Financial Data and Key Metrics Changes - The company reported net sales of $107.9 million for Q2 2025, a decline of approximately $15.1 million compared to the previous year [29] - Adjusted EBITDA for the quarter was $13.2 million, with an adjusted EBITDA margin of 12.2%, reflecting an increase of 130 basis points year-over-year [29] - Adjusted operating income increased to $4.9 million, marking a strong increase of $2.8 million compared to the prior year [29] Business Line Data and Key Metrics Changes - In the Power Solutions segment, net sales were $44.6 million, down $5.5 million year-over-year, primarily due to the sale of the Lubbock operations [30] - The Mobile Solutions segment reported net sales of $63.4 million, a decrease from $72.9 million in the previous year, impacted by rationalized business and lower automotive volume [32] - Adjusted EBITDA in the Mobile Solutions segment was $8.6 million, reflecting a slight year-over-year growth due to cost control actions [33] Market Data and Key Metrics Changes - The automotive market accounted for 39% of the company's revenue, with overall light vehicle production remaining flat globally [12] - The U.S. GDP-linked businesses showed a rebound in the second quarter after a weak first half, although trade uncertainty continues to impact demand [14] - The medical equipment market is growing, with the company increasing its participation significantly above market growth [18] Company Strategy and Development Direction - The company aims to achieve approximately 20% gross margin as part of its long-term plan, with a focus on margin expansion and operational efficiency [22] - A commitment to increase personnel in specialized growth areas, including the hiring of a new Chief Commercial Officer, indicates a strategic focus on expanding into electrical and medical markets [38] - The company is actively pursuing M&A opportunities to enhance its growth strategy and improve its operational footprint [90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite uncertainties in the automotive market, emphasizing the importance of new business launches [41] - The company is leaning towards the lower end of its revenue guidance due to macroeconomic uncertainties and customer feedback [41] - The outlook for the electrical market remains positive, with growth opportunities identified in power generation and distribution sectors [50] Other Important Information - The company plans to launch approximately 112 new programs in 2025, contributing an estimated $48 million in annual revenue at peak run rate [36] - The company is preparing for an Investor Day in December 2025 to provide further insights into its strategy and performance [42] Q&A Session Summary Question: Can you remind us about the incremental margin from new business wins? - New business wins are accretive by three to four points on the EBITDA line overall, with a focus on existing open capacity and strategic investments [46] Question: What are the growth opportunities in the electrical market? - The company is seeing growth in power generation, particularly with customers like Cummins, while residential distribution has been softer [50] Question: How does the company plan to achieve its revenue guidance? - The company expects to benefit from new business launches and a consistent performance from its base business, without relying on market rebounds [55] Question: What is the status of the Group of Five facilities? - All facilities are on track to be profitable this year, with expectations for run rate profitability by the end of the year [60] Question: Can you provide details on the M&A program? - The company is actively pursuing specific acquisitions that align with its strategy, focusing on synergies and operational improvements [90]

Financial Data and Key Metrics Changes - The company reported a net sales decline of 10.2% in Q3, with organic sales decreasing by 11.1% when excluding foreign currency benefits [20][34] - Adjusted EBITDA was $76.6 million, a decrease of $29.7 million year-over-year, primarily due to lower sales volumes and reduced gross margins [35][36] - Gross margins contracted by 110 basis points to 37.8%, driven by unfavorable mix, tariffs, and inflation [21][35] Business Line Data and Key Metrics Changes - Global Pet Care reported a net sales decrease of 9.6%, with organic sales down 11.4%, primarily due to targeted stop shipments during tariff-related pricing negotiations [38][39] - Home and Garden net sales decreased by 10.3%, negatively impacted by a cold and wet start to the season [46] - Home and Personal Care saw a reported net sales decline of 10.8%, with organic sales also down 11.4%, driven by softness in personal care and home appliance categories [52][53] Market Data and Key Metrics Changes - The overall North American Companion Animal category declined in the low single digits, while European consumer sentiment weakened, impacting sales [40][45] - In Latin America, organic net sales grew in the low double digits, predominantly in the chews category [41] - The Home