GLPEY Earnings

Operator: Good morning, ladies and gentlemen. Welcome to Galp's Third Quarter 26 Results Presentation. I will now pass the floor to Joao Goncalves Pereira, Head of Investor Relations. Joao Goncalves Pereira: Good morning, everyone, and welcome to Galp's Third Quarter 26 Q and A Session. I am joined today by our Co CEOs, Maria Joao Carioca, and Joao Marques da Silva, as well as by the remaining executive team. But before passing the mic for some quick opening remarks, let me start with our usual disclaimer. During today's session, we will be making forward looking statements that are based on our current estimates. Actual results could differ due to factors outlined in our cautionary statement within the published materials. With this, Joao Marques, the floor is yours. Joao Marques da Silva: Thank you as well, And before turning out to our quarterly performance, I would like to briefly address this morning's announcements. As disclosed, discussions with Mueve have concluded without an agreement. Throughout this process, the parties remain committed to exploring the potential benefits of combining downstream activities to create additional value for our shareholders. We continue to believe that consolidation can create opportunities to increase scale, strengthen competitiveness, and support future growth. At the same time, our confidence in the stand alone value of our downstream business has never changed. While the strategic rationale for consolidation remains compelling, value discipline will always guide our decisions. We remain open to opportunities but we only deliver them on terms that clearly create long term value for our shareholders. Turning to the quarter. Strategy execution remains firmly on track. In Brazil, the ramp up is progressing as planned. With production already reaching peak levels on several days. In Namibia, we are about to start drilling the next exploration and appraisal campaign in Mopane. These milestones reinforce the core pillar of Galp's investment case. Visible tangible growth, from our upstream portfolio. Maria, would you like to add a few words? Maria Joao Carioca: Thank you, Joao. Yes. I would, and good morning, everyone. Let me start by reinforcing Joao's message regarding this morning's announcement. Capital discipline on value accretion is simply nonnegotiable. So ultimately, the deal did not go through simply because we were unable to align on a value creating partnership. That said, Galp's investment case and capital allocation priorities remain strong and distinctive We continue to be fully confident in the standalone value of our downstream businesses, and our equity story continues to offer a quite unique combination of growth, resilience, and optionality. So this third quarter speaks precisely to the strength and resilience of our portfolio. Despite continued disruption across global energy markets, our asset base successfully captured the volatility and actually delivered another strong operational performance. This performance translated into rather robust cash generation, accommodating both the higher working capital requirements and the acquisition of the wind portfolio announced in July. Net debt remained broadly stable, and our balance sheet position was further reinforced. Following another strong quarter and updating our assumptions for the remainder of the year, we once again raised our full year guidance. We now expect EBITDA of around $5 billion and operating cash flow close to 3.9 billion. Our focus remains clear. Delivering operational excellence, executing our strategy with discipline, and maximizing value creation. With that, we are happy to take your questions. Operator, we may start the Q&A session. Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To ensure everyone has the opportunity to ask a question today, please limit yourself to just 2 questions. And now we take our first question. It comes from the line of Joshua Eliot Stone from UBS. Please go ahead. Joshua Stone: 2 questions, please. 1, you talked about your capital allocation priorities remaining unchanged. Can you just remind us, where do you see shareholder distributions fitting into that frame? And can you confirm that you are policy of 1/3 of cash flow being returned to shareholders is also unchanged? And then second, slightly smaller question, but just on the upstream operating costs. I noticed it is a bit of a step up to $4.4 a barrel unit cost. Is it fair to say that probably a normal run rate now as Bacalhau ramps up and going into the future periods. Thanks. Maria Joao Carioca: Good morning, Joshua. Thank you for the questions. So on distributions, we continue to look at our framework as a rather competitive and sustainable. We have indeed approached the topic of revisiting following a portfolio change that with this morning's announcement is no longer the case, so we do not see that as a topic on the table as of this moment. So as we stand right now, the current policy applies hence, the 1/3 of OCF is still what we have outlined at the moment. On upstream, your question on OpEx, Yes, indeed, I think this is the combination of both a slightly heavier maintenance schedule