Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:00:00 <\/p>\n
Welcome everyone to BP’s second quarter 2026 financial results call. I’m joined by Meg O’Neill, Chief Executive Officer, and Kate Thomson, Chief Financial Officer. We’ll be focusing today’s call on the second quarter performance and the contents of the video that I hope many of you will have seen by now. Before we start with questions, though, let me hand over to Meg for a few opening remarks. Meg. <\/p>\n
Thanks, Craig, and thank you to everyone joining the call. I hope everyone will have seen our results today and the video Kate and I recorded. As such, I’ll keep my opening remarks brief so we can get to questions. 2Q was another good quarter financially as we continue to build momentum. Strong earnings and good cash conversion supported us with the further strengthening of the balance sheet. Net debt was down $3 billion quarter-on-quarter, and financial obligations are now down around $7 billion since first quarter. You will have seen our outlook for the further significant progress we expect through the end of the year. We have also continued to take deliberate steps to simplify BP and our portfolio, including the announcements on the North Sea and Archaea Energy, and the completion of the Gelsenkirchen transaction. <\/p>\n
There are areas where our performance fell short. Operationally, our plants didn’t run as well as we expect. I want us focused on driving consistent operational performance. It is the foundation for everything we do, and we know we need to improve. We have more to do to turn cost reductions into bottom-line earnings improvement. BP has strong assets, deep capability, and real growth potential. My focus is on turning that potential into stronger performance and greater shareholder value. That means continuing to strengthen the balance sheet, simplifying and high-grading the portfolio, investing with discipline, taking cost out of the system, and driving much sharper accountability across the company. I call this getting BP Fit to Grow, where every part of BP needs to earn its place, generating cash, improving returns, and strengthening the whole. <\/p>\n
I believe BP can and will be a world-class integrated oil and gas company with advantaged upstream positions, a resilient downstream business, and distinctive trading capability. That is what my leadership team and I are focused on, moving at pace, making the tough decisions, and building a more focused, competitive BP that delivers stronger outcomes. Back to you, Craig. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:02:40 <\/p>\n
Thanks, Meg. As everyone knows, as per customary practice, I’m going to ask everybody to poll for one question please per person, so that everyone gets a chance to ask. If we have the time, we can come back to a follow-up question, we are going to aim to wrap up the call in 45 minutes. On that note, I’m going to take the first question from Biraj Borkhataria at RBC. Biraj. <\/p>\n
Biraj Borkhataria <\/p>\n
Head of Equity Research <\/p>\n
0:03:08 <\/p>\n
Hi. Thanks for taking my question. Thank you for the detail in the slides today. Meg, you’ve made some comments around getting fitter to grow and building that platform for growth, the other comment was around competing in the right weight class. The question really is, what weight class do you think BP is in? Because if I look at the traditional super major peer group on key metrics, you’re the smallest of the bunch, many of them produce multiples of what you produce. Do you want to be in that weight class, and is that a fair assessment of where you want to be? Just some reflections on that would be helpful. <\/p>\n
Sure. Thanks, Biraj. Look, I think it’s prudent for us not to try to label ourselves as a super major, in fact, that’s one of the things that I’m trying to reinforce with the comments around weight class. You look at our numbers, we produce about 2.2 million barrels oil equivalent a day. Our refining capacity is about 1.5 million barrels a day. Sizable on both fronts. The reality is, we need to make sure we’re competing with players at our size, we need to make sure in each part of the business, upstream, downstream, trading, that we are competing to win. We want to be in the best basins, we can’t be in every basin. We need to make sure we’re focused, that we’re making good decisions, that we’re selective in our choices. <\/p>\n
For me, that’s what it means when I say that we need to be getting fit, we need to be competing in our weight class. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:04:46 <\/p>\n
Thanks, Biraj. We’re going to take the next question from Fergus Neve at Rothschild. Fergus. <\/p>\n
Yep. Hi, everyone, and thank you very much for taking my question. Just looking at the BPX results and data for 2Q26, it looked like another strong quarter. 1H production looks to have grown close to 20% year-on-year, in spite of sequentially lower gas prices. Could you just comment on some of the work you’re doing in the U.S. and perhaps on the plan for that business moving forward, particularly in terms of the new strategic priorities that you laid out today? Thanks. <\/p>\n
Yeah, thanks, Fergus. BPX is really an important part of BP Group. Appreciate your attention to detail. In the quarter, production was 545,000 oil equivalent barrels per day. It is continuing to grow quarter-on-quarter. A couple of things that we like about the business. First off, we like the financial metrics. If you think about the portfolio chart we presented, when we look at BPX, it’s got the ability to generate competitive returns, competitive cash flow. We’ve got significant growth potential with the resource base we have there. It is very much an integral part of the group. One thing that differentiates BPX from many of the other assets in our business is the ability to invest in short cycle projects. <\/p>\n