and Garden category experienced lower total sales, but Spectracide gained market share in pest control products [47] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and maintaining a nimble stance during volatile times, with a target of approximately $160 million in free cash flow for the fiscal year [26][60] - There is an ongoing effort to diversify the supplier base and develop non-Chinese sourcing alternatives to mitigate tariff impacts [16][17] - The company is actively pursuing M&A opportunities to accelerate growth in its pet and home and garden businesses, while maintaining a disciplined approach to capital allocation [29][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming near-term tariff-related volatility and emphasized the importance of making difficult decisions for long-term health [19][66] - There are signs of improving macroeconomic conditions, with expectations for consumer confidence to stabilize as geopolitical tensions subside [65][66] - The company anticipates a strong start to Q4, with improved sales performance and positive momentum in the Home and Garden division [23][66] Other Important Information - The company executed cost reduction activities, expecting to reduce costs by over $50 million in fiscal 2025 [15] - Share repurchases totaled approximately 900,000 shares during Q3, with a total of about 4 million shares repurchased since the HHI transaction [31] - The company is streamlining its global business and reducing fixed costs while diversifying its sourcing footprint [59] Q&A Session Summary Question: How much sales were left on the table by stopping shipments in Q2, and what impact lingers into Q4? - The estimated sales left on the table in Q3 is around $30 million, with a significantly lower impact expected in Q4 [72] Question: Why is guidance still difficult despite improved clarity on tariffs? - The company emphasized the complexity of the situation, noting that Q3 results were distorted due to significant operational changes and tariff impacts, making it challenging to provide accurate guidance [75][76] Question: Can you discuss your capital allocation strategy in a soft consumer environment? - The company believes the market is undervalued and plans to continue share repurchases while pursuing M&A opportunities to grow its pet and home and garden businesses [82][83]

Financial Data and Key Metrics Changes - The company reported consolidated EBITDAX of $338 million and adjusted free cash flow of $36 million for the second quarter [5] - Total production and oil volumes met guidance, despite weather-related impacts reducing daily production by approximately 780 barrels of oil equivalent per day [5] - Capital expenditures for the quarter were $257 million, exceeding the high end of guidance due to accelerated activities and drilling cost overruns [5][6] - Net debt increased by $8 million, while net working capital was reduced by $41 million [12] Business Line Data and Key Metrics Changes - The company executed three Horseshoe wells using water-based fluids, achieving significant cost savings [6] - Completion stage architecture improvements led to a 9% reduction in pumping cycle times, saving $13 per foot [7] - The company drilled the longest wells in its history, including a lateral of 16,515 feet, and set records for feet drilled in a single day [7][8] Market Data and Key Metrics Changes - The company has hedged approximately 95% of expected second-half oil production at an average price of $69 per barrel, along with hedging for natural gas and other products [14] - The optimization strategy is expected to lower WTI breakevens by about $5 per barrel across 1,300,000 completable lateral feet [10] Company Strategy and Development Direction - The company is shifting from an acquisition-focused strategy to optimizing existing assets, resulting in a 10% reduction in employee and contractor headcount [11][12] - The focus remains on generating adjusted free cash flow and reducing debt to build long-term shareholder value [14] - The company plans to bring 38 wells online by October, with expectations for significant debt reduction in the latter half of the year [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in generating substantial adjusted free cash flow in 2025, with a target of reducing net debt by approximately $185 million for the remainder of the year [13] - The company is optimistic about capital efficiency improvements and the potential for larger-scale developments in 2026 [20][41] Other Important Information - The company achieved a major milestone by drilling a stacked Horseshoe development, which is believed to be a first in the industry [9] - Sustainable savings from operational efficiencies are expected to deliver an incremental $25 million in cash flow per year [10] Q&A Session Summary Question: Production trajectory into 2026 and capital efficiency - Management highlighted improvements in capital efficiency and successful drilling practices that support production growth into 2026 [18][20] Question: Cost accomplishments and LOE