BP p.l.c. (BP) Earnings Call Transcript & Summary

Well, good afternoon and good morning, everyone. I'm delighted to welcome our guests in the room and those on the webcast. Further to our announcement earlier today, we're hosting our Capital Markets update in London. We're scheduled to do it in New York. So thank you to everyone for changing your plans and in joining us here at our headquarters and online. As usual, I'll start with our cautionary statement. In this presentation, we will make forward-looking statements that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to factors we note on this slide and in our U.K. and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents are available on our website. Before I hand over to Murray, let me provide an overview of the agenda for the next few hours. We'll kick off with Murray and Kate, who will take you through our group strategy, including our financial frame, following which there'll be a short break. Gordon, William, Emma and Carol are all here today, and they'll then take you through the deep dives into our businesses after the break. Following that, we'll have the opportunity to take questions and then we'll have closing remarks from Murray. So on that note, over to you, Murray.

Thanks, Craig, and thank you, everyone, for joining us online and here in the room. It's great to be here on an exciting day for BP. Now I'm going to start at the end. Having finished today's presentation, these are the key takeaways you hear from us. First, today is more than an update. The strategy is being fundamentally reset. Second, we're reallocating capital to drive growth from our highest returning businesses. Third, we acknowledge performance has not been where we want it to be, and we are focused on relentlessly driving improvement. This is all in service of growing long-term shareholder value for you, our investors, which is at the core of the strategy we are presenting today. It's underpinned by a plan that delivers compelling free cash flow and strong returns growth, supporting resilient distributions and a stronger balance sheet. And it builds on our track record of lowering emissions. Taken together, we believe we are laying out a compelling investor proposition. Now I want to start reflecting briefly on our past. For more than 100 years, BP has been focused on discovering, developing and producing oil and gas in the nations where we operate. Over time, we expanded this to build out routes to market, refineries, tankers, service stations, LNG plants to enhance margin. In the early 1990s, we started trading paper contracts on the products we produced, the birth of trading. And in the early 2000s, we expanded our product mix, providing power, bioenergy and other products that our customers were demanding. By 2020, we'd established a high-quality oil and gas business, a high-graded integrated downstream business and a world-class trading business. The key to success across all of these was to be in the best basins with competitive costs and access to advantaged supply, infrastructure and customer demand centers, allowing us to trade up and down the value chain as value shifts over time. This is what we mean by integration. In 2020, we made some bold strategic changes, accelerating into the energy transition while progressively reducing our hydrocarbon business. We then saw COVID, the war in Ukraine, a recession and the shift in attitudes of markets and governments have a fundamental impact on the energy system. Pressure on budgets meant that lower cost energy went out in most nations and the pace of transition and decarbonization, while important, was not as fast as envisioned. And energy demand continues to rise. Our optimism for a fast transition was misplaced, and we went too far too fast. From this, in my 25 years with BP, I carry forward 3 core learnings. First, make sure you're very strong on process safety. This is crucial to securing a successful future for BP. We have demonstrated strong progress is achievable, and safety will always come first at BP. Second, make sure you're very efficient with your capital investment, not chasing too many projects and make sure the returns are attractive and robust. We have clear lessons from the 2010s on capital projects and the past 5 years on transition businesses, trying to do too many things or not getting the risk-reward balance right. And third, preserve your core strengths, invest in your best assets and continue to grow them as you diversify into new business lines and remain flexible, moving at pace with society, a lesson from the past 5 years. These lessons all form the foundation for our shift in strategy that we announced today. So why do we have conviction that we can do this? We believe we have a world-class portfolio, a top-tier oil and gas business in attractive basins, leading integrated positions and brands across the value chain, all underpinned by distinctive advantages and trading technology and partnerships. Our new strategy plays to these distinctive strengths and competitive advantages. We are one of only a few companies globally at scale that can provide governments and our customers with an integrated energy offering. This includes hydrocarbons, renewables, bioenergy and lower carbon product offerings, provided through advantaged routes to market. We believe over time an integrated energy company strategy will win out over pure play oil and gas or a pure-play low-carbon strategy. This is the BP of today, and we're proud of it. What also gives us conviction is that energy demand is growing over the next decade and beyond, creating a significant opportunity for BP. First of all, energy is a growth market. The world is in an energy addition phase, consuming increasing amounts of both fossil fuels and low carbon energy. Second, oil and gas will be needed for decades to come. Global demand for oil and gas, gas to 2035 continues to be robust, including strong growth in natural gas demand from emerging Asian economies. Demand for North American natural gas is set to expand by at least 15% in the same period, and LNG demand grows by around 50% to 2035. Third, while the pace and shape of the energy transition is uncertain, we continue to view it as a significant opportunity to grow value. Global carbon emissions need to be reduced and as well as looking for more energy, countries, companies and customers are looking for lower carbon products and services to support their own decarbonization objectives. Demand for bioenergy grows around 35% to 2035. Electricity demand increases by around 1/3 to 2035. Wind and solar both continue to grow quickly, and markets for carbon capture and low carbon hydrogen are beginning to develop. It's clear that BP operates in a growing and dynamic industry, and we're well positioned to compete. Since I took over the CEO role at the start of 2024, we have taken deliberate action to significantly refocus the portfolio. The scale and pace of action over the past year is greater than anything I have seen over the past 20 years. This includes in low carbon, we announced new partnerships like the JERA Nex bp Offshore Wind JV, announced the U.S. onshore wind auction and acquired full ownership of Lightsource bp. In Upstream, we established new partnerships like our gas JV in Egypt with ADNOC, reached final agreement for new resource access in Iraq, expanded in India and divested mature gas fields in Trinidad. And in Downstream, we announced exits from Netherlands and Turkey retail markets, acquired full ownership of BP BioEnergy and then sold the SAPREF refinery, and we're not done yet. We are planning to further simplify and focus our portfolio with announcement today of a $20 billion divestment program, which we expect to deliver through 2027. Having started the process in the fourth quarter, we are announcing today that we will be carrying out a strategic review of Castrol. Having turned performance at Castrol around and being a less integrated business, we will be looking at options to accelerate Castrol's next phase of value delivery. Alongside this, we're continuing with our aim to bring a strategic partner into Lightsource BP to help further grow and optimize the platform in a capital-light way. Proceeds from both of these potential transactions are included in the $20 billion divestment program, and the proceeds from these transactions will be dedicated to strengthening our balance sheet, contributing to lower net debt to a range of $14 billion to $18 billion by 2027. In summary, the past year at BP has been one of action. We have conviction in the quality of our portfolio in the markets in which we operate, and we have created a strong foundation supporting today's announcement. Today, we are fundamentally resetting our strategy, including reallocating capital across the business, driving further cost interventions, announcing further significant high grading of our portfolio, leading to compelling growth in free cash flow and returns with a significant strengthening of the balance sheet and continued resilient distribution to shareholders. Core to this reset, we are going to grow the upstream, our oil and gas business, increasing investment to grow production while also growing cash flow in addition to the disciplined expansion of biogas, while maintaining strong and safe operations throughout. And we are focusing the downstream, our customers and products business, reshaping the portfolio to focus on markets and businesses where we have advantaged and integrated positions. We have clear actions to drive improved performance, including addressing cost and customers and improving operations and refining. And we continue to believe the energy transition presents significant opportunity. We will invest with discipline to deliver the returns our shareholders expect through selective investment in biogas, biofuels and EV charging where we see strong demand growth, adopting innovative capital-light partnerships and renewables and focusing investment on a few hydrogen and carbon capture projects to support us in decarbonizing our own operations and to position us for growth through the next decade, all while continuing to drive value through our distinctive strengths in trading, technology and partnerships. While BP has a new direction over the long term, our focus today is on delivery over the next 3 years through 2027, laying out near-term credible intangible targets that will support the growth at BP and on which we will be measured. These will set the foundation for continued growth beyond 2027. And as you'll see from our business deep dives, we expect to see growth in cash flow well beyond 2027. We will update you on the longer term as we execute on our plan over the coming years. Underpinning our strategy is a clear financial objective, growing cash flow and returns to maximize long-term shareholder value. We are targeting to grow adjusted free cash flow at a compound annual growth rate of over 20% to 2027 from around $8 billion price adjusted to 2024 and to grow return on average capital employed to over 16% by 2027 from around 12% price adjusted in 2024. We execute -- to execute this plan, we are reallocating capital to the highest return opportunities where we will invest with rigorous discipline with a reset $13 billion to $15 billion capital frame. That's $1 billion to $3 billion lower than 2024. We will invest around $10 billion in oil and gas, 20% more versus previous guidance, enabling us to build more higher-returning major projects and increase exploration. Our downstream is now well positioned, enabling us to focus spend progressively to around $3 billion, which is around $1 billion lower than 2024. And in our transition businesses, we plan to pursue fewer and higher-returning opportunities and access growth more efficiently. We now expect to invest between $1.5 billion to $2 billion per year through 2027, over $5 billion lower per year over the next 3 years versus our previous guidance, and we have no plans for further acquisitions. The upstream is and will continue to be BP's primary cash-generating business. To grow the upstream, we're focused on maintaining safe and efficient operations. This underpins everything we do. Increasing oil and gas investment to $10 billion per year for 2025 to 2027, with expected returns of greater than 15% and strengthening the portfolio through discovered resource access in our core regions, including the Middle East, Azerbaijan and Trinidad, while we reload the exploration hopper. The outcome is an upstream that is growing to 2.3 million to 2.5 million barrels a day in 2030 with around 1 million per day -- 1 million barrels of oil equivalent per day expected to be delivered from the U.S. and with the capacity to increase production out to 2035. We expect to increase operating cash flow by around $2 billion in 2027 compared to 2024. And going forward, our Archaea business will now be reported within gas and low carbon energy. We will continue the disciplined build out of Archaea, business with competitive returns where we hold a market-leading position and expect to be cash flow positive from 2026. In Downstream, we are focusing our portfolio around our core integrated positions and taking action to improve performance. By 2027, we expect to deliver around $3.5 billion to $4 billion of operating cash flow growth relative to 2024, split broadly 50-50 between customers and products businesses. And we expect to progressively focus CapEx to around $3 billion. Across this period, we expect to continue to deliver returns greater than 15%. To position us for growth, we are reallocating capital and driving greater focus in our portfolio, including through the strategic review of Castrol, high-grading our mobility network, selling Gelsenkirchen, while selectively investing in EV charging and biofuels growth markets. We also recognized performance has not been consistent enough. Refining has experienced operational challenges and our cost performance in our customers' business needs to be more competitive. Today, we are setting clear actions to improve this performance. In short, this includes safely delivering around $2 billion of structural cost reductions across the portfolio, focused customers growth from our most advantaged and integrated businesses, consistently improving refining availability to 96% from 94% in 2024 and realizing value and growth from our prior acquisitions, Travel Centers of America or TA and BP BioEnergy. This growth opportunity is significant, and we are confident in delivering. Turning to transition. We will invest with an intense focus on delivering competitive returns. Following a high level of investment over the past few years, our focus now is ensuring these investments deliver the returns we demand. CapEx into transition businesses will be reduced to $1.5 billion to $2 billion per year, with less than half of this now in low carbon energy. The reduction in capital for biogas, biofuels and EV infrastructure, and focusing on fewer key growth markets. Returns must compete with the rest of the portfolio. In our low carbon energy business, which includes renewables and hydrogen and carbon capture, we are now focusing on 5 to 7 projects this decade that either decarbonize our own operations or establish CCS and hydrogen hubs. To progress the returns must be mid-teens and underpinned by government support. We expect to grow our top-tier platforms in offshore wind and solar in a capital-light way for BP, and we expect to deliver further value upside through trading around these electrons and longer term to build optionality for future growth and scale, paving the way for more material value realization as projects come online and ramp up. Finally, delivering our strategy sustainably remains fundamental, and we recognize its importance to our shareholders. Here, we were building on the strong progress that we have made over the past several years. We are now focusing our sustainability aims on 5 areas that are most relevant to the long-term success of our businesses and to our ambition to be net 0 by 2050 or sooner. Net zero operations, net zero sales, people, biodiversity and water. Our net zero operations aim is to be net zero across Scope 1 and 2 emissions within our operational control by 2050 or sooner. This includes maintaining near zero methane intensity across our operated producing assets. Since 2019, we reduced operational emissions by around 38%, already beyond our 20% target in 2025. Informed by our current outlook of a reduction of around 45%, we have adjusted our 2030 aim to a range of 45% to 50%. For net zero sales, our average life cycle intensity aim for energy products that we sell, we have made progress, including increasing retail power and bioproduct sales. We have updated our methodology guided by current sectoral guidance on Scope 3 emissions. We are on track for our 5% interim reduction target in 2025 compared with 2019, and informed by our reset strategy, our 2030 aim is now an 8% to 10% reduction. These aims are contingent on supportive policy and market developments. In summary, we are fundamentally resetting our strategy. We are reallocating capital to drive growth from our highest-returning businesses, and we are focused on driving improved performance. All in service of growing long-term shareholder value. With that, let me now hand over to Kate.

