Galp Energia, SGPS Stock

Good morning, ladies and gentlemen. Welcome to Galp's Second Quarter 2026 Results Presentation. I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations.

Good morning, everyone, and welcome to Galp's Second Quarter 2026 Q&A session. I'm joined today by our Co-CEOs, Maria Joao Carioca and Joao Marques da Silva as well as the full executive team. But before passing the mic for some quick opening remarks, let me start with our usual disclaimer.

During today's session, we will be making forward-looking statements that are based on our current estimates. Actual results could differ due to factors outlined in our cautionary statements within the published materials.

With this, Maria Joao, would you like to say a few words?

Thank you, Joao, and good morning, everyone. During the second quarter, Galp continued to operate in what we know was a very highly volatile market environment. It is, therefore, rather reassuring to have a high-quality asset base that allows us to capture market tailwinds, sustain our financial performance and maintain net debt rather stable despite relevant cash outflows during the quarter.

Acknowledging this continued market uncertainty, but also the strong operating performance in the first half of the year, we are updating our full year EBITDA guidance to circa EUR 4 billion and our operating cash flow guidance to EUR 3 billion. This guidance is based on an average Brent price of $70 per barrel and the refining margin of $10 for the second half of the year.

Furthermore, the Board will propose a 10% increase to the 2026 dividend per share. This brings it to EUR 0.70, with the first advancement on this payment to take place in August. This reflects not only the strong results delivered so far in 2026, but also the Board's confidence in the resilience and quality of Galp's portfolio across the cycle. Testimony to this quality, our upstream portfolio continued to demonstrate outstanding performance.

Legacy assets maintained very strong uptime levels, while the 3 producer wells at Bacalhau are successfully delivering on the expected ramp-up path and delivering also excellent productivity results.

Looking at Namibia, our strategic partnership with TotalEnergies should be soon completed. And more importantly, we remain on track to drill a new well in the Mopane complex during the fourth quarter. Overall, we're making steady progress across all key milestones and further strengthening the visibility of Galp's rather unique upstream growth profile for the next decade.

Joao, would you like to complement?

Thank you, Maria Joao. Indeed, this quarter demonstrates that Galp is executing with consistency across multiple fronts. While continuing to deliver strong financial performance, we are also making disciplined strategic decisions that are strengthening the quality of our portfolio and positioning the company for long-term value creation.

Earlier today, we announced the acquisition of a new wind portfolio. This is a final step in reshaping our renewables business into a stronger and higher quality platform. The 361-megawatt fully operational portfolio in Spain builds on the acquisition we announced back in April. This takes our total renewable capacity to 2.7 gigawatts with wind now at about 30% of the mix and lifts our pro forma renewables EBITDA to roughly EUR 110 million for 2026.

With this acquisition, our renewable portfolio gains greater scale, a better balance across technologies and increased resilience. It also gives us more flexibility and optionality as we evaluate future partnership opportunities and alternative ownership structures. In parallel, we are also making progress in downstream. Discussions with the shareholders of Moeve continue to move forward in a constructive way. All parties remain aligned on the strategic rationale and potential benefits of the transaction.

By bringing our downstream activities together, we believe the combined business will be better positioned to unlock value, increase scale, strengthen its competitiveness and reinforce their strategic position. Our focus remains unchanged, ensuring that any transaction is the right one for Galp and its shareholders, delivering sustainable long-term value.

To conclude, Galp delivered both strong financial results and strong strategic execution this quarter, a result of the continued commitment of our people and our partners. Together, we are building a stronger company, reshaping our portfolio and reinforcing Galp's distinctive investment case for the years ahead. We are now happy to take your questions.

Operator, we can start the Q&A.

[Operator Instructions] And your first question today comes from the line of Biraj Borkhataria from RBC.

First one is just on the renewable portfolio. You've obviously made a move to hybridize that. So just a broad question of whether you see yourselves as owners of that portfolio longer term because it feels like this is the sort of final step to looking to sell down as you make it more robust.

And then second question is on distributions. Raised the dividend, but no change in the buyback today. Even if I look at your macro assumptions, which look conservative, it looks like the buyback should be much higher. So I'm just wondering how you're thinking about the cadence of updating that guidance or whether you're just going to look to 2027 to top it up or that will be a 3Q event?

Thank you, Biraj. On your first one, I will leave the second one to Maria Joao. You know us quite well. So we've been managing actively our portfolio across Upstream, downstream and now renewables. So allow me to underline the strategic rationale on the wind transactions and the quality also of the acquired portfolios.

For us, maintaining and diversifying the power generation is aligned with the strategy of maximizing the value of the volumes under management across the energy value chain. The recent wind acquisition just reinforces Galp portfolio, building a more -- a much more diversified and resilient portfolio with multi-technology rebalancing the risk return profile.

Let me also emphasize on the energy management commercial angle, it will provide us access to a more stable generation source. It will unlock additional value in ancillary services and reduces the unitary imbalance cost for the entire portfolio. With the second wind acquisition, we have reached sufficient scale, as you say, the final step and diversification with no further acquisition target at this point.

So we are now focused, as you also say, on the best options to optimize capital structure of such position in our power portfolio. Increasing scale and diversification will enhance us to be ready to pursue the partnership structures and increase the resilience of its cash flow generation.

So in summary, the recent wind transactions strengthen Galp Integrated Power strategic positioning and increases flexibility to evaluate the strategic partnership opportunities towards ownership, financial structures, alternatives while retaining optionality in its exposure to the long-term growth of the Iberian power market.

Maria Joao?

Let me then follow up and pick up on your question on share buyback, Biraj. As Joao just signaled, we have a number of pieces moving in our portfolio. So touching upon the share buyback would actually go to a discussion on the distribution policy that we see is something that we would like to engage as we get more visibility on some of those moving parts. And of course, in particular, more visibility on what will be the final terms on Moeve.

So we acknowledge that there may be potential adjustments to the policy. But for now, what we wanted to do was to make sure that we could signal the merits of what we see in our portfolio right now. So continued growth ahead of us. Bacalhau is ramping up nicely. Upstream continues to perform rather well. So what we see in the dividend component, and that's why we opted for the 10% increase. So let me remind you that normally, we will be increasing at 4%. This is us putting forward a 10% increase that actually raises the floor of our dividend. And with that, we believe that we're signaling trust and believe that we will be able to sustain growth throughout the cycle as we're raising this floor for our overall distributions.

So overall, this is a signal on trust. It's always an acknowledgment that the first half of the year was a really positive one. It does not take us to the distribution policy discussion. We believe that one is to be had once we have more visibility, in particular of the Moeve deal. Thank you.

Our next question today comes from the line of Alejandro Vigil from Santander.

The first one is about the new guidance of EUR 4 billion EBITDA and EUR 3 billion operating cash flow. If you can go through these different levels to reach such a high level of operating cash flow in comparison with the EBITDA, so the high conversion of this EBITDA into cash.

And the second question is about Brazil and the oil export taxes. If you can provide an update on the situation in the country and impacting your company?

Thank you, Alejandro. So we're updating the guidance fundamentally on the back of what is our continued good performance. So you see there that we revised our Upstream guidance also in tandem. And this is bringing us fundamentally to the upper part of the interval we had guided to before. And remaining businesses, we're also seeing good indications. So we know that the context has been one of considerable volatility.

But still, as that volatility flows through the balance sheet and our accounts, we see continued strong operational performance, hence, the revision of the overall EBITDA to EUR 4 billion, OCF now at EUR 3 billion. We do see that refining margin incorporated in the guidance is one that it has been probably the variable with the most volatility in recent weeks and times. So we're seeing spot prices well above what we included in our guidance. So we are guiding at numbers that are, you may say, relatively conservative. So $13 per barrel at refining margin, $80 on the Brent.

So all in all, what we believe we can speak to here is maybe a little bit in terms of cash taxes. There's an element that can be further incorporated into the guidance as we normally see cash taxes on Upstream being treated, and we have them treated differently from taxes on downstream. So the high cash result is, to a large extent, reflecting the fact that cash taxes on downstream will be coming into our accounts in 2027, whilst the Upstream are already flowing through.

So that informs a lot of the relationship you see between the cash result and the EBITDA. But overall, very strong operational performance, over 25% of our revised uptick on guidance is coming from operational performance. Of course, in this context and with all the volatility, the remaining 75% of the uptick in guidance is coming indeed from the macro.

On Brazil, I think that was the second part of your cash -- of your question, sorry. So what we're seeing in Brazil is a continued concern about how to capture with fiscal policy, the current context. So we do see a continuation of the export tax. We have been seeking to optimize and make sure that our operational management of the circumstances delivers the best possible results. We have guided you for a total possible income that even though the time line for the tax has now been revised by the Brazilian government, we still expect overall impact to be around that order of magnitude.

We had initially guided for EUR 70 million. So far -- for EUR 100 million, I'm sorry. So far, we are at -- in our accounts, you will find a little under EUR 20 million in cash. So you see that the impacts are actually being actively managed. And overall, we expect our initial estimates to remain. We do see this as something to watch attentively. We do hope that the Brazilian government -- we'll continue to understand that these are taxes that weigh down on our ability to continue future investments.

We will be assessing all our options to protect value, and we will, of course, continue to do so in close association with other operators in the country. We continue to engage with the Brazilian Oil and Gas Association as we see this as an industry topic, not an account-specific topic. So overall, something to watch out closely. Impacts remain contained, and we continue to manage this very actively. Thank you.

Your next question today comes from the line of Joshua Stone from UBS.

Two questions, please. First, I wanted a clarification on the distributions. Is it your intention that you will still return at least 1/3 of your CFFO to shareholders? So regardless of the merger, we should expect distributions of more than EUR 1 billion this year if you hit your targets? Just a clarification on that one.

And then secondly, on the renewables side of the business, are there any synergies connected with these wind assets and integration into your retail portfolio or commercial portfolio? And if so, could you walk us through, is there any impact with the Moeve merger on that part of the transaction?

Thanks, Josh. Let me start with the distribution questions. So as you know, our current policy is for 1/3. We have the dividend component growing at a preannounced rate. So that rate, we revised it this year from 4% to 10%. So we do expect that value to be well known already and in advance. The remainder of our distribution is only communicated upon the publication of the results. So that is a number that we will be guiding on or that we'll be presenting only upon closing the results.

All in all, we haven't touched on our distribution policy thus far precisely because, as I mentioned before, we do see that with the relative size of the Moeve transaction and with everything that's moving in our portfolio, we may need to discuss our distribution policy. But for now, we find that, that is too soon, and we are remaining within that overall distribution policy. Thank you.

Josh, on your second one, I'll go back to my previous comments on the energy management and commercial angles as this portfolio will give us additional access to a stable generation source. We will be converging in terms of prices, unlocking additional value. And in the power market, apart from the significant growth that we have -- we can see in Iberia with further potential coming for sure from AI technology, but also from increasing ancillary services sophistication.

And let me state that ourselves, we are now a top-tier company in intraday trading in 2025 in Iberia. We are the #1 in solar and the #2 in wind. And finally, let me also emphasize the connection between gas and power, what we represent in Iberia today and how this can make all the sense within the decisions that we've just taken. Thank you.

Your next question comes from the line of Katherine O’Sullivan from Citi.

So just again on -- coming back on this morning's wind acquisition and implied valuation around EUR 1.2 million per megawatt. So a bit above what you paid back in April for a slightly younger portfolio. So can you help us to understand the expected equity IRR there? I know you just talked a bit about value creation.

And the follow-up on that, the average age of the assets is around 20 years. So how much of the value creation case is linked to repowering rather than the cash flows from the existing assets? And if you could discuss any repowering opportunity within these portfolios, any level of CapEx that would be associated?

Kate, so to your question, on both portfolios, we are, on both cases, below 1.2x per megawatt. We will have -- on the second portfolio, we will have no CapEx, no relevant CapEx in the short term. So this will be our short term -- our short-term focus will be on the cash generation. Of course, we will not leave aside any repowering opportunity, but that will come further ahead on the cycle. And that's -- well, on the high single-digit returns, that's where we are today. Thank you.

Your next question today comes from the line of Sasikanth Chilukuru from Jefferies.

I had 2, please. The first was regarding the agreement and the discussions with Moeve. The macro conditions, especially in refining have changed materially since your announcement back in January. I was wondering if this has changed your discussions regarding valuations or the indicative shares that you've kind of highlighted previously in any form. The second question was related to the dividends to minority shareholders to Sinopec.

First half dividends are EUR 39 million, very low compared to the EUR 240 million paid last year. And this comes as cash flows from the Upstream are -- have increased or are increasing materially. Just wanted to understand why these dividends to minorities are low? And how should we think about these dividends as we look into the second half and also into 2027?

Thank you, Sasi. And on your -- I will take the first one. Well, the Galp-Moeve transaction, it's a long-term value creation transaction. It will not be affected on the short term by the refining margins. All the discussions we are having are progressing well. Of course, the due diligence process, it's a complex one. But to your point, no interference, no discussions regarding the recent short-term refining margins. They were supportive on both sides, but not really impacting the decision. I pass to Maria Joao.

Sasi, thank you for your questions. On the dividends to minority shareholders in Brazil, of course, what we -- if you look at our numbers last year, you'll see that same line had a higher volume to an extent we looked at the profile, and we also looked at the current taxation [Technical Difficulty] results.

So we managed actively, and we put forward some of the dividend payments to make sure that we enjoy [Technical Difficulty] of fiscal status to those payments. And that is the fundamental driver behind this. There's no operational performance issues at all impacting this line. Thank you.

Your next question today on the line of Guilherme Levy from Morgan Stanley.

Firstly, just going back to the shareholder remuneration discussion. Could I pick your brain about ways to remunerate the shareholder from here? How do you feel about specialty at this point to complete the 1/3 of CFFO policy vis-a-vis pure buybacks on top of the normal dividends?

And then secondly, could you provide us an update on gas monetization and gas trading, perhaps an update on Venture Global volumes? How much of it is hedged at this point? But also in Brazil, could you talk a bit about how much of your production is currently being sold to Petrobras? How much is being sold to third parties? That would be great.

Guilherme, I'll start with the distributions and then I think Joao will pick up on the gas trading. So what I've been mentioning today on the distributions is a lot, I guess, to a large extent, the way we've been thinking about this. So we look at our distributions policy very much through the cycle. And thus far, the 1/3 distribution rule has been a steady base on which we've been able to reflect our profile. So we are clearly a growth stock, not necessarily one that goes for the dividend yield alone.

So thus far, this combination of having a 1/3 commitment on OCF, and I'll remind you that we have a distribution index to OCF, not free cash flow. So that also helps having visibility on how it is that we are connecting our distributions to our operational performance. But on this basis, so what we see right now is we do have a number of changes coming up in terms of how our profile and our results and EBITDA generation will evolve over the coming months. Visibility on those specific terms will be critical for us to then have a sound discussion on how we see this distribution policy moving forward. But the priorities remain the same, right?

So we continue to aim to have a distribution policy that is, first and foremost, very reflective of our performance and our equity story. We, of course, keep track of how the industry is adjusting, and we aim to become and to continue to be competitive in terms of overall distributions. We also expect those distributions to be sustainable in the sense that we want to have a dividend floor that is stable, that is clear to all our shareholders through the cycle. And then we use share buybacks as the adjustment factor, if you like, whenever there is indeed a tailwind that allows us to have an additional distribution going on.

So overall, we do expect our distribution policy to retain these aspects. We do see the portfolio as having continued performance to sustain a very competitive distribution policy. We will be looking into to whether the current design of that distribution policy is the best to continue to deliver on these objectives as we see fundamental movements in the portfolio. So no fundamental changes in the goals, willingness to adjust if moving portfolio requires a moving distribution policy, but now only once we have sufficient visibility. Thank you.

Guilherme, on your second one related with the gas. So first, just to highlight, we have no changes in our hedging strategy. We have 2026, 70% hedge. Venture Global is delivering according to plan. And Brazil, it's a regional play. We are acting on the wholesale side, increasing volumes, taking the benefit from our equity position, and that's all. Thank you.

Your next question comes from the line of Ignacio Doménech from JB Capital.

My first question is on your gas sourcing, okay, if I'm not mistaken, significant volumes from Algeria and Nigeria expire next year. So I was wondering what is your strategy and your ongoing conversations in terms of gas sourcing for the next year and how we should think on this going forward? You have more exposure to spot prices to long-term secured contracts?

And my second question is regarding your strategy given the significant changes and optimization of the portfolio. I was wondering when would you be able to update the market on your longer-term strategy, if we could expect a Capital Markets Day in 2027. I would assume this is contingent to some of the ongoing partnerships. But if you could give us a time line, that would be helpful.

Ignacio, on your first one, so we will enjoy our gas portfolio as a diversified portfolio and highly competitive. So on your point, of course, we are interested on the North African contracts that we have. It's true that some of them will expire soon. We are having conversations on that, but no further update to give you. So that -- so only to reemphasize, we really enjoy our position in gas, and LNG trading and diversification and competitiveness are key for us, and we will try to keep those as a key factor to our position in the world markets. Thank you.

So let me pick up on the second part of your question. If I understood correctly, you're wondering as to whether we'll have an updated strategy and a possible Capital Markets Day anytime soon. Ignacio, we're very focused on execution to be clear and to be honest. So we have the Web transaction ongoing. We have a number of movements to our portfolio, and that is clearly taking up our attention spend, so to say. And we feel that upon closure of those transactions, we will, in any case, have a lot more visibility and a lot more ground to have a clear communication.