projections - Management discussed ongoing cost reduction initiatives and the impact of transitioning to more efficient lift types [22][24] Question: Production cadence heading into 2026 - Management indicated that production would be high in Q4 2025 but expected a slight decrease in early 2026 due to timing [30] Question: Non-core asset sales and future cadence - Management stated that non-core asset sales are opportunistic and will continue as long as favorable prices are available [33] Question: Net debt trends and leverage outlook for 2026 - Management expects to continue paying down debt in 2026, with a corporate breakeven below $55 per barrel [39] Question: Development program and capital allocation for 2026 - Management confirmed a focus on larger-scale developments and capital efficiency opportunities moving into 2026 [41][42]

Financial Data and Key Metrics Changes - The company reported a net income of $411 million and adjusted EBITDA of $566 million for Q2 2025, compared to a net loss of $162 million and adjusted EBITDA of $584 million in the same quarter of 2024 [7][25]. - The dollar's depreciation against other currencies contributed positively, reversing previous foreign exchange effects by $220 million [25]. - The company expects earnings growth to accelerate in the remainder of 2025 due to strong market conditions and cost reduction efforts [6][15]. Business Line Data and Key Metrics Changes - Phosphate production guidance for the third quarter is set at 1.8 million to 2 million tons, with annual guidance now at 6.9 million to 7.2 million tons [11]. - Potash production guidance has been increased to 9.3 million to 9.5 million tons due to strong global demand and completed maintenance activities [12]. - The Mosaic Fertilizantes segment is expected to see EBITDA growth driven by cost reductions and higher realized prices, despite facing credit issues [13][31]. Market Data and Key Metrics Changes - The global phosphate market remains tight, with robust farmer demand, particularly from India, which is addressing two years of pent-up demand [9][20]. - Potash prices are expected to hold steady due to strong demand and limited supply, with U.S. customers indicating normal demand despite higher prices [21][23]. - Brazilian fertilizer shipments are anticipated to reach record levels, supported by increased input demand in the first half of the year [20]. Company Strategy and Development Direction - The company is focusing on improving operating performance and enhancing reliability in its phosphate production business, with significant maintenance work now completed [5][10]. - The new Pomeranci facility adds 1 million tons of distribution capacity, reinforcing the company's market presence in Brazil [13]. - The company aims to achieve $250 million in cost reductions by 2026 through further operational efficiencies and automation [34]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong market fundamentals for fertilizers, despite some macroeconomic pressures affecting agriculture [16][17]. - The company does not foresee a significant price reset in the phosphate market in the near term, expecting tight supply dynamics to persist into 2026 [8][20]. - Management highlighted the importance of market access as a competitive advantage, allowing the company to respond to demand fluctuations effectively [6][15]. Other Important Information - The company is making progress on capital allocation, with expectations for stronger free cash flow in the second half of the year, which will facilitate debt repayment and shareholder returns [15]. - The Biosciences segment has seen revenues more than double compared to the previous year, with expectations for positive EBITDA contributions starting in Q4 [14]. Q&A Session Summary Question: Share price performance and changes since Investor Day - Management acknowledged the market's negative reaction and clarified that while there were extraordinary expenses, the underlying performance remains strong [38][40]. Question: Run rate and production trends - Management indicated that July's run rate was not as expected due to delays but expressed optimism for August and September based on encouraging production numbers [46][52]. Question: Idle and turnaround costs - Management provided insights on the expected ramp-down of extraordinary costs, emphasizing the variability in turnaround expenses and historical averages [54][56]. Question: Hurricane season preparations - The company has implemented measures to harden assets against potential weather disruptions and has completed crisis planning for the hurricane season [61][63]. Question: Tariff impacts on phosphate imports - Management discussed the current tariff situation, noting a 10% tariff on phosphate imports and its indirect effects on the market [70][72]. Question: Specialty phosphate pricing and market conditions in Brazil - Management addressed concerns about pricing in the phosphate division and the impact of government financing support for farmers, highlighting a slower market in Brazil [91][96].