in July, so this quarter had that bit of a seasonality effect. But it is also, of course, the fact that Bacalhau is still on a ramp-up, and we still have a bit of fluctuation there. So there was still a few 1-off costs in Bacalhau as well. So all in all, not what you would call your new normal in Brazil at all. Joshua Stone: Thank you. Got it. Thank you. Operator: Thank you. And the next question today comes from the line of Alejandro Vigil from Santander. Alejandro Vigil: Yes. Good morning. Thank you for taking my questions. The first 1 is regarding those comments about that the gap is open to strategic partners If you can elaborate on that and the potential and some transactions in some other areas like renewals. So for example, you have been discussing in the past. And my second question is about the we are now almost end of the year. If you can start discussing the 2027, how you see in terms of the. Particularly of the upstream business in terms of volume if possible. Thank you. Joao Marques da Silva: Gracias. Good morning, Alejandro. So. And on the first question, it is it is clear in our DNA. How partnerships make sense for a company like us, long term partnerships. And you are you are right. We are looking with. Within our portfolio, We are looking in. Into opportunities. So this. it is something that we do on a regular basis. And it is also true that on the on the renewable side, The recent acquisitions improved scale, improved the technology mix, increasing the platform's strategic attractiveness. So it is it is clearly that we are much better prepared now. We are not, in a hurry. that is that is very clear. And at this point, also, no further inorganic acquisitions are planned. But finally, it will be always, as Maria Joao just said, a disciplined decision making. So no pressure. Steady pace, and the partnerships will make sense. Not only in renewables, but also as we spoke on the downstream. So the rationale and the endgame even on the downstream side though we do not did not find a good end to the deal. We will remain. And that is that is something that we need to keep in our mind. Thank you. Maria Joao Carioca: Alejandro, let me pick up on your 2027 question on upstream in particular. We are not yet guiding for production numbers but you can get the gist. Right? I mean, Bacalao has been evolving towards plateau quite steadily, so we do expect Bacalhau to be there throughout 2027. That as working interest for Galp means approximately 40 thousand barrels. So given that plus the fact that our remaining assets in Brazil are still holding to a rather low and actually that is best practice in the industry, a rather low depletion rate. Under 5%. TEPE has a number of initiatives that have brought us back to prior levels. So you just take current levels, give it the bump of Bacalhau, and we are not officially guiding, but I think the mathematics kinda works on a pretty straightforward manner. Alejandro Vigil: Yeah. Thank you. Thank you, Thank you. Operator: Next question today comes from Matthew Smith from Bank of America. Please go ahead. Matthew Smith: The first 1 would be around Moira, if I could. I guess you expressed quite strong confidence in completing this deal in the past and now sort of I guess, value seems to be a sticking point. Are you able to shed any further light on that the volatility of commodity prices and perhaps even political backdrops, whether it be windfall taxes or other conversations. Have they been a bit of a headwind there? Can you comment on that? And the follow on would really be, could you foresee a similar deal in the future with a different party as it relates to the downstream business? And then if I could call the second question around the commercial business. That seems to be the real standout for the quarter, usually a very steady and improving business performance there, but quite a sizable beat. So could you add any color and draw out any 1-offs, if at all relevant, please? Thank you. Joao Marques da Silva: Good morning, Matthew, and thank you for the question. Let me start. By giving a word of appreciation to the teams that have been working for the last couple of months. It was indeed a lengthy negotiation period. And as you said, we needed to come to an end, and that is what happened right now. I would not comment on any specific terms that you have mentioned. It was a combination that in the end. In the commercial terms, did not allow us to reach a sustainable and value-accretive deal. And that is that is that is all. So it was indeed a last mile, decision, but it was a very well supported decision. And let me also tell you that we are really comfortable with the quality of the assets that we hold. And it is visible on the delivery that you have just mentioned. On the commercial side, We still believe, and it is it is part of our it is part of the. Of our way to develop or to reach a partnership to segregate the commercial retail business from the industrial business. It makes all the sense and we will follow that. So on the commercial. On the on the commercial question, it is indeed a high record quarter. I need to say that >80% of the of the delivery came from outside