Good morning, everyone, and welcome to BP’s First Quarter Results Presentation for 2020. Similar I’m sure to many of you listening, we are presenting our results today while working from home. Well, this is a departure from the usual process. It is something we are all getting used to and our IT team has been doing a fantastic job to provide a resilient system to support these types of events, both for internal and external purposes.Turning them into the presentation, I am joined remotely today by Bernard Looney, Group Chief Executive; Brian Gilvary, Chief Financial Officer; Murray Auchincloss, Upstream Chief Financial Officer and CFO designate. Let me then draw your attention to our cautionary statement. During today’s presentation, we will make forward-looking statements that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to factors we note on this slide and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents are available on our website.I’ll now hand over to Bernard.

Thanks, Craig, and good morning everyone. I hope you and your families are keeping safe and well and thank you for joining our call. We are in a very different world today than any one of us would have imagined just a few weeks ago. The coronavirus pandemic has gripped our world. People are losing their loved ones before their time. Many more are afraid for their families, for their finances, their livelihoods, for their futures. And the question I get asked often will life ever go back to normal?Alongside the physical and mental health impacts is the economic impact. The pandemic is having a severe impact on global economic activity and that has consequently had a major impact on energy markets. With this backdrop, companies like BP are doing what we can to help, not because it is expected of us and it is, but because we want to. Our teams want to. We want to make a difference.Since the pandemic began, our focus has been on three clear priorities. First, protecting the health of our people; second, supporting our communities; and third, strengthening our finances. It is a simple frame that helps us balance, complex and competing demands between keeping our people safe and running the business, helping society in a time of real need and safeguarding the company for our shareholders and it works well for us. We think of it as performing with purpose. And I think you will see this coming through in our results today.In a moment Brian will look back in our performance over the first quarter and then Murray will take you through the steps we are taking to build resilience to the new environment including the actions we are taking to adapt our financial framework. But first, I’d like to give…

Thanks, Bernard, and good morning, everyone. Turning firstly to the environment, where we have seen significant volatility. Oil markets were initially impacted in January, as we started to see the coronavirus pandemic impacting commodity demand in Asia, notably in China. This situation was further compounded on the supply-side following the fallout from the OPEC plus and Russia production discussions in early March. And has since dramatically deteriorated with the COVID-19-driven collapse in global demand.The impact on the global economy is severe, with the IMF now anticipating a 3% contraction in economic activity this year; this compares with a contraction of 0.1% in 2009 following the financial crisis. This economic backdrop, coupled with pre-existing supply and demand factors, has resulted in the exceptionally challenged commodity environment we see today.In March, Brent and BP’s refining marker margin touched levels not seen for well over a decade, while Henry hub gas hit multi-year lows. The pandemic has sharply reduced product demand, notably in the mobility sector. Flight cancellations have spiked, and compared with a year ago, traffic congestion has fallen by 60% on average across urban areas. Together, these factors have contributed to sharp falls in refining margins and utilization.The resulting reduction in demand for crude oil and products has begun to put severe pressure on storage and logistics. The effect on prices has been substantial and has promoted volatility such as the extraordinary negative prices seen in the May WTI contract expiry last week. In April, OPEC and its partners agreed to significant supply cuts, which will help reduce the imbalance but is unlikely to prevent material supply shut ins by producers in the near-term, some of which may be difficult to reverse.Gas markets were challenged before the pandemic following significant growth in supply over the last couple of years. The effects…

Thank you Brian, and good morning everyone. BP entered this challenging period with a strong portfolio, a disciplined financial framework and a strong liquidity position. That we have this is testament to Brian’s stewardship as CFO over the last decade and I would like to offer my thanks to Brian for the great support that he is providing me through this transition.This is the sixth downturn that I have seen in my career and as a leadership team we know how to respond. We are focused on maintaining liquidity and are taking thoughtful, but decisive, interventions to work our way, step-by-step, through this downturn. With this in mind, I want to talk about two things, first, the actions we are taking to adapt our financial frame, and second, updated guidance for 2020.As Bernard has already outlined, we are focused on four near-term objectives to deliver an even more resilient financial framework. Underpinning those are a set of decisive actions, which we laid out in our market update at the start of the month.We are strengthening our balance sheet. At the end of the first quarter we had liquidity of around $32 billion. This included a new $10 billion revolving credit facility signed in March. And in early April, we raised around $7 billion of new bonds at competitive rates across the U.S. and European debt capital markets. In addition, S&P and Moody’s recently reaffirmed our investment grade credit ratings. We also continue to evaluate further options available to us to strengthen our balance sheet beyond creating additional liquidity.We are reducing our capital expenditure. For 2020, we have reduced our group CapEx guidance to around $12 billion, a decrease of about 25%. Looking to 2021, we will flex our spend according to the environment, and have the ability to flex down…

Thanks, Murray. I’ll summarise in a moment, however before I do that, I’d like to cover two important issues. Our AGM is approaching next month, and our strong recommendation is you vote now and appoint the Chairman of the meeting as your proxy to ensure your votes count. In terms of the event itself, we are keeping options open, but it is no surprise that this year is going to be very different to the usual gathering of shareholders. We will find a way to conduct the business set out in the notice of AGM while complying with lockdown measures that may well still be in place. We will update you, and all our shareholders, as soon as we can about how we do that. But for now, we are being as flexible as possible so that we can accommodate further changes should the Government enact emergency measures dictating how the meeting takes place.The second of those important issues is to mark an historic moment. This is Brian’s 33rd and final set of quarterly results after nine years as CFO and 34 years at BP. The strength and resilience of BP today owes a huge debt to his energy, his credibility, and his complete command of the finances. He has been instrumental in our relationships with the investor community and I know we are all going to miss his passion, commitment, and judgement and his candour. We will give him a proper send-off when he leaves in July. But for now, Brian, thank you for everything you have done for BP. And for everything I have learned from you over many years.So, let me then quickly sum up what you have heard today. First, BP is operating well thanks to good work done in recent years, as well as the outstanding courage and commitment of our team today. Continuing to operate well, and staying safe, is our absolute focus every minute of every day.Second, we are responding fast to adapt BP to the most brutal market conditions we have seen in a long time. We can do that, and we will do that. We know what is required. We are adapting our financial framework through a focus on four near-term objectives to drive our cash balance point lower and support our ongoing commitment to sustainably growing free cash flow and distributions to our shareholders over the long-term.And third, we are stepping up to help where our help is needed. We believe that is the right thing to do – and helps fulfil our purpose to re-imagine energy for people and our planet. And I remain in awe of how so many of our colleagues are responding to the ‘for people’ part of our purpose. We are performing with purpose, and I am confident we will come through this period stronger and able to deliver on our purpose and the net zero ambition we set out in February.Thank you for listening. And let’s now turn to your questions.

Okay. Thank you again, everybody, for listening. We’re going to turn to questions and answers now. As I said at the start, we’re working remotely today. So do please bear with us if there’s a bit more of a delay on some of the lines, but I expect everything will be fine. [Operator Instructions]So on that note, we’ll take the first question from Irene Himona at Societe Generale.