Financial Data and Key Metrics Changes - For Q2 2025, the company reported EBITDA of $350 million on net sales of $3 billion, with a net loss of $12 million or $0.09 per share [10][15] - Compared to Q2 2024, net income decreased by $325 million due to higher North American feedstock and energy costs and lower average sales prices across segments [15][19] - The company achieved over $75 million in cost reductions towards a full-year target of $150 million to $175 million [14][20] Business Line Data and Key Metrics Changes - The Housing and Infrastructure Products (HIP) segment delivered EBITDA of $275 million on sales of $1.2 billion, representing a 24% EBITDA margin, with a 16% increase in sales driven by pipe and fittings demand [10][17] - The Performance and Essential Materials (PEM) segment saw sales of $1.8 billion, down $57 million from Q1 2025, with EBITDA of $52 million, significantly lower than the previous year due to production disruptions and higher costs [18][19] - The HIP segment's sales volume growth was supported by municipal water applications, while the PEM segment faced challenges from global oversupply and production outages [11][12] Market Data and Key Metrics Changes - The company noted a significant underspending on water infrastructure in the U.S., which is expected to support pipe and fitting sales for years to come [11] - The demand for PEM materials is stabilizing, albeit at lower levels than desired, with global manufacturing activity remaining soft [25] - The municipal water applications market is expected to grow at a rate of 5% to 7% over time, driven by infrastructure investments [99] Company Strategy and Development Direction - The company is implementing a three-pronged profitability improvement strategy for PEM, focusing on improving plant reliability, reducing costs, and optimizing the manufacturing footprint [13][25] - The long-term outlook for the HIP business remains positive, with expectations of organic growth at a compound annual growth rate of 5% to 7% [24] - The company continues to evaluate acquisition opportunities to broaden its product portfolio and deepen customer relationships [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment due to elevated interest rates and slower North American construction activity but emphasized the stability and resilience of the HIP segment [10][23] - The company expects production sales volumes to improve in Q3 2025, with a reduction in the impact of production disruptions compared to Q2 [21][22] - Management remains optimistic about the long-term demand for housing and infrastructure products, driven by demographic trends and undersupply [23][24] Other Important Information - The company announced the planned closure of its epoxy site in Pernice, The Netherlands, which is expected to lead to profitability in 2026 [19][20] - As of June 30, 2025, the company had cash and investments of $2.3 billion and total debt of $4.7 billion [20] Q&A Session Summary Question: Guidance on HIP margins and pricing headwinds - Management indicated that margins are expected to remain in the range of 20% to 22%, reflecting the realities of the residential building and construction markets [30][31] Question: Impact of tariffs on exports - Management noted that there has been no significant impact from tariffs on exports to Brazil, as customers have access to duty drawbacks [32][33] Question: Planned turnarounds and their impact - The majority of the $110 million impact from production disruptions was due to planned turnarounds, with no major turnarounds expected in the second half of 2025 [42][43] Question: Cost improvement initiatives - The additional $200 million in cost improvements will be across the entire PEM footprint, not solely focused on the Pernice site [44][45] Question: M&A opportunities - The company is open to M&A opportunities in both HIP and PEM segments, driven by valuation opportunities [48][49] Question: Plant reliability improvements - Management expects ongoing improvements in plant reliability, with no significant additional capital outlay required [53][54] Question: Pricing outlook for polyethylene and PVC - Pricing for polyethylene has not yet settled for July, with announcements for price increases in August [77][82]

Financial Data and Key Metrics Changes - Net sales grew 3.3% to a record $454.3 million, while adjusted EBITDA increased 1.6% to a record $72 million, and adjusted EPS was $2 per share compared to $1.98 last year [6][21] - Gross margin was 33%, reflecting a seasonal mix shift towards higher margin products and progress on pricing initiatives [6][21] Business Line Data and Key Metrics Changes - Food service segment sales increased 4.8%, driven by price increases and volume growth in pretzels, with pretzel sales up 12.8% [9][21] - Retail segment sales decreased by 7.1%, primarily due to a decline in frozen novelty and handheld sales, although Dogsters and Dipping Dots Sundays continued to grow [11][21] - Frozen beverage segment sales increased by 6.1%, with a modest decline in beverage volume offset by higher machine revenue [13][21] Market Data and Key Metrics Changes - Box office sales increased 