If I contrast it to a deep-water development in the Gulf of Mexico, for example, those are the sorts of developments where you take an investment decision in one year, and it’s four or five years before you get any revenue, whereas BPX, we’re getting revenue very quickly after making those investment decisions. When we look across the group, the fact that we’ve got a combination of short cycle capital plus the long-dated investment opportunities, really does offer an advantage compared to other companies in our sector. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:06:45 <\/p>\n
Thanks, Fergus. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:06:47 <\/p>\n
We’ll take the next question from Doug Leggate at Wolfe. Doug, good morning. <\/p>\n
Doug Leggate <\/p>\n
Managing Director <\/p>\n
0:06:53 <\/p>\n
Good morning, everyone. Good morning, Meg. Clearly a very strong message this morning, I wonder if I could just hit the capital structure, the balance sheet, the hybrids, and wrap all that together with one very simple question, which is that the scale of the free cash flow, including disposals, including the working capital reversal, that you could potentially generate, not just in 2026 the second half, but also in 2027, starts to put some fairly big questions over what you do with the capital structure, how low you take it. Dare I tempt Kate to maybe answer this? Why do you need any hybrid bonds and worry about the credit rating? You could theoretically wipe them out. I’m just trying to think out the box. <\/p>\n
Doug Leggate <\/p>\n
Managing Director <\/p>\n
0:07:40 <\/p>\n
What do you do with the scale of the potential deleveraging capacity that you have going forward? Thanks. <\/p>\n
Well, Doug, let me just jump in, and then I’ll let Kate weigh in. One of the things that I think is important to think about, and I’ll frame for you how I think about the balance sheet question. We need to be thinking about our capital framework with a couple of goals. One simple one is we need to make sure we’ve got our investment-grade credit rating because that ensures we’re able to do much of the business that we need to be able to do. We need to make sure that our balance, in terms of equity and debt, is one where we have more dollars from cash flow that are going to shareholders than going to liability holders. <\/p>\n
One of the key areas of concern I have with the structure as it stands today is there’s too much cash going to liability holders. The second concern I have with the structure as it stands today is our resilience in a low-price environment. A lot of the focus we have on getting the balance sheet in shape is about making sure that we can get the frame right to return value to shareholders through the cycle and invest in the business through the cycle and be resilient in that low-price scenario. I’ll let Kate speak to some of the specific choices we’ve made. <\/p>\n
Thanks, Meg. I agree with those comments, by the way. Hi, Doug. Thank you for your question. Yes, we have an opportunity to drive our leverage down materially, certainly through the second half of 2026, as you can see from the sort of $39 billion-$41 billion total financial obligations we’re guiding to today in terms of the end of the year. Look, as I think about your specific question on hybrids, we’ve stated today there’s $1 billion of hybrids that will be naturally redeemed in the third quarter. We redeemed $2.9 billion in 2Q just gone, and there’s another $1.4 billion that we have already told you we’re going to allow to move off the books when they redeem in 2Q next year. The most cost-effective way to remove hybrids is to wait until they mature. <\/p>\n
Buying them back in advance of that can be a very cost-effective approach and not necessarily the most value accretive for shareholders. Right now, we’re clear on the forward trajectory with hybrids. For now, the balance beyond those two points I’ve mentioned remain part of our capital structure. I think it’s important we look holistically across the entirety of our capital structure and make sure it is fit for what it is going to be required to do for BP for the long term. This is about creating the financial resilience of a company to support the growth that we have got in front of us that we want to be able to execute through cycle. That’s how we think about it. <\/p>\n
At some point, when we’ve got through the delivery of our first target, then we can come back and explain how we holistically think about our financial frame, how we think about rewards to shareholders, how we think about our capital, and how we think about our balance sheet. They all need to sit together cohesively as one frame. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:10:57 <\/p>\n
Thanks, Doug. We’ll take the next question from Josh Stone at UBS. <\/p>\n
Josh Stone <\/p>\n
Head of Equity Research <\/p>\n
0:11:04 <\/p>\n
Thanks, Craig, and good afternoon. Thanks for the new disclosure you provided on the operating cost side, particularly on the variable costs, which I think is helpful. I wonder, have you been able to diagnose why the improvements you have made have not managed to flow through to the bottom line? You made a comment about that in your prepared remarks. When do you think is it reasonable for us to start seeing these operating cost changes actually, and the changes you’re making to the organization, actually flow through to the bottom line? Thanks. <\/p>\n
