Hello and welcome to the Repsol's third quarter 2026 results conference call. Today's conference will be conducted by Mr. Josu Jon Imaz, CEO, and a brief introduction will be given by Mr. Pablo Bannatyne, Head of Investor Relations. I will now like to hand the call over to Mr. Bannatyne. Sir, you may begin.

Thank you, Operator, and good morning to everyone joining us today. Welcome to Repsol's third quarter 2026 results presentation. Today's conference call will be hosted by Josu Jon Imaz, our chief executive officer, with other members of the executive team joining us as well. At the end of the presentation, we will be available for a Q&A session. Before we begin, let me remind you that during this presentation, we may make forward-looking statements based on estimates. Actual results may differ materially depending on a number of factors, as indicated in our disclaimer. With that, I will hand the conference call over to Josu Jon.

Thank you, Pablo. Good morning and welcome to everyone. And let me say that before we begin, I would like to extend our deepest condolences on behalf of everyone at Repsol to the families and loved ones of those who lost their lives in yesterday's tragic train accident in Spain. Our thoughts are today also with those who were injured and with everyone affected by this tragedy during this very difficult time. It's not the best day to enter in this kind of messages, but I mean, it's also our duty to go into the key messages impacting in the third quarter of Repsol. So going back to what is the aim of today's speech, let me say that Repsol delivered a very strong set of results on cash flow generation in the third quarter of 2026, underpinned by high refining margins A robust contribution from trading and discipline execution across all business divisions. Market conditions were, again, extremely volatile over the quarter, reflecting ongoing geopolitical tensions and elevated levels of uncertainty. Operations at our industrial assets remain stable, allowing us to ensure continuity of supply to our customers in an exceptionally tight middle-district market. The complexity of the current scenario continues to underscore the critical role of energy security and a diversified energy mix for our economies. The commodity environment remains highly supportive, driven by stronger refining margins and oil prices averaging close to $100 per barrel. In addition, volatility generated significant opportunities for trading, while resilient demand in Spain continues to support the performance of our commercial businesses. built on Aldidin multi-energy proposal. In this context, Repsol continues to deliver on its strategic commitments while capturing favorable market conditions supported by disciplined capital allocation, reliable operations, and the successful delivery of growth projects. Looking ahead, the refining outlook remains positive, even assuming a normalization of the situation innermost driven by the necessity to replenish inventories Restore disrupted refining capacity and complete deferred maintenance. Turning to the results, third quarter adjusted net income was 2.7 billion euros, roughly a 2 billion euros increase over the same period in 2025, with the industrial division as the main contributor. Cash flow from operations amounted to 3.5 billion euros in the quarter, a 2.3 billion increase year on year. Cumulative operating cash flow to September stood at 6.5 billion euros, already exceeding our initial estimate for the full year. Working capital was mostly driven by higher inventory levels in refining and trading, reflecting higher prices and a strong focus on security of supply to ensure the availability of diesel and jet fuel across Spain and what would be defined in some way as our natural hinterland. Net debt stood at 2 billion euros at the end of the quarter, a 1.6 billion reduction compared to June, driven by a strong cash flow generation. The giving ratio stood at 6.2% as of the end of September. Shareholder remuneration delivered in the quarter remained aligned with our distribution framework. The second dividend of the year was paid in July, bringing the total dividend in 2020 26 to 1.051 euros per share, approximately an 8% increase compared to 2025. And regarding share buybacks, the capital reduction associated with the second 500 million euros program was executed this week on Monday, bringing total year to date buybacks to 850 million through the redemption of 33.1 million shares. Furthermore, to deliver on our strategic cash flow from operation distribution commitment, this morning we announced our third 950 million euro share buyback program to be executed by year end. As a result, total buybacks executed in 2026 will reach 1.8 billion bringing total shareholder remuneration to 3 billion euros which will place distributions at the lower end of the committed range. Regarding the evolution of the main macro indicators in the quarter, starting with oil, Brent crude averaged $97 per barrel, 7% below the previous quarter, but 40% above the same period in 2025. In gas, every half averaged $3 per million BTU, 3% higher quarter on quarter, and 3% below the same quarter a year ago. In Europe, main price references continue to stress them, reflecting a tight gas inventory situation on the continent. The refining margin indicator averaged $36 per barrel, a $22 increase over the second quarter, and $27 higher than in the third quarter of 2025. Finally, at the exchange rate, the US dollar remained stable against the euro at an average of 1.15. Continuing with upstream performance, our focus remains on the successful execution of our development pipeline, maximizing value in Venezuela, and further optimizing the portfolio. Third quarter adjusted net income was 415 million euros, a 93% increase year-on-year, supported by stronger oil and gas price realizations, higher volumes, and a greater contribution from equity affiliates. Production averaged 574,000 barrels equivalent per day, a solid 4% increase year-on-year driven by the ramp-up of PICA, the contribution of Leon Castile, and higher volumes in unconventionals and in Libya. Excluding organic transactions, production increased 5% year-on-year. The average production in the first nine months of 2026 was 557,000 barrels per day, Production has averaged 590,000 barrels per day in October, with daily volumes exceeding 600,000 barrels a day on multiple occasions quarter to date. In Alaska, the PICA project contributed an average of around 10,000 net barrels per day to third quarter volumes. Phase one continuous production operations commenced, was launched in June. reaching 69,000 gross barrels per day at the end of September, nearing its plateau of 80,000 gross barrels per day. We continue working in increasing production through the bottlenecking and preparing the phase two FID. The second phase is expected to add a further 40,000 gross barrels per day of production by 2030. In the horseshoe unit, we plan to apprise the stirrup discovery during the upcoming winter exploration campaign. Going on with Libya, third quarter production averaged 45,000 net barrels of oil per day, a 12% increase year on year, driven by better field performance and positive contractual effects. In Brazil, the development of raya is progressing well, with two of the six development wells already complete with significant time and cost savings, increasing our confidence in delivering first oil on a schedule and within budget. In Venezuela, production averaged 72,000 barrels per day in the third quarter, and our priorities remain firmly centered on monetizing current production and increasing volumes investing in that country. In problem four, we aim to increase production from the current 580 million gross cubic feet per day to 645 in the first quarter of 2028. Of the five cargoes to be received by Repsol in 2026 as payment for gas production, three have been monetized and the remaining two are already committed. At the J.B. Petrochiriquide, we have made solid progress since assuming Operatorship in April, including the award of a significant proportion of the contracts required to increase light crude oil production. Lastly, at Peso Carabobo, we are also making progress towards having a productive participation contract in place by year end, in line with the agreement reached with the country's Minister of Hydrocarbons. This heavy crude oil asset offers the greatest upside potential because it's a greenfield nature and subject to the appropriate conditions being in place could make, from my point of view, a substantial contribution to the country's production