Repsol Q2 2026 Earnings Call | Upstream Cash Realizations Support Renewable Plan

Thank you Pablo. Good morning and welcome to everyone. We delivered a strong set of results and strategic execution in the second quarter of 2026. Operating under a highly volatile commodity environment shaped by a complex and evolving geopolitical scenario. Tensions, as you probably know, around the Strait of Hormuz disrupted energy trade flows, resulting in an estimated 1.3 billion barrels of oil supply lost due to the crisis and the shutdown of nearly 3 million barrels per day of refining capacity. Despite multiple attempts to deescalate the situation, agreements for the reopening of the trade were repeatedly broken down until a ceasefire was announced in June. The collapse of these negotiations in July has generated extreme volatility to this date. The conflict brought into focus the importance of security of supply, diversification of energy resources, production of domestic resources and protection of European Union refining capacity. In this context, Repsol remains fully committed to ensuring security of supply while continuing to deliver on its well-established priorities, growing cash flow, enhancing shareholder returns and allocating capital in a disciplined manner all while preserving a strong financial position. Furthermore, our performance demonstrated once again the strength of our resilient business model. Our advantage Atlantic basin positioning, flexible tier one refining and diversified sourcing capabilities allow us to maintain stable operations ensuring continuity of supply to our customers while capturing value across the portfolio. In particular, the industrial division benefits from a strong momentum in the refining, chemicals and trading businesses as market dynamics evolve into a scenario of actual physical supply disruptions. In the afternoon, the first story achieve a major milestone to consolidate the United States as one of the primary drivers of our growth incorporating a world class asset with our own life platform and in low carbon generation. We continue to execute our successful asset rotation strategy as we transition the business into a self-financed growth model in renewables. In terms of results, second quarter adjusted net income was 1.8 billion euros, more than 1 billion higher year on year largely reflecting the stronger contribution from industrial. First half adjusted net income was 7.2 billion, 135% higher compared to same period in 2025. Cash flow from operations stood at 1.9 billion euros, 24% higher year-over-year for an accumulated 3 billion euros delivered in the first half of 2026. Cash generation was impacted by a 1.3 billion euro working capital buildup mainly related to inventories. This reflects our focus on enforcing security of supply, increasing storage and ensuring availability of diesel and jet fuel in Spain and in our natural haven in a highly disrupted market environment. Excluding working capital movements, operating cash flow generation amounted to 3.3 billion euros in the quarter and 5.7 billion accumulated to June. Net debt stood at 3.7 billion euros by quarter end, a reduction of 1.1 billion compared to March, and this included the deconsolidation of approximately 0.6 billion euros of debt associated with the renewable assets divested in Spain. The gearing ratio stood at 11.3% as of June and at 3.1% if we exclude leases. Shareholder remuneration remains aligned with our cash distribution framework following the payment of the second dividend earlier this month in July. The total cash dividend for 2026 reached 1.051 per share, approximately 8% higher than in 2025. With respect to share buybacks, the initial program of 350 million euros launched in March was completed this week and the corresponding capital reduction was executed through the redemption of 15.8 million shares. Additional share buybacks will be implemented in the second half of the year to deliver as promised on our 30 to 40% cash flow from operations distribution target. I will provide further details when we touch on the outlook for the remainder of 2026. Turning now to the evolution of the main macroeconomic indicators, Brent crude averaged $14 per barrel, 53% higher year on year as you can see in this slide driven by geopolitical tensions and disruptions to oil supply, and we have an average of $2.9 per million BTU, 15% below the same quarter last year mostly reflecting weaker seasonal demand in North America and Europe. European gas prices experienced very different dynamics. Main references rose more than 40% year on year due to geopolitical risk and of course the disruptions to critical LNG export infrastructure that increased concerns over security of supply. Repsol's refining margin indicator averaged $14 per barrel, supported by stronger diesel, jet fuel and gasoline spreads together with wider heavy to light crude differentials. At the exchange rate, the US dollar at 1.16 against the euro, a depreciation of approximately 3% compared with the second quarter last year. Jumping into the upstream performance, let me express our deepest condolences and support to Venezuela following the devastating earthquake that struck the country last month. As a long established partner in this country, Repsol stands in solidarity with its people during this difficult time. Second quarter adjusted net income was 371 million euros, 19% higher year on year driven by stronger oil and gas price realizations, higher volumes and an increased contribution from equity affiliates partially offset by the Indonesia country exit that was executed in 2025. Production averaged 558,000 barrels of oil equivalent per day, the highest level in two years and 4% above the previous quarter. Quarterly volumes were supported by higher contributions from the UK, Brazil, and the US. The US contributed more than 200,000 barrels of oil equivalent per day, representing approximately 37% of total company volumes. And conventional production averaged around 175,000 barrels per day, a 17% increase over the first quarter driven by the connection of new wells in the Gulf of America. Production averaged more than 30,000 barrels of oil equivalent per day underpinned by the ramp up of Leon Castile in Alaska. The first phase of Pikka initiated production in May as part of its late stage commissioning process. Current production stands at around 23,000 gross barrels per day and the first oil sales are expected in August. The project remains on track to reach the plateau of 80,000 gross barrels per day in this quarter. In the third quarter, production in Venezuela averaged 71,000 barrels of oil equivalent per day, broadly in line with the same quarter last year and our activity was not affected by the earthquake. In May, we received the first cargo under the new US export licenses and the framework agreed with the Venezuelan government that was associated to the gas production of Cardon. An additional four cargoes are expected in 2026. One to help fund the investment needed to increase gas production by approximately 10% and three more cargoes to monetize current production. During the quarter, an agreement was reached to evaluate the potential development of the Orcon area. This area of Orcon is in the eastern part of the Maracaibo lake between Barua and Motatan fields, both of which are already part of our portfolio and we have, let me say, a lot of expectation regarding Orcon, an area that we know in a deep way from the past. Operation in Libya remained stable. Our position was strengthened through the signature of the PSCs that were associated with the blocks that were awarded in the February licensing round in Brazil. We are currently drilling the second development well in Raya. Remember, Raya is the new name for the former Camp 33. The project, which is expected to contribute a peak production of 40 to 50,000 barrels net to Repsol, remains on track to achieve first oil in 2028. Looking at the third quarter, production has hovered around 580 to 585,000 barrels of oil equivalent per day in these first three weeks of July and full year 2026 expected production remains in the range of 560 to 570,000 average barrels per day, probably in the high part of this range.

