bp

First quarter 2026 results

Webcast Q&A Transcript

Tuesday, 28 April 2026

This transcript contains minor modifications from the original for accuracy or clarification, none of which change the substance of the original. Please refer to the cautionary statement included in the 1Q 2026 webcast slides.

Q&A transcript

Craig Marshall: Welcome to our 2026 financial results call, which we are hosting today from our offices in Washington, D.C. I am joined by Meg O'Neill, chief executive officer; Carol Howle, deputy chief executive officer; and Kate Thomson, chief financial officer.

I hope many of you will have seen our 1Q video by now, and we look forward to taking questions shortly. Before that, though, let me hand over to Meg for a few brief opening remarks. Meg?

Meg O'Neill: Thanks, Craig, and hello, everyone. It is great to be here. As I said in the video, it is a privilege to be here as bp's CEO, and I am really excited about the opportunity ahead of us. This has been another strong quarter for bp despite a lot of external volatility. Importantly, our underlying operations continue to perform well.

We produced 2.3 million barrels of oil equivalent per day, supported by continued high plant reliability, higher production in the Gulf of America and strong performance in bpx, offsetting disruptions in the Middle East and some divestment impacts.

Refining availability was above our target of 96%, and throughput was over 1.5 million barrels per day, our highest quarterly figure in four years.

In trading, our focus remains on capturing value through-the-cycle, while operating within a clearly defined risk framework. This all supported delivery of $3.2 billion of underlying net income, significantly higher than the fourth quarter, and $8.9 billion of operating cash flow before a working capital build of $6 billion.

We also made progress in simplifying our portfolio with the agreed sale of the Gelsenkirchen refinery announced in March, further increasing our structural cost reduction target by end 2027. While net debt increased this quarter, this was

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largely due to a build in working capital. We remain confident in delivery of our net debt targets, and we also announced today our plan to reduce our corporate hybrid stack by over $4 billion by the end of 2027, subject to market conditions.

So continued strong operational and financial delivery and accelerating strategic progress. A lot of really great work by the team. Carol, Kate and I are looking forward to your questions.

With that, I will hand back to Craig to take us through the Q&A.

Craig Marshall: Thanks, Meg. I am going to take one question per person, please, so everyone gets the chance to ask, and we will aim to wrap the call up in about 45 minutes. On that, first question we will move to Josh Stone at UBS. Josh, good morning or good afternoon.

Josh Stone (UBS): Good morning, good afternoon. Thanks, Craig. Hi, Meg. Congratulations on the new role. I wanted to touch on something you said in your prepared remarks about going back to the traditional upstream/downstream reporting lines with a review to reduce complexity, increase accountability. Can you maybe just expand on what this means in practice for bp? Perhaps where you see the biggest benefits coming from there? What needs to change internally? And also, how the organisation has responded so far to that announcement? Thank you.

Meg O'Neill: Thanks for the question, Josh. Look, the decision to move towards an upstream/downstream model is all about changing ways of working and driving simplification, driving improved accountability and focus and speed and decision making.

If you think about how the business operates, it is quite a different skill set. The skill set associated with finding oil and gas resources, developing and producing them is quite different from the way of thinking that is associated with getting customers the products they need, getting refining set up to deliver the product, the product mix, be it gasoline, diesel, jet.

It is also important to really highlight the value that we see within bp of our trading organisation, which allows us to maximise value from molecules as they move from refining all the way to those end customers. It is all about driving

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accountability, driving simplicity and efficiency and decision-making. The initial response from the organisation has been very positive.

Craig Marshall: Thanks, Josh. We will move next to Michele Della Vigna at Goldman Sachs. Michele?

Michele Della Vigna (Goldman Sachs): Congratulations on a quarter that really showed many of the strongest characteristics of bp, from plant reliability to trading to downstream margins. The key missing element remains production growth. If we look back, Meg, at your time as CEO of Woodside, you more than doubled the size of that company. I am just wondering, how important do you think reviving this oil and gas growth is to the bp investment story? Do you think that the company has the right resources to deliver it?

Meg O'Neill: Yes. Great question. Look, one of the things that I would highlight is some of the exploration success that we have had over the past year and a bit. We have announced 14 discoveries since the start of 2025. I think it is important, Michele, to highlight that a number of those are, what I would call, short cycle. Those are discoveries that can quickly be tied back to existing infrastructure. Those are opportunities to bring production online at pace, which helps with mitigating production decline, which is something we, of course, always fight in the base business.

