Kate Thomson: Yeah. Sure. Yeah. Thanks, Roger. I was out with TA actually about a month ago. We talked a lot about this. So the sector that TA has historically focused on is a sector where there are probably smaller sized truckers capturing a higher margin. As a consequence, they’re probably far more sensitive to spot price. And actually, what’s happened in the spot freight rate over the last couple of years is it has declined. If these truckers are being sensible, they don’t drive when the economics don’t make sense. So as a consequence, we’ve seen volumes down. What I would say to you is, is having spoken with Debbie and her LT out there and they are all over how they offset that until such point as the recovery starts to kick in and we expect currently that trucking recession will probably start to mitigate towards the end of this year with a full recovery next year.
So as you would expect, thereafter streamline, streamlining their costs, they’re contemplating how to high grade their site portfolio and they’re focused on securing some customers which diversify their customer base into the larger fleets where you may get slightly slimmer margins, but you’re going to capture upside from the non-fuel income.
Murray Auchincloss: Great. Thanks. Thanks, Kate. I think on the Permian, Roger, obviously, we got our third, we got our third central gathering process up online now. I think that takes our capacity for black oil up to around 100 KBD. So I think a lot of the wells are drilled and we should be popping them and filling that up as we move through the second quarter. Conditions inside the Permian, it’s a bit looser there’s, there are more rigs available, obviously from low natural gas prices that’s making the supply side of it a little bit better, and no real change from October on the productivity. All the recent benchmarking we’re doing is showing us at the top of the pack on the productivity on NPV for drilling spent. So we’re proud of the team for driving that as well.
We’re not feeling any constraints. We’re not feeling any constraints on export at this stage and we’re looking forward to getting the fourth and last central facility online mid-next year. So hope that helps. I’ll be out there next week to see the guys and next quarter, I can give you a more detailed report.
Roger Read: Thank you.
Craig Marshall: Thanks very much. We’re actually going to jump to an online question that we’ve received from Alejandro at Santander, he’s struggling with the phone lines. Sorry about that, Alejandro. He’s asking Murray and Kate about Namibia and the investment plans there after the Azule Energy announcement?
Murray Auchincloss: Yeah. Sure. I can take that one. So we’ve been in Namibia as BP for about a decade. We entered back in 2010 or 2011, drilled a couple of dry holes, unfortunately last decade, but we’ve been monitoring it ever since. Given the recent success that’s happened, we started to look at some farm-ins and obviously, we were able to farm into the blocks south of Galp’s big discoveries with Rhino. We farmed in for 42%, and we chose to do it through E&I ourselves, chose to do that through Azule, which is our West African, our West African energy company. So we’re looking forward to completing that farm-in. We then move towards drilling wells later in the year. There are two wells to drill under our agreement and we’ll see how it goes, but it’s a nice little addition to Azule.
It’s got a great growth profile inside Angola to the end of the decade and cross fingers if we get some discoveries, it gives it legs for another 10 or 20 years. So we’ll see how the drilling goes. You can never count on these things, but it looks like it’s at a nice postcode. Craig, back to you.
Craig Marshall: Thanks, Murray. We’ll take the next question from Christyan Malek at JPMorgan. Christyan?
Christyan Malek: Hi. Thanks for taking my questions, and sorry for the background noise, in the airport. And two questions, please. First, just on the cost savings. I have to congratulate you, for continuing to drive efficiencies. My only sort of kind of just sort of question around growth is your liquids growth in ’26 back to that sort of theme. Why aren’t you thinking or framing in the same way you’re doing costs, but more in an upcycle view of you to consolidate or scale up your liquids given your constructive outlook? It strikes me as sort of very bare market to continue to focus on cost, albeit that’s absolute necessary. So just wanted to hear more about your liquids plan, particularly given the U.S. consolidation that we’re seeing and how do you frame that on a medium-term basis given we are after all talking about 2026?
And the second question is around low carbon and trading. Is there a plan or thinking about being more explicit around those businesses in terms of breaking them up to show your cash flow pathway? Clearly, trading is more challenging given it’s more discrete, but on the low-carbon side, just to understand better what the free cash flow trajectory will be on a medium-term basis as we start to think about drawing a path to EBITDA targets? Thank you.
Murray Auchincloss: Great. Kate, do you want to lean off with disclosures on low carbon trading?