That's great. Thank you, Murray. Good afternoon, and good morning, everyone. It's great to see you all here. Thank you for joining us. I'm going to turn now to our financial plans where I'll outline the rationale and implications of our revised approach to capital allocation. In summary, we're reducing and reallocating our CapEx to focus on the highest return investments in our portfolio and announcing a significant step-up in our cost reduction plans. Together, we expect these actions to drive higher capital and cost efficiency and support growing cash flow and returns. This enables us to further strengthen the balance sheet and deliver resilient shareholder distributions. We've also taken action to simplify our financial targets, including, for example, retiring the concept of transition growth engines, and I'll talk more on this in a few minutes. Let me start with CapEx. We're setting a capital frame of $13 billion to $15 billion per year to 2027, including inorganic spending. You should see this as a level of spending that maximizes cash generation that maintains and grows the financial scale of our company while balancing other demands on our cash, including maintaining a strong balance sheet and making distributions to shareholders. Within the $13 billion to $15 billion CapEx frame, we're reallocating capital to the highest return opportunities and investing more in upstream oil and gas. In more detail, an average of around $10 billion per year will be allocated to oil and gas, of which around 70% is expected to be allocated to oil and 30% to gas. Archaea will now be reported in our gas and low carbon segment with the CapEx being less than $500 million per year. And in customer products, we are progressively focusing CapEx down from around $4 billion in 2024 to around $3 billion by 2027. This CapEx covers refining investments to build our integrated mobility business and includes less than $500 million per year for EV charging. Low carbon energy. We expect CapEx on average will be less than $800 million per year through 2027, around half of which is allocated to hydrogen and CCS projects which are already through FID. As Murray mentioned, in total, our transition CapEx will be in the range of $1.5 billion to $2 billion per year over 2026 to 2027 with 2025 being higher due to the deferred consideration for the BP Bioenergy acquisition. Going forward, we will be providing annual supplementary disclosures on performance metrics, including earnings and CapEx for BP BioEnergy, Biogas and EV charging. These businesses have established business models that are of sufficient scale and where we are investing with discipline to grow. To be clear, convenience is no longer included in our definition of transition businesses. We're also focused on growing returns within a set of balanced investment criteria. In Upstream, including biogas, we screened for investments that have returns greater than 15% at the project level, assuming our central price assumptions and the next wave of major upstream projects is expected to deliver returns of around 20%. To ensure additional capital discipline, we also test project economics at $60 Brent for convenience and EV charging. And in low carbon energy, where we're allocating less than 5% of CapEx, we see mid-teens returns, including leverage and farm down of assets. Our disciplined investment decisions, coupled with consistently strong execution to drive attractive returns on capital employed. And in 2027, we're targeting a group-wide ROACE of at least 16%. Turning to costs. I hope the explanation and disclosures we provided at the fourth quarter results has helped investors better understand our cost reporting. We also demonstrated the progress we're making having delivered $750 million of structural cost reductions in 2024, safely delivering cost reductions without compromising growth. This is the area of relentless focus for us as a leadership team. Structural cost reductions are savings as a result of operational efficiencies, divestments, workforce reductions and include the outcome of the deployment of digital and technology solutions. We're now targeting $4 billion to $5 billion of structural cost reductions by the end of 2027 compared to a 2023 baseline. We continue to build on the actions we laid out in our third and fourth quarter results last year. Firstly, in third-party spend, our total resource management program introduces systematic management of the contractor landscape across BP through both elimination and optimization. We're reducing our contractor numbers by more than 3,000 with 2,600 of these having already left BP. We're partnering with our top suppliers, including removing waste from our supply chains through a series of interventions across upstream and downstream and exploring cross-industry sharing of logistics assets. Recently in Trinidad, we agreed a standby vessel sharing agreement with another operator, and we're already working on taking this opportunity to other regions with cost reduction opportunities of over $170 million already identified. Secondly, we're simplifying our organizational structure, reducing interfaces and duplication and scaling up our business and technology centers, enabling activity to be transferred to high-value highly skilled teams in competitive locations such as Pune in India. As we announced in January, we currently expect this to impact around 4,700 BP roles. Thirdly, we are high-grading our portfolio. In addition to the portfolio choices we've made over the last 12 months, we've also announced further intentions to reshape our portfolio, including the announcements around Castrol and Gelsenkirchen, both of which could result in material reduction in costs, which would be in addition to our $4 billion to $5 billion target. And finally, we're deploying our industry-leading digitization and technology. For example, we've developed and deployed an AI wells assistant to the production environment in the Gulf of America, improving data retrieval time by 10x and opening the way for simpler and faster workflows across our drilling portfolio. You'll all hear more on our cost reduction efforts from the team shortly. Taken together with the underlying growth in our businesses and through the actions we're taking to reduce or cost reductions of around $1.5 billion. In biogas, we have clear plans to increase capacity and drive further improvements in CapEx and cost efficiency. In the Downstream, we expect to increase operating cash by $3.5 billion to $4 billion, with delivery split broadly evenly between customers and products. In customers, our recent acquisition of BP Bioenergy is expected to contribute around 1/3 of the growth to 2027. The balance is underpinned by a structural cost reduction program of around $1.5 billion from stronger performance at TravelCenters of America and growth across our other businesses. In Products, around 2/3 of the cash flow growth is underpinned by improved refining availability, structural cost reductions of around $0.5 billion and commercial optimization. The balance comes from turnaround phasing, value chain optimization and a modest increase in our refining margin assumption. Turning next to the balance sheet. I've spoken before on why a strong, resilient balance sheet is important to BP, enabling us to manage the business through the commodity cycle. We think about our capital structure holistically in terms of all relevant liabilities and the through-cycle cash generation capacity of our assets to support them. We have come a long way on net debt. It built progressively through the second half of the last decade and peaked at $51 billion in the first quarter of 2020. During the COVID pandemic, we took the decision to issue hybrid bonds, which generated significant liquidity at a time of extreme uncertainty and diversified our sources of capital. We hold hybrids as a permanent feature of our capital structure. But to be clear, we do not plan on increasing the portfolio further. Of course, we've proactively managed maturities and the increase in hybrids at the end of 2024 was largely due to us taking advantage of strong market conditions, where we issued $2.5 billion of perpetual hybrid bonds securing competitive rates ahead of the refinancing needs this year and in 2026. we'll consider options to reduce the hybrid stack as we approach each maturity window, but will be driven by value and working inside the S&P limitations of 10% reduction in any 1 year up to a cumulative reduction of 25% of the total hybrid stack. And turning to leases. In broad terms, we've continued to use leases in a consistent way, both before and after the 2019 accounting change. These leases are primarily on operating assets such as vessels used by trading and drilling rigs in the upstream. There are product storage and retail service stations within the downstream, including from the acquisition of TravelCenters of America and now farmland in BP Bioenergy. These are all assets that we choose not to own directly. We continuously manage leases to suit business needs, and we'll always look to optimize finance costs. Looking at our capital structure as a whole, our balance sheet is strong. However, we see incremental value in adding further resilience and flexibility through the cycle. So today, we're announcing a net debt target of $14 billion to $18 billion, which we'll achieve through to the end of 2027. We're constantly reviewing and seeking to high grade our deep portfolio of assets. And today, we've announced a divestment program of $20 billion through to the end of 2027. Any potential proceeds from the strategic review of Castrol and Lightsource bp transactions will be dedicated to strengthening the balance sheet. The exact timing of achieving our net debt target range will therefore be impacted by the timing of any potential transactions. To be clear, we expect net debt to reduce over time, and we're going to move at pace to delever the balance sheet. For the first half of 2025, we expect net debt to increase given the expected timing of divestment proceeds and movements in working capital. We then expect net debt to reduce as we deliver performance improvement, grow operating cash flow and execute on our divestment program. Our financial frame brings all of this together and details the policies and guidance for how we allocate capital between the balance sheet, shareholder distribution and capital investment. We fully understand the importance of striking the right balance between these 3 calls on our cash. I've already explained why and how we are reducing capital spending and introducing a net debt target range. So let me now turn to shareholder distributions. Our policy is to maintain a resilient dividend, and we've simplified our guidance. You should expect an increase in the dividend per share of at least 4% per annum subject to Board approval. We also remain committed to sharing excess cash through buybacks over time. It's a policy that enables us to share the upside in cash generation when the price environment is stronger, whilst ensuring the balance sheet remains resilient in a lower price environment. To help you think about total distributions, our guidance is for total dividends and share buybacks to be in the range of 30% to 40% of operating cash flow over time. Given the reset of our strategy and financial frame today and subject to Board approval, we expect the 1Q 2025 buyback to be between $750 million and $1 billion. Going forward, you can expect us to announce buybacks at the time of the quarterly results consistent with our guidance of distributions. So let me recap. The announcements we're making today to lower the CapEx frame to reallocate spending towards higher returning opportunities and deliver the $4 billion to $5 billion structural cost reductions are expected to drive higher cash generation. We have a target to deliver greater than 20% compound annual growth in free cash flow to 2027 and improved returns on capital employed to greater than 16% by 2027. Strong cash flow generation and divestment proceeds support our target to reduce net debt to $14 billion to $18 billion by the end of 2027. These 4 primary financial targets are financial framework. And taken together with the 5 sustainability aims that Murray talked about earlier, we believe support our reset. These primary targets will provide clear, transparent measures through which we will drive performance and on which you'll be able to judge our progress. Subject to Board approval, they will form part of the basis for internal performance management and remuneration measures through to 2027. Further information will be provided in our 2024 annual report and accounts. Alongside the simplification of targets, we are in parallel retiring all other targets and aims, including those related to our previous strategic themes and transition growth engines. And with that, I'll hand you back to Murray.

Thanks, Kate. I'm truly excited about the strategy we've laid out. It's really cool. Reset BP, a new direction for BP and a BP comprising a unique set of assets, capabilities and experience and importantly, backed by a world-class team. This is a fundamental reset for BP. It's comprehensive, touching all parts of our business and strategy. It includes significant interventions around CapEx, costs in our portfolio, and it drives new and clear outcomes, including growing cash flow and returns, a stronger balance sheet and a clear distribution framework. And we will be communicating our progress through a simple reporting framework and with greater transparency, including a significantly reduced number of targets. So let me summarize our proposition to you, our shareholders. Over the next 12 months, we expect to see the cash flow being delivered from the performance improvements we are addressing, in particular, in our downstream. Our disciplined investment into upstream projects with attractive returns is expected to similarly support our target to grow free cash flow and returns. And in doing so, this is expected to enable us to strengthen the balance sheet and distribute 30% to 40% of operating cash flow over time to our shareholders through a resilient and growing dividend through cycle with share buybacks. Finally, we continue to build on our strong track record in lowering Scope 1 and 2 emissions through the decade. We believe this makes BP a compelling investor proposition, sustainably delivering long-term shareholder value through the energy transition. Thank you for listening. And before we break, let me show you a short video that I hope brings all this to life. Following the break, we will then hand over to Gordon, William, Emma and Carol, who will run you through the exciting plans we have to grow value across our businesses. And now on to the video. [Presentation]