We do have other more material longer term growth options. Bumerangue is probably the most noteworthy. It is not every day that you discover an eight billion barrel in place field. Now obviously a bit of work to do. We need to do appraisal, but that is a significant part of our longer-term growth story, complementary to the work that is underway already in the Gulf of America with the Paleogene development and bpx with onshore.

Production growth is part of our plan, but I think it is important to go back to some of the points we made in the announcement and points that Kate has been making for a while, is we have got to get the balance sheet strengthened. A stronger balance sheet puts us in a position where we can make those investments in production growth through the cycle. That is how we are thinking about the totality.

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I am excited about the opportunities we have, but the focus right now is making sure we have got that laser focus on delivery every day and strengthening the balance sheet.

Craig Marshall: Thank you, Michele. We will turn next to Doug Leggate at Wolfe Research. Doug, over to you.

Doug Leggate (Wolfe Research): Thanks, Craig. Good morning, everyone. Meg, you have inherited a capital structure which has been getting a lot of attention. Obviously, the hybrids, get mentioned that was part of the targeted reduction in debt and equivalents. I am just curious, from your standpoint, is there an ideal capital structure that you think of? I mean, the current environment, for example, one could argue there is a line of sight where the hybrids could be taken out completely, given the weight of the prospective cash flow you have. I am just curious how you think about what defines the capital structure and where you see the right balance of debt and equity and their equivalents?

Meg O'Neill: Yes. Thanks, Doug. It is a really good question. One of the things that I think about, and this is probably a very simplistic way of talking about it, and I will hand to Kate for a bit more detail, is when we think about sources and uses of cash, one of the things we are trying to tackle is the amount of cash that is going to liabilities. That underpins the work that we are doing, strengthening the balance sheet, tackling that debt, now tackling hybrids.

You would be aware of the Deepwater Horizon obligations that we are chipping through, and the end of those obligations is within sight just a few years down the track. It is all about reducing the amount of cash that we generate that is going to these liabilities, which means more cash is available for investing in the future of the business and returning value to shareholders.

I will hand to Kate to talk about the stack and more specifics.

Kate Thomson: Yes. Thank you, Meg. Hello, Doug. Good to hear your voice. Back in February, we made the decision as a Board to pause our buybacks. That was a very deliberate act to accelerate the pace with which we were going to strengthen the balance sheet and deliver on our net debt target.

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Accelerating the deleveraging is incredibly important. I am probably going to echo some of Meg's earlier comments because it does two things. It creates the platform for growing our company. It gives us greater generation of free cash flow, lower financing costs and means that we have confidence in resilient distributions to shareholders and investing for growth through cycle. Those are really important.

The level of confidence that we have in the delivery of our net debt target is what has given us the space to be able to make an economic decision around $4 billion of our hybrids, which is very clearly the two tranches that come forward for redemption in 2026 and 2027.

I would go back, though, to the holistic view of our total financial obligations that we shared deliberately in February. We are moving at pace to reduce across that, but we will be making economically driven decisions as we step into that and rebuild the balance sheet. That is all about how we create our platform for everything that is to come.

Craig Marshall: Thank you, Kate. Thanks, Meg. Thanks, Doug. We will move next to Biraj Borkhataria at RBC. Biraj?

Biraj Borkhataria (RBC Capital Markets): Hi. Thanks for taking my question. Just to follow-up on the on the hybrid stack. It is more of a technical question. I understand you cannot talk about your intention to do more than the 25% you have announced. In practical terms, there are obviously various call dates for the remaining bonds. Would you need to wait for those and step through those step by step, or is there a scenario where if you had the disposable cash, you could do all the remaining hybrid bonds in one go? Just thoughts on that. Thank you.

Kate Thomson: Okay. Biraj, good to hear your voice. Just in terms of the announcement that we have made today and how to think about that. We expect that S&P will permit the reduction under their methodology on corporate hybrids. Remember that it is $12 billion, the original hybrids that we issued in June 2020. So, we expect to maintain the equity treatment on that.

In terms of moving forward, I think it is incredibly important. Two things. One, hybrids remain an important and permanent part of our capital structure. Also back to what I was saying a minute ago about economically driven decisions,

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retiring hybrids ahead of redemption periods can be very expensive depending on market conditions. That is something that we would think incredibly carefully about. I think the most economic way to retire hybrids is to allow them to roll off as they hit those periods. The first one comes towards us now, the window opened in March and concludes in the second quarter, hence our guidance in terms of what we are going to be doing.