growth. Continuing now with the industrial division, adjusted net income was 2 billion euros, 1.7 billion higher than in the same quarter a year ago. Results benefit from stronger contributions in refining liquids and gas trading. and from the operations we have in Peru. Compared to the previous quarter, the refining business benefits from a better margin environment driven by higher middle distillate and gasoline spreads, wider heavy to light crude differentials and higher utilizations. These improvements were partially offset by a negative price lag effect. You perfectly know because I explained that last quarter, the jet effect when jet prices is rising, and the premium generated over the indicator was $10 per barrel, in line with the previous quarter, bringing the current realized CCS margin to around $46. Utilization of distillation capacity was 81%, while conversion units, that is our main driver, operated at 98%. Crude processing continues to be negatively impacted by the reduced availability of Cartagena Topin III unit that is expected to restart the normal operations in the fourth quarter. Our remaining refinery maintenance schedule for 2026 doesn't include major turnarounds in our facilities, and all that is going to allow us to run at full conversion capacity until year end. At the beginning of October, the refinery margin indicator was and the potential emergency stock releases. Since then, the indicator has recovered to around 44-45 dollars per barrel, bringing month-to-date average to around 18-19 dollars per barrel. Turning to the trading businesses, the solid third quarter results reflected Our ability to capture the optionality embedded in such a high volatile market, excluding the working capital bill, crude and gas trading activities generated 1.1 billion euros of cash flow from operations in the first nine months of 2026, a 153% increase over 2025. The spike of a threat costs creates a material opportunity for trading through fleet management. Lastly, in chemicals, performance was negatively impacted by lower prices, sales, and utilizations reflecting a weaker market. The petrochemical margin indicator averaged 387 euros per ton, 32% below the second quarter. The CNES expansion project is expected to commence operations in November, improving the earnings contribution of the chemical business with a strong focus on differentiation and specialties. Continuing now with customer, adjusted net income was 244 million euros, 4% increase over the same quarter in 2025. Performance was driven by a higher contribution from lubricants, asphalt, aviation, and specialty business. Cash flow from operations remained strong at 511 million euros in the quarter, representing a 32% increase compared to the same quarter last year. Demand in Spain has proven resilient through the current price environment supported by the mitigation measures adopted by the Spanish government, the record tourism activity this quarter, population growth, and higher sales across our hinterland. The aviation segment continues to benefit from solid demand, with the Spanish market growing by 4% year-on-year, In mobility, sales of transport fuels at our service stations were broadly in line with the same period last year. Including wholesale, volumes were 8% above the third quarter of 2025, and the non-oil contribution margin grew by 6% year-on-year. The business continues to reflect the customer support initiatives introduced by Repsol on the 21st of March. These measures deliver approximately 30 million euros in discounts to professional and retail customers in the quarter for an accumulated 80 million euros to September since their implementation. Reinforcing our customer value proposition price environment as we are in power and gas retail customer activity and commercial performance remain solid. Our customer base reached 3.4 million as of the end of the quarter. This figure represents a 60% growth year on year. Finally, our digital client base through our wallet app reached 12 million at the end of September. This figure is a 15% increase over the third quarter in 2025. and that is supported by this ambitious multi-energy offering built, as I mentioned before, around the WILET application. Turning to the low carbon generation adjusted net income was 37 million euros, a 48% increase year on year, thanks to higher contribution from renewable generation and also the contribution of combined cycles. The average full price in Spain was 122 euros per megawatt hour, 84% higher year-on-year. Persistent intraday volatility drove record margins in pump storage hydro generation, so a while, which stood 82% higher compared to the third quarter in 2025. Rapsol's total power generation reached 3.9 terawatt hour, an 18% increase compared to the third quarter of last year, 2025. Wind and solar production amounted to 2.5 kWh, 31% higher year-on-year. At the same time, the company continues to lay the foundations for future growth in Spain, the US, and Italy. In the US, we recently took the final investment decision on the Reiter Station solar project that is located in the state of Ohio, which will add 269 MW to our portfolio. We currently have close to 1.4 gigawatts of wind plus solar capacity under construction, all with FID taken in this country, distributed in four different projects. Looking ahead, the business continues to focus on consolidating its self-funding position. You can see that in the figures of this quarter or previous quarter. and for full year 2026 we anticipate a positive free cash flow supported by active portfolio management. Moving now briefly to a summary of the financial results. In this slide you may find an overview of all the figures I mentioned and all the figures covered today. For further details, of course, I encourage you to refer to the complete set of documents that were released this morning. At this point, let me review. Our outlook to the end of the year. During 2026, we have continued to deliver on our strategic priorities based on a competitive shareholder remuneration, a solid financial position and capital discipline. For the full year, upstream production is expected to average between 560,000 to 570,000 barrels per day in line with our initial guidance. Net capex is expected to remain at between 2.5 and 3 billion euros by year end. The company is actively managing cost pressures to preserve the value and returns of its investments. Under the current commodity price context and a fourth quarter refining margin indicator of around 22, 23 dollars plus a figure that could be close to eight dollars per barrel as a premium, We expect to generate between 9 to 9.5 billion euros of cash flow from operations in full year 2026 and with 3 billion euros of shareholder remuneration through dividends and buybacks we expect to be at the lower end of our cash flow distribution range. Let me underline that this reflects a prudent approach given the uncertainty of the current environment While still, I think that we are delivering attractive shareholder returns that are supported by strong cash generation. To conclude, eight months into the execution of our strategic update, we presented, remember, the Capital Market Day in March, we continue to deliver against our key priorities, supporting, better said, our key priorities, all that is based and supported by a strong business momentum. A solid operational performance across all divisions of the company. The strength and resiliency of our industrial model built on flexible tier one refining assets, advantage positioning and diversified sourcing capabilities has allowed us to ensure continuity of supply. That's important for the Spanish economy and we are fully focused on ensuring the security of supply in our Natural Hinterland, while capturing value across the portfolio. Moreover, we are on track to deliver on our targeted profitable production growth based on new projects coming on stream and with the US as one of the main contributors. And a better than expected macro scenario combined with this solid operational performance has allowed us to increase our cash flow for an operational expectation for 2026 by around 60%. In line with our capital allocation framework, we are deploying this additional cash to support higher shareholder distributions and reinforce our financial position while delivering on our investment plan. Our stronger balance sheet enhances our resiliency against fluctuations in the current scenario while preserving flexibility to capture potential attractive growth opportunities. With this, I will turn it over to Pablo as we move on to the Q&A. Thank you very much.