Brian, all the best for your forthcoming retirement. So here are my 2 questions. Firstly, in the upstream, you had a $1.1 billion impairment charge. You say this is partly from the oil price impact put on your North Sea assets. As we look to the second quarter with oil at $18, how should we think about the risk of impairing assets in other areas of your operations, please? And if you can remind us of what oil price is reflected in your book values.My second question on net debt, which is up $6 billion since year-end. Your actions will lower the cash breakeven to less than $35. Again, Brent is $18. Can you talk perhaps about the ceiling for net debt, either in absolute terms or as a gearing ratio, the maximum that you think BP’s balance sheet can tolerate before having to look at dividend as a source of saving cash?

Irene, thank you. It’s Bernard, and I’m actually going to ask Murray to take on both of those questions, first one on the upstream as he’s currently still CFO of the upstream and then the net debt question as well. So Murray, over to you, please.

Great. Thanks, Bernard. In the upstream, as you said, we had that degree of impairments. It came from a variety of assets around the world, including $400 million impairment on the Alaska transaction as well. The testing price inside the quarter, we used $30 this year in 2020 and then a gradual return to our long-term pricing in the out-years. It’s not particularly sensitive, the rules of thumb aren’t particularly sensitive to impairments on price near term. So I wouldn’t anticipate dramatic impairments moving forward as price moves around, it’s more about anchoring that long-term price, and it’s obviously too early to say anything about that right now.On net debt, as you can imagine, we’re in action on that debt. We feel that we’re in good shape with our interventions on cost, the $2.5 billion that we see coming out by the end of 2021. On the intervention on CapEx, so we’re driving it down to $12 billion with further flexibility of another $1 billion or $2 billion as I previously mentioned. We think that then takes our breakeven point down to a very competitive level at the $35 that you heard, $11 RMM and the Henry Hub level.Additionally, we have significant divestments underway which we think will help reduce net debt over time. The phasing of those, of course, is subject to market conditions. But we do expect net debt to increase a bit in 2Q. We’ll see how that goes based on the environment. And the Board will then consider in due course what we do with that in 2Q as they take decisions in 2Q. I think that’s all I’d say for now, Irene. Thank you.

Murray, I just want to add the breakeven plan for next year is in absence of the dividend, just to give a sense. Other people talk about it in that light, which I think...

Yes. Sure, Bernard, that’s a good idea. The – we’ve introduced the term balance point as opposed to breakeven, just to make it a bit more clear about how sensitive we are to things other than Brent. Brent makes up about 50% of our sensitivity, RMM and natural gas make up an equal amount as well. So we think balance point is a much more important point to anchor yourselves on.That balance point that we talked about, the $35, $11 and $2.50, that includes payment to the dividend, the full $8.4 billion that’s on an annualized basis. In the event you were to remove that and quote this on a pre-dividend level which some of the competition are doing, our breakeven on Brent with those other assumptions constant would be around $7. So we feel pretty resilient. We feel pretty resilient from an operating perspective. We feel we’ll get our divestments away. And so we think we’re in pretty good shape right now. Thanks, Bernard.

Thanks, Murray. And thanks, Irene, for your question. Hope you’re well.

Okay, we’ll take the next question from Jason Kenney at Santander.

Bernard, a true baptism of fire as chief executive, and probably the most interesting first 10 weeks of any chief executive in any industry ever. So more generic questions, I suppose. What do you think has been your most surprising day and what has been your most rewarding day in those first 10 weeks so far? And then, Brian, thanks so much for your time and support over the years. I’ve really enjoyed our conversations on the road. What do you think has been your most challenging time whilst at BP and also your most proudest achievement?

Jason, thank you and good to hear your voice. And I’ll do what Brian would do for us and let him have a little bit of time to think about his answer, and I’ll take yours. Yes, it’s been an interesting time in the British sense of the word. I’m glad I didn’t spend a huge amount of time on the 100-day plan.Surprising and rewarding. I think the most rewarding thing really genuinely has been just watching our people in action on so many levels. We – like other companies, we do extraordinary things around the world. We’ve got – we had 12,000 people in the jungle in Papua building an LNG facility. We have people who go offshore to keep gas and oil running. We have 6,000 retail staff here in the U.K. who are providing essential services, fuel and delivery services for people and old people.And just watching them do their jobs, they’ve had to undergo massive sacrifices. We’ve had to take that 13,000 people down to 6,000 people. We have people sometimes spending 2 weeks in a hotel before going offshore or going to site, so that we can confirm that they are virus-free. They’re undergoing enormous sacrifice, and at the same time they’re doing that really stepping up to help the community. And people want to help inside BP right now. We know it’s expected of us.But that’s not why we’re doing it. We’re doing it because we want to. And the provision of free fuel to the emergency services in the U.K. and the Nightingale Hospitals, and people printing 3D masks at home and so on. So my – the most rewarding thing of this is to watch our people in action.And the most surprising thing, Jason, has probably been the connectivity that I feel with the organization. We have relied on travel so much in the past to see people, and I have spent more time with people in the last few weeks than I probably would ever have had in a year inside the company. I’m virtually connecting in what they call coffee chats with China, with the team in Air BP in Paris. I was connected to a bunch of people in Toledo. And I even joined a happy hour in Australia, though I think I joined that one a little bit later than I was supposed to.We’re doing a webcast every week with over 10,000 people. I do it from home here. It’s real, there is no pizzazz, and I just think the connectivity with the organization would have been something I would never have imagined. But much more interesting to hear from Brian.

Thanks, Bernard. And yes, most challenging time is – I mean, there’s been so many. And the nature of the business that we operate in means that we tend to operate in some of the more difficult parts of the world. It would probably be the 60 days between May 1 and June 30, 2015 when we were trying to resolve all the Deepwater Horizon issues and trying to get a handle on the liability going forward. So that was probably the most difficult 60 days I spent with 2 of my colleagues, Tray Coban and Eric Nitcher, supported by Keith Wester. But that was almost certainly the most challenging time for us.Proud, I think actually what’s happening right now and the way this company is responding. And I’ve been inundated with messages from friends, family, responding to all the things that BP has been doing, like I have a sister and sister-in-law, both nurses. I’ve got cousins in the police force, the things that we did around emergency services right out of the traps in terms of what Bernard laid out, in terms of making petrol free for twos and blues has made me feel immensely proud by the amount of feedback that we’ve got by that. But I think it just reflects on the company. The one that I thought I joined 34 years ago, it’s responding exactly the way I would have expected it to respond.And I think coupled with that is also the succession of the team. I think Murray coming through as the next CFO, I think nobody could have been better-prepared for the situation that we’re dealing with and the team that I’ll leave behind that works alongside Murray in responding to this crisis. And I think it’s – the difference between this and Deepwater Horizon is this impacts 7.6 billion people on the planet. It’s impacting all companies. And I think just the way we’re responding today is probably actually a good way to step down and move on to other things. Thanks for that question, Jason.

All the best, Brian. And Jason, thanks to your very thoughtful question.

Okay. Thank you, Jason. We’ll take the next question from Os Clint, Bernstein. Os, good morning.