At this point allow me to dedicate some minutes to highlight the potential of our north slope assets in Alaska. Our position includes three fields within the Nanushuk with ongoing appraisal activity to unlock future developments with Pikka scale potential. The Pikka units are high quality oil development with robust economics and significant long-term growth visibility. Phase one, that is the project that is now producing 23,000 gross barrels a day that I mentioned before, brings around 400 million gross barrels of 2P reserves into production with further 2C resources expected to be developed through a phased plan. In this direction, phase two, also referred to as Pikka expansion or Pikka two, is expected to add another over 40,000 gross barrels per day of production with all major key permits secured. The project will leverage existing infrastructure to accelerate this development. The Koka unit, located as you can see in the map in the southeastern part of the prospect, recent appraisal confirmed a high quality light oil reservoir. Just considering the 2C resources estimated for the northern area, I could say that Koka has the potential to become a major development that could have a similar scale to Pikka. The Horseshoe unit, located in the southwestern part of this map, represents another promising opportunity with material upside. The Stirrup 2 well planned for this winter in the window we have to drill in winter is the next step to appraise the subsurface potential. Lastly, our position in the play was strengthened by the 42 new exploration licenses secured in the latest federal round in partnership with Shell, with Repsol as operator, supporting future development plans.

Going on now with the industrial division. Adjusted net income was 1.2 billion euros. This figure compares with 103 million in the same quarter a year ago. But remember that that period last year was affected by the negative consequences of the blackout in the Iberian Peninsula. Results benefit from materially stronger contributions from refining, from Peru, from chemicals and also from the liquid trading business together with the unwinding of non-respended sales adjustments that were registered as negative in the first quarter. Refining was positively impacted by higher product spreads, wider heavy to light crude differentials and the normalization of the kerosene sales price lag effect that I also mentioned in the first quarter conference call which negatively impacted that first quarter. The refining margin indicator was 28% higher quarter on quarter and 137% above the second quarter last year. The premium generated in this second quarter averaged around $10 per barrel. Diesel and jet fuel supply remain exceptionally tight. I mean that is curious because I don't know if the financial markets are really reflecting this tightness we are seeing in the physical market and this situation is driven by the simultaneous disruptions in the Strait of Hormuz and what is probably more forgotten, what is happening in Russia that reduces the refinery availability and low global inventories. Gasoline spreads benefit from the refinery maintenance season in Europe, the maximization of middle distillate yields and higher seasonal demand. The utilization of distillation capacity reached 79% while conversion units operated at 89%. Crude processing was negatively impacted by the reduced availability of the Cartagena topping three unit that is expected to restart by year end. The HVO minus UCO spread remained at healthy levels, supported by the correlation with the mineral alternative and also the transposition of the RED III European directive in Germany in the second quarter. Biofuels generated more than 100 million euros of EBITDA and looking forward, we expect RED III to be transposed also in Spain and that is going to bring greater regulatory certainty about biofuels in the market. Looking ahead, we expect the refining margins to remain at healthy levels through year end and into 2027, underpinned by first the replenishment of inventories, a resilient demand that is still very resilient, and the catch-up effect of deferred maintenance in July. The refining margin indicator has averaged more than $30 per barrel and the premium of this refining margin in July was above $9 per barrel. So in real terms, as of today, the average is $34 per barrel with a premium of $9 per barrel. So benefiting from lower Brent prices compared with what we experienced in March, April, stronger middle distillates and wider gasoline spreads in the middle of the driving season where we are now. Continuing with chemicals, the business registered its first positive operating result in two years thanks to better international margins and higher operational rates at our plants. The petrochemical margin indicator averaged $569 per ton, more than three times its value in the first quarter, and the plant utilization benefited from the restart of the Sines cracker in Portugal which had been shut down since 2023 because of the low margins of monomers. Looking ahead, the expansion project that includes two new plants of high value added polymeric materials is expected to start operating between this quarter and the beginning of next. One of the plants, linear polyesterine, is going to be operational in September and polypropylene at the end of September or the beginning of October. The liquid trading business delivered a very strong performance as well, doubling its contribution compared to second quarter 2025. Crude and gas trading activities generated more than 500 million euros of combined cash flow from operations over the first half of 2026. Lastly, the new HVO unit in Puerto started operations in April, becoming our second on-purpose facility of this type. Another project that will be the second of retrofitting is currently under evaluation in Spain.