Thank you, Josu Jon. Before opening the Q&A, I will kindly ask participants to limit yourself to a maximum of two questions. If time permits, we will try to cover more in a second round. To begin, I would like the operator to remind us of the process to ask a question. Please, go ahead.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Thank you, operator. Let's get started. Our first question comes from Alistair Seim at Citi. Please, Alistair, go ahead with your question.

Yeah, thanks, Pablo. Hi, Josu Jon. I really just had one question, and it was to try and get an update on how you're thinking about the upstream capital exercise. Obviously, the agreement you have with the private equity shareholder, I think, took us to sort of earlier this year. And I'm just interested in your thoughts about how you think the market is positioned for that transaction currently. Thank you.

Thank you, Alastair. I mean, I think that we have a full alignment. Repsol, our partner of EIG, our shareholder of the EMP vehicle, about what to do now. I mean, I'm not the right person to talk on behalf of EIG, but I mean, we have a very close contact, a very close collaboration. And I could say that first, we are fully aligned. We are comfortable with the vehicle. We are convinced that this vehicle is improving its performance on the portfolio day after day. And we are now fully focused on extracting value from Alaska, where in coming days, the first days of November, as the operator Santos expressed, we are going to achieve in a stable way the 80,000 barrels a day gross production. You know that we also have in Alaska, we are taking all this information from the new wells and so on and production to feed the engineering of the feed process that is going to allow us over the year 2027 to have a full preparation for the next second phase, the FID of the second phase of PICA. On top we have the results with performance from Cuoca, the stirrup appraisal I mentioned before in the Horseshoe area. I mean, we are creating value in Alaska. We have the opportunity of Venezuela where we are fully supported by the Venezuelan government and fully supported by the American administration. We are doing pretty well in terms of preparing the increase of gas uh production uh growing and having i mean all the work over we have to do uh to to grow in the in the light oil production in petroglyph giving all the steps to prepare the the all the contracts on the the the full project in the petro carabobo area so we are convinced that we are Thank you very much.

Thank you Alistair. Our next question comes from Viraz Brocataria at RBC. Please Viraz, go ahead with your question.