Now having said that, your challenge is a fair one. So we do acknowledge that an update and a consolidated [Technical Difficulty] could enhance market understanding. We are trying to make sure that we step in and give as much transparency and as much clarity on our strategic rationale as we move through our portfolio changes.

And we believe that once we gain further visibility and we are further along this execution challenge that -- the set of execution challenges actually that we have, then we'll be in better conditions to communicate on the overall consolidated position and what this means in terms of full visibility for our strategic rationale and portfolio changes. Thank you.

Your next question today comes from the line of Michele Della Vigna from Goldman Sachs.

Two questions on downstream. First, with refining, I was wondering, could you tell us what is your current state of margins and whether you have any major turnaround in the second half? Also, the HVO plant should start up relatively soon. I was wondering if you could update on the start-up timing there?

And then secondly, on the Moeve joint venture, could you perhaps lay out what the remaining hurdles are to define that partnership and whether there is any early views of how much financial leverage those 2 entities, the marketing and the industrial one could take on when the joint venture is fully established?

Michele, so on a couple of ones on the first one. So the spot margins clearly above $30. Just reminding that as Maria Joao alluded, we are assuming 13 barrels -- $13 per barrel on our estimations. We have, let's call it, a small short downtime expected in September, but it's very, very, very minor. So we are keeping our throughput really high on between the 80% and 85%, and that's where we stay at this point. On the HVO H2 start-up, so we are -- we have construction ending by year-end and COD should be met next year, early next year.

On the second one, so on the hurdles in Moeve, we -- well, that's a market standard. So on the retail side, we see a net debt to EBITDA between 3 and 4x. And on industrial, the ratio goes up 1x. That's where we are. At this point, complexities on the due diligence and nothing else but that. Thank you.

[Operator Instructions] And the next question today comes from the line of Paul Redman from BNP Paribas.

My first question was just on CapEx. You guided to net CapEx '25 to '26, I think it was of EUR 0.8 billion a year. If my numbers are right, 2025 was EUR 100 million, 1H has been EUR 800 million. And then you've got the deal to complete, which would be another EUR 400 million. When I add all those up, I've not got much breathing room for the next couple of quarters on organic CapEx. Can you just talk me through that and whether we should be expecting any divestment proceeds to come in?

And then my second question is, just to be really clear on the distribution program. there won't be any change to the EUR 250 million buybacks you're doing in 2026, the actual cash you're spending. The change will be for 2026 cash when you guide to a 1/3 of operating cash flow buyback for 2026 cash flow.

Paul, so let me start with the last one because I think it's the easier one. No, we're not going to be touching upon the EUR 250 million in 2026. Fundamentally, that is the number that plugs into our distribution policy once we did the respective dividend distribution given the results in '25. okay? So no changes to that. The result for '25 is known.

We published the share buyback number once we had the figure for '25 results. It's been ongoing. It's been executed at a relatively accelerated pace, but that's performed at arm's length by a financial institution that takes it away and execute it in the best way possible. So no changes to the total amount in 2026.

As for CapEx breathing room for the next quarters, we do expect to land relatively close to what we had expected. We may come in a bit slightly above, but we don't expect any major deviations. We do have macro and a number of other elements pushing us forward. So we'll see how it actually lands, but I would not be signaling now on a major deviation from those numbers, if anything, slightly above. Thank you.

Your next question today comes from the line of Matt Lofting from JPMorgan.

I just wanted to ask you for your thoughts. I mean, Galp has a strong history in pursuing and forming strategic partnerships in businesses and specific assets. When you look now at the ongoing processes that you've talked about with Moeve in the Upstream, but also referring a bit more to the merits of partnerships in renewables now as well. Can you just sort of summarize the fundamental differences perhaps that you see in what you're trying to optimize or unlock between those 2 businesses?

And then Secondly, as the process is, if we assume advance, what sort of the key principles are for how Galp can best ensure an appropriate financial and governance framework for stakeholders in the future?

Matt, thank you for the question. So if in the Moeve -- Galp-Moeve deal, it's clearly a scale deal, a deal that has a lot of complementary assets on both sides, Portugal and Spain, clearly, a deal that will build a European platform on the industrial side, a deal that will clearly build on the network and on the retail side, a winning platform also to face the electric mobility CapEx. If we go to the renewable side, we are clearly looking at a much different kind of partnership.

We need to look at the financial side of it, the structures that -- and the potential that we have to leverage these assets. So every time I mention what the returns that we are expecting, we are -- I remind you, we are speaking about unlevered assets. And so building a bigger scale platform also on renewables and benefiting from the integration that we have on the energy management through the cycle, it's really, really important.

So clearly, 2 different animals. But on the renewable side, we clearly benefit to have a much more balanced portfolio after these 2 acquisitions to face that second step. Thank you.

So Matt, if I understood the second part of your question correctly, you're fundamentally asking about how are we standing in terms of capital allocation priorities and how to communicate strategy moving forward. So on that, again, we continue to have moving parts in the portfolio that we believe play to an overall strategy of making sure that our capital allocation is consistent with our core businesses and our ability to deliver an equity story that is very much a growth story, hinging on the performance of our Upstream assets and their relative quality.

So everything that we've been doing to clear up the portfolio speaks to this concern about making sure that we have the right capital allocation to each of the businesses, reflecting their performance and their growth profile. We expect to continue to do that. A lot of what we've been doing has been precisely about either derisking those assets and a lot of what you saw us doing in Upstream has been about that. So making sure that Namibia became a sufficiently derisked asset with a partner that clearly will be an asset in developing the basin as we move forward.

When we look to downstream, again, the principle has been one of making sure that the assets have a situation and the context within our portfolio that speaks to partners that can take forward the transition story that needs to happen in those assets that we can do so in a way that ring-fences capital expenditures and gives full visibility into what is expected in terms of future performance and fundamentally future CapEx requirements whilst also giving us the ability to better explore the financing structure of those businesses. So giving us the ability to explore the opportunity to have further leverage on these businesses.

So this is the story of what we've been doing, and I expect that to be the guideline moving forward as we continue to go through the portfolio. So same story, very mindful of capital allocation, but very aware of the different values and of the different drivers in our different businesses within the portfolio. Thank you.

Our next question comes from the line of Nash Cui from Barclays.

Two, please. The first one is on production. You upgraded 2026 production guidance to around 130,000 barrels a day. Could you please talk about the drivers behind this upgrade? And could we see upside beyond this level?

And then the second question is on refining margin. You mentioned earlier that spot margin is more than $30 per barrel and your assumption in the second half of the year is $10 per barrel, which seems conservative. I wonder if you could share your view on the margin outlook, please.

Let me start with Upstream production. I think there are 2 fundamental drivers behind what we're seeing in terms of our guidance, our updated guidance for production. One is the fact that our legacy assets have been performing rather well.

We've actually seen both a lot of commitment from Petrobras, our core partner in Brazil, in making sure that the maintenance and the ability to deliver from those assets, for instance, in 2P, we're now engaging in a program that is over 40 initiatives to make sure that we drive the productivity of those wells far into their active lives. So good performances in our legacy assets.

We've had maintenance with very few unplanned events, and that is also one of the core aspects that we look into when we look at how we guide for the remainder of the year. So quite a bit of the expected maintenance for this year is well behind us. So we do think that, that is one of the factors bringing us to the top end of our guidance profile. Having said that, this is planned maintenance. We've been having extremely good performance on that respect, but we always guide taking into consideration that unplanned events may happen, and we guide for a central scenario. We don't guide for the best possible scenario. So we always have a little bit of a buffer or cushion there, if you like, for such eventual circumstances.

Now the real driver behind the change in numbers for our production is, of course, Bacalhau. Bacalhau has been ramping up. I think we're extremely aligned with Equinor in terms of the fact that this is a profile that we see as taking us to full ramp-up towards the end of the year, as we always mentioned. Now having said that, this is a ramp-up. So it will have glitches fluctuations. You've seen higher numbers early in the year.

We are now in 3 producers, hoping to connect the fourth producer and have it fully online soon enough. So a very good path, very much in line with what we were expecting so far, but still, again, being cautious and acknowledging that this is a ramp-up. So guiding for a central scenario and not for our best possible scenario. We're now seeing producers with extremely high flow rates that would give us very good performances. We're guiding for a central scenario, not for the top performances observed to date. Thank you.

Nash, going back to your question on refining margins. Well, we are living a very particular world within the volatility that we have. And if you go back to the end of June, we clearly see a different scenario. And of course, escalation on the Middle East conflict, additional attacks on Russian refineries. Of course, they bust and they have clearly a very, very sizable impact on the refining margins that we are having on the spot market. But our prudent approach assumptions to the second half, we see them as the more consistent ones.

Considering the fundamentals of the market, of course, you have all the sensibilities available, you can input those to your model and consider them. But we can see margins squeezed by rising or rising input costs. We can see also some decrease on the oil product prices, mainly in diesel and jet, should there be a stable or resolution. And we also need to consider some demand destruction at this point.

So there are a number of factors that can also take some pressure out from the spot market, and we think it's the best way to approach our second half. But again, you can consider you have the sensibilities which we shared and you can consider them in your model. Thank you.

Your next question today comes from the line of Christopher Copeland from Bank of America.

The first one goes back to your renewable acquisitions. You've spent just shy of EUR 800 million. And I'm just looking at your EBITDA guidance pro forma EUR 110 million, comparing that to what you gave us earlier for the EBITDA contribution from renewables as more than EUR 30 million. So are we doing the right math to sort of say, okay, you have acquired assets at a roughly 10x plus EBITDA multiple? First question.

And second question, can you help us a little bit quantifying that underlift impact in Upstream on EBITDA considering that EBITDA quarter-over-quarter has barely moved. Would like to understand how much of that you would argue could come back in the third quarter.

So Chris, let me pick up on the underlift one as that's probably the easier one. So it's approximately EUR 60 million impact from underlift. So the effect there is simply the reflection of what was happening in terms of how we were registering in our accounts, the numbers that were at the time that were valid at the time that our partners were actually lifting those cargoes versus what is now that we've actually come through on the sales, the actual market prices for that. So this does bring quite a few swings into our numbers.

So I will remind you that first quarter was actually positive. So we had a plus EUR 50 million there. And that's -- all in all, if you take the plus EUR 50 million on the quarter plus the number for the second quarter, it's a significant swing quarter-on-quarter, EUR 110 million. But overall, the mechanics is that I've just described, it's bringing into our account at the moment of sale, the difference vis-a-vis the prices registered at the time that our partners lift from the wells where we are in partnership. I hope this clears your question. Thank you.

And Chris, on your first one. So you're absolutely right. So our -- just to sum up, our underlying assumption on the wind power prices are around EUR 50 per megawatt. And indeed, we are looking at 10% returns, again, unlevered assets. Thank you.

Your next question today comes from the line of Ahmed Ben Salem from ODDO BHF.

So you raised the 2006 EBITDA guidance to around EUR 4 billion, largely reflecting strong Brent and refining margins. So how much of the upgrade comes from the macro assumptions versus underlying operational improvement?

Thank you, Ahmed. So from the total upgrade, I think I mentioned it briefly before. But overall, there's approximately 25% of this upgrade coming from operational drivers and the remainder is indeed the reflection of the macro tailwind. So these operational upgrades are distributed across the portfolio. But all in all, fundamentally accounts for those operational changes that we see in terms of volumes and in terms of actual operational performance. Thank you.

Our next question today comes from the line of Fernando Abril-Martorell from Alantra.

Only one. On -- based on the comments you've made on the leverage target for the RetailCo and the IndustrialCo and also based on the targeted stakes you want to have in each of the subsidiaries. Is it possible that the deal could generate an extraordinary dividend Upstream to the holdco level to you guys to Galp? And if so, what would you do with those proceeds, an extra DPS for shareholders or bringing leverage down further? I don't know, any comments on this would be helpful.

Fernando, I really understand your question, but it's too early to have an answer. Of course, your options are -- they make sense, but we cannot comment on that. It's too early. We are still triggering all the valuations. We are still triggering all the agreements, and it's not the time to speak about that, as Maria Joao already alluded. Thank you.

We will now take our final question for today. And the final question comes from the line of Sadnan Ali from HSBC.

Two, please. The first one on refining. Can you just talk to us about your operational performance at Sines over the past few months? I think with the 1Q results, you said you made changes to your hydrocracker to increase the jet yield. And I was just wondering if you've made any other operational changes over the past few months. And with that, can you just remind us how much flexibility and agility you have in your system to say, alter the crude slate or the product yield slate on a short-term basis?

And then secondly, just on the Commercial division, the discount mechanisms in place for Spain and Portugal. Can you quantify the impact it's had so far this year and your expectations going forward?

On the first one, Sadnan, so it's -- well, we are having a pretty high throughput through the quarter, and we are expecting higher throughput versus what we were assuming. So we were assuming around 80 million barrels. We are on the 80 million, 85 million range. I've mentioned already, so we are expecting light maintenance activities on the hydrocracker in September.

And let me also give you some numbers on Sines outputs, which are roughly 45% middle distillates on which jet accounts for around 10%. We are trying and we have the flexibility to rise it to 13%. That's where we are looking -- at this point, we are on the 14%. The normal is a 10% ratio, and that's what we are expecting. So we are expecting to operate with full availability during July and August and having the minor maintenance activities in September. Thank you.

Thank you. This concludes the Q&A and today's conference call. Thank you for participating. You may now disconnect.

Good morning, ladies and gentlemen. Welcome to Galp's First Quarter 2026 Results Presentation. I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations.

Good morning, everyone, and welcome to Galp's First Quarter 2026 Q&A session. I'm joined today by our Co-CEOs, Maria Joao Carioca and João Marques da Silva as well as the full executive team.

But before passing the mic for some quick opening remarks, let me start with our usual disclaimer. During today's session, we will be making forward-looking statements that are based on our current estimates. Actual results could differ due to factors outlined in our cautionary statements within the published materials.

Having said this, Joao, would you like to say a few words?

Of course. Thank you, Joao, and good morning, everyone. Galp had a strong start to 2026 in a quarter marked by higher volatility and geopolitical tensions in the Middle East. Galp has no direct exposure to the region. Our operations are mainly Atlantic-based. Still, we are closely monitoring developments, and the impact can be felt globally.

Due to disruptions across parts of the value chain, our Midstream team has actively managed crude and refined product supply, well done. This allowed us to so far to secure a healthy position for Galp and for Portugal.

In our Commercial business, we have also reinforced campaigns and discount mechanisms to help our customers to manage the impact of higher fuel prices. And overall, during the quarter, we have continued to run our operations efficiently. In March, our Upstream and Industrial assets showed strong availability, allowing us to benefit from higher commodity prices.

Maria Joao, over to you.

Thank you, Joao. Good morning, everyone. The quarter's solid operational performance that Joao just highlighted flowed through to the P&L and actually further supported Galp's robust financial position. I would highlight the fact that net debt remained stable quarter-on-quarter despite the balance sheet working capital impact from the sharp increase in commodity prices.

We're focused on managing ongoing market volatility and supply disruptions, but this has not at all hindered our continued execution in the strategic initiatives that are currently underway across our portfolio. We continue to strive for both pace and discipline in our execution.

In Namibia, procurement activities are progressing, and that allows us to remain on track to start drilling activities on the next exploration and appraisal campaign by Q4. At the same time, discussions with NV shareholders regarding the merger of our downstream businesses continue to evolve positively. So we continue to have a potential agreement still expected by midyear. Overall, 2026 is indeed shaping up to be a challenging but also a rather exciting year for Galp.

Operator, we are now ready to take questions.

[Operator Instructions] And our first question today comes from the line of Matt Smith, Bank of America.

I wanted to focus on the Upstream business first. I think you mentioned Bacalhau contributed 10,000 barrels to performance in the quarter, which would make the underlying Brazil performance look extremely strong versus recent history. So I was just hoping you could give us a bit of color there and any context how that's running versus your full-year guidance, that would be useful.

And then I just also wondered price dislocations has been a hot topic for April. Is there any color you could give us in terms of the realizations that you're achieving on your crude post quarter end? And then I guess, on the other side of the same coin, what Refining margins have done since the quarter end? That would be useful.

Thanks, Matt. Thanks for the question. So let me try and tee it off with some comments on Bacalhau and I guess, overall on the performance of our Brazil Upstream business. So overall, rather good performance. I think it maps out against what we had in terms of the guidance we had given. We've given 125,000 to 130,000 barrels, and we've delivered at the very top end of that guidance. Bacalhau has indeed been a part of that [ up end ] guidance.

I would, nevertheless, stress that we're still ramping up the unit. So it's good indications. We now -- we've had 2 producers already registering significant flow rates, and the third producer is already connected. And that has indeed been delivering according to our expectations of a good reservoir. But in any case, we're ramping up. So it's still commissioning.

It's still, I'd call them maybe hiccups to expect. Plateau is still expected later in 2026. So overall, very good indications, good performance, but I would nevertheless remain conservative and remain within the estimated time frame for plateauing and for the overall ramp-up to take place.

So other than that, our legacy business in Brazil continues to perform rather well. You know that there are ongoing works in Tupi to continue to maintain the current good performance of the wells. You know that this is still ongoing set of partnerships that have been the cornerstone of our performance. So no major comments there, just general good performance.