of Portugal, namely from Spain, namely from the B2B. We were very well, performing on the on the spot markets and with the. With the opportunities that the current context pricing wise are offering to us. But let me also underline the very, very substantial performance from the convenience from the convenience side, which represents by now roughly 1/3 of the delivery. it is a very consistent pattern that we have that we deliver to the market. Let me also tell you that in the Portugal side on the Portuguese side, we have decreased 10% roughly our delivery. So the African business, the Spanish business are the levers to the to the numbers that you have just seen. Thank you. Operator: Thank you. Our next question today comes from Guilherme Levy, Morgan Stanley. Please go ahead. Guilherme Levy: Firstly, Still on Moeve and in terms of the downstream segment as a whole, would you consider restructuring that does not necessarily involve a partner? Would you consider spinning off downstream even if you are not able to scale it up first? And then secondly, in terms of longer term plans and guidance, I suppose the difficulty in the past few quarters for Galp has been the continuous restructuring or geo stocks. In. On Namibia last year, on Wave this year. Now that the talks with Wave did not advance, but, you still left the door have opened to potentially dose some more restructuring in the subsidiary in the future. How should we think about the impact that has to your ability to provide longer term guidance over the coming quarters? Thank you. Joao Marques da Silva: Thanks, Guilherme. I will take the first 1, and Maria Joao will take the second 1. it is-- I can see where you go, but it does not make too much sense for us. Not to have a partnership on the downstream considering not only the scale complementary, competitiveness, but also the deconsolidation. So that is something that it would not it would not make any sense to keep 100% of this business in a future partnership. So that is that is what we. that is how we see it. And for us, clearly, the retail play is completely different from the industrial play, which is a an investment case. Considering energy transition. We feel ourselves in a in the right direction on. In Sines. We really believe that CNS will continue to be a first year refinery, very well balanced and dimension to the Portuguese market, which is their natural market to the refinery, and the retail business, which is a clear focus on the customer side, where we live in Portugal and with the delivery that we have just mentioned are breaking, records quarter on quarter. So that is that is where we see we see ourselves very comfortable. And available to look at partnerships that will allow us to take on competitiveness on those ends. Thank you. Operator: Let me take the second part of your question. Maria Joao Carioca: So it has indeed been periods of negotiation that has entailed quite a lot of work for the teams, but quite a lot of that work has actually been helpful in the sense that it has shown us pathways towards optimizing some of our operations, towards greater efficiency in running some of our support functions. So there is quite a few lessons learned from the process that we engaged in, and we see that as something that we will continue throughout the coming years. So there is, the same lines of optimization, I believe have been with us for quite some time, but now with the benefit of having taken some learnings from the transaction. So we will continue to optimize on support functions. We will continue to look into everything that has to do with optimizing the portfolio. We have already spoken here today about renewables. We do see some catalysts for optimization there. We do know that up continues to be our growth engine, and they are also Mopane is about to go into a new stage. And we do continue to look at Brazil as promising. And even though even small opportunities can turn into interesting options. So a few catalysts there. We will continue to look into partnerships and into market structures as a way forward in our portfolio, and we will take opportunities to optimize. And we do feel that this is a way forward that has actually been to quite a few. To quite some extent, a beneficial 1. Thank you. Guilherme Levy: Thank you very much. Thank you. Operator: Next question comes from Paul Redman from BNP Paribas. Please go ahead. Paul Redman: The first 1 is just a little bit about the renewables deal. You have been through 2 big negotiations the past year and a half, Mopane and Moeve. I want to see if there is any learnings you could take from those discussions around how you think about the strategic options you have for the renewables deal? Is there anything you might have done differently in those discussions? And that could translate into any possible future options. Secondly, on refining margins, it is been very volatile. You have raised your macro scenario for the year to $25 a barrel. Can I ask what you have seen so far in Q4 to date? What you are seeing on screen today for refining margins. And then to touch on next year, this year, you are hedged. I think it was 30% of your portfolio at