Galp Energia Sa

Good morning, ladies and gentlemen. Welcome to Galp's third quarter 2025 results presentation. I will now pass the floor to João Gonçalves 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 João 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 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 be further to factors outlined in our questionnaire statements within the published materials. With this, João, would you like to say a few words?

Thank you, João. And good morning, everyone. We have a couple of João's around here. Well, the third quarter was a strong one for GALP. Solid operating performance, according to 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 105 to 110 guide. On top of that, Bacalhau reached first oil just a few weeks ago, a very important milestone, a key project for the Alps, 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 macroenvironment continues volatile and challenging, GALP operates a highly resilient portfolio with a 2026 dividend break-even just below $40. Resilience and short-term growth underpins our distinctive investment case. Maria João, a few comments.

Thank you, Ron. Indeed, quite a few 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 nine 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 0.4 times. This is a reassuring level when facing the current volatility in commodity prices, and it's also 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. Looking into the ongoing bilateral discussions, these are showing good progress, and we maintain confidence in our timeline and in establishing a strong partnership that will allow us to accelerate and to prioritize Mopane. Operator, we may now take questions. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To ensure everyone has the opportunity to ask a question today, please limit yourself to just two questions. Please stand by while we compile the Q&A roster. Thank you. We will now go to our first question today. And the question comes from the line of Alejandro Vigil Garcia from Santander. Please go ahead.

Hello, thank you for taking my questions and congratulations for the strong results. The first question is if you can, of course, very difficult, if you can give us some color about what are you thinking about the Mopane farm down in terms of the structure, in terms of the, you know, in general, how you are seeing 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 the, you know, projections about production, next year , start up. You can give us some color, initial, even qualitative about the next year guidance. Thank you.

Gracias, Alejandro. So let me start with Mo Payne. 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 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, Bacalao 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 bacalao, 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 Irocema. 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 Bacalao. Bacalao will, of course, be ramping up, so we don't expect it to get to full plateau until Thank you.

Thank you.

Thank you. Your next question today comes from the line of from RBC. Please go ahead.

Hi, everyone. Thanks for taking my question. The first one is just on CapEx for next year. There's obviously one big uncertain piece, which is Namibia and, you know, any carry you might get, but Are you able to give some color on what you expect to spend in 2036 capex if we were to exclude Namibia? And then the second question is just on the financial framework. You have now 1.2 billion euros of debt, and obviously back allows ramping up as well. In the past, you showed a chart highlighting that you had roughly 1.2 billion euros of capital employed in your low-carbon segment. I'm just 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 use of the free cash flow. Thank you.

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 0.8 billion per annum on the 25 to 26 periods, so that is still the overall guidance. Now, this year we had, of course, the approximately 800 million from the announced investments, so this leaves us with gross capex of about 2.4 billion accumulated in the period Now, for 2026, we do expect numbers to be slightly lighter than in 2025, but it's still a challenging year. So, Bacalao is still going to be ramping up. We are going to be keeping pace towards the conclusion of our transition investments in Siems. And we have what is our normal run rate, so to say, of approximately 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 150 to 200 million in our renewables portfolio. And commercial has an ongoing transformation and digitalization program. And that is approximately another I'd say 100 million per year. So all in all, we're maintaining, of course, a very disciplined approach. We continue to aim for a capital-wide structure, but still guiding up to approximately 0.8 billion per year because we are still in a 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 1.5 to 1.6 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 about 65% of our capex is still transformation. There, of course, the numbers that we were getting, for instance, of CapEx enhanced net debt. Thank you.

Thank you. Your next question comes from the line of Matt Smith from Bank of America. Please go ahead.

Hi there. Good morning. I wanted to 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's fully appraised, or would you be open to seeing the southeast region appraised as the next step? Or, you know, is there a red line on that topic, or are you open to discussions with a potential new operator? So it'd be the first part. And then the second part, you know, 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 were able to share any high-level thoughts as to how you think that can be achieved as part of the deal structure. And perhaps I could bolt onto 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.

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 de-risk the assets, 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, you know, part of the conversations with our partners has also been conducive to that shared understanding, open to perspectives on the assets Not close 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 base for the assets 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 that 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 swap, 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 those also don't hinder our visibility on how to progress further with Mopane.

Thank you. Thank you. Your next question comes from the line of Pedro Alves from CaixaBank. Please go ahead.