Hi, thanks for taking my question. I just had one on refining and one on distributions. On refining, it's obviously an exceptional environment and there's a growing disconnect between the indicator and the realized margin. So could we just talk about one aspect in particular there and that's and that's the spot freight. Can you talk about your actual exposure to that within the refining segment? And then just one clarification on refining. In your initial remarks, I think you said $44 to $45 indicator. I wasn't sure if you meant 24 to 25 or there was some misstep there. Just some clarification on that. And then on the distribution front, X leases, you're now in a net cash position and obviously that will improve further into year end. How should we think about where you want to be on the payout ratio for 2027? Should we expect you to be at the higher end because you're sitting on excess cash or would you expect to keep building on that cash on the balance sheet? Thank you.

First of all, Viraj and all the people listening in the conference, sorry because now I'm checking that I had a mistake when I was relating the third quarter performance. I mean, the real figures in October about the refunding margin are 18, 19 dollars per barrel as average in October and 24-25 today. So I'm growing. So sorry, because it seems to me that your 44-45 perhaps was my mistake trying to express 24-25. So first, sorry, in order to clarify. And again, the expectation we have for the whole fourth quarter, including refining margin plus premium, is at around $30 a barrel, 3-0. So again, Sorry for this mistake in such a sensitive figure. Going to your question about what is happening with exposed freights, I mean, it's true that the crude freight cost in average over the last month, years, has been at around $1, $1.5, $2 a barrel. And what we are experiencing in this October is completely exceptional. The freight rates rose sharply in October, reaching about $30 a barrel cost at the beginning of October, comparing with this $2 a barrel I mentioned for the whole year 2025, for instance. And these rates are expected to decline from the second half of October. And we estimate an average monthly increase for October of about $10 a barrel. So figures are there. What is the impact of these spot freights and this freight cost on our margins? So there is An impact on both IMC, the refining margin, and the CCS margin, including the premiums. The key difference is timing. The refining margin, the IMC, is reflecting current market conditions. For that reason, in the first half of October, the refining margin was lower than in September. For that reason, I said that the average for the whole month could be at around $18, $19 a barrel and is now growing, being $24 a barrel, roughly speaking, today. But the fact, because the CCS production margin reflects the freight cost for the crew that was bought 1 or 1.5 months before, There is a positive effect on the premium. So probably for the whole October, the positive effect on the premium coming from this freight rates cost could be at around $7, $8 a barrel. So again, probably in three, four weeks, this effect is going to disappear, both eliminating this lag effect Both figures are going to go on in previous terms with these differences of $6, $7, $8, $9 a barrel. But what we are going to see in October is a lower refining margin. I mean, the figure I mentioned before is reflecting this effect and a higher premium coming from this lagging effect related to freight costs. Going to distribution, I mean, the 2026 distribution is totally fine. 3 billion euros. That is, roughly speaking, 10% of the market cap of the company. We think that is very attractive. It's within the 30-40% of cash flow from operation. It's a figure, 950 million euros. I mean, it's a significant figure that we could We can execute without any problem from now on before the end of the year. And I mean, all in all, taking into account the execution capacity we have, taking into account the volume of figures, taking into account also the reinforcing the balance sheet of the company and so on, we took the decision of being in the lower part of the range, 30-40% redefined in our Capital Market Day. On top of that, we are increasing the dividend cash we are going to pay in January. What is the rationale of that? Again, for me, it's written on a stone what we define the Capital Market Day. If we take the figures of the Capital Market Day and we take the forecast of the total redemption of shares over this year, I mean, I have to approximate the figure. Of course, that is not a commitment because that is going to depend and many more. Thank you very much. The total amount is going to be increasing at 3% plus the reduction of shares over the year. We could estimate, again, it's an estimation, a dividend, cash dividend in 2027 of 1.15, roughly speaking, of euros per share. I mean, if we take this figure as an approximation, we are comfortable paying 56 cents of euro in January, and 59 in July. So for that reason, we are increasing in three cents this estimation for the cash dividend for the year. And again, I mean, we are fully committed with this 30, 40% of distribution for our shareholders taking into account the cash flow of operation. I mean, and let me say that a stronger cash generation doesn't automatically justify. Thank you.

Thank you very much, Viras. Our next question comes from Nasqui at Barclays. Please, Nas, go ahead with your question.

Hi, good morning, everyone. Thanks for taking my questions. I have two, please. The first one is I understand that you have pushed back some of the refinery maintenance. I wonder if you could update us on the latest planned maintenance schedule, please, kind of probably from Q4 into Q2 next year. and also I know some of your peers have moved very quickly into Venezuela. I wonder if you could give us an update about your future plan there and also any update on the recoverability of your receivables position. Thank you.

