BP(BP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Underlying pre-tax earnings reached $5.3 billion, with underlying net income at $2.2 billion, indicating strong operational performance [3] - Operating cash flow for the quarter was $7.8 billion, supporting a growth target for adjusted free cash flow of 20% CAGR from 2025 to 2027 [3][4] - Upstream production increased by approximately 3% quarter on quarter, with upstream plant reliability at around 97% [3][4] Business Line Data and Key Metrics Changes - Underlying earnings in the first nine months were approximately 40% higher than the same period in 2024, with record performance in the downstream segment [4] - Refining availability was close to 97%, contributing to improved margins [3][4] Market Data and Key Metrics Changes - The company has made 12 exploration discoveries in 2025, including significant finds in Brazil and Namibia, enhancing its resource base [4][53] - The refining portfolio has shown strong performance, with refining availability year to date at 96.4%, surpassing the target of 96% [91] Company Strategy and Development Direction - The company is focused on a 12-quarter plan, emphasizing operational performance and strategic progress [3] - A disciplined approach to capital investment is maintained, with organic CapEx expected to be below $14 billion [4][5] - The company is actively pursuing a $20 billion divestment proceeds target, with $5 billion already completed or announced [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum built towards achieving cost and net debt targets, despite market volatility [5] - The company is optimistic about future growth opportunities, particularly in exploration and production, with a focus on high-quality options [5][19] Other Important Information - The company has secured a rig to drill the next appraisal well at Boomerangy, with expectations for a flow test by the end of next year [9] - The strategic review of Castrol is progressing well, with strong interest from potential buyers [15] Q&A Session Summary Question: Inquiry about Boomerangy geological map confidence - Management expressed confidence in the geological map based on extensive data and seismic technology advancements, indicating a significant oil and gas column [8][9] Question: Update on Castrol strategic review - Management confirmed strong performance in Castrol with nine consecutive quarters of earnings growth and noted strong interest in the strategic review process [15] Question: Timing for portfolio simplification announcements - Management indicated ongoing portfolio review efforts and plans to update the market as decisions are made, highlighting recent divestments and project sanctions [20] Question: Insights on AI deployment within the company - Management detailed progress in AI applications across various operations, including predictive maintenance and improved drilling efficiency, contributing to overall performance [25][27] Question: Production guidance and potential risks - Management refrained from providing specific long-term guidance but acknowledged the potential for increased production based on recent discoveries and operational performance [32] Question: CapEx profile and flexibility in budget - Management outlined a CapEx range for the next few years, emphasizing flexibility to adjust spending based on market conditions and operational needs [61][63] Question: Economics of the Kirkuk contract in Iraq - Management provided limited details due to contractual restrictions but noted initial production tests and the potential for significant oil production growth in Iraq [68][70] Question: Update on LNG arbitration case - Management expressed satisfaction with the arbitration outcome and indicated that further updates on damages would be provided as the process progresses [74] Question: Balance sheet and gearing ratio considerations - Management emphasized a focus on net debt reduction and financial resilience, rather than a specific gearing ratio target, as part of their overall financial strategy [77][79]