2Q26 Presentation & Q&A transcript
July 27, 2026
Video Presentation
Maria João Carioca - Co-CEO & CFO
Welcome everyone and thank you for joining us for Galp's half year 2026 results.
We continue to operate in a highly volatile market environment, with Brent and refining
margins moving well above the levels we assumed at the start of the year. Our
operating performance has kept pace and, as a result, we are raising our full-year
2026 Group Ebitda guidance to around €4 bn, up from above €2.6 bn previously.
Operating Cash Flow guidance moves in tandem, to around €3 bn.
This includes a stronger upstream production, now expected at around 130 kboepd,
and a continued robust Midstream contribution, as we incorporate updated macro
assumptions for the full year, with Brent now assumed at 80$/boe, and refining
margins at 13$/boe.
Turning to the quarter itself. Upstream production came in at 127 kboepd, slightly
lower quarter-on-quarter, as the more visible impact from planned maintenance was
mostly offset by the continued ramp-up of Bacalhau, which remains on track, with
three producers connected and revealing exceptional well-productivities. Upstream
Ebitda was €700 m, with improved oil realisations mitigating increased transportation
costs, although partially hindered by downwards revaluations of underlifting positions.
In Industrial & Midstream, Sines operations returned to near full availability and
captured the international products cracks, with a realised refining margin of
16.8$/boe, while we see market volatility and high cracks environment persisting into
July.
Midstream delivered another strong quarter, with Ebitda further supported by a partial
reversal of the non-cash accounting lag effects that weighed on the first quarter.
Overall, the segment Ebitda rose to a €458 m.
Commercial Ebitda reached €113 m, up 12% year-on-year, reflecting the usual
seasonal uplift, as well as improved market conditions across the Iberian B2B
segments, which more than offset the pressured demand environment.
Renewables Ebitda was €11 m, higher quarter-on-quarter, supported by higher solar
resource and increased installed capacity, already consolidating in June the wind
portfolio acquired back in April.
At the Group level, Ebitda reached approximately €1.3 bn. Operating Cash Flow
followed suit at €1.1 bn. Capex for the quarter was €496 m, including the €318 m
cash-out for the recent wind portfolio acquisition.
The strong cash delivery allowed Galp to sustain its net debt level, accommodating
not only the Renewables acquisition, but also shareholder distributions of €240 m in
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dividends and an accelerated buyback of €179 m. All in all, net debt remained rather
stable at €1.38 bn, with net debt to Ebitda slightly improving to 0.40 times.
In recognition of the strong year-to-date performance, outlook and strategy execution,
Galp’s Board of Directors will propose to the Annual General Shareholders Meeting of
2027 a dividend per share increase of 10%, raising 2026's DPS to 70 cents. This reflects
the Board's confidence in the resilience of our cash dividend base across the cycle,
underpinned by the quality of our upstream asset base and continued Bacalhau rampup.
Let me now turn to strategy execution, as we have been actively optimising our
portfolio.
We just announced the acquisition of a new wind portfolio, in operation, as we have
been actively rebalancing our Renewables business towards a higher-quality, more
diversified platform.
After integrating these two wind portfolios, Galp will hold 2.7 GW of installed capacity,
doubling our annual generation versus 2025, with wind accounting for around 30% of
the mix and strengthening the resilience of our earnings profile.
Consistent with the capital optimisation initiatives being pursued across Galp’s broader
portfolio, this transaction strengthens Galp’s strategic positioning and increases our
flexibility to evaluate partnership opportunities, towards optimised ownership and
financing structures under potential deconsolidation alternatives, while aiming to retain
optionality on our exposure to the growing Iberian power market.
On the downstream combination with Moeve, discussions continue to progress
constructively, with all parties remaining well aligned on the merits of the transaction.
Given the scale of the transaction, and the number of workstreams still in progress,
including extensive due diligence across multiple geographies, we now target a final
agreement in the second half of the year.
Finally, on Namibia, I am pleased to report that our strategic partnership with
TotalEnergies has secured all regulatory and governmental approvals. The parties are
now progressing on the remaining Joint Venture documentation required for
completion.
In the meanwhile, we continue to progress the preparation for the next exploration
and appraisal campaign at Mopane, targeting drilling during the fourth quarter. In
parallel, the PEL 56 partners continue to progress towards Final Investment Decision
on the Venus development, and we remain closely aligned in support of the project's
planned timeline.
To summarise: a quarter of strong operational delivery, a meaningfully improved
outlook, and continued progress across all our main strategic initiatives that are
shaping Galp's differentiated equity story. Thank you for listening.