Thank you, Nash. So, first, I want to express in at least a clear way We are going to fulfill the full program we had in our budget for the maintenance of our refineries in 2026. We are not delaying or passing any turnaround activity to 2027. That's important. If we go to the fourth quarter, I have to say that we had the catalyst reposition or change in Cartagena's hydrocracker that was forecast In April, May, and we decided to delay to September, the end of September. So it was a turnaround period to change the catalyst that was executed in 18 days, 19 days, rather speaking, that was over some days ago. So it's the only thing impacted in Cartagena this quarter. And what also we have at the end of this year, this quarter, is program maintenance for Puerto Llano, that is going to impact enough part of the conversion. I mean, it's the vacuum, the mild, and the FCC. It's not impacting the cocker. So that is everything we have for this quarter. Going to 2027, I'm talking about refining because, I mean, the chemical side, we have the cracker of Tarragona and so on, but that is chemical business, nothing to do with refining and refining margins. What we have for next year, I mean, the most important The next turnaround maintenance activity in 2027 is going to be the conversion of Cartagena in the last quarter of the year, so the fourth quarter of 2027. In the midst, we don't have any significant maintenance activity. Of course, there are always, I don't know, hydro-desulfuration units, a piece breaker, things like that that are not impacting in the Neither in the conversion activity, nor in the premium, we are capturing. So, thank you. Going to Venezuela. I mean, Nash, first, the situation in Venezuela has improved, clearly compared with seven months ago. I mean, the priority now, of course, for Repsol is to contribute, to consolidate this progress and strengthen the social stability of the country. and supporting the economic development. So increasing production is going to be important. I mean, increasing production means increasing tax collection and improving the quality and the life in the country. We are fully committed on that as responsible operator. Today, our fully focus is first to be paid. And I have to say that PDVSA is respecting in a full way this approach. I mean, every... A cubic feet of gas we produce is paid through the cargo program we have had over this year, including an additional cargo to finance the investment in Cardon to increase from 580 cubic feet per day to 645 that is going to be in operation by the first quarter of 2020. All that has been delivered by PDVSA. And when we go to Petro Quiriquire, I have to say that PDVSA is also fully delivering the commitments they have. That means that we have an agreement after paying the royalties. All that has to be paid through a program using heavy oil cargos. I mean, they are delivering about this commitment and we are using these proceeds, this cash in, to invest and to increase the production in petro-curriculum. So we are in a win-win strategy, growing, using the cash coming from Venezuela to invest in the country, to improve the situation in the country, and to increase the production. On top of that, we are in the last steps of the negotiation of the contract, where we are going to have a relevant role in petro-carabobo in the Orinoco's faja, in the Orinoco area, where that is a greenfield project we are going to grow in a significant way. Before the end of the year, you are going to have relevant news about this commitment and this activity of Repsol. And let me say that thanks to this production, Petrocara Bobo, we are talking about a plateau at the end of the road that could be at around 210 1,000 barrels a day, gross production, where Repsol is going to have a stake at around one-third of the total stake of Petro Carabobo. So that is material, is oil. And let me say that I'm comfortable with the commitment I took as CEO of Repsol at the beginning of this new positive journey for Venezuela, when I said that in one year We were going to be able to increase in a 50% the oil production in Venezuela, multiplying by three each figure in three years. We are fully focused on that and fully prepared to deliver the commitment I took in January in the White House. Thank you.

Thank you, Jostro. Very helpful. Thank you very much, Nash. Our next question comes from Michele de la Viña at Goldman Sachs. Please, Michele, go ahead with your question.

Thank you and congratulations on an exceptional quarter. Two questions, if I may. The first one, I wanted to come back briefly to freight rates and I was wondering if you could help us understand for all of your crude tanker needs How much of that is effectively guaranteed under long-term rates versus spot? And if you have long-term rates, whether the benefit of that would be reflected in your refining margins or should be considered instead as trading profits on top? And then secondly, it's probably not too material, but I just was wondering, relating back to the Cartagena fire that you suffered earlier on, whether you expect insurance payments from there and how material those could be. Thank you.

Thank you, Michele, thank you very much. I mean, first, going to the thread rates, let me first elaborate that if we take the two phases of the coin, heavy products, including oil, and light products, diesel, kerosene and so on. I mean, for Repsol, because we are selling the main, high main part of our production in the Spanish market, so we don't need any kind of freight or we don't have freight costs associated to our product. I mean, there are some tiny amounts, I don't know, diesel from going from Cartagena to La Vega in Marseille and things like that. But we are selling by pipe in our own country. So we have to look only to one or look at one part of the coin that is the supply of crude oil. If we go to the fleet needs, roughly speaking, one third of the needs of the crude oil and the products we are moving is supported by our own fleet through and so on. And two-thirds could be related to the spot. In some way, these long-term positions we have, including also trading, are supporting an additional income in our trading activity, where we are managing from our trading business the fleet of Repsol. As of today, If we take the whole cash flow from operation of trading over these nine months, 150 million euros, roughly speaking, are linked to this freight activity. So a positive impact on trading. But if we take, and that is not cash in, it's not reflected in the cash flow from operation, if we take the whole nine months in mark to market position, we could have a potential benefit of 400 I think that, broadly speaking, your first question was answered, Michele. Going to the Cartagena fire, yeah, I mean, let me, I mean, till the end of the road, Not delivering and expressing all the figures, but I could say that most of the cost, and when I say cost, in the broadest meaning of the cost or lack of opportunity, is going to be covered by the insurance contracts and policies we have in place. So most of them, they are going to be fully covered. Michele, thank you. Thank you.

Thank you very much, Michele. Our next question comes from Sasi Khan Chirikuru at G-Fresh. Please, Sasi, go ahead with your question.