You heard from Murray about our conviction that demand for all forms of energy will continue to grow. And the oil and gas will be needed for decades to come. William Linn and I will now spend the next 30 minutes talking about how we are investing to grow the value of our oil and gas business. First and foremost, safety is always our top priority, maintaining safe and efficient operations underpins everything we do, with 2024 being our best ever year for process safety Tier 1 performance. We expect plant reliability to be around 96%, enabled by our leading technology and capability, which you'll hear more about shortly. We will maintain our focus on safely reducing costs, taking out around $1.5 billion of structural costs by the end of 2027. This includes further standardization and digitization of processes. We will expand the use of the agile flow to work model as we centralize even more work in our capability hubs. This helps us to establish more with a smaller footprint. We have learned a lot over the last 4 years and with hindsight, see that we haven't invested enough in our oil and gas businesses over that time period. To address this, we've announced today that we expect to increase investment from our prior guidance of around $8.5 billion per year for '25 to '27 to an average of around $10 billion per year. This additional investment allows us to strengthen the portfolio. We are building our U.S. portfolio to around 1 million barrels of oil equivalent per day by 2030 as we increased production in our U.S. onshore business and develop our enormous resource base in the Gulf of America [indiscernible]. We have the next wave of major projects starting up with an expected IRR average of greater than 20%. We are accessing discovered resource, with recent examples such as Karabagh in Azerbaijan and Manakin and Cocuina in Trinidad and Kirkuk in Iraq. And we're reloading and improving the exploration popper as we increased spend on exploration, seismic and drilling. We expect that these additions -- these actions will result in an oil and gas business that is growing to 2.3 million to 2.5 million barrels a day in 2030, with the capacity to increase further out to 2035. This excludes future potential divestments. On a prior guidance, on a like-for-like basis, that was 2.2 million barrels a day in 2030. A consequence of lower investment in oil and gas in recent years is that we have not added as many reserves as we produced with an average reserve replacement ratio of around 50% over the past 2 years. Through our additional investment, we expect to get our reserve replacement ratio back to around 100% by the end of 2027 and maintain it on average at that level through the rest of the decade. That means by the end of 2027, we expect to book around the same amount of reserves as we produce even as production increases. Our focus is on further improving performance through consistent execution and delivery. With higher production and better unit cash margins, we expect our oil and gas cash flows to grow by around $2 billion between 2024 and 2027. Let me explain why we are confident that our plan to grow the value of our oil and gas business will be successful. First, we have a balanced portfolio across hemispheres, product mix, fiscal and commercial terms. And it's a portfolio with scale and flexibility. We are the #1 or #2 integrated energy company in every region that we operate. The only exception is the U.S. onshore. Here, we like the flexibility that over 7 billion barrels of oil and gas resources across 3 basins gives us. This allows for a rapid response when the price environment changes. Second, we have the expertise of giant oil and gas field finding, development and operations. We are known, respected and trusted to develop and manage large, complex oil and gas fields with our world-class petrotechnical operations and project teams. Historically, BP has been involved with developing and producing many of the world's largest oil and gas fields. Today is no different with examples such as Azeri–-Chirag–-Gunashli and Shah Deniz in Azerbaijan; Thunder Horse in the Gulf of America, Baba, Rumaila and Burgan in the Middle East; Tangguh in Indonesia and Greater Tortue or GTA, as we call it, in offshore, Mauritania and Senegal. Third, we have strong incumbent positions and deep relationships with governments, partners and the supply chain across the regions where we operate. We've earned their trust and become a partner of choice. For example, in December, BP and XRG established a new regional gas platform called Arcius Energy. Also, we've been selected by ONGC as the technical services provider for Mumbai High, India's largest oil and gas field, in addition to signing a wide-ranging MOU primarily focused on oil and gas exploration and production. And finally, we have highly integrated oil and gas value chain, which includes some of the world's biggest oil and gas pipelines, such as the pipeline system that delivers Shah Deniz gas from Azabajan to Europe and countries along the southern corridor. And our supply, trading and shipping team optimize the sale of our oil, gas and LNG through its advantaged network of assets and customers. You'll hear more about that shortly from Carol. There may be some perception by some that over the past few years, we've lost our technical and execution capability. This is simply not the case. We have as many engineers and geoscientists working for BP today as we did in 2019. And thanks to our agile flow to work model and digital efficiencies, the same number of people can now execute a greater amount of work. For example, our Wells organization now operates with around 15% people per rig line than they needed 4 years ago. This slide shows our technology journey since 2016. BP is a leader in seismic imaging. For example, in the Gulf of America, we've discovered 20 billion barrels of resources, thanks to our leading ability to image the reservoir beneath salt. And we can now model thousands of subsurface scenarios compared to a handful just a few years ago. This reduces risk by providing us with a much better idea of the range of outcomes. In drilling, automation and technologies such as real-time geosteering are helping us to minimize nonproductive time and improve drilling directional accuracy, which helps to increase resource recovery. And in AI and advanced analytics between 2022 and 2024, we increased BP-operated production by around 4% and protected around 10% from going off-line through surveillance and real-time monitoring and analysis. For instance, we have now acoustic sensing installed in over 400 offshore wells to continuously monitor for sand incursion into the well. This allows us to proactively intervene and avoid costly outages, which we believe to be unique across the industry. Looking ahead, we are busy developing the next wave of technologies, advances in seismic imaging and processing is enabling us to create an innovative digital twin of the subsurface. This will unlock more value as we further reduce subsurface uncertainties ahead of drilling. On drilling and rig automation, we will focus on expanding automation in our rig fleet, leveraging data analytics for drilling optimization and early detection of unplanned events. We also further -- we are also further developing our ability to leverage AI and high-performance computing when we plan new wells. For example, in Azerbaijan, we're making exciting progress towards reducing the time required to design a well from months down to weeks. And through our unique partnership with Palantir, we are further enhancing our predictive analytics capability, incorporating unstructured data to forecast equipment failures, thereby improving facility reliability and promoting early intervention. This slide shows our track record as a strong operator. In safety, our 2024 Tier 1 process safety events were the lowest ever recorded in BP. We have reduced our Scope 1 and 2 operated emissions by 38% since 2019, which includes reductions from site monitoring, energy efficiency and emissions reduction projects, including electrification. We've also reduced our methane intensity by 50% to 0.07%, with methane measurement now in place at all of our major-operated upstream oil and gas assets. We believe that we've set the gold standard for methane measurement. We're focusing our actions based on the data that we collect to accurately report our performance and maintain near zero methane intensity. In plant reliability, 2022 to 2024 has been our highest 3-year period of plant reliability on record at over 95%. Our managed base decline remains within the 3% to 5% range, although we do anticipate that this will increase slightly over the next couple of years, driven by higher decline in some of our gas regions. And over the past 3 years, our unit production costs have remained in the top or lowest cost quartile at over $6 per barrel, always with safety as our top priority. This has been achieved by the adoption of technology and efficiencies we've seen through the centralization of technical capability into our business technical centers. It's not only in operations that we have a strong track record. For our major projects, as shown on the chart on the left, based upon data from IPA, an independent benchmarking company, we are competitive on cost and are ahead of the industry on schedule. In early 2024, Azeri Central East in the Caspian Sea, a new platform was delivered safely, on budget and with no operability issues. It is one of the world's most technologically advanced platforms with remote operations from onshore. GTA was a base opening LNG project with ultra deep -- in ultra-deepwater and was not without its challenges. But I'm delighted to say that it's now up and running with the first cargo of LNG expected to sail away very shortly. Moving to the right-hand side of the slide, in wells, improved designs have allowed us to safely deliver more complex wells at significantly lower cost and with improving predictability. Over 70% of the wells we drill are top or second quartile. And according to Rushmore, another independent benchmarking company, we continue to keep nonproductive time on our rig-related lower completions at around 30% below industry peers. At Thunder Horse in the Gulf of America, innovative approaches such as managed pressure drilling have delivered wells more efficiently, improving well construction efficiency by more than 30%. We've also simplified well designs, which improves well control capability and safety. Managed pressure drilling is now being used across the Gulf of America and will be used in Kaskida and other paleogene projects in the future. Looking across our deepwater oil, LNG, conventional and unconventional assets, we believe that our oil and gas portfolio is distinctive and advantage. William and I will now provide some color on a few of these regions. Our U.S. onshore business is called BPX. It has the entrepreneurial spirit of a domestic U.S. E&P with the safety systems and global expertise of BP. BPX is our global unconventional center of expertise which enables capability sharing across the company. It is also deeply integrated with the supply, trading and shipping team, providing equity gas flows and ensuring we maximize value across the value chain. BPX production exceeded 430,000 barrels of oil equivalent per day in 2024 as the team delivered its 2022 to 2025 volume target 1 year early. We expect to see a 7% CAGR growth through the rest of the decade to reach more than 650,000 barrels of oil equivalent per day in 2030. Recent and near-term growth is weighted more towards liquids following the start-up of 3 of our 4 central processing systems in the Permian Basin. When we met in 2018, we told you that we held 6 billion barrels of oil equivalent resources across the 3 basins shown on the slide in BPX. However, with our leading-edge application of technology, we've been able to book an extra 1.5 billion barrels of resource since that time. So despite producing around 800 million barrels since 2018, we now have over 7 billion barrels of oil equivalent resources booked. This includes over 10 with advantaged access to LNG infrastructure. The BPX team's subsurface expertise is leading to material improvements in capital efficiency and cash delivery. One example is what we call [ ARTAN ] a process that optimizes the design and position of fracs, which have generated over $1.5 billion of value so far. Another example is that our distance drilled per day in the Permian Delaware Basin has improved 5x more than other companies between 2022 and 2024. The efficiency gains by the BPX drilling team are delivering top quartile performance in 2 of the 3 basins that we operate in, while maintaining best-in-class safety performance. And in the Eagle Ford, we have the potential for hundreds of refracs. Results to date have yielded an increase in recoveries of 80% to 100% over and above the initial well at a fraction of the cost. With our resources in the sweet spot in each of our basins, a team with a track record of delivery and returns are bridging over 45%, we have high confidence in the future of our U.S. onshore business. And then in the Gulf of America, we have an advantaged position in one of the best -- the world's best deepwater basins. We are one of the biggest producers there and are building capacity to over 400,000 barrels of oil equivalent per day by the end of the decade. Our existing hubs, Thunder Horse, Atlantis, Na Kika, Mad Dog and Argos are operating well with 2024 plant reliability at 95%. We're enhancing well placement by applying technologies such as 4D seismic ocean bottom nodes and advanced processing. This is helping us to maximize resource recovery, which is expected to average around 40% across our existing hubs. And then excitingly, in the Paleogene, we have around 10 billion barrels of oil equivalent of discovered resource in place, the largest undeveloped resource in the basin. Our industry-leading seismic indicates other prospects that could increase this position by up to 50%. Since we sanctioned Kaskida in July last year, we made good progress with the project remaining on track for first oil in 2029. And we're leveraging standardized industry solutions and have secured contracts for a flooring production facility, subsea production systems, subsea pump 20,000-psi drillship and export infrastructure. Kaskida has some of the thickest paleogene reservoirs encountered to date in the basin. And in 2026, we plan to drill an appraisal well that could demonstrate a material field extension and underpin future phases of the development. And further, we expect to take FID on the Tiber Guadalupe development later this year, and we will use about 85% of the Kaskida design. This design one, build many approach helps us to safely drive efficiencies and reduce cycle time. We are also currently showing a seismic survey over the Guadalupe Gibson and Gila discoveries, which may identify opportunities for further phases of activity. I'll now hand over to William to take you through the rest of the presentation. William?

Hello, everybody. Thank you, Gordon. I'm William Lin, EVP of Gas and Low Carbon Energy. We've been in the Middle East for 100 years. And over that time, we have built a reputation and a track record through partnering with governments and operating or participating in technical services agreements for most of -- some of the biggest gas fields and oil fields across the region. We are known for our safety culture, technical capability, and we are trusted to deliver. Governments across this region are looking for companies to help develop their huge discovered oil and gas resources in a sustainable way. This makes BP a genuine partner of choice. We have recently made several announcements in the Middle East, as you can see on this slide. This underpins our growth in the region and includes Oman and the UAE for oil, gas and LNG and there's potential for even more opportunities. In Iraq, we're very pleased that we have now reached agreement on all contractual terms, subject to final government ratification, to support them in redeveloping an enormous resource base across 5 big fields in Kirkuk. The area sits in one of the most prolific hydrocarbon provinces in the world. There are over 3 billion barrels of discovered and developable resources related to the initial phase of the redevelopment. But what's even more exciting is that across our lease and the surrounding area, we believe there could be 20 billion barrels of potential resource opportunity to play for. Now we feel that security and geopolitical risks have improved. And although some challenges remain, we have the experience, knowledge and relationships to work our way through them. So why do we like operating in the Middle East. It's a region with some of the largest resources in the world. Our presence in the region really plays to our strengths. With the use of existing infrastructure and facilities and access to a mature supply chain, development and operating costs can be very, very competitive. In addition, the cycle time to first oil or first gas can be as little as 2 to 3 years, driving more competitive project returns and earlier cash flows. As we look out to 2027, we expect to start up 10 major projects with a combined peak net production of around 250,000 barrels of oil equivalent per day. Additionally, our joint ventures in Norway, Angola and Argentina will be starting up a further 7 projects. Beyond that, we are planning to start up a further 8 to 10 major projects between 2028 and 2030 including Kaskida, in the Gulf of America, where we took FID in 2024 and Tiber Guadalupe with FID planned this year. We have taken -- we've also taken FID on Tangguh UCC in Indonesia and are making very good progress towards FID on Shah Deniz compression in Azerbaijan. In total, this is around 20 major projects that we expect to start up between now and the end of the decade, more if we include our joint ventures in Norway, Angola and Argentina. That figure is about 1/3 higher than previous guidance. The average IRR that we expect from this next wave of major projects is over 20%, well above our 15% hurdle rate. The previous slide showed our most mature projects. In addition to these, we have an extensive number of further project opportunities as shown on this map, which demonstrates the depth, quality and longevity of our hopper. These options provide us with quality through choice as we will invest with discipline and only progress projects with the highest value. For oil, we have quality options in attractive regions such as the Gulf of America and Azerbaijan to fill and maximize our existing hub infrastructure. And we also have potential new hub development opportunities in Canada as well as Brazil, subject to further appraisal. This is in addition to our plans to grow in the U.S. onshore that Gordon described to you. For gas, we have shorter cycle faster payback opportunities in regions such as India, Egypt and Indonesia, backfilling ullage. And we are progressing gas growth options in Oman and LNG regions such as Trinidad. Although our exploration success over the past few years has not been what we would have liked. Our 10-year track record still stands at a success rate of 1 in 3 wells. We have made over 40 discoveries in the last decade, including recent successes in Trinidad, Egypt and the Gulf of America. As we look ahead, we are planning to step up investment in exploration, including in seismic, to reload and enhance our oil and gas hopper within our existing basins as well as in regions and geographies where we do not currently have upstream activity, enabling global quality through choice. You heard from Gordon how our seismic technology is reducing risk and helping unlock more resources. This gives us greater confidence as we ramp up our exploration program with around 40 wells planned over the next 3 years and 10 to 15 of those to be drilled in 2025. A number of these wells could be tied back to fill existing infrastructure, making cycle time to start up much shorter. You already heard that we expect to increase our capital investment through to 2027 from our prior guidance of an average of $8.5 billion per year to around $10 billion per year. This allows us to invest in high-quality, high-return projects in -- and also in discovered resource access. Most of our capital expenditure between 2025 and 2030 is expected to deliver production this decade. However, around $13 billion is for major projects that we expect to start up after 2030. This provides us with the capacity to continue growth out to 2035. In the chart on the left, you can see that we expect increased production through the decade, reaching between 2.3 million and 2.5 million barrels of oil per day by 2030, excluding divestments. Our prior guidance on a like-for-like basis were 2.2 million barrels per day. This is an outcome of the actions that Gordon and I have just described to you and will primarily be driven by growth in the Middle East and the U.S. onshore. Production will briefly touch 2.2 million barrels of oil equivalent per day in 2026, again, excluding divestments as gas declines in the near term before production starts to grow again in 2027 and beyond. Turning to reserves. We have 16 billion barrels of commercial resources that we intend to produce. These are proved and probable reserves plus other resources in which we have already drilled a well or are close -- are located close to existing developments. Put more simply, that's 18 years of production that we know is commercial, and we plan to develop. In total, we have 31 billion barrels of discovered resources that sit on our leases. That 16 billion barrels of commercial resources plus 15 billion barrels that we are working to unlock. Continued advances in technology, combined with efficiencies such as deployment of standardized industry solutions will help us commercialize and ultimately produce some of these barrels. Based on our investment plans, major project start-ups and access to discovered resources, we are very confident that by the end of 2027, our reserves replacement ratio will be around 100%. We expect on average to maintain that level through the rest of the decade. That means from 2027 to 2030, even though production is growing, we expect to book the same amount of reserves as we produce. Finally, we expect our liquids production to increase at 2% CAGR. This is on top of the 4% CAGR growth that has already been delivered over the last 2 years. In addition to growing our production, we also are improving our unit cash margins between 2024 and 2027. This is driven by a change in production mix as lower margin barrels are replaced by higher-margin major projects coming online in addition to reducing structural costs. The outcome of this is growing oil and gas cash flows, which we expect to increase by around $2 billion between 2024 and 2027 with line of sight to further growth through the end of the decade. So in summary, we believe we already have a distinctive portfolio with advantaged incumbent positions in world-class assets. A portfolio that is balanced across hemispheres, product mix, fiscal and commercial terms, a portfolio with flexibility allowing for rapid response once to a changing price environment. A portfolio where we are a proven strong operator with high plant reliability and low production costs, and a portfolio where we can leverage our incumbency with our assets, knowledge and relationships to competitively access and develop new oil and gas opportunities. We'll, of course, remain performance-focused to ensure continued quality execution and consistent delivery with safety always our top priority. At the same time, we are increasing our disciplined capital investment in oil and gas, which enables us to strengthen the portfolio. We expect to start up 10 major projects by the end of 2027, several of which are short cycle projects tying back to existing infrastructure with 7 more in our joint ventures. We expect to start up a further 8 to 10 major projects between 2028 and 2030. We also expect to access additional high-quality, lower-cost discovered resources and increased investment in exploration as we reload our hopper. All of this will result in us growing oil and gas cash flow with improved margins and returns. I'll hand over to Emma now who will take you through customers and products presentation.