Thanks, Josh. I’ll take that one. Look, the teams are working really hard across the company to drive our cost base down to get us competitive, as competitive as we can be. Frankly, it’s not moving fast enough to be able to deliver that outcome all the way to the bottom line. That’s what us, that’s what our shareholders care about. Structural cost reductions are interesting. When they’re really important, they come all the way through to the bottom line. The disclosure that we’re giving you today is line of sight to material reduction in our absolute cost base by the end of next year, getting to around $18 billion compared to $22 billion at 2025. There is going to be material improvement in our absolute cost base as we move through the next 18 months. <\/p>\n
We need to apply a lot of urgency and a lot of focus to continue to push this through in every dimension of the business, because at the moment, what we’re delivering is not enough to offset the headwinds that we’ve experienced in terms of inflation environment, foreign exchange, and activity choices. What really matters, beyond any target on structural cost reductions, is getting that to the bottom line. As we deliver 18 next year, just to be clear, we expect to have delivered $5.8 billion of structural cost reductions compared to the original target of four to five. As I say, what matters is what comes through to the bottom line in terms of earnings and cash flow. <\/p>\n
Maybe if I can build. One of the things that has struck me coming in, I do think we have momentum and a lot of the work on getting the organization designed and driving that accountability mindset where we’ve got business owners who have the tools and capabilities and people they need to drive the business, we are simplifying the structure above that. That is part of the uplift in, or the cost reduction that we’re going to see next year. We start to see those come through to the bottom line in 2027. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:13:37 <\/p>\n
Thanks, Josh. We’ll take the next question from Jeoffrey Lambujon, TPH. <\/p>\n
Jeoffrey Lambujon <\/p>\n
Analyst <\/p>\n
0:13:46 <\/p>\n
Good morning, good afternoon, and thank you for taking my question. Meg, you’ve been very clear today that every dollar of capital has to compete and that growth has to be earned. I wanted to ask about this in the context of BPX specifically. If you could walk us through how you think about the Haynesville’s competitiveness versus the oil basins, whether in the context of returns for the Mac or other factors you might highlight. Given the underlying growth potential from BPX overall, how you think about the Haynesville’s contribution to that? <\/p>\n
Sure. Thanks, Jeoffrey. Look, the Haynesville is really a significant position for us. I’ve been really impressed. I’ve spent quite a bit of time with the teams working BPX, in the work that we’ve been doing to really drive excellence in our drilling and completions performance. We’re really starting to see that come through to the bottom line. Maybe if I give you an example that brings that to life. The first quarter of this year, we set a new basin 24-hour initial production rate record at 81 million scf a day, from a well with a 15,000-foot lateral. The production rates are staying high, which is even better, producing 63 million scf a day for over 80 days. Really accelerating the resource capture that we’re able to get from the Haynesville. <\/p>\n
One of the things we always need to be mindful of is the cost environment or the price, sorry, the price environment that we’re seeing in the Haynesville, and always making trade-offs around where can we most effectively deploy those dollars within BPX. The Haynesville is gas. Eagle Ford has both gas and oil, and Permian is quite oily. It’s something that we work closely with the team on to make sure that the decisions about where to deploy rigs are going to deliver the best overall value for BP as a group. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:15:42 <\/p>\n
Thanks, Jeoffrey. We’ll take the next question from Matt Lofting at JPMorgan. <\/p>\n
Matt Lofting <\/p>\n
Executive Director <\/p>\n
0:15:49 <\/p>\n
Thanks, Craig, and hi to everybody. Thanks for taking the questions. Meg, I wanted to ask you about the second of the five priorities that you outlined this morning in terms of simplifying the portfolio. I think you outlined earlier in the year changes, in particular to the organizational structure. I noticed, though, in the prepared remarks, you’re still sort of referencing a degree of complexity to BP’s business. I wondered if you could share examples of where you see some of the next areas of major focus in terms of that priority set and how that sort of, in your mind, comes together in terms of more comprehensively streamlining BP’s business as you look forward. Thank you. <\/p>\n
Yeah. Thanks, Matt. Look, one of the reasons we included the portfolio chart in the presentation is to give you a flavor for how we’re thinking about those portfolio decisions. As I said in the remarks, we’re not thinking about history or legacy attachment or emotion. We’re just looking at the numbers, and we’re digging into, for each of the assets in our business, what’s the track record on delivering free cash flow growth? What’s the track record on delivering returns? Do the returns lift the group return on capital employed or pull them down? It’s not just the two dimensions shown there. I’ll also note that those two dimensions are historic. A business that we were investing in in that time period would score very low on free cash flow, but it doesn’t reflect the potential of the business. <\/p>\n