about $8 a barrel. Are you planning to do similar hedging next year, and what sort of price assumptions should we be using for that? Thank you very much. Joao Marques da Silva: Well, thank you for your questions. So I will follow I will follow the first well, the 2 questions. So on the first 1, it is it is clear in the learning side. What we have done and the recent acquisitions that I have just mentioned, so it is it is they. They have improved our scale. We have they have gave us a different generation profile. A different mix, and it is clear on the results. That we are much more balanced right now considering the consolidation of the 2 wind farms that we just bought. The objectives in the end will be to create additional capital flexibility. We know that. While we want to maintain our exposure, to the long term power growth that we see in the market. So that is that is very clear. Both strategic and financial partnerships are possible. No structure is excluded at this point. But it is very early now. And as I said, no further inorganic acquisitions are planned. And we will keep our discipline, not pressure whatsoever, but at a steady pace. On the on the refining margins, it is it is it is indeed a very volatile environment. We expect margins to keep on the double figures. We have seen as per today, margins going >20 and it. We are not expecting to see a reduced volatility. Edging. We use hedging selectively when the market process exceed Galp's market release. that is that is how we see it. The policy reserves those buttons, but. And then nothing to change. A few legacy hedges are still in place for 2027, slightly >15%. that is the number. And we will speak to our policy as I have mentioned. Thank you. Operator: Thank you. And the next question today comes from Kate O'Sullivan from Citi. Please go ahead. Kate O'Sullivan: So firstly, back on the downstream. Following the end of the Moeve talks will you remain active in the market now pursuing the downstream partnership? Or do you feel current environment is not optimal perhaps? And then secondly, just a question on the Rovuma LNG contingent payment. Would a Q4 FID trigger receipt of the full contingent consideration within the quarter? And can you clarify the payment lag after FID or any tax deductions that could affect net proceeds. Thanks. Joao Marques da Silva: Thanks, Kate. Good morning. I will take the first 1, and maybe as well, we will will take the second 1. So the transaction. And Maria Joao just alluded to that, was a catalyst. it is not our investment thesis. So we will continue to offer this 3 distinctive growth story to the market. We know that there is a transformation that will allow us to benefit from scale and competitiveness on the downstream side. So the transformation will keep on our side. We will be prepared to see potential transactions that we are not active right now in the market. Operator: To the second part of your question, Kate, yes, indeed. Maria Joao Carioca: If I recall correctly, this should be a 20 business day mark once we get FID. So it should it take place, within those 20 business days, it will still be in the quarter. Let's see what news we get then on that front. Kate O'Sullivan: Thank you. Thank you. Operator: Next question comes from Sassikanth Chilukuru from Jefferies. Please go ahead. Sasikanth Chilukuru: Hi, thanks for taking my questions. Now I just wanted to come back to Moeve and. Just because previously, you have highlighted the proposed satellites help Galp sharpen its focus on the upstream and the renewable side. Now if you were to retain full control of these businesses and you said you did not necessarily actively marketing it. I just wanted to understand how you think about the longer term for these businesses. How do they fit in the. How perhaps through your capital allocation priorities as well? You said it is it remains intact, but I just wanted to see if you can elaborate on what that means and even if you were to really retain this full control of these businesses, The second question was going back to the refining outlook. You talked about $20/barrel right now. Just wondering if you can provide more context on where you are seeing these high refining margins on your outlook, maybe perhaps on a product basis especially if you could talk about the diesel market now that you are seeing right now? How it is kind of shaping up. Joao Marques da Silva: Thanks, Sasi. So on the first 1, as we know, our commercial business, it is truly a cash generator. We have a leadership position in Portugal, and we feel really comfortable with the with the current situation that we have, Though there is a carve-out process that we need to keep going on that. So that is the transition That we have been dealing with for the last couple of months. And we will keep doing that to allow us to fully segregate the businesses of commercial and industrial. On the industrial front, as you know, we are in the final ramp up of the major investments that we are doing in Sines. Which means that we will be positive cash flow next year. We are in the pre commissioning phase right now with no major turnarounds planned to 2027 and within a very a