Thank you, William, and good afternoon. Today, I'm going to explain how we're focusing our downstream business. customer and products to drive cash flow growth and strong returns. Our strategy is to drive value safely and efficiently as we serve our customers' evolving mobility needs. This is underpinned by some core beliefs that the key markets we face are growing. Miles traveled in fuels plus EV, convenience demand and aviation, all by 2% to 4% per annum in the medium term. And that through the energy transition, integrated players will create more value. Reflecting on our progress since 2020, while we have generated average returns above 15%, we have not achieved our full potential. The external environment was different to what we anticipated, and we tried to do too much. As a result, in our customers' businesses, our costs are now too high. Furthermore, reliability at our refineries has been inconsistent. To address this, we're doing 2 things. First, we're taking decisive action to reshape our integrated portfolio. We've already made progress divesting noncore assets and focusing our capital, particularly in EV charging and biofuels. But we now intend to bring even greater focus, high-grading our assets, divesting where appropriate and reallocating capital into our most advantaged businesses to drive cash flow growth and returns. Second, we're executing a clear set of actions to drive near-term performance. In refining, we're in action to improve reliability and safely deliver structural cost reductions aiming to lower our breakeven and create a more resilient business. And in customers, we're executing a structural cost reduction program to ensure that margin growth benefits our cash delivery. We're also focused on driving value from our recent acquisitions. And my presentation today is going to focus on these 2 areas, reshaping our portfolio and improving performance. As a result of these actions that we're taking, we expect to drive higher and more resilient cash flows and continued strong returns, generating $3.5 billion to $4 billion of growth in operating cash flow by 2027. The range reflects our current view of uncertainty in market factors, primarily fuels margins. Growth will be split broadly equally between customers and products, albeit earnings may move along the value chain depending on market conditions. Starting with customers. Our recent acquisition of BP Bioenergy is expected to contribute about 1/3 of the growth to '27 that's a full year, the small green bar. The balance in customers is underpinned by a structural cost reduction program of around $1.5 billion, stronger performance at TA and growth across our other businesses. Moving across the slide to products. 2/3 of the cash flow is underpinned by a sustainable reduction in refining per barrel cash breakeven. And 1/3 of the balance comes from turnaround phasing and further value chain optimization, including from trading. So across C&P, we expect a stronger greater rate of growth in 2025, reflecting the acquisition of BP Bioenergy and recovery at our Whiting refinery. Over the period, we expect to progressively focus our capital investment to $3 billion by 2027, while still seeking returns above 15%. I'm now going to talk about the first of our 2 focus areas, the actions we are taking to reshape the portfolio. Let me start by reflecting on the portfolio we have today. I'm not going to go into this slide in great detail, but I do hope it gives you a sense -- a clear sense that as we reshape, we are building from a strong foundation. We have a portfolio which spans the value chain, advantaged and integrated businesses with leading market positions, iconic brands and strong partnerships, all underpinned by world-class trading. What do I mean by integration? In fuels, manufacturing combined with wholesale and retail enables competitive cost of supply and predictable demand and infrastructure gives huge optionality to our trading and supply teams. We're reshaping this portfolio to build a business that's more focused on our integrated positions, resilient to the energy transition and generates near-term growth and strong returns. So let me explain what we're doing. In refining, we have already made progress announcing the closure or divestment of 3 of our refineries since 2020. And earlier this month, we announced our plans to sell Gelsenkirchen complex. We have made strong progress in improving the size of competitiveness, reliability, investing in steam and power to lower cost and commencing a reconfiguration of the refinery, including a reduction in capacity and associated costs. We believe this position -- this positions the site to better unlock its value and its potential under new ownership. In Biofuels, we're reshaping to drive disciplined growth. We have scaled back near-term plans for new biofuels plans, in line with our view of demand progression and consistent with our disciplined hurdle rates. And we have taken control of BP Bioenergy, a top 3 sugarcane bioethanol producer in Brazil, creating the opportunity for growth and to realize synergies. In integrated mobility, we're driving focus. We are exiting noncore markets with 2 transactions completed since 2020 and the sale of our Netherlands business recently announced, and we are high-grading our network, planning to exit around 10% of our company-owned retail sites by 2027. And in EV charging, we have reduced the amount of capital investment to average below $500 million per annum through 2027. The majority is now allocated to just 4 focus markets, leveraging our retail network to maximize returns. In addition, today, we've announced a strategic review of Castrol. I'm going to come back to this in a moment. But first, let me explain what we're doing in refining and biofuels in a little bit more detail. As I said earlier, we believe integrated value chains create distinctive value. In refining, we aim to maximize this value through a regional asset strategy, moving from left to right. In the U.S., Whiting and Cherry Point are advantaged due to a combination of scale, location and configuration. These assets anchor our participation in the West Coast and Midwest integrated fuels value chain, optimizing from refining, pipelines, logistics, through trading and into our mobility business, including aviation. In Europe, we have 2 flexible coastal refineries, Rotterdam and Castellón. Here, we aim to maximize the integration value trading and also with our mobility businesses. These assets also provide optionality around future biofuels and hydrogen investments. Finally, we have 2 assets in Germany. I've already explained the actions accidents we're taking on Gelsenkirchen. And at Lingen, through site optimization and green hydrogen investment, we plan to enable this site to evolve through the energy transition. Moving to the action that we're taking to reposition our biofuels portfolio. We believe that an integrated biofuels business will be best placed to deliver attractive returns. And our assets and capabilities mean that we are well placed to participate and to add value. However, we will be disciplined about where and when we allocate capital, driven by our 15% return hurdle rate and looking for capital-light solutions where appropriate. Let me explain our approach. First, we already generate earnings from biofuels today, producing around 10,000 barrels per day of biofuels through coprocessing at our refineries. Here, we see further potential for flexible, low capital growth options depending on policy support and market conditions. Second, we recently took control of BP BioEnergy, accessing around 50,000 barrels a day of biofuels production. Ownership creates the opportunity to realize value from integration with trading and improvements in productivity. Third, feedstocks. Here, we believe that our world-class trading organization and ability to build innovative partnerships are sources of competitive advantage. And fourth, we will assess options for investment in stand-alone biofuels plants co-located with our existing refineries with the potential to move 1 project to FID by 2027. However, we will only proceed when project economics are supportive. Turning now to Castrol, where we have today announced a strategic review to explore options to accelerate and enhance value creation. Castrol is one of the top 3 global lubricants businesses in the world. Its leading position is founded on key competitive strengths, technology. Technology-driven advanced formulations, which provide customers with premium products, iconic global brands and strong partnerships with leading OEMs, and an advantaged distribution network with a presence in over 150 countries. In 2024, Castrol grew underlying earnings by 14%, and has demonstrated 6 consecutive quarters of year-on-year underlying earnings growth. Castrol is capital-light with a strong cash conversion and has produced industry-leading returns with a return on capital of around 20% in 2024. In the mobility sector, where Castrol is one of the market leaders, there is potential for continued growth. This is underpinned by a growing car park, particularly in emerging markets where Castrol is well positioned. For instance, Castrol is the #1 lubricants brand in India. And we expect Castrol to grow more strongly than the market underpinned by technology, differentiated premium brands, which account for over 50% of sales volumes and generate premium margin. Castrol also has compelling opportunities to diversify and grow, leveraging its distinctive competitive strengths. In industrial lubricants, business aims to significantly expand participation in this fragmented market. And in thermal management, Castrol has a significant opportunity, deploying its products and technology to supply liquid coolant to the fast-growing data center market. The strategic review announced today will explore all options with the intention of accelerating Castrol's next phase of value creation. I'll now move to the second of our focus areas, performance and the 6 points where we're taking action. Starting with products. In Refining, we're executing a business improvement plan to enhance competitiveness. Point one, we're in action to improve reliability, aiming to consistently achieve availability at 96% or above. Point two, we have a plan to safely deliver structural cost reductions of greater than $500 million by 2027 relative to 2024. And point three, we expect to drive further optimization across the value chain, including trading. Moving to customers. Point four. We have commenced a structural cost reduction program that we expect to deliver around $1.5 billion by 2027 relative to 2024. Point five, we are focusing on our most advantaged assets to drive growth, making selective investments in our customer offer and working to improve margin capture. And point six, we're in action to realize value and drive growth from our recent acquisitions, TA, TravelCenters of America and BP BioEnergy. I'll now cover each of these points. Starting with refining. Gordon runs our operations across oil, gas and refining. And in recent years, team have made good progress strengthening safety at our refineries. Tier 1 and Tier 2 process safety events have been reduced by 50% since 2021. We are now taking decisive action to improve profitability and resilience. Through our interventions on reliability, cost and commercial performance, we expect to achieve a sustainable reduction in our operating cash breakeven of around $3 a barrel. I've already explained that this drives around 2/3 of our cash flow growth from products of this, around half comes from the improved reliability, including the recovery from last year's power outage at Whiting and around half comes from the actions to safely reduce cost and improve commercial performance. I'll now touch briefly on each of these levers. Firstly, consistently achieving availability of above 96%. This will be enabled by further turnaround efficiencies, building on strong delivery in 2024 as our centralized turnaround organization drives standardized work management, scope optimization and sharing of learnings and expertise. A centralized maintenance model, prioritizing activity to enhance efficiency and effectiveness of speed -- of spend. And an updated digital strategy, including deployment of AI for workflow optimization and predictive analytics. We are collaborating with Palantir to speed up the digitalization of our refineries, emulating what we've already achieved in our oil and gas businesses and by further investment into Whiting to improve infrastructure reliability. Second, we aim to safely deliver structural cost reductions greater than $500 million by 2027. In addition to the interventions just described, we are also progressing plans to safely optimize our workforce costs. We are reducing contractor numbers and moving roles to our business and technology centers in areas such as engineering support and planning that can be safely performed remotely. And we also expect the Gelsenkirchen steam and power investment to reach full capacity in 2025, driving around a 30% reduction in energy costs compared to 2023. Finally, we are working to maximize commercial value, including through biofuels co-processing. In addition to the sustainable improvement in our refining breakeven, our products cash flow growth will be further underpinned by turnaround phasing and by further value chain optimization and trading. Moving to customers. We're in action to deliver a structural cost reduction program of around $1.5 billion by 2027. As we grow our gross margin, this program will help us to help lower our cost to margin ratio, improving conversion from top line to earnings and improving our position relative to our peers. We made a great start in 2024, delivering around $250 million of structural cost reduction, and we are now focused on 4 areas. We're streamlining our operating model. By 2027, we expect around 25% of current office-based staff to either exit the organization or to move to business and technology hubs. This creates a platform for standardization and automation. For example, in Europe, we have now combined our retail fuels and convenience and EV charging teams under a single leader to significantly reduce overheads and remove duplication. And in marketing, a significant cost category. We are moving capabilities to a business and technology hub, to standardize and automate processes driving efficiencies. We're investing in digital. This includes driving improvement in frontline operations. Let me give you 2 examples from our retail business. In the U.S., we have invested in a common retail operating system across our network. This has the potential to reduce store operating costs by around 20%. And in Europe, investment in self-service and automation is already delivering a labor efficiency of around 10% with further potential as we continue its rollout. These changes to our operating model and to our digital estate are significant because labor is around half of our cost base. Turning now to our supply chain. We are materially consolidating our supplier base to drive standardization and economies of scale, for example, in the U.S. retail, after a period of rapid growth, we are now achieving double-digit reductions in expenditure in some categories. And in marketing, as I mentioned earlier, we are in action on the operating model, but also digital to have the addressable spend on third-party agencies. In customers, we also have a plan to drive growth through a focus on our most advantaged assets. We're confident in this because we have a track record, delivering margin growth over the last 3 years before our acquisitions. Starting with integrated mobility, fuels, convenience and EV charging. In fuels, in our key markets, the U.S., Europe and ANZ, Australia, New Zealand, company-owned site volumes are above the market average, demonstrating our advantaged locations and distinctive offers. 60% of our volume is sold in the U.S., where we expect demand to remain resilient. In convenience, we expect continued market growth in forecourt and food for now, and we're making focused investments in this offer. For example, in the U.S., where we have a top 5 market position in convenience, we are developing our own brands and proprietary food and beverage items. Here, we nearly double the margin -- double the average store margin with growth potential as we roll out and expand the offer. We know that loyalty customers are over 5x more valuable than the average non-loyalty customer. So we're investing in digital to strengthen our offer. A great example is our U.S. earnify app. Launched in May, it already has 5 million registered customers. And across our network, we're focusing investment in our best sites to provide our customers with the right mix of fuel, convenience and EV charging for every -- for each location. In EV charging, we are integrating and building on our well-positioned retail network to install rapid and ultrafast charging, co-located with fuel and convenience. This improves capital productivity and drives footfall from EV customers that we know, generate, on average, 20% more convenience margin per visit than an ICE, internal combustion engine customer. Turning to Aviation. This is a great business in a growing market, highly integrated with supply and trading with a strong track record, delivering and EBITDA compound annual growth rate of around 9% since 2019. We plan to make selected high-return investments to build our footprint and see strong growth potential in sustainable aviation fuel. And as outlined earlier in the presentation, Castrol offers potential for growth in existing and new business lines. In customers, we are also focused on realizing value and growth from our recent acquisitions. I've already spoken about BP Bioenergy. So let me turn to TA, TravelCenters of America. We acquired TA in 2023, and it is a great business. The Interstate network complements BP's existing positions, offering exposure to the sizable U.S. freight market, truck services making it more resilient. We have realized around $100 million of structural cost reductions. We have achieved over $70 million of value from supply and optimization underpinned by integration with trading. And we've grown the network and added new fleet customers. This drives revenue in our nonfuel offer with around 2 nonfuel transactions for every fuel transaction. Looking forward, we see further opportunities to grow value, including a further $100 million of structural cost reductions by '27, further upside from trading integration and bioblending and a strong pipeline of customer opportunities and options to grow our network. TA is an important contributor to earnings and cash flow growth to 2027, and we have strong conviction in its realization. Today, you've heard a lot from me about the actions we're taking. Bringing this all together, this slide outlines 6 key operating and portfolio KPIs. 3 for products, 3 for customers against which you can measure the progress that we are making. To summarize, we're in action. Through our portfolio choices and investment decisions, we are reshaping our integrated portfolio, and we're taking decisive steps to improve near-term performance. We believe this plan will result in $3.5 billion to $4 billion of cash flow growth to 2027 and continued strong returns. Thank you for your time, and back to William.