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2Q26 Presentation & Q&A transcript
July 27, 2026
Q&A Session
João Gonçalves Pereira – Head of Investor Relations
Good morning everyone, and welcome to Galp’s second quarter 2026 Q&A session.
I’m joined today by our co-CEOs, Maria João Carioca and João Marques da Silva, as
well as the full Executive team. But, before passing the mic for some quick opening
remarks, let me start with our usual disclaimer:
During today's session, we will be making forward-looking statements that are based
on our current estimates. Actual results could differ due to factors outlined in our
cautionary statement within the published materials.
With this, Maria João, would you like to say a few words?
Maria João Carioca - Co-CEO & CFO
Thank you, João, and good morning, everyone.
During the second quarter, Galp continued to operate in a highly volatile market
environment. It is, therefore, reassuring to have a high-quality asset base that allows
us to capture market tailwinds, sustain our financial performance and maintain net
debt rather stable, despite relevant cash outflows during the quarter.
Acknowledging the continued macro uncertainty, but also the strong operating
performance in the first half of the year, we are updating our full-year Ebitda guidance
to circa €4 bn and our Operating Cash Flow guidance to €3 bn. This guidance is based
on an average Brent price of $70/bbl and a refining margin of $10/boe for the second
half of the year.
Furthermore, the Board will propose a 10% increase to the 2026 dividend per share,
to €70 cents, with the first advancement on this payment to take place in August. This
reflects not only the strong results delivered so far in 2026, but also the Board´s
confidence in the resilience and quality of Galp’s portfolio across the cycle.
Testimony to this quality, our Upstream portfolio continued to demonstrate
outstanding performance. Legacy assets maintained very strong uptime levels, while
the 3 producer wells at Bacalhau are successfully delivering on the expected ramp-up
path and delivering excellent productivity results.
Looking at Namibia, our strategic partnership with TotalEnergies should be soon
competed. More importantly, we remain on track to drill a new well in the Mopane
complex during the 4th quarter.
Overall, we are making steady progress across all key milestones and further
strengthening the visibility of Galp’s unique upstream growth profile for the next
decade.
João, would you like to complement?
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João Marques da Silva –Co-CEO and EVP Commercial
Thank you Maria João.
Indeed, this quarter demonstrates that Galp is executing with consistency across
multiple fronts. While continuing to deliver strong financial performance, we are also
making disciplined strategic decisions that are strengthening the quality of our portfolio
and positioning the company for long-term value creation.
Earlier today, we announced the acquisition of a new wind portfolio. This is a final step
in reshaping our Renewables business into a stronger and higher-quality platform.
The 361 MW, fully operational portfolio in Spain builds on the acquisition we announced
back in April. This takes our total renewable capacity to 2.7 GW — with wind now at
about 30% of the mix — and lifts our pro-forma renewables Ebitda to roughly €110 m
for 2026.
With this acquisition, our renewable portfolio gains greater scale, a better balance
across technologies and increased resilience. It also gives us more flexibility and
optionality, as we evaluate future partnership opportunities and alternative ownership
structures.
In parallel, we are also making progress in Downstream. Discussions with the
shareholders of Moeve continue to move forward in a constructive way. All parties
remain aligned on the strategic rationale and potential benefits of the transaction.
By bringing our downstream activities together, we believe the combined business will
be better positioned to unlock value, increase scale, strengthen its competitiveness
and reinforce their strategic position. Our focus remains unchanged: ensuring that any
transaction is the right one for Galp and its shareholders, delivering sustainable longterm value.
To conclude, Galp delivered both strong financial results and strong strategic execution
this quarter - a result of the continued commitment of our people and our partners.
Together, we are building a stronger company, reshaping our portfolio and reinforcing
Galp's distinctive investment case for the years ahead.
We are now happy to take your questions. Operator, we can start the Q&A.
Biraj Borkhataria - RBC Capital Markets
First one is just on the renewable portfolio. You have obviously made a move to
hybridise that. Just a broad question of whether you see yourselves as owners of that
portfolio longer term? Because it feels like this is the final step to looking to sell down
as you make it more robust.
Second question is on distribution. Raised the dividend, but no change in the buyback
today. Even if I look at your macro assumptions, which look conservative, it looks like
the buyback should be much higher. I am just wondering how you are thinking about
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the cadence of updating that guidance or whether you are just going to look to 2027
to top it up, or that will be a Q3 event.
João Marques da Silva – Co-CEO and EVP Commercial
Thank you, Biraj. On your first one - you know quite well that we have been managing
actively our portfolio across Upstream, Downstream, and now Renewables.
