Can you share the gas-to-oil ratio for Bumerangue and timing for further drilling? Also, elaborate on disappointing diesel margins in TravelCenters of America.

Gordon Birrell stated it's too early to be precise on gas-to-oil ratios for Bumerangue, awaiting lab results, but they will move at pace with an appraisal program likely involving 3-4 wells and a drill stem test. Murray Auchincloss explained that while M&C had a record Q2, TA's diesel margins are tight, and actions are being taken to improve them. “I think on TravelCenters of America, maybe just to talk about M&C as a whole first. We've had a very good run in M&C now. For the first half of 2025 versus the first half of 2024, we're up about 50% in profitability across the 2 half years.”

What's different in the current portfolio/cost review compared to six months ago, and where are cost savings being seen, particularly with AI?

Murray explained that extreme upstream success (10 discoveries) necessitates a fresh look at the portfolio within the $13B-$15B capital frame, driving value and returns. Kate described cost progress as 'decent' ($1.7B of $4B-$5B target achieved), aiming for best-in-class. Emeka detailed technology-driven savings, including reducing contractors, streamlining applications, and leveraging Palantir/AI for supply chain optimization and a unified data platform by mid-2026. “We set out the $4 billion to $5 billion target in May last year against the $22.6 million and delivering $1.7 billion of structural cost reductions to date, I think, is pretty good progress.”

How does BP define 'best-in-class' for cost, and what is the outlook for trading performance in H2 FY25 and into FY26?

Kate explained that benchmarking for 'best-in-class' varies by business (central functions, customers, refining via Solomon, upstream basin-by-basin). Murray stated that trading conditions for oil are expected to remain volatile due to tight physical inventories, while gas trading focuses on optionality and arbitrage. He reiterated the guidance of 4% returns to the corporation from trading, split evenly between oil and gas, ratable across quarters. “I would expect continuing volatility in that space on diesel and gasoline, we move into a heavy tar season in October as well. So that should provide conditions for volatility.”

BP (BP) Q2 FY25 earnings call: guidance and Q&A

Earnings call· Jun 2025 (Q2 FY25)· Energy· Aug 5, 2025

Source: earnings call transcript

Executive summary

BP Q2 FY25 — Strong Operational Performance and Significant Discoveries

BP reported a strong operational and strategic quarter, marked by significant exploration success and robust refining availability. The company is actively managing its portfolio through divestments and challenging capital allocation, while driving aggressive cost reductions. Despite tight diesel margins and notable impairments, BP remains focused on disciplined investment and maximizing shareholder value through its 12-quarter plan.

Highlights

Underlying earnings in customers' business (M&C) increased by approximately 50% year-over-year in H1 FY25.
Achieved 10 commercial exploration discoveries year-to-date, including significant finds in Brazil (Bumerangue) and Namibia.
Refining availability reached 96.4% in Q2 FY25, the best Q2 performance since 2006, and 96.3% for H1 FY25.
Delivered $1.7 billion in structural cost reductions since early 2024, progressing towards the $4 billion to $5 billion target.
Announced a dividend of $0.0832 per ordinary share, a 4% increase, and a $750 million share buyback for Q2 FY25.

Concerns

Diesel margins in TravelCenters of America (TA) business are currently tight, impacting profitability.
Incurred $1.2 billion in impairments this quarter, primarily related to assets undergoing sales processes and hydrogen/biofuels projects.
Experienced a working capital build of $4.7 billion in H1 FY25, with only $600 million reversing in Q2, leading to a $2 billion permanent build.