very interesting environment, as you mentioned. So we have on your second question, roughly 50% of the Russian refining capacity outside of the market. So we are still observing the mid distillate in a very. Well, let's say, tight momentum, and we are benefiting from that. We need to also understand how the freights are pushing up and making additional pressure on the margins. that is why the beginning of October, we have seen some lower margins. But, at this point, we see very sustainable and fundamental to assume a double digit margin to 2027, at least the first quarter. Thank you. Sasikanth Chilukuru: Thank you. Thank you. Operator: And the next question comes from Ahmed Ben Salem from ODDO BHF. Please go ahead. Ahmed Ben Salem: Yeah. Hi. Thank you for taking my question. it is regarding the Namibia drilling program. So what are the key objectives and decision points of the upcoming Mopane drilling campaign? And when should we expect sufficiently sufficient visibility on resource and FID timing? In parallel, what level of capital exposure should we assume across Galp's Namibian portfolio over the next 2 to 3 years? And is another farm down part of the strategy. Thank you. Maria Joao Carioca: Thank you, Ahmed. So the. For Namibia, and particularly for mopane, the next stage is fundamentally 1 of E&A. So all the wells that are expected are, again, going on an objective, the hinges fundamentally on derisking the resources and making sure that we are ready to get to an optimal development concept. So we have very strong alignment with Total on this. So what we are now starting is the E&A campaign. The first Mopane 4x is going to be essentially exploratory. We will be developing the in tandem according to results. If you recall, we tapped into the Southeast end of the block, but that is 1 of the areas where we clearly see our focus, and that is the untapped area where we are going to be focusing. So all procurement is pretty much in place. We will be starting with the Southeast, looking for derisking and developing the concept. We will see how it goes should we get results that are positive and, see good pace, we may choose to drive this back to back, but that is still up for the discussion and clearly subject to our results. So let's see how it goes. And let's take 1 drill at a time. So concerning the CapEx level, you will recall that the terms of the terms of the of the carry keep us at only 25%. So again, we will see the pace depending on results and depending on whether or not we will be deploying DSPs as well. But in any case, this. At this point is something that will be carried only in 25% by Galp. A possible farm down is not something we have on the table right now. We are very focused on developing the concept and delivering first oil, and we do hold the assets as 1 that we find very positive in our portfolio, so not in the not in. Not active right now. Thank you. Operator: Thank you. Next question today comes from Ignacio Doménech from JB Capital. Ignacio Domenech: The first 1 is on the upstream business. Just wanted to get a sense on the oil discounts in the fourth quarter. What are you seeing so far? The month of October if the. This should soften a bit versus what we saw in the third quarter, particularly if the pressure on tanker rates eases. Okay? My second question is related with the shareholder distributions. So you reiterated that 1/3 of OCF. Last quarter, you already listed the cash dividend. So I was wondering on that relationship between the dividends and the buyback, how management or the board. Views that buyback, particularly at the current level of the share price. And if potentially there is other options that management may be contemplating in order to create long term value for shareholders? Thank you. Maria Joao Carioca: Thank you, Ignacio. So starting with upstream and what we see in terms of conditions. It has indeed been quite a floating quarter versus now beginning of October, but all in all, we saw a lot of what is happening with the discounts and the premiums were in our Brazilian slates very much impacted by what is been happening in terms of Asian demand. We had a pressing third quarter, but right now, we have also seen quite a rebound. So we are again back up to approximately, let's say, about $10 of premium maybe a bit above that. Well, the complex is still there, but all in all, what we see is that our Atlantic refiners are favoring a lot of these short haul routes, that is also weighing in and contributing to this rebound that we see. And we see some ability to sustain that going forward. Freight is also a very and we also saw quite some fluctuation there. We had you know, usually, we would have our freight, and we are very much on spot. So, usually, we would have our freight up to $3 to $4/barrel. We had quite a bit of a hike in October. It went all the way up to the twenties. You know the dynamics there. It has to do with how the industry is. It has also to do with the fact that Gulf is not yet stable, so there is a lot of redirecting, a lot of very different traffic and movements going on there. And that is to some extent, pressuring the fleet in general and, of course, reflecting