Continuing now with customer, the adjusted net income was very positive at 29 million euros, a 7% increase over the same quarter in 2025. And this increase was driven by a higher contribution from the low-carbon aviation and specialties business and power and gas retail. Cash flow from operations amounted to 483 million euros in the quarter. And despite the sharp fuel price increase generated by instability in the Middle East, we haven't seen any signs of demand destruction in the short term and that is from a point of view supported by resilient economic activity in Spain and by the positive measures adopted by the Spanish government to mitigate the impact of higher energy prices on consumers. Repsol's sales of road transportation fuels in Spain were 7% higher year on year. The net oil contribution margin per service station was also higher, 6% higher compared to 2025. The mobility business was logically impacted by the customer support initiatives that were proactively implemented since March on top of adding our effort to the government measures. And these initiatives, which enhance our customer value proposition, have delivered approximately 50 million euros in this period in the second quarter in discounts to both professional and retail customers. Since the 21st of March, that was the day we enforced these discounts, Repsol has extended these measures to weekends from the middle of July till the end of August because weekends are the days with higher driving activity during holidays in summer, mainly in a country like Spain that will receive again more than 100 million tourists, 100 million visitors in our country. In power and gas retail, we added 116,000 new customers, equivalent to an 18% increase year on year, reaching 3.3 million clients by quarter end. The number of digital clients reached 11.6 million, a 15% increase over the same period of 2025, again with Waylet as the main contributor. Turning to low carbon generation and renewable generation. Adjusted net income was 10 million euros, 2 million higher than in the same period in 2025. The average pool price in Spain was 55 euros per megawatt hour, 43% higher year on year with significant intraday volatility. Wind and solar production reached 2.5 terawatt hours, 59% higher compared to the same period in 2025. And during the quarter, an agreement was reached to incorporate a new partner to an operating renewable portfolio in Spain valued at 849 million euros. The portfolio comprises 402 megawatts of wind generation capacity, 303 megawatts of solar and more than 0.5 gigawatt of hybridization opportunities. This transaction is expected to reduce Repsol's net debt by 700 million euros. The assets will be jointly controlled with our industrial partner Masdar, which resulted in the consolidation in the second quarter of the 550 million euros financing secured in 2025. And in addition, Repsol will receive cash proceeds of 150 million that are not in our accounts in this quarter because the closing is expected in the last quarter of 2026. Since completing our first asset rotation almost five years ago in November 2021, we have successfully rotated roughly two-thirds of our global renewable portfolio including all our wind and solar assets in Spain. These transactions have generated an average equity IRR of 10%, demonstrating our ability to create value while accelerating our transition towards self-funded growth in this business. Moving now briefly to a summary of the financial results. In this slide, you may find an overview of the figures that we are covering today. For further details about these numbers, of course, I encourage you to refer to the complete set of documents that were released this morning.

Let me now update to the most difficult part of my speech, that is the outlook for the rest of the year, because believe me, I suppose that we are going to discuss a bit about that later, but in this context it is really difficult to update the outlook about what is happening in the world. Of course, I'm going to try to be very accurate about the outlook of our own internal metrics. In the first half of 2026, we generated 5.7 billion euros of cash flow from operations excluding working capital movements, underpinned by a solid operational performance and a supportive macro. This figure is ahead of our estimates at the beginning of the year. The duration and impact of the disruptions in Hormuz and Russia remain really difficult to assess. That said, we remain positive about the business outlook for the second half, particularly in refining and trading but also in the upstream supported by higher production volumes. Based on this outlook, our second buyback program of the year has been increased from 350 to 500 million euros. Let me underline that this program, which is the second program of the year but not the last one, will be executed before the end of October. It is a program for now until October, and this program already takes us beyond the initial share buyback guidance for 2026. In our first quarter result presentation in October, probably we are going to have greater visibility on full year cash flow from operations generation, and that day we will announce the third and final share buyback program for 2026. So we are going to launch a third program in October and we are going to deliver what is written in stone, the 30 to 40% of operating cash flow to our shareholders. The amount of the program and this percentage, of course, will be announced that day depending on the macro conditions and the situation that day. But we are going to launch a third program in October. Our disciplined capital approach will remain at the core of our decision making and the projected full year net capex is around 2.7 billion euros, in line with our expectation at the beginning of the year. In conclusion, over the first half of 2026, we have delivered a strong financial performance and we continue the strategic progress supported by the optimization of industrial value chain, profitable production growth, the resilience and good performance of our commercial businesses, and the ongoing evolution of our renewable platform to be more competitive growing in a self-financed strategy. Shareholder remuneration will remain our top priority as you know, and aligned with this we have already raised the total expected share buyback for 2026, but again that is not the end and a further upgrade will be announced with the third quarter results to deliver on our cash flow from operations distribution target. So with this I will turn it over to Pablo and we are going to move to the Q&A. Thank you so much.