Hi. Thanks for taking my questions. I had two, please. The first was on capital allocation. The balance sheet is decreasing materially now at 6% and going towards potentially a net cash. I was just wondering in this scenario how the priorities of capital allocation priorities were changing versus our CAPEX M&A distribution upgrades or perhaps letting the balance sheet even go down further in that context. I just wanted to hear your views on that. The second one was on working capital. How should we think about working capital going forward? How much of the 2.4 billion euros outflow so far this year, how much of that was related to price and how much of that now was related to perhaps additional stocks for the security of supply?

Thank you Sashi. I mean going to your first question, I mean we are going to follow The roadmap and the journey that was defined in the capital market day. And you are right, we have a small giving rate that is even smaller if we eliminate the impact of leases. In that case, we have a negative debt, so a positive We are not going to change this priority. We are going to be fully focused on delivering on our commitments with our shareholders. Cash dividend growth plus the share buyback for next year. Reinforcing the balance sheet means that we don't want to be pro-cyclical. I mean, it's not now the best time to invest in assets that are at the top of the cycle. I want to be crystal clear about that. Our organization, and I know that that could be strange, but it's now fully focused in containing cost, in efficiencies, trying to reduce our management processes, reducing the cost of the company, because I think that having So, we are entering in a complex macro environment scenario. I don't know what is going to happen because of course I don't have a crystal ball, but let me say that when we see high inflation in our economy tightening, Thank you very much. We repurchased 250 million euros of the hybrid that is going to be mature in 2028. We also have a senior bond, 500 million euros that is going to expire this quarter. We are not going to refinance this bond. I mean, we are optimizing the financial structure for the company. We are improving our balance sheet. We are reducing our costs. And saying that, of course, in this capital allocation policy, I mean, we have to move the tune in some things. For instance, going to the investments, the 950 million that were announced in our capital market day. Today, I don't have any incentive, any necessity to push in this direction. Of course, we could. Thank you very much. In Norway, where we could accelerate an additional infill well. We are accelerating our activity in the Gulf of America. In the Sapinua, we are also accelerating our well there. Alaska, I mentioned before. In the industrial side, we are analyzing the potential acceleration A second, a Coruña retrofit with 1.2, roughly speaking, million tons a year capacity. A half will be SAF and a half will be HVO. That is going to help us to cover the market positions we have to cover the European mandates in terms of renewable fuels and so on. In the customer side, We go on, as you could say, growing in the power and gas retail activity in the Iberian Peninsula. We are targeting mobility expansion in our own hinterland. So, I mean, we have a lot of opportunities in our portfolio in the low carbon generation. We are trying to finish the process before the decision investment we could take in the storage capacity in the Iberian Peninsula to take opportunity of these low prices we are seeing in the renewable energy over the central hours of the day. For instance, here we have in mind the pump storage expansion of Aguayo without one gigawatt of capacity, hybridization of projects in the renewable side and so on. So, let me say, we are going to be very selective in the organic, We are not going to enter in millions of euros. We are going to be selective, anti-cyclical, and trying to maximize return. I mean, I prefer to be unbalanced towards protecting the balance sheet of the company than entering in a dynamic of acquisitions because we have cash in our hands and with the risk of being

Thank you very much, Sassi. Our next question comes from James Carmichael at Betabank. Please, James, go ahead with your question.

Hi. Morning, guys. Thanks for taking my questions. Just a couple. I was just thinking about product markets generally. If we go back to Q2, you mentioned that diesel, jet and gasoline supply could become a real issue for Europe in the coming months. Just wondering how you view that now heading into winter and if there's any particular areas of tightness that you see. And then just on the chemicals business, it's had one decent quarter in Q2, but otherwise doesn't really seem to be. Improving materially, maybe some obvious reasons for that, but just interested in your sort of view on the chems business and the outlook there. Thanks.

Sorry, before, thank you, James, for going to your question. Sashi, sorry, you asked me about the working capital. I mean, we don't have, let me say, any physical capacity to increase our storage in these circumstances. So at all, at the same price level, you could expect the same working capital at the end of the year and this 3.7 billion euros of increase over the year 2.4 could be related rather speaking to prices so I mean in case of seeing in coming one two years prices go down of course that is going to be a cash in and 1.3 1.4 1.1 1.5 could be related to Storage, so inventories, and activity. That's, rather speaking, the 3.7% of increase we have had over the year. So, sorry, 1.2% price. Sorry, I made a mistake. 1.2% price and 2.4% was inventories and activity. So, and Sachi, that is explaining the working capital and what will happen with the working capital. So again, two-thirds. is inventories and activity and one third is price. James, going to your question, what we have seen, I mean, diesel has been a real issue in Europe this summer. And I'm not going to describe some European countries, but I mean, I have seen driving across Europe this summer. Some difficulties in some service stations in some European countries. So that is a real concern. Market, the tightness of the market, it seems to me that is also to be related to some other factors. First, the temperature in winter in Europe, a colder winter means first more gas hole to hit. I have some concern related to the tightness of diesel in Europe in coming months. We have to take into account that Many countries, OCD countries, they are releasing strategic reserves of diesel and all that is helping to overcome the current situation. Saying that, going to the Spanish economy, because the refining capacity we have and because we don't have any problem to get the supply to feed our refineries with oil, We are fully comfortable with the capacity we have to provide all the diesel and the kerosene that the Spanish economy needs and is going to need in coming months. But let me say this concern about Europe is not only mine. Yesterday, I think that there was a very interesting statement coming from European Commissioner Jorgensen that I fully support and Repsol was present in that meeting. Saying that crises are also opportunities and we have to look at the future of the refining sector in Europe. Jorgensen said that refining is strategic and diesel and jet fuel are essential for mobility and for the broader economy. And they said more because the defense commissioner joined that statement. I mean, that is also very important for defense. So we have to create an environmental support I think that refining is crucial for that because the concern is there and the tightness is there. The European Commission is taking positive measures from my point of view to build a better European refining business for the whole continent, but that is reflecting that the problem is there. And let me only add that in Spain we are more comfortable because we invested some years ago in a strong business and that is going to guarantee not only what the Spanish economy needs but also what the Spanish tourism sector that you know that accounts for 12-13% of the total Spanish GDP needs in terms of jet for aviation and so on.