On the realizations of our different businesses, but I believe your question referred particularly to equity crude. I think, as you know, about 70% of our exports flow through to China. We, in any case, normally deliver on index to dated Brent circa 2 months ahead. So the fluctuations that you saw throughout this period did not necessarily capture the full breadth of the impacts we suffered.

In any case, in equity crudes, we registered a discount of approximately $5 per barrel. And this just fundamentally reflected the fact that what we were seeing throughout the period in terms of the costs underlining our activity, particularly when you saw it during the period concerning freight costs was indeed a lot of fluctuation and a lot of volatility. Thank you.

Allow me to complement on the Refining margins, your question. Of course, when we compare ourselves with the highs of March, we are observing an average of between $10 to $12 per barrel. On the last couple of days, additional volatility, margins increased up to the [ 20s ]. But more importantly, what we are expecting is to operate at full availability during the next couple of quarters.

Reminding that [ Siemens ] refinery outputs are 45% on mid-distillates. Jet will account for less than 10% of that. And if we look at the downtrend from March, it reflects a bit of margin squeezing by rising input costs, and I'm speaking about utility, freight cost inflation.

But we are also looking at some decrease on the oil product prices, mainly on diesel and jet as pricing is reflecting a probable resolution on the conflict. And finally, Europe margins declined more versus other regions, again, representing a different higher utility gas prices situation. And I'll stop here.

Your next question today comes from the line of Alejandro Vigil from Santander.

Congratulations for the strong results. The first question is about the guidance of '26. You started the year with very conservative guidance. If in the current context of higher energy prices, you are considering some increase in this guidance. And particularly more important, the implications in terms of shareholder distributions, you're expecting some additional cash flow to shareholders driven by these high energy prices.

And the second question is about the Moeve joint ventures in the Iberian downstream. If you are close to closing these transactions, if you are seeing some releverage opportunities in the joint ventures that you are setting with Moeve?

Alejandro, on the updating of guidance, we acknowledge, obviously, that the macro that was underlying our existing guidance is, to a large extent, no longer directly applicable. It no longer holds. We've seen significant changes in terms of most commodity prices and most underlying adjacent costs.

But in any case, what we are at this stage acknowledging is that the situation continues to be of high volatility, way too many moving pieces. So we don't feel that this is the time to pin down the new guidance. We will be looking and most likely doing so as we publish our second quarter results.

Right now, sensitivities are for us, the tool that's guiding us through the period. So what we're looking is fundamentally approximately numbers that you've seen in the past for Galp, but it's approximately $160 million for each $5 of Brent impact and a bit under that. But well, if you take each $5 of Refining margin, I'd say that the sensitivity is approximately $200 million.

So we're navigating the volatility using uncertainties, and we're certainly looking into what are the underlying large trends in the market to support this. And then once we see some more firm ground, we will look to revise the guidance.

The second part of your question on distributions, I think it follows through from my initial comments. So again, we will not be revising distribution. It's really early to assess all the full impact of everything that's going on. So we do see that our distribution policy, the 1/3 OCF in itself already embeds flexibility to capture part of what is the current circumstance.

And I think this will give a great segue for Joao to comment next on Moeve, particularly because this business is in itself rather transformative. Our expectation is that it will be value accretive, and there will indeed be elements of releveraging that Joao will comment on. But those again speak to our not moving our distribution policy at this stage.

Alejandro, well, just giving you some [ sequence ] from Ms. Joao's words, we've highlighted a number of times that both companies are to be designing as self-funded ring-fencing industrial versus retail businesses differences. At this point, well, I need to say that we've seen a lot of traction in the market. That's what we've been receiving from the investor side, from the financing side and these companies to be independently run with financial flexibility.

Of course, we will be looking at the optimal finance structure and leverage all the way down. So that's what we are expecting. That's the flexibility that we need to enhance. And you are absolutely right, the macro scenario will, of course, releverage some opportunities.

Your next question today comes from the line of Biraj Borkhataria from RBC.

Two, please. Just the first one is just on Bacalhau. If once we get to a full ramp-up phase, how should we think about the Upstream sort of DD&A and OpEx per barrel at the blended rate, given the mix of assets there? And second question is just on the Venture Global offtake that you have. Could you let us know how much of those volumes you've hedged for 2026 and how much is sort of exposed to the upside and widening spreads?

[Technical Difficulty] the low 2 digits. I'm not sure you picked up my -- the initial part of my answer. I think there was some technical issue here. So I'll just very quickly repeat through.

On Bacalhau, right now, the numbers you're seeing are fundamentally numbers that reflect the fact that we're still ramping up. Now having said this and going straight to your question, what we're seeing in terms of DD&A expectations is in the low 2 digits, of course, once you plateau.

And this should bring us to operating costs that are not too dissimilar to what we have right now, maybe slightly above what we have right now as we truly perform in the upper 2s, lower 3s right now. And what we expect for Bacalhau is to be fundamentally in the 3 to 4 operating cost figures. I'll let Joao comment on the hedging numbers for LNG.

And Biraj, really quick one. So consider between 70% to 75% hedged on the venture contracts in 2026.

And the next question comes from the line of Josh Stone from UBS.

Just building on the last question, I wanted to ask about the Midstream and the outlook there, just given the widening of gas spreads and your ability to capture that. So just talk about, one, how the business actually performed if you adjust out the time lag? And two, what you're thinking about the outlook?

And secondly, I wanted to ask on Refining because you spoke back about some Refining margin trends. And based on -- I presume that's based on an indicator. I'm curious as to how do those indicators match with what you're seeing on the ground in terms of Refining profitability. And with the extreme backwardation we've seen, has that had created any disconnect between like on-the-ground profitability versus the indicators you're looking at? And maybe as part of that, can you can talk about the role of hedges and your hedging position in Refining?

Thank you, Josh. you should consider on our latest guidance to our Midstream above 500 million into 2026. We still see some supportive but narrower gas spreads. Consider that the trading gas is contributing around 70% of our total performance. And that largely, as I've just mentioned, a large portion of that is already locked for 2026, around 70%. Of course, we have some flexibility on the portfolio, and we have an increased footprint in Brazil. And that's basically what we have.

On the Refining side, our crude procurement is based on the physical products. And you know that -- well, we have mainly selling products at the market condition in the Iberian Peninsula. Of course, we are long on the gasoline side, and that's one of the products that we are long in. But namely, we are counting on a fully operational refinery to capture the market conditions, and I'll stop here.

Your next question today comes from the line of Guilherme Levy from Morgan Stanley.

The first one, thinking about the recent view on onshore wind, I was keen to hear more about the rationale to increase exposure in renewables at the moment, how to think about the long-term positioning in this division? And if we should be expecting more opportunistic deals like this one over the coming quarters?

And then secondly, going to your Commercial segment, I know that in your opening remarks, you commented about campaigns and discount mechanisms to move the impact of higher prices to consumers. I was keen to see if you are seeing some sort of slowdown in sales, even though you have implemented those measures, or not so far?

Thank you, Guilherme. Maybe I'll start on your second one. And it's true, we are observing different behaviors on the Spanish side and on the Portuguese side. Of course, the different framework that the Spanish market has changing prices on a daily basis, influences demand and pricing in a different way.

On the Portuguese side, on the retail -- namely on the retail, we change -- we have weekly prices. And those discounts and those campaigns are reflecting an additional help that we think our customers need today. That's why we've launched the recent campaign on the [ Mundo Gulf ]. But more than that, since early this year, we've started a more broader campaign cross-selling oil, gas and power and also in the retail side.

We have observed, namely in March, an increase on the volumes. And it was like a push before the prices going up on the Portuguese side, and that's something very normal. That will be, of course, neutralized on the April volumes. It was more on the Spanish side, if we compare the two markets, the Spanish market, namely on the March volumes, had a more substantial increase than the Portugal one.

But of course, we are operating in a high prices context, and that's something that will affect the average ticket volumes that we have. Substantial contribution from the nonfuel business also around 22% of the overall Commercial business.

Going back to your first question and on the offshore, on the wind rationale and thinking ahead, I need to tell you that, of course, this recent acquisition allows us to have a much more balanced portfolio. Wind now represents around 25% of our generation mix. And of course, if we think further, it will enhance eventual long-term strategic optionalities and partnerships that we may have.

I need to remind you that we are challenging -- almost every day, we challenge ourselves if we are the best owners of this business and of course, if we have the best structure to manage this business. But all in all, we are trying to diversify and to optimize our Renewables business, and that's where we stand today. And that's where we will be standing on the next couple of months.

Your next question today comes from the line of Sasikanth Chilukuru from Jefferies.

I had two, please. The first was in Refining and getting back to the hedges. I was just wondering if you could further elaborate on your hedging strategy in Refining. It would be helpful to understand the rationale, the hedge profile for the current year and into 2027 and the type of hedging structures you're using there.

The second one was on Bacalhau and the ramp-up. I was just wondering if you could comment on the cash taxes paid there and the impact that this field has at the group cash tax rate this year and for 2027?

Thank you for your question. So let me maybe complement what João has already shared with us on our hedging strategy. So we have hedging strategies in place for both Refining and Midstream. I would highlight the fact that there's no hedging in place for Upstream.

But on Refining, in particular, which I believe was your question, the policy we have -- and again, this is a hedging policy that's been syndicated with the Board. It goes through Board oversight. It goes through all of our risk management and internal control processes. So it's under strict limits and triggers.

Now the limits we have on board right now, the ones we're acting against are for Refining, circa 1/3 of our throughput. So if you look at what we have in place right now for 2026, and that's fundamentally flat throughout 2026. What we have in place is about 28 million barrels. That's locked at approximately $8 per barrel, again, flat throughout the year. Into 2027, we don't have any significant positions. We don't have any hedging into 2027 for Refining, again.

Now on Bacalhau, the regime under which Bacalhau is, is still a shared regime. So it's 50-50 between concession and PSC. So that gives us a relatively benevolent tax regime vis-a-vis the remaining assets we have in Brazil. So we acknowledge that this is overall a lower SPT rate than what we have, for instance, in Tupi, and that is going to be obviously a part of what we believe will be the approximately 400 million of OCF that Bacalhau will be delivering once it plateaus.

[Operator Instructions] And our next question today comes from the line of Michele Della Vigna from Goldman Sachs.

Congratulations again for the strong performance. Two questions, if I may. First, on exploration, it's going to be very exciting in Q4 in Namibia. I was also wondering if you could update us on your thinking about Sao Tome and the attractiveness of that basin.

And secondly, I wanted to come back to the carry that you're getting for -- in Namibia for both exploration and then the Mopane development and how that is likely to be accounted, whether that will be -- effectively, whether your CapEx will be net of that or whether that will be considered as a financing and the gross CapEx will reflect the full spend on Mopane?

Thank you, Michele. So on exploration, I know that exploration is all that the industry is talking about these days, quite a change from a few years ago. But on exploration, in particular, we are very focused on Namibia right now, as you well put it. So we're trying to make sure that all the conditions are in place and everything is going according to plan to a large extent. So we do expect to have news towards the end of the year.

On Sao Tome, as you know, that's a much earlier-stage basin. So nothing too significant going on here. So it's still in our forward-looking plans, and there are no major developments in recent days or recent times that I would highlight at this stage.

As for Mopane carry, how will you reflect it, I'm afraid at this stage, that is still being fully assessed with our auditors and our accounting. So of course, we'll be looking for a very clean disclosure. And so ideally, we would be reporting CapEx just for that component that reflects our responsibilities once the deal is closed. So once that is closed and confirmed, we actually hold 25% of full responsibilities, and that will be what we will be trying to show as explicitly as possible in our financial statements.

The exact way in which we'll be doing that is still under discussion, while the deal isn't fully closed yet. So we're still waiting for Namibian authorities to close that component and then for the GOA to be fully detailed. So we will get back to you on that, of course. But for now, it's the 25% financial responsibilities, and we will be showing that through our accounts.

Our next question today comes from the line of Matt Lofting from JPMorgan.

Most of mine have been asked. I'll just ask a couple of follow-ups downstream related. I think you mentioned earlier sort of a near 10% jet fuel yield that Galp can generate at Sines. That's high or sort of high end relative to industry averages. So I wondered if you could just talk about what enables Galp to generate that kind of jet yield from Sines and whether you see any additional upward flex in the context of almost inevitable tightening in jet supplies in Europe now over the coming weeks?

And then secondly, when you sort of think forward, uncertain backdrop, but if we do see a sort of prolonged knock-on effect from Middle East conflict for middle distillate supplies in Europe over the coming months. To what degree could the combination with Moeve enhance Galp's ability to produce and source middle distillate supply for Iberia and Europe as a whole?

Thank you, Matt. So going back -- and we need to go back in history to understand that. We've made a couple of investments that allow us to be today as we are producing such a yield. I'll go back to 2012, where we've done a couple of investments on the idle cracker. And that's why we are getting such a yield on the jet side.

Of course, we will be trying eventually to reduce additionally the jet volumes blended into the diesel pool. We are, of course, also increasing the average inventories, but that's a different thing, managing the whole context that we have from the Middle East.

On the Moeve combination, of course, we are getting scale, additional scale. We are getting complementary assets also, but it's still very early for us to speak about that. Of course, that we were thinking about the SAF and the SAF production units that we have been building through the last years, ourselves and Moeve. And that's a very important asset to look at on the synergies. But it's still very, very early to say that.

Complementary optimized logistics, supply chains, that's what we are looking at, turnaround efficiencies, higher trading firepower. So that's where we are when we look at the transaction. Thank you.

We will now take our final question for today. And the final question comes from the line of Paul Redman from BNP Paribas.

I had two questions. Firstly, I just wanted to ask about Namibia. Is there any update on the drilling campaign? And I wanted to ask about timing of FIDs and development. Is there any opportunity to accelerate Mopane? The previous plan had been Venus first and Mopane second. Could there be a world in which that changes and Mopane could be brought forward?

And then secondly, I know it's early, and clearly, you have a lot of strategic moving parts at the moment. But this quarter, you kept net debt flat despite a EUR 200 million working capital build, EUR 160 million at [ year ] out for 2P. So if I ran this forward on the 1Q scenario, your balance sheet is going to materially delever through 2026. that's even before we get to the world of if Rovuma LNG gets sanctioned, you get cash in from that.

So I wanted to ask how you're thinking about the balance sheet at the moment? And then how you're thinking about allocating capital going forward? Is this -- could you see more M&A? Is it all back to shareholder? So just kind of get your early thoughts on how to think about it.

Paul, thank you for your questions. So let's start with Namibia. Maybe just an overall status and next step, so I think it's relevant to say that at this stage, where we are concerning the partnership is, good pace moving forward. I think one of the critical steps that was concerning the preemption rights, that timeline has expired. No preemption rights were exercised.

So right now, we're just looking on to the local authorities to make sure that government approval comes as swiftly as authorities find it viable to come through. I think that the tone continues to be a very positive one. I think if you're looking into Namibia, just recently, the discussions on the basin, the conference that took place are all very, very positive and very mindful of the current context and the implications that has for a new location such as Namibia.

So once we get that approval, we then will be in a condition where we will be able to discuss the more operational aspects. So the details on the GOA, the operatorship transfer. So all in all, what we are expecting for Mopane, in particular, is still that we will be able to initiate the next campaign in 2026. If the first drills are positive, we will then look into the DSTs.

So I remind you that the work we're doing -- that we will be doing now in this stage will fundamentally be work towards making sure that we have the optimal development concept. So without that development concept mature, that's clearly too early stage to be discussing any significant changes in what were the underlying time lines both for Mopane but also for Venus, of course.

And I will remind you that for Venus, until the operation is closed, we're not yet in the consortium. So I'm not going to comment extensively. I think it's public, and we have visibility over the fact that everything is moving and we're working clearly towards having an FID in mid-2026. So that is, of course, well in advance of the current stage that we have for Mopane.

I will again remind you that Venus has always been at least 2 years ahead of Mopane. So these time lines, we may be able to work through some aspects, but it's to have a fundamental turnaround and shift would be a significant departure. So yes, we'll be looking to accelerate. Yes, once we get everything closed and Total comes in full steam, that is hopefully a fast track towards Mopane. But at this stage, doesn't fundamentally change the sequential timeline that we had.

On the second part of your question, so jumping from Namibia and Upstream to the overall portfolio, as I understand, your question was overall, how do we see the portfolio moving forward? I think, again, Paul, we have a distribution policy that's been pretty stable and that we cherish as such fundamentally because we believe that our financial strength has been very value accretive in what we've been doing with the portfolio. I think we've demonstrated extensively that we're not sitting on the portfolio.

We're actively managing it, both upstream, downstream and even in the way we're delivering on renewables. That speaks of a portfolio that leverages on our current financial strength, leverages on our balance sheet and fundamentally has allowed us to do what we believe to be a unique case in the sector.

We're delivering growth with a very clear line of sight, and we intend to stay that way. We have a very strong engine in upstream, and that engine is being upholstered as we speak and strengthen. So that's where we want to be. It's -- if we continue to deliver on this investment case, this is a unique investment case, and that's what's going to drive us forward. And that's what we're going to be looking at in terms of capital allocation. Thank you.

Thank you. This concludes the Q&A and today's conference call. Thank you for participating. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to Galp's Fourth Quarter and Full Year 2025 Results Presentation.

I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations.