Kate Thomson: Yeah. So thanks, Christyan. So the low carbon trading is obviously included in our trading numbers. It’s also included in our transition growth engine disclosures when we make those at the half year and the full year, but we don’t, we won’t be breaking those out beyond the five transition growth engines. I think there’s enough complexity in that disclosure as it is already.
Murray Auchincloss: And on liquid side, Christyan, I guess in our Denver presentation to you, back in October, we talked about a pretty resilient oil portfolio with the capacity to grow production through 2027 by 2% to 3%. As we look at our sanctions moving forward from sanctions in the Middle East to sanctions in the East Coast of Canada to Brazil to the Gulf of Mexico to the North Sea, potentially to Azule and Aker BP. We have an awful lot of oil in the portfolio. And as we make those sanctions, that would give us more duration to grow the oil business as well beyond 2027, but I can’t really, I can’t really commit to that until I’m clear, until I’m clear about which sanctions we move forward. I think on the question of do you want to go buy?
I’m a countercyclical human being with low carbon energy in the doldrums right now, now is the time to go countercyclical. That’s why we’re doing light source BP at a countercyclical moment in time and watch the space, we more do, we may do some more things over the coming years in a countercyclical environment. On the oil side, with oil at $85 or $90, I’m not sure it’s the right time to be buying oil. We might consider some bolt-ons, but we just would prefer to be countercyclical rather than pro-cyclical and we do, we do have some pretty strong growth as we look forward, especially relative to the competition, especially in the high margin basins of the OECD. So I feel okay where we are right now. I don’t want to do high priced acquisitions and instead I’ll go countercyclical with scarce cash where countercyclicality exists.
Hope that helps, Christyan.
Christyan Malek: Thank you.
Craig Marshall: Thanks, Christyan. We’ll go to Irene Himona at Bernstein, next. Irene?
Irene Himona: Thank you. Good afternoon. My first question, Murray, going back to the $2 billion cost saving. You did mention, I believe, 8% cash cost inflation on that $22 billion cost base. So I wonder, should we think of the $2 billion reduction target as partly or wholly removing that inflationary impact and leaving the sort of underlying cost base flat, would you say? And then secondly, on convenience, I mean, your convenience gross margin grew 62% in ’23, and for an increase in site numbers of about 19%. So I wanted to ask so far in ’24, are you seeing similarly fast improvements in that convenience margin or faster, slower? Where do we stand? Thank you.
Murray Auchincloss: Yeah. I think on the $2 billion cost savings, Irene, our intent is to drive that through the business and drive that down to free cash flow delivery. So eating inflation is how I think about these things. And it’s why we say at least two, maybe something above that takes us to beat inflation, but I’d like to try to beat inflation, especially as it’s — as that’s starting to mitigate as we look at all what all the central banks are telling us these days. So I would like to drive that through to bottom-line cash flow delivery and that certainly as a leadership team is what we’ll be working towards moving forward. Kate, do you want to tackle the convenience GM question?
Kate Thomson: Yeah, thanks. Thanks, Irene. Hello. Nice to hear you. Yeah. In terms of convenience, so year-on-year, if you look at 1Q versus 1Q ’23, you’re seeing a significant impact there with regard to TA. We’ve seen which we acquired last year, that’s just opened its 300 sites. So it’s driving significant volume. What I would say on gross margin, if you exclude TA, we’re seeing between 9% and 10% per annum growth in our gross margin year-on-year. So that’s what gives us confidence with regard to convenience delivery.
Craig Marshall: Okay. Thanks very much. We’ll take the next question from…
Irene Himona: Great Thank you.
Craig Marshall: Sorry, Irene. Thank you. We’ll take the next question from Lucas Herrmann at BNP. Lucas?
Lucas Herrmann: Yeah. Thanks very much, Craig and a couple. One is very straightforward. Just on the share count and the reduction this quarter, the buybacks obviously being 1.75, the share count reductions just over $130 million. I presume that the absence of a greater reduction is because you’ve issued a lot of stock with employees, the benefits or not the benefits. And so we’ll see, yeah, more material sums go out on buyback than the 1.75 or so you’re indicating for future quarters? That was the first. And the second was almost, yeah, congratulations, you’ve achieved 30% growth on your 2022 Permian for your 2022 BPX numbers already. Does it make this number seem rather modest, shall we say, but I think more importantly, Murray, can you just comment on the profile we should expect for liquids as you move through 2025?
