supply teams are really looking hard at optimizing our value chains, and we’re pushing further down value chains to try to optimize margin, bringing trading midstream closer together as we work together to drive real outcomes. I look forward to continuing strength in this space, especially. So I hope that helps, Peter. Gordon, over to you on BPX production trajectory.

Yes. Peter, BPX production, our strategy laid out during Capital Markets Day remains the same, which is a 7% CAGR through to 2030, growing the business to 650,000 barrels per day by 2030. That stays on plan. Of course, it won't be a perfectly straight line through to 2030, but the overall strategy remains the same. First quarter to second quarter production was particularly strong, 16% quarter-to-quarter growth, strong production efficiency is coming through, which is what I've observed in BPX under the leadership of Kyle Kunz and his team. Some of the capital productivity metrics continue to improve, on the NPV per section metric, we're 1, 2, or 3 across the 3 basins that we operate in on reserves per foot drilled. We’re top quartile across our 3 basins that we drill in, and we’re #1 in the Black Hawk and the Haynesville. These metrics just keep improving as the team focuses on them, so production is strong, and we expect it to continue to be strong through this year.

Thanks, Gordon. We'll take the next question from Doug Leggate, Wolfe in the U.S.

I have a follow-up on BPX, and I’ll direct it to Gordon based on your previous answer. Gordon, you mentioned the reorientation of the partnership with Devon Energy. It seems you received a larger share of wells in progress, which likely contributed to your volume in Q2. I'm curious if this will be a one-time occurrence or if you anticipate it will serve as a new baseline for growth. We discussed this with Kyle and sensed there may be some potential for upside in the long-term growth target. That’s my first question. My second question is for Murray or possibly Kate. Referring to Slide 15 in your presentation regarding structural cost-cutting measures, you've indicated $900 million in cost savings this year to date, but there is an offset of $800 million from growth in the organic acquisitions. How much of the projected $4 billion to $5 billion savings by 2027 do you expect to have similar offsets, and how much do you foresee actually contributing to the bottom line?

Super. I'll let Kate take the structural cost conversation and then Gordon to take Devon. Go ahead, Kate.

Yes. Yes, with regard to the structural cost reductions. So $1.7 billion so far since we announced the $4 billion to $5 billion of structural cost reductions. As I look through the first half in particular this year, you can see the bricks that we’re trying to be as explicit as we can in terms of what are the costs that are going up in our organization versus how are the structural cost reductions offsetting those. We said we were going to grow the upstream. That’s a key part of our strategy, and we’re doing that, which brings costs with it. So as you can see from the first half results, we've added about $200 million of costs associated with higher production in BPX Energy and bringing major projects online. The other thing that's gone on with growing the organization are the acquisition costs associated with Lightsource bp and bp bioenergy. We also have environmental, so inflation around $400 million; $300 million of that was inflation in the first half of the year. The other factor more than offsetting that is the $900 million of reductions going the other way to deliver the absolute cost reduction. As I look forward at the $4 billion to $5 billion, I want to see material cost reductions flowing all the way down to the bottom line. That’s good for us; it’s good for our shareholders. In terms of quantification, it’s very hard to call it, Doug, because it's difficult to see what’s going to go on with regard to inflation in the environment. We’ve seen wicked inflation in the last 3 or 4 years. I don’t want to box myself in by predicting what that’s going to become. You can hear from the tone of what we’re saying today that we are relentless in our drive to be as competitive and as lean as we can within the boundaries of safe operations and growing our organization for long-term shareholder value.

Doug, thanks for the question. The first thing I would say is we're very happy with the value uplift from the Devon transaction. Devon has been a tremendous partner for many years. We worked well with them in that part of the Lower 48, but it was time to simplify and do our own thing, so we’re very pleased with the value uplift. We're very pleased with the transaction. To be specific on your question, the amount of production that came with the transaction was very, very small. Now it will grow as we bring some of the drilled uncompleted wells online, but it doesn’t represent a massive new baseline for our growth; it’s a relatively small wedge.