Good morning, everyone, and welcome to Galp's Fourth Quarter and Full Year 2025 Q&A session. In the room with me, I have both our co-CEOs, Maria Joao Carioca and Joao Marques da Silva as well as the full executive team.

But before passing the mic for some quick opening remarks, let me start with our usual disclaimer. During today's session, we will be making forward-looking statements that are based on our current estimates. Actual results could differ due to the factors outlined in our cautionary statement within the published materials.

With this, Joao, would you like to say a few words?

Thank you. Thank you, Joao, and good morning, everyone. Let me start by acknowledging the rapidly evolving and deeply concerning conflict in the Middle East, which is increasing geopolitical risk across the globe. The escalation, including strikes on critical infrastructure and threats to vital shipping routes has materially increased uncertainty in global energy markets and the broader macro environment, reinforcing the need for resilience and discipline. Despite this increased volatility and looking back at 2025, it was a remarkable year for Galp, marked by consistent strong operational performance and disciplined project execution. Allow me to highlight a couple of key points.

Starting with Brazil, where production reached in average 111,000 barrels per day, above 2024 levels with high fleet availabilities and strong resiliency of our main reservoirs. On top of that, Bacalhau reached first oil and is showing high productivities as we ramp up the unit throughout the year. In Sines, our low-carbon projects are advancing as planned, and we expect to start commissioning the plants by the end of the year. Midstream and commercial had very supportive strong performances in 2025, resulting in a robust group operational cash flow of EUR 2.2 billion higher year-on-year, even under a more depressed macro scenario and allowing Galp to maintain a strong financial position. Finally, we've communicated meaningful portfolio evolutions, reinforcing Galp investment case.

Earlier this year, we've announced our intentions to merge our downstream activities with Moeve. We see this as an opportunity to unlock greater scale, resilience and returns in mature and transforming industries, while sharpening Galp's focus and free cash profile. We are working towards the final agreement by mid-2026.

Maria Joao, I'll pass it to you.

Thank you, Joao. Good morning, everyone. Let me just add a few initial remarks on Galp's short-term outlook. Even as the current geopolitical situation evolves and admittedly continues to generate tension and uncertainty certainly for energy markets worldwide. Galp's operations are very much Atlantic centered, and we have been monitoring these developments and already taking action to reroute our equity oil shipments. So therefore, we're not really facing any material direct impact at this point. Nonetheless, and Joao well put it, volatility uncertainty are notably high. And as such, it will be fundamental to sustain our clear focus on operational performance and disciplined financial management.

So now looking at Galp's case and also in light of the significant portfolio evolutions that Joao just discussed, which we expect to unfold during the year, we are limiting our guidance only to 2026, and we'll be looking to better update the market on new strategic guidelines once we have more visibility.

Overall, we continue to see a strong operational momentum going forward, and our guidance is very much reflective of that. Driven by Bacalhau ramp-up, production is expected to increase at least 15% to a range of 125,000 to 130,000 barrels. Together with sustained industrial and midstream EBITDA contribution of above EUR 700 million and a still strong commercial of above EUR 350 million, we aim to deliver above EUR 2.6 billion EBITDA and an OCF of over EUR 2.0 billion.

Now keep in mind that this is, of course, assuming a much weaker macro deck year-on-year. We're assuming Brent at $60 and a dollar-to-year exchange rate of 1.18. If we were to assume 2025 macro, OCF would actually be expected to surpass EUR 2.6 billion, clearly reflective of our portfolio growth. Organic CapEx is expected at around EUR 1 billion with Bacalhau CapEx ramping down, but including activities from Namibia. More precisely, we're expecting one well in 2026 and the possible FID of Venus around midyear. We have strong alignment with Total on the next steps for Mopane and the upcoming exploration appraisal campaign is key to unlock further potential in the Southeast region and ideally to better converge on the development concept for the asset.

Finally, we are maintaining our distribution guidelines intact for 2026. So on top of the EUR 0.64 dividend per share that we will be submitting to the AGM in May, we will launch tomorrow a EUR 250 million share buyback to be executed throughout the year. This is sustained year-on-year even under a clearly more challenging macro context that we have been planning for.

Operator, we may now take questions. Thank you.

[Operator Instructions] We will now go to the first question, and the question comes from the line of Matt Smith from Bank of America.

And the first one would be around the potential Mopane development. I mean Total talked to some quite impressive numbers in terms of production rates, recovery rates for potential FPSO there. I guess my specific question was, would it be right to presume that, that would be a development which extracts from both the Northwest and Southeast regions? Or is this potentially just focused on one of those regions, please? That would be the first.

And then the second was following up on comments that were in your video transcript talking about adding further depth to the upstream funnel. Just wondered if I could dig into those comments a bit more. Does that expand beyond Namibia, I suppose Mopane and Venus are already in the upstream funnel. Any further color you could give there would be interesting.

Thank you, Matt. So on the comments on Namibia, I think we've been very clear and try to guide on where we see Namibia standing and the work that remains to be done. So Total's comments are very much aligned with our expectations. I believe you have registered 800 about 1.1 million barrels. So that is what we are looking to now go in and narrow. Now we did see first the Northwest and then we spoke about the more Southeast regions of Mopane as 2 potential regions. The work we have now to be done is very much in trying to narrow down what could be a concept and get full alignment on what can be the wells' locations, the drilling plan, the full complex. So it's still too soon to discuss the development concept.

We understand that Total is very much aligned with us and has a vision for the region, which is a very positive one. they've actually put out there the number that we are aligned with, which is approximately 200,000 barrels FPSO, which is a sizable one. But it's clearly something to be developed on how to best articulate these regions and how to best make sure that the development concept is the one that is most value accretive for the region. No specific guidance any further than this at this stage. On the upstream funnel, so indeed -- and again, I think we've been talking very much about there is indeed some CapEx cushion in our numbers.

We've always guided for net CapEx precisely because over the past few years, we have been using our CapEx flexibility as a way to manage the portfolio and as a way to make sure that our financial discipline is put in place and that we drive value out of that. On upstream, we are indeed looking to -- it is our growth engine. We are indeed looking to -- even though we now have a much clearer line of sight into growth going forward, we are obviously very focused on maintaining that line of sight into growth and into maintaining that ability of upstream to deliver steady growth at an adequately derisked profile. We are very much aware of our core preferences. So we remain Atlantic Basin. We remain focused in circumstances where we can have a presence with a partner that provides us a solid back into whichever geography we're in.

We have had very good experiences with deepwater. So again, the notion is looking into those preferences of ours, but acknowledging that the funnel of available opportunities are out there is always going to have limited options. We will, of course, continue to add to our profile. I'll remind you that we've just added Venus to the profile. That will be a natural follow-up to our Bacalhau. It will also then be in tandem and in sequence with Mopane final delivery. So it's this smooth growth curve that we're looking for and looking for opportunities and that we hope we will be able to bring to the funnel.

So if I could just follow up on that. Is there a preference to add into the funnel through the drill bit or inorganically?

I'll just retain the notion of managing the funnel with flexibility, but a very clear idea of the type of assets we would like to deliver or to have options on and certainly, a very clear focus on a growth profile that remains highly visible and very, very transparent. So we would like assets that fit into the portfolio in a way that speaks to the current investment case.

Your next question today comes from the line of Alejandro Vigil from Santander.

Congratulations for the results. One first question will be about the capital intensity of Galp. I know it's difficult, many moving parts, the Moeve transaction. But if this EUR 1 billion of organic CapEx guidance you provided for '26 could be a good reference for future level of CapEx intensity. That will be the first one. And the second one is about the Moeve transaction. Probably you have advanced in terms of discussions with regulators. And just if you can see any obstacles for the transaction or you see a potentially smooth combination of both companies?

Alejandro, let me start with a bit on CapEx intensity, and then I'll ask Joao to comment on Moeve. So we are guiding for organic CapEx at EUR 1 billion. I think that's what we were alluding to, and that is very much in line with our run rate and what we already saw in 2025. So this, of course, speaks to our continued upstream focus. So upstream continues to be approximately over 40% of where we see our organic CapEx spend. I've already commented to some extent on what we're seeing our net CapEx, and that is, of course, a maintained guidance with a little bit of cushion for flexibility and a bit of headroom.

So other than that, it's a very familiar move. So we continue to have relatively light maintenance CapEx. Upstream is still delivering within the framework that this light CapEx provides us. So it's still operating at very low operating costs and with breakevens that in this current circumstances are particularly beneficial. So we're talking about approximately $20 upstream breakevens. So all in all, it's very much focused on light maintenance, both in upstream and also, of course, there's a few remaining elements in downstream, but fundamentally keeping flexibility and making sure that the bulk of our CapEx still addresses growth opportunities.

Alejandro, thanks for the question. So it's -- well, it's an ongoing process. We didn't reach yet the authorization moment. So we are expecting to have a final agreement mid-2026. Both parties agreed on preliminary deal guidelines, and we are still discussing further in-depth details and structure. So for now, no authorization process has started, and we are expecting authorizations from the standard authorities. For instance, foreign investment and competition approvals should be required, but not at this stage, only later on. Thank you.

Our next question today comes from the line of Josh Stone from UBS.

A question on the renewables business, the guide you've given is quite like cautious, the capacity buildup perhaps happening a bit slower than you might have first expected. You've been quite creative or you're looking like quite creative on the downstream business by merging assets and taking them off the balance sheet. So might you consider something similar for your renewables business? Does it still make sense for these assets to be fully consolidated? So that's the first one. Second one, on the Moeve merger, and I appreciate some insight on the timing. How soon after finalizing an agreement could a deal be completed, do you think?

So on the renewables guidance, as we've been telling you guys, renewables keeps us in a position that will allow us to have the optionality. And in terms of strategic positioning, it's -- we like those assets and decarbonization angle that they allow us. So today, as per today, of course, we are looking into the market. We are active and open to partnerships and portfolio optimization. But still, we are very much focused also on optimizing our portfolio. So we are looking into the hybridization and storage projects. We're aiming to reduce risk and increase the return from our assets. So that's where we stand today. On the consolidation, can you repeat your question because I understood it was on the Moeve side. We -- can you repeat that one?

Just if the renewables business should still be fully consolidated, if actually there could be an opportunity to maybe partially sell it or take it and treat it more like an associate business if that might make more sense? I'm just curious as your thoughts there.

So we will be continuing to assess if we should be the only and only owners of the assets, but no more considerations at this point. Thank you.

Your next question comes from the line of Guilherme Levy from Morgan Stanley.

The first one, just going back to the Moeve discussions. Could you perhaps just provide us with some color around synergies, even if from a qualitative macro standpoint without providing numbers, that would be great. And then secondly, going back to exploration, Shell earlier this year drilled an unsuccessful well in Sao Tome. And I was keen to pick your brain in terms of the structures that you are planning to target in the well that is scheduled to be drilled next year there.

Thank you, Guilherme. Allow me just to go back to Josh because I thought I skipped one. Josh was asking about the final decision, it should be mid-2026. That's when we are expecting to reach a final agreement. On your question, Guilherme, and namely on the synergy side. So clearly, that's a point that we need to focus to unlock. We see our assets, both Galp and Moeve together as very complementary. If we look at on the logistics, supply chains, overall, the assets that we are combining on the industrial side, we see a lot of efficiencies and complementary on those. Also on the retail side, of course, we are building a larger scale retail network.

And by doing that, we will be benefiting from both strong brands on both territories, and that for sure will allow us to increase the value that we can extract from the assets. We will have, for sure, higher trading firepower. We will have, for sure, turnaround efficiencies. So altogether, we should be ready to materialize on the first year of closing. And if you look at overall studies, you should see that at least 10% combined synergies should be a target for the deal. Thank you.

Let me address the Sao Tome question. So Guilherme, we are indeed looking at what's happening in the basin. As you know, it's indeed a very, very young basin. We are taking in some of the information that we're sharing with the other operators and you mentioned Shell. But we are incorporating all of that into our models and into our thinking about a lot. We have in mind a well for 2027, but that is the topic in our time line.

So if you recall back when drilled Falcao was a well that confirmed the existence of a petroleum system. So now it is particularly relevant that we take on the next steps to make sure that the information we gather adds and gives consistency to that petroleum system as we see it. But for now, what we're looking at is a well in 2027, and that gives us some time to incorporate the information we're gathering from other players in the basin.

Your next question today comes from the line of Matt Lofting from JPMorgan.

I'll ask 2. Just on Namibia, if you zoom out a bit relative to earlier comments, there's probably a sense that Galp's new partner in the country and the industry as a whole is sort of gaining greater confidence in the basin and the confidence of positively trending above the ground as well as what you're seeing below the ground. I just wonder how Galp sort of sees that in terms of next steps and moving forward, not sort of 2026 solely, but beyond that as well on a medium-term basis?

And then secondly, I just wanted to ask you about Brazil and life after Bacalhau to a certain extent, sort of seems like that asset is ramping up very well. How do you see sort of next steps in Brazil on a medium-term basis for Galp when you think about things like enhancing recovery factors and future exploration opportunities in the presold?

Thank you, Matt. So let me start with Namibia. So indeed, I think we've been consistently vocal about the fact that this is an asset that we'd like. We retained 40% precisely because we wanted to make sure that we got a solution for the asset that enabled a development at pace that spoke to what we saw in the asset. It required significant derisking as we were addressing it back in '24, '25. But the perspective was always one of derisking and finding a way forward. So I think that's what we certainly got with the partnership with Total. We commented on the fact that the partner we were looking for would precisely be a partner with an aligned vision on the asset, the expertise, the experience in Total's case, the presence in the basin to complement the information.

So it is now particularly rewarding to start seeing some of the appraisals to come along the same lines as we had foreseen them, and we were putting them to consideration by potential partners. So moving forward, yes, we're clearly very much focused on next steps. So we are expecting completion of the deal with Total by midyear. Of course, if there's any advancement to that, we will be delivering on that. And I think the conversations with local authorities have continued, have been -- there's progress being made. I think interests are very well aligned, and this is very, very relevant. So I think towards that good pace of completion, there's also the element that the preemption rights that were the normal ones within the existing assets. Those were not exercised.

So the deadline is over, and that's one of the elements that is -- if you like, there's a tick box or a box that's been ticked, and we can move forward on that aspect. Other than that, you know that the terms of the deal included additional E&A, and this is very much to address the point that I spoke of earlier to make sure that the development concept is matured and is the one that best addresses the specific characteristics of the asset. So it's a 3-well campaign, as you well know. And we are expecting to have the first well of that campaign by the second half of 2026. It's ongoing work. We're assessing currently rig opportunities, and we're also linking this back to one of the elements of the deal that we found we had a particularly good fit with our portfolio, the Venus asset. So there as well, progress is being made. The FEED works have been finalized.

We're expecting FID. So I think all in all, what we're seeing is that Namibia is indeed a rather promising basin. I think we're now in a good spot to work together with Namibian authorities and with our partner to push and to drive that growth forward. Short-term next steps are very clear. We're working on completion, but we're also already moving ahead with making sure that we can engage in an E&A and that we drive that at a pace as we would like to. So rather good feeling both in terms of the ability to move forward and also the ability to do so in a way that is collaborative with local authorities and that grants us the conditions and the best possible approach towards the asset.

On Bacalhau, and I think it's -- these 2 are actually a segue, a natural segue. Our experience in Brazil has also been one of being together with partners that can push forward the development of relevant assets. So Bacalhau is the latest of that string of assets that we've had access to and that we've been working together with the respective operators to push forward. A lot of the work we're doing in Brazil other than the ramping up of Bacalhau has indeed to do with making sure that we sustain what we consider to be reference practices in terms of being able to continue to deliver and continue to sustain production in those assets.

So I think the hallmark of that type of work right now is the 2P Myvalor set of initiatives. It's approximately -- I believe it's in the neighborhood of 40 initiatives. And I think those have been pushing our assets to continue to deliver at what have been already performances that are very solid in the market in terms of Sundown's performances.

We're working very closely with Petrobras. This is all about making sure that value is delivered in those fields. The fields themselves continue to demonstrate amazing resilience and amazing ability to sustain solid output. So it's all about making sure that asset integrity, that maintenance schedules that this set of initiatives is put together to sustain this growth, not just in the very short term, but also well into the near-term production and elongate our plateaus in these assets.

Brazil also has additional resources. You've heard us talk about the Pulatos. This is a very different stage basin. This is one still to be derisked. But again, it speaks to our upstream portfolio having a sequence of assets in different stages of derisking and in different stages of maturity, but one where we continue to elongate the time line to deliver steady production and to continue to develop the growth element of our portfolio.

[Operator Instructions] And our next question today comes from the line of Nash Cui from Barclays.

Can I ask 2 questions, please, on downstream. The first one is on refining margin. I wonder if you can give a bit of color on the short-term refining margin, please? And what is your quarter-to-date and spot refining margin, if you don't mind disclosing. And the second question is more on your low carbon portfolio. You are spending 35% of your CapEx on low carbon projects. I wonder, given some of the recent debate on carbon on ETS and some of your peers have cut their low carbon ambition. Does that change any of your kind of medium- to long-term view on low carbon and some of the assumptions there?

So on your first question on refining margins, what we can tell you is that currently, we are trading on the double-digit mark. So that's where we are at this point, very focused on efficiency and asset reliability, overcoming a couple of weeks harsh in terms of weather conditions. So that's where we are focusing ourselves. On the CapEx spending, so that's your second question. We are clearly focused on delivering the 2 main projects in Sines. We should be ending 2026 with the commissioning. So both on the green hydrogen project, 100 megawatts. Basically, we have all the stacks inside at this point, very committed to deliver, but also on the HVO, around 60% to 65% of the CapEx is already committed, and it fits really well within our portfolio. So we are not expecting any further decisions. We spend around 35% of our CapEx in low-carbon projects.