Do not forget there will be some working capital build in the second quarter. It is a component of our working capital that rolls off.

Craig Marshall: Thanks, Biraj. We will take the next question from Lydia Rainforth at Barclays. Lydia?

Lydia Rainforth (Barclays): Thank you very much. Meg, welcome. I am going to come back to this idea of talking about simplifying bp. Can you give us some concrete examples of what you actually mean? Because again, when I am thinking about the upstream/downstream reorg, we are talking about simplification a lot. Then just linked to that, are the targets that bp have already set out the extent of the ambition we should think about, or should we think about there being more than that over time? I am not talking short term, but just over time. Thank you.

Meg O'Neill: Sure. Thanks, Lydia. Look, on the simplifying front, perhaps the clearest example is with the structure right now with production and operations - refining sits under that portfolio, which has been really incredibly valuable for driving performance improvement in refining. If you look at our reliability numbers, upstream/downstream are both in that 96% range. I think that is a reflection of a value of having brought those parts of the business together.

But it adds complexity if you think about how refining fits in the value chain. Getting refining right is about getting the right supply into the plants and getting the right products to customers. Much closer links to the customers and products and the mobility and convenience and aviation businesses.

Moving refining into downstream really aligns it with the flow of products and allows the leader of that business to think holistically about how do you maximise value from the front of the refinery, all the way to the end customer. So,

I think that is a good simple example of how the upstream/downstream will drive more efficient decision makings.

Now, the targets that we have announced out to 2027 are still in place. That would represent first quartile performance across the business and in all of our support functions.

But obviously, we are going to be relentless in continuing to challenge ourselves, continuing to learn, continuing to benchmark, and making sure that wherever we are in the business, that we continue to have that chronic drive for cost efficiency for safe, reliable operations, and for best-in-class performance. That is our goal.

Craig Marshall: Lydia, thank you. We will take the next question from Chris Kuplent at Bank of America. Chris?

Chris Kuplent (Bank of America): Thank you. Good afternoon and welcome, Meg. Can I ask a very open question? I am sure you have been very excited for months now to arrive at bp. Can you look back and say what has been the thing that is getting you most excited about it, perhaps already last year? Since you have actually entered, what has been the most surprising thing you have encountered? The two may be the same thing, so I hope I get away with asking just this question. Thank you.

Meg O'Neill: Sure. Thanks, Chris. Look, it really is an honour to be part of the bp team. I have worked in a large integrated company. I have worked in a pure play E&P. The thing that excites me about bp is the breadth of the business. We have got world-class upstream with some really fantastic assets. We have got a very dynamic downstream in some very critical markets for our customers, and then a world-class trading organisation.

I think we have got all of the ingredients to be a really phenomenal company. Kudos to the team, we have been on a journey for the last couple of years trying to make sure that we are delivering on the potential of the organisation. So, I think there is opportunity to continue that journey, to bring a bit more momentum to the decisions and the progress that the team has been making over the past year.

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In terms of most surprising, look, I would say it has been really a warm welcome, which is not surprising. I think bp's culture of care is well known, but seeing the commercial capability up close and personal, which I had only ever seen across the table as a joint venture partner, we have got some really capable people here. I think we have got all the raw ingredients between the assets and the talent to deliver on the full potential of the corporation.

Craig Marshall: Thank you, Chris. We will take the next question from Henry Tarr at Berenberg. Henry?

Henry Tarr (Berenberg): Thanks for taking my question. I suppose to come back to something that was asked earlier. You referenced a stronger and simpler bp. As you look at the business, are there particular core regions or assets that you think are very strong? Then perhaps others which might seem, even after the divestment programme, that are not quite as core. Then within that, how do you view bpx as part of the portfolio? Thank you.

Meg O'Neill: Sure. Thanks, Henry. Look, you spotlighted one of the core assets. Our Americas position really is world-class. If you look across the breadth of the business, the US, and as Craig said we are doing this call from D.C., is incredibly important. All parts of the business are present here from upstream, onshore, offshore, downstream, trading. We have got a very significant footprint here in the US, and a lot of our future growth is coming from the US between the Paleogene and bpx.

Going south from here, Bumerangue is again a very significant discovery, eight billion barrels in place. That will be an important part of the business as we move forward in time.