We’re taking a look at the numbers, and we’re using those numbers to unemotionally guide our decisions around portfolio. As we look at the business, we are spread relatively thin. I think we’ve got too many assets in BP today. When we look across the portfolio, there are assets where we’d say others will see more value and be able to deliver more value, and we can sell those and achieve good value for our shareholders through that sort of transaction. That allows us to continue simplifying, streamlining, and focusing in the organization that is above the asset. Hopefully that helps you understand how we’re thinking about things. Nothing is sacred. Nothing is off the table. We’re just going to have the same kind of rigorous discipline in looking across the business. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:18:24 <\/p>\n
Thanks, Matt. We’ll take the next question from Naisheng Cui at Barclays. <\/p>\n
Naisheng Cui <\/p>\n
Director of Equity Research <\/p>\n
0:18:31 <\/p>\n
Hi. Good afternoon. Thanks for taking my question. Looking at the first pages of your appendix slides, you had three major FIDs in 2025, but nothing so far in 2026. I wonder if you could provide some color on any major FID expectations for the next 12 to 18 months, please. Could you also give us an update on Bumerangue, please? Thank you. <\/p>\n
Thanks for the question, Naisheng. Let me start with your second question first. Bumerangue, I think we’ve talked about this a bit before, but very significant discovery in 2025. 8 billion barrels, liquids in place. That’s always a good starting point. Having a fair amount of oil always gives you kind of one of the core ingredients we need to be successful in our business. We are getting ready to do an appraisal campaign, which will start either late this year or early next year. We’ll be getting more data. It’s going to be really important, in that appraisal campaign, to get dynamic data. What we have right now is a static characterization of the reservoir, which is all very positive. It’s a very thick column. It’s got gas condensate, as well as an oil leg. <\/p>\n
We need to understand how fluids will flow through this reservoir. That’s important data that we’ll be gathering early next year. When we look to other FIDs, you’re right, this is a quiet year. Last year was certainly a big year. Team is very focused on ensuring we’ve got competitive opportunities to deploy capital. When I look at the slate today, not expecting anything major to hit FID this year. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:20:23 <\/p>\n
Thanks, Naisheng. We’ll take the next question. Actually, I’m going to move online. I know a number of people are already starting their summer vacation. There’s a question from Kim Fustier at HSBC. Upstream plant reliability fell to 92.4% due to some operational issues in the North Sea and Indonesia, and refining availability dropped to 94.7%. Can you discuss specifically what went wrong operationally this quarter in both upstream and downstream, and what are you doing to address these issues? <\/p>\n
Great question, Kim, it’s been a disappointment. After four or five quarters of what I would call really quite strong reliability in both upstream and downstream, we have seen a drop-off. North Sea, it was a couple of different issues, one at the Glen Lyon FPSO that took that facility offline for a couple of months, then some trips in ETAP. Indonesia, we had a turnaround that ended up being extended and had some operational issues when we were trying to restart. In refining, we had a third-party event at the Whiting Refinery that caused a bit of downtime in April. Those are each of the individual events. What I think is important for us to do is to step back from the individual events. We need to, of course, do deep investigations to understand the specifics of what happened. <\/p>\n
More importantly, we need to step back and ask ourselves, do we have the right framework for our teams all around the world to deliver strong operational performance? That’s what we’re doing, making sure we’ve got our arms around it. There are some areas of improvement that we have identified already, the teams are getting after those, both in the refining space as well as the upstream space. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:22:11 <\/p>\n
Thanks, Meg. I’m going to stay online with the next two questions. I’ll maybe take the first one, which comes from Alejandro Vigil. Thank you, team. If possible, a question to Meg about her views about biofuels as part of the portfolio. Is it core? Does it have similar characteristics to biogas, and could it be a potential divestment? I think, Meg, you’ve probably answered in terms of reflections on how we hold the portfolio choices that we’re making. I think equally wouldn’t be commenting on any potential divestments down the line. Maybe over to you on that. <\/p>\n
Yeah, look, let me maybe frame in a bigger way how we think about some of these bio opportunities. I’ll start with some of the successes. We actually do quite a bit of work on biofuels in the U.S. We trade quite a bit of biofuels. We blend biofuels. When you look at the performance of the downstream and trading business, or our customers and products business, particularly the U.S., we’ve got some real shining examples for how this can be a value uplift for BP. It’s a value uplift in a capital-light manner, that’s perhaps one of the attributes that differentiates it from the Archaea business, where we’ve gone in in a capital-intense manner. <\/p>\n
Our team still trades quite a bit of biogas in the U.S., the question that we’ve been asking ourselves and the conclusion we’ve come to is actually we can access some of those lower carbon molecules in a manner that takes less of BP’s capital. There are other companies that are quite interested. I know we announced today the intention to divest Archaea. Part of why we announced that is we’ve got interest. Again, if there’s somebody who sees an opportunity to create additional value, who will invest in that business, who will build on the foundation, because our team has made really good progress in improving the profitability of that business, that will be a good outcome. <\/p>\n