Guidance & targets

Category	Target	Timeline	Confidence
Major project startups	10 startups by 2027 high materiality	FY27	High
BPX production volume	650,000 bbl/d by 2030 high materiality	FY30	High
Structural cost reductions	$4 billion to $5 billion high materiality	Open-ended (program started early 2024)	High
Net debt trend	Slightly trend down high materiality	H2 FY25	Medium
Refining turnarounds	Lower turnarounds medium materiality	FY26-FY27	High
LNG redirectable volumes	50% in 2025 medium materiality	FY25	High
LNG redirectable volumes	60% in 2026 medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Customers & Products (M&C) Profitability for H1 FY25 vs H1 FY24 up 50%. Overall very strong performance across the segment, with specific challenges in TA diesel margins. Diesel margins (TA): tightRetail fleet: strong performanceAviation: near record levels of profitabilityCastrol: 8 great quarters in a row	—	up about 50%	—	best on record since 2012
Upstream Strong operational performance with significant project startups and exploration success, including Bumerangue in Brazil and discoveries in Namibia. Major project startups: 5 completed (out of 10 by 2027)Production added from startups: roughly 125,000 bbl/dExploration discoveries: 10 commercial discoveries year-to-date	—	—	—	—
Refining Achieved best Q2 availability since 2006 and best H1 availability on record, driven by vulnerability management and digitization. Availability (Q2 FY25): 96.4%Availability (H1 FY25): 96.3%	—	—	—	—

Orderbook & backlog

Share buyback authorization $750 million Q2 FY25

New authorization for the second quarter.

Deals & partnerships

Various Ongoing program to divest assets $20 billion

No change to the overall divestment program.

Various interested parties Sale process for Castrol business

Complicated business operating in 120 countries, lot of interest, transacting for value.

Counterparts Farm-down process for Paleogene asset Kaskida in Gulf of America

Will continue if value can be achieved, otherwise happy to carry 100%.

Counterparts Seeking partner for Tiber asset in Gulf of America

Will consider bringing in a partner after FID, currently 100% owned. Lots of interest for premium assets.

Partners Decapitalization of pipelines, structured as an equity raise

Sensible way to approach infrastructure, don't need to own but need control over equity production movement.

Eni Joint venture for exploration and production in West Africa

Led to discoveries in Namibia (Capricornus well) and Angola (Gajajeira in Block 114).

Databricks and Palantir Partnership to implement a new unified data platform until mid-2026

Aims to reduce 100,000 data pipelines into a single one.

NVIDIA Partnership for investments in compute and seismic algorithms

Supports subsurface teams in building resource hopper and exploiting resources.

Capital programs

Total resource management project underway

Spent to date: 3,200 contractors exited

Start: early 2024

Benefit:Cost savings, streamlining third-party contractors

Part of structural cost reduction efforts, with another 1,200 contractors to exit. Leveraging Palantir and AI.

Risks & headwinds

Elevated CO2 content in Bumerangue discovery early in the appraisal

elevated measure of CO2

Mitigation:industry knows how to handle elevated levels of CO2; sent samples away to a certified lab for full composition analysis.

Tight diesel margins in TravelCenters of America (TA) current quarter

diesel margins across that business quite tight

Mitigation:taking some actions to fix that; drive diesel margins to a better place and to get more customers into the business.

Macro volatility and headline volatility impacting trading through the third quarter and into the start of the fourth quarter (oil); heavy tar season in October (diesel/gasoline)

likely to be a fair bit of volatility

Mitigation:shorten the duration of trades to manage that risk (oil trading). Gas trading designed for optionality and arbitrage.

Inflationary environment last 3 or 4 years

$400 million (H1 FY25, $300M of which was inflation)

Mitigation:relentless in our drive to get as competitive and as lean as we can with structural cost reductions.

Fiscal situation in UK North Sea expect to get some clarity on this at some point this year

monitoring any potential changes to the fiscal situation

Mitigation:will then make decisions once clarity is received.

Working capital build H1 FY25

$4.7 billion total working capital build through H1 FY25, $2 billion of permanent working capital build to date

Mitigation:expect between $1.5 billion and $2 billion of that to reverse through the remainder of the year.