Hi, good morning, everyone. Thank you for your time. And just let me echo my thanks to Brian who will be sorely missed. So for – sorry, Bernard, I mean you’ve touched on this a little bit, but I wanted to just get you to talk personally around being on the frontline during Deepwater Horizon and that single shock to BP, where obviously dividends and CapEx had to be reduced and assets. So I wanted to get you to characterize how today’s twin shock, this double shock, kind of feels to you compared to back then and really how well-positioned BP are to get through this. It sounds like you think you are at least, but you’ve also – or maybe Brian was using the word exceptional quite a few times in terms of those opening comments. So if you could just talk around that, it would be interesting, please.And then secondly, just on the major projects, 700,000 barrels a day up online running is supposed to have higher cash margins, lower breakevens, no better way to test the profitability of that pipeline. But could you talk about how much of that is above water in this current commodity price environment? And you made some comments around inevitable material supply shut-ins. Do you expect BP to have to make any of those in 2020, please? Thank you.

Always good to hear your voice. And Murray, could I ask you please to take the major projects question first?

Yes. Sure. Hey, Os, nice to hear your voice. Yes, 700 mbd of projects online now, 900 is the eventual target. As you all have seen just from an operational update perspective, at Tangguh we have had the down-man in the jungles, down from 13,000 to around 6,000 people, so the pace of that might be a little bit slower than we were anticipating at the beginning. And I expect maybe one or two other projects may struggle with COVID as we move forward. But so far, we’re sticking with guidance.On the margins associated with these, you’ll remember that an awful lot of them were gas and an awful lot of them were fixed price gas. So we’re really pleased with those right now. As you can imagine, what gives us the resilience on the balance sheet is all these fixed price gas contracts. If you look at our Mad Dog Phase 2 as an example, on the other side of things, obviously, that depends on what the oil price is, as it produces out starting in 2021 and beyond. So I think by and large, the gas ones are doing pretty well. The oil ones will be highly sensitive to what the price is when we start producing from them. And so I think in hindsight, probably that choice around the gas and that choice around fixed price was pretty important for us.Bernard, back to you.

Thanks, Murray. Os, to your question on how we think about it today? I mean the – as Brian said, the Deepwater Horizon accident was a real tragedy, and we just passed the 10 year anniversary and we’ve been communicating inside the organization that we must never forget what happened. And 11 people lost their lives and the environment was impacted and people’s livelihoods were impacted. It was one company. It was one sector. And of course, what we face today is – the word is unprecedented and, of course, it is true. Because what we face today is affecting company in the world, every sector.I think there’s 187 countries in the world or four billion people in lockdown. And I think what’s interesting about it is that it’s – I think economists are finding it very hard to predict and model because we haven’t really seen something like it before. So it’s very hard to model the future response. So we have been guided by a very simple frame, and I laid it out, protect the health of our people, number one; number two, support our communities; and number three, strengthen our finances. And within the finances element, we’re focused on liquidity, $32 billion at the end of the first quarter. We’re focused on the balance sheet committed to delivering those $15 billion with Alaska confirmed on Monday.And as Murray said, driving that balance point down. And I would remind people that our balance point was about $56 in 2019, getting down to $35 next year. So the way I think about it, Os, is that it is brutal. And that’s the term that I have used. Equally, I am confident that we will get through this. But I have to say, as I would share with you what…

It does. Thank you very much.

Thanks, Os.

Okay. Thank you, Os. We will take the next question from Lydia Rainforth at Barclays. Lydia?

Thanks, Craig. And good morning everyone and certainly just to say thank you very much for all the work that BP has been doing in terms of supporting the community as well.Two questions if I could. The first one, probably for Bernard, how do you think about whether the risk/reward profile has changed between fossil fuel investment going forward and renewables? Effectively, does what we see in September now have changed as a result of what we’ve seen in terms of the prices now? And then secondly, probably one for Brian, where do you think BP is in terms of efficiency relative to where you were when you started a CFO? And what’s still the biggest area of improvement that you think there is there for Murray to see?

Thanks, Lydia. Good to hear your voice, too. And thanks for the feedback. I’ll let Brian handle the opportunity set that he’s leaving for Murray in a moment. In terms of risk/reward on fossil fuels versus renewables and the whole subject of the energy transition, I think I’ve been on record as saying that what is happening now has only reinforced mine. And it’s not just me; it’s the leadership team’s belief in the energy transition and what we laid out on the 12th of February. I think there is the background of the – the pandemic has reminded us of the sort of frailty of the ecosystem and how lives can change overnight almost and people are looking up at clear skies and so on. And so I think there is that backdrop which I think means that climate will remain in the agenda going forward.But specifically, to your point on risk/reward, I think I would add two things. Number one, I think the pandemic, I think, only adds to the challenge for oil in the future. I think we’re all living and working very differently. It’s working. Who would imagine this call this morning being done this way? No travel. I’m connecting with people. The company is running. And I think there’s a real possibility that some of that will stick. Not all of it, but I think there’s a real possibility that some will stick. And therefore, the question has to be, will consumers consume less, and I think there’s a real possibility that, that may happen. So I think, number one, the pandemic, I believe, only adds to the challenge for oil.And secondly, we talk a lot about the negative prices for WTI just a few weeks ago. At the same time as that was happening, Lightsource BP is doing 400 megawatts of solar contracts in the United States right at that time. That sector continues to attract investment; it attracts investments because of its risk profile and its resilience. And I think that those two things, with the backdrop around climate, I think reinforce to me why we must do what we said on the 12th of February, which is to reimagine energy and to reinvent the company. And when we come to update you and others in September, I think we are working through what that means and what that looks like. And the shape of that will be similar, the conviction will be every bit as strong, if not stronger.So with that, I’ll leave it to Brian to tackle the efficiency question.

Thanks, Lydia. And I think on efficiencies, I think – I look back over the last decade, it was in the period 2011, 2012 that we started to introduce digitization, automation and more recently robotics in terms of what we do in the background of accounting and finance. And I think what Bernard has laid out with the new team around digitization and agile working, I think, will be the next big kick on, I think, for Murray with the team and the next big level of efficiencies we’ll be able to drive.In terms of balance sheet, actually, I look back and think back on the date 17th of June 2010, when we had $2.5 billion of liquidity and we were dealing with a problem at that point that was unique to ourselves of Deepwater Horizon. And I look today where Murray is coming to this quarter with $32 billion of liquidity.I think all the things we learned back during Deepwater Horizon, we kept liquid and in use within our system that enable us to – in some respects, as we came into January, we thought we were responding to a demand-side problem, that very quickly became a supply side problem and has now reverted back to demand side problem. I think all the things that we learned back in 2010 have been deployed as we deal with this situation which is more of a macro situation. But I think there’s still a huge amount more inside finance that can be done, and you’ll see those efficiencies coming through, I’m sure, as Murray lays out the plans for the next 12 months, 18 months. Thanks, Lydia.

Thanks, Brian. And Murray, maybe you’d like to comment, the – you have a particular passion for modernization in general and within the finance function. And maybe you just want to add a little bit of color around what Brian was saying on what you feel is possible down the road here.