37% year-over-year, driven by the success of the Minecraft movie, which helped to compensate for sluggish performance in other channels [7][21] - Beverage sales were negatively impacted by foreign exchange headwinds, which affected total frozen beverage segment sales by approximately 270 basis points [13][21] Company Strategy and Development Direction - The company is focused on targeted pricing actions, cost reduction initiatives, and consumer-led innovation across its portfolio to address near-term challenges [19][20] - Plans to innovate around better-for-you products and eliminate certain artificial ingredients from products served in schools by 2026 [18][21] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the consumer backdrop, tariff-related risks, and projections for box office sales to be down in Q4 [19][20] - The company is optimistic about growth prospects, including potential permanent menu placements with major QSR customers [10][16] Other Important Information - The quarter included a non-recurring gain of $10.6 million from insurance proceeds related to last year's plant fire and a $1.5 million brand impairment charge [21] - The balance sheet remains strong with approximately $77 million in cash and no long-term debt [26] Q&A Session Summary Question: Retail segment promotional activity pullback - Management acknowledged insufficient promotional depth in the retail segment and plans to correct this in the future [30] Question: Handheld capacity outsourcing plans - Management confirmed that capacity from a shut-down plant has been successfully shifted to another facility, which can now produce more than before [31][33] Question: Cost structure around marketing and distribution - Marketing expenses increased due to summer promotions, while distribution costs improved through freight optimization and lower fuel expenses [37][39] Question: Handhelds volume expectations for fiscal 2026 - Management expects a 10% lift in handhelds next year, with capacity in one plant rising about 37% [46] Question: Materiality of new programs with QSR chains - Management indicated that tests with churros and frozen beverages could have a meaningful impact on sales for 2026, with positive indications from ongoing tests [48][49]

Financial Data and Key Metrics Changes - The company reported a solid Q2 performance with double-digit margins and accelerating free cash flow, raising the full-year profit guidance by $35 million for continuing operations [6][11] - Adjusted EBITDA for continuing operations was $145 million, with a profit margin of 7.5%, reflecting a 210 basis point improvement from the previous year [20] - Free cash flow guidance was increased by $50 million to approximately $275 million at the midpoint for the year [27][30] Business Line Data and Key Metrics Changes - Continuing operations saw sales of $2.052 billion, a decrease from the previous year due to lower end market demand, while adjusted EBITDA was impacted by lower sales and tariffs [18][20] - Cost savings initiatives delivered $59 million in profit, contributing to a total of $110 million year-to-date, with a target of $225 million for the current year [22][30] Market Data and Key Metrics Changes - The company experienced softness in the North American commercial vehicle market, partially offset by better volumes in South America and Europe [11][62] - Tariff impacts were noted, with expectations of an 80% recovery for the year, although there was a headwind of 80 basis points in Q2 [10][11] Company Strategy and Development Direction - The company is transitioning to a more North American-centric light vehicle company, with a strong aftermarket business and integrated thermal and sealing operations [12][34] - A commitment to return $1 billion to shareholders, with an increased share buyback target of $600 million, was announced [7][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 10% margin target for 2026, supported by a cost reduction savings plan of $310 million [34][38] - The outlook for the commercial vehicle market remains cautious, with no cyclical upturn expected in the near term [64] Other Important Information - The Off Highway business is classified as a discontinued operation, with the sale expected to close in Q4, and the company is focused on a smooth transition [6][7] - The company has ample liquidity of approximately $1.35 billion at the end of Q2, allowing for flexibility in capital allocation [32] Q&A Session Summary Question: Can you provide color on the drivers of the expected margin improvement from new business backlog? - The new business wins are coming from significant programs with customers like JLR and Ford, contributing to the backlog [41][42] Question: How much room is there for incremental cost savings? - Most remaining cost savings will focus on operating improvements in the plants, with opportunities to reduce stranded costs [45][46] Question: Will the Off Highway guidance cut impact deal closing timing? - No, the guidance cut will not impact the timing of the deal closing, as the Off Highway team has maintained margins despite lower revenue [52][54] Question: What is driving the expected improvement in working capital? - The improvement is attributed to the normalization of working capital requirements and efficiency gains expected in the second half of the year [97][99] Question: Can you clarify the nature of variable costs associated with stranded costs? - Variable costs include fixed costs that will decrease with the reduction in business size, such as auditing costs [100][101]