Going to the chemical business.

So first, the quarter. The quarter is impacted after a positive second quarter, as you mentioned, James, by two effects. First, growing costs. I mean, NAFTA and natural gas to feed the crackers and the difficulty to translate these prices in international markets for customers. So a lowering of margins. Second effect. We have an additional 20 million euros cost this quarter because we were in all the preparation phase of the Cracker of Sinus to start the new derivative activity from November on. So you know that after these ups and downs over years, Put in an operation and commissioning a cracker is not an easy task. So 20 million OPEX more this quarter because this activity. I have my full commitment about what I said, even in this acid international margins scenario. I mean, to put the chemical business of the company this year with a positive EBITDA, The EBITDAs of today is 58 million euros. It seems to me we could expect something close to 70, 80 million euros positive for the whole year and having a positive result, a positive EBIT in 2027. All that is not only efficiencies, is the expansion of CNES that is going to add even this depressed scenario, 80, 90 million euros of new EBITDA in 2027 is the new the reactor of OPCM in Tarragona that is also adding and contributing with 10 million euros the BIDDA in 2027 is the the plant of ultra high molecular weight polyethylene that this October is going to enter in in operation that is going to to contribute with five new million euros of a BIDDA next year is the electrification of cracker of CNES that we are Thank you. And all that, of course, not taking into account the potential recovery of the business that we have not seen today.

Thank you very much, James. Our next question comes from Alejandro at Santander. Please, Alejandro, go ahead with your question.

Yes, thank you Josu Jon and Pablo for taking my questions. Just coming back to a previous question about the Repsol upstream potential and market listing, which is your preference considering the strong balance sheet of the company between having the company listed in the market or just recovering the full control of the vehicle? Thank you.

First, gracias Alejandro. Again, we are fully comfortable, fully aligned in the strategy of the E&P business with our partner of EIG. We are now fully aligned with them and fully committed together to improve the quality of our business and growing, taking the opportunities we have in our portfolio. So that is my full priority, increasing the activity and the production in Alaska, Venezuela, Trinidad and Tobago, Gulf of America, the unconventional in the US, Libya, the UK, because when I say that we have to be anti-cyclical, I mean, it's not evident today to grow in the UK, but you know that we are doing pretty well in this country. So that is my full priority. We are comfortable with our partner and we are working together to improve the quality of our business Thank you, Alejandro.

Our next question comes from Fergus Neve at Rothschild and Redburn. Please, Fergus, go ahead with your question.

Brilliant. Thank you very much for taking my question. Just the one, if I may, please. You commented that October production has been around 590,000 barrels of all equivalents a day. I was just wondering whether that is a sustainable starting point for the rest of 4Q and potentially into 2027 or whether there are any more temporary factors that we should be considering when we kind of look forward over the next 12 to 18 months. Thanks.

Micro. Yes, the figure is what you mentioned, 590,000 barrels a day, the average of October. Today we are producing 600,000 barrels a day. Probably the figure in coming two months is going to be closer to 600,000 barrels a day, 600,000 barrels a day than to 590,000. But I mean, that is math. You have the inertia of 10 months. As of today, taking the whole year, every morning, Today, we are at 560,000 barrels a day of average over the last 10 months. So, improving and growing the average after 10 months, I mean, that is math. The inertia is very high. So, I'm comfortable. We are going to be in the 560,000-570,000 barrels a day. It could be great, and we are going to do our best to be in the high range of this figure, but again, We are competing with the match of the previous 10 months. So I'm comfortable saying that that is going to be the average of the year from 560 to 570,000 a day. And we are going to be in these figures significantly higher in coming two months. Thank you. And for the next year, temporary factors to be considered. I mean, for next year, what we are going to see are positive factors because the positive factors, I mean, That is not time to give you a guidance, but I mean, next year we are going to be in our range the whole year, probably in from 580 to 600,000 barrels a day. That is going to be, and we are working in the budget on this basis. And the growth is going to come mainly from the ramp up of Alaska that is going to be consolidated, of course, next year. Leon Castile that as of today probably here and I have the numbers I have in in my mind it could be a 12-13 thousand sub barrel of production and next year probably is going to be close to 17-18 thousand barrels a day the growth in Venezuela that I mentioned before we have something coming from the unconventionals these high prices means that for instance the PSCs and so on they have a negative impact in Bolivia and and some others. So, but all in all, next year, we could give you a better guidance in February, but we are preparing the budget under the assumption of 580 to 600,000 barrels a day for the whole year. Thank you, Fergus.