Yes. I think it’s pretty material and it’s much bigger than what I’ve hoped for over time. Over the past while, we’ve done everything we can to digitize our wells in the ground. We’ve done everything we can to digitize the design digitize the design of the wells and the projects. We’re now starting to embark upon an inside operations, inside the upstream, a single procurement system in place that we can now monitor over top of it and watch how people are procuring and see where inefficient loops exist. And the next big digitization effort will be in the end-to-end purchasing process from an engineer raising an invoice to acceptance of work, to delivery of the goods, to implementation of the work to billing.And we’re amazingly inefficient as a sector inside that space. We’re no exception here at BP. And if we can get our data in the right shape, which David Eyton will lead us on very capably with a series of different partners like Palantir. I think we’ve got magnificent strides we can make in reducing the waste inside those systems. We can move to just-in-time delivery like most sectors live on.We can use things like the airlines use on planning. Instead of doing planning on spreadsheets, we could do planning with AI. So I see the prize is enormous. It’s not just in the back office places like supply chain and finance, but it’s also across the broader business. So Lydia, as you can tell, my passion for this remains, and I think the big prize is still ahead of us.

Great, and thank you all.

Thanks, Lydia.

Thank you, Lydia. We’ll take the next question from Biraj Borkhataria at RBC. Biraj?

Hi everyone, thanks for taking my questions. I have two, please. The first one is on your breakeven guidance of $35 a barrel. Could you just help me square the circle versus, for example, Q1 2020? If I start with roughly $5 billion of underlying cash flow this quarter, can you just bridge the gap and how we get to the 2021 numbers. And then second one hopefully relatively straightforward, but on Macondo, the latest less than $1 billion, But obviously, you paid $300 million in Q1 and you’re going to pay another $1.2 billion in Q2. So can you just reconcile what happens in the back half of the year? Thank you.

Biraj, thank you. And maybe, Brian, if you’re able to take the Macondo one first. And Murray, if you’re able to take the balance point. Brian?

Yes. Yes, sure. And the difference is simply tax. It’s – the run rate now, we’re into $1 billion or less after tax. And so therefore, when you add back the tax credits, that will get you back below $1 billion for the year.

Sounds like it was a relatively easy question. So thanks, Brian. And the balance point, Murray, or the breakeven, but you may want to use the language of balance point bridge from the first quarter to $35 is Biraj…

Yes, Biraj, thanks for the question. Always tricky to do this stuff in an individual quarter. It’s much easier to do it for a full year. So I’d encourage you to look at it that way. Probably the way I’d encourage you to think about it is the previous guidance that we’ve given. So previously, we said $40 Brent, $14 RMM, $3.25 Henry Hub was the breakeven point paying the dividend. We’ve now lowered that down to less than $35 Brent, $11 RMM and $2.50 Henry Hub. You can go on the website and find our rules of thumb. And you’ll find that that’s about $6 billion of lost revenue, so to speak, or $6 billion that we achieve.And then, of course, you’ve got our cost and CapEx moves that we’ve talked about. Reduction in cost of $12 billion this year and another $1 billion to $2 billion next year potential, if we decide we need to do that, and the $2.5 billion of cost. So that’s probably the easiest way to reconcile it. And you get within about $1 billion post tax, which is obviously lost revenue from the decreases of investment we see across a couple of years. Trying to do it from a single quarter is pretty difficult, it would have a lot of moving parts along the way. And happy, Biraj, if that didn’t help, to have IR team follow-up with you afterwards.

Thanks, Murray, and thanks, Biraj.

Okay. We’ll take the next question from Christyan Malek at JP Morgan. Christyan, good morning.

Hi, good morning, and thanks, gentlemen. And before I begin, a message to Brian, just saying thank you for being such a great steward to the financial community, and I appreciate all your help and advice. I’m sure you’ve got plenty of exciting things in store, including several more management plans, but also some greatly deserved rest, I hope.My questions refer to the future production outlook and the capital frame. And they’re sort of interlinked. I mean if you get to $35 breakeven, and I appreciate the math around that in the previous questions, but the CapEx would have to stay in the $12 billion to $13 billion range next year. Now given the energy transition focus, and it appears there is no change in your energy spend, am I right to assume that this is for the structurally lower production outlook over the medium term? And if that’s the case, is it fair to assume you’re willing to expedite your guide of a lower reliance on related revenues, framing the vision outlined a few months ago?Second question is on dividend sustainability. What were the main factors behind the Board decision to keep the Q1 dividend unchanged? And looking forward, if management is considering a move back to scrip financing, I just want understand the logic behind that given this creates a larger share count and dividend burden, which is somewhat contradictory in the phase where portfolio is becoming less oily.

Christyan, thank you. I’ll have a go at both of those, and Murray or Brian can help if I’ve missed anything. Maybe taking your second question first around the basis of the first quarter decision that was taken by the Board. And very, very simple, as you might imagine. The Board has been meeting weekly since the pandemic has begun and reviewed the first quarter dividend as it usually does, as it always does, and reviewed it in full and made the decision or took the decision to pay the dividend based on the underlying performance of the business in the first quarter and the actions being taken by the team that we have described.And then the second quarter decision and the subsequent decisions will be taken based on the context at that time. On the – your conversation around the breakeven and what that means for capital and what that means for the energy transition, I would just remind us all that we have – we – it isn’t just one-dimension, CapEx-only way of getting to $35 breakeven. I think Murray has laid out an ambition to get to $2.5 billion of cost savings by the end of next year.I think we will try to do more. That may create more room for investment. We shall see. But the number one thing is to get the business healthy in an environment that we think looks more like what we should be planning for than anything else. So we are very, very focused on getting that breakeven to that point. And what that means for the energy transition and so on, I think we best leave until September when we will update the marketplace on the strategy. And our plan remains to do that in September. So rather than front run that, and I’ll let it go until we chat later in the year.

Okay. Thanks, Christyan. We’ll take the next question from Jon Rigby at UBS. Jon?

Thanks, Craig. Hi, guys. Thanks for taking my question. Two, as always. The first is – and given it’s Brian’s last quarter, I thought I would ask a question on trading. Is – I was intrigued by the absence of the contribution in oil trading. I think, actually, you note that it’s weaker year-on-year. But if I look at the conditions in the quarter, highly volatile, contango emerging towards the end of the quarter, it would seem to me pretty decent conditions for IST. Just a question, is that at a misread? Is it – from my perspective, is that a reflection of risk management from your side? Or was there just missed opportunities in the quarter?The second question goes to the Alaskan deal or re-deal that you announced yesterday. I can see that you’ve taken another impairment. So I think we’re up to about $1.7 billion of impairments against the Alaskan assets in preparation for its sale. So my question really is at what point do you think you start losing value by selling – by just pursuing the sale rather than preserving value by keeping the assets and just accepting that the balance sheet has to be somewhat higher-geared for a period of time? Thanks.

Jon, thank you. Good to hear your voice as well. And two fair questions. I think we’ll take them in turn, if that’s okay, Brian, for trading, first, and then Murray for the Alaska deal.

Yes. Thanks, Jon. And I would have not expected less from you on the question on trading. It was a good quarter for trading in terms of the first quarter overall. So across oil and gas, it was a good quarter. It was a strong quarter for gas and it was a below average quarter for oil. In oil, we took some conscious decision actually off the back of COVID-19 in January. We were concerned about a demand-side reaction off the back of coronavirus, and that was ahead of the OPEC meeting. And therefore, we took some downside protection across the oil trading business where we expected that – actually, it was pretty unclear what the outlook looked like for oil price. It got very clear once OPEC and Russia kicked in with their supply push, which exacerbated and obviously then led to a much stronger demand side.As you said at the end of the quarter, though, I think conditions have become more constructive with contango, as you said. So all I would say is it was a strong quarter for trading overall in oil and gas. Gas was a strong, strong quarter. Oil was below average. And I agree with your points in terms of constructive nature at the end of the quarter with contango now kicking in. But the markets still remain volatile, and I think downside protection is an important thing to have in these markets going forward.