Thank you V. I'm going to be very clear about your first question about the outlook of the year buybacks and so on. First, let me underline that we are entering an unexplored period in the world that is impacting the economy and is impacting all businesses and it's also impacting commodities, industrial activity, and so on. I prefer because today I could anticipate what I'm seeing for the rest of the year but believe me I don't have more information than you have because what is happening is out of my control in some way, not what is happening with our business, I'm talking about what is happening in Hormuz, what is happening in the Persian Gulf, and what is happening in Russia. So in this sense, what I'm going to underline is first, we are going to launch a third share buyback program in October, that is going to happen. Secondly, I'm going to respect the range of 30 to 40% of total distribution by the end of the year that we announced in the Capital Markets Day. We are going to respect in any case this percentage and the decision about the amount of this share buyback in October will be taken in October knowing first what is the perception we have because we will be at October 29th with probably more clarity about the development and performance of the year and of course also taking into account what the situation in macro terms is in our economy. So that is the certain part of what I'm saying. We are not considering other mechanisms like special dividends and so on. You have to take into account that in this sense the only limit we could have, and take this answer only technically, is that excluding the 350 million that was the first program, we have the limit of the 10% of the capital of the company that was approved in our AGM in May. So technically that is the only limit we could have but this 10% represents more than two billion euros, so it is not today our concern. But again, we are reinforcing our balance sheet, that is positive in a time where volatility is there, the geopolitical situation is complex, and we are going to respect all the mechanisms we committed to our shareholders. Shareholder returns are our priority and we are going to launch this share buyback again in October and we will take into consideration the information we will have at that time to take the best decision. But in any case, that is going to be very positive for our shareholders. Going to the premium on the refining margin, if we take this second quarter, the contribution from biofuels could be at around $2-2.2 per barrel. Remember that the biofuels weight now in our portfolio is higher because the operation of Puerto on-purpose new plant retrofitting. We have also Cartagena, we have Corros, and we are experiencing pretty good margins for biofuels and HVO in international markets. The rest is driven by the crude slate balance optimization. And when you have such disruptions in the market, you have plenty of room to change your yields, to change the products you produce. You focus more on kerosene with better margins than some other products and so on. And that is the reason behind this high margin premium. A good integration of our refineries and the capacity to adapt the programming and planning of the refinery in terms of crude slates and deal with products to the best situation we are seeing in the market day after day. So $10.3 per barrel in the quarter as premium and 2.2 coming from biofuels. Going to the maintenance activity in the third quarter. First of all, let me say that in this July we are optimizing to the maximum of the distillation, the last barrel giving us a positive margin. We could have an average in July of 85% distillation utilization rate and the conversion utilization rate is at 102%. In July, technically it could be above 100% because the main units like the cokers are batch units. If you optimize the time of the cycle, you could produce above the technical 100% specification. So that is what is happening in July. And if we go to the maintenance program, in this context we are trying to maximize production, of course. We had in Bilbao the coker shutdown in April and May but that is the past. We don't have any maintenance there. In Puerto, a partial shutdown of a conversion unit is going to go to the fourth quarter. So nothing in the third quarter. And in Cartagena we have to change at the end of September the catalyst of the hydrotreater. In some days, not rocket science in terms of duration. So we could say that we have a quite clean third quarter in terms of turnarounds for our refineries. And probably what is happening in passing our conversion capacity above 100% is reflecting this situation. Thank you, Vidas.

Thank you, Mikuel. As I said before, you know the figures of the second quarter: 558,000 barrels a day average. July as of today: 582,000 barrels a day. Main contributions are coming from Alaska, which is starting to grow. We are going to have Alaska at the end of September with the ramp-up fully operational. So that means we will have 80,000 gross barrels a day. You have to take the Repsol share of this figure. Venezuela, let me say, is performing in the right way. On top of and despite this state of emergency and this hard humanitarian situation Venezuela suffers, let me say that Repsol demonstrated strong commitment and solidarity in this process, sending humanitarian aid and fully committed with the actions that Venezuela's government is promoting in this sense. But the good news, not only for Repsol but also for the country, is that the hydrocarbon assets, including Repsol's assets, did not suffer any significant damage. That is important because we produce the gas that sustains the power system of Venezuela and the production remains secure from the supply side. I have to say that the government representatives in Venezuela are devoting all attention also to go on helping companies to increase production. We also have, and I want to underline, all the support of the American authorities to the improvement of the situation in Venezuela. I think the American federal government is doing pretty well supporting what is needed to increase production in Venezuela, giving to Venezuelan government and Venezuelan people the capacity to have more revenues, more fiscal revenues to improve the social and economic situation in the country. So we are starting to see an improvement in production in Venezuela. I had four weeks ago, some days before the earthquake, the opportunity to be in the country, to be in Caracas and to meet President Rodriguez and the minister of oil of Venezuela, and they are fully committed with this target. I maintain what we said: from April on, from the time we receive all the licenses needed, we are going to increase our production by 50% in one year and we are going to multiply by three our production in three years. Taking all that into account, I can't forget what is happening also in terms of production growth in the Vaca Muerta, in the unconventional, where we are seeing some. In Leon Castile, today we could be producing 13,000-14,000 barrels a day net to Repsol, and we will be next year producing 19,000 barrels a day. So there is also a ramp-up in Leon Castile. All in all, we are going to be at around 600,000 barrels a day at the end of this year, so I am fully comfortable with the range of 560-570,000 barrels a day I had as indication. I have the perception that probably we are going to be in the high part of this range at the end of this year.