Allow me to underline the strategic rationale on the wind transactions and also the
quality of the acquired portfolios. For us, maintaining and diversifying the power
generation is aligned with the strategy of maximising the value of the volumes under
management across the energy value chain. The recent wind acquisition just reinforces
Galp portfolio, building a much more diversified and resilient portfolio with multitechnology, rebalancing the risk/return profile.
Let me also emphasise on the energy management commercial angle. It will provide
us access to a more stable generation source. It will unlock additional value in ancillary
services and reduces the unitary imbalance cost for the entire portfolio.
With the second wind acquisition, we have reached sufficient scale, as you say, the
final step, and diversification with no further acquisition target at this point. We are
now focused, as you also say, on the best options to optimise capital structure of such
position in our portfolio. Increasing scale and diversification will enhance us to be ready
to pursue the partnership structures and increase the resilience of the cash flow
generation.
In summary, the recent wind transaction strengthens Galp´s integrated power
strategic positioning and increases flexibility to evaluate the strategic partnership
opportunities towards ownership, financial structures, alternatives, while retaining
optionality in its exposure to the long-term growth of the Iberian power market.
Maria João Carioca – Co-CEO & CFO
Let me then follow-up and pick up on your question on share buyback, Biraj. As João
just signalled, we have a number of pieces moving in our portfolio. Touching upon the
share buyback would actually go to a discussion on the distribution policy that we see
is something that we would like to engage as we get more visibility on some of those
moving parts. Of course, in particular, more visibility on the final terms on Moeve
We acknowledge that there may be potential adjustments to the policy, but for now,
what we wanted to do was to make sure that we could signal the merits of what we
see in our portfolio right now. So continued growth ahead of us. Bacalhau is ramping
up nicely, Upstream continues to perform rather well.
What we see in the dividend components, and that is why we opted for the 10%
increase. Let me remind you that normally we would be increasing at 4%. This is us
putting forward the 10% increase that actually raises the floor of our dividend. With
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that, we believe that we are signalling trust and belief that we will be able to sustain
growth throughout the cycle as we are raising this floor for our overall distributions.
Overall, this is a signal on trust. It is also an acknowledgment that the first half of the
year was a really positive one. It does not take us to the distribution policy discussion.
We believe that one is to be had once we have more visibility, particularly on the
Moeve deal. Thank you.
Alejandro Vigil – Santander
The first one is about the new guidance of €4 bn Ebitda and €3 bn operating cash flow.
If you can go through these different levels to reach such a high level of operating
cash flow in comparison with the Ebitda. So, the high conversion of this Ebitda into
cash.
The second question is about the Brazil and the oil export taxes. If you can provide
an update on this situation in the country and the impact in your company.
Maria João Carioca – Co-CEO & CFO
Thank you, Alejandro. We are updating the guidance fundamentally on the back of
what is our continued good performance. You see there that we revise our Upstream
guidance also in tandem. This is bringing us fundamentally to the upper part of the
interval we had guided to before.
In the remaining businesses, we are also seeing good indications. We know that the
context has been one of considerable volatility, but still as that volatility flows through
the balance sheet and our accounts, we see continued strong operational performance,
hence the revision of the overall Ebitda to €4 bn, OCF now at €3 bn.
We do see that refining margin incorporated in this guidance is the one variable that
had the most volatility in recent weeks and times. We are seeing spot prices well above
what we included in our guidance.
We are guiding at numbers that are, you may say, relatively conservative. So, $13/boe
at the refining margin, $80/bbl on the Brent. All in all, what we believe we can speak
to here is maybe a little bit in terms of cash taxes. There is an element that can be
further incorporated into the guidance, as we normally see cash taxes on Upstream
being treated differently from taxes on downstream.
The high cash result is, to a large extent, reflecting the fact that cash taxes on
downstream will be coming into our accounts in 2027, whilst the Upstream are already
flowing through. That informs a lot of the relationship you see between the cash result
and the Ebitda.
Overall, very strong operational performance. Over 25% of our revised uptick on
guidance is coming from operational performance. Of course, in this context and with
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all the volatility, the remaining 75% of the uptick in guidance is coming indeed from
the macro.
On Brazil, that was the second part of your question. What we are seeing in Brazil is
a continued concern about how to capture with fiscal policy the current context. We
do see a continuation of the export tax. We have been seeking to optimise and make
sure that our operational management of the circumstances delivers the best possible
results. We have guided you for a total possible outcome that, even though the
timeline for the tax has now been revised by the Brazilian government, we still expect
overall impact to be around that order of magnitude. We had initially guided for €100
m. So far, in our accounts you will find a little under €20 m in cash. You see that the
impacts are being actively managed. Overall, we expect our initial estimates to
remain.