Thanks, Brian. I think it’s Jon who’s done the analysis of your various adjectives to describe trading results in the quarter. So it sounds like he’s got it right. Murray, Alaska?

Yes. Yes. And hey, Jon, maybe you can send me the adjectives you learned from Brian. On Alaska, look, we continue to feel pretty good with the transaction. The original transaction, you’ll have seen what everybody thought about that. I thought it was a fairly reasonable price. The impairment you’ve seen come through, the $400 million, a lot of it has to do with the adjustment upfront.Oil prices have dropped this year so the adjustment in the interim period has to come through. So that’s what a lot of it has to do with. And the remainder of the impairment is a fairly mild haircut on NPV. So I continue to feel very good about the transaction. I think it’s good for both Hilcorp and ourselves. They’ll do a tremendous job operating that facility on behalf of the State of Alaska. So we’re just happy to continue with it. And I think both sides will be happy in the end.

Very good. Completely agree, Murray. I think, Jon, this remains a great deal for our company. It definitely is a good deal for Hilcorp, and I think it’s a great thing for Alaska and the U.S. So right operator at the right point, strategically coherent, and we feel good about where we’ve gotten to. So it is now about completing the execution of that deal and moving forward and letting Hilcorp do what they do. So we wish them well.

Thank you, Jon. Okay. We’ll take the next question from Thomas Adolff at Credit Suisse. Thomas?

Good afternoon. Two questions for me as well. In terms of disposals, you’ve mentioned that you’ve identified more than twice the remaining $5 billion to hit the $15 billion target by the middle of 2021. That’s a good ratio. But are you worried that whatever deal you’re currently negotiating and maybe renegotiating, you will see less cash upfront, whether it’s upstream, midstream or downstream, and everything is a little bit more phased than staggard? And then secondly, this $1 billion to $2 billion in CapEx flexibility you have in 2021, is that enough to sustain your upstream business? Are you happy to let it decline for a little while? Thank you.

Murray, I’ll leave you with both of those questions, please, first, on disposals and then on the additional flexibility.

Yes. Thomas, thanks for the questions. Nice to hear your voice. On divestments, as you said, another $5 billion to go. For those of you who weren’t keeping track, we announced $15 billion a few years ago. And we’ve delivered on $10 billion of those so far, so another $5 billion to go. The $5 billion that we’re going after now are more in are the non-upstream, downstream-type spaces. So it’s more about infrastructure plays. It’s about real estate. It’s about buildings. It’s about things where yield is hunted. And it’s probably a very different set of purchasers than we normally see inside our business. Haven’t seen any hints about phasing of payments, et cetera, on that stuff, Thomas.It’s more just about what yield is acceptable for both counterparties. So I feel pretty confident that we’ll be able to get those transactions announced, and then timing will just depend on COVID. It’s pretty hard to do due diligence right now remotely on the telephone. So it will take us some time to be able to get back to normal due diligence and then move forward with those transactions. So I feel okay. If we were selling upstream, I’d be giving you a different answer, but that’s not what we’re doing right now. So I hope that helps answer your divestment question. On the CapEx flexibility, yes, we’ve announced $12 billion of CapEx, a reduction of $12 billion of CapEx in 2020.And we have further flexibility that we’ve identified $1 billion to $2 billion next year. We haven’t made decisions on that yet. That’s to come as we watch the situation unfold. Of course, an awful lot of that has to do with things like infill drilling, et cetera, and retail expansion that you might expect around the world. So those are decisions we don’t need to make today. We can make them later. As far as what shape that does to the upstream, I think Bernard laid out in his ambition that we’re happy for the upstream to decline. And I’m very happy for upstream volumes to decline. I’m not really focused on volume. I’m focused on cash flow and returns.So the volume decline will just be an outcome of decisions we make. And you should know that we’ll be very, very focused on our scarce capital dollars, focusing that towards the highest return opportunities that we have both in the upstream and the downstream. And just very, very focused on that margin and returns. And that’s what we want to do to drive our breakeven lower. It will help with that. And volume outcome will be volume outcome. So thanks, Thomas. Appreciate the questions.

Thank you. Very clear, Murray. And Murray is right to reinforce what we said in February, that over time, we would expect capital to increase into the non-hydrocarbon businesses, and as a result, capital to decrease in the hydrocarbon businesses, which would, over time, result in volume, which we’re not so anxious about. We’re concentrating on value and cash flows declining over time.So we are also, as we go through this, doing what we can, to Christyan’s point, to enable the energy transition. We’ve left our $0.5 billion of low-carbon investment unchanged, untouched this year. Where we cut elsewhere, we did not cut that back. So we will, over time, be working hard to create space to do more in that space. So Thomas, good to hear your voice and thanks for your question.

Thank you.

Okay. Thank you, Thomas. We’ll take the next question from Michele Della Vigna at Goldman Sachs. Michele, good morning.

Good morning. And thank you so much for your time in these difficult days. And Brian, thank you for all of your help and insights over the years. I have two questions, if I may. First of all, value versus volume is clearly the right strategy. I was wondering if you could shed a bit more light on the breakdown of the 70,000 barrels per day impact this year and what that impact could be in 2021 if CapEx stayed at the current level. And then my second question is on operating working capital. A big build in Q1. Clear reasons for it. I was wondering, as we look forward to the rest of the year, should we expect perhaps a stabilization in Q2 and then a reversal as demand recovers in H2 or perhaps in 2021?

Michele, great to hear from you. Thanks for joining. I’ll let Murray take the outlook for working capital, and he can correct me on the volume. The 70,000 barrels a day that we’ve guided to is predominantly in the Lower 48 where we’ve basically gone from about 13 rigs to 1 or 2 rigs. So the majority of it is there. We’ll also see some in Iraq, but that’s the majority of where the volume is. And Murray, you can correct me and take the working capital question.

Yes. I think production volumes, probably too early to call what the 2020 impact can be. The reason I say that is generally, when our business [indiscernible] perhaps ready play with, then you get after by getting operation instead [indiscernible] production. So I think there might be a linear expansion of [indiscernible]. So we’ll update you on that situation. And on working capital build…

Murray, I’m sorry to interrupt you on the call. I think we’re struggling to hear you a little bit.

Is that better, Craig?

That’s better. Sorry. You may want to cover the production point again. Apologies.

Yes. I’m sorry. Okay. On the production point – yes, okay. On the production point, Bernard’s right, 70,000 this year. It will extend into next year. The principal thing – the reason that we can’t give a number yet for 2021 is generally, our operators, when we don’t have rigs in a basin, do a great job at operating the business better and some of that gets mitigated. So we’ll update you on what the impact in 2021 is in September when we’ve worked our way through that decision-making process.On the working capital build, the $3.7 billion in 1 – in the first quarter, Brian gave a clear explanation of what it is. The inventory sitting in tanks, we’d expect to sell through the year. So that should just gradually be worked through the system. And then the IST receivables will just depend on what price structure is. On a flat price structure, you’re probably getting the majority of it over the coming 3 quarters. On an increasing price, you’ll get it very quickly. On a decreasing price, it will drag a little bit. But I should say working capital is quite volatile right now. There are a lot of moving parts out there. And so yes, it’s going to be tricky to forecast what that is right now.Brian, I don’t know if you’d add anything more to that one.