Thank you, Sashi. First, we have increased our working capital this half by 2.7 billion. Let me split the figure in two. The first is price. Because what we have in our tanks and storage has a higher price. So roughly speaking, it could be 1.4 billion coming from price and another part is volume, 1.3 billion. And let me say that this is a result of the focus we have now. What is behind this decision? You could say, 'Okay, you are not optimizing your storage.' There are solid reasons for that. The first: I have to guarantee that when the refining margin is $34 per barrel and with that premium of nine, I can't have a problem of oil supply because I have a storm in Bilbao in port or so on. So I have to work in a less optimized way in terms of working capital because I have to guarantee that the refineries have crude covering 100% of our conversion units. That is happening today. So that is a reason for that. When I say crude oil, I'm talking about intermediate products and so on. So we have a priority now. Our refining system is making money and I have to guarantee that this process continues with no disruptions because from time to time we have two refineries in the Atlantic Ocean and storms appear from time to time. That is the reason. The second reason is that we have seen a very tight market for products. I don't know what the market is seeing, but believe me, diesel and jet fuel could be concerns for Europeans in coming months. So we have to guarantee that we are able first to supply our customers in Spain because we have a strong commitment with them. So if this commitment means we have to increase storage a bit, we do it. And secondly, because this company has also a full commitment with the countries where we operate and we have a commitment with the Spanish society and the Spanish economy. Tourism is very important for Spain. 15% of the Spanish gross domestic product comes from tourism. This year probably tourism is going to experience an even better year because the uncertainty in some regions in the world, Eastern Europe, Middle East, more difficult to travel to Asia, will concentrate an important part of European tourism in Spain. And we are fully committed to guarantee that these people are going to have jet fuel to come to Spain and to supply the Spanish tourism and the Spanish economy. That is part of our business because they are our customers. We have increased our jet production by 35% in our refineries and now we are able to provide not only the kerosene that our customers need in Spain but we are also providing jet fuel to our customers in some other European airports. So we are selling.

jet in Paris and in some other areas because we are taking also this situation as a commercial opportunity for the future. So that is what is behind this working capital. If you ask me what is going to happen at the end of the year, in physical terms, we can't increase this effort because we have a full use of the storage units we have in Spain. So you are not going to see an increase coming from the physical side. If we go to the price, that is not in our hands. If price of products and price of oil is higher, you are going to see a higher cash flow from operations coming from the operations and you are going to see the higher working capital coming from this price. So when we are talking about distribution, we are talking of course the survey back of the cash flow from operations. But you are not going to have surprises in this sense at the end of the year. The only surprises you could have could be positive because we could have the capacity to release in commercial terms a part of these inventories, apart from this storage. I think your second question is very interesting, Sashi, because I think that we have to use the balance strength first to weather and to resist in a volatile scenario from this autumn on that I don't know how it's going to be developed, and secondly because in the future, of course, we could have opportunities in a different scenario, but again, we are going to be very present in the use of capital. Having a balance sheet is always an opportunity, but we are going to be very present as we are in the use of capital and the use of the capex. And again, the distribution to our shareholders is going to be the priority of the use of this capital, and of course we are seeing a lot of opportunities to grow in the E&P as you mentioned, but these opportunities are mainly organic. We have a strong pipeline to grow. I mentioned before Pikka, I mentioned Koka, I mentioned Horseshoe, Venezuela is also there, Libya is there. We have opportunities in our portfolio. So we are going to use these opportunities to grow. I don't see today opportunities in the M&A in the E&P because assets are expensive given the current macro context, but that is not a concern for me now because we have a lot of opportunities to grow in the E&P in an organic way. Thank you, Sashi.

So thank you, thank you very much for your first comment because in Repsol we are really happy about the victory of the Spanish football team last Sunday. So thank you so much for your comments about that. Going to your questions, firstly, the returns have been fantastic, but what is behind that? We are producing mainly focused on our market. So the production we have today, probably we could be producing 70% of the needs of our clients in Spain. If we take the average for this year or what we forecast, taking into account the current HVO margins we are experiencing, probably the EBITDA of this business is going to be at around 325 million euros this year. If we add what we are getting in the commercial side in renewables plus the trading, probably the figure could be close to 380 million euros of EBITDA. I'm reminding you that the capital employed in this business could be at around 500 million euros. So the returns are okay. And probably what is behind is that these units are fully integrated in a refining system. We have experience industrially to manage these kinds of units. Secondly, we have worked hard over the last years building the supply chain to have the raw materials to make all that profitable. And third, of course we have the impact of international focus and the international market, but we have an internal market that is in some way the focus of the production. We have, you know, we are deploying also in a commercial way these renewable fuels. We have already almost 1,700 service stations in Spain that are providing 100% renewable fuel, and that is an offer for our customers, and we are seeing this offer as a part of our business. So I think that all that is behind the profitability we are making in this business. It's true that sometimes international margins could be lower and probably the returns are going to be lower at that moment. But now we are quite happy, and as I mentioned before, probably we are going to enter in a third on-purpose plant that is going to be probably a retrofitting in one of our refineries to cover a bit the gap between what we need in our markets and the current production we have.

