BP PLC

The financial framework sets out how we allocate capital, balancing

between strengthening the balance sheet, investing in the business, and

delivering resilient distributions.

Net debt« at 31 December 2024 was$23.0 billion and is expected to

reduce over time to a targeted range of $14-18 billion by the end of 2027,

reflecting the allocation of potential proceeds from any transactions related

to the Castrol strategic review and announcement to bring a strategic

partner into Lightsource bp. The exact timing of achieving our net debt

target range will therefore be impacted by the timing of any potential

transactions. bp is committed to maintaining a strong balance sheet and ‘A’

range credit metrics throughout the cycle.

Our shareholder distributions include a dividend, resilient to a lower price

environment, and we remain committed to sharing excess cash through

share buybacks over time. Our distribution policy reflects the balance

between the uses of cash alongside an ongoing consideration of factors,

including changes in the environment, the underlying performance of the

business, the outlook for the group financial framework, and other market

factors which may vary quarter to quarter.

We expect operating cash flow to cover capital expenditure« and the

dividend. Capital expenditure in 2024 was$16.2 billion, including$0.1 billion

of inorganic capital expenditure«. We expect capital expenditure of around

$15 billion in 2025 and a range of $13-15 billion per annum from 2026 to

2027 including inorganic expenditure. This is a level that maximizes cash

generation and grows the financial scale of the company. Within this frame

we are reallocating capital to our highest returning opportunities, with an

average $10 billion per year allocated to oil and gas, $3-4 billion in

customers and products and less than $800 million per year in low carbon

energy to 2027. In a period of low prices, the group has the flexibility to

reduce or defer capital investment, as appropriate.

In 2024, the return on average capital employed« was 14.2%a at an average

of $81 per barrel. The return on average capital employed is targeted to be

over 16% by 2027 at $70 per barrel in 2024 real terms, and assuming bp

planning assumptions, as we execute our reset strategy. This is supported

by an expected compound annual growth rate in adjusted free cash flow«

of over 20% from 2024 to 2027 and subject to the same price and planning

assumptions.

a Nearest equivalent IFRS measures of numerator and denominator are profit for the year

attributable to bp shareholders and total equity respectively: Profit for the year attributable to bp

shareholders divided by total equity at the end of 2024 0.5%.