Yes. I mean just to say in terms of $3.7 billion, about just over $500 million was inventory that we didn’t move at the end of the quarter, which was all off the back of the demand-side drop. Just over $2 billion was the IST movements. And it’s just simply a difference between the over-the-counter positions that we have, which don’t set along cash and futures positions. They will naturally unwind. And exactly as Murray said, if the price moves up, they’ll unwind a lot quicker and we’ll see that cash flow back in. But the majority of that cash will flow through this year.

Thanks, Brian. Thanks, Murray. Thanks, Michele.

Okay. Thank you. We’ll take the next question from Henry Tarr at Berenberg.

Two, if I may. One, you talk in the release about the material supply shut-ins by oil producers in the near term. Do you think BP may be involved in some production shut-ins somewhere in the portfolio? And then maybe on a broader point, where do you see the risk of production shut-ins globally that may not come back as things normalize?And then secondly, it would be helpful perhaps if you could comment on whether you’re having discussions with ratings agencies currently. So is there a timetable for the next review? And maybe just again on the importance of retaining that investment-grade rating.

Henry, thank you. Great questions. I’ll let Murray take the ratings agency question and on supply shut-ins. In terms of the OPEC+ agreement, which comes into effect in a few days in countries in the Middle East, in Angola, in Azerbaijan, in Russia, we are in conversations and in dialogue and obviously working on the instructions of the governments in those countries. So very much in action on that.In terms of having to shut in our own production because we can’t get product to market, I think we’re very grateful and very fortunate to have the great trading business that we do have. So thus far, in our operated businesses, we have not had to shut in any production because we couldn’t find a market or we couldn’t find storage. And right now we feel pretty good about that. And then probably the third tranche of shut-ins is around things like the capital – reductions in capital that we spoke about and production in the Lower 48 and so on and so forth. So I think it will – time will tell on how long the broader picture will recover. We’re seeing at least 1 million barrels a day come out of the tight oil in the U.S. this year. It might be higher than that. Obviously, people are looking at oil sands in other parts of the world. So I think too early to say what the ultimate response will be, but I think many will struggle to find a home and we will see shut-ins increase through the second quarter. Murray, ratings agencies?

Yes. Great. Thanks, Bernard. And Henry, thanks for the question. We had a series of conversations with Moody’s and S&P at the back end of March. I think they’ve moved their way through our sector and you saw their reports come out. From our perspective, we were pleased with the ratings, A- stable and – with S&P and A1 negative with Moody’s. We feel those are good ratings. And investment-grade is obviously important to us. The nature of our conversations with them is just very much like yours, all the actions we’re taking on cost, CapEx, divestments to make sure that we have a very strong balance point. And we don’t have anything specifically scheduled with the ratings agencies, but I’m sure that we’ll catch up with them as we move through 2 quarter – the second quarter at some moment in time. Thanks for your question.

Okay. Thank you. We’ll take the next question from Alastair Syme at Citi.

I’d like to extend my thanks to Brian as well. Best wishes as to what he’ll do next. I just want to pick up on the volume question that you just talked about there, Bernard, on BPX. And clearly, you’ve reset your expectations very heavily this year. I’d like – I just wanted to get some perspective around how that makes you think around this business going forward. Does it make you more or less inclined to want to put capital towards this business given, on the one hand, it’s highly flexible; but on the other hand, the economics are totally highly sensitive?And then the second question, I just wanted to come back on the Hilcorp transaction. What exactly are we waiting for in terms of the Alaskan regulators to approve this transaction? And related to that, when the sort of the final dollar payment is made by the buyer, does BP retain any financial liability after that?

Thanks, Alastair. And I’ll ask Murray to take the second question around the Hilcorp transaction, and I’ll have a go at the question on the BPX business and our outlook for it. And I think if we think about the business on 3 dimensions, the rocks – the quality of the rocks, the synergies that we’re delivering and the volumes or the investment into the volumes. The rocks, as we said before, continue to be as, if not, better than what we planned for. So I think we’re very pleased with the physical asset, so to speak. I think on the synergies, I think the team has done a fantastic job. And to the best of my knowledge, we had promised to deliver $70 million of savings in year 1. I think we delivered $240 million. We had planned to drill – to deliver $350 million of synergies by ‘21, and I think that number is now up to $400 million or maybe a little bit more. So that’s all good.And then the volume, of course, is down. The investment levels are down. In many ways, Alastair, that is one of the attractive things about the business is that it does provide us that flexibility to shift from 13 rigs to 1 rig in a matter of weeks, really. And my thanks to the team for doing that. But the economics of the business and the investment proposition remains strong in the right environment, and we have the ability to flex it up and down depending on what we see. And Dave and the team and Jack continue to work on making sure that the business is as healthy and as well run as possible. So I feel good about it. It does provide that flexibility, and that’s what we needed at that time.So Murray, over to you on Hilcorp.

Great. Alastair, on approvals, we have received the federal approval, and we’re now working with Hilcorp on the DNR, the Department of Natural Resources, and the RCA, the Regulatory Commission. Those are the 2 set of approvals that we need to work our way through. We’re confident in conversations with them that we’ll get there this year. And we’ll just have to see what pace that unfolds at.And then as far as trailing obligations, BP doesn’t retain any obligations on the upstream. But on the downstream, on the TAPS pipeline itself, we’ll retain some of that liability moving forward. But this, of course, is all subject to regulatory approval. Hope that helps.

Thanks, Murray. Thanks, Alastair.

Okay. Thanks, Alastair. We’ll take the next question from Lucas Herrmann at Exane BNP.

Gentlemen, I’m glad you’re all healthy. And Brian, again, as with the others, many thanks for all your help over the time. And I hope you don’t have the opportunity to walk back into that trading room and find that you’re trading crude at under $10 in the weeks before you depart.Two questions, if I may. I really wanted to sort of go back to dividend and go back to the framework that you’re using. Clearly, we’re early into this crisis. And clearly, dividend adds discipline in the context of the way that you manage the business. I think it would be probably fair to say that the market questions or is questioning the sustainability of dividends, and structure, more importantly, before the COVID crisis actually happened.That, I’d argue, was evident from yield. And given the way that debt is moving, and you talk around demand uncertainty, you talk about the need to strengthen your finances, you talk about the ceding of revenues by virtue of CapEx reductions, it’s quite hard not to believe that there must be a better financial frame or structure for returning capital to shareholders. The question I’ve really got for you is can you please explain to me what the logic of borrowing at 4% to pay out as 11% actually is? That’s the first. The second question then is just on projects and time lines and whether you can give any update on Mad Dog. Should we be anticipating delays given the impacts of COVID? And similarly, Oman, are we also likely to see some delay in the start-up of Phase 2? Thank you.