Thanks, Doug. We'll take the next question from Biraj Borkhataria at RBC. Biraj?

I wanted to go back to the comments around the strategic review or thorough review of the portfolio because you obviously did a thorough review ahead of the CMD. Does this mean you start with a blank sheet of paper again and start over? Or should investors assume this review is for things over and above what you've already announced? The question relates to Castrol because if you're doing a thorough review of capital allocation, would it make sense to do a big transaction like that? Or would you wait for it to finish the process? The second question is just on the financial frame and net debt. I see reported net debt going down, but the lease stack is going up and also the lease costs are creeping higher again. Could you just talk about from here whether you'd expect total leases to be stable from here, or move up or down? Or what exactly is driving that?

Biraj on the first one, we obviously are starting our portfolio review from what we stand now. We’ve made a bunch of decisions back in February. We’ve made a whole bunch of additions to the portfolio from the upstream that I talked about. Within a $13 billion to $15 billion frame, we now need to think about what the right priority is, driving for value and returns on behalf of shareholders. There's no change to the divestment program. We continue to have a $20 billion divestment program, and we continue pushing Castrol forward. So rest assured, this is all about trying to stay within the strategy, accelerate the delivery of it, but of course, continuing to drive quality through choice, which we live and breathe every day. Kate, over to you on the other question?

Biraj, just on leases. The way we think about leases is pretty different from how we think about debt. At the end of the day, we’re incurring leases directly to drive value in terms of production, etc. As you look at what's happened year-on-year, our lease liability has grown by about $4 billion from this time last year. Just over $2 billion of that is the accounting for the floating LNG in Mauritania and Senegal. To my point, it’s about driving production. Offsetting that is about $900 million of recoverables we’ll receive from our partners in respect to those lease costs. There are a few other moving parts. We brought on our books about $600 million of leases associated with the BP bioenergy acquisition. The lease renewal of about $400 million in one of our refineries in the U.S. and then there’s some trading around lease opportunities, which I won’t disclose because that’s commercially sensitive. So leases are an area we step into deliberately to drive value for shareholders, and I think they’re appropriate. We, of course, are testing them to make sure they are of value to us. With regard to the forward shape of it, I mean it will depend on very specifically on some of the big moving parts, particularly in our upstream portfolio. We’ve been talking a lot about Brazil and Bumerangue on this call. Now if that moves at pace, I can foresee a number of lease situations potentially around FPSOs over in Brazil that will be added to that and rightly so with regard to our lease liability on our balance sheet. So it’s very difficult to guide going forward. It depends on the resource allocation decisions we step through as we get to each final investment decision.

Thank you, Biraj. I'm going to jump back on to the telephones now for 2 questions. First one from Paul Cheng at Scotiabank. Paul?

Gordon, I want to go back into the BPX. The second quarter, the production increase is quite impressive. Is it all coming from Permian? Can you give us some idea of how the Haynesville drilling and development plan is going to look like for the remainder of the year into next year? Are you adding any rigs over there? The second question, I want to go back into pursue. Can you give us some kind of idea – let’s assume you’re going to take multiple boats for the development because the reservoir is very big. From a cost recovery standpoint, are all the costs in one pool or are they just individual project basis? Can you give us some idea of the timeline? I assume to fully delineate that you may need at least say 3 or 4 appraisal wells, so is that the earliest? Everything goes, say according to plan, maybe a late 2027 or early 2028 FID?

Gordon, I'll let you do Brazil, and I'll answer BPX to give you a bit of relief. Why don’t you start off with Brazil?

Yes. Thank you. Paul, thanks for the question. I’ll answer the easy one first: the terms of the lease that we have in – our public knowledge, and it's one cost pool. Everything is funded through a single cost recovery pool. I would expect we need to get the results back from the lab on the full composition analysis, which will inform the hydrocarbons we have in the column, and that will then inform the detail of the appraisal program. We have more work to plan it, but I would expect, as you say, a 3- or 4-well appraisal program to allow us then to move to a full field development. I wouldn’t speculate exactly when we would have that appraisal program done, but we will move at pace as soon as we get these results back. We've done some pre-drill work already on what an appraisal program would be. We're not starting from scratch, but we'll move at pace on appraisal.