As Craig said, other more material divestments, we’ll be looking at the portfolio through the lens I described, we’ll announce those as the time is appropriate. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:24:22 <\/p>\n
Thanks, Meg. Maybe the last one online, and then we’ll come back to the phones. It’s from Ahmed Ben Salem at ODDO. Meg, you repeatedly describe BP’s goal as becoming a simpler, stronger, and more valuable company. Three years from now, what are the three metrics that would convince you that this transformation has been successful? <\/p>\n
Look, there’s a couple of things, Ahmed, and thanks for the question. There’s some really basics in terms of operational performance. We need to be stronger on the safety fronts, continue to have that strong, consistent, reliable performance in our base assets. At the end of the day, the most important metric for are we more valuable is are we growing total shareholder return? That’s through share price appreciation and dividend cash distribution. At the end of the day, we’ll be looking at TSR. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:25:18 <\/p>\n
Thanks, Meg. Okay, back to the phones. We’ll take the next question from Mark Wilson at Jefferies. <\/p>\n
Mark Wilson <\/p>\n
Managing Director <\/p>\n
0:25:26 <\/p>\n
Thank you. I’d like to ask Meg regarding the U.K. sale process generated such a lot of commentary, much of which speaks to BP’s exit. Your release speaks, obviously, to a process to market, and there’s obviously various different models that can come out of a marketing process. My question is whether there are indeed multiple outcomes in that process, including, but not exclusive to, satellite models. I note in connection to that, you show in your slide pack 10 major startups from 2025 to 2027, but seven from equity accounted associates, including Aker BP and Azule. Maybe that tells a story of potential benefits of such models. Thank you. <\/p>\n
Well, look, with North Sea, this has been very carefully considered. We’ve had a number of inbounds, as I’ve said. That was a bit of the catalyst for launching a process. We’ve kicked the tires on a variety of models. At the end of the day, we need to ask ourselves, where do we want to focus our precious leadership time? Where do we want to focus our precious dollars? Our intention is to market for a full divestment. Kate, did you want to talk about the projects? <\/p>\n
I was just trying to do the math to match yours, Mark. I can see three out of the projects that have started up have been in joint ventures. We’ve had two, I think, in Azule and one in Aker so far. Let us pick that up offline and make sure we’re looking at the same data as you. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:27:15 <\/p>\n
Mark. Thanks for your question. I think the seven projects we can certainly come back to you on. They are the joint venture projects that sit alongside the 10 BP-operated projects. Let’s follow up on that. We’ll take the next question from Lucas Herrmann at BNP. Lucas. <\/p>\n
Lucas Herrmann <\/p>\n
Managing Director <\/p>\n
0:27:33 <\/p>\n
Yeah, thanks very much, Craig, and thanks Kate and Meg for the opportunity. Briefly, just trading in gas. I think we’re looking at a market which is relatively high priced in terms of international pricing, where we’re seeing good volatility, which tends to favor trading businesses, and where historically you’ve talked about the ability to redirect cargo and take advantage, and indeed, we saw that very strongly in 2022. I’m not criticizing an average result for the quarter, but I am perhaps surprised that the business, given your competence, has not done better. <\/p>\n
Lucas Herrmann <\/p>\n
Managing Director <\/p>\n
0:28:09 <\/p>\n
Any comments there, and are there any comments you’d care to make on the outlook as we go into the third quarter on whether you have potentially more flexibility or the market may be more conducive to delivering a return that is above the average we’ve seen in the last few quarters? Thanks very much. <\/p>\n
Yeah, thank you, Lucas. Hi, I’ll pick that one up. Yeah. Gas average the last two quarters, I think the gas trading business has done pretty well. When you look at the level of volatility comparatively in oil and products versus gas, I would say that gas has been much more benign than oil and products. In 1Q, we saw quite a lot of volatility, certainly in January, that allowed us to capture value. The European stroke international gas price has started to move around more recently. I would’ve said that sort of the results for the year so far in terms of gas are not out of line. The LNG bench has done a good job of capturing value, trading around physical flows and optimization of those, as you know. <\/p>\n
The contrast is stark with what’s been going on in the products and in the crude markets, where the volatility, I would describe, as pretty wicked, and it’s been a very tough environment for our traders to trade through, and I think they’ve done a good job of capturing value within a carefully managed risk framework. I’m never going to guide forward on trading, as you know. I would just remind you that over six years now, we’ve added 4% uplift to the group earnings on average capital employed from trading, and that has been through benign and volatile years. Your guess is as good as mine in terms of what volatility from here is going to look like. <\/p>\n
I suspect we will see more volatility in the space of international and European gas, given where storage and European gas looks like it’s at currently compared to five-year averages. I think let’s see. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:30:18 <\/p>\n
Thanks, Kate. Thank you, Lucas. We’ll take the next question from Chris Kuplent at Bank of America. Chris. <\/p>\n
