Galp Energia Sa

Good morning, ladies and gentlemen. Welcome to GALP's fourth quarter and full year 2025 results presentation. I will now pass the floor to Joao Gonçalves 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 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 with our usual disclaimer. During today's session, we will be making four looking statements that are based on our current estimates. Actual results could differ due to the factors outlined in our questionnaire statement within the published materials. With this, João, would you like to say a few words?

Thank you. Thank you, João, 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 GAL. 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 of all, and it's showing high productivity as we ramp up the unit throughout the year. In CNES, 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 2.2 billion euros higher year on year. even under a more depressed macro scenario, and allowing Gallup to maintain a strong financial position. Finally, we've communicated meaningful portfolio evolutions, reinforcing Gallup 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 a final agreement by mid-2026. Maria Joao, I pass it to you.

Thank you, João. 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 João well put it, volatility and certainty 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 GAAP's case, and also in light of the significant portfolio evolutions that Siobhan just discussed, which we expect to unfold during the year, we are limiting our guidance only to 2026. And we will 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 about 700 million euros, and a still strong commercial of about 350 million euros, We aim to deliver above 2.6 billion euros EBITDA and an OCF of over 2.0 billion. Now, keep in mind that this is, of course, assuming a much weaker macro DAG 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 2.6 billion euros, clearly reflective of our portfolio growth. Organic capex is expected at around a billion euros, with bacalao capex ramping down, but including activities from Namibia. More precisely, we're expecting one well in 2026 and the possible FID of Venus around mid-year. 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 a development concept for the asset. Finally, we are maintaining our distribution guidelines in tact for 2026. So on top of the 64 cents dividend per share that we will be submitting to the AGM in May, We will launch tomorrow a €215 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.

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 yourselves to just two questions. Please stand by while we compile the Q&A roster. Thank you. We will now go to the first question. And the question comes from the line of Matt Smith from Bank of America. Please go ahead.

Hi there. Good morning. Thanks for taking my questions. And the first one would be around the potential Mopane development. I mean, Total talked to some quite impressive investors. 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 focusing 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 Maupain and Venus are already in the upstream funnel. Any further color you could give there would be interesting. Thank you.

Thank you, Matt. So on the comments on Namibia, I think we've been very – 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 to about 1.1 million barrels. So that is what we are looking to now go and narrow. Now we did see first the northwest and then we spoke about the more southeast regions of Mopaine as to 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 NetCapEx 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 de-risked 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 deep water, so again, The notion is looking into those preferences of ours, but acknowledging that the funnel of available opportunities out there is always going to have, you know, 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 Bacadao. it will also then be in tandem and in sequence with Mopain 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.

Okay. Well, thank you very much for all that detail. Happy to pass it on.

Thank you. Your next question today comes from the line of Alejandro Vigil from Santander. Please go ahead.

Hello. Thank you for taking my questions and congratulations for the results. The first question will be about the capital intensity of GALP. I know it's difficult, many moving parts, the Moeve transaction, but if this $1 billion of organic CapEx guidance you provided for 26 could be a good reference for future level of CapEx intensity. That would 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, you know, obstacles for the transaction or you see a potentially smooth combination of both companies. Thank you.

Let me start with a bit on capex intensity, and then I'll ask to comment on . So we are guiding for organic capex at 1 billion. I think that's what you 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 are net CAPEX and that is, of course, a maintained guidance with a little bit of caution 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 break-evens that in this current circumstances are particularly beneficial. So we're talking about approximately $20 upstream break-evens. 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.

Buenos dias, Alejandro, and 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 structures. So for now, no authorization process has started, and we are expecting authorization from the standard authorities. For instance, foreign investment and competition approvals should be required, but not at this stage, only later on.

Thank you.

Thank you. Our next question today comes from the line of Josh Stone from UBS. Please go ahead.

Thanks, and good morning. A question on the renewables business, the guide you're giving looks quite ferocious, the capacity build up perhaps happening a bit slower than you might have first expected. You think quite creative, or you're looking at it to be quite creative on the downstream business by merging assets and taking them off the balance sheet. 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, on the Moeda merger, and I appreciate some insight on the planning, how soon after finalizing an agreement could a deal be completed, do you think? Thanks.

Hi, Josh. Good morning. 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, we like those assets and the decarbonization angle that they allow us. So 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 focus also on optimizing our portfolio. So we are looking into the hybridization and storage project, aiming to reduce risk and increase the return from our assets. So that's where we stand today. On deconsolidation, can you repeat your question? Because I understood it was on the Moira side. 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 treat it more like an associate business, if that might make more sense. I'm just curious of your thoughts there.

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

Thank you. Your next question comes from the line of Guilherme Levy from Morgan Stanley. Please go ahead.

Hi, good morning. Thank you for taking my questions. The first one, just going back to the MOIV 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 Saint-Thomas, and I was keen to pick your brain in terms of the structures that you were planning to target in the well that is scheduled to be drilled next year there. Thank you.

Thank you, Guilherme. And 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 questions, Guilherme, and namely on the synergy side, So clearly that's the point that we need to focus to unlock. We see our assets, both DALP and Moeve together, as very complementary. If we look on the logistics supply chain, 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 efficiency. All together, 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 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 the lot. We have in mind a well for 2027. But that is the topic in our timeline. So if you recall back when Drilled Falcone 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. 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 information we're gathering from other players in the basin.

Perfect. Thank you.

Thank you. Your next question today comes from the line of Matt Lofting from JP Morgan. Please go ahead.