Fantastic. Thanks, Gordon. And then on BPX, just to step into Gordon's space a bit. The growth between Q1 and Q2 is principally from the Permian, with the ramp-up of Crossroads, as well as a lot of work on refracs and infill drilling in the Eagle Ford. Just to remind you, the refracs are working fabulously, and the infill program on wells drilled a decade ago are twice as productive as the original wells. That’s just the changing technology on frac over time. So we're seeing a lot of growth out of the Eagle Ford. You should expect liquids, assuming prices stay relatively stable, to continue to grow through the decade. Of course, if prices move up or down, we may change that capital allocation, but that's our sense right now. As for the gas basins, I think the first thing I'd say is capital productivity is improving. We're seeing about a 10% year-on-year improvement right now. In the Haynesville, they just drilled their first EU well. That’s a vertical well with a big U and fracs on the straight sides of the U. Obviously, you don’t frac into the U, and we’re getting tremendous productivity from that. We’re seeing from 3 well pads, 160 million SCFs a day and with the capacity to get up to 180 if we can solve some metallurgy issues. Performance is fantastic. The business is actually holding gas production relatively flat at around 2 to 3 rigs. That's across the Permian, the Haynesville, the Eagle Ford, the Hawkville, etc. The team is doing a very, very good job in that space. As for what we’ll do in '26 and '27 ramp-up, that’s still something we’re thinking about. We’re watching gas prices. We’ve started hedging out '26 and '27, and that will determine how much we lean into that space by adding rigs. That’s a decision we’ll make in the fall as we head towards our 2026 capital allocation. So ask me again next quarter, and we can answer that question. Thank you, Paul.

Thanks, Murray. We'll take the next question from Chris Kuplent at Bank of America. Chris?

I hope you can hear me well. I have two quick questions. First, to U.K., can you clarify the connection between disposal proceeds and your net debt guidance for the end of the year? I noticed that TANAP has been structured as an equity raise. How does this eventually relate to a reduction in net debt based on your consolidation approach? Are there any additional details we should consider regarding how you are structuring the announced disposals? The second question goes back to Murray or possibly Gordon. Regarding the strategic review and potential portfolio changes, you are one of the remaining super majors with U.K. North Sea assets that aren't part of any new joint venture. You initiated a structure with Aker BP in Norway. Is the U.K. a particular area of focus as you assess your portfolio? Could you comment on its value in your overall portfolio?

Great. Thanks, Chris. Gordon, why don’t you tackle North Sea? And then I'll hand over to Kate on divestment process.

Yes. Thanks, Chris. The North Sea, we have a proud history, and we're proud of the team up there producing for over 60 years now, and it's been a tremendous piece of business. The reason we haven't jumped into a joint venture is we believe we've got the best portfolio up there, and that’s been our view for quite some time. We’re also monitoring any potential changes to the fiscal situation in the North Sea, which we expect to get some clarity on this at some point this year. Once we get clarity on the fiscal situation, we’ll then make decisions. It’s too early. We’ve got to get a little more information in the North Sea. I’d say North Sea performance this year in terms of safety, production, cost has been tremendous. The production facilities have been much more reliable than they were in the last couple of years. So, kudos to the team up there, but we stay and we watch and see what happens with the review of the fiscal.

Yes. So Chris, in terms of net debt guidance, firstly, I’d say that we are expecting some strong operations to continue. Gordon is doing a great job on the kit staying up and available, so we plan on that continuing. I’ve talked you through a level of working capital release through the second half of the year that we expect to come through. Then the other major moving part is around divestment proceeds. We’ve signed 3. We’ve had divestment proceeds in the door of 1.7. Your specific question with regard to TANAP, this decapitalization of pipelines is a sensible way to approach our infrastructure. We don’t need to own them, but we do need to have control over the ability to move our equity production to market. The way we account for it is proceeds; we receive the cash. But then it’s accounted for through non-controlling interest. So you see that line going through the balance sheet, and you'll see it going through the income statement as well each quarter.