Then some of our core areas, the Middle East and AGT. We have got some real high-quality assets there. There is a lot of strength in the business as it stands today. Now the team has been doing tremendous work already, looking at assets and parts of the business that might not be core to our long-term journey. Kudos to the organisation for getting the Castrol deal across the line late last year. You would have seen the announcement of the Gelsenkirchen refinery divestment.

Every business needs to chronically be asking ourselves, what are the assets that are with us for the long term, and what are things that might be of greater value

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in someone else's hands. That is a good chunk of the work that Carol is going to be doing as Deputy CEO.

Craig Marshall: Thanks, Meg. Thanks, Henry. We will take the next question from Martijn Rats at Morgan Stanley. Martijn?

Martijn Rats (Morgan Stanley): Thank you. Also welcome from my part. I wanted to ask you two things. It feels like a bit of a missed opportunity not to ask you about Iraq. bp is such a large operator there with the Rumaila field. I was wondering if you could give us your thoughts on if the Strait of Hormuz were to be opened, what are we looking at in terms of the steps that need to be taken to ramp up production? What does that operationally require, the logistics of the supply chain? How much time would that take? I would be really interested in your thoughts.

The second thing I wanted to ask has some longer term strategy implications. There is real swing to earnings on a quarterly basis from bp's trading business. Of course, if you have physical assets, sometimes trading opportunities naturally arise, and a company like bp should take advantage of that. If the trading business grows over time, there is also a point where it starts to change the nature of the company a bit. I mean, like you can go from an asset company with some trading, and it can become a trading company with assets, if you see what I mean.

I was wondering, given that you have taken a fresh look at bp, what do you think is the natural size of the trading business within the company? At what point does it become too large, perhaps?

Craig Marshall: Martijn, there is definitely more than one question in there. So I am going to be pretty deliberate. We will take your first question on Iraq, and then I am sure the question on trading may come back up. I do want to make sure we get through everybody. Maybe Meg on Iraq, and I am sure somebody can ask about trading and ask Carol.

Meg O'Neill: Sure. Well, thanks for the question, Martijn. We put it in the presentation. Our total production from the Middle East is around 400,000 oil equivalent barrels per day. We have historically exported about 100,000 barrels per day through the Strait of Hormuz, which includes barrels from Iraq and some

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barrels from Abu Dhabi. It is worth noting that we have also been able to lift some Abu Dhabi production from the Fujairah Terminal.

Look, the Rumaila field is operated by the Rumaila Operating Organisation. We have involvement as a technical services contractor. Questions on what it is going to take to get that back online are probably best directed to the operator. We stand by ready to work closely with the Iraqi government and with the operator to provide the advice and insights we can on getting the field back online as soon as possible, once the shipping restrictions are lifted.

Craig Marshall: Thanks, Meg. We will turn next to Lucas Herrmann at BNP. Lucas?

Lucas Herrmann (Exane BNP Paribas): Thanks very much, Craig, and Meg, and all the team, actually. Best of success with everything. I want to ask a question on LNG trading, probably directed at Carol. If I go back to 2022, the company very proudly talked about the redirection of 200 or so cargos. One of the features, I understand, of your contracts is 90% are written with redirection clauses. If I think about the environment we are in now, the volatility, the spreads that one can see today, how do I think about your ability to maximise that? To what extent is there length in the portfolio? To what extent are you starting to enact those clauses on the basis that my initial presumption was correct? Thanks very much, Carol. Any guidance would help.

Carol Howle: Lucas, you know we do not give guidance. Now, good to hear from you. With regards to the LNG portfolio, you are right. We can redirect our cargos. More than 90% of our cargos are re-optimised prior to final delivery.

What I would say is, we are still growing our LNG portfolio. Last year, we had just under 27 million tonnes per annum in terms of the strategic portfolio, which is up year-on-year and around 15 million tonnes of what we call the incremental merchant volumes. There is growth in that portfolio.

There is also great diversification in the portfolio. If I look at it in terms of our ability to rewire and think about where we can get supply into as you say these demand centres, particularly with the disruptions that we are seeing, we have supply from Trinidad, Mauritania, Senegal, the US, and also Coral in Mozambique, all of which we can look to optimise to make sure that we get LNG to customers.

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We still run the portfolio in that way. We are still looking to make sure that we optimise bp's assets as well as support customer flows and deliveries. On that basis, we continue to work through that. Just to finish off, 2022 was a little bit different in terms of we did see TTF prices surge about 300%. Last quarter, it was around 100%. So slightly different levels of volatility, but the fundamentals of the business are still the same.