Hi, good morning. Thank you for taking my questions. 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 will resume some stoppages. And then in industrial and midstream, which probably carries the bulk of it, of the upside to our targets, certainly above the 800 million of EBIT last guided. But it's also true that you will be carrying 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 with around 3 billion for the full year? And the second question, On the recent orange basin discoveries in Namibia, 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 from OPEAN? 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? Thank you.

Good morning. 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 of the guidance. We are very comfortable with the previous guidance. On that revised items, 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 CNET. That's what we will hit as on the fourth quarter. We still have some support on the margin side, on the On the refining margin side, well, supported by a demand that we could call stronger than expected, but also with the supply and the performance on the new capacity, which is not coming into play as it was expected. We are also 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, supported. And that's all for now. Thank you.

Thank you. So maybe I pick up on the second question from Pedro on our perspective concerning Namibia and recent developments, if I recall correctly your question. So Pedro, we normally abstain from commenting on what we see in the market coming up as news from other players. But generally, yeah, I acknowledge the perspective you put forward 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 VW. 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 is very conducive to that growth actually taking place. We also see alignment in its core stakeholders, relationships with local authorities that 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 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 thank you thank you thank you

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

Good morning and thank you for taking the questions. Two for me. The first one on commercial. Strong results in Q3. And I'm 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 structural change that would support further improvement into 2026. The second question is more on financials, working capital. I think that was a positive movement during the quarter, but still negative for the nine months. Maybe if you can give us any guidance on Q4. Thank you.

Thank you, Alessandro. It's indeed a very strong quarter, uncommercial. We need to assume, well, we have some tailwinds. It's always the stronger quarter of the year, so when you perform well in the stronger quarter of the year, it's an important one. I would, well, divide into main aspects of the business, referring to your transformation claim, so we have, of course, Better news from the Spanish side, after a number of volumes were removed from the market, related with players that were not playing in a level ground field. 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 non-fuel business. Non-fuel, as per today, is contributing nearly 30% non-fuel in new business, nearly 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 non-fuel. Less than half are tobacco, which was clearly a very strong anchor on the past. So if you ask me on the 2026 view, we will be clearly aiming to surpass the $300 million. That's what That's what we will deliver this year. But, of course, with the growing electric mobility network that is already on the break-even, 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 300 million.

Thank you. On working capitals, so maybe to put in perspective the nine 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 at the beginning of that early 2025 that impacted The bad weather and the blackouts 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 or within expectations. Thank you.

Thank you.

Thank you. Your next question comes from the line of Alistair Sim from Citi. Please go ahead.

Hi, everyone. In your negotiations on Namibia, are you finding broad agreement on the asset resources? You know, I ask simply because it's quite a long time since you've updated the market on the resources. You've talked about 10 billion plus in place, significant volumes of light oil. I mean, are these statements that you think the prospective buyers agree with? You know, 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?

Thank you. Thanks, Alistair. 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 on the country. It's 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. Thank you.

Thank you.

Thank you. Your next question comes from the line of Joshua Stone from UBS. Please go ahead.

Yeah, thanks. Hi, and good morning. Two questions, please. One on Venture Global, just if you could 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. Are you able to say how many partners you're still in talks with after your shortlist? I'm just trying to gauge competitive tension and how it's changed during the process, which seems quite important to you. Thanks.

Good morning. On venture global, we're not expecting any outcome before next year. 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.

Thank you. Thanks.

Thank you. Your next question comes from the line of Irene Hermona from Bernstein. Please go ahead.

Thank you very much. Good morning. My first question is on refining in the fourth quarter. Your maintenance will last about six 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 five, for example? And then my second question on the upstream in Q3, you mentioned 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? Thank you.

Hi, Irene. So on the first one, so we are expecting the turnaround to go until mid-November. We will have PlantOne and the FCC from 50 to 45 days together while 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. Thank you.

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 40 million. That's four zero million. All in all, what we see is still strong production being at the top range of what is our current guidance of 105 to 110. So this effect we registered in the quarter was fundamentally ongoing, normal progress of operations, just transiting the cargoes as they come into our possession. Thank you.

Thank you. Thank you. Your next question comes from the line of Ignacio Domenech from JB Capital. Please go ahead.