Thank you, Chris. We'll come back to teams and take the next question from Kim Fustier, HSBC. Kim?

I had 2, please. Firstly, I wanted to ask about the strength in underlying cash flow, ex working capital, over $7.5 billion, which was quite impressive. I noticed that the quarter-on-quarter increase was sort of $0.5 billion more than the increase in net income this quarter. Could you maybe talk about the moving parts there? Was there anything unusually strong about this quarter? Any larger dividends from associates, for instance, or lower cash tax payments? Then my second question is on the Gulf of America. I believe you're now in a farm down process. On your Paleogene assets, Kaskida and Tiber, what's the level of interest from industry, and what do you think would be the best time to farm down? Would it be at the point of FID for Tiber? When might that be? Or would it be later during the development phase?

I'll take Gulf America to give Gordon a break, and I’ll pass over to Kate on underlying. As far as Gulf of America goes, we're in conversations with counterparts on Kaskida. We will continue doing that and see what's possible if we can get value. If we can, great; if we can't, we're happy to carry on for 100%. On Tiber, we expect to bring 2 sanction this year, just waiting for that to be brought up to the Resource Committee and to the Board, and clearly, we won't do anything until we've FID'd that, but that we can consider, given that we have 100% in both, we bring in a partner. The only question is at what time we think we can maximize value for shareholders. We're in conversations with counterparts. There's, of course, lots of interest in premium assets such as this, and we just need to make sure we get the right value for shareholders as we move through that conversation. Kate, underlying EBITDA and earnings, I guess.

Yes. So Kim, excluding working capital, our ops cash effectively grew by $1.5 billion quarter-on-quarter. Around $1 billion of that is due to underlying earnings, and in particular, I'd call out better trading, better gas trading, and better oil trading. The other major component is lower cash taxes, over $200 million quarter-on-quarter. There are another slew of various smaller drivers, but nothing worth calling out.

Strong underlying performance, Kim, I think, is the core message; really strong underlying performance, and well done to the teams for delivering it.

Thank you, Kim. We'll go to the next question from Lucas Herrmann at BNP Exane. Lucas?

Nice to see some momentum returning to the business. A couple if I might. Kate, Murray, one big beautiful bill fiscal implications for you, corporate tax in particular. If I could start there. The second one is probably to Gordon. Going back to refining, the last 2, 3 years, we have seen a lot of 5-year turnarounds, a lot of downtime, production, the run rates, as you highlighted, have been very good, but they've been very good on – we see muted available capacity. As we look forward over the next year or two, how should we think about availability within that business, let alone uptime?

Gordon, do you want to lead off on refining? I'll tackle the tax.

Yes, absolutely. Lucas, thanks for the question. Just as a reminder, the '22, '23 timeframe we were catching up on tars from the backlog during COVID. I’d say ‘24, ‘25 a more normal period of turnaround. However, Q2 ‘25 was particularly high, and we've guided through to be slightly lower power – for lowest power outages for the balance of ‘25. As we go forward into 2026, ‘27, we should see lower turnarounds relative to ‘24, ‘25, Lucas. So we’ll be on the ramp down on tar days relative to ‘24, ‘25 as we go into ‘26, ‘27. I hope we can hold on to the availability we’ve been delivering this half as we go through ‘26, ‘27; that’s the mission.