Thank you, Emma. I'm going to cover our low-carbon energy portfolio, which includes our renewables, hydrogen and carbon capture businesses. I'm going to talk about 3 things, how we're applying what we've learned to reposition the business. What this means, including significantly reduced capital and cash costs, and I'll talk through our high-graded portfolio and prioritized projects. The volatility and uncertainty experienced in the world in recent years has impacted the low-carbon energy industry. The solar sector has been particularly sensitive to increasing interest rates, inflation and supply chain issues. Offshore wind has been materially impacted by supply chain inflation across all subsectors, including turbines and vessels during a period of intense competition and bidding for licenses. And in hydrogen, a combination of slower policy, slower technology developments, higher costs, combined with reduced customer willingness to pay has led to much less progress. With the benefit of growing experience, we are clear in the strategic value of low-carbon energy for BP. Renewables for BP is about access to electron flows, first and foremost, for trading, including supplying AI data centers. Hydrogen is still, albeit at a much more measured pace key to industrial decarbonization, including for our own refineries and enabling improved margins for refined products. Carbon capture helps to decarbonize our own operations and for other parties through building new value chains and future merchant business models, including with blue hydrogen. But we sought to grow too quickly, and we chase frankly, too many options. We learned many lessons across all these areas, and we recognize those lessons incurred a cost. So as a result, we have changed our model for low carbon energy. Let me explain what that means in practice. First, our portfolio is far more focused and has been high-graded. In renewables, we have 2 top-tier platforms able to grow with discipline, while being capital light for BP and our shareholders. We are in the process of divesting our 1.3 gigawatt U.S. onshore wind business, which we expect to complete this year. In hydrogen CCS, we have prioritized 5 to 7 projects this decade, down from a global hopper of 30 and 4 of which we have already taken FID in 2024. Secondly, by establishing capital-light platforms and high-grading our portfolio, we significantly reduced BP CapEx to around $2 billion in total out to 2027. That's around $10 billion less than previous guidance during this period. Two years ago, we expected to spend $30 billion through the decade. Now we expect to spend $4 billion to 2030. Capital will be redeployed to projects that are value accretive and meet our investment criteria, including securing fiscal incentives where needed. We will also drive cost efficiency. We expect cost reduction of at least $0.5 billion per year by 2027. We will look to establish partnerships that combine complementary capabilities and assets and enable access to forms of financing and structures relevant for low-carbon businesses. The partnerships we established look to combine complementary capabilities and assets that enable lower forms of financing and structures relevant for -- a lower cost of capital, sorry. We will align with actual demand for lower carbon products, and we will continue to build future optionality for trading electrons and molecules, working with Carol's team to leverage our proven trading, origination and commercial capability. All of these changes support the wider group agenda on costs and cash flow growth out to 2027, as described by Kate. More selective investment will enable us to learn, to scale and to create optionality for future growth when markets, policy and demand are fully ready. We expect growth in these businesses this decade but the vast majority of scale and value will come post 2030. I'll take you through each of our businesses, starting with offshore wind. In December, we announced our agreement with JERA to combine our global offshore wind businesses to form a new stand-alone, equally owned independent joint venture that when complete, has the potential to be a top-tier platform for offshore wind. JERA is a phenomenal partner, Japan's largest power company and one of the world's largest electricity producers and LNG buyers. They bring a complementary capability and portfolio of high-quality assets and pipeline. Together, the new JV will have 1 gigawatt of operating assets and more than 13 gigawatts of development pipeline. BP and JERA share common beliefs, values and strategic objectives, and we have a long history of partnership in LNG and more recently, potential cooperation in renewables, hydrogen, CCS and power. We have agreed that the new JV will have a clear funding model and defined capital investment plans from both partners to support highly disciplined, capital-efficient growth. The JV will continuously optimize its portfolio of projects based on value and leverage access -- and leverage access to external capital and financing. And we will maintain access to our equity share of power offtake, including supplying our own internal demand when it's applicable and when it makes commercial sense. Formation of the joint venture is progressing extremely well and is subject to regulatory approvals, which we expect to complete by mid-2025. We are very excited about the opportunities ahead. Now moving to solar. Lightsource BP is a leading solar and battery storage development, construction and operating platform with very strong capability and experience, is a globally recognized brand with access to international markets and investment-grade customers. Lightsource BP has a proven track record of having developed 12 gigawatts to FID, including 3 gigawatts of projects in 2024. In 2024, it also constructed over 2 gigawatts under budget as well as significantly developing strong battery storage capabilities and footprint. Lightsource BP is delivering double-digit equity returns and the business is now scaled to deliver 3 to 5 gigawatts annually, backed by a pipeline of 50 gigawatts of mature opportunities. We see further potential through the evolution of the business model from a develop and flip to one in which projects will be grouped together by geography and sold, but with Lightsource BP retaining an equity share to provide some operating cash flow. This will leverage the platform scale and sustainably grow revenues while maintaining a capital-light model with more timely dilutions of developed projects. This approach also enables us to provide optionality for BP's trading expertise to optimize electronic flows and capture additional value. As mentioned earlier, we will aim to bring in a strategic partner into the business to help us further grow and optimize the platform as a stand-alone joint venture. We intend to initiate this process in the next few months. As Kate already mentioned, proceeds will be allocated to BP's balance sheet. Moving to carbon capture, an important lever for industrial decarbonization. In 2024, we sanctioned projects that will sequester millions of tons of CO2 while unlocking value and optionality across our gas, power and hydrogen businesses. Following the U.K. government's commitment to fund through the Track 1 cluster process, BP, together with our partners, reached financial close for 2 major projects at Teeside in December. The Northern Endurance partnership, or NEP will be one of the U.K.'s largest CO2 transport and storage networks and in Europe -- one of the largest in Europe as well and a critical enabler for the East Coast cluster. Linked to this is net 0 Teeside power, planned to be the world's first commercial scale gas-fired power station with carbon capture technology and dispatchable low-carbon electrons. Both projects are structured as incorporated joint ventures and will benefit from regulatory frameworks that will provide financial support, enabling access to competitive external financing and a very capital-light approach for BP. Together, they represent one of the largest, nonrecourse project financing in the U.K. with a combined value of around $10 billion. In Indonesia, on behalf of our partners, we announced FID in 4Q 2024 of the Ubadari CCUS compression project or we call it UCC, which will unlock 3 trillion cubic feet of additional gas resources to help meet growing demand in Asia, while enabling Indonesia's first CCUS project at scale, where CO2 will be captured, utilized for enhanced gas recovery and then sequester. We have confidence in this business model we know very well, an upstream production sharing contract with the government of Indonesia and with our partners. So with NEPCCS and Tangguh CCUS, we have sanctioned 2 economically viable carbon capture projects in the Eastern and Western hemisphere, enabling the creation of new value chains in strategic locations with the potential to grow into material industrial decarbonization hubs. We will learn by doing, and we'll apply those learnings. Finally, in hydrogen, we've significantly high-graded and focused our portfolio. We are prioritizing projects where we have a clear, supportive regulatory framework and fiscal incentives, where we have secured local demand with a willingness to pay, where we have access to the value chain opportunities such as competitive renewable power for green hydrogen or linkage to carbon capture for blue hydrogen and the ability to structure in a capital-light way through financings and partnerships and/or dilutions. Above all, returns and competitiveness remain the key criteria for projects to progress with expected mid-teen returns. This includes leverage, integration, farm downs and government support. Of the 4 projects we sanctioned last year, 2 are linked with our refineries at Castellón in Spain and Linden in Germany, underpinned by our own hydrogen demand and enhancing the value of our refined products with supportive fiscal policy and funding from the EU and from local governments. The projects are expected to start up in 2026 and 2027. Meanwhile, our H2Teesside blue hydrogen project, which is part of the East Coast cluster continues to progress through feed and will be enabled through the NEP project we already sanctioned. This project will help fulfill the U.K.'s hydrogen ambition and support the development of a regional hydrogen network for industry. We will seek external funding, including bringing in partners as well as we have done with Iberdrola in Castellón and with ADNOC/XRG in H2Teesside. We are now in delivery mode. We're not in an origination mode. Nearly all of the capital for hydrogen CCUS from 2025 to 2027 is in service of the 4 FIDs taken to date plus H2Teesside. And as we progress these projects, we will learn through execution and operation, building capability and optionality to grow as the hydrogen market develops over time. So in summary, we have been in action on our approach -- on our portfolio in low carbon energy. We're high-grading, making deliberate choices based on clear criteria. We are decapitalizing reducing CapEx by around $10 billion from 2025 to 2027. We're taking out structural costs, at least $0.5 billion by 2027. And in doing so, we're playing our role in supporting the delivery of the group's financial targets. We will continue to maintain optionality for electronic molecules flow and more material value realization in the next decade. Now let me hand over to Carol to talk about supply trading and shipping.

Great. Thank you, William. I'm sure you'll all be pleased to know that my section is the last one before we get to Q&A. So I'll try not to talk too quickly, but I recognize I'm in the way of your deep Q&A. So Carol Howle, and I'm responsible for supply, trading and shipping, which includes the biogas business. So some of you may have noticed a slight change to our name. We used to be trading and shipping now we are supply, trading and shipping. That's because fuel supply midstream now works with us. We've created a joint organization. That means we have a simpler, more integrated single competitive base to the market. So also recognize that ST&S is an area of investor interest and we believe it's a differentiator for BP that you might have some questions for us. We're trying today to spend a little bit more time on how we operate, what our global scale is, what differentiates us, give you a little bit of a peek inside our business model, just a little one. And then we hope you take away from that, that we've got a distinctive business model and that we run the ST&S as a business. It's composed of sustainable returns but also incremental value upside. We've also operated as a global business for decades, and we've built capability, scale and optionality across our portfolio with leading market positions. We provide risk management, flow and optimization services to BP equity and assets to improve overall cash flow and returns. And we've delivered resilient results through a number of commodity cycles, providing around 4% uplift to group returns over the last 5 years now on average. So I'm going to talk to a few of those businesses. But first, let's talk a little bit about the model. So we have 3 broad sources of value. The first is our global diverse portfolio of group and third-party positions that we've built across multiple commodities, multiple geographies and customers to access advantaged markets and to meet changing energy demands and to maximize margins and returns. The second is how we optimize this portfolio across, again, a diverse set of global value chains to drive greater returns and cash flow. We do this by leveraging our portfolio of pipelines of terminal agreements, tolling arrangements, supply and offtake and long-term customer contracts. And we continuously redeploy resources amongst those where we see opportunities that meet or indeed beat our hurdle rates. The last source of value is what most people think of us trading. So it's leveraging the information that we've gathered across all of the customer flows and assets across all of that information, and we use our extensive, real-time market analytics to then formulate value trading or speculative positions. Now all of this is underpinned by our world-class team, across trading, compliance, control, analytics, operations and, of course, risk management. And we do have a continued focus on leveraging technology to improve margins and returns as well. So as I say, our business has a proven track record. We've demonstrated resilience to commodity cycles and the ability to capture upside when market conditions present greater opportunities. And we've delivered on average a 4% uplift to BP's returns over the last 5 years. What I'll call out here though is that of that 4%, at least 2% comes from that base global portfolio. So that evidences the importance of the BP asset base and the value that we can deliver from integration. And we're also confident around this delivery going forward, not guided but confident. So next, snapshot, global scale. So as I say, we've built our business across traditional hydrocarbons, and you can see the scale of that there in terms of customers, countries, the regional offices that we have. But we're also very much positioned to access growth markets, and we're creating greater diversification and greater resilience in our returns through that. And that includes activity in power, biogas, biofuels and adjacent agricultural commodities. We've increased the scale of our oil, gas and power and LNG businesses since 2019. And while this growth has seen an increase in variable costs, which I think was called out in the Q4 results, we are very much focused on profitability and cash flow. And those variable costs are part of the delivery, and we are focused on those day in and day out. And of course, as I say, we continue to deliver around 4% to group returns. So what I'll do now is, I'm going to bring a little bit of this to live talking about those leading market positions in our businesses. So I'm going to talk to oil, LNG, U.S. Gas & Power and U.S. biogas businesses. So if we move across first to our global oil business. So if you look at this one, you can see here that from a global oil perspective, we are responsible for managing the equity positions for our oil businesses. We're also responsible for providing optimal feedstocks into the refineries, and we're also responsible for finding homes for those products. In addition to that, we've built a significant merchant portfolio, which complements that group base. And that merchant portfolio is extensive. We've built it across multiple geographies and commodities. For example, we are active with customers in over 130 countries, which is more than 2x the group footprint. We also trade more than 10x the amount of oil that we produce. We also manage more than 8 times the refined products capacity that we have. So you can see there that we're able to scale using the BP asset footprint, we're able to scale and diversify and grow that portfolio. And we have a very diverse slate there as well, I would say. I won't read out all of the commodities that we're engaged in. But as you can see, we have deep access across the value chain, but we're also looking at how we can access key growth centers. And that's very much from a capital-light perspective. So we are looking at how we can access demand centers like sub-Saharan Africa, Latin America and also the petrochemicals area, which we do see growing demand for through the energy transition. So all of this, we believe, provides us with a differentiation to BP, but also the ability to deliver across different commodity cycles. Now Emma mentioned the full ownership around BP Bioenergy and that also provides us with an opportunity to scale this same model across the ethanol value chain. So we can trade from physical sugar as a feedstock, all the way to moving ethanol around the world to the most valuable return that we can deliver. The oil business has had a strong track record of delivery, and it does contribute around half of that uplift, so around half of the 4% uplift to group returns, it's delivered that on average over the last 5 years. So we are very successful within that business, and the business has been very resilient. And just to be clear, our group positions across production, refineries and downstream markets, they underpin the first source of value that I mentioned, that base global portfolio that delivers around at least 2%. So without that access across the value chain, we would see an erosion in the base value of the portfolio, and we would see a reduction in our ability to optimize and trade around our group and merchant flows. So turning now to LNG. We believe we have an advantaged portfolio that is differentiated and positioned to continue delivering strong returns and cash flows. So let me explain why. We've got key global positions across supply, sales and regas, and we built material positions across equity assets, offtakes and through our JVs. We have deep and long-standing relationships in large demand centers, including JERA, which was mentioned earlier. We also have full value chain access from diversified group and merchant supply, all the way through to end customer pipeline sales in Europe and Asia. For example, we were the first non-Chinese company to establish regas access to downstream customers in China. We've also built flexibility into our portfolio through spot and midterm merchant volumes, providing greater optionality to meet evolving global LNG demand and to deliver incremental cash flow when market dislocations occur. And we continuously run tools to test and execute reoptimization opportunities in the portfolio, such as rewiring supply to sales based on demand and pricing signals and all of that is enabled through our flexible shipping fleet and differentiated contracts. Now for example, 50% of our supply volumes are open to Asia and Atlantic cross-basin optimization, and that's going to grow to around 2/3 in 2026. In addition, we optimize more than 90% of our cargoes before final delivery. So you can see the size and ability to flex that portfolio. We've also grown our portfolio by around 50% since 2019, and we're confident in 2025 that we'll add LNG offtake from GTA, also from [ Beach ], and also from our overdue contractual rights with Venture Global. And of course, those volumes are all before we add in our spot and midterm merchant volumes as well. In addition, we've contracted future supply through projects like Woodfibre that's due to come online in 2027. And William also mentioned some of the future gas contracts through '28 onwards. So all of this creates for us a nimble portfolio that is uniquely able to respond to opportunities. It delivers enhanced returns and cash flow, and it has an outstanding track record of delivery. So turning to U.S. Gas & Power, which we believe were unrivaled in, and you can see some of the stats on the slide there, but we built this business over decades. So we have material equity gas positions across BPX and Gordon mentioned that. So producing 1.5 Bcf a day and we are the largest producer of landfill gas through Archaea. Now this is over 4x the size of the closest U.S. gas and power marketing peer, and we have a massive resource base of around 30 Tcf in BPX and optionality of around 1 Tcf in Archaea. Additionally, we've built a significant merchant portfolio that we integrate with our equity, optimize and risk manage to deliver value. We're a leading gas marketer with around 17 Bcf a day bought and sold or more than 10x our Lower 48 gas production. And in Power, we've expanded our reach to the end customer and are now the third largest commercial and industrial power supplier in the U.S. We're active across the U.S. Our world-class analytics team gives us a deep understanding of markets, infrastructure and weather outlooks and that supports optimization and trading to deliver even greater value. We also leverage our renewable portfolio to structure solutions for customers like Microsoft, who are looking for firm and lower carbon power solutions. And William and I have also set up a joint team focused specifically on power generation solutions for data centers, covering gas, biogas, power and renewables. And we are one of only 3 commercial nonbank swap dealers in the U.S., which means we're uniquely positioned to deliver bespoke customer solutions due to the breadth of our offer. So moving now to Biogas. So you heard from Murray earlier that we expect to see growing demand, and we believe that we are well positioned in the U.S. to meet this anticipated demand. Now our business is integrated across the value chain, meaning we can capture margin up and down the value chain as the market evolves. So we have the largest upstream position through our Archaea with a strong pipeline with the potential to recover 1 Tcf of landfill gas by 2050, and that's underpinned by long-term gas rights agreements with strategic partners. Through our biogas team, we also optimized our equity mix with one of the largest merchant offtake positions in North America. Our routes to market and access to key infrastructure is unmatched as we leverage both our North America Gas & Power business and our biogas team to move molecules to the highest returning markets, providing lower carbon energy solutions to our customers. In the Downstream, we are also one of the largest suppliers into U.S. transportation through our co-marketing agreement with Clean Energy with more than 600 fueling stations. And together, we supply customers like Amazon, UPS and LA Metro. We're also continuing to assess other BP channels into fleets, for example, with Emma. And also, I've mentioned pathway site data centers with William, but also into the marine sector and as a potential process feed into SAF and diesel production. So now a brief update on Archaea. There have been a few questions I know around our acquisition around its pace and around the delivery. So I'll share a little bit around what we've learned, the actions we've taken to improve performance, drive resilience, but why that's reinforced our conviction that this is a great business for decades to come. So the first point I'd share is that we should have integrated into BP faster. So we should have driven prioritization, high-grading of the projects, driven the business efficiencies and driven the improved returns and cash flow much faster with that integration. The second is that our time lines proved to be overly ambitious on the build-out and commissioning of the plants. That was due to permitting and interconnect delays. Now that isn't an Archaea issue specifically. That is a U.S. market issue specifically. But it did impact delivery against our original plans. So in 2023, we spent time getting deep into the organization structure, deep into engineering design, working through inefficiencies, high-grading project choices and building momentum to drive performance in 2024, which is exactly what we've done. We've restructured the organization and with supercharge capability, bringing in expertise from areas such as BPX operations. We focused the portfolio, selecting only the highest returning projects, and we are improving the performance of legacy plants, resulting in a smaller but higher value portfolio company. And we have the continued optionality to add capacity if we see the right returns and that is the focus, the right returns. In terms of the outlook to Archaea, we are delivering double-digit returns, and we've got a clear plan, though, to drive further improvements in capital efficiency, operating cost and to improve the returns. Now we expect the majority of our current portfolio of projects to be online by 2028. More than 50% of our projects qualify for investment tax credits, while all of them qualify for the clean fuels production tax credit. We expect to be free cash flow positive from 2026 on. And we're going to continue to assess and develop new routes to market to create more optionality to meet customer demand and to deliver resilient returns. We are focused on building a robust business with increasing resilience to all commodity cycles. So in summary, hopefully, that short drop through the business provided a little bit of clarity and why we believe we are uniquely positioned to deliver sustainable value. So to summarize, we're organized and run our world-class team as a business composed of sustainable returns and incremental value upside. Our business is well established with deep integration across the group and differentiated modeling capabilities and leading market positions. We continue to diversify our portfolio and our services adding in lower carbon products where they are right for our customers and where they meet our hurdle rates. And we're positioned to access growing markets and new commodities to meet changing energy demands and to deliver resilient returns and we've delivered those returns through a number of cycles, delivering around 4% uplift to group over the last 5 years on average. I just had to get in one more time. Right. Now I'm done. So now we're going to go to Q&A. So I know the rest of the team will join me up on stage.