Yeah, thank you very much. Meg, I’ve got a question for you. Thanks for your laying out the five priorities. I noticed that they’re very inward-focused, getting the performance up to speed. <\/p>\n
What can you tell us already at this point, and apologies if you think that’s unfair, to sort of say to shareholders, “Look, this is the landing point in terms of returns to shareholders.” Maybe you want to frame it as CFFO payout or some sort of indication how you’re thinking around restarting the buybacks or giving shareholders more than the 4% minimum DPS increase. Thank you. <\/p>\n
Yeah. Look, thanks, Chris. Look, it’s an important question, and we know it’s one that our shareholders are keenly interested in. Kate and I are doing a tremendous amount of work on the financial frame to make sure we’ve got laser-like clarity on what a good frame for BP at this point in time looks like. Again, we need to make sure the balance sheet is positioned well. We need to understand the financial liabilities that we want to carry. The goal, of course, is for us to be able to invest and reward shareholders through the cycle. We fully understand that shareholders are keen to have increasing TSR, and we’re fully committed to that, but we’ve got work to do on the balance sheet. $40 billion of total liabilities is still too much. <\/p>\n
We are still not going to be able to offer that resilience through the cycle that we need to be able to. We’ve got a bit of work to do. We know the market is very interested in hearing this, as soon as we’ve got our views ready, we will be communicating with you. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:32:19 <\/p>\n
Thanks, Chris. We’ll turn to the U.S. and take the next question from Jason Gabelman at TD Cowen. Jason. <\/p>\n
Jason Gabelman <\/p>\n
Managing Director <\/p>\n
0:32:27 <\/p>\n
Hey, thanks for taking my questions. Wanted to ask about the increase in capital expenditures for this year. Seems like CapEx move higher, there wasn’t any associated increase in production levels or downstream levels or nothing we could really discern. Wondering what you’re getting for that higher CapEx and if you think CapEx could trend higher over the next few years as you look to strengthen the earnings potential of the company. Thanks. <\/p>\n
Look, that’s pretty straightforward, Jason. If you look at the CapEx guidance for the full year, you’ll note that the second half run rate is higher than the first half. When we had built the plan last year and when we initially put out guidance, we were assuming a farm down of some of our Palaeogene assets. We’ve deferred that because we want to make sure we’re getting good value for BP shareholders on assets that are going to be part of our portfolio for the next 30 years. We’re being extremely disciplined in our divestment processes to get that fair value. That means we’re picking up more of the capital onto our books. Net net, it is the right decision for our shareholders. <\/p>\n
Could I just add one comment as well? I think you also asked Jason on whether we should expect CapEx to trend up going forwards. I think that there’s no reason that I can see right now for CapEx to be trending up. It’s part of a disciplined approach. Every dollar of capital we spend has to compete, and we want to maintain a really tight control over the capital we’re spending in our company. I see no reason for it to go up. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:34:10 <\/p>\n
Thanks, Kate. Thank you, Meg. We’ll take the next question from Henry Tarr at Berenberg. Henry. <\/p>\n
Henry Tarr <\/p>\n
Director of Equity Research <\/p>\n
0:34:18 <\/p>\n
Hi, thanks for taking my questions. The first one was just on the Ginger gas field. As you ramp that up, I guess Shell are also ramping up capacity in the region, how much capacity does Atlantic LNG have for additional volumes? When might utilization there sort of pick up and how material could it be? Just the second question, I think you talked about sort of delaying farm downs, perhaps you alluded to that in the last question. If you could talk maybe more about the environment today for selling some of these assets, in terms of whether the volatility is having an impact, et cetera, that would be great. Thank you. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:35:14 <\/p>\n
Henry, we’ll take your first question because I’m going to be disciplined here, if we have time, we’ll come back to your second one or IR can follow up. Maybe the first question on Ginger gas field. <\/p>\n
That’s a gas field that’s due to start up, as I believe, in 2027. That’s not online today. <\/p>\n
No, there’s plenty of capacity in the plant for Ginger and plenty of capacity for the other assets that are under development. Look, if we get to a point where ALNG is stretched, I think that’ll be a good problem to have, that’s not a problem that’s confronting us at this point in time. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:35:49 <\/p>\n
Thanks, Henry. You can repoll or we’ll come back to you if we have time. I’ll take the next question from Maurizio Carulli at Quilter. Maurizio. <\/p>\n
Thank you very much for taking my question. First of all, congratulations for the positive results and for Meg’s update on the strategic priorities that BP is implementing. I’ve read the text this morning with great interest and frankly pleasure as well. I have one question, if I may. Can we have an update on the process for the selection of the new chair? For what you can say, of course, at this very early stage. Thank you. <\/p>\n