Hello. Thank you for taking my questions. The first one is on exploration on South O'Reilly. So we said recently all that are well there, and I would assume that I will be looking to do the same in 2026. So just wanted to... or 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 bacalao should be flat next year, so if you can elaborate a bit on the declining rates there.

and maybe if there's any there's been any change in the recovery factor uh to be thank you thank you so starting with um stp um no commitment so far we do see the developments in the recent activity by Shell to be something that we will incorporate in our thought. As you know, we're looking at some of Mayprinsford's potential, a high potential exploratory region. We do have plans to spot 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 profiles. 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. This is, as we see it, very good performances. We would expect it 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, so the uptick, if you'd like, from the infill campaign that are under execution. So those, when they come in, they allow us to holds a little bit the natural decline rate, it is already a best-performing decline rate vis-à-vis similar assets. So that's where we're standing there. Thank you. Thank you.

Thank you. As a reminder, to ensure everyone has the opportunity to ask a question today, please limit yourselves to just two questions. If you would like to ask a question today, please press star 1 1 on your telephone. Thank you. We will now go to the next question. And your next question today comes from the line of Matt Lofting from JP Morgan. Please go ahead.

Thanks, everybody, for taking the questions. Two, 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 don't expect to surpass the sort of the three-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've performed so far and what the rest tells us for our guidances. 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 to 110. 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 have guided for in upstream. Joao, 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. You know, well, GALP is in Mozambique for more than 65 years at this point. We've invested more than $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 GAP 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 recognizing 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 with full respect So hopefully we'll find that solution soon. Thank you.

Thank you. Thank you. Your next question today comes from the line of Paul Redman from BNP Paribas. Please go ahead.

Hi, guys. Thank you very much for your time. I wanted to come at Namibia maybe with a slightly different angle, but you talk about in your press release the fact you had a bunch of non-binding offers through the summer, and now you have a short list. I just want 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 dates? Any colour here would be really useful. And just also on the midway, 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 4Q25? And secondly, have you thought about if Revuma LNG does get FID'd, how you would think to allocate that cash in 2026?

I do tend to answer many of your questions, but we're all fully engaged and I'm sure João would would likely take up, but then again, on your question here, the short list 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, and maybe just to comment on the cash issue, what Joan just mentioned, we continue a dialogue with the Mozambican government We've also been continuing our dialogue with our advisors 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 Raul 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 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 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. Namibia 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. Thank you.

Thank you. Your next question today comes from the line of Nas Swee from Barclays. Please go ahead.

Hey, good morning, everyone. Thanks for taking my questions to place. The first one is on distribution. Gulp delivered 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 stainless refinery is going to be back online very soon. How do you see refining margin in November, December, and into Q1, please? Thank you.

Thanks, Nash. So let me start with distribution. We are maintaining for now our one-third of OCF guideline. 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 one-third 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 to our shareholders.

On the refining outlook, I've made a couple of mentions to the supply-demand balance at this point. So, we are expecting, if we think forward on the first queue, we are expecting some part of the underperformance of the new capacity, Dorje Bokas and Dengot, 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, well, some refiners will be into maintenance on the last quarter, but they will come back, hopefully. That will be the case of CNET, 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 affected. So, around 20 to 40% of the Russian capacity is affected. So, there are a number of factors that will have us to a much more prudent environment on the refining side. So, we are expecting lower margins on the first queue. 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.

Thank you. Perfect. Thank you very much.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To ensure everyone has the opportunity to ask a question today, please limit yourself to just two questions. We will now take the next question. And your next question comes from the line of Guillaume Levy from Morgan Stanley. Please go ahead.

Hi, good morning, and thank you for taking my questions. I have two, 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 Rick Sands discussions on the Tupi and Irasema feuds. 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. Are there any updates on the unitization proceedings of Berbigão?

Thank you. Thank you, Guilherme. So on the recent developments on the arbitrations, we see these as, you know, 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. 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 A&P, with Petrobras, our partners in the bloc, and with the local government. The developments that we see are steps. We have 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 interests there. So the recent decision has been focused only on future outflows. That means that currently for GALP 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 interest. on the unitization of Burbi gown, so no fundamental decision. It's still an open matter.

Thank you. Thank you.

Thank you. We will now take our final question for today. And your final question comes from the line of Peter Lowe from Rothschild and Co. Redburn. Please go ahead.

Hi, thanks for taking my questions. The first was just on back allowed. 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.

Thanks, Peter. On Bacalao, so we had a very low volume expectation for this year, so for the fourth quarter of 2025. 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 in the world, so 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 reference 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 of share. And, you know, if the Brent holds at, say, 70, this should be approximately 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, you know, 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 0.9 billion, so no change there. And what you've seen in this quarter was, again, just 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 mixed effect in our overall tax rate with our cash overall payments expected to be fully within guidance for the year. Thank you.

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