And let me add that on the longer term, we need to -- when we will be able to close if we close the transaction with Moeve, of course, we need to see it as a whole asset base together the 3 refineries with the petrochemicals, with the green molecules. That's where we need to be looking at after mid-2026.

Your next question comes from the line of Mark Wilson from Jefferies.

I'd like to ask my first question on Mopane and PEL83. Excellent to see the FPSO development scenario there. I was just wondering, your slides show the potential field extension ending at the southern limit of the license. So my question is that the drilling in the Southeast obviously looks to confirm or even add to volumes. But is there a secondary reason for drilling down there to appraise in case there's a unitization discussion needed with the licenses to the South. So that would be my first question. And the second one then, your outlook on refining based on a $5.5 margin, you just spoke to double digits. Could I ask on your view to the impact of the current conflict specific to Galp's refining outlook?

Thank you, Mark. So you're well ahead into eventual unitization issues. We do not see those at this moment as being sufficiently -- as being relevant or being a topic. Our concern right now is very much about making sure that we got a development concept that best encompasses the characteristics that we see in the assets. So you saw us looking first into the Northwest, and we got into the Southeast, and we saw really good characteristics there. And I think overall, it's an oilier setup and everything else, permeabilities, porosities, pressures, all of those made us look further into the Southeast region.

But I would remind you that we had -- we drilled one well there, right? So it's really small data sets to really drive forward a concept definition, and that's very much what we're looking into. And at this stage, that is clearly the drive, and we don't really see an issue with a Rhino, Azule block being a topic for unitization at this stage.

And Mark, on your second question, indeed, the double digits I've just made reference, that's a short-term today impact from a number of events. We see ourselves as prudent and plans, and we need to look to what can be a medium and long-term scenario. That's why we will be sticking to the $5 to $6 refining margin. That's where we believe the market will be, and that's our guidance.

Your next question today comes from the line of Ignacio Domenech from JB Capital.

The first one is on the EUR 155 million tax refund in Spain that the Spanish court recently ruled in favor on Galp side. Just wanted to understand when and how are you planning to account this refund. This is entirely for Galp or if there is any part that should be served with consumers? And then on the -- my second question is on the LNG trading outlook. I just wanted to understand your view for 2026, you're expecting a bit more challenging conditions. And if I may related with the LNG trading and the arbitration with Venture Global, if you have any visibility of the time line and if the recent result with one of your peers in Iberia changes your view on the potential outcome?

So on your first question about [Foreign Language], you know that's, I would say, a special hydrocarbon tax supply in Spain from May 2013 to December 2014. And as you know, it was applied, I would say, unevenly across different regions and autonomous regions. The court decision that you are mentioning should lead Galp to collect these reimbursements and -- well, together with the interest, but still too early to guide you on the exact amount. We surely need to understand the timings, the notional considering the accrued interest, but also the methods to be reimbursed. These taxes for sure, they were paid at the same time. So nothing was provisioned. But indeed, we need to take our time to better understand this decision.

On the -- on your second question on the LNG outlook in 2026, we are very much focused on the delivery cargoes from the Venture contract. So everything has been accomplished since the first cargoes delivered. For this year 2026, we are expecting to get full volumes, which means 15 terawatts, about 15 cargoes. And the only thing we can tell you is that we are assuming and expecting narrower gas price spreads. So that's the -- that's the guidance that we should be giving you at this point. We will be very actively on the risk management side, and that's what I can say by today. We will not comment on the legal courts or decisions or other companies that are having the same as well, at least cases with Venture Global. Thank you.

Our next question today comes from the line of Fernando Abril-Martorell from Alantra.

A couple of questions, please. First, there is a slight improvement in the EBITDA to operating cash flow conversion. I understand partly driven by a more advantageous tax profile of Bacalhau. So could you clarify how long this more efficient tax structure is expected to last? And additionally, how do you plan to manage the 10% withholding tax on dividends in Brazil? It seems to have a limited impact on your guidance. And second on Moeve more strategically, if this transaction proceeds, you would effectively sell control of your industrial business and also controlling retail. So could you elaborate on a little bit on the strategic rationale behind this shift, I would say. And more broadly, would also selling control of renewables be a potential option over time for you?

Thank you, Fernando. The taxation circumstances overall for Galp, and then I'll go into your question on the withholding tax in Brazil. So overall, we did see our cash taxes in '25 and our expectation for '26 is also a more beneficial one. I think this is the combined effect of a number of aspects. You touched upon one which is obviously, a core one, which is the fact that Bacalhau is -- first oil has occurred. So the taxation will be adjusted accordingly. We are still ramping up. But in any case, that gives us already some room to reap the fiscal benefits that are within the Brazilian law, and we will be accounting for those correspondingly.

So if you combine that, and I'd say that, that is a dominating factor. If you combine that with our macro deck on exchange rates and if you take into consideration the relative weight of upstream, I think that gives you the full picture on what we're expecting in terms of cash taxes for 2026. The withholding tax for '26 in particular, we don't expect distributions to be significant. We had a good view, a good vision of the expected development of this tax. We'll see whether it is sustained and how the Brazilian authorities look through it. But for 2026, we were able to somehow anticipate in as much as possible what we could see in terms of impact and the minorities that we are expecting to -- the payment to minorities we're expecting in '26 is a relatively small one, I'd say, in the circa EUR 50 million. So with very limited impact in terms of our overall figures.

Fernando, about your second question on Moeve. So the governance is still -- is part of the negotiation process ongoing, as I told you, and we will be resuming by mid-2026. As you've mentioned, we are expecting -- well, we are expecting to have 2 independent companies in the retailco with call control, as you mentioned, but also in industrial with a significant minority stake. Of course, these 2 companies were -- well, at least thought as something that would strengthen our resilience in a precious sector with 2 completely different pure plays in each of the companies and fully funded and tailored capital allocation.

So that's how we see it. It's still early to have final decision, and that's where we stand. On your question on renewables, as I've mentioned earlier in the call, we see renewables as an important part of our portfolio. For sure, we will be challenging ourselves if we are the best owners of these assets all the time, and we will not exclude opportunities to enhance this portfolio, making it more lean for a future movement. But that's something that we should be considering all the time. So naturally, we can consider partnerships in renewables as well, but no decisions have been taken at this point.

We will now take our final question for today. And the final question comes from the line of Biraj Borkhataria from RBC.

Two, please. The first one is on Mozambique. There's a comment in your slides around not including that payment in your net CapEx guidance. And I know there's a dispute around capital gains tax there. So could you just help me understand the steps to resolve that issue as well as the timing around that? And then the second question is on the inorganic activity that you've budgeted around EUR 0.5 billion for inorganics. Based on your comments from the previous questions, it sounds like you're more focused on upstream deals. If I look at your portfolio, you're basically all oil projects at the moment and you've sold the LNG one. So is it safe to assume that you're focused on oil only? Or would you seek to diversify into gas?

Thank you. So let me start with Mozambique. And if I understood correctly, but let me know if I didn't get it right. So you're going into the capital gains taxes as an update on where we stand with that conversation with Mozambican authorities. So it is an ongoing conversation. We are still very confident about the way we address the issue and that our claims will, in the end, be understood by local authorities. So all legal internal and both internal and external assessments continue to confirm that understanding. So in that sense, we see that this is a tax contingency that we don't consider necessary as all assessments continue to confirm our view. Now having said that, we're going to continue to engage with the government of Mozambique. We understand they have questions.

We are addressing them. As you well know, there are steps that have been taken towards arbitration precisely to support this stage of sharing information and building a mutual understanding, and we hope that this will be resolved satisfactorily. I'll remind you that we remain in Mozambique. This is a geography that we've been present for decades, a geography that even though the gas project could not meet our requirements within the portfolio. still has a downstream presence that we would, of course, like to continue to see operate successfully.

So on Mozambique, I would say that, that is the circumstances other than the fact that on the remaining part of that sale, so Area 4, the onshore component, we did not indeed include that in our CapEx guidance. For prudency, what we're hearing from the operator is still positioning towards making this happen towards the end of 2026. So Exxon continues to position that as their expectation. Still -- and given the relative size of our portfolio for prudency's sake, we did not consider that cash inflow. So if it does come, it will be an upside.

And I guess that follows through. It's quite a segue into the second part of your question, right? So in terms of our inorganic CapEx, in the guidance that we've put out there, there is indeed -- I mean, if you just run the math quickly, that does give us kind of a EUR 500 million buffer, so to say, is -- and the way I stick our preference is fundamentally, we're trying to make sure that our portfolio stays as clear as possible towards our investment case.

So right now, should there be available upstream assets, that would be our preference. And right now, our upstream portfolio is very much focused on oil. So gas is not an area where we are actively looking into opportunities. It's not -- I think you framed it as a preference. It's not in our preference at all right now. We will look should there anything particular come in the funnel, but it's not where we're directing our teams to, and it's not where we see our portfolio heading at this stage.

So fundamentally, that's, I guess, what we would see in terms of direction in terms of inorganic CapEx. Should there be any other opportunities, we will always look at them with the same type of discipline and respect for what we've been trying to deliver in terms of the hurdle rates we consider and the ability to actually deliver value that we've seen in the past. But right now, where we see that being more consistent with our investment case is indeed in oil upstream.

This concludes the Q&A for today and today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to Galp's Namibia Partnership Conference Call.

I will now pass the floor to João Gonçalves Pereira, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining our conference call on the partnership we've just announced in Namibia. I'm here with our co-CEOs, Maria João Carioca and João Marques da Silva, who will walk you through a short presentation and then take your questions. As always, before we begin, let me remind you of our usual disclaimer. During today's session, we may make forward-looking statements. Actual results may differ due to factors outlined in our cautionary statement included in the published presentation.

With that said, Maria João, shall we begin?

Thank you, João, and welcome, everyone. Today, we bring to you the way forward for our Namibia NAP's Upstream assets, the Orange Basin, PEL83 block encompassing Mopane. That way forward is now supported by the strong partnership Galp has just established with TotalEnergies in Namibia. So let me take a step back to recall that safely drilling 5 wells in just over a year was a remarkable achievement for Galp.

Now bringing on board a highly experienced deepwater operator is at the onset, an important recognition of our work. This transaction allows Galp and Total to join forces on the 2 largest discovered resources in Namibia, Mopane and Venus and supports the potential creation of a major producing hub in the country. For Galp, this represents not only the best conditions for a clearly value-accretive development of the Mopane asset, but also an important step in strengthening our Upstream portfolio, supporting our production profile in the aftermath of our recent Bacalhau first oil and bringing clarity to our cash flow and CapEx profiles well into the 2030s.

So after very constructive negotiations, we see strong alignment between Galp and Total on forging a strategic partnership to accelerate the development of the Upstream business in Namibia with this asset swap. For Mopane, we will launch an exploration and appraisal campaign, including 3 wells over the next 2 years. This will, of course, help to further derisk resources and progress towards the first potential development. The first of these 3 wells is already under assessment for 2026.

For Venus, this is a discovery where Total is already more advanced, clearly a few years ahead of Mopane with a clear development plan that includes 160,000 barrel oil per day FPSO and the potential for first oil by 2030. Continuing to mature the project and maintaining a constructive dialogue with the Namibian authorities will be key as we target FID in 2026.

Looking back at all the discussions we had this year about Galp's priorities for this partnership, I do believe this partnership delivers on every single one. It was essential for us to partner with a highly credible operator with proven ultra-deepwater expertise and the financial strength to drive Mopane forward. We're mindful of Mopane's importance for Galp's equity story, and ensuring strong alignment on the derisking of the asset was fundamental as it was establishing concrete and immediate next steps, such as the well already under assessment for 2026.

Galp's solid financial position was instrumental in enabling Galp to pursue a value-driven transaction. Our position in Venus is consistent with strengthening our portfolio and supporting our growth strategy as it expands our options and brings forward potential operating cash flows from Namibia.

In terms of structure, the core of this transaction is an asset swap with Total. Galp will exchange a 40% participating interest in PEL83, home to Mopane, for a 10% interest in PEL56, home to Venus, and a 9.4% interest in PEL91. In addition, and importantly, Galp and Total have signed a funding agreement under which 50% of all Galp's investments towards the first development in Mopane will be carried. This includes exploration, appraisal and development CapEx. As per normal industry practices, the carrier will then be repaid only upon first oil in Mopane through 50% of Galp's future cash flows from the project and enabling Galp to significantly derisk its exposure.

Now João, would you like to take it away?

I do. So thank you, Maria as well, and good afternoon, everyone. This transaction is more than a deal. It shows the strong commitment that both Galp and Total have to Namibia. It also reinforces our shared goal of creating more value from the assets as we foresee infrastructure, technical and operational synergies between PL83, PL56 and PL91, increasing the chances of successful developments in old blocks to maximize recoverable volumes and value.

As we approach the end of 2025, we see average production close to 110,000 barrels per day. And we see a very clear, very tangible short-term growth, especially after starting up Bacalhau just a few months ago. In 2026, as Bacalhau ramps up, these are highly competitive assets with breakeven levels around $20 per barrel and the carbon intensity at almost half the industry average. But this new partnership also adds more depth to Galp's strong Upstream portfolio and supports our unique growth story. We have several high potential developments already coming to life, which should contribute to operations over the next 4 years.

Venus at pre-FID stage, pre-FEED stage, will now play an important role here. As we have a pipeline of exciting opportunities with Mopane as a frontrunner now benefiting from Total vast experience globally and top-tier operationship capabilities to accelerate delivery, which we believe will support Galp's growth well into the 2030s. So as Maria João and I look at Galp's investment case, we feel increasingly confident about the portfolio we are building and how it positions Galp for the future.

We now welcome your questions. Thank you.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Paul Redman from BNP Paribas Exane.

As I'm limited to one question, I just wanted to ask whether you can give us any guidance on how this asset was valued through the negotiation period? And how we should think about, yes, as I say, the valuation of the asset from here?

Good afternoon, Paul. Thank you for your question. So indeed, this is, of course, one of the core priorities and one of the core concerns throughout the whole negotiation process. So the transaction hinges on 2 fundamental elements driving valuation. On the one hand, the asset swap with Venus and then on the other hand, the carry that we will have with Total supporting all investments going forward from E&A all the way up to the development and first oil.

So the way we've been looking at this is both in terms of financial valuation, but also in terms of the fit that the transaction plays into our portfolio. Fundamentally, when we first looked at the structure of the transaction, what comes to light is the fact that this gives us a unique and rather strong position in the basin. This is a young basin as I'm sure that you're all very much aware of. Being able to partner with what is currently the most experienced operator in the basin with a track record of ultra-deepwater with knowledge of the other asset that has proven of relevant interest in the basin so far, Venus, this made sense on a number of fronts to us. And it made sense not just for the asset in itself as synergies will come into play, experience will be exchanged.

The readout on all the information we shared was it made very obvious that this was an operator that had in-depth and insight to bring into the exploration of the asset. So in addition to those elements that play into the asset, there's also an element playing into our overall portfolio because the asset swap is done with an asset, Venus, that is mature is probably an expression that is too early to assign to Venus, but it's certainly more mature, more advanced, I'd say, than where Mopane currently stands. So that plays very well into the way we look into our Upstream production profile. It will forward cash flows coming in from Namibia. It will actually bring us closer to having those cash flows coming into our P&L, and it will give us additional experience into the overall basin and into the economics of the basin. So it made a lot of sense.

Now how does this play out? So it is indeed an asset swap, 10% of Venus, so PEL56, plus approximately 10% of PEL91. And to add to that, the carry of all of the 50% that Total will be supporting in all the investment in E&A all the way up to development until first oil, so first cash flows. So fundamentally, the value driver here is whereas we were at this stage supporting 100% of the bill for developing Mopane, we will now be supporting 25% of that bill. So this is a significant value. If you come to think of what could be the relative weight of these 2 components, the asset swap versus the carry, when we run the numbers and we look at what is our expected case for the asset, this is approximately a 70-30. So actually, 70% of the value of the deal is hinging on the carry and then the value of the asset swap with Venus is approximately 30%. So this is more or less the relative weight that we see in the deal.

And it speaks to a central case of having effectively this significant carry by Total throughout the period that it takes for what will be first oil, so a first FPSO of relevant size being delivered and then starting to be repaid. And I should highlight here that the carry is a carry that is uncapped and noninterest-bearing. So this, as it starts to be repaid, will be fully dependent on the existence of sufficient cash flows and those cash flows will be determining the pace of the repayment.

So bringing these 2 elements together, it gives us strong alignment with Total. It sets all the right incentives, and you've heard me talk about the importance of alignment and the importance of having a partner that in itself and then by design in the deal is fully aligned towards keeping pace in the development of Mopane. So the valuation drivers spoke to the strategic intent. So to us, this is a deal that indeed checks a lot of boxes out there say it checks all the boxes. I'm aware that it doesn't immediately distribute cash. But then again, vis-a-vis the value drivers that I was just alluding to, we found that to be a trade-off that was still significantly value accretive. Thank you, Paul.

And the questions come from the line of Matt Smith from Bank of America.