Yeah. Well, thank you, Maurizio, and glad you found the update constructive as you think about BP. Look, the chair selection process is underway, and I’m not going to provide running commentary. There’ll be a point in time where the board will have an announcement to make, yeah, we’ll just encourage you all to be patient. Maybe the important point to make, though, Maurizio, is there is no doubt the board is in place. They’ve been very clear in supporting the strategic priorities that we’ve laid out in the 2Q. There’s tremendous clarity with the 90,000 employees in BP on the direction of travel. We are getting after it. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:37:15 <\/p>\n
Thanks, Maurizio. Appreciate your comments. We’ll take the next question from Bertrand Hodee at Kepler Cheuvreux. Bertrand. <\/p>\n
Yes. Hello. Thank you for taking my question. I had a question on the farm down process in the Paleogene in the U.S. I understand from your comments that this is a key in your portfolios, that is an asset you’re going to have for the next 30 years, as you mentioned earlier. Have you seen interest first? What has made you deferred the farm down process? Is it just a question of price or choosing the right partner? I wanted to know also if it’s just around Kaskida, Tiber, Guadalupe, or the whole Paleogene acreage you are looking for a partner. <\/p>\n
Yeah, thanks, Bertrand. Look, maybe to describe how I think about these things. The Paleogene is a very significant asset for BP. The two developments we’ve sanctioned, Kaskida and Tiber, Guadalupe, will commercialize over 500,000 bbl of oil. We need to be really deliberate in who we bring in. We want to make sure we get the right partner at the right price. Again, if I think about the Gulf of Mexico, the Miocene developments back in the 1990s, those were very material capital investments for BP. They’re investments that are paying the bills today. Again, we just need to make sure we’re being disciplined and bringing a partner in who can add value to the development, and is willing to pay appropriate consideration up front, and we’ll be patient. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:39:15 <\/p>\n
Thanks, Meg. We’re going to take the next question from Steve Richardson at Evercore. Good morning, Steve. <\/p>\n
Steve Richardson <\/p>\n
Senior Managing Director <\/p>\n
0:39:23 <\/p>\n
Hi. Thanks for taking the question. Meg, I was curious, there was a statement in the SEA about writing off too much value. I wonder if you could talk a little bit about that. Ideally, there’s really two ways to address it, right? there’s making sure that the new projects you’re sanctioning are durable at a low price, but you’ve also got a portfolio review going on, and I suspect that you’re testing assets down to lower prices, and you’ve mentioned that. Could you talk a little bit about how you’re evaluating the existing portfolio and your expectation of when you’ll be able to confidently say that the portfolio that’s under you and the assets that are on the balance sheet are durable at a lower price and we can stop that cycle of writing off? <\/p>\n
Yeah, it’s a great question, Steve. Look, if we look back over the history, we have had too many impairments. The reality is those are shareholder dollars that were not used effectively, really wasted. We need to start by being upfront and acknowledging that we have made some decisions in the past that did not deliver the outcomes we expected. You have the commitment from Kate and myself and the leadership team to really strengthen decision-making, strengthen how we look at opportunities to make sure that we are protecting shareholder value. Your comment around new projects must be durable, that is absolutely how we’re thinking about our future investment decisions. Now, that said, we still have a bit of work to do as we look at the portfolio. A number of transactions have already been announced. <\/p>\n
We’re in the process of working to complete the Castrol transaction later this year, for example. It’s going to take us a bit of time, but I would also assure you that we are moving with pace on the low-hanging fruit. There are clearly some assets that do not form part of our long-term business, and I think are transactable, and I think are transactable at fair value. I think in the hands of new owners, they will continue to generate value. We’ll be very focused on maximizing value for our shareholders as we go through this process. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:41:53 <\/p>\n
Thanks, Steve. I think we’ve got time for probably two more questions. We have one polled, coming back to Biraj at RBC, and then one more for whoever wants to take it. <\/p>\n
Biraj Borkhataria <\/p>\n
Head of Equity Research <\/p>\n
0:42:06 <\/p>\n
Hi there. Thanks for getting back to me. Just a quick one, which is probably for Kate, and it’s on Lightsource. Are you able to say what the sort of total balance sheet obligations are associated with Lightsource at the moment? I saw the comment around $1 billion of hybrids related to a subsidiary. I wasn’t sure if that was related to that. I had a figure in mind of about $3 billion of debt related to that business. Is that in the right ballpark? Thank you. <\/p>\n
Hi, Biraj. If you go back to when we completed the acquisition of the remaining 50% of Lightsource, which was 4Q 2024. At that point, we disclosed that we were acquiring debt of around $3 billion. You’ll recall it was Lightsource, but also the completion of bp Bioenergia. Having said that, the majority of it was Lightsource. I think the way to hold this, because I guess what you’re pushing at is what is the impact on our financial obligations at the point at which we transact on Lightsource, and I think we just need to wait until we have signed a transaction. Until we get to that point, we don’t have full clarity on what is the shape of the transaction, and therefore, what is the impact on our bp financial obligations and debts. <\/p>\n