Financial Data and Key Metrics Changes - The company reported an underlying net income of $2,400,000,000 and operating cash flow of $6,300,000,000 for the second quarter, with a working capital build of $1,400,000,000 [7][19] - A dividend per ordinary share of $8.32 was announced, reflecting a 4% increase, alongside a $750,000,000 share buyback program for the second quarter [7][20] - Operating cash flow increased by $3,400,000,000 compared to the previous quarter, driven by higher earnings and a lower working capital build [19] Business Line Data and Key Metrics Changes - In the gas and low carbon energy segment, the underlying financial result was $500,000,000 higher than the previous quarter, attributed to improved gas marketing and trading results [16] - Oil Production and Operations saw a $600,000,000 decrease in underlying results due to lower realizations and higher depreciation, depletion, and amortization (DD&A) charges [16] - The Customers and Products segment reported an underlying result approximately $900,000,000 higher than the previous quarter, driven by seasonally higher volumes and stronger fuel margins [16][17] Market Data and Key Metrics Changes - Upstream production averaged 2,300,000 barrels per day for the first half of the year, reflecting a 3% quarter-on-quarter increase [7] - Refining availability was reported at over 96%, with a 3% increase in the first half of the year compared to the same period last year [11] - The company achieved 10 exploration discoveries in the year, marking its best performance in recent memory [10] Company Strategy and Development Direction - The company is focused on delivering structural cost reductions, with $1,700,000,000 achieved since the start of the program, aiming for $4,000,000,000 to $5,000,000,000 by 2027 [24][22] - A strategic review of the portfolio is underway to maximize shareholder value and ensure effective capital allocation [34] - The company is committed to maintaining a resilient dividend policy and sharing excess cash through buybacks [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in the upstream sector, supported by recent project start-ups and exploration successes [11][10] - The company anticipates slightly lower upstream production in the third quarter, with seasonally higher volumes expected in the Customers segment [30] - Management emphasized the importance of safety and continuous business improvement as part of the operational strategy [34] Other Important Information - The company has made significant progress in its divestment program, with expected proceeds from completed or signed agreements nearing $3,000,000,000 [5][19] - The introduction of a new BP refining indicator margin aims to enhance external understanding of refining profitability [34] Q&A Session Summary Question: What are the expectations for upstream production in the third quarter? - Upstream production is expected to be slightly lower compared to the second quarter [30] Question: How is the company addressing cost reductions? - The company has delivered around $1,700,000,000 in structural cost reductions and aims for $4,000,000,000 to $5,000,000,000 by 2027 [24][22] Question: What is the outlook for dividends and share buybacks? - The company remains committed to a resilient dividend policy and plans to share excess cash through buybacks, with a $750,000,000 buyback announced for the second quarter [20]

Financial Data and Key Metrics Changes - The company reported an underlying net income of $2.4 billion and operating cash flow of $6.3 billion for the second quarter, with a working capital build of $1.4 billion [6][17] - A dividend per ordinary share of $8.32 was announced, reflecting a 4% increase, alongside a $750 million share buyback program for the second quarter [6][18] - Operating cash flow increased by $3.4 billion compared to the previous quarter, driven by higher earnings and a lower working capital build [17] Business Line Data and Key Metrics Changes - Upstream production increased by approximately 3% quarter on quarter, averaging 2.3 million barrels per day for the first half of the year [6] - The gas and low carbon energy segment's underlying financial result was $500 million higher than the previous quarter, while oil production and operations saw a $600 million decrease [14] - In the Customers and Products segment, underlying profit was around $900 million higher than the previous quarter, marking the best second quarter performance in over a decade [15] Market Data and Key Metrics Changes - Refining availability was reported at 96% for the first half of the year, with a 3% increase compared to the same period last year [9] - The company completed two significant refinery turnarounds in the quarter, contributing to improved competitiveness and reliability [10] Company Strategy