I was hoping you could touch upon the at least 3 wells that have sort of been committed for Mopane described as exploration and appraisal wells, that campaign. Could you sort of please describe the sort of what you're looking to achieve there? Is it to go back to the Northwest region? Is it to appraise the Southeast region? Just trying to get a sense of sort of what further derisking you're trying to do there, please?

Thank you so much, Matt. So indeed, these 3 wells, I'd start by saying that they're particularly important to us because they were instrumental in making sure that we were able to build strong alignment with the partner. So the discussion on the steps forward was one of the core topics in making sure that we converge and could build a positive partnership.

Now what are we looking for with these 3 wells and potential DSTs? I think somehow the fact that Galp drilled 5 wells in a little over a year kind of turned into a bit of a success curse, if you'd like, if that's a possible expression. We drilled pretty fast. That gave us a lot of information. We were aiming towards information that allowed us to derisk the asset sufficiently to now come to a partnership that could indeed take the asset to the next stage and take the asset to an actual concept for driving value and to actually explore it. But indeed, we were drilling to derisk the assets, which means that we will now need to continue that path already hand-in-hand with our partner and already aiming at a concept.

So what do I mean by this? We did touch 2 clusters. You've heard us discuss before the Northwest and the Southeast clusters, different ones. What we're trying to get with these additional wells right now is just a better sense of what is the way to approach and what is the best concept. So each of these clusters, the fact of it being worthy does not mean that it is the priority or that it should be #1. And I would recall that the Southeast complex, for instance, has only had one well drilled. So clearly, learning to be done there. I mean, if you think -- even now if you think of Venus, Venus is 2 years ahead of us and additional information and a lot of additional design work done into it. So what we're looking for right now is precisely catching up on that additional information required for us to actually be now not in a derisking for partnership mode, but in a derisking for development mode. So that, I would say, is the fundamental concept behind it.

So agreeing to those 3 wells with Total was fundamental. The pace at which that drilling will be conducted was also relevant to us. So having an understanding that the first of those 3 wells will already take place in '26 was also a core element in coming to an agreement with Total. And I think it will give us -- they will give us a clearly design to give us a better understanding of the Mopane complex, and they will certainly be critical in unlocking the development most worthy. So that is the fundamental purpose. Thank you, Matt.

We're going to proceed with our next question. And the questions come from the line of Biraj Borkhataria from RBC.

I'm just going to ask 2 quick ones, if that's okay. So first one is embedded in this deal, there will be an assumption of whether the FPSO is purchased or leased because obviously, that would change the value of the carry. So could you clarify which one it is? And then are you possible to give any clarity on '26 and '27 capital spending on the updated basis of your portfolio?

Thanks, Biraj. I'm assuming you are talking about the Mopane FPSO, whether it will be owned or leased. We're still designing the concept. Then again, economically, if it is leased, it should represent less CapEx. So economically, it shouldn't be a major driver in terms of impacting the valuation. I think at this stage, a number of the scenarios we've run are hinging towards an owned solution. But again, I wouldn't want to lock it up. I'll tell you that we looked at the economic implications of the 2 scenarios, and we feel that they could both be encompassible within the scenarios we're studying.

As for the 2026, '27 CapEx profile, we've been very focused on closing the deal. We'll be getting, of course, a better understanding now. I'm sure you are aware that Venus is very well positioned towards FID already in 2026, but Total has been engaging towards making sure that the best terms and conditions for that 2026 FID to be readily under the best conditions. So there are still ongoing conversations. We're still trying to make sure that the best conditions in the basin are present. So we'll see how these discussions evolve. And this will, of course, affect to some extent, the CapEx profile. Still very, very positive on having an early 2026 FID and with that ensuing the CapEx profile.

So this fits to a rather large extent with our current CapEx profile. You know that Bacalhau's investment is now in a phase down as we ramp it up. We have a number of projects delivered next year. So to an extent, this is a year of completion and final investments on the number of what were our ongoing projects. And Venus as it comes in, should the conditions be met, should conversations be successful towards that end, will fit in rather nicely with our profile without demanding any additional or excessive effort on our part or stressing our balance sheet in any way. Thank you, Biraj.

We are now going to proceed with our next question. And the questions come from the line of Guilherme Levy from Morgan Stanley.

I was just curious about the capital deployment of Venus once it starts. Of course, you just mentioned your initial expectations for 2026 and 2027 and how they are depending on the FID decision of Venus. But once it starts, should it be a little bit more phased across the different tiers, a little bit more concentrated in the back end of the decade? How should we think about that?

Thanks, Guilherme. So on Venus, Venus is, as I put it before, at a more advanced stage than what we've got in Mopane, I'd say 2, if not 3 years ahead of it. So this means that -- and as I just mentioned a couple of minutes ago, we are indeed aiming for an FID in 2026, not a decision taken already. Again, still building on the conditions towards that decision, but well positioned.

It is a decision for a 160 FPSO. So the way works have been progressing, a lot of the preparatory studies and a lot of the preparatory analysis are already conducted, so we understand and we've been given exposure to -- full exposure to the materials by Total. So what we see is a project that is now in its final FEED stage. So there is a case there for first oil in 2030. Should, again, and I cannot stress this enough, should all the conditions be in place for the FID in 2026. So I know a lot of the work done right now, combines not just the technical FEED stage work, but also the dialogue with the authorities to make sure that not only Venus is ready, but now with this deal in hand that, that the partnership is in full bloom to drive the assets forward. So again, FEED stage, a significant 160 FPSO. Let's hope for the FID in 2026.

We are now going to proceed with our next question. And the questions come from the line of Josh Stone from UBS.

Congrats on getting the deal signed. I guess I was a bit surprised really that Mopane was not better prioritized than the development in terms of that was one of your key conditions going into the sales process, and you did have multiple bidders. So only one well planned in '26 fewer than I had expected. I was also under the impression that AVO-1 was sort of ready to go, so to speak, in terms of FID. So can you just -- I mean, you've talked about that Venus is 2 years ahead. But when you look at the economics, how does Venus compare to, say, AVO-1 on your calculations? And is there any chance that Mopane could get ahead of the queue in terms of the development here?

Okay. Josh, thank you. Thank you so much for the question and for the congratulations on signing. So when we look at the relative development stages of Venus versus Mopane, I would say that indeed, the difference of 2 to 3 years that we've been talking about apply. So what this means is not necessarily that the partnership is going to be prioritizing Venus over Mopane. It's simply reflecting the relative maturity states of the 2 assets.

We know, again, as I mentioned before, the work we did in Mopane was fundamentally around making sure that we have sufficient clarity of having clusters that were development worthy. So AVO-1 was looked at and you mentioned it, is it not ready to FID? No, it was looked at in a way that still leaves significant room and work to be done until we have a concept, until we have even the clear decision and this is now a decision to be taken within the partnership of what is the priority within the different AVOs that we have in Mopane.

And again, the Southeast cluster was also very worthy of consideration, is also a very interesting complex. So what we're looking for fundamentally is understanding what is the overall development of the Mopane complex and what is the optimal development. This is something that for Venus has already been undertaken. So the last 2 to 3 years, we believe that was the nature of the work that was done by Total. That is the nature of the work that we have ahead of us now. So it's not so much about not being ready, it's about being at a stage where the work towards being ready still is to be done and still has significant inputs to contribute to the final decision. We do not have sufficient information to have a final decision just now.

We are now going to proceed with our next question. And the questions come from the line of Irene Himona from Bernstein.

Congratulations on this. Back to valuation, if I may. You mentioned the value of the CapEx carry is about 70% of the total value of the deal. Of course, there is no development concept as yet. There is no CapEx. But if I was to take a sort of big-picture top-down view and to assume that one FPSO plus subsea and everything else today would cost possibly around $10 billion to $11 billion, meaning a $2 billion, $2.5 billion undiscounted CapEx carry net to Galp. Would you say that it's possible and realistic or not?

Thanks, Irene. I think indeed, I think that is one scenario. And again, we're working towards making sure that the concept is clear enough, but that is indeed something that underpins fundamentally the calculation. So those are reference values. So again, this is a carry that is uncapped. So should we look for an FPSO that is larger than the numbers you're outlining there, we will have the comfort of knowing that Total will be covering that additional investment.

So once we bring our current commitments, which currently stands at 100% and will now be at 25% of the overall investment that leaves us with sufficient balance sheet and sufficient flexibility to make sure that we can carry the exercise forward. So the valuation numbers you're referring to are a reference case. We'll see what the opportunity actually entails. And what we try to make sure was that the partnership terms were such that without the cap and without any interest-bearing repayments, that gives us sufficient comfort that we will be ready to support the full development of the asset. With that in mind, the time value of the money carry that you referred to is the driver of value for this component of the transaction. So yes, it's referencing a case to that type of understanding of the asset and then taking the time value of money into consideration when running the valuations.

We are now going to proceed with our next question. And the questions come from the line of Matt Lofting from JPMorgan.

I wanted to just ask about, I think the carry component of the transaction, if I understand right, only is limited to the first development, as you've called it or the first FPSO. But with that in mind, can you just share your thoughts on to what extent the sort of the full 10 billion barrels in place that Galp's referenced over the last year or 2 has been factored in or recognized by TotalEnergies in this transaction? And to what extent Galp would see multi-FPSO upside beyond that first development on taking a long-term view?

Thank you so much, Matt. So all information concerning the asset, the PEL83 overall data we have available, all work done on the overall block, but specifically and to full detail, all information, all available data, all incoming data as we were working through the negotiations, all of that has been shared with Total. So our models are in full transparency shared with Total.

Actually, you have probably heard me mention in previous calls that one of the elements in this negotiation that was something that we built on was precisely coming to a common understanding of the asset with the potential candidates, in this case, with Total. So we have alignment with Total on prospectivity. Our focus has been very much on making sure that we successfully align interest towards the first development. So I think both parties towards all our conversations, we always had a very clear intent of not diverging, not losing focus, not going elsewhere in the block to look for an opportunity before we have a clear case for Mopane. So we do acknowledge that there's more E&A to be done. I think we've been flagging that very consistently. It should be very obvious when we have only one well drilled in Southeast. So that is all taken into consideration with Total and is part of the buildup towards this first development.

The carry being limited to this first development, obviously reflects the fact that after that, there will be cash flows coming in and the economics will be more easily supported by both partners. So that is a significant value of carry already. And we understood that it was best to concentrate that carry on the first development and to have its spread. Having said that, it is a development. It is a carry until development. But to us, it is very relevant the fact that it also covers all of this remaining E&A activity that we were mentioning. So this is E&A activity that will be carried by Total, will only be returned upon cash flows from first -- from first oil from production. So there's no repayment whatsoever after conclusion of E&A or upon entry of a development stage. This goes all the way to first cash flows. Thank you, Matt.

We are now going to proceed with our next question. And the questions come from the line of Alessandro Pozzi from Mediobanca.

I think you now have a good insight of Venus development as well. And I was wondering, is there a scenario whereby potentially you could accelerate the development of Mopane by using a similar development so that you can accelerate the build-out of the FPSO, if you want to build one? And -- or perhaps maybe Mopane is different in terms of fleet characteristics from Venus, so I was wondering, yes, if you can share your thoughts about similarities in the 2 developments?

Thank you, Alessandro. I think there are 2 sides to the answer to that question. There is -- it needs to be very clear that the concept for Venus is not at all one that we have a clear idea of being the same one that may apply to Mopane. The characteristics of the 2 blocks are rather different. So what we do see in terms of advantages have to do with the fact that, of course, the experience in the basin, the learnings that Total has been gathering in drilling in Venus. So the logistics and the common infrastructure and the setup, those will all, of course, accelerate and improve the economics of exploring Mopane. But we don't see it at this point. Again, still conducting work towards understanding what is the concept to best explore and to optimally explore and to come to conditions for exploration in Mopane. We don't see that as benefiting from using exactly the same concept.

Distance will not allow for a joint exploration, but it will allow for everything that has to do with setting up a production hub in the basin that we see as being a major advantage. We are also keen and eager to engage with local authorities in understanding how can those conditions be improved and how can this hub be helped towards improved conditions. So that is very much the focus. We do see benefit, but the benefit is not indirectly applying the same concept from one block to the other. Thank you, Alessandro.

We are not going to proceed with our next question. And the questions comes from the line of James Carmichael from Berenberg.

I guess, clearly, gas handling has been something that Total has been pretty open about as being a challenge for Venus. And it seems that they've overcome it, obviously, if they're looking to FID next year. So just wondering if that experience was helpful during the process and whether you've got any more clarity on the gas content at Mopane given all the data that you've had coming in over the last few months.

Thanks, James. I think clearly helpful to have an operator in the basin that is dealing with the idiosyncratic terms of the basin. What we do see is Total is a highly experienced operator. So there are, of course, ideas and the exchanges between -- our technical teams have been rather positive, and the teams have been discussing solutions to cope with gas. And again, the levels of gas are very different, not just between Venus and Mopane, but also Mopane is a block with a number of AVOs. And what we've found in the different AVOs is also different amidst itself, and that's part of the reason why we've never really guided on gas content for the overall of Mopane precisely to avoid the temptation to extrapolate values that will not be realistic in any -- in the specific circumstances of a specific solution.

Now what we have been discussing with Total is the solution that's envisioned for Venus. We see that as a solution that provides sound handling of the gas characteristics of Venus. I'm sure that being a couple of years ahead will give us experience in then understanding whether or not that solution will be applicable to Mopane. But at this stage, that is fundamentally what we're trying to incorporate into our thoughts on Mopane.

We are now going to proceed with our next question. And the questions come from the line of Naish Cui from Barclays.

Can I ask about the timing of this transaction, please? Just wonder why do you feel so strongly that this transaction needed to be down right now and within 2025? Do you feel that more value will be extracted if you can wait for 1 more year?

Thank you. Can you hear me? Hello?

Yes, I can, yes.

A bit of a technical difficulty here. So in terms of timing for this transaction, we discussed before the why now when we launched -- when we relaunched, actually, we went back in the market after initial discussions with a number of players that had shown interest in Mopane over the time. I think fundamentally, as we gathered information from our drilling campaign in '24, I would put it down to how we were looking at the decision tree ahead of us. We felt that for Galp to continue on its own, that was not the best way forward for the asset. It would be very difficult for Galp to withstand the full 100% of the CapEx required.

So when looking at our decision tree, continuing on our own and weighting the probabilities or the risk profile, if you'd like, and I think that was fundamentally the nature of the decision, what was the risk profile of continuing on our own versus believing that we already have sufficient information to reengage with the market to explain to potential bidders what it is that we see in the asset, why it is that we like the asset, why it is that we want to retain a significant stake in the asset, but still we feel that we need to bring someone in as an operator with the relevant experience, that was the thought process and that was what drove us forward.

So the timing had a lot to do with the sequence that came after the fast drilling that we had been conducting over 2024, the amount of information that, that drilling had already provided to us. And the fact that even towards local authorities, our commitment has always been in open dialogue to make sure that the terms and conditions of our licenses that have always been met and that are already met, but that require that we are active in pursuing solutions to explore the asset and to actually drive towards first oil to make sure that, that timing, that pace had the best conditions possible, and we did feel that a partner at this stage would be the way to build those conditions. So the timing is entirely risk profile and asset development pace and ambitions driven and that was the core consideration in our process. Thank you.

Now going to proceed with our next question. And the questions come from the line of Mark Wilson from Jefferies.

My question would be, you've mentioned there's no cap on the 50% carry on PL83, but there are 2 clear spend areas, the exploration and appraisal of at least 3 wells in 2 years and then a potential development of Mopani area after it. So my question is, does the Total 50% carry continue if you end up doing more exploration and appraisal drilling either within the 2 years or after that, if the Mopani development has not been sanctioned by that point?

Thank you, Mark. Excellent question. Indeed, it does. The agreement with Total is carry all the way towards first oil and first cash flows at Mopani. So we wanted to agree on a reference program as part of making sure that we did meet that alignment and that signaling towards the right pace of developing the asset. But the 3 wells plus DSTs is what was commonly agreed by with the technical teams as being the joint vision as to what we would find at this stage with the knowledge currently available to us and the necessary work in E&A stage towards then the follow-up steps.

Having said that, should we need less, should we need more? The partnership is designed to make sure that we can sit down and take those decisions. We would not want to lock a potential partner into a circumstance where we would be drilling just because we had a contractual arrangement, but could see no economics in continuing to drill in E&A. And we also didn't want to have a partnership whereby we still needed a fourth well or an additional DST, and that would already be cost for contention and not sufficiently covered in the arrangement. So it's a very simple arrangement, 50% carry all the way to first cash flows from first oil.

We are now going to take the final question. And the questions come from the line of Ahmed Ben Salem from ODDO BHF.

It's regarding the size of the implied resources of Mopane. So you will receive 10% of Venus that contains 1 billion BOE and that you will hand over 40% of Mopane that is supposed to be larger than Venus, containing around 3 billion BOE of recoverable resources. So what is the size of Mopane that is implied in this deal? And does the carry agreement compensate for the difference?

So again, the carry -- the current agreement covers not only the asset swap, but also the carry. So again, Venus is more advanced. So the numbers that we are comparing reflect those relative stages of advancement. The numbers for Mopane at this stage has indeed been shared with Total. So those are the ones that are being considered in our sizing of the opportunity. And if you take into consideration the valuation of Venus as it currently stands, and I think you can look up a couple of numbers in the market. I think there's publicly available information on Wood Mac and on Welling. So you can have a sizing of that amount.