Alaska, going to this development. Pikka 2 is going to be very integrated with Pikka and with Pikka 1. Pikka 1, the current production, is on track now. Pikka 2 is going to be fully connected to that. And if we go to Koka, Koka probably is going to have its own development plant, its own processing facility, and of course all that is under review. What we know today about Koka is that the performance of the well could be highly positive. Remember that the production test we developed this February or March, I can't remember the exact date, was at around 3,900 barrels a day from a single well. So we are very positive about the prospect, about the potential development, and we think for that reason we say that could be a new Pikka. But our focus in terms of development in the short term is going to be fully focused in the next weeks and months on the analysis of the FID of Pikka, which probably is going to be taken with a high probability in 2027 because we prefer to know all the information coming from the west, from the production of Pikka and so on, before having the whole engineering project. And when you ask about the resources, the answer is yes, the 2C figure includes Pikka, includes Koka, and includes Horseshoe. Thank you.

Thank you so much. You are right about the growth profile in the upstream. Only I want to remind you that when we take 580 to 600, we are taking into account 2026 where the average will be something between 560 and 570. So that means that we are seeing growth in 2027 and 2028. And remember also that we exclude, and I underlined that in the capital markets day, the Venezuela increase from this figure. If Venezuela works in the right direction, and we expect, we hope, we expect, and we are fully committed with the development of Venezuela, this figure from 580 to 600,000 barrels a day for the period 2026-2028 will be higher because we have to add the improvement we are going to get in Venezuela. And again, what we have seen in Venezuela is a full commitment of the Venezuelan government and PDVSA to make things go in the right direction, increasing production, increasing the revenues of the country, and improving the social and economic situation of the country. And we are seeing also a full commitment of the American federal government to make all that possible. So quantifying the guidance for 2028-2030 is not an easy game now, but we are seeing the company producing above 600,000 barrels a day. Going to the red tree, let me say that this implementation is positive. Because what we are seeing is that uncertainty means we have more security to take investment decisions. So I'm sure that this red tree is going to support the investment decisions we are going to take related to this biofuel plant in Spain to produce biofuels and going to hydrogen. I think that is also fully justifying the current FID we took in the last months, Petronor and Cartagena, and I think that is opening the door through the Tarragona FID and probably a fourth one in the Spanish geography of our refinery. So positive implementation and certainty that are going to favor investment decisions in Spain.

Thank you, Nash. Yes, I could quantify Venezuela. We are receiving and we are to go on receiving the cargos that are going to pay all the gas production and the bills of our gas production in Cardon. So we had one in April, one in July, and we are going to receive four more cargos for the rest of this year. And going to Petroquiriquire, we have started to receive cargos in a regular way, and these cargos are going to cover what is needed to pay the opex and the capex to grow the production in Quiriquire. We are going to finance with these cargos the investment required to fulfill the commitment of all increase production I mentioned before. So when you talk about the guidance of the year, when I'm talking now about production in the year, it is included because we started in April, so that means that the impact this year is going to be lower, and for that reason I'm quite comfortable saying that we are going to be in the high range of the 560-570,000 barrels a day. When we go to the metrics, because this of course Venezuela is going to be included in the dividend side in the cash flow from operations. But all that is included in our figures.

Going to a refining margin outlook. What is behind that? First, probably the main factor because everybody is talking about Hormuz, and probably Hormuz is not the main factor behind the refining margins. I think that Russia could be even more important than Hormuz today for the European market because probably 50-55% of Russian refineries are out of production now. That means that the 100 million barrels a day of middle distillates that Russia was exporting to Europe have fully disappeared. So the impact is equivalent or even higher than the impact coming from the Persian Gulf. So first try for my opinion. The second one, Hormuz, the Strait of Hormuz. Of course, the figure I mentioned for Russia, probably we could quantify something similar to 800-900,000 barrels a day of middle distillates that disappear from the European market coming from Hormuz. A third factor: demand is very solid. Even the International Energy Agency that changed the demand outlook for the year, the figure we had in mind was a reduction of fuel demand in the world at around 100,000 barrels a day, but probably almost replicating the consumption figures of 2025 at these prices where you could think that there is some kind of elasticity in parts of the demand. So demand is very solid in the world for hydrocarbons and for products. And when we look at our markets, I'm mainly talking about Spain and Portugal because the Spanish economy is growing in a good and healthy way. And we also have this addition of a tourism site with more than 100 million visitors in the country. All that is also pushing the demand up. And on top of these factors, I'm going to add two more to be very comfortable and probably positive about refining margins not only for 2026 but also for 2027. First, when you analyze the inventories, the reserves in Europe, in the US, and in the main markets, they are significantly lower than the average of the last years. So we need to fulfill these reserves and we are going to need time for that. So the fourth factor: the feed. Believe me that every refinery is trying to do its best to produce as much as possible, as Repsol is doing of course. And if you look at the United States, that is happening. The US is exporting a lot of products, and again thanks to our American friends and brothers, we in Europe are securing the energy needs we have not only in gas terms but also in product terms because the US is offsetting, is covering the lack of product coming from Russia. But refineries from time to time need maintenance, they need turnarounds, sometimes you have operational penalties, and all that is going to happen in the coming months. So for that reason, I'm convinced that there are solid reasons to support pretty good refining margins not only in 2026 but also in 2027. Thank you, Nash.