on an operator such as ourselves that has a significant part of freight cost in spot. But all in all, we also see some fluctuations there, and we see conditions to become normalized. So all in all, the premiums in October that we have seen have been compensating by Asia and with less pressure from freight. So all in all, we are back to the to the tens in terms of premiums. In terms of distributions, you know, what I get from your question, the 1 third distribution policy encompasses the dividend So the 1-third meets the annual growth of dividend per share, which we announced in August that we would be growing at 10% per year this year, given the very good performance. So we have already paid out the first part of that 10% growth. We will be paying the next component and the remainder of that all the way up to the 1 third will be at decision by the shareholders, and we will be announcing it as results close. So at this stage, the policy holds. The final format of that payment will be, up for consideration once we have the final results. Thank you. Ignacio Domenech: Very clear. Thank you. Operator: Thank you. As a reminder, if you would like to ask a question, you will need to press 1 and 1 on your telephone keypad. And wait for your name to be announced. And the next question comes from Matthew Lofting from JPMorgan. Please go ahead. Matthew Lofting: Thanks for taking the questions. 2, please. Your commentary seems to suggest that Gale continues to see strategic partnerships as an avenue to unlock value potential, particularly downstream. When you take stock, how the perception of the merits of these structures has been conceptually influenced by the Moeve process through 2026. And if it is been enhanced under sort of better value parameters and scenarios. Just wondering how you see the way forward from here in terms of next steps to unlock that. And then secondly, you mentioned freight cost just now. it is another area of the value chain that is clearly been volatile in recent weeks and months. But if freight costs were to stay higher, could you just talk about how that impacts a business like Galp's in an aggregate sense, perhaps both upstream and downstream? Thank you. Joao Marques da Silva: Hey, Matthew. Good morning, and thank you for your question. Indeed, it was a long lengthy within the Moeve review. And of course, the number of lessons learned, namely on the on the. On the carve out. So it is. It was something very important for us. Our teams work together on the segregation from the retail business, and the industrial business. The strategic rationale is still compelling. So we really see ourselves looking forward to a transaction. But at this stage, would say that no deal is better than a bad deal. And that is that is how we see it. And we are very confident on the portfolio that we that we have. No pressure whatsoever. To have a transaction. And the future and the future partnerships needs to have the alignment, the credibility, and the transparency that we need to evolve through businesses like industrial business in Portugal, but also the commercial bit. Thank you. Maria Joao Carioca: On freight costs, we continue to operate a portfolio that has both legs to it. So these impacts are twofold in our portfolio, both in terms of refining, but also of our oil business. To some extent, there is a little bit of a natural balancing some of these pressures and we will continue to look at them as such. Now what we are also considering is options in terms of extending our midterm charters. Current circumstances are such that we will, of course, need to look at that in a very disciplined way. it is a very tight market. But we have relied fundamentally on spot tanker markets, and we feel that if pressure in the markets continues, it will be worthy an assessment towards looking at our current policy and seeing if we can get better terms and continue to weigh these 2 arms in a way that is more balanced and less risk prone. Thank you. Operator: Thank you. Next question today comes from Michele Della Vigna from Goldman Sachs. Michele Della Vigna: Thank you very much. 2 remaining questions for me. The first 1 is whether you had any clarity of how the CapEx carry in Namibia will be treated from an accounting perspective. If it ends up being net CapEx that you report, or the whole CapEx and the carry becomes a like a loan? Any clarity there will be helpful. And finally, still staying in Namibia, I was just wondering what is left to take the FID in Venus. My understanding is there are some tax negotiations going on, but any more clarity there would be very helpful. Thank you. Maria Joao Carioca: Thank you, Michele. The accounting treatment of the carry terms is not 100% closed, but in principle, the 25% of our carry will be pushed through cash flow. So take it as ongoing work, but as a reference. Concerning the FID on Venus, again, very aligned with Total. We see this as a core first development for both ourselves and for the country and for the basin. So we do see construction but it will be the first instance. So it is particularly relevant that whatever measures are possible towards reinforced visibility are taken