We do see this as something to watch attentively. We do hope that the Brazilian
government will continue to understand that these are taxes that weigh down on our
ability to continue future investments.
We will be assessing all our options to protect value, and we will, of course, continue
to do so in close association with other operators in the country. We continue to engage
with the Brazilian Oil & Gas Association as we see this as an industry topic, not an
account specific topic.
Overall, something to watch out closely. Impacts remain contained, and we continue
to manage this very actively. Thank you.
Joshua Stone – UBS
Two questions, please. Firstly, I wanted a clarification on the distributions. Is it your
intention that you will still return at least a third of your CFFO to shareholders?
Regardless of the merger, we should expect distributions more than €1 bn this year,
if you hit your targets. Just a clarification on that one.
Then secondly, on the renewables side of the business. Are there any synergies
connected with these wind assets into integration into your retail portfolio, commercial
portfolio? If so, could you walk us through if there is any impact with the Moeve merger
on that part of the transaction?
Maria João Carioca – Co-CEO & CFO
Thanks, Josh. Let me start with the distribution questions. As you know, our current
policy is for one-third [of OCF]. We have the dividend components growing at a preannounced rate which we revised this year from 4% to 10%. We do expect that value
to be well known already and in advance.
The remainder of our distribution is only communicated upon the publication of the
results. That is a number that we will be guiding on, or that we will be presenting only
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upon closing the results. All in all, we have not touched on our distribution policy so
far, precisely because, as I mentioned before, we do see that with the relative size of
the Moeve transaction and with everything that is moving in our portfolio, we may
need to discuss our distribution policy. For now, we find that that it is too soon, and
we remain within that overall distribution policy. Thank you.
João Marques da Silva – Co-CEO and EVP Commercial
Josh, on your second one, I will go back to my previous comments on the energy
management and Commercial angles. As this portfolio will give us additional access
to a stable generation source, we will be converging, in terms of prices, and unlocking
additional value. In the power market, apart from the significant growth that we can
see in Iberia with further potential coming for sure from AI technology, but also from
increasing ancillary services sophistication.
Let me state that, ourselves, we are now a top tier company in intraday trading in
Iberia. We are the number one in solar and the number two in wind.
Finally, let me also emphasise the connection between gas and power, what we
represent in Iberia today, and how this can make all the sense within the decisions
that we have just taken. Thank you.
Kate O’Sullivan – Citi
Just again, coming back on this morning’s wind acquisition and implied valuation
around €1.2 m per MW, so a bit above what you paid back in April for a slightly younger
portfolio. Can you help us to understand the expected equity IRR there? I know you
just talked a bit about value creation.
A follow-up on that. The average age of the assets is around 20 years. How much of
the value creation case is linked to repowering rather than the cash flows from the
existing assets? If you could discuss any repowering opportunity within these
portfolios, any level of Capex that would be associated.
João Marques da Silva – Co-CEO and EVP Commercial
Hi, Kate. To your question, on both portfolios, we are, on both cases, below 1.2 times
per MW. On the second portfolio, we will have no relevant Capex in the short-term.
Our short-term focus will be on the cash generation. Of course, we will not leave aside
any repowering opportunity, but that will come further ahead on the cycle. That is on
the high single-digit returns, that is where we are today. Thank you.
Sasikanth Chilukuru – Jefferies
I had two, please. The first was regarding the agreement and the discussions with
Moeve. The macro conditions, especially in refining, have changed materially since
your announcement back in January. I was wondering if this has changed your
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discussions regarding valuations or the indicative shares that you have highlighted
previously in any form.
The second question was related to the dividends to minority shareholders, to Sinopec.
First half dividends are €39 m, very low compared to the €240 m paid last year. This
comes as cash flows from the upstream have increased or are increasing materially.
Just wanted to understand why these dividends to minorities are low and how should
we think about these dividends as we look into the second half and also into 2027?
João Marques da Silva – Co-CEO and EVP Commercial
Thank you, Sasi. I will take the first one. The Galp-Moeve transaction is a long-term
value creation transaction. It will not be affected by the short-term refining margins.
All the discussions we are having are progressing well. For us, the due diligence
process is a complex one. But to your point, no interference, no discussions regarding
the recent short-term refining margins. They were supportive on both sides but not
really impacting the decision.
Maria João Carioca – Co-CEO & CFO
Hi, Sasi. Thank you for your questions. On the dividends to minority shareholders in
Brazil, of course, if you look at our numbers last year, you will see that same line had
a higher volume. To an extent, we looked at the profile, and we also looked at the
current taxation in Brazil. So, we managed actively, and we put forward some of the
dividend payments to make sure that we enjoyed better fiscal status to those
payments. That is the fundamental driver behind this. There are no operational
performance issues at all impacting this line. Thank you.