Thank you. I mean, clearly, Cardon is paying the gas bills. So that's a game. And Petroquiriquire, the cargos are paying the opex and the capex we need to grow in oil assets. So I'm confident about Venezuela. I think that there is a strong commitment from the Venezuelan government and PDVSA to make possible this production growth. But what we need to grow and to invest in this growth is of course recurrent cargo payments. So all that is a positive look because investment means more production, means more tax collection for the country, and means more barrels for Repsol. In this sense, we are fully comfortable with the country and with the proven financial approach we are applying in the country to grow.

When we go to low carbon or renewable business, renewable is a part, is a pillar of our strategy. I want to underline that we have 24 million customers in Spain and Portugal, and we have a multi-energy approach to this market. Today, 25% of the total cash flow from operations of this company comes from our customer or commercial business, and it is growing. And that is crucial for the company. Probably the EBITDA of the cash flow from operations of this business is going to be at around 1.4-1.5 billion euros. So that is important. Profit here is going to be a bit lower than the 25% of the cash flow from operations, but it's not because this business is performing in a bad way because they are going to beat last year's figures. It's because the situation that some other businesses are experiencing is going to push the cash flow from operations of the company above these figures. And our customers also need power. We are growing in a retail power business where we have already 3.3 million customers and we are growing. If we compare the figures with last year, we added half a million new customers over the last year. So we produce power. We produce renewable power to feed the needs of our customers either at home or in their vehicles because I want to remind you also that we have 10,000 recharging points accessible in our network. So in this sense, renewable is important for that reason. It is not only because of transition ambition, but because this business is also performing in the right way, growing now in a self-financed way as we committed in our capital markets day. We have an Iberian integration multi-energy strategy, and we are applying this experience in renewable production to the US where we have significant projects that are competitive. So in this sense, we are comfortable with this business, and we see the renewable business as a pillar in the long term of our portfolio, growing in a self-financed way and guaranteeing this 10% return thanks to this rotation system that is working as we proved also this quarter with the transaction with a strategic partner like Masdar. Thank you, James.

Gracias. Going to your first question, in this case, first we had and we have and we are happy having an industrial partner like Masdar committed in the renewable business. That is not the kind of different partners we had before that were more financial. This is an industrial partner in the renewable business with some kind of appetite to have also a cooperation in the operation of this business. So we were happy giving them the co-control of the operation. That was the reason behind, and of course, we are also respecting and delivering what we said in our capital markets day about the self-financed method for this business. So we don't have any kind of preference for this method; it could be an option. But I have also to remind that now we have rotated all the assets, wind and solar, we have now in operations in Spain. Of course, we are going to develop new assets in the future, but we are open to go back to the former or the previous 51% with consolidation we had before. If we go to the renewable portfolio available for disposal, you mentioned, I have here my notes, in the second half, Pington, you know that 800 megawatts fully operational in the US, and we are working on the transaction that could rotate this asset, and of course that is going to be very positive in terms of cash and debt for the company.

The remaining $8, again, let me say that the premium is a theoretical construction. The premium is what is the result of comparing the refining margin with the construction of a slate of crude oil and so on, and the real results we are getting in refining. So I know that there is enough to know exactly what is behind, but it's quite theoretical because this number is also a difference between two figures. So trying to approach what is behind the other remaining $8 a barrel of premium: mainly the capacity. It could be $2 maximum from what is happening in our crude slate. If we have Basra, for instance, a crude oil in our budget, our theoretical budget, because Basra now is out of the market with prices that are very high because it's not a reality in operational terms in the market. We substitute this crude oil by another one and we are capturing an additional margin above the theoretical margin we had in the IMC. So that could be $2 a barrel. On top of that, we have the optimization of crude oil. When you have a lot of volatility and you have different prices in different parts of the world, the capacity you have to optimize the rate is high, and probably the higher impact comes from the yield from the product side. If you are shifting your production from diesel in some months towards jet because jet spreads are significantly higher for some weeks, you are optimizing your refining theoretical margin. So you are capturing an additional premium. These reasons are mainly behind all that. Gracias.

Thank you, Ahmed. So it was an option and is an option, but that is not now our priority. We are fully prepared to list the company theoretically, all the reports, all the control mechanisms and so on we need, but now it's not our priority. We are convinced that our upstream is becoming a better upstream day after day with more production, putting Alaska in production, working on Pikka, improving our position in Venezuela. So because we are convinced that we have a better business day after day, we are not in a hurry to jump into the market. So the two partners, Repsol and EIG, we are fully aligned now in focusing the full 2026 year and months to come in improving the quality of the business. So it's an option we are prepared, but we are not going to execute this option in the coming months and in any case in 2026. Thank you.