Thanks, Lucas, and great to hear from you. And let me take the first one on the dividend. And let me just do it in two turns: number one, the decision around the first quarter dividend; and number two, the decision around subsequent dividends. The first quarter dividend decision was taken by the Board, reviewed as usual and in full and was a decision, Lucas, taken on the basis of the underlying performance of the business in that quarter and the actions being taken that we’ve outlined today. The subsequent dividend decisions will be made at that time. The second quarter will be made in the second quarter, obviously. Three factors affecting any of those decisions: the underlying business performance, the outlook for the financial framework and the environment at that time. And I’m really not going to say any more on that at this point in time other than to turn it to Murray to answer the question around the projects.

Great. Hi, Lucas, Oman is feeling pretty good. We went through a big turnaround in the first quarter. The plant is back up online now and we’re starting commissioning on the plant. So Oman is feeling good and on track to start up in 2021. Mad Dog Phase 2, we had to down-man in Korea as COVID swept through. We had, I think, 50 expats in the yard in Korea. They have now returned to the yard and they’re assessing the state of it. I don’t think we’d announce any delays at this moment in time. But as you can imagine, COVID is a dynamic situation and we’ll have to see how that unfolds over time. I hope that helps, Lucas.

Thanks, Murray. Thanks, Lucas.

Okay. Thank you, Lucas. We’ll take the next question from Martijn Rats at Morgan Stanley. Martijn?

Yes, thanks. Good morning, and also my best wishes for Brian for whatever lies ahead, and thanks for all the help and support over the years. A lot has been covered and I don’t want to sort of repeat previous questions, but I want to build on Lucas’ question that he just asked and take the angle of capital expenditure. And what I find as sort of intriguing perspective is this, with the CapEx budget of $12 billion and a dividend which is $8.4 billion, effectively, the CapEx budget is $1.40 per $1 of dividend. Now if you track that over the decade, as far as I’ve been able to reconstruct this, this is at least the lowest level since 1984. So CapEx, at least relative to the dividend, is exceedingly low. And in the previous downturns, there was quite often scope to reduce CapEx from, say, $3 per $1 of dividend to $2. But it rarely dropped below that ratio of 2:1. And I was wondering if in your assessment, with $12 billion of CapEx or $1.40 per $1 of dividend, whether that level of CapEx and the returns that are available to you, whether that level of CapEx is sufficient to sustain that $8.4 billion dividend over the long run?

Martijn, thank you. I’m not going to go back over the dividend decision. I think we’ve made our basis for that clear. I haven’t looked at the analysis back to 1984, but that’s good to see. The one thing I would make on that analysis, Martijn, is that even in the last four or five years, I think the productivity that we get out of $1 of spend is materially different to what it was four, five years ago.So I do think that sometimes dollar-for-dollar comparisons can be helpful, but other times, I do believe that the productivity has improved dramatically over that time period. But I understand the question. And in terms of what the right level of investment is for the company in the longer term, I’m afraid I’m going to have to ask you to wait until September when we’ll come back and talk about the strategy for the company and the medium-term outlook where we will discuss all of these things in much greater detail.

Thank you.

Okay. Thank you, Martijn. We’ll take the next question from Jason Gammel at Jefferies. Jason?

Thanks very much, gentlemen, and I hope all your families are safe. First question I had was just some clarification on reductions in cash costs, the $2.5 billion achieved by the end of 2021. Does that mean that the run rate on the $35 balance point is achieved at the end of next year? And would you expect that these costs would be sustainable in – these cost savings would be sustainable in a higher oil price environment? Then my second question, I was just hoping you could elaborate a little bit further on guidance for lower-level North American heavy crude discounts. We’re obviously seeing some pretty weak WCS prices. So is this really more of a reflection of what you see as a weakened WTI price over the course of the second quarter?

Jason, thank you. I hope you and your family are well as well. Murray – I’ll let Brian take the second question, which is around the heavy crude and the WTI, and Murray on the first one, the $2.5 billion – the $35 year-end versus – run rate versus full year and the sustainability. And I know the answer to the sustainability, which is very much so. But can you take the first one for Jason, please, around the cash costs?

Sure, Jason. As you can guess, we have been dealing with us for a while. We’re on the conservative end of things when we put statements publicly. So we’ve talked about the $2.5 billion as a run rate, which you’re right, is at the end of the year. But as you know, our track record of delivery in this space, we’re obviously making good strides right now on cost as we speak. And I expect, as Bernard said, there will be more to come when we talk about this in September. So do presume end of year for now, and we’ll update you in September. And we’re on it, as you could guess. As far as…

The $35, Murray, the $35 is a full year number. And that takes account of the $2.5 billion being an end year number. Yes.

Correct. Yes. Absolutely correct. And then sustainability of the cost savings, look, we’re not presuming we’re going to get any deflation. The supply chain’s in a pretty difficult place inside the Upstream business. Inside some of the other businesses, the supply chain is very resilient. But we’re not presuming very much a deflation inside. This is more about fundamental changes to the efficiency of the business. So yes, they are sustainable. Hope that helps.

Thanks, Murray. Thanks, Jason.

And then, Jason, on WTI-WCS, what we saw in the first quarter, remember last year, averaged around about $13 with a discount to Canadian TI. That blew out to about $20 through the first quarter, and I think quarter-to-date, it’s already $14.50. I think you’ll have to wait and see how WTI clears over the next three to four months, and then you’ll get a better handle on ultimately what will happen with heavy crude. But I would expect to see heavy continue to back out as storage fills up pretty much everywhere. And we’re going to be a top – tank topped, and then it will be a question of what the recovery looks like from a different perspective. So it’s going to be pretty hard to call WTI-CS, but it is tracking around about $14 already quarter-to-date and $20 in the first quarter, which is significantly above what we saw last year.

Thanks, Brian. And Murray, I was just wondering, before we leave the cost one, whether you wanted to – I know you looked recently at some of the wells that we’re doing drilling from around the world in London and some of the benefits that you saw there. Anything, just to give a little bit of color on what’s possible?

Yes. I wanted to come back to that CapEx question that Martijn had about – is the CapEx ratios of the past the same moving forward? And Martijn, it’s very much the same question when people say, you need an 85% reinvestment ratio to grow. I think that’s a thing in the past as well. And the reason that I think that is that productivity has increased so much with digitization. That’s why you see us so passionate about this. A small example of that is in West Africa. The last time we drilled in West Africa, say, two or three years ago, it was costing us $150 million to million to drill a well.Fast forward three years, we’ve digitized and centralized the operations. It’s from – it’s being run out of Sunbury as opposed to in Africa. It’s with a lot fewer expats on the ground. It’s with a co-located supply chain. It’s with standard well, standard conductor, standard riser, et cetera, et cetera. And instead of $150 million, it’s down to $50 million for the exact same activity when equalized on rates. So I just think the sector had a shale revolution a decade ago. It’s in the midst of a digital revolution right now, and it’s structurally changing the cost of supply of our business. So I don’t think these historic ratios, to compare spend to dividend, et cetera, make an awful lot of sense just because of the productivity improvements that we have seen and we continue to think we can deliver moving forward. Hope that helps.

I think, Murray, we would have had 27 engineers on the ground, expatriates, three or four years ago. And today we’ve got two?

40 expatriates four years ago, and we’re – 40 expats. And now we’re down to two on rotation, one every two weeks. So it’s an amazing change.

Yes. And more to come. So great. Murray, thank you.