Guilherme Levy – Morgan Stanley
Firstly, just going back to the shareholder remuneration discussion. Could I pick your
brain about ways to remunerate the shareholder from here? How do you feel about a
special dividend at this point to complete the one-third of CFFO policy vis-à-vis pure
buybacks, on top of the normal dividends?
Secondly, could you provide us an update on gas monetisation and gas trading?
Perhaps an update on Venture Global volumes, how much of it is hedged at this point?
Also in Brazil, could you talk a bit about how much of your production is currently
being sold to Petrobras? How much is being sold to third parties? That would be great.
Maria João Carioca – Co-CEO & CFO
Hi, Guilherme. I will start with the distributions, and then João will pick up on the gas
trading.
What I have been mentioning today on the distributions is, to a large extent, the way
we have been thinking about this. We look at our distributions policy very much
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through the cycle. Thus far, the one-third distribution rule has been a steady base on
which we have been able to reflect our profile. We are clearly a growth stock, not
necessarily one that goes for the dividend yield alone. Thus far, this combination of
having a one-third commitment on OCF, and I will remind you that we have a
distributions indexed to OCF, not free cash flow, so that also helps having visibility on
how we are connecting our distributions to our operational performance.
What we see right now is we do have several changes coming up in terms of how our
profile and our results and Ebitda generation will evolve over the coming months.
Visibility on those specific terms will be critical for us to then have a sound discussion
on how we see this distribution policy moving forward.
But the priorities remain the same, right? We continue to aim to have a distribution
policy that is first and foremost, very reflective of our performance and our equity
story. We, of course, keep track of how the industry is adjusting and we aim to
continue to be competitive in terms of overall distributions.
We also expect those distributions to be sustainable in the sense that we want to have
a dividend floor that is stable, that is clear to all our shareholders through-the-cycle,
and then we use share buybacks as the adjustment factor, if you would like, whenever
there is indeed a tailwind that allows us to have an additional distribution going on.
Overall, we do expect our distribution policy to retain these aspects. We do see the
portfolio as having continued performance to sustain a very competitive distribution
policy. We will be looking into as to whether the current design of that distribution
policy is the best to continue to deliver on these objectives, as we see fundamental
movements in the portfolio.
No fundamental changes in the goals. Willingness to adjust if a moving portfolio
requires a moving distribution policy, but not now, only once we have sufficient
visibility. Thank you.
João Marques da Silva – Co-CEO and EVP Commercial
Hi, Guilherme. On your second one related with the gas. First, just to highlight, we
have no changes in our hedging strategy. We have 2026 with 70% hedged. Venture
Global is delivering according to plan.
Brazil is a regional play. We are acting on the oil field side, increasing volumes, taking
the benefit from our equity position. That is all. Thank you.
Ignacio Doménech – JB Capital
My first question is on your gas sourcing. Again, if I am not mistaken, significant
volumes from Algeria, and Nigeria expire next year. So, I was wondering what is your
strategy and your ongoing conversations in terms of gas sourcing for the next year,
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and how we should think on this going forward? You would rather have more exposure
to spot prices, to long-term secured contracts?
My second question is regarding your strategy during the significant changes and
optimisation of the portfolio. I was wondering when would you be able to update the
market on your longer-term strategy? If we could expect a Capital Markets Day in
2027? I would assume this is contingent to some of the ongoing partnerships. Maybe
you could give us a timeline. That would be helpful.
João Marques da Silva – Co-CEO and EVP Commercial
Hi, Ignacio. On your first one. We enjoy our gas portfolio as a diversified portfolio and
highly competitive. On your point, of course, we are interested on the North African
contracts that we have. It is true that some of them will expire soon. We are having
conversations on that, but no further updates to give you. Only to re-emphasise, we
really enjoy our position in gas, in LNG trading. Diversification and competitiveness
are key for us, and we will try to keep those as key factors to our position in the
market. Thank you.
Maria João Carioca – Co-CEO & CFO
Let me pick up on the second part of your question. If I understood correctly, you are
wondering as to whether we will have an updated strategy and a possible Capital
Markets Day anytime soon.
Ignacio, we are very focused on execution, to be clear and to be honest. We have the
Moeve transaction ongoing. We have several movements to our portfolio, and that is
clearly taking up our attention span, so to say. We feel that upon closure of those
transactions, we will, in any case, have a lot more visibility and a lot more grounds to
have a clearer communication.