Craig Marshall: Thanks, Lucas. We will move next to Alejandro at Santander. Alejandro?

Alejandro Vigil (Santander): Thank you for taking my questions, and best of luck, Meg, with your new challenges. My question is about when looking at the market expectations of your role, Meg, in the company that could provide a boost in terms of the strategic delivery of the company. In which of the key targets of the company in terms of divestments, in terms of cost cutting, in terms of a stronger balance sheet you see more upside in the company today? Thank you.

Meg O'Neill: Yes. Thanks, Alejandro. Appreciate the question. Look, there is opportunity, and the team is focused across the breadth of the business. One of the things that I am very focused on is ensuring that we are capturing maximum value from all of the assets we have in our portfolio today. One of the things I would like to frame is, there are some big rocks, things like the Castrol transaction that has a material positive impact on the balance sheet. There is lots of work that the teams can do every single day to increase value to bp shareholders. That is working on reliability. It is things like well optimisation, making sure we have got the right slates running through the refineries to get the products that the customers need and that offer the best value for bp shareholders.

There is a tremendous amount of work to do to continue that focus on safe, reliable, cost-efficient operations, to relentlessly drive to be cost-efficient across the business, and that includes the above field or staff functions. The trading business really is world-class, and you are seeing the positive impact of that part of the business in the results today.

I am focused on, it is a bit of all of the above. The balance sheet repair is critical, and again, it is about trying to make sure that we have more of the cash that we

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generate available for investing in growth and value to shareholders. That, at the end of the day, is something that is going to be a critical focus for the leadership team for the coming couple of years.

Craig Marshall: Thanks, Meg. Thank you, Alejandro. We will take the next question from Matt Lofting at JP Morgan. Matt?

Matt Lofting (JP Morgan): Thanks, everybody, and Meg, welcome to bp. Wishing you the very best of luck. You spoke earlier in the video released earlier today on creating durable cash flows. I wondered if you could just unpack that a little bit in terms of how you and the team are thinking about that over and above baseline returns and some of the metrics that perhaps go into thinking about that. Thank you.

Meg O'Neill: Yes. Thanks, Matt. Great question. One of the things that we are all quite aware of is the fact that we are in a very cyclical industry. We produce a commodity that, if you look back over the last six years, has had some pretty extreme price volatility. We need to make sure that the decisions we are making on the portfolio and the business allow us to be profitable through the cycle and to be able to have that same disciplined approach to investment through the cycle.

It means when prices are high, we remain disciplined. We continue to have our belt tight on operating expenditure and capital expenditure. That is the thing that will serve us well when there is a lower price environment. It means stress testing the investment decisions we make, stress testing the portfolio, making sure that, again, we have that resilience to a low price environment.

Kate, did you want to elaborate on that?

Kate Thomson: I guess maybe a couple of points. The portfolio gives us quite a degree of diversification in a number of dimensions, both in terms of product mix, geographical exposure, fiscal exposure, and that is part and parcel of being resilient.

In terms of a further upside, one area of focus that we have been working hard on as well is around the capital frame. It is incredibly important at moments like this that we keep tight control on capex, and then the focus is on excellent

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execution against the dollars that have been put to work in the various parts of the business.

Craig Marshall: Thanks, Kate. Thank you, Meg. We will take the next question from Jason Gabelman at TD Cowen. Jason?

Jason Gabelman (TD Cowen): Thanks for taking my question. I wanted to go back to the capital structure, and it seems like the balance sheet, the way things are moving can not only meet the target but potentially exceed the $14 billion debt target when you account for the Castrol sale. How do you think about the right size for the balance sheet? Do you think that $14 billion is the floor? Can you go below that as you think about developing some of these high-quality assets that you have in the hopper? More broadly, should we expect a larger capital framework update now that Meg has taken over?

Kate Thomson: Hi, Jason. In terms of capital and the $14 to 18 billion, look, that is our primary focus right now, the delivery of that. There are various components that we will deliver on that, not least the closing of the Castrol transaction, which we have said will likely close towards the back end of 2026. It is incredibly important we remain focused on delivery of that as the primary target. As you can see from what we have said today, we are also reducing our hybrid stack, which drives lower financing costs in that dimension. We will continue to optimise on that.

