Murray Auchincloss: For BPX?
Lucas Herrmann: On the startup of. Yeah, for BPX.
Murray Auchincloss: Yeah.
Lucas Herrmann: So as you said, I mean you’re adding 100,000 barrels a day of liquid capacity, but nothing like that as yet is coming through in the numbers, obviously, Bingo or whatever has just started. Just give me some better sense of where you think liquid will actually be at the end of the period.
Murray Auchincloss: Great. Okay, fantastic. Kate, you want to take the first one, I’ll take the second.
Kate Thomson: Yeah. Sure. Hi, Lucas. So you look just on employee share dilution, we haven’t made any disclosures yet with regard to the impact on 2024. If you look back over the last couple of years, I think 2022 was around $500 million and it was just over $670 million last year. It’s probably going to be of an order of magnitude and the same kind of ballpark for 2024, but obviously, it’s going to depend on share price, and actually when employees actually decide to exercise their options, that will drive a levels of impact and we don’t have that level of clarity at this point, but we’ll update you as we step through the year.
Lucas Herrmann: And you would expect to offset that dilution.
Kate Thomson: Yeah, over time.
Murray Auchincloss: Yeah. We will offset over time as you say, Lucas. So a good eagle eye catch. As far as the BPX liquids profile goes, you’re building up the profile from somewhere between 100 and 120 KBD depending on reservoir responsiveness in the Permian by 2025, assuming the fourth facility comes online as well we’re expanding — we’ve got most of our rigs focused on the liquid window in the Eagle Ford right now given where natural gas prices are. So there should be an uplift there. I don’t have a number at my fingertips, but I can make sure we get that for next quarter. Lucas, if you ask the question again. So there is strong liquids growth as we grow across BPX through ’24 and into ’25.
Craig Marshall: Okay. Thanks, Murray.
Murray Auchincloss: Pleasure.
Craig Marshall: Thanks, Lucas. We’ll take the next question from Peter Lowe at Redburn. Peter?
Peter Lowe: Hi, thanks. I guess another question on BPX production, but this time on the gas side, kind of your gas volumes are still growing quite strongly, and a lot of other producers in North America kind of scaling that production. So does that simply reflect your hedging position or can you talk a bit about kind of why that growth is coming through in such a weak gas price environment? And then just a quick one. Are you able to quantify the impact of price lag effects in the Gulf of Mexico and the UAE on the OP&O results in the quarter? Thanks.
Murray Auchincloss: Okay. Kate, do you want to do the price lag and we’ll come back to the gas profile?
Kate Thomson: Yeah. Sure. Thank you. On price lag, the impact in the quarter was about 0.4, pretty much what we said it was going to be in the trading statement, so we were in line with that.
Murray Auchincloss: Great. Thank you. On the gas profile, you’re right, we’ve hedged out natural gas at – for around $4 through ’23 and ’24. So obviously, we’ve kept that going while we’ve got those hedges in place. We’ve started to reduce rig count right now and point it more to the liquids levels of the Eagle Ford as I talked about. So you’re just doing retention drilling inside the Haynesville. I think what I’d say is the Haynesville is prolific where we drill and the amount of production that comes online and the sustainability is quite high per well. We are in absolutely the best spot of the Haynesville through the BHP acquisition and the teams have really got their capital efficiency down. They’ve really got their frac structuring down to make sure that we get a fabulous production out of these wells.
So I think that’s what’s explaining the growth so far. And then, of course, we’ve got a choice as we move into 2025 based on what we see on gas pricing about whether or not we ramp the gas drilling back up or we stick with liquids and oil. All I’d say is we’ll be very, very value driven. We won’t be volume driven and we’ll see where the best value is and then apply our rig count at that rate. So I hope that helps, Peter.
Peter Lowe: Thanks.
Craig Marshall: Thanks very much. Next question from Kim Fustier, HSBC. Kim?