Now having said that, your challenge is a fair one. We do acknowledge that an update
and a consolidated real estate could enhance market understanding. We are trying to
make sure that we step in and give as much transparency and as much clarity on our
strategic rationale as we move through our portfolio changes. We believe that once
we gain further visibility and we are further along this with the set of execution
challenges that we have, then we will be in better conditions to communicate on the
overall consolidated position and what this means in terms of full visibility for our
strategic rationale on portfolio changes. Thank you.
Michele Della Vigna – Goldman Sachs
Two questions on downstream. First, with refining, I was wondering could you tell us
what is your current state of margins and whether you have any major turnaround in
the second half? Also, the HVO plant should start up relatively soon. I was wondering
if you could update on the startup timing there.
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Secondly, on the Moeve joint venture. Could you perhaps lay out what the remaining
hurdles are to define that partnership, and whether there are any early views of how
much financial leverage those two entities, the marketing and the industrial one, could
take on when the joint venture is fully established? Thank you.
João Marques da Silva – Co-CEO and EVP Commercial
Hi, Michele. On the first one, the spot margins clearly above $30/boe. Just reminding
that, as Maria João alluded, we are assuming $13/boe on our estimations. We have,
let us call it, a small, short downtime expected in September, but it is very minor. We
are keeping our throughput high between 80% and 85%. That is where we stay at this
point.
On the HVO/H2 startup, we have construction ending by year-end, and COD should
be met early next year.
On the second one, so on the hurdles, well, that is a market standard. On the retail
side, we see a net debt-to-Ebitda between 3 to 4 times. On industrial, the ratio goes
to >1 time. That is where we are. At this point, complexities on the due diligence and
nothing else but that. Thank you.
Paul Redman – Exane BNP Paribas
My first question was just on capex. You guided to net capex 2025 to 2026, I think it
was of €0.8 bn a year. If my numbers are right, 2025 was €100 m, 1H has been €800
m. Then you have got the deal to complete, which will be another €400 m. When I
add all those up, I have not got much breathing room for the next couple of quarters
on organic capex. Can you just talk me through that, and whether we should be
expecting any divestment proceeds to come in?
Then my second question is, just to be really clear on the distribution programme,
there would not be any change to the €250 m buybacks you are doing in 2026, the
actual cash you are spending. The change will be for 2026 cash when you guide to a
one third of operating cash flow buyback for 2026 cash flow.
Maria João Carioca – Co-CEO & CFO
Hi, Paul. Let me start with the last one because it is the easier one. No, we are not
going to be touching upon the €250 m in 2026. Fundamentally, that is the number
that plugs into our distribution policy once we did the respective dividend distribution
given the results in 2025. Okay? So, no changes to that. The results for 2025 are
known.
We published the share buyback number once we had the figure for 2025 results. It
has been ongoing. It has been executed at a relatively accelerated pace, but that is
performed at arm’s length by a financial institution that takes it away and executes it
in the best way possible. So, no changes to the total amount in 2026.
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As for capex breathing room for the next quarters, we do expect to land relatively
close to what we had expected. We may come in slightly above, but we do not expect
any major deviations. We do have macro and several other elements pushing us
forward. We will see how it lands. I would not be signalling now on a major deviation
from those numbers. If anything, slightly above. Thank you.
Matthew Lofting – JP Morgan
I just wanted to ask you for your thoughts. Galp has a strong history in pursuing and
forming strategic partnerships in businesses and specific assets. When you look now
at the ongoing processes that you have talked about with Moeve and the Upstream,
but also referring a bit more to the merits of partnerships in Renewables now as well,
can you just summarise the fundamental differences perhaps, that you see in what
you are trying to optimise or unlock between those two businesses?
Secondly, as this processes as we assume in advance, what are the key principles on
how Galp can best ensure an appropriate financial and governance framework for
stakeholders in the future?
João Marques da Silva – Co-CEO and EVP Commercial
Hi, Matt. Thank you for the question. For the Galp-Moeve deal, it is clearly a scale
deal, a deal that has a lot of complementary assets on both sides, in Portugal and
Spain. Clearly, a deal that will build a European platform on the industrial side, a deal
that will clearly build on the network on the retail side, a winning platform also to face
the electric mobility capex.
If we go to the renewable side, we are clearly looking at a much different partnership.
We need to look at the financial side of it, the structures there, and the potential that
we have to leverage these assets. Every time I mention what are the returns that we
are expecting, I remind you, we are speaking about unlevered assets. So, building a
bigger scale platform also on renewables and benefiting from the integration that we
have on the energy management through the cycle is really important.
Clearly two different animals. On the renewable side, we clearly benefit to have a
much more balanced portfolio after these two acquisitions to face that second step.