Okay. Thank you. Bernard, we’ll take a question from the web. This is a question from Colin Smith at Panmure Gordon. Will current conditions delay the implementation of the new organizational structure due by the middle of this year?

Colin, thanks for the question. And the simple answer is, no. We remain on track. We are as well as doing all the things that we’ve laid out today. And we’re also in the midst of selecting the next level in the organization, what we call Tier 2. Those decisions have been broadly made and, we expect to announce the next level of the organization, the direct reports to Murray and my leadership team here in the next couple of weeks. So, we remain on track for July 1, standing up as a new organization. And I think everything that we’ve seen so far, says that the model is going to work. It’s different of course, but, we do see real opportunity in there, both from an efficiency standpoint, but also from a ways of working standpoint, and already seeing even greater cooperation between the businesses and trading and so on.So pretty excited. I have to say, about what’s possible here and looking forward to getting to the next stage. And that will be the next level of announcements in the next couple of weeks. And then getting to July 1 where we’ll plan on standing it up. So we remain on track.

Okay. Thank you, Bernard. We’ll move into the last couple of questions. We’ll take the next question from Pavel Molchanov at Raymond James.

Hey guys. This is Muhammad Ghulam on behalf of Molchanov. Thanks for taking the questions. So, you guys are present in a number of countries that were part of the OPEC+ plus agreement from a couple of weeks ago. You guys having – as you guys anticipate having to reduce volumes in any of those countries?

Muhammad, thank you for your question. And the answer to that is yes. We’re in conversations today in Angola, in Azerbaijan, in Russia and in the Middle East. And Murray talked earlier about some of what those numbers could look like. But yes, is the answer to your question. We do expect to see volumes reduce in the second quarter because of the OPEC+ agreement. And as Murray also said, volume is probably not the best indicator of the strength of the business at this time. So, we’re working very much on the other things that we laid out around liquidity, balance point and balance sheet. But the answer to your question is, yes. Thank you, Muhammad.

Okay. Thank you. And my other one would be, you guys started drilling a prospect at the Shafag-Asiman Block in Azerbaijan. In January, any update you guys provide them as well.

Thanks Muhammad. Murray, any updates on Shafag-Asiman and then in the Caspian?

Yes. So this is Shafag-Asiman well. We’ve been talking about it for a lot of years, maybe eight or something like that. It commenced drilling back in January as you stated. Recently we’ve taken the decision to pause drilling COVID-related. And once the situation clears we’ll get back on it. Originally the well was forecast to be taking nine months to get to a TD, to total depth. So there’s the update right now. Thanks.

Thanks, Murray.

That’s all from me. Thank you, guys.

Thanks, Muhammad.

Thank you, Muhammad. Okay, we’re going to take the final question from Peter Low at Redburn.

Hi, thanks for taking my questions. Just a quick clarification on the 2021 cash neutrality target, and sorry if I’ve missed this, but can you just confirm what level of CapEx that assumes? Is it the $12 billion or $1 billion to $2 billion below that level reflecting the extra flexibility you’ve talked about today? And then just secondly, on the disposal program outside of Alaska, which I appreciate you isn’t finalized yet. Can you give us any guidance on the actual cash proceeds expected to be received this year? Thanks.

Very good. Peter, thank you very much. Murray, both questions please.

You’re making me do a heavy load, boss. So CapEx for 2021, we’ve assumed that we’re in a low price environment when we make that forecast. So, we’ve flexed the CapEx down to $11 billion. Now that’s still a decision to be made. We have not made that decision yet. That’ll happen in the coming months. But it helps to get a sense of – get a sense of what’s capable inside the business. And remind me the second question, guys.

Disposals, any idea of the cash proceeds from the remaining five that has yet to be announced? Any idea of cash proceeds’ phasing?

Yes. So, we’ve now, just to go back to that, that route of questions. We have announced $10 billion of the $15 billion already. We’d expect the next $5 billon to come by the middle of 2021. On proceeds, we’ve received through the first quarter, $3.5 billion. Proceeds, is tricky to predict right now, if I’m honest. Given the state of the markets, given the inability to do things like due diligence and get into data rooms, et cetera, that’s a little bit tricky. I think – so the key judgment will be what – how will we come out of COVID and when can people start traveling again to look through these things? My sense is, we’ll probably have somewhere around, $3 billion-ish of proceeds this year with the remainder to follow. But it’s very subject to how we move our way through COVID, which I think is almost impossible to predict right now. I hope that helps.

Thanks. Very helpful.

Thank you very much, Peter.

Okay, thank you Peter. That’s the end of the questions. Thanks very much for those. Let me then just hand over to Bernard for a couple of closing comments before we close the call. Thank you.

Thanks, Craig. Thanks to the team for pulling this together. Brian, you got lots of compliments on there. Anything you’d like to say before you depart?

Thanks, Bernard. Yes, no, look, it’s been a real privilege to be the CFO of this company. This is, I think my 34th quarter, because I actually sneak to next one in by doing Byron’s last one over 34 years. So this is sort of symmetry in terms of timing. It’s been an absolute privilege. It’s been great to work with all of you on the sell side. I think we are incredibly fortunate to have such strong quality of analysts on the sell side in this sector, and it’s been an absolute pleasure to be able to work with all of you over the best part of a decade through the ups and the downs. But I think the great thing for me is, your questions have always been thoughtful, detailed, and actually trying to help us with how we describe the results. It’s been a privilege.As I said, it’s – that first question from Jason about a moment, I reiterate back, I think what Bernard laid out on February the 12th for the company and the path for this company going forward is all the reason why I joined the company 34 years ago. And I wish the team well. I’ll be one of the big cheerleaders on the side. And I’m sure, I’ll come across all of you in the future. And thank you Bernard, for allowing me to say a few words at the end.

Brian, thank you. The thanks go to you. You’ve been a brilliant CFO through a very difficult period for our company and we wouldn’t be here only for you. And I think we can all say that very, very easily. So, you’ve done an amazing job under exceptionally difficult circumstances. So, we’re very grateful. And we wish you well and Brian’s going to be very active. So, he’s not going anywhere.But with that, thanks everybody for your patience. You have some really thoughtful questions. And I understand we may not have answered them all and the way that you would have liked, but we are where we are. We’re, like many companies, we’re doing our best to navigate, these unprecedented circumstances as best we can. We probably won’t get everything right, but we’re doing what we can. No one really knows how things are going to unfold here, but we’re very much in control of the things that we control. I think, you know, we’ve been tested many times over our history and we always respond and we know how to respond. There is a plan. It’s a clear plan.We’re in action. We’re 100% focused on the three things, protecting our staff, the mental and physical health of our staff, supporting our communities and strengthening the finances of the company. And to that end, we’re reinforcing the liquidity. We’re lowering the balance point, and we’re strengthening the balance sheet. And we’re doing that while we do our best to safely deliver the energy and the products that the world needs. While we’re striving to get to net zero and help the world build back better, which is what we need to do. And I’m immensely proud of all of my colleagues here at BP who are coming to work every day, really looking out for each other and stepping up where they can to help people and all the time running the business, safely and efficiently. And that’s coming with a lot of personal sacrifice, but they’re a really, really rising to the challenge and we’re all very proud of them.So thank you all. And let me just say, please look after yourselves and your families and, I wish you all well. And thanks, Craig and your team for hosting the call. Thank you everyone.