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Speaker 1: BP has raised its dividend by ten percent and said

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Speaker 1: it we'll buy back another one and a half billion

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Speaker 1: dollars of shares. That's despite the oil Giant second quarter

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Speaker 1: profit following by more than expected on weaker oil and gas.

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Speaker 1: Joining Mark and me, now, is Bernard Looney b CEO. Bernard,

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Speaker 1: really wonderful to have you on the program? One point

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Speaker 1: five billion dollars worth of buybacks? I think you need

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Speaker 1: to have a talk with that Bernstein analyst who said

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Speaker 1: you'd on need deliver five hundred million, so it's much

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Speaker 1: higher than expectations. Are you still on track to give

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Speaker 1: back four billion dollars worth of buybacks this year?

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Speaker 2: Well, Denny and Mark, good morning, Thanks very much for

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Speaker 2: having me on. Look. I think it's been another good

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Speaker 2: quarter for the company. We grew our own and gas

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Speaker 2: production by three percent, while we drove costs down by

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Speaker 2: nine percent. In that business. We brought on two new projects,

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Speaker 2: one in the United States one in India about ninety

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Speaker 2: thousand bars a day. And we grew in our transition

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Speaker 2: growth engines as we said we would, ten percent growth

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Speaker 2: in biofuels. We almost triple the amount of power we're

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Speaker 2: selling in our ev charging network, and we increased our

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Speaker 2: renewables and our hydrogen pipeline. So it's been a good

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Speaker 2: quarter and it's that performance and that outlook that has

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Speaker 2: given the board the confidence to announce the one and

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Speaker 2: a half billion dollar buyback this morning, and as you said, importantly,

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Speaker 2: also increase the dividend by ten percent. And that dividend

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Speaker 2: increase of ten percent is in part due to the

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Speaker 2: fact that we've reduced our share count by nine percent

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Speaker 2: over the last four quarters, so we can essentially keep

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Speaker 2: the dividend amount the same while increasing the dividend per share.

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Speaker 2: So this has been a good quarter. The companies running

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Speaker 2: well and we're very pleased.

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Speaker 3: Bernard, good morning. Investors likely to be happy at that

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Speaker 3: buyback amount, as you mentioned, and the increase in the dividend.

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Speaker 3: Do you think that's going to be sufficient to close

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Speaker 3: the valuation gap with some of your European peers or

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Speaker 3: US peers, because one of the issues has been in

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Speaker 3: the past the disappointment on buybacks. You've now fix that

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Speaker 3: or made a big step to fix that. But there's

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Speaker 3: been another comment about the lack of predictability around buybacks,

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Speaker 3: and is this the start of a new era of

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Speaker 3: more aggressive buybacks or do you think that predictability is

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Speaker 3: still going to be an issue.

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Speaker 2: Mark, Thanks for the question. I think just a couple

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Speaker 2: of things. On the buyback program itself, I think we're

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Speaker 2: just being very consistent. To be quite frank, we said

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Speaker 2: at the beginning of the year, our distribution policy in

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Speaker 2: general says that we'll return at least sixty percent of

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Speaker 2: surplus cash to shareholders through buybacks, and then each year

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Speaker 2: we update on specifically what that year will be. This year,

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Speaker 2: we've said it will be sixty percent that we will

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Speaker 2: return as per last year. So that's the steps that

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Speaker 2: we've taken today. One point seventy five in the first quarter,

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Speaker 2: one point five in the second quarter are entirely consistent

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Speaker 2: with what we believe the outlook for the year will be,

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Speaker 2: which means that we'll return that's sixty percent to shareholders.

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Speaker 2: So that's consistently what we are doing. The financial framework

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Speaker 2: is unchanged, and as I said, we expect to do

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Speaker 2: four billion dollars of buybacks at sixty dollars, and with

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Speaker 2: prices above that, one can expect the buyback level to

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Speaker 2: be about that. As you are seeing in terms of

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Speaker 2: valuation gaps that people speak about, not necessarily within the

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Speaker 2: European companies, but versus the United States. It's simply a

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Speaker 2: question of focus and delivery. We've got real plans to

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Speaker 2: grow this company materially over the next couple of years.

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Speaker 2: Between now and twenty twenty five, we intend to bring

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Speaker 2: on two hundred thousand dollars a day of new production

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Speaker 2: from New Orlean gas production from major projects. We're going

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Speaker 2: to double our biofuels production. We're going to double our

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Speaker 2: biogas production. We're going to grow the business and a

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Speaker 2: business in our growth engines that was delivering seven hundred

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Speaker 2: million dollars just in the first half of this year,

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Speaker 2: will be delivering three to four billion dollars by twenty

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Speaker 2: twenty five, and indeed ten to twelve billion dollars by

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Speaker 2: twenty thirty. So this is a growth story. This is

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Speaker 2: about execution, this is about focus, and that's what we're

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Speaker 2: set on doing.

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Speaker 1: Wend. When it comes to the execution of your traders,

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Speaker 1: you point out another exceptional quarter for gas trading, the

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Speaker 1: softer than the first quarter. How much softer? What was

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Speaker 1: the difference between these two quarters for your trading units.