If we go to your first question, you are right, I said that we are running at full storage capacity and so on. I said that saying that we don't have any appetite to increase in physical terms the current capacity we have because with the capacity we have, it's not only our own physical limit that we could overcome as you mentioned, looking for another potential experience in the country. But we think that we have enough product to fulfill the running process in the right way of our refineries and to cover the needs of our customers and to guarantee the security of supply of jet, diesel, and gasoline in the Spanish market. So we are comfortable and we are not looking for new storage capacity. We have invested 2.7 billion euros to guarantee this security of supply over the last six months and we are comfortable with this figure. Venezuela, I'm going to be very clear now. From the point of view of Repsol, it is not time to talk about the debt of the past. The debt is there, but we are fully aligned with the Venezuelan government commitment and we are fully aligned with the message from the American government that now is time to increase the production in Venezuela, to improve the social and economic situation of the country, to increase production, to get new revenues for the country through this increase of production in a win-win game. And I'm sure that this time these conversations will arrive in the future. But now it is not on the table, and now we are fully committed to this message of increasing the production in Venezuela. Of course, as I said before, in a financial prudent way and guaranteeing that we are not exposing more money in Venezuela, we are financing this growth with the money we are getting through the cargos we receive. This time will arrive. I think that will arrive, but now it's not on the table.

Merci. Yes, we expect a strong third quarter in the customer business because there are two, I mean July is going in a very positive way. And let me simplify, of course take it as a simplification, but this summer on top of the second quarter, we have part of the 100 million visitors coming to Spain flying, renting cars, and driving on our roads. So that is part of this strong third quarter. And you have to take into account that Canary Islands and Balearic Islands are also important destinations and you have to fly there. Secondly, you have millions of people from France, from Switzerland, from Germany, from Belgium going to Algeria and Morocco driving through the Strait of Gibraltar, but crossing and traversing the Iberian Peninsula driving a car. So that is also part of the increase in summer, and of course Spanish citizens that are also going to use the car this summer. So yes, we could expect a strong third quarter in our customer business. If we go to Alaska, I have to say that the initial phase of Koka appraisal is similar or it could be similar to Pikka with a potential extension to the south that is also there. So this south potential with the knowledge we have today, we think that it has a very good property. So we are comfortable now with the assumption that could be similar to Pikka, but again we have to take the risk of what I'm saying now, but that is our approach today. Next.

Thank you so much for your question, Matt. I'm going to be very clear about that. We are prepared for the worst. If the worst happens, Repsol is prepared to supply the Spanish economy with the products we produce. And when I say the worst, I'm saying a worsening of the situation in Hormuz. I'm not saying that is going to happen. It would be great to see a solution in the short term. But in case as a hypothesis of seeing a worsening situation in Hormuz, we are prepared for the worst. We are prepared in terms of a crude oil slate coming in 100% from the Atlantic and the Mediterranean side. We have enough storage production capacity to guarantee that all the kerosene that is going to be used in Spain in the year could be provided in the quarter. We have, of course, by Repsol, and we could have even an excess or have 30% of our production that could be used to provide kerosene to potential customers with providers that could have run out of the product. So we are prepared for the worst. We have developed a logistic, storage, and production effort for that. But I hope that what I'm saying is not going to apply, but seeing what is happening in terms of the tightness of jet fuel and so on in the European market, I'm not going to hide that I have a strong concern about the capacity we are going to have in Europe to secure this product in some countries. So I'm going to say more. We are prepared in our small dimension, of course, to cover the Spanish needs and to modestly also help some other European countries in our hinterland to supply them the products they could need to secure partially the needs they could have in case of worsening this situation.

Let me elaborate a bit more on your question about market intervention and so on. I think that now the priority of authorities in Europe and in Spain is to guarantee the security of supply. When you are talking and we are talking about the risk of not having the product that our societies could need in coming months, I want to remind that in Spain we are better than in some other European countries. We have a reinforced supply system and that is thanks to companies like Repsol, like Moe, like DP that invested hard in the refining system in Spain. In the case of Repsol, we have invested 15 billion euros in our refining system in Spain over the last 14 years. And on top of that, as I mentioned before, we have invested more than 2.7 billion euros in the last months to guarantee the supply of kerosene and diesel. I think that now is time to guarantee the supply. To guarantee the supply, you have to have the right incentive of profits, the legitimate incentive of making money. I think that is not going to happen. But if someone wants to introduce an unjustified and counterproductive extraordinary tax or something like that in the energy business, in the energy sector, this measure will undermine security of supply and will erode the competitiveness of European industry. So I think that we are the guarantee of the security of supply. It's time to guarantee the security of supply in Spain and in Europe to support the Spanish tourism system. It is not the time to attack the refining and industrial activity because if you analyze the accounting of this quarter, money is not coming from the price of oil or the price of gas. It's coming from the industrial activity. So if you attack the refining and the industrial activity that makes possible the security of supply, you are in some way paving the way to have supply problems in the short term. And let me elaborate a bit more on this concept of what some people talk about extraordinary profits and so on. If you take the net result of Repsol for the first half of 2025, this 400 million euros, and you add something that is only an accounting effect because the oil price and the impact on your inventory, that is the inventory effect of 600 million euros, plus the 200 million euros that we missed last year because the blackout, we would have had a profit in the half of 1.2 billion euros. If you take the 2.2 billion of this year and we reduce this figure by the 800 million coming from the inventory effect, which again is an accounting effect coming from the price of the asset, we are talking about 1.4 billion euros. So from 1.2 to 1.4, the net result of Repsol, if you decouple what is happening behind from year to year, improved by 15%. Is that okay? Yes, it's positive. Yes, of course. But it's not extraordinary at all. Thank you very much.