Thanks, everybody, for listening. That was a little bit of time that we took. Thank you for your patience and bearing with us. We're now -- we've got an hour now to move to the Q&A session. And what we're going to do is, we're -- because there are going to be lots of questions in the room. We're going to take a single question each, go through everybody, and then we'll go down to a second round of one each after that, if that's okay.

Whenever you ask your question, please tell us who you are and what organization you represent. Irene jumped off the hurdle first. So Irene, over to you, please.

Irene Himona, Bernstein. I wanted to ask about energy transition, where you told us that BP went too far and too fast in relation to the actual. And I wanted to ask, first of all, what gave BP the confidence 5 years ago to go so far and so fast? And secondly, why do you think in reality, the world has been so much slower? Is it the cost of these technologies regulation, what drives.

Thank you, Irene. I think if I rewind back to 5 years ago, there was a lot of optimism in the world, and there were a lot of priorities in the world that the energy transition became much more important. If you think about it in the priorities of cost carbon footprint and certainty. Certainly back then, transition was the #1 thing that all of the nations around the world and all the corporations we're thinking about. A lot has changed since then. We had COVID, we had a war, we had a material recession and that impacted the ability of nations and corporations to afford these things. And so we found ourselves in a different place now where nations are prioritizing affordability, assurance of flow, security of supply and the transition just is not being valued as much as it was 5 years ago. We find ourselves now with much more conviction around this. Nations now want all forms of energy, security of supply is top of the mind. Affordability is top of the mind. And of course, nations continue want to transition as well, but the priorities have changed, and that's why you see the strategy today. We're leaning into our upstream, which is our core capability over time. We're really high-grading the downstream into the integrated markets that help the fabulous talk that Carol just gave were capital light into transition, recognizing the importance of supporting the world in transition but doing it in a smarter way than we have in the past. And all of that, we think, is very competitive for the future. And I'm excited that we're out talking about it now. Thank you, Irene.

Michele Della Vigna from Goldman Sachs. Choosing which 1 question to ask. I wanted to ask one on trading. Clearly, it's been an extraordinary success story, 4 percentage point of addition to ROACE. I'm just wondering in your future planning. So for the next 3 to 5 years, what do you assume? Because it feels like if we go further back, it was more closer, perhaps to 2 percentage points rather than 4. And also, if possible, how much did it actually add in 2024?

All right. Go for it. Carol...

I'll answer the last bit first. In terms of -- we don't give a sort of a discrete guidance or information disclosure around how much we delivered last year. But it is 4% on average now over the past 5 years. I would say in terms of how we're looking at the business going forward, and the way that we build ourselves out across the platform is we are looking at global geographies. We're looking at global commodities. We're looking at value chains. We're looking at how we can access those, whether it's infrastructure, whether it's structural access. We do that on a capital-light basis. I mean, pet chems is a great example, right? When you think about energy transition, potentially the decline off in terms of ground fuel transportation, where do your naphtha barrels, where do your light barrels go, your LPGs, your ethanes, your naphthas, they will go into pet chem feedstock potentially. That's where you're going to see some margin. So we're looking at how do we create this resilience in the new value chains of the future. That's why we also look at things like agriculture. So it's fantastic with BP Bioenergy, I mean, we trade ags a bit at the moment anyway, so we have experience in it. But this gives us another value chain we can access, whether it's sugar feedstocks or instead of looking at ethanol from a domestic perspective, we can now look at the arbitrage in terms of demand into other geographies. So we're constantly evolving our business. We're constantly in search of where the next margin is going to be coming from, and we're constantly looking to develop the capabilities to do that. The fantastic thing is also we get the growing asset base on the oil and gas side. We like that. And then also, the structure that William did around JERA, for example, we still have 50% offtake on that. So we are able to access these electrons and value chains even as we change how we capitalize those businesses going forward.

Fantastic. Thanks, Carol. I can never get an answer to the question, Michele, on what's the plan for the future other than assuming in the future what we've delivered in the past is the best thing I think we can say. And Carol has a fabulous business that we're all enthusiastic about it. I hope you enjoyed her unpacking it a bit more. Biraj, I'll go to you next.

It's Biraj Borkhataria, RBC. Regarding the strategic review, obviously, a lot of work has gone into this presentation today. You made some comments around focusing on integrated assets in the downstream. And as you did your strategic review, I was wondering if you had considered something more radical within marketing and convenience. Could you just talk about how integrated you see that within your downstream operations and maybe to trading as well? And then just related to that, the 10% of sites you're looking to sell, is that on the base of 21,000 sites? Or is that a subset of that?

I think you might have snuck 2 questions in there, Biraj. Let me just start with portfolio and how we're thinking about it, and I'll ask Emma to answer the portfolio -- the sites question. We'll keep to one question each, please. As we think about the portfolio moving forward, from an upstream perspective, we have fabulous assets. And as long as they're growing, we want to keep them inside the portfolio if they're high margin, high return, one or 2 in the baseline. At some moment in time, assets end up better in other people's hands. When we can't see investment opportunity in them. So that's how I think about the upstream. From the downstream perspective, what we're trying to emphasize now is integrated positions are what count. Why do integrated positions count? Because of what you just heard from Carol. To use trader language, natural shorts that are so valuable, the places where we can refine or where we can sell. And we're really focusing the downstream on these integrated advantaged markets with shorts. The thought of them taking the downstream and spinning it off eliminates the short for Carol. It completely eliminates the short and all of a sudden, trading doesn't exist. So I find when people think about shouldn't you spin this thing out? The answer is, you'll completely destroy and damage trading. Why would you want to do that to such a valuable part of the portfolio? But make no mistake, we are constantly focused on what's the right integration. Sometimes we might buy some things that add to the integration. For this phase, we're now focused on getting rid of the parts of the portfolio that aren't as integrated that allows us to really read a high grade and strengthen the balance sheet. And that's how we're thinking about the downstream right now. Emma, could you answer Biraj's Part 1a, please?

Sure. Basically, of the 20,000, circa 20,000 about 1/4 are company-owned. The divestment -- the high grading refers to the quarter.

Thank you, Emma. Next question.

Doug Leggate from Wolfe Research. You talked a lot about the balance sheet and reducing net debt. You don't about the capital structure, which is almost double your net debt. And when we think about equity volatility, that's a pretty key driver for perhaps one of the biggest barriers to what's been going on with your share price. So my question is, when you think about the call on cash flow from all your sources of financing, how does that -- how does the breakeven change from what you saw last year at $80 oil with, I guess, $2 billion to $3 billion of surplus cash? How does that change by 2027 as you look at the strategic outcomes?

Can I take that?

Yes.

Yes. Thanks, Doug. Look, we tried to be incredibly transparent today. We talked about debt. We talked about leases. We talked about hybrids. And as we look at our capital structure, we are acutely aware of the cost of all of those components. I also explained pretty clearly, I think, why we took the decision in 2020 to issue hybrids. It was extreme uncertainty. It created significant liquidity, and it diversified our portfolio. Of course, it has a cost, and we are aware of the cost. Around half of our hybrid stack is fixed cost, and it's fixed cost significantly below 6%, which actually compares pretty well to our recent tenure, which we issued at 5.3%. Having said all of that, today, we're putting out a net debt target. I'm really pleased with putting a net debt target out because, in my view, what gets measured gets done. And it's important that we create a resilient balance sheet for our company, resilient in terms of having a strong credit rating, in terms of protecting shareholder distributions, and in terms of investing into the company to grow for the long term. And in our view, that is what we are going to be doing over the next three years. As proceeds come towards us, of course, we take a view based on value at that point in time and circumstances at that point in time, having regard to the cost of the components of the capital structure as well as the net debt target, which is the primary target and which we will deliver.

That's the breakeven?

I'll take that offline. I'm not going to do math in the room.

Great. Next question? No questions on the web yet, so I'll just keep going side to side.

Paul Sankey at Sankey Research. Thinking about where BP is a leader globally. Could you talk about your super core assets, if you want? And you just referred to the importance of downstream to trading. One area where you clearly are a global leader is in trading, and I'm struggling with how to -- what's total core and key to BP because you seem to have just said that you have to have that downstream in order to maintain the trading. Equally at the same time, you've talked about the multiples of volumes that the trading does relative to the assets. So it doesn't seem that whilst you said you want assets and the more the merrier, you necessarily need to own all this stuff to be a dominant trader with certain key super core assets. Can you talk a little bit more about that, just how the asset base and this trading all fit together? Because whilst you've done some excellent disclosure here relative to the past, it's still extremely difficult for us in a high-volatility business to really work out what the core value is and how it fits with core assets.