Thank you.
Maria João Carioca – Co-CEO & CFO
Matt, if I understood the second part of your question correctly, you are fundamentally
asking about how we are standing in terms of capital allocation priorities and how to
communicate strategy moving forward.
On that, again, we continue to have moving parts in the portfolio that we believe play
to an overall strategy of making sure that our capital allocation is consistent with our
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core businesses and our ability to deliver an equity story that is very much a growth
story, hinging on the performance of our upstream assets and their relative quality.
Everything that we have been doing to clear up the portfolio speaks to this concern
about making sure that we have the right capital allocation to each of the businesses,
reflecting their performance and their growth profile. We expect to continue to do that.
A lot of what we have been doing has been precisely about either de-risking those
assets, and a lot of what you saw us doing in Upstream has been about that. Making
sure that Namibia becomes a sufficiently derisked asset with a partner that clearly will
be an asset in developing the basin as we move forward.
When we look to downstream, again, the principle has been one of making sure that
the assets have a situation and a context within our portfolio that speaks to partners
that can take forward the transition story that needs to happen in those assets, that
we can do so in a way that ring-fences capital expenditures and gives full visibility into
what is expected in terms of future performance and fundamentally future capex
requirements, whilst also giving us the ability to better explore the financing structure
of those businesses, so giving us the ability to explore the opportunity to have further
leverage on these businesses.
This is the story of what we have been doing, and I expect that to be the guideline
moving forwards as we continue to go through the portfolio. So same story. Very
mindful of capital allocation, but very aware of the different values and of the different
drivers in our different businesses within the portfolio. Thank you.
Naisheng Cui – Barclays
Two, please. The first one is on production. You upgraded 2026 production guidance
to around 130 kboepd. Could you please talk about the drivers behind this upgrade,
and could we see upside beyond this level?
The second question is on refining margin. You mentioned earlier that spot margin is
more than $30/boe, and your assumption in the second half of the year is $10/boe,
which seems conservative. I wonder if you could share your view on the margin
outlook, please.
Maria João Carioca – Co-CEO & CFO
Okay. Let me start with Upstream production. There are two fundamental drivers
behind what we are seeing in terms of our updated guidance for production. One is
the fact that our legacy assets have been performing rather well. We have seen a lot
of commitment from Petrobras, our core partner in Brazil, in making sure of the
maintenance and the ability to deliver from those assets. For instance, in Tupi, we are
now engaging in a programme that has over 40 initiatives to make sure that we drive
the productivity of those wells far into their active lives. So good performances in our
legacy assets.
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We have had maintenance with very few unplanned events, and that is also one of the
core aspects that we look into when we look at how we guide for the remainder of the
year. Quite a bit of the expected maintenance for this year is well behind us, so we
do think that that is one of the factors bringing us to the top end of our guidance
profile.
Having said that, this is planned maintenance. We have been having extremely good
performance on that respect, but we always guide thinking into consideration that
unplanned events may happen. We guide for a central scenario. We do not guide for
the best possible scenario. So, we always have a little bit of a buffer or cushion there,
if you would like, for such eventual circumstances.
Now, the real driver behind the change in numbers for our production is, of course,
Bacalhau. Bacalhau has been ramping up. We are extremely aligned with Equinor in
terms of the fact that this is a profile that we see as taking us to full ramp-up towards
the end of the year, as we always mentioned.
Now, having said that, this is a ramp-up, so it will have glitches, fluctuations. You
have seen higher numbers early in the year. We are now at three producers, hoping
to connect the fourth producer and have it fully online soon enough.
So, a very good path. Very much in line with what we were expecting so far, but still,
again, being cautious and acknowledging that this is a ramp-up, so guiding for a
central scenario and not for our best possible scenario. We are now seeing producers
with extremely high flow rates that would give us very good performances. We are
guiding for a central scenario, not for the top performances observed to-date. Thank
you.
João Marques da Silva – Co-CEO and EVP Commercial
Naish, going back to your question on refining margins. Well, we are living a very
particular world within the volatility that we have. If you go back to the end of June,
we clearly see a different scenario. Of course, escalation on the Middle East conflict,
additional attacks on Russian refineries, they have a clearly very sizable impact on the
refining margins that we are having on the spot market.
Our present approach assumptions to the second half, we see them as the more
consistent ones considering the fundamentals of the market. Of course, you have all
the sensitivities available. You can input those to your model and consider them. We
can see margins squeezed by rising input costs. We can see also some decrease on
the oil product prices, mainly in diesel and jet, should there be a stable arm of
resolution. We also need to consider some demand destruction at this point.