And then I think on the U.S. legislation, we're very positive on it. The U.S. is a very big operation for us. 60% of our profitability and cash flow comes from the United States. We invest 50% to 60% of our capital there as well. So it’s a massive business for us. We’re very proud to support the United States in growing their energy production. We look forward to growing production out of both the Gulf of America and BPX by, I think it’s 10% per annum out through the end of the decade. So, we’re pleased with that. The tax bill that came through was very favorable to us. Obviously, it sustained the corporate tax rate at 21%, and the immediate expensing helps offset any pressure from tariffs as well. So it wasn't – it was very positive for us, Lucas, and it's very positive for us in the United States, and we're excited and happy to be continuing to drive in the U.S.

Murray, is there any quantifiable benefit you can think about at this stage? Sorry for the echo.

From a financial perspective, it wasn't like we were accruing at a higher tax rate or anything like that. So it’s just – it’s a continuation at the 21%. Cash taxes would offset anything in tariffs, I think, is all I would say at this stage, although tariffs are highly variable. I think it's not material, but it's very positive for us Lucas; I can't really say more than that right now.

Thanks, Lucas. We'll take the next question from Henry Tarr at Berenberg. Henry?

I had 2. There was a strong rebound in the gas and low carbon business in the quarter. How do you think about that as you look into the second half and into next year? One of your peers pointing for some different reasons, perhaps, but just slightly lighter outlook as we look into 2026, so how do you see that business? Then the second question: in your early interactions with the new Chairman, what have the discussions mainly been focused on? Clearly, there's the change around the portfolio and looking into that. But which areas do you think he might have the most impact on in the organization?

Super Henry. Look, first, I'm really excited for Albert to come on board. He's got a tremendous track record at CRH. 10 years of fantastic delivery, experiencing many of the industrial challenges we face in an oil and gas company as well. It will be fantastic to have Albert on board full-time. We’ve been in conversations early on. The question is how do you drive shareholder value as much as you can? How do you get really disciplined with capital, investing for returns and value as much as you can, and how do you drive real competitive cost tension into the business to make sure that we challenge ourselves day in and day out to be the very best in the basins in which we operate, which Kate unpacked a little bit earlier. It’s a hard performance drive. I think from a portfolio perspective, it’s too early to judge anything; we just need to go through this and work together to see what makes the most sense for us across the portfolio, given the richness of the opportunity set that sits with us. I look forward to updating you in due course in that space. I think on gas and low carbon, maybe you were asking a gas trading question. Maybe that's what that was, Henry.

Partly gas trading, yes.

I believe our gas trading is primarily focused on maximizing optionality. We approach our business differently than others, seeking opportunities in both oversupplied and undersupplied markets, where we can capitalize on volatility. As mentioned previously, 50% of our LNG business will be redirectable by 2025, increasing to 60% in 2026. We don't confine ourselves to strict percentage targets; instead, we aim for flexibility. Our trading assumptions remain unchanged. Historically, we've achieved a 4% return over the last five years, and we anticipate maintaining this trend. Additionally, we have recently rolled out exciting new projects, including operations in Mauritania and Senegal, and we've begun G&A Phase 2 in Brazil with a 3-gigawatt power plant that offers us exclusive access to 1 to 3 million tonnes per annum into Brazil. This adds a new dimension to our trading strategy moving forward. I hope this addresses your inquiry about gas and low carbon.

Super, Henry. We are 5 minutes over time. I appreciate I think there's a couple of questions pulling for a second time. Please relay those questions back to Investor Relations. We’ll certainly get answers back to you. My thanks to everybody on the panel, and maybe I can just hand back over to Murray to close the call.

Super. Well, thanks to Gordon, Emeka, Kate, and thanks the entire BP team for delivery. It was another strong quarter for BP operationally and strategically and encouraging progress. As I've said, this is 2 quarters in of a 12-quarter program, and there's a lot more to do across the next ten quarters. We are fully focused on delivering safely, reliably, investing with discipline, and driving performance improvements across all parts of the business, all in service of delivering our 4 key targets and in maximizing long-term shareholder value. We can and will do better. Thanks for listening, and for those taking vacation, I wish you a peaceful and relaxing break. We look forward to talking with you soon. Thank you. Bye-bye.