On capex, we have set a frame of $13 to 15 billion for the next two years. I think that feels right. It is the right capital structure to maintain and grow the company. Right now, as I have just said a minute ago, keeping tight control on that space is very important, and this year we have tightened it further to $13 to 13.5 billion. That feels good. It is the right balance around investing in the core parts of the business as well as focusing on and growing some of our future production that you can see coming online. Meg referenced some of the short cycle stuff. We are also investing in some of the longer stuff. That is about creating the right balance.

Craig Marshall: Thank you, Kate. We will take the next question from Fergus Neve at Rothschild. Fergus?

Fergus Neve (Rothschild): Hi, everyone. Thank you very much for taking my question. I just wanted to go back to exploration, which you touched on briefly

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earlier in the call, and is a real interest at the moment in the industry. You have announced discoveries in Egypt and Angola this year. The Matsola well offshore Libya was being drilled when we all met for the 4Q results, which you were quite excited about. I wonder whether you could give us an update on your exploration activities so far this year, a look ahead to any other wells we should be looking out for as the year goes on? Thanks.

Meg O'Neill: All right. Well, thanks, Fergus. Appreciate the interest in exploration. It is one of the key engines to get new opportunities into the front end of the business. Very pleased with the success that the teams had over the past, call it, year and a quarter.

As we said, two discoveries, so good progress in Egypt and Angola. Egypt is a great example of discovery that is very close to existing infrastructure, something that has that ability to be commercialised at pace.

Matsola, you may have heard from our partner in that, was a non-commercial discovery. It is in a very big and diverse basin with a number of prospects, and we have further exploration opportunities in Libya that we will be pursuing over the course of the coming years.

Perhaps another one to watch is we will be drilling another well in Brazil on an exploration prospect there ahead of doing the appraisal drilling on Bumerangue. Those are probably some of the ones to be watching out for over the course of 2026.

Craig Marshall: Thanks, Fergus. We will take the next question from Kim Fustier at HSBC. Kim?

Kim Fustier (HSBC): Thank you for taking my question. Kate, you flagged that the difference between the Refining Indicator Margin and the realised margin could be greater than $5 per barrel if current conditions persist, driven by crude differentials, product yields, and freight costs. Are you able to give any more colour on those three components? Is there anything you can do to capture more of the margin and mitigate any headwinds? Can you do things like tweak refinery product yields towards more jet and diesel?

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Kate Thomson: Yes, I will take that, Kim. Thank you for the question. What we are trying to do here is give as much help as we can to the market in terms of how to think about rules of thumb in what are pretty unusual circumstances regarding our basket of commodities. We have described the fact that the RIM is a little bit dislocated from realised margins right now, in terms of realised margins being below the Refining Indicator Margin.

I have said three things are contributing to that. One is feedstock availability. One is product yields. It is volatile. We are producing output that I would describe as different from standard, and that is very much about trying as much as we can to create product that our customers need around the world and then ship it to those destinations. Then, of course, we have got higher freight costs.

In terms of where we are seeing it the most, at the moment, we are seeing it more in Europe than anywhere else. As you would appreciate, this remains an incredibly volatile situation. I am not going to predict how the next couple of months will unfold. We will give as much colour as we can once we get to the trading statement for the second quarter to try and describe how it has actually manifested.

Craig Marshall: Super. Thanks, Kim. This is the last question. I will make the offer, given we have time, to come back to Martijn for his follow-up after this question. Mark Wilson at Jefferies first, please.

Mark Wilson (Jefferies): Okay. Thank you. bp has seen very strong exploration success in recent years and conversion of that discovered contingent resource into reserves is what changes reserve life in years, which has been a focus for various companies in the sector. I would say less of a focus for bp, but bp's reserve life is lower than the average. Could I ask you therefore, Meg, what is your view of a healthy reserve life number for a modern IOC? Does it have to be double-digit, or has technology, cycle time improvements, etc., changed that number fundamentally? Thank you.

Meg O'Neill: Well, thanks for the question, Mark. Look, we have been pretty upfront about the journey we have been on. We went through a period in the early 2020s where we were not exploring as actively. We have made some adjustments

in the last couple of years to refocus on this core approach to bringing new opportunities into the business.

We have also signalled that we want to be getting our reserve bookings up. Good progress was made last year. Kate will remind me of the number.

Kate Thomson: 90%, of which about 15% was due to price. If you back out price, it was about 76%. That was a material improvement.