I think if you can just be patient, we will update you as we reach that point. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:43:25 <\/p>\n
Thanks, Kate. Thanks, Biraj. I am going to take one last question, even though four have since polled, and at top of the list is back to Fergus Neve, please. Then Mark, Chris, and Nitin, we can come back to you. <\/p>\n
Brilliant. Thank you very much for coming back to me. I really appreciate that. I just wanted to follow up on one of the earlier comments about asset sales and the extent to which the portfolio has too many assets in it at the moment. I wondered whether that points to potential of going beyond the $20 billion target that you have set by the end of 2027, not necessarily by the end of 2027, but into the future. Just on that, have you got any update on how you are tracking against that target at the moment, particularly considering the slight reduction in the divestment proceeds guidance for the full year this year? Thanks. <\/p>\n
Let me take that one, Fergus. Thank you. Look, firstly, how are we tracking? We delivered $5.3 billion last year in terms of proceeds. We’re guiding on $8 billion to $9 billion this year. What I would say to be really clear is we’ve never held the $20 billion as a key target of ours. It was put into the market to demonstrate one main lever that we could utilize to drive our deleveraging and increase our financial resilience. I’m far more focused on getting our balance sheet to where it needs to be than the number of divestments we make. Every divestment choice, as you’ve heard us say today, has to be completely value driven. We’re not selling assets at any price to hit a divestment target. <\/p>\n
I think that makes no sense to our shareholders. That is the way to hold it. We will update on proceeds as we go, what we are totally focused on is getting that balance sheet in shape as opposed to hitting a number on divestments. By the end of this year, we should be at about 16, 15, 16. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:45:30 <\/p>\n
Thank you, Kate. I’m actually going to correct myself. I am going to take a final question from Nitin Kumar at Mizuho. Nitin, I know you’ve just initiated coverage on BP. Thank you. We will take that as the final question. <\/p>\n
Great. Thank you. I’m still new to the story, Meg, I just wanted to ask you, thanks for laying out the strategic priorities. You’ve talked a lot about asset divestments and pruning the portfolio, as you have come to know the company from the inside, are there areas that we should expect to see more investment, or are there other businesses where you can play offense given the capabilities of the company? <\/p>\n
Outstanding question, Nitin. I’ll take you back to the theme of the five priorities, which is about getting fit to grow. We do have growth opportunities. We do have places we can invest capital in a profitable manner that delivers strong, resilient shareholder returns. The U.S. is probably the top country on the list, both with the offshore and the Paleogene and onshore and BPX. I’d be remiss if I didn’t also acknowledge that the downstream in the U.S., the downstream and trading business combined, is also quite a profitable business. There are opportunities. We’ve got the Middle East. The Kirkuk development, for example, is another asset that has growth potential. Then Bumerangue in Brazil. There’s a number of quite significant assets, particularly in the upstream, where we have that growth potential. <\/p>\n
The focus for us is make sure that we’re getting the company in sufficient shape. Again, it’s that get fit so that we can deliver that growth over the coming years. <\/p>\n
Craig Marshall <\/p>\n
SVP and Head of Investor Relations <\/p>\n
0:47:25 <\/p>\n
Thanks, Meg, and thank you, Nitin. I look forward to talking to you further in the coming months. I think that’s us at time for today’s call. Thanks so much to everybody for dialing in. Maybe Meg, if I can hand back to you for any final comments before we close. <\/p>\n
Excellent. Well, thank you, Craig, and thanks everyone for your questions and for your interest in BP. I look forward to seeing a number of our investors over the coming days and meeting more of you over the second half of the year. We do have a very important second half ahead of us at BP. One that I want to assure you the whole team is focused on delivering. We look forward to updating you as we go. Thank you <\/p>\n","protected":false},"excerpt":{"rendered":"Craig Marshall SVP and Head of Investor Relations 0:00:00 Welcome everyone to BP’s second quarter 2026 financial results…\n","protected":false},"author":2,"featured_media":41713,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21198],"tags":[12347,67,6704,633,1498,254,11,12348,4356,12353,12349,12350,12354,12355,5775,12356,3051,1460,12357,12351,12352,12358,12359,73,12360],"class_list":["post-102129","post","type-post","status-publish","format-standard","has-post-thumbnail","category-bp","tag-401k","tag-bp","tag-bp-plc","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-investing","tag-investment-tools","tag-investor","tag-market-news","tag-mortgage","tag-mutual-funds","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-track-portfolio"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/117083363436555751","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/102129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=102129"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/102129\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/41713"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=102129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=102129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=102129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}