and Development Direction - The company is focused on delivering a compelling investor proposition and sustainably growing long-term shareholder value, with a commitment to continuous business improvement [5][33] - A strategic review of the portfolio is underway to maximize shareholder value and ensure effective capital allocation [33] - The company aims to deliver $4 billion to $5 billion in structural cost reductions by 2027, with significant progress already made [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in the upstream sector, supported by successful project startups and exploration discoveries [9] - The company anticipates slightly lower upstream production in the third quarter, with seasonally higher volumes expected in the Customers segment [28] - The outlook for cash taxes paid is expected to be around $1 billion higher than the second quarter due to timing of installment payments [29] Other Important Information - The company has made significant progress in its divestment program, with expected proceeds from completed or signed agreements now close to $3 billion [4][17] - The company has achieved around $1.7 billion in structural cost reductions since the start of its cost reduction program [21] Q&A Session Summary Question: What are the expectations for upstream production in the third quarter? - Upstream production is expected to be slightly lower compared to the second quarter [28] Question: How is the company addressing cash flow and capital expenditures? - Cash taxes paid are expected to be around $1 billion higher than the second quarter, and the company plans to redeem $1.2 billion of hybrid bonds in September [29] Question: What is the company's approach to refining margins moving forward? - The company will no longer provide guidance on refining margins but will introduce a weekly refining indicator margin to enhance understanding of refining profitability [30][32]

Financial Data and Key Metrics Changes - The company reported a CapEx of approximately $170 million for 2025, down about 65% from 2024, with a full-year CapEx forecast reduced from around $400 million to approximately $350 million [9][10][33] - Production was higher sequentially due to the ramp-up of the GTA project and strong performance in the Gulf of America, although it was lower than guidance mainly due to timing issues [31][32] Business Line Data and Key Metrics Changes - In the Gulf of America, net production was around 19,600 barrels of oil equivalent per day, driven by strong performance from the Kodiak and Oddjob fields [16] - Jubilee gross production was around 55,000 barrels of oil per day, lower than expected due to planned FPSO shutdowns and underperformance of some wells [14][15] Market Data and Key Metrics Changes - The company has hedged 7 million barrels of oil for 2026 with a floor of $66 per barrel and a ceiling of $75 per barrel, taking advantage of higher prices in late Q2 and early Q3 [12][35] Company Strategy and Development Direction - The company aims to grow production, reduce costs, and enhance the resilience of its balance sheet, with a focus on free cash flow generation [5][37] - Future expansion opportunities are being explored, particularly in the GTA project, which is now fully operational, and in the Jubilee field, where consistent drilling is planned [20][38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q2, including production declines and operational issues, but expressed optimism about the potential for recovery through improved data and regular drilling [44][49] - The company is focused on maximizing cash flow and reducing net debt, with expectations of continued production growth into 2026 [33][37] Other Important Information - The company has agreed on indicative terms for a term loan of up to $250 million secured against Gulf of America assets, aimed at addressing upcoming debt maturities [11][34] - A Memorandum of Understanding (MOU) was signed with the government of Ghana to extend licenses, which is expected to facilitate long-term investments in the Jubilee field [15][76] Q&A Session Summary Question: Concerns about Jubilee production decline - Management acknowledged the 40% decline in Jubilee production and emphasized the need for regular drilling to maintain production levels, with plans to bring additional wells online [42][48] Question: Cost reduction strategies for GTA - Management discussed exploring various operating models to reduce costs, including refinancing the FPSO and optimizing operations [50][55] Question: CapEx guidance and sustainability - Management confirmed that the reduced CapEx guidance of $350 million is sustainable, focusing on maximizing free cash flow while progressing key projects [60][64] Question: License extension details - Management clarified that the MOU includes a commitment to increase gas volume while maintaining existing fiscal terms, allowing for a consistent drilling program [75][76] Question: GTA costs and future cash flow - Management provided insights into GTA costs, indicating that they expect to normalize costs and achieve a breakeven of $50 to $55 per barrel, with free cash flow sensitivity linked to oil prices [81][86]