What to watch in Q3 FY25

Bumerangue discovery CO2 content and gas-to-oil ratio

Next quarter

Current Elevated CO2 measured, samples sent to lab; too early for precise gas-to-oil ratio.

Target Full composition analysis results, more clarity on gas-to-oil ratio.

Why it matters

Determines the commercial viability and development plan for a significant discovery.

We do need full composition analysis to come back. However, we're pretty excited by it. Am I -- are we worried about elevated CO2? Not particularly, we need to find exactly what that level is.

Find out whether BP delivers this. Inve re-checks your case every morning.

Q&A highlights

How concerning is the elevated CO2 in the Bumerangue discovery, and what is the production outlook for the end of the year after recent startups?

Gordon Birrell stated that while elevated CO2 was measured, samples are being analyzed, and the industry knows how to handle such levels. He emphasized the large structure and 500-meter hydrocarbon column. For production, 5 of 10 promised major project startups by 2027 are complete, with one more expected this year. Production is on plan, with roughly 125,000 bbl/d added, and a strong production year is expected despite turnarounds and weather.

“There was an elevated measure of CO2, of course, on the measurement we've made on the rig. And I would emphasize that we've sent samples away to a certified lab. We do need full composition analysis to come back. However, we're pretty excited by it. Am I -- are we worried about elevated CO2? Not particularly, we need to find exactly what that level is, but the industry knows how to handle elevated levels of CO2.”

asked by Michele Della Vigna · answered by Gordon Birrell

2 min read 5 chapters

Detailed narrative

Exploration Success and Portfolio High-Grading

BP reported its best year for exploration discoveries in recent memory, with 10 commercial finds, notably in Brazil (Bumerangue) and Namibia. This success, coupled with new access deals in Azerbaijan, Iraq, Libya, Abu Dhabi, and India, is prompting a thorough portfolio review to prioritize value and returns within the $13 billion to $15 billion capital frame.

The company is actively challenging its portfolio, having dropped three non-competitive rigs and shut down green hydrogen programs in Australia and blue hydrogen/CCS programs in the U.S.

Cost Reduction and Digital Transformation

BP is making 'decent progress' on its structural cost reduction target of $4 billion to $5 billion, having achieved $1.7 billion to date. Efforts include reducing technology organization costs through digitization and streamlining partners, as well as optimizing supply chain management.

A key initiative is the 'total resource management project' which has seen 3,200 third-party contractors exit, with another 1,200 planned. The company is also implementing a 'cutting edge' unified data platform with Databricks and Palantir to reduce 100,000 data pipelines to a single one by mid-2026, aiming for both cost reduction and improved data transmission.

Refining Reliability and Market Outlook

The refining business achieved its best Q2 availability since 2006 at 96.4%, and best H1 availability at 96.3%, attributed to vulnerability management, centralized maintenance, and digitization. Management expects the refining market to remain 'relatively tight' through H2 FY25 and into early FY26 due to low diesel/gasoline/jet stocks and global refinery closures offsetting new capacity additions.

Turnaround days are expected to be lower in FY26-FY27 compared to FY24-FY25.

BPX Growth and Capital Productivity

BPX Energy is on track to achieve its Capital Markets Day target of 650,000 barrels per day by 2030, representing a 7% CAGR. Production growth in Q2 FY25 was particularly strong, up 16% quarter-on-quarter, driven by Permian ramp-up and successful refracs/infill drilling in the Eagle Ford.

The company is seeing significant capital productivity improvements, including a 10% year-on-year improvement, and is achieving high productivity from new well designs like the EU well in Haynesville.

U.S. Operations and Fiscal Environment

The U.S. is a critical region for BP, contributing 60% of its profitability and cash flow and receiving 50% to 60% of its capital investment. Management expressed positive views on recent U.S. legislation that sustained the corporate tax rate at 21% and included immediate expensing, which helps offset tariff pressures.

This favorable environment supports BP's plans to grow production in the Gulf of America and BPX by 10% per annum through the end of the decade.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.