And then if you just take the valuation drivers for the carry that I discussed earlier on with Irene and a number of your colleagues on the call, you'll see that this leads us to a valuation that is relatively balanced vis-a-vis Venus. So indeed, there's a lot of additional prospectivity on both sides, and that also adds to the consideration. But fundamentally, the resources have all been shared. Aligned vision on the sizing of those resources that is driving the relative valuation of these assets, even though Venus is more advanced, and we're then complementing the difference with the carry at the reference case that I mentioned earlier in the call. So fundamentally, irrespective of additional prospectivities, the alignment of the value of the 2 assets given their sizes and the teams have worked together to get alignment on the sizes as well. And that is reflected in the size, the extent and the timing of the carry.

We are not going to proceed with one final question. And the question comes from the line of Ignacio Doménech from JB Capital.

I have one question on the CapEx for Venus. I just wanted to know what would be the incremental CapEx for Galp until the first oil and stipulated with that 70%, 30% value of the transaction that you were mentioning before. Just wanted to know what is the funding cost that you have assumed for the carry at Mopane?

Ignacio, the incremental CapEx -- sorry, can you hear me?

Yes. I perfectly hear you.

Okay. So on the CapEx of Venus. Venus is again a much more advanced project. So if we take a look at what is expected there, this is CapEx that will push us through all the way to the final years of 2030. We're looking at 160 FPSOs, so a relatively large ship. No FID decision has been taken yet. So we still have the final numbers to reconsider and to size and to validate. But we understand and we were shared -- or given information as to the current state of discussions from Total with providers and building the overall case towards the economics of Venus and the FID decision that is to be taken. We are in agreement with those terms. As you may well understand, those are not public at this stage, but we are in agreement.

And once more, this is something that from the numbers we've been given knowledge of, from our experience in the basins, from what we know to be the logistics and the operational requirements to set up the investment there, we are comfortable with what's being designed and with what's being outlined. This fits rather well with, again, our own CapEx profile. And I will remind you once more that as Bacalhau and our decarbonization investments in the refinery phase down, these leave us with additional room to invest.

I think some of you will have heard me say that I will not sit on a pile of cash. This is actually a usage of cash that we find that is rather value accretive and that allowed for this partnership to be set up in a way that we believe is strategically relevant for Galp's Upstream portfolio. So all in all, comfortable with the CapEx, but no FID yet. Competitive economics as we see them fully in agreement and comfortable with the effort level that will require our own balance sheet. Thank you, Ignacio.

Thank you. This concludes the question-and-answer session and the conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good morning, ladies and gentlemen. Welcome to Galp's Third Quarter 2025 Results Presentation. I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations.

Good morning, everyone, and welcome to Galp's Third Quarter of 2025 Q&A session. In the room with me, I have both our co-CEOs, Maria Joao Carioca and Joao Marques da Silva as well as the full executive team.

But before passing the mic for some quick opening remarks, let me start by our usual disclaimer. During today's session, we'll be making forward-looking statements that are based on our current estimates. Actual results could differ due to factors outlined in our cautionary statements within the published materials.

With this, Joao, would you like to say a few words?

Thank you, Joao, and good morning, everyone. We have a couple of Joaos around here. Well, the third quarter was a strong one for Galp. Solid operating performance according businesses testifies our strong operating momentum. In Brazil, upstream production continued elevated with 115,000 barrels per day, driven by high availabilities of the fleet during the quarter. This gives us confidence on ending the year close to the upper end of our 150,000 to 110,000 guidance.

On top of that, Bacalhau reached first oil just a few weeks ago, a very important milestone, a key project for Galp, which will drive our free cash flow growth in the coming years. Well, but meanwhile, in Iberia, we've captured strong seasonal trends in downstream businesses, particularly in refining and in commercial, where we posted a record high quarter EBITDA.

As EVP of Commercial as well, congratulations to the team with results above pre-COVID levels. Although macro environment continues volatile and challenging, Galp operates a highly resilient portfolio with a 2026 dividend breakeven just below $40. Resilience and short-term growth underpins our distinctive investment case.

Maria Joao, a few comments.

Thank you, Joao. Indeed, quite a few rounds around here, but strong operating performance across businesses translating into robust cash delivery. I believe that's the highlight for this quarter. Just looking at the 9 months operating cash flow, we are flattish against 2024, whereas Brent is down more than $10. So this is illustrative of the resilience that we just discussed.

And on that same note of execution towards resilience, this quarter, we further reduced net debt and reinforced our financial position. Net debt is now at 0.4x. This is a reassuring level when facing the current volatility in commodity prices, it's also a solid ground on which to develop our value-accretive opportunities in the portfolio.

Looking at the full year and even though we're not upgrading guidance today, we're confident that we will exceed our group EBITDA and OCF guidance based on the strong performance across the asset base so far. We acknowledge that Namibia remains the most relevant aspect in Galp's equity story. So looking into the ongoing bilateral discussions, these are showing good progress, and we maintain confidence in our time line and in establishing a strong partnership that will allow us to accelerate and to prioritize Mopane.

Operator, we may now take questions. Thank you.

[Operator Instructions] We will now go to our first question today and the question comes from the line of Alejandro Vigil Garcia from Santander.

Congratulations for the strong results. The first question is if you can -- of course, very difficult. If you can give us some color about the -- what are you thinking about the Mopane farm down in terms of the structure, in terms of the -- in general, how you are seeing this -- the momentum of this transaction?

And the second question, also probably difficult at this point is in terms of next year. If you can give us some color about how is projections about production next year Bacalhau start-up. You can give us some color initial, even qualitative about the next year guidance.

So let me start with Mopane. As you know, we've been commenting on the fact that we are very, very focused on achieving a partnership that will help us drive the asset forward. So at this time, we're still not diving into details. I believe it's still critical for us to make sure that our priorities are clear. And I think the conversations we've had so far and the bidders we've engaged with speak to those priorities. We were very keen on making sure that we had an experienced operator with us to make sure that the asset moves forward at the pace and with the priority that we see conducive to good value creation for Galp. We've been reporting and we're very glad to continue to engage in conversations with bidders, and those bidders are all very experienced operators with very relevant track records.

So this is where we are. I think with those bidders sitting down to talk to us, what we're doing is making sure that we get very clear alignment on progressing Mopane. And that has been conversations, that has been the tone of the conversation and progressing well. So we're very confident on making this partnership a success by year-end. And I think that is clearly the focus and the color available at this time.

On next year, so Bacalhau is very, very early days, but it's a good start. We've been, of course, testing and making sure that the early numbers and the early performance of the assets are consistent with what we were expecting so far, good news. So excluding Bacalhau, we were expecting production to be fundamentally flattish. So this is on top of what are, we believe, best practice declining rates in our assets in Brazil. So we continue to have an expectation of under 5% decline rates, particularly in Tupi and Iracema. We're working towards not only sustaining, but actually making sure that we perform above those thresholds. So there is an infill campaign under execution to continue to drive the performance of those assets.

So that leads us in the end to this flattish performance that I mentioned. And on top of that, you will have Bacalhau. Bacalhau will, of course, be ramping up. So we don't expect it to get to full plateau until 2027.

Your next question today comes from the line of Biraj Borkhataria from RBC.

The first one is just on CapEx for next year. There's obviously one big uncertain piece, which is Namibia and any carry you might get. But are you able to give some color on what you expect to spend in 2026 CapEx if we were to exclude Namibia?

And then the second question is just on the financial framework. You have now EUR 1.2 billion of debt and obviously, Bacalhau is ramping up as well. In the past, you showed a chart highlighting that you had roughly EUR 1.2 billion of capital employed in your low carbon segment. I was wondering if that's still the case. And the reason I ask is I'm trying to understand if there's a sort of structural level of net debt for that part of the business because it would be helpful to think -- as we think about sort of excess payouts and uses of free cash flow.

Thank you, Biraj. Very comprehensive set of questions. So on CapEx and adding a bit more color to what I mentioned before, we're not revising our net CapEx guidance. So still at a little bit under EUR 0.8 billion per annum on the '25 to '26 period. So that is still the overall guidance.

Now this year, we had, of course, approximately EUR 800 million from the announced divestments. So this leaves us with gross CapEx of about EUR 2.4 billion accumulated in the period. Now for 2026, we do expect numbers to be slightly lighter than in '25, but it's still a challenging year. So Bacalhau is still going to be ramping up. We are going to be keeping pace towards conclusion of our transition investments in Sines. And we have what is our normal run rate, so to say, of approximately EUR 400 million per year of CapEx.

So if you dive a little bit into what that entails other than the upstream run rate CapEx, you also get maintained investments in renewables. We're still foreseeing approximately EUR 150 million to EUR 200 million in our renewables portfolio. And commercial has an ongoing transformation and digitalization program, and that is approximately another, I'd say, EUR 100 million per year. So all in all, we're maintaining, of course, a very disciplined approach. We continue to aim for a capital-light structure, but still guiding up to approximately EUR 0.8 billion per year because we are still in the critical stage of a number of these investments we have in the portfolio.

On the financial framework and following up from our CapEx approach, so in terms of capital employed, you mentioned the numbers for our transition and for our low carbon investments. I believe we now hold approximately EUR 1.5 billion to EUR 1.6 billion in our capital employed that pertain to that type of assets and that type of approach.

On debt, fundamentally, what we have is debt being managed at the corporate level. So in terms of what we see as our structural level, this reflects to a large extent, the free cash flow generation we have in our businesses and of course, the fact that we continue to drive our CapEx towards -- a significant portion of it being towards transition. Approximately, I'd say it's about 65% of our CapEx is still transformation. So there, of course, the numbers that we were guiding for in terms of CapEx and hence, net debt.

Your next question comes from the line of Matt Smith from Bank of America.

I wanted to ask -- try a couple of questions on Namibia, if I could. And the first would be, I mean, you're clearly focused on seeing the asset developed as soon as possible. So I just wanted to double check the details on that, whether that meant taking FID on the Northwest region as soon as possible, given that region is fully appraised? Or would you be open to seeing the Southeast region appraised as the next step? Or is there a red line on that topic? Or are you open to discussions with a potential new operator? So that would be the first part.

And then the second part, perhaps more high level, you're clearly looking to solve for alignment on the acceleration of these assets. I mean I just wondered whether you're able to share any high-level thoughts as to how you think that can be achieved as part of the deal structure. And perhaps like a bolt-on to that, maybe it's related, maybe it's not, but a question that we're hearing more and more, would you be open to any form of asset swap as part of the transaction, if you're able to comment on that?

Thank you, Matt. So on Namibia, indeed, the focus is very much making sure that we align with our partners. So we do have our own technical teams looking at the assets and incorporating all the information that we absorbed. So again, it feels like it was a very long time ago, but we went through a very fast stage of drilling and finding new information. It was critical to derisk the asset, and we are now using that information, processing it ourselves and also sharing it with our prospective buyers and developing a perspective on the asset based on that.

So we're very open and the teams have indeed been progressing as we acquire more knowledge and as we -- part of the conversations with our partners has also been conducive to that shared understanding, open to perspectives on the asset, not closed on which of the Northwest versus Southeast clusters needs to be the core driver for an initial development, very open to a perspective that is just the one that drives the best space for the asset overall.

As for the deal structure, again, very, very early to close on what could be a deal structure. We are, of course, trying to make sure that debt structure sets the right alignment and the right perspective in moving forward with the deal. So here, I guess, fundamentally, what we're trying to make sure is that when we are considering eventual asset swaps, those are open in the discussion as long as they allow us for clear visibility on the type of return we're getting out of the Mopane assets and as long as that those also don't hinder our visibility on how to progress further with Mopane.

Your next question comes from the line of Pedro Alves from CaixaBank.

The first one on the 2025 outlook. Perhaps if you can share a bit more details on what drives the upside to your latest official guidance. I think we have here different moving parts in upstream production, clearly with very good availability of the fleet. But in Q4, probably you will resume some stoppages. And then in Industrial and Midstream, which probably carries the bulk of the upside to your targets, certainly above the EUR 800 million of EBIT last guided. But it's also true that you will carry heavy maintenance in refining now in this Q4. So at the consolidated level, I think it was widely expected that you would exceed guidance. I guess the question is, are you comfortable with the consensus now at around EUR 3 billion for the full year?

And the second question on the recent Orange Basin discoveries in Namibia and some of your neighbors. Have you noticed that this is driving any change in the market appetite or dynamics in the talks as you engage with your potential partners for Mopane. I mean these new finds obviously raise visibility on the basin, but does waiting longer for Galp risks giving prospective buyers other alternatives to elsewhere in the basin?

So I'll start with the 2025 guidance. And in fact, we are on the back of a very strong quarter, but we will not be tweaking every quarter the guidance. We are very comfortable with the previous guidance. On that revised guidance, we revised also, well, the trading conditions, we've included the Venture Global volumes. That was the major point. And as you say, we will have a last quarter with a turnaround in Sines. That's what will hit us on the fourth quarter. We still have some support on the margin side, on the refining margin side, well, supported by demand that we could call stronger than expected, but also with the supply underperformance on the new capacity, which is not coming into play as it was expected.

We are also -- well, entering into the heating season and some refiners as ours will go into maintenance that will also make some support. And overall, on the downstream, we have a very strong position in Iberia. We delivered very strong results in the third quarter, but we are entering the low season. So we expect to be prudent, maintaining the previous guidance. Midstream will be, for sure, supportive, and that's all for now.

Thank you. So maybe I'll pick up on the second question from Pedro on our perspective concerning Namibia and recent developments, if I recall correct your question. So Pedro, we normally abstain from commenting on what we see in the market coming out as news from other players. But generally, yes, I acknowledge the perspective you put forth as we hear news from other players and from drilling ongoing, -- and as we see what's coming out of the different players there, I mean, recently, we've heard news from Rhino. We've heard news from BW. What we still see is a basin that is very young in terms of its prospective development, but one where there's a convergence of developments that give it room for growth, and we see the concentration of interest there as very conducive to that growth actually taking place.

We also see alignment in its core stakeholders. Relationships with local authorities with the government continue. There's continued interest. There's a good vision of what is the importance of having full support to the development of the asset. So all in all, what we're seeing is still a very young basin, but one where prospects continue to be conducive to investment taking place, and we continue to like the risk of the assets. So we will be farming down a bit, but still holding on to a relevant perspective -- a relevant percentage. So I think that speaks the loudest on the overview we continue to have of the basin and of Mopane in particular.

Your next question comes from the line of Alessandro Pozzi from Mediobanca.

2 for me. The first one on commercial, strong results in Q3. And just wondering if you can maybe give us your view on whether the results that we've seen in this quarter is just a function of a much stronger seasonality than usual or whether there is a structural change that would support a further improvement into 2026?

And the second question is more on financials. Working capital, I think it was a positive movement during the quarter, but still negative for the 9 months. Maybe if you can give us any guidance on Q4.

Thank you, Alessandro. It's indeed a very strong quarter. On commercial, we need to assume, well, we have some tailwinds. It's always the stronger quarter of the year. So when you perform well on the stronger quarter of the year, it's an important one. I would, well, divide in 2 main aspects of the business referring to your transformation claim. So we have, of course, better news from the Spanish side after -- well, a number of volumes were removed from the market related with players that were not playing in a level brownfield. So that's one. So very supportive volumes with around 20% year-on-year growth on the fuel side. But on the second hand, we have a fully revamped nonfuel business. nonfuel as per today is contributing nearly 30% nonfuel and new business, nearly at 30% of the full delivered value on this business. So that's something that we need to sustain.

Today, more than half of our tickets are nonfuel, less than half are tobacco, which was clearly a very strong anchor on the path. So if you ask me on the 2026 view, we will be clearly aiming to surpass the $300 million. That's what we will deliver this year. But of course, with the growing electric mobility network that is already on the breakeven, we've crossed the 9,000 charges mark this year, and that's also very important because as of today, we are offering a complete diverse offer to the customer when he enters into our commercial retail network, and that's one, but also supported as an integrated play. So the play with industrial, the play with midstream, it's an integrated play. And we are taking advantage of that also. So strong results and surely for the next year, above the EUR 300 million.

On working capital, so maybe to put in perspective, the 9 months of this year reflect the fact that actually we ended 2024 with a particularly low level of working capital. There were very few cargoes in transit. So overall, we had a working capital level that we knew was going to be adjusted throughout 2025. And a couple of events up to the beginning of that early 2025 that impacted, the bad weather and the blackout in the Iberian Peninsula had an impact in our accounts. But fundamentally, we're returning to regular levels, not much to highlight there in terms of working capital all within expectations.

Your next question comes from the line of Alastair Syme from Citi.

In your negotiations on Namibia, are you finding broad agreement on the asset resources? I ask simply because it's quite a long time since you've updated the market on the resources. You've talked about EUR 10 billion plus in place, significant volumes of light oil. I mean are these statements that you think the prospective buyers agree with? I ask because I think this is why the sales process broke down last year. So just to get a sense of where that's at.

And then secondly, very quickly, can you talk to upstream tax rates? You were low in 2Q, you're low again this quarter. What's going on? And what do you think the rate is that we should be using in our models going forward?