Kim Fustier: Hi, good afternoon. Thanks for taking my questions. Firstly on CapEx, you said $16 billion of CapEx guidance is now evenly spread over the year as opposed to weighted to the first half. I just wondered if there had been any project slippage to the right. And then secondly, sorry for going back to the $2 billion cost savings, but I think you said that some of those cost savings will have associated restructuring charges. I wonder if you could provide any detail on the kinds of areas where you might incur such charges. I mean, is this related, for instance to headcount reductions and is the $2 billion figure net of those restructuring costs or is it going to be lower than $2 billion after those restructuring costs? Thank you.
Murray Auchincloss: Great. Kate, do you want to tackle both of those?
Kate Thomson: Yeah. Sure. So on CapEx, so we’re still confident of our guidance of around $16 billion for the full year. What’s happened over the course of the last couple of months is that a couple of lumpy payments that would you around the back-end of the second quarter have just tipped over into the beginning of the third quarter and we just wanted to make sure that you’ve got line-of-sight to the fact that it probably wasn’t so heavily focused on the first half compared to the second half, it’s a little bit more evenly now spread around the remaining quarters of the year. And with regard to [indiscernible], we’ll update you in due course as we get clear on the implications of that. At the moment, we are allowing each business and function to work on their own plans to deliver efficiencies.
And as we said, some of that will have some [indiscernible] associated with it, but not all of it. And as we get clear on the scale of the numbers and when we report them, we’ll update you.
Craig Marshall: Thanks, Kim. We will take the next question from Menno Hulshof at TD Cowen. Menno, over to you.
Menno Hulshof: Great. Good afternoon, and thanks for taking my questions. So the first is on the simplification of the org structure. You’ve clearly made significant headway already, but where do you think you stand in that process? And then, the second is yet another follow-up on the $2 billion target. And apologies if you talked about this already, but can we get a rough breakdown on how much each of the four initiatives is expected to contribute and whether achievement of the $2 billion is expected to be fairly linear over the next two and a half years? Thank you.
Murray Auchincloss: Sure. Why don’t I tackle both of those since I gave you the last two ones, Kate? I’ll give you a relief. You should think about the four cost initiatives each delivering around a quarter of the benefit. It may end up being different than that, but that’s a good estimate for right now. And as far as the linear nature, we said it’s by the back end of ’26 and it will take time to do some of these things. So I wouldn’t count on much impact in ’24 and ’25. It should be coming in through ’26 as we work our way through it. On the org structure itself, we have announced the first stage of simplification. There will be multiple steps along the way, maybe two or three steps is how I’m thinking about it. We have reduced my direct reports down to 10.
We’ve combined some functions inside the organization as well. Those need to be well-managed. We have to have very, very strong management of change as we go through this and make sure that safety is paramount as we do it. And we expect in due course to announce another set of simplification steps to try to make the place easier to work in and maybe around year end, we’ll see that next step. And so that’s what’s happening on simplification inside the company. Craig, back to you.
Craig Marshall: Thanks, Murray. Thanks, Menno. Three questions left. We’ll take the first one from Henry Tarr at Berenberg.
Henry Tarr: Hi, there, and thanks for taking my question. Two quickly. One on the outlook for U.S. offshore wind at this point in your Beacon wind project. How are you thinking about offshore wind broadly in the U.S. and that project moving forward? And then just coming back to a comment about the potential to be countercyclical in low carbon, where do you see sort of attractive returns today in low carbon either within your own business or sort of externally or where might you be looking across that space? Thanks.
Murray Auchincloss: Great, Henry. I think on — I’ll tackle both of these. I think on Beacon, look, we’re going slow on that one. Infrastructure needs to develop off the Northeast Coast of the U.S. We need to see some changes in pricing mechanisms moving forward so that we can move to — more to an integrated model like we see in Europe and it’s hard to predict at what pace that will happen. But I think on Beacon we will be going slow, I think is what I’d say for now. As far as countercyclical, I’ll have to be careful on this one because the second I say anything about it, I’ll have too much competition. So I think what I’d say is, the — my hierarchy of returns on the growth engines from biogas to biofuel to convenience to electrification are the places that are quite interesting to me and you can figure out what the countercyclical moment might be inside some of those based on what’s been happening recently, and I’ll stop myself saying any more than that because my mergers and acquisitions team might shoot me if I say anymore.