Meg O'Neill: Yes. We are making good headway in replacing produced reserves. We have set ourselves a target of 100% reserve replacement by 2027. The team is very focused. As I said, this is a core method for growing the upstream and continuing to refill those opportunities, and something we are laser-like focused on.

Craig Marshall: Thanks, Mark. Okay, we have eight minutes before the end of the call, and I am going to turn back to Martijn for his question, which will be pointed at Carol. Then we do have two follow-ups, I think will take us to the end. Maybe Martijn, you first, and then we will get to Lydia and Alastair for the follow-ups.

Martijn Rats (Morgan Stanley): Yes. Thanks, Craig. Look, the question is simply, what do you think is broadly the right size of the trading businesses within bp. It is large enough to capture the opportunities that there are, but not so large that it starts to dominate other things. That was effectively the question.

Carol Howle: Yes. Thank you. What I would go back to is the main, or the core objective of the Supply, trading & shipping business is to support bp's assets. We are there to make sure from a production perspective we keep our molecules flowing, and we improve net backs. We are there to make sure that we keep the refineries supplied with the best feedstocks. We are there to make sure that we can also help deliver those products to the market, whether that is wholesale or into the retail businesses or into the aviation businesses.

That is the core objective that we have. Then it is around building a merchant portfolio on top of that optimises all of those flows or allows us, as we have talked about before, capital-light opportunity to access growth markets, where, again, we can look to improve the returns on our refined products or indeed our upstream production.

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Then the pure trading piece is the icing on the cake, I would say. That is subject to volatility. It is obviously subject to us managing that very closely and from a risk perspective, from a disciplined perspective.

Really, Martijn, I mean, we are here to serve the bp assets. We are not there to be trading for trading's sake. Our primary goal is to serve bp.

Craig Marshall: Thanks, Martijn. I will go next to Alastair, who has not asked a question first. Alastair at Citi, over to you.

Alastair Syme (Citi): Thanks, Craig. I was actually going to ask another trading question to Carol, I guess within the boundaries of what you are prepared to talk about commercially. Can you explain to me why the oil trading result of the quarter was exceptional and the gas trading only average? I mean, I was under the impression that both commodities moved directionally in the same manner and on pretty much the same external events. Why the relative?

Carol Howle: The first thing I would say is that, as we have all seen, significant structural tightness due to the conflict and also due to the closure of Strait of Hormuz. What we have seen is, on the oil side, we have seen the disruption come through on crude, and we have seen it also come through on refined products, both in terms of impact to the Middle East, but also a reduction in refinery runs in Asia. That is meant we have seen a shortage of supply in Asia, which has then also gradually rolled through into the West.

Now what we have been doing on the oil side is really very much, as I said, focus around making sure that we keep our production flowing, we keep our refineries wet, we keep our refineries producing a maximum yield with regard to where we are seeing the shortage of products for our customers, which would be across jet and diesel. We have been doing that.

We have got a global scale, a diverse portfolio across a number of different geographies that we have been able to rewire supply and demand across, and that is where you have seen that value coming through on the trading side.

With regards to the gas side, as I mentioned earlier on the call, we have not seen the extent of volatility, because sometimes people equate this to 2022. We have not seen the extent of volatility in those gas markets as we saw previously.

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Now, what we are watching, though, and monitoring very carefully are things like the EU stock levels. We are looking at where they should be against the five-year average. It is injection season, so we are watching that very carefully. Obviously, continued disruptions to Strait of Hormuz has the potential to increase the shortages that we are seeing in the market.

Again, as I said, in answer to Lucas's question, the portfolio that we have got across bp and merchant does have the diversification in it to make sure that we work very closely to meet our supply commitments.

Craig Marshall: Thank you, Al. We will come back to Lydia at Barclays. Lydia?

Lydia Rainforth (Barclays): Thanks, Craig. I appreciate the second chance. I was actually just going to come back to Kate and Carol, if I could. I mean, just obviously there has been a lot of changes over a number of years. Can you just talk about through now how you work together as a management team? Partly linked to that, Kate, I mean, just given another restructuring side of upstream/downstream, are there going to be more restructuring charges that we should think about having to put in, or is this generally additive from where we are?

Kate Thomson: Look, Lydia, we do provide updates on restructuring charges. We will do a deep dive into costs generally at the second quarter. One comment I would make, so I will take the opportunity with the mic to say that we have continued to make good progress on our structural cost reductions. We have now delivered another $300 million. We are 70% delivered against the $4 to 5 billion that we originally set out.