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Speaker 2: Yeah, the trading organization in gas in particular had a

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Speaker 2: very good quarter and exceptional quarter, as we called it,

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Speaker 2: a little bit less than the first quarter, but still exceptional,

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Speaker 2: as we say, And it's really just a characterization of

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Speaker 2: a slightly law volatility in the markets in the second

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Speaker 2: quarter than there was in the first quarter.

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Speaker 3: What's your look on demand on both oil and gases,

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Speaker 3: particularly coming into winter on Are there any particular regions

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Speaker 3: where you're kind of worried about the demand strength?

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Speaker 2: You know, I think there's a lot of talk obviously

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Speaker 2: about concerns about the global economy, there's a lot of

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Speaker 2: talk about concerns about China growth. In spite of all

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Speaker 2: of these things, demand for oil has been incredibly resilient.

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Speaker 2: In fact, there are some reports that say oil will

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Speaker 2: reach its maximum demand ever this year. So we're expecting

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Speaker 2: over two million borrows a day of growth in demand

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Speaker 2: for oil this year, which is very strong when you

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Speaker 2: look back in history, and we expect that demand growth

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Speaker 2: to continue into next year. And when you couple that

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Speaker 2: with the discipline that we're seeing from OPEK plus, then

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Speaker 2: I think you can only believe that while it's very

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Speaker 2: difficult to predict, obviously, one would have to suspect that

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Speaker 2: the outlook for our oil prices is strong over the

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Speaker 2: coming months and years, driven by demand and driven by

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Speaker 2: the discipline that we see from OPEK plus in natural gas,

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Speaker 2: if I look in Europe, I think, obviously storage levels

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Speaker 2: are much better than they were last this time last year,

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Speaker 2: so that's good news. But there's a lot of uncertainty,

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Speaker 2: and it really depends around how much demand will recover

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Speaker 2: from what we saw in as a lost last winter

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Speaker 2: and what the weather will be like. So not out

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Speaker 2: of the woods yet when it comes to gas in Europe,

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Speaker 2: but certainly in a better position than we were this

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Speaker 2: time last year.

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Speaker 1: What about industrial demand in China, Bernard, what does the

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Speaker 1: read through look like for that to recover?

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Speaker 2: I think in China and in many ways what we're

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Speaker 2: seeing throughout the world, if I look at it through

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Speaker 2: through our product lines, I think we're seeing very strong

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Speaker 2: gasoline and very strong jet fuel demand. People are traveling,

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Speaker 2: people are spending on services, let's say, and then on

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Speaker 2: the diesel end of the spectrum, which tends to be

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Speaker 2: more associated with the manufacturing end of the spectrum. We

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Speaker 2: see that as being weaker than people had expected. China

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Speaker 2: is still growing, has grown three percent in the first

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Speaker 2: half of this year obviously well short of what people

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Speaker 2: would expect from China five to six percent, but we

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Speaker 2: do see things beginning to cover in China, so it's

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Speaker 2: really a story that we see throughout the rest of

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Speaker 2: the world's strong services and relatively weak manufacturing.

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Speaker 3: You got some criticism recently for winning a German offsh

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Speaker 3: for a bid that you might have overpaid for bidding

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Speaker 3: for these low carbon projects, and I'm curious about what

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Speaker 3: kind of returns you expect in that project, and are

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Speaker 3: you worried about diluting your returns by bidding such high

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Speaker 3: prices for low carbon projects.

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Speaker 2: Yeah, thanks Mark, we're first of all resolutely delighted with

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Speaker 2: that when it's exactly aligned with the strategy of the

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Speaker 2: company one hundred percent. We said that we will get

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Speaker 2: six to eight percent unlevered returns from the renewables part

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Speaker 2: of the business, which is one part of our five

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Speaker 2: transition growth engines. We fully expect to get sixty eight

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Speaker 2: percent from this win in Germany. I think just a

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Speaker 2: couple of points I'd make is what's a little bit

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Speaker 2: different maybe to other companies, is we have a huge

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Speaker 2: demand for green electricity in the twenty thirties from our

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Speaker 2: own businesses in Germany, from our own refineries and our

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Speaker 2: decarbonization plans there. We're building out i think now the

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Speaker 2: second largest fast charging network in Germany. So we need

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Speaker 2: green electricity for our charging business, we needed for our

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Speaker 2: bio fuels projects that we're building there, and we needed

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Speaker 2: for our trading business. So we think we'll need five

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Speaker 2: to ten gigawatts. We think they're going to be a

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Speaker 2: shortage of green electricity in the twenty thirties, and our

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Speaker 2: belief is that we can develop and build and operate

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Speaker 2: these wind farms providing that green electricity, those green electrons

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Speaker 2: cheaper than we can do by procuring it on the marketplace.

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Speaker 2: We don't need to necessarily own the assets. We want

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Speaker 2: access to the electrons. We'll bring in partners, we'll farm

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Speaker 2: it down over time. But we're absolutely delighted with this.

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Speaker 2: It's consistent with strategy and it's a great win for

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Speaker 2: BPN for our shareholders.

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Speaker 1: Hey, Bernard, we really appreciate your time this morning. Thanks

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Speaker 1: so much for joining us. Bernard Lunei there, the CEO

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Speaker 1: of BP