Hi, thanks for taking the questions. I'll ask two. 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 their confidence are 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 Bacalao to a certain extent sort of seems like that asset's 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 pre-sold thank you

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 de-risking as we were addressing it back in 24, 25, but the perspective was always one of de-risking 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 assets, the expertise, the experience, in Total's case, the presence in the basin to complement the information. So it is not particularly rewarding to start seeing some of the appraisals to come along along the same lines as we had foreseen them and we were putting them to consideration by potential partners. So moving forward, yeah, we're clearly very much focused on next steps. So we are expecting completion of the deal with Sofal by Of course, if there's any advancements to that, we will be delivering on that. And I think the conversations with local authorities have continued, there's progress being made. I think interests are very well aligned, and this is very, very relevant. So I think towards that good basis completion, there's also the elements 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'd 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 three-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 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 ENA and that we drive that at a pace as we would like to. So, are there good feelings 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 and the best possible approach towards the asset. On Bacalhau, and I think these two 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 their respective operators to push forward a lot of the work we're doing in brazil other than the ramping up of bacalao 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 Tupi Mail Valor 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 performances. We're working very closely with Tetrabras. 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 and these assets. Brazil also has additional resources. You've heard us talk about Pelotas. This is a very different stage, based on this is one still to be de-risked. But again, it speaks to our upstream portfolio having a sequence of assets in different stages of de-risking and in different stages of maturity, but one where we continue to elongate the timeline to deliver steady productions and to continue to develop the growth element of our portfolio.

Super. 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 yourselves to just two questions. We will now go to our next question. And our next question today comes from the line of Nash Sway from Barclays. Please go ahead.

Hey, good morning, everyone. Can I ask two 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 cap on low-carbon projects. I wonder given some of the recent debate on carbon, on ETS, and some of your peers have caught their low carbon ambition, does that change any of your kind of medium to long-term review on low carbon, on some of the assumptions there? Thank you.

Hi, Nash, and good morning. So on your first questions on, 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 cap expanding, so that's your second question. We are clearly focused on delivering the two main projects in Siemens. We should be ending 2026 with the commissioning, so both on the grid 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, we move it. Of course, we need to see it as a whole asset base together, the three refineries, with the petrochemicals, with the green molecules. That's where we'll need to be looking at after mid-2026. Thank you.

Thank you very much.

Thank you. Your next question. comes from the line of Mark Wilson from Jefferies. Please go ahead.

Thank you and good morning. I'd like to ask my first question on MAPANA and PL83. 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 licence. 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 $5.50 margin. You just spoke to double digits. Could I ask, on your view, to the impact of the current – conflicts specific to GALP's refining outlook. Thank you.

Thank you, Mark. So while you're well ahead into eventual unitization issues, we do not see those at this moment as being relevant or being a topic. Our concern right now is very much about making sure that that we got a development concept that best encompasses the characteristics that we see in the asset. So you saw it looking first into the northwest, and we got into the southeast, and we saw really good characteristics there. And I think, you know, overall, it's an oilier setup, and, you know, 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 what we're looking into and at this stage that is you know clearly the drive and we don't really see an issue with you know a rhino azula block being a topic for utilization 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 planned, and we need to look to what can be an immediate 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. Thank you.

Thank you very much. Very clear.

Thank you. Your next question today comes from the line of Inacio Domines from JB Capital. Please go ahead.

Hi, good morning. Thank you for taking my questions. The first one is on the 155 million tax refund in Spain that the Spanish court recently ruled in favor on GALP. I just wanted to understand when and how you plan to account this refund. Is this entirely for GALP or there is any part that should be shared with consumers. And then on the second question is from the LNG Trading Outlook. I just wanted to understand your view for 2026 if you are 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 timeline and if the recent result with one of your peers here in Iberia changes your view on the potential outcome. Thank you.

Gracias, Ignacio. So on your first question about impuesto especial sobre hidrocarburos, you know that that's a, 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 amounts. 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 these decisions. 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 were delivered. For this year, 2026, we are expecting to get full volumes, which means 15 terawatts, about 15 cargoes, and the only thing we we can tell you is that we are assuming and expecting narrower gas prices spread. So 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 Thank you.

Understood. Thank you. Thank you.

Thank you. Our next question today comes from the line of Fernando Abril Martorell from Elantra. Please go ahead.

Good morning. Thank you for taking my questions, a couple of. First, there is a slight improvement in the ABDA to operating cash flow conversion. I understand partly driven by a more advantageous tax profile of Pagayao. 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 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.

Thank you, Fernando. Gracias. The taxation circumstances overall for Gallup, 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 Bacalao is, first of all, has occurred, so the taxation will be adjusted accordingly. We're 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 the 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 2026 in particular, we don't expect distributions to be significant. 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, such as 15 million. So, it's very limited impact in terms of our overall figures. Thank you.

Thank you. Hola, Fernando. About your second question on mueve. So the governance 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 to have two independent companies in the retail co. with co-control, as you mentioned, but also in industrial with a significant minority stake. Of course, these two companies were... well, at least thought as something that would strength our resilience in a precious sector with two 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 a final decision, and that's where we stand. On your question on renewables, As I 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 this asset 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. Thank you.

Thank you.

Thank you. We will now take our final question for today. And the final question comes from the line of Biraj Bakhtaria from RBC. Please go ahead.

Hi, thanks for getting to my question. Two, please. The first one's 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 half a 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. You've sold the energy one. So is it safe to assume that you're focused on oil only, or would you seek to diversify into gas? Thank you.

Hi, Viraj. Thank you. So let me start with Mozambique. And if I understood correctly, the 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 four, the onshore components, 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 quite the 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, you know, kind of a 500 million buffer, so to say, is, you know, and the way I take our preferences fundamentally, we, 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 investing. 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 organic APEX. 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.

Understood. Thank you.

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