In terms of restructuring costs, it is really important that right now we get the organisation of the team inside the company right, and we will step through that at pace, but in the right way, and we will obviously be engaging with our people first and foremost before we say anything else externally. Everything else will flow out of the consequence of how we structure the company and how we run our teams.

Carol Howle: Then from the leadership perspective, as Kate and I talked about earlier in the year, we very much have been working as the management team around the turnaround of bp, and you have seen that delivery coming through on

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the performance side, on the operational excellence side and obviously from the financial perspective and the progress against our core targets.

I do think, Meg will probably be embarrassed for us saying this, but she is a fantastic leader. I do think actually having her in the organisation and bringing in that external perspective, both challenging us where we could be better because I do think bp has more upside, but also supporting us and engaging us in, I think, a very different way.

One of the webcasts from a staff perspective, the feedback at the end was very much around confidence, pride in the organisation and clarity. That is what you will see from the management team going forward.

Craig Marshall: Okay. I am going to sneak in two more and then we will aim to finish pretty promptly. Jason Gabelman has recalled at TD Cowen. Jason?

Jason Gabelman (TD Cowen): Thanks for squeezing me in. Maybe two quick clarifying questions. Is there any risk to your European refineries access to crude, or do you feel like those are well supplied? Can you just talk about how you think about Middle East investments and if you need a higher return given the higher risk we are seeing in the market? Thanks.

Carol Howle: I mean, on crude supply, we are working very hard to keep our refineries supplied. We have a wide range of both upstream positions, but also merchant positions, and so we are able to diversify the slate into our refineries. We are not seeing an issue there, but as I say, the team are working very hard to do that to make sure that we are then supplying our customers.

Meg O'Neill: On the Middle East question, bp has been in the Middle East for 100-plus years. It is a core part of the company's footprint. Everywhere we go around the world, we are always looking at opportunities and risks. It is in the DNA of what we do, is managing a wide variety of risks as we make our investment decisions.

Craig Marshall: Thanks, Jason. Then final quick question from Doug back at Wolfe. Doug?

Doug Leggate (Wolfe Research): Thanks for letting me double-dip. Meg, I inadvertently forgot to say my words of welcome as well. We are very much

looking forward to working with you, and good luck. However, I have a very specific question. As a lifelong upstream professional, coming into an organisation that has just announced eight billion barrels of oil in place with one well, I think as Ariel described it, in an area the size of London, are you concerned about market perceptions? Is there any scenario in your mind where there is not a development at Bumerangue?

Meg O'Neill: Well, look, I saw the Bumerangue announcement, of course, when I was on the outside and thought, okay, this sounds big, but you always need to dig in with a critical eye. I have had the opportunity to sit down with the Bumerangue team, see the seismic data, see the well logs, understand what they are doing in terms of the appraisal plan and development concepts that we are maturing.

Obviously, a bit of work to do given the size and complexity of the resource. The appraisal plan will be really critical to firming up our understanding of not just fluids in place, but how fluids will move through the reservoir and how we might commercialise it. But very impressed with the quality of the team that we have put on this opportunity.

The leadership moved at pace to get some of our best folks onto this so that we can move the opportunity forward with an appropriate amount of pace.

Look, I would say I am excited. It is not every day that you discover a field of this size and quality, so great opportunity for us and pleased with the commercial terms that we have for the opportunity as well. We have got all the right ingredients.

Craig Marshall: That is great. Thanks, Doug. Thank you, Meg, Carol, and Kate. That is the end of the questions. We will wrap up the call, but maybe if I can just hand over to Meg for some closing remarks.

Meg O'Neill: Thanks, Craig, and thanks to everyone for joining us on the call. It has been great to have a first chat with you, and I look forward to getting to know you over the coming weeks, months, and years. I am really pleased again with the strong quarter operationally and financially and the good work we are making on delivering on our strategic goals.

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The priority we have across the management team and the organisation is to accelerate progress with that really tight focus on safe, reliable operations and capital discipline. As you have heard quite consistently and Kate has been leading this since before I arrived, we need to have that really rigorous focus on strengthening the balance sheet. That means we need to stay disciplined in our spending and our investment, and that will allow us to build a more resilient bp.

Just to close, and I know it is a month in, this really is a great company. We have got remarkable people, world-class assets, and I am super excited about the opportunity ahead. Thank you all.

[END OF TRANSCRIPT]

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