There are a few factors that can also take some pressure out from the spot market,
and we think it is the best way to approach our second half. Again, you can consider,
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you have the sensitivities that we shared, and you can consider them in your model.
Thank you.
Christopher Kuplent – Bank of America
The first one goes back to your renewable acquisitions. You have spent just shy of
€800 m. I am just looking at your Ebitda guidance pro forma €110 m, comparing that
to what you gave us earlier for the Ebitda contribution from Renewables as more than
€30 m. Are we doing the right maths to say, okay, you have acquired assets at a
roughly 10 times plus Ebitda multiple? First question.
Second question. Can you help us a little bit quantifying that underlifting impact in
upstream on Ebitda, considering that Ebitda quarter-over-quarter has barely moved?
Would like to understand how much of that you would argue could come back in the
third quarter.
Maria João Carioca – Co-CEO & CFO
Chris, let me pick up on the underlifting one, as that is probably the easier one. It is
approximately €60 m impact from underlifting. The effect there is simply the reflection
of what was happening in terms of how we were registering in our accounts the
numbers that were valid at the time that our partners were actually lifting those
cargoes, versus what is now that we have actually come through on the sales reflecting
the actual market prices. This does bring quite a few swings into our numbers.
I will remind you that first quarter was positive, so we had plus €50 m there. All in all,
if you take the plus €50 m on the quarter plus, and the number for the second quarter,
there is a significant swing quarter-on-quarter, €110 m. Overall, the mechanics is that
I have just described, it is bringing into our accounts the moment of sale, the
difference vis-à-vis to the prices registered at the time that our partners lift from the
wells where we are in partnership.
I hope this clears your question. Thank you.
João Marques da Silva – Co-CEO and EVP Commercial
Chris, on your first one, you are absolutely right. Just to sum up, our underlying
assumption on the wind power prices are around €50/MW. Indeed, we are looking at
10% returns, again, unlevered assets. Thank you.
Ahmed Ben Salem – Oddo BHF
You raised the 2026 Ebitda guidance to around €4 bn, largely reflecting strong Brent
and refining margins. How much of the upgrade comes from the macro assumptions
versus underlying operation and improvement?
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Maria João Carioca – Co-CEO & CFO, Galp
Thank you, Ahmed. From the total upgrade, I mentioned it briefly before. Overall,
there is approximately 25% of this upgrade coming from operational drivers, and the
remainder is indeed the reflection of the macro tailwind. These operational upgrades
are distributed across the portfolio. But all in all, fundamentally accounts for those
operational changes that we see in terms of volumes and in terms of actual operational
performance. Thank you.
Fernando Abril-Martorell – Alantra
Only one question. Based on the comments you have made on the leverage target for
the RetailCo and the IndustrialCo, also based on the targeted stakes you want to have
in each of the subsidiaries, is it possible that the deal could generate extraordinary
dividend upstream to the HoldCo level to you guys, to Galp? If so, what would you do
with those proceeds? An extra DPS for shareholders or bringing leverage down further?
I do not know. Any comments on this would be helpful.
João Marques da Silva – Co-CEO and EVP Commercial, Galp
Hi, Fernando. I really understand your question, but it is too early to have an answer.
Of course, your options make sense, but we cannot comment on that. It is too early.
We are still triggering all the valuations. We are still triggering all the agreements. It
is not the time to speak about that, as Maria João already alluded to. Thank you.
Sadnan Ali – HSBC
Two, please. The first one on refining. Can you just talk to us about your operational
performance at Sines over the past few months? With the 1Q results, you said you
made changes to your hydrocracker to increase the jet yield, and I was just wondering
if you have made any other operational changes over the past few months? With that,
can you just remind us how much flexibility and agility you have in your system to
say, alter the crude slate or the product yield slate on a short-term basis?
Secondly, just on the Commercial division. The discount mechanisms in place for Spain
and Portugal, can you quantify the impact it has had so far this year and your
expectations going forward?
João Marques da Silva – Co-CEO and EVP Commercial
On the first one, Sadnan, we are having a pretty high throughput through the quarter,
and we are expecting a higher throughput versus what we were assuming. We were
assuming around 80 mboe. We are now on the 80 to 85 range. I have mentioned
already that we are expecting light maintenance activities on the hydrocracker in
September.
Let me also give you some numbers on Sines outputs, we have roughly 45% middle
distillates yield, on which jet accounts for around 10%. We are trying, and we have
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the flexibility to rise it to 13%. That is where we are looking at. At this point, we are
at 14%. The normal is a 10% ratio, and that is what we are expecting. We are
expecting to operate with full availability during July and August and having these
minor maintenance activities in September. Thank you.
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