Yes. I'll let Carol talk about how she thinks about the core assets inside the trading sense. All I'd say to you is we continue to provide you with the information to talk about what the returns are in trading. We've now been transparent for 5 years and what it is. We tell you it's half oil. We tell you it's half gas. It will move between quarters. Why? Obviously, because there's volatility. Carol has told you today, 2%, very, very confident. The next optimization, pretty confident. And the other bit, the value-based trading, it's for you to judge how you would model that. So what we've unpacked for you over time is more and more certainty about what this is. And we've been able to deliver that through COVID, through a war, through the dampest level of volatility we saw in 2024. The volatility inside oil was almost nonexistent, yet we still deliver that 4%. So hopefully, that helps in setting the frame for how we think about it and how we're communicating it to you. If we provide any more transparency, we're going to have to give up commercial advantage, and that does not make sense. So Carol, your thoughts on the core assets as you approach the trading short?

So I mean it's really important for us to have that structural demand going forward. And we use that information. We use that customer access to build scale and to build optionality. So from that perspective, not only are we locking in an intrinsic margin when you're looking at the supply to the demand center, but if we're able to actually build flow around it, we can also optimize, move cargoes and utilize infrastructure in different ways. Now we're very much focused when we're looking at BP assets around what's the overall return to BP. So it's got to be the right return to BP. So Emma has talked about some of the businesses that you have divested. But then we also talk about some of the areas that we're very excited about, like sub-Saharan Africa and your South Africa position, Emma, in terms of the amount of access that gives us. So it's focused around the returns for BP, the access it gives the incremental value we can deliver from it, the optionality that it creates and then we use that information flow and the real-time market analytics to actually then build value trading positions on top of it.

I guess what I'm driving at is 2 things, the waiting and U.S. refining and U.S.gas. Those are presumably super cool to the traders.

We like those positions, yes, but we like Rotterdam as well, for example. And Castellon is a very good European asset for us.

Yes. Maybe if you're asking a refining question, the northern tier refineries are incredibly valuable for the fuel supply network that Carol enjoys and that Emma delivers to customers each and every day. And the coastal refineries are absolutely critical for the flow to Africa. So we really have high graded from 20 refineries back at merger time down to now 5. And we feel this is the right point, the right point. Thank you for the question. Next over here in the back row.

Ryan Todd at Piper Sandler. Maybe if I could stick on the downstream side a little bit. The $3.5 billion to $4 billion of incremental cash flow at a flat margin deck is a pretty significant number. And maybe within that, on the product side, which is a couple of billion dollars, the $3 barrel lower breakeven cash cost is not a small improvement. So can you maybe help us understand like how much of that comes from just Whiting, running at a normalized run rate? How much of that is maybe from GSK leaving the portfolio versus some level of confidence in kind of the remainder of that wedge that you can get there?

I'll ask Emma to start, and then we'll pass to Gordon on that refining questions.

Yes. Sure. Thank you. So the $3 a barrel, that's on our realized refining margin, first of all. Gelsenkirchen is still in the portfolio, we assume, in this period of time because we -- let's see where we get to with the sale, just to clarify that. Whiting is probably about $1 a barrel, the recovery from that. And then the remainder of that, we've talked about improvement and reliability and consistency and availability, which then enables us when we have consistent reliability -- consistent availability and reliability, then we're really able to optimize the commercial performance together with Carol across the asset. And then another chunk comes from the cost side. So perhaps, Gordon, over to you on cost and reliability.

We're going to take out $0.5 billion of cost as a contributor to the cash flow growth that Emma talked about there in just high-level buckets maintenance, we think there's $200 million of maintenance cost to come out without impacting safety. And the reason for that is we've adopted a centralized, standardized model in the upstream for quite a number of years, that's delivered a lot of efficiency, and we're going to apply that to the refineries in a rigorous way. Digital, we think by digitizing processes there's $100 million of cost to come out there just simply by digitizing and automating some processes. And then workforce rationalization. So these jobs that can be done in our business and technology centers, we'll move them there. There'll be some rationalization of cost contractors are leaving the organization as we speak. It will be another $100 million. And then there's a couple of other buckets. But there's clear price to go after in the matter of cost without impacting that critical safety performance.

And reliability, Gordon, how are you feeling about the 96%?

Yes, 96%. We just got to achieve it consistently. 4 out of the last 8 quarters, we've actually achieved 96%. We've just got to achieve 8 out of 8 quarters. So the maintenance will help on that. The big outage in fighting last year, we understand exactly why it happens, and we've taken actions to make sure it doesn't happen again in Whiting and right across our refining portfolio. That particular vulnerability was biggest in Whiting, we've seen investment required the electrical systems in other refineries. So we're in action option to refine -- to invest there that will impact the availability. But I'm pretty confident that we can achieve 96% consistently, not just 4 out of the last 8 quarters going forward.

And just to clarify that of the $3 a barrel, about half is related to reliability, including Whiting and the other half is cost and commercial.

Great. Thanks very much. Over to this, side, Chris.

I'll try hard with this one-question rule, but let me try and unpack your portfolio changes embedded in the financial frame here. To what degree is your reduction in net debt exclusively a function of portfolio changes and disposals? And maybe if you could sort of try and give us a like-for-like on your cash flow growth. Is that pre or post portfolio changes? Just so we can understand what's apples, what's pears, please?

Yes, let me unpack that. So the announcement we made today with regard to strategic review of Castrol is not embedded in -- a change in the ownership of Castrol is not embedded in the cash flow projections or any of the cash cost reductions. We need to wait and see what the shape and scale of that transaction looks like. So I'm not going to prejudge that. Of course, if we're announcing 2 material asset transactions and saying that we're going to use the proceeds of those to deliver the balance sheet, you can see that they're going to be a material factor and the delivery of that target. And as I've said, the delivery of the target, the timing of the delivery of the target is going to be dependent upon the timing of those transactions. We're not going to rush. We will deliver those transactions for maximum shareholder value and if the price isn't right. We've got plenty of other options at our disposal in order to deliver that target because it will get delivered. The other thing I'd say, which I mentioned in presentation earlier is both with Gelsenkirchen and with Castrol, if those 2 transactions lead to a significant change in ownership, and we've announced that we're going to put a Gelsenkirchen up for sale, they would have a material impact on our cash cost reduction. That is not in the $4 billion to $5 billion. It would be materially higher were those transactions to lead to something significant. Hope that helps.

Josh Stone here from UBS. A question on the target setting and sort of philosophy of how does BP go about setting its targets? Because it's clear the organization has been guilty overpromising over the last few years. And I wonder or when you set these new targets, did you get to the root cause of maybe what was driving that, whether it's do with accountability or channels of communication? And can you give us some confidence around these new targets? And any contingency you're including inside of them?

Yes, sure. You always -- as you do these things for the past 25 years, kind of my reflection is seeking to get to a P50 outcome and understanding the true nature of a P50 outcome and then you stretch, right, and you have to judge as a manager of how far you stretch these things. So we spent a lot of time, whether it's on major projects, trying to understand exactly what is that P50 outcome that's going to deliver. And then as you think about things like that and portray them externally, you of course, try to give yourselves a little bit of room. As I think about the targets that we've set out today, the '24 to '27 target, I feel pretty good about it. As you listen to the team, there are concrete actions on plans. They're very, very clear what we're doing. It's not, here's your overview. It's here are the actions we will be taking BTCs, procurement, et cetera, alliancing. And here are the numbers they can deliver. And of course, to give yourself a little bit of headroom but not too much. On your production, you always got the bottom-up roll-up. You always know not to give the maximum number, you balance yourself a little because things happen. That's the nature of these industries. So what I would say is I've been on a 25-year journey really trying to find the midpoint of these things. And by trying to get the organization to a P50 rigorously understand the P50, rigorously understand the roll-up they have, how much challenges inside it, you can generally start to flush these things out. As I look at '24 to '27, I'm confident we're in good shape. We're going to deliver these, and we're going to do everything we can to lean in and deliver them sooner. But I think it's a well-balanced set of targets that we have out there, and I've got a great team that's going to deliver it. So I hope that helps.

Can I just add one small point, Murray? I don't know whether you caught it in what I was saying earlier, but we have those 4 primary targets; growing cash flow; growing returns; reducing costs; reducing debt. Subject to Board approval, the intention is that those four primary targets will be reflected in the way that we incentivize and remunerate the most senior leaders in the company. So that gives us added confidence and conviction that these will get delivered.

Fantastic. Let's go back to this side. Still nothing on the web.

Alejandro Vigil from Santander. My question is, because the new shareholders distribution criteria is 30%, 40% of operating cash flow. If you can help us to bridge the '24 qualitatively, it's not needed in a number, not from the $26.5 billion of operating cash flow in '24, you can help us to understand the '25 number, the potential of operating cash of '25, to understand the buybacks announced the first quarter announcement?

Okay. So I'm assuming you've got the toggle between the numbers that we've disclosed in the stock exchange announcement for the fourth quarter, the full year and into the $10.3 billion and rebate to the 2024 real prices, okay. What I would say is we are forecasting 20% CAGR in our operating cash flow through the 3-year period. I'm not guiding on 2025 flow. What I would say is we're pretty confident that around 50% of the growth is going to come through in the first year, 3 things primarily. We've got over $1 billion of lower CapEx. We've got recovery in our refining. As Gordon has just talked to, confidence in the refinery is being available for 96% of consistently through the period. And we've got a full year of BP Bioenergy. Those 3 building blocks are very part of why you'll see a significant step up in terms of operating cash flow, '24 to '25. And then from '25 to '26 to '27, you should expect the other 50% of that growth to come through pretty evenly.

Hope that helps. Great. Lydia.

Thanks. It's Lydia Rainforth from Barclays. If I go back to the upstream part of the business, I thought we should have a question on that. Can you talk through – and obviously, you've done some big transactions in Kirkuk. So, what the potential is there? And then Haynesville as well, just in terms of the potential that you're seeing there?

Fantastic. William, you want to take Kirkuk, and Gordon, take Haynesville?

Yes, Kirkuk, obviously, we're very excited. We got the agreement landed yesterday and announced, as you will see. It's a fantastic agreement. As I said, the first phase gives us access to 3 billion barrels of discovered resource that we will help redevelop with the North Oil Company in Iraq. It's a 25-year agreement. It is without going into a lot of detail, which I shouldn't go into due to confidentially, but it is a better margin. It is a better return than Rumaila, okay? I can say that. I'm not going to say how much, but it is better, okay? And it is starting to move into what we've been working with the Iraqi government on, which is how do we improve the terms. We've now 15-plus years on now, can we improve the terms and incentivizes and have more skin in the game. So 25 years. It also gives us access to gas. We don't have that in Rumaila, right? We have BGC that takes the gas. We manage the oil and that creates all kinds of complexity. We have gas and oil together have gas rights and oil rights, and we'll be able to lift the incremental production that we produce, we'll be able to book the reserves, get the production, we have the ability to take cargoes either through export or or down south through displacement in Basra. So there's a lot of flexibility in the contract. We're very privileged to be in a position where we really leverage that incumbency position that partner of choice. And so very, very excited about the opportunity. There's lots of running lots of running room exploration deep rights in our agreement, plus we're doing MOU that's going to access additional exploration. So as you heard me say, it's up to 20 billion barrels of resource to play for.

Fantastic. Haynesville.

Yes. Lydia, and just to reiterate, BPX three basins, the Permian, largely or mostly oily, bit of gas, the Eagle Ford, that's gas and oil and then Haynesville, primarily gas. We like it because we can switch capital between the 3 basins switch rigs and people between the 3 basins very readily, very short cycle, depending on the price signals we're getting from oil and gas. Specifically on the Haynesville, we have 10 Tcf of resource there, fabulous wells. The most recent wells we've been drilling 60 million standard cubic feet per day per well. The last 7, I think, on average, were 60 per day. So high productivity, very close to the emerging LNG markets on the East Coast. And the team is very confident. The worry we always had on Haynesville was the takeaway rights, could we get pipe capacity to take away? The team are working on that, very confident that we can get the gas away if we choose to ramp up the Haynesville drilling program over the next couple of years.

It's a fabulous basin and we have tons of flexibility. And the funny bit in the chart that you saw at $4 Henry Hub, it's equal quality to the Permian at 70 real. You guys are all watching the forwards on natural gas, you know how high quality that is right now. Let's move back to the left side.

Maurizio Carulli from Quilter Cheviot Investment Management. I have a question on Iraq. But before that, allow me as a shareholder to congratulate for the reset in the strategy. And more importantly, for having redefined the distribution policy to a more sustainable terms because I firmly believe that over distributing is not the right way to create shareholder value, let alone growing it. Now on Iraq, I've been following the energy sector for more years that I want to say. And historically, in Iraq has always been very difficult to produce money, and for a number of reasons. Answering Lydia's questions, you said that, of course, the terms for the Kirkuk redevelopment are different with respect to what was in the past. My question is the difficulty in producing profitability in the past in a have been due to exclusively the agreement terms or there were other factors. And if that is the case, what gives you the confidence of being able to overcome these factors outside the terms of the agreement in order to have attractive returns?

Yes. I'll just take this one. As we look back over the past 15 years with Rumaila now, 15 years with Rumaila, the biggest hamper to making great money out of it was the original terms. It was an auction. It was a bidding round and everybody did it to the lowest number and presto, that's what you got was difficult terms as a contractor. Of course, the host nation got fabulous terms and there's profit from them magnificently. And they've reinvested inside their nation. And I'd invite you to go to Baghdad. It's a changed place now. It's much changed with the wealth that they provided and invested into their infrastructure. So congratulations to the Prime Minister for having achieved that. This is different. This is different. It's a bilateral relationship based on 15 years of helping them in Rumaila and this is a much different commercial arrangement that we start with. We did have issues in the 2014, '15 time with payment. That was when oil price was very low and the nation was struggling. It's much wealthier now. Oil prices are much better. The breakeven of the nation's very, very strong. So I think those are the two real challenges that we had in the past. I think as you look forward, just to reemphasize what William said, huge resource base, low lifting costs, low development cost, a tremendous opportunity for us to use our big management, our big field management skills. We get access to gas. We get paid in 60 to 90 days, we can take the product where we want. And we're both incentivized. Both sides are very, very incentivized to grow with us on behalf of the nation. They've given us rents that we like that's very attractive and hits all our hurdles inside our portfolio. And of course, they're incentivized to help us do that. So I feel this is a magnificently aligned structure. And I think in 10 years' time, we'll look back on this as one of the most important transactions BP has done in 20 years. I really do. So there's a little bit for you, and we're very enthusiastic, and we're thankful to the Prime Minister for helping us get here, and we're going to do proud for them. Another question over here, and then I'll move over there.