from both parties. So there are. it is clearly in finalized talks. Let's hope that it evolves. It is our expectation that it now comes together and closes soon. In any case, EPC providers have been selected, so the conditions for, continued and for offers towards continued sound economics are still there. So, constructive, complex, but, we are really hoping on this being done and these finalizing talks and for soon closure soon. Thank you. Michele Della Vigna: Thank you. Thank you. Operator: Next question today comes from James Carmichael from Berenberg. Please go ahead. Analyst: Hi. Morning, guys. Yes. A couple left. From myself. Just on I guess in the midstream commentary, you referenced legacy sourcing contracts. In Africa as being a contributor to the strong results I was wondering if you could sort of remind us on flexibility that gives you and what sort of any sort of numbers around the impact of those contracts. And then just looking at the price lag effect in the oil products business, it seems a bit less obvious in Q3 than it was in Q1. I am just wondering if you are able to mitigate it or if it is just a bit masked because of the strength in the underlying performance in that segment. Thanks. Joao Marques da Silva: Thank you, James. I will take the first 1. Indeed, the African volumes together with some additional cargoes and some additional volumes that we have delivered in the in the Iberian market. Allowed us to increase our results, on the on the midstream. it is also important also to finalize that the Venture Global contract represents additional cargoes from the U.S. So that is also an important factor to leverage the results in the quarter. And on the 9-month up to now, And of course, we are looking into flexibility, additional flexibility, and we will not underestimate the opportunity even to renegotiate additional volumes from the African countries. So that is that is something that we believe we can do along the side of the number of years 20 years now that we have we have been with the. With these parties. So that is that is a reference that we should also take with us. Thank you. Maria Joao Carioca: James, let me pick up on the on the price lag effect. So indeed, only an accounting effect, not cash. So as I am sure you are aware. No major changes. So we do have accounting mismatches between how we price sales versus how we price the cost of those sales, but, we have gone through the. Some of those effects already in the first quarter. And at this moment, we are eroding some of those effects and now continuing to experience them as the market continues to have significant volatilities, but nothing major there. No changes in those accounting effects. And as you well put it, a little bit of it has been, to some extent, being absorbed by the business and by the natural, good performance of the business. So nothing striking there. Thank you. Analyst: Thank you. Thank you. Operator: We will now take our last question. Last question today is from Naisheng Cui from Barclays. Naisheng Cui: Hi. Good morning, everyone. Thanks for taking my questions. My first question is on the full year refining margin guidance. Around $25 per barrel. If my math is right, the new guidance implies more than $30/barrel margin for Q4. I wonder if you could share some assumption there please, just for Q4, including some shaping cost levels. Thank you. And then my second question is on Brazil. Given your significant Brazil exposure, I wonder, has anything changed in how you assess the fiscal and the regulatory risk when allocating the incremental capital to Brazil versus other parts of the portfolio? Thank you. Maria Joao Carioca: Thank you, Naisheng. So not much to be said in terms of full year refining margin. It has been a bumpy ride, but now what we are fundamentally looking is at forward. So we do see some rebounds and as you well put it, it is been a year with quite some fluctuations, but we see that within the performance that we have been achieving so far. So we should have comfortable numbers throughout the end of the year as the third quarter has demonstrated. So on Brazil, long term. Right? So we have been in Brazil throughout many different stages in their political panorama. We do not comment on any political or electoral results. We continue to have open dialogues with all the relevant authorities, both within the industry context and with our partners. We believe that Brazil is very much aware of the fact that continued investment will be critical to develop its resources. So open dialogue on the impact of fiscal stability and clear rules towards management of international investment are, of course, differential, and we seek those out. But in any case, we have been through many different stages in Brazil. We see ourselves as being in Brazil for the long term. We have positive relationships and have always been able to engage in productive dialogue. So we will continue to do so and are confident that it will continue to be a powerful growth engine for us. Thank you. Naisheng Cui: Thank you. Thank you. Operator: And this concludes today's conference call. Thank you all for participating and you may now disconnect.