Thanks, Alastair. So let me pick up on the Namibia. So no issues in terms of agreement as to what our asset resources in place in Mopane is. It's a topic for technical discussion, of course. But actually, as we share information and as we have the technical teams engaged, I believe there is significant alignment and the vision we have on where the most interesting areas of the assets lie and what those represent in terms of potential overall asset resources have not been an issue of stress or an issue of disagreement at all. Quite on the contrary, very supportive and aligned discussions.

So on upstream, the second part of your question, what do you see in tax rates? Actually, I believe you see it on the overall tax rate for the integrated portfolio, it does reflect the fact that in this quarter, in particular, the weight -- the relative weight of upstream in our overall portfolio was lower. So as upstream usually has a higher tax incidence when you have very good performances across other businesses, so industrial delivering, midstream delivering, commercial, as we mentioned already, with record high levels, that brings our overall tax rate down, and I believe that was what you were referring to.

Your next question comes from the line of Joshua Stone from UBS.

2 questions, please. One on Venture Global. Just if you can give any indication of when you expect a decision on the arbitration there and any expectation around what to expect, noting that we've seen different outcomes for different plaintiffs so far?

And then second, on Namibia, thank you for the additional insight. I just wonder, are you able to say how many partners you're still in talks with after your short list? I'm just trying to gauge competitive tension and how that's changed during the process, which seems quite important for you.

On Venture Global, we are not expecting any outcome before next year, and that's it.

On Namibia then, we're not commenting on how many partners. It's plural. I think the critical thing to us all very experienced operators, as I mentioned before, competitive tension has been in play, productive conversations. So I think the conditions for a good progress have been met, and we've been engaging with partners, different paces, but still good conversations and good progress so far. Thank you.

Your next question comes from the line of Irene Himona from Bernstein.

My first question is on refining in the fourth quarter. Your maintenance will last about 6 weeks. We can work out the utilization. But can you give us a sense of where your unit margins in refining may move to in relation to the $3.2 in Q3? Are we looking at something around $5, for example?

And then my second question on the upstream in Q3, you alluded to the fact that your sales were higher than your production. Can you perhaps quantify that? So what were your sales in the quarter? And what was the EBITDA benefit of that overlift?

So on the first one, so we -- well, we are expecting the turnaround to go until mid-November. We will have Plant 1 and the FCC around 50 to 45 days together at the same time. So on the quarter, we are expecting negative contribution from refining. That's what we are taking at this point. Of course, this contribution will be offset by a strong continued contribution on the midstream side.

On upstream, I believe what you're referring to is the fact that this quarter, we have a lower number of cargoes in transit. So that equates a little bit to having sold more than what we actually produced. The overall impact we estimate from that, so it was approximately one less cargo in transit that we had before. The value we estimate for that is of approximately EUR 40 million, that's EUR 4-0 million.

All in all, what we see is still strong production being at the top range of what is our current guidance of 105,000 to 110,000. So this effect we registered in the quarter was fundamentally ongoing normal progress of operations and just transiting the cargoes as they come into our possession.

Your next question comes from the line of Ignacio Domenech from JB Capital.

The first one is on exploration on Sao Tome e Principe. So Shell recently spud a well there, and I would assume that will be looking to do the same in 2026. So just wanted to know your thoughts on the exploration campaign there, if there is any commitment by that to do any drilling in the next year?

And my second question is a follow-up on the declining rates in Brazil. I think you mentioned that production, excluding Bacalhau, should be flat next year. So if you can elaborate a bit on the declining rates there? And maybe if there's been any change in the recovery factor at Tupi?

Thank you, Ignacio. So starting with Sao Tome e Prince, STP. No commitments so far. We do see the development in the recent activity -- the activity by Shell to be something that we will incorporate in our thought. As you know, we're looking at Sao Tome e Prince for its potential, high potential exploratory region. We do have plans to spud there in '26 to '27. But again, the information that is coming up on Block 10, and that's not a block we're in, but that information will be important in adjusting our perspective.

Having said this, we are very aware of how important our growth profile is as a differentiating factor. So we're always looking at our assets and making sure that we're addressing them in a way that delivers at pace with our profile.

I guess that's the perfect segue into your question about how do we see our declining rates in Brazil. So I mentioned that we're currently having -- experiencing declining rates of approximately 5% in the portfolio as a whole. And this is, as we see it very good performances. We would expect that for the type of depth and the type of assets that we're operating, declining annual rates would be in the neighborhood of 8%. We're actually delivering at below that in 5%. That delivery is in -- that concern with that type of best practice delivery is precisely what's behind the flattish production for next year. So next year, we will have the input or the uptick, if you'd like, from the infill campaigns that are under execution. So those when they come in, they allow us to halt a little bit the natural decline rate. It is already a best-performing decline rate vis-a-vis similar assets. So that's where we're standing there.

[Operator Instructions] And your next question today comes from the line of Matt Lofting from JPMorgan.

2, if I could, please. First, clearly, the second and third quarters have been very strong quarters operationally for Galp, which I'd like to congratulate you all on. You indicated this morning that you now expect to surpass the sort of the full year guidance, which was only updated in the summer. So I wondered if you could just expand on what areas of the business have outperformed the expectations or the baseline that you had in the summer? How much of that is a higher refining margin? How much of it is non-refining?

And then secondly, I think you communicated earlier this month that Galp had formally notified Mozambique on the dispute concerning the capital gains situation in the country. Could you update on the latest status there, please, and your thoughts on it?

Thanks, Matt. Let me start with how we performed so far and what the best tell us for our guidance. So I think overall, it's been good performance across all businesses. But looking into the fourth quarter, what we expect is that coming in on top of what has been very good production in upstream. So we still expect to be at the upper level of the reference we gave on 105,000 to 110,000. So that is, of course, a good driver towards our results.

If you add to that the combined performances of the remaining businesses that will add to the overall perspective of delivering above the current consensus. So no particular focus there, just general throughout the portfolio, good performance, if anything, top-tier performance in terms of what we had guided for in upstream.

Joao, do you want to comment on Mozambique?

I will. Thank you, Matt. So at this point, international arbitration was triggered, but we need to say that we are continuing to pursue a constructive engagement with Mozambique. Well, Galp is in Mozambique for more than 65 years at this point. We've invested more than EUR 1.1 billion in upstream projects. We are very, very, very present on the downstream business with terminals. So that's a country that we fully respect. However, on this case, the government estimates based on accounting books share capital disregards fully all the investments made in upstream. And Galp does not contest its tax obligation. But of course, we need to challenge incorrect and inconsistent interpretation of the law. And that's something that creates uncertainty and that we need to fight and to help Mozambique.

So at this point, we don't have any provision recognized in the books. It's fully supported by our external assessment that reiterates our position. So we believe there are no legal grounds to sustain the account claim. But more than that, I finish where I started. We are very, very engaged to pursue a solution with the government and we fully respect. So hopefully, we will find that solution soon.

Your next question today comes from the line of Paul Redman from BNP Paribas.

I wanted to come at Namibia maybe with a slightly different angle, but you talked about in your press release the fact you had a bunch of nonbinding offers through the summer and now you have a short list. I just wanted to ask, is there anything you can say on what drove that shortlist? Was it partner? Was it the valuation, FID dates, start of production date? Any color here would be really useful. And just also on Namibia, just trying to work out, I think I get a sense from who's answering which questions kind of as co-CEOs, who's running the process? Or are you both involved in the process?

And then secondly, just on Mozambique, does the arbitration put any risk on the cash expected in 4Q '25?

And secondly, have you thought about if Rovuma LNG does get FID-ed, how you would think to allocate that cash in 2026?

Paul, I do tend to answer many of your questions, but we're all fully engaged, and I'm sure Joao would likely take up. But then again, on your question here, the shortlist notion is fundamentally taking into consideration the prospective offers we got, the pace at which the different bidders were able to address the questions that we engaged and actually the depth and the comprehensiveness of the analysis that was entailed in the initial offers. So fundamentally, we've moved at a faster pace with those players that had the best positioning and had the best ability to engage in the discussions that came in the later stages after the initial offer there.

So on Mozambique, maybe just to comment on the cash issue, what Joao just mentioned, we continue a dialogue with the Mozambican government. We've also been continuing our dialogue with our advisers in terms of making sure that our position on what is the due tax is further explained and strengthened. So we don't expect any additional cash issues or cash risks in the fourth quarter concerning this topic. We do expect conversations with the Mozambican government to continue, and we do see conditions for us to continue our presence in Mozambique. I think I would underline what Joao mentioned before, this is a market where we've been for a very long time. We respect our institutional obligations. We are just pursuing the due course of the law.

So finally, I believe there was an additional question there on Rovuma FID in 2026. For cautionary reasons, we do not include any additional proceeds in our numbers. So we've seen positive news in recent days. We'll see how those proceed. And hopefully, there will be an FID, but we will we will expect news on that front. We have not yet included that as an upside in our numbers. If those come along, it plays into the discussion we were having before then maybe is a big elephant in the room, a lot of what will be our future discussion in terms of how to go from there. It will be something that we will bring up once the deal is concluded.

Your next question today comes from the line of Nash Cui from Barclays.

2, please. The first one is on distribution. Galp delivered a very strong earnings and cash flow and net debt has coming down. I wonder if you could talk about how we should think about cash distribution in 2026, please?

Then the second question is on refining margin outlook. I know your Sines refinery is going to be back online very soon. How do you see refining margin in November, December and into Q1, please?

Thanks, Nash. So let me start with distribution. We are maintaining for now our 1/3 of OCF guideline. But we see that as something that has been very aligned to the type of consistency and predictability going together with the flexibility that we value considering ongoing processes such as Namibia. So the 1/3 OCF, again, together with what we've been delivering in terms of cash dividend growth, that's about 4% per annum with the flexibility to give an uptick such as the one we had last year, acknowledging favorable conditions. So this gives us sufficient room for -- as growth comes through our balance sheet and our P&L, we are indeed sharing that and distributing that to our shareholders. We like the consistency through the cycle of having a steady guideline based on OCF. And you have seen us use buybacks as kind of the plug-in number to ensure additional performance flows through to investors as we release it.

So no expectations all in all to change this overall guideline. We do believe it will serve us well, and it will allow us to flow through any good performance in terms of cash generation straight through to our shareholders.

And Nash, on the refining outlook, I've made a couple of mentions to the demand -- supply-demand balance at this point. So we are we are expecting, if we think forward on the first Q, we are expecting some part of the underperformance of the new capacity, [indiscernible], we are assuming that they will come back in full potential. So that's one.

On the second hand, we will be in the heating season and some refiners will be into maintenance on the last quarter, but they will come back, hopefully. That will be the case of Sines. So that's another one.

And thirdly, at this point, we know that we have lower inventory levels on both sides of the Atlantic and a couple of Russian capacity at this point are affected. So around 20% to 40% of the Russian capacity is affected.

So there are a number of factors that will add us to a much more prudent environment on the refining side. So we are expecting a lower margins on the first Q. But all in all, we are very focused at this point on the turnaround and to do it in a safe way, and that's where we are.

[Operator Instructions] And your next question comes from the line of Guilherme Levy from Morgan Stanley.

I have 2, please. The first one, we have seen later last week that Petrobras has had a setback on its arbitration proceedings against the ANP on the ring fence discussions on the Tupi/Iracema [indiscernible] fields. Are there any updates that you can share with us? And are there any courts that you can take this process to after arbitration?

And then the second one also related to the ANP, but are there any updates on the unitization proceedings of Berbigao?

Thank you, Guilherme. So on the recent developments on the arbitrations, we see these as a lot of news flow here and a very important asset. So the discussions on the ring fence are, of course, very, very loud. But what we see here is not a setback, an ongoing discussion. We are progressing with our arguments. We see local authorities still engaged and making sure that we take the asset forward. We understand the conditions in Brazil. So we understand that there is the need to discuss the ability to generate value from that asset and to make sure that all the parties and stakeholders involved are driving the right value out of it.

But fundamentally, what we continue to try to work on is an active dialogue with ANP, with Petrobras, our partners in Block and with the local government. The developments that we see are steps. We are -- we've acknowledged that we don't share in the vision concerning the way to treat these reservoirs. The geological data tells us those are separate reservoirs. So we continue to activate the appropriate legal actions to protect our interest there. So the recent decision has been focused only on future outflows. That means that currently forgot that we no longer have any cash outflows concerning our position in preserving our interest there. So overall, we'll continue to monitor. We'll continue to be very actively engaged, and we'll see how that progresses, but still defending our interests.

On the unitization of Berbigao, so no fundamental decision. It's still an open matter. Thank you.

We will now take our final question for today. And your final question comes from the line of Peter Low from Rothschild & Co. Redburn.

The first was just on Bacalhau. Can you comment what you expect the production contribution to be in the fourth quarter? And then what the shape of that ramp-up might look like through 2026 and into 2027?

And then the second question was on cash tax payments. They looked like they were quite low in 2Q and 3Q. Is there any kind of seasonality at play there? And should we expect a step-up in the fourth quarter?

Thanks, Peter. On Bacalhau, so we had a very low volume expectation for this year, so for the fourth quarter of '25. The first oil did come up in line with what were our expectations. But overall, the contribution is still very slow. What we're seeing in terms of take-up from the actual operations is positive. It's good pressures and also what we're seeing is also good delivery so far. But we'll monitor and assess to make sure that the ramp-up takes place.

What we have as referenced for the ramp-up continues to be our cost experience in the basin. So in Tupi, for instance, some of our best performers had the fastest ramp-up of approximately 11 months. So it's clearly a different size boat and some differences in the assets. So we do see ramp-up of at least a year.

Again, going back to my prior mention of full contribution coming up only in 2027. So when it does come up, just as a reminder, that should be approximately 40,000 barrels per day share. And if the Brent holds at, say, 70,000, this should be approximately EUR 400 million in OCF per annum at plateau, but we'll see throughout 2026, and those are expected numbers only for 2027 as we plateau.

Cash tax payments. So again, what we have is there's an element of phasing in our taxes. So typically, we have a pretty high first quarter, and that took place. Our overall guidance is still at the level of approximately EUR 0.9 billion. So no change there. And what you've seen in this quarter was, again, as a recall, just the impact of having a lower weight of our upstream business, which is more heavily taxated than our remaining businesses. So a mix effect in our overall tax rate with our cash overall payments expected to be fully within guidance for the year.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Welcome everyone and thank you for joining us. Galp's strong operating momentum continued into the third quarter of 2025, delivering yet another period of robust operational performance across our businesses. Highlights this quarter go to our sustained upstream production at elevated levels and the captured favorable refining margin environment over the summer. Group EBITDA reached EUR 911 million in the quarter.

On a brief overview of our businesses performance and starting with Upstream, production stood at 115,000 barrels per day, slightly higher than Q2, as we benefited from high fleet availability and limited unplanned events, which remain below historical trends. Upstream RCA EBITDA came in at EUR 464 million, up Q-on-Q.

On our IFRS figures, we have now adjusted for past earnings from the Tupi field, in Brazil, to reflect the new tract participation at 9.06%, leading to a net cash payment of around EUR 80 million expected in Q1 2026.

Now moving to refining. Robust system availability enabled us to capture the supportive light and middle distillates environment during the summer, leading to a strong realized margin of $9.5. As we have been flagging throughout the year, we are now performing a large, planned turnaround, which started earlier this month and is expected to last until mid-November.

During this period, safety is of paramount importance as we welcome on the ground over 5,000 workers. We will also take the opportunity to accelerate execution on our low carbon projects, having just received the first electrolyzer module.

In Midstream, our trading activities continued to be a strong contributor, with the gas sourcing portfolio now also supported by LNG supplies from the U.S., with Venture Global cargoes flowing as per the delivery plan.

Commercial, benefiting from the seasonal tailwinds, posted an EBITDA of EUR 119 million, up 28% year-on-year, also supported by improved business environment in Spain and continued operational enhancements.

In Renewables, solar power generation was over 700 gigawatts per hour. And even though we continue to see a low pricing environment, our teams remain focused on optimizing revenue streams through ancillary services and storage developments.

So all in all, operational strength translated into sound cash generation, with free cash flow reaching EUR 548 million, also benefiting from the continued unwind of working capital, as discussed in Q1, and despite a pick-up in the pace of investments during the quarter.

After paying the first interim of the 2025 dividend, we further reduced net debt, which now stands at EUR 1.2 billion, consolidating our solid financial position. Net debt to EBITDA stands at 0.4x, a reassuring level when facing the current weakening of the commodity prices environment.

Looking at the performance year-to-date, we are confident that full year production should be at the upper end of the 105,000 to 110,000 barrels per day range we guided for. Ultimately, we see Galp positioned to surpass current guidance for 2025 at both group EBITDA and operating cash levels.

We look ahead with confidence. Galp has a highly resilient portfolio and CapEx plan, with an estimated dividend breakeven just below $40 per barrel for 2026, and we now celebrate having just achieved first oil from the Bacalhau FPSO a couple of weeks ago.

This is one of the largest and most efficient oil production units now in operation in the world and a very important growth driver for Galp's cash generation. Congratulations to our teams and partners. We will now focus on completing commissioning and ramping up the unit throughout 2026.

Finally, on Namibia. We collected non-binding offers during the summer, all from highly credible players, and we are now well advanced in bilateral negotiations with a shortlist of preferred bidders. Discussions have been supportive of a value-accretive partnership, with strong alignment on the way forward from Mopane.

All in all, we remain confident in our initial planning towards reaching an agreement before the end of the year and in setting a partnership that will allow us to accelerate and prioritize the asset.

Thank you again for joining us.