It's Anish Kapadia from Palissy Advisors. Just wanted to ask, in the context of a higher interest rate environment now versus the last few years and also several liabilities on your balance sheet that are not captured in your net debt, what would you estimate is the 2025 total cash financing when you consider all the elements? So the interest on the net debt, the hybrid coupons, lease interest, dividends to minorities and the factoring of receivables.

That's quite a calculation to do sitting here. I think you can see quite clearly from our cash flow statement, our interest costs, you can see our hybrid costs going through. We don't break out cost of any factoring that we do. I'm happy to pick up and make sure you've got the breakdown component parts. But I think based on my calculations mentally, I should -- I think you've got in the order of about you include lease costs, hybrid costs, et cetera, after you get past operating cash flow, you got in the order of about $7 billion.

I think I'll move over here now.

It's Steve Richardson at Evercore ISI. Murray, can you talk a little bit about value realization. So from -- if you think about Castrol, for example, as you go through these alternatives, if you believe that there is hidden value of the portfolio or unappreciated value, how do you think about realizing that value either through like what you've done in some of your JVs successfully versus an outright sale, if somebody else finds more value in it than you do even some of your past experience with publicly traded subs. Can you just talk about those 3? And how does that in a way with the net debt reduction, obviously, as well. But just talk about value creation.

Yes. So first, we've announced a $20 billion package. We're getting after it as fast as we can. I've already had techs on inbounds on Castrol, imagine that. So we're in action. We've set a target. We're going to deliver that target, and we're going to I think, is the first thing I'd say. The type of transactions we've done over the past 15 years, we've been very active. It's probably $150 billion, $125 billion to $150 billion we've rotated. Generally, inside the upstream, we wait till late in life. Generally, we wait till in late in life, and we find a point where the pass over value to others is higher. However, we do test for farm downs. We do constantly test partners who approach us about what value they might give us relative to our own. Generally, in the past, it's been hard to get anything for 2P. So you get something from 1P, you won't get it for 2P. And so generally, those transactions don't work because you can't find a value match you'll get a price disconnect. So it leads you in the upstream to generally waiting for late life and seeing what kind of transaction can become available. And that's where the exotics have come out of for Aker BP to Azule to the transaction that William did in Alaska with Hilcorp. Those are the kind of late-life transactions that generally we see. But we're open. If somebody wants to come and make a knockout bid on 25% of Kaskida, we're open to it. We're open to it, but it has to be for value. And we're not going to give it away is generally our thought pattern. Inside the Downstream, it's all about integration now. It's all about integration and other assets that we'll be testing ourselves constantly is this an integrated asset? Do we keep it? Do we test it with the market? That's how we but it's a more straightforward transaction. We've done exotic partnerships in the past in those. So it's pretty hard to pull off and it's hard to find where value realization has been created. And then I think the thing that we've all been working on so hard in the past 12 months is to decapitalize the low-carbon space. We had a good portfolio of offshore wind together, we started sounding out the market on different opportunities. We came to an agreement with our great partner, JERA, who we've worked with for decades and decades and decades and found a matching point. Probably one of the largest utilities inside Asia with our industrial capability brought together, that will create something special along the way. And Lightsource will be the same thing. You could do an outright sale, but I think you'll create an awful lot more value if you pull a partner in who can scale it, give us electron flow, that will create an awful lot more value. So I think on value realization for me is to stay open to whatever people are telling you, think about it with your core assets, don't sell off your core assets that have growth and then think exotically, and I don't think there's any corporation inside our sector that does more exotic transactions than we do to drive value. So we're very firmly in action on that. We're very open to thinking about these things. We're going to deliver that $20 billion target as fast as we can. And we're open to do structures as needed. Hopefully, that kind of answered your question.

Roger Read, Wells Fargo. Going back to 2020, the initial kind of more aggressive energy transition. And one of the things that was mentioned at the time was the people of BP wanted do this. Here we are a few years later, the people of BP are going to go in a different direction. You've got a fairly ambitious goal upstream stretching out to Iraq as well as the other areas you're operating. So I'm just curious, as you look across the people of BP, technically, their commitment levels that you're going to be able to deliver all this? And how is this change of strategy impacting them and their commitment to making this change?

Gordon?

Yes. Roger, so the one thing I like about strategy and I'm excited about, you may expect me to see the upstream investment. And I am excited about that but I'm also excited about the fact that we're going to execute in some of the low carbon projects, as William explained, two world-scale carbon capture projects. We're not doing PowerPoint anymore We're in action, we've got engineers on the ground, we're cutting steel in these projects. And our people that -- people see us doing that. We've deployed a lot of people on to that. So it's not as if we've completely abandoned the energy transition, quite the opposite. We're in an industrial scale investment in low carbon. Now at the same time, many of our engineers and scientists are petroleum people who like to go and find, develop and produce oil and gas. And going to places like Iraq is a fantastic opportunity. You learn so much going to some of these countries that are a bit different from maybe the we were raised in. And so we don't have any shortage of people who are keen to go and deploy their skills into the new areas, whether it be West Coast, India, the Mumbai High or Kirkuk more in Rumaila or more in Azerbaijan. We've got people who want to do that and like to do that. And it's the entrepreneurial adventure or spirit that I think and hope we still have inside our company.

William, you're staffing up India? How do you find it?

Yes. I mean, lots of excitement, I agree with Gordon, but maybe let me answer the low carbon side. I think the beauty of the platforming option of creating this platform for offshore wind with JERA is that we take our offshore wind capability that we did hire in and we brought a lot of people in since 2020 when we had our original sort of ambition. And those people, those qualified very experienced people, they actually go into the JV right JV then has that new sort of lease on life, where the JV then says, let's go execute these offshore wind projects, unshackled, untethered from BP Group and what our financial framework at our strategy needs right? And that JV will have its own principles, its own criteria. And it sort of gives them that new lease on life, too. So I think when we think about both what Gordon said and what I've said now, our people, all in all, feel content.

Alastair and then Lucas.

If I go back the last five years, we, kind of, all understood what BP was about, right? So the integrated energy company, you could Believe it or not, or whatever. I guess, as you pivot back to oil and gas, you're now at a Very competitive landscape for investor capital against all these other big integrated Companies. So, I guess I'm struggling to think of what BP's competitive position is relative to the industry or what's your strap line as you're trying to attract investor capital here?

So I'd start with one of the best upstreams around. Look at the Gulf of Mexico, look at the Lower 48 mix back in the Middle East with strong growth. So we have tremendous growth opportunities inside the Upstream fabulous assets, high-graded after many years of divestment, a leading technology charge that Gordon talked about, and you're going to see a lot more on that. So that's the start of the offer. Concentrated downstream with integrated positions that underpins Carol's business. Who else has a trading business like us to take advantage of discontinuities. And to be honest, we've got a pretty aggressive cost program. We've got a pretty aggressive cash flow growth target. And this is a good time to enter the company with share price suppressed. It's only upwards from here. And we're not done. We're absolutely not done. We will continue to access in the upstream and grow the business. We're going to continue to agree with great things through trading, even if Carol won't acknowledge that she'll grow in returns. And we're very, very excited about it. So quality of assets, quality of people, technology, trading, those are the fabulous things that we offer that not many in the sector can offer this high-graded portfolio with this growth rate with the extra zone technology and trading that you'll hear so much from us over time. Lucas?

Lucas Herrmann, BNP Paribas, Exane. It's a mouthful. And it's a little philosophical and it's about balance sheet buyback and how you think about and really bedding down the improvements actually. So it's -- Castrol is a great asset, in my opinion, Castrol is an asset which I assume, that I believe you could probably sell relatively quickly. I'm not saying you want to do that. You're very clear you want to maximize value. But it's not that difficult to see the balance sheet position pretty dramatically within a relatively short time, not least given that you've also got other divestments ongoing. The question is this, to what extent is your payout ratio going to require that you bed down the improvements in the business before I'm assuming the oil price is flat, okay, so let's just take the commodity out of the equation. So you need to see the turnaround in the business in the downstream, in particular, before you're willing to become more what's the word generous with shareholders around payout. Am I making sense?

Yes. It's a philosophy question. I'll take the philosophy question. So if you think about -- if you think about what trying to do, We have a big growth in cash flow in '25, as Kate described, hopefully, around 50% of what we're talking about in cash flow growth that comes from operating well. We're two months and everything is okay so far, which is fantastic. The team around me is doing a fabulous job. And we need to continue to see that being delivered. At the same time, we feel for resilience, we need to drive the balance sheet down. And so we are going to be in action on these divestments. We are in action. We are moving fast. We have teasers out. We have data rooms open, and we are moving because we recognize the observation you're making silently there. We have said we will have a cost program that delivers another $4 billion to $5 billion, that's going to be fairly evenly spread over the next 3 years. We did $800 million last year. We think it will be evenly spread over 3 years. It's hard, hard lifting that the teams are going through. We have immense confidence in it, but it's hard lifting as we do that. And William kind of signaled to you where we have the growth inside the downstream, and we have a bit of decline in the upstream in a few gas regions, and we need to overcome that and then start to really grow the upstream as we move through '26 and beyond. So you have a few moving parts inside there. What we have said is that we're back to 30% to 40% distributions like our other European peers is how we talk about it. We've given you a signal for 1Q. And assuming a flat price environment, we're going to make sure things are getting down and we get the divestment starting to move away as we do that and as we feel more confident, Kate and I will be recommending to the board that we start to lean into these things. So make no mistake. We have set a capital range of $13 billion to $15 billion. We mean it. Make no mistake, we set $14 billion to $18 billion of net debt. We mean it. And we've said 30% to 40% access. If there's excess cash either through environment or through pace of divestments, the only place it can go is in distributions. So they will come, is my viewpoint. And this is a great team that's going to great things, and you should have confidence in that. I hope that helps unpack a little bit of how I think about it. We're getting close to the end of time. Sorry, Irene, you already did one. Go ahead.

Luke Parker Wood Mackenzie. I had a question about strategic venture or your integrated joint ventures, the Aker BP, Pan America and so forth. These have become a material part of the business now when I think about the CapEx that's going through them and increasingly so, the cash flow that will be coming out with them. How do you think about those and that structure, the advantages, but also the disadvantages, risks, challenges? And do you plan on doing future be on light source perhaps? Or are you open to it?

We always look for innovative structures. Generally, they come along every 5 years or so is how we've observed it. Aker BP was middle of last decade. Angola came a few years later. JERA Nex was a fabulous thing that came out. So it's hard to pull these things together to find like-minded companies with complementary asset bases. In all cases, in all the things, the upstream things you do, you've got a late life of the growth and you need to the two together to create the magic that creates these entities. So you always look for them. We've tried to do it. We tried to do it in Canada ages ago. We tried to do it in Alaska, et cetera, and we'll continue to seek these out. I think as you think about holding them, they're great growth ventures and they create interesting, interesting options. Who would have thought when we got into Aker BP that we could get access to Johan Sverdrup and Lundin? Who would have thought? It was a dream that we'd be able to do that, with Shell, Oyvind and Aker, we achieved it. So I think when you set it up, it creates a fabulous option that you can then go and start doing different things. And Gordon and Azule has started to do that as well, right? He's entered Namibia. We drilled our first well. A second well will come. Who knows where Azule will grow to, but it's a growth vehicle. And I think as far as we're concerned, these are interesting options. They've got great growth moving they create great optionality for additional interesting transactions. And so that's how we think about them, Luke. Over to here.

Yes. I'll ask one BPX -- sorry, Giacomo Romeo, Jefferies. I'll ask one on BPX. I think in the past, Murray, you were very clear about saying that it is -- you see this as a self-funded vehicles. Do you think that's still the case? How do you see that potentially as -- in terms of using it to capture potential upside in the gas price in the U.S. in the near term. And in terms of scale, obviously, you outlined that you think that it has room for growth, but you are subscale compared to many players in the region. Can you see in over the next few years, any potential for any ways to grow inorganically there?

Gordon.

Yes. Just taking the second point of your question first, Giacomo, in terms of scale. So we're going to grow it to 650,000 barrels per day. It's not the biggest, but it's very, very high quality. I mean we're in the best geology in each of the 3 basins, and the 3 basins we think are the best in the Lower 48. So the biggest is not always best. I like the quality of what we've got there. And just to reiterate, I also like the ability to move capital between the 3 basins depending on how the pricing signals are. So scale, it's not all about scale also at 650,000 barrels per day will be material. We have a fabulous team there. In terms of -- if you were hinting about divestment or IP or floating off, it's such an integrated part of our company. We've got a leadership team that's very entrepreneurial. We give them certain privileges to be stand-alone, but they have the BP OMS, the safety system and the support when they require it. But perhaps more importantly, the other center of expertise for nonconventional. So you take fracking, for example, they do way more fracking than any other part of our company. So all the fracking expertise that we're going to need for Kaskida and Tiber will all come from BPX. The fracking expertise we needed to get Oman kicked off all came from BPX. It's the integration in that center of capability and as you heard from Carol, the integration with ST&S is huge in terms of creating an uplift. So we like what we've got. We're going to grow it as fast as we can and continue to take the benefits of that integration.

And we're very excited about the gas price rise. I think with that, I have to cut it off because we're cut off on broadcasting. So just make me -- let me do a quick close, and then we can catch up with people in the room who have more questions as well. Thank you for all the questions today. for listening to our capital markets update. Today marks the start of a new chapter for BP, building on our over 100-year history. I'm excited about it. We fundamentally reset our strategy, laid out a new direction for BP and are taking comprehensive action to grow long-term shareholder value. We're going to invest to grow value in our core upstream business, building on our balanced and resilient oil and gas portfolio and the attractive pipeline of new projects. We're going to drive improved performance in our downstream business, while high grading around our core integrated markets. We're going to invest with discipline in the energy transition, focusing on key growth markets and being more selective with our investment we deliver the returns our shareholders expect. All of this is focused on a clear plan over the next 3 years to grow cash flow and returns, allowing us to strengthen the balance sheet and deliver resilient distributions. And underpinned by a clear set of targets we've laid out, which we will be very, very focused on delivering. Last, we have a brilliant team who helped deliver this. The people in this company are outstandingly capable individually and as a team, players. They're problem solvers. They adapt challenges. They'd have to change. They're committed to the success of the company and the success of translating into value for shareholders. And I'd like to thank all of them for their support. Thanks, guys. We've reset BP for today and tomorrow. And I'm looking forward to what we're all going to do on your behalf next. Thank you for listening.