Thank you very much. Cheers.

Thank you, Fergus. Our next question comes from Ahmed Bensalem at Odo. Please, Ahmed, go ahead with your question.

Yeah, hi. Thank you for taking my question. I have two if I may. So the first is on refining. With margins currently at $25 per barrel, what would you consider sustainable level for next year, 27? And on distribution, you are targeting around 30% payout this year despite the very strong cash generation. What would need to happen for you to move closer to the upper end of your target of 30% to 40% range? Thank you.

Thank you, Ahmed. First, the refining margin, yes, I have a positive view also for next year. Of course, I don't have a crystal ball. And let me say that this is really hard to anticipate a potential refining margin for the whole year 2027. But I mean, taking into account even the case of a full Thank you very much. I mentioned also that some companies, because they reported that, they are delaying the turnaround activities in the refinery. So all in all, not having a crystal ball. But today, I think that the refining environment remains fully favorable for the whole 2027 year. If I have to give you a figure, and please take this figure very consciously because, again, It's very difficult to anticipate that, but we are working under the basis of the analysis of a refining margin for Repsol of $19 a barrel for next year, 2027, and probably the premium is going to remain above $4 a barrel. So, of course, we will continue to monitor market developments closely and we will update to you Our refining margin estimations accordingly, because again, that is not, I don't have a crystal ball. What would need to happen to move up to the range towards 40%? Again, we have to see first a clarification of the macro scenario. And as I said before, I mean, not always the 40% is going to appear when the The figure we are launching in the buyback program from now on to the end of the year could be executed. It's not an easy game, but I could say that if we are taking this commitment, it's because we have time and we could execute respecting the governance and the market rules and the compliance in an open way. But, I mean, increasing significantly this figure today could be even a problem in terms of execution. So, I mean, we have to balance many, many things, Hamed. And perhaps you could see a higher range in the future, probably with a lower cash flow from operations. So these figures are not necessarily related. We are comfortable now because we are fulfilling the capital market day The cash flow from operations generation is pretty good, believe me. I mean, we are seeing day after day in the company a very positive cash flow generation, so we don't have this concern. It's true that our balance sheet is strong, but let me say that is a minor problem. I could live with a strong balance sheet, mainly when we could see I mean, a potential different macro scenario. I think that to jump into acquisition and so on is not a good business, except in fully anti-cyclical investment that in our business. I mean, that is not today, it's not very evident, but of course we are analyzing small opportunities. And I think that it's important to put the focus, even in these circumstances, in reducing costs, being efficient and improving the break-evens of every business of the company. Because that is what is going to do ArabSol stronger in coming months, years, able with a strong balance sheet to take the opportunities that this year that are going to appear in the market. Thank you.

Thank you.

Thank you, Ahmed. Our next question comes from Matt Loftin at J.P. Morgan. Please, Matt, go ahead with your question.

Thanks for taking the question. Congratulations on the strength of the results. Just one follow-up question, really. Josu Jon, you talked about capital allocation earlier. It strikes me increasingly that the cash generation in 2026 and the strength in balance sheet position creates, you could say, maybe a once-in-a-cycle opportunity for companies in this sector to Thank you very much. Thank you, Matt.

I mean, first, we have a lot of opportunities, but I think that it's important to analyze very cautiously the expected returns of these opportunities. So we are going to be very, very tough about harder rates, about The returns we are going to ask to any investment in the company, of course, depending on the cost of capital of every business of the company, that could be different. But I think that we have to be present. There is room, of course, to increase. And I mentioned before, I'm not going to repeat all the projects we have in mind and so on. But I mean, we have also some execution capabilities and we have to measure that. We have a good engineer in the company, but we have to be able to manage that in a proper way so that we have a bottleneck, let me say, in terms of execution of investment. So we are going to be proud from this point of view. We are going to accelerate some things. But we are not going to enter in a dynamic of investing everywhere, doing everything. That is crystal clear. And the inflationary challenges, I mean, we are following that in a very close way because, as you mentioned, that is going to be part of the landscape in coming months. That is appearing everywhere. So we are following any investment decision we are going to take into account what is happening in these markets. Things, for instance, are better in some places than in some others. I mean, today we could see in the US, I mean, service companies and so on, inflation is starting to spike and to grow, so we are going to consider In any investment analysis this situation, what is happening, and that is going to be part of our investment decision process. So you could expect some acceleration of some projects probably next year, but always under the general principles in financial terms we defined in the capital market day eight, nine months ago. Thank you, Matt.

Thank you, Matt. Our next question comes from Henry Patricot at UBS. Please, Henry, go ahead with your question.

Yes, thank you, Pablo. Two questions for me. The first one, just to come back to the outlook for production. In Libya, you mentioned that production has increased to 45,000 WAP a day. Do you see any more upside in India in that country? And then secondly, a quite remarkable resilience in fuel demand. What are you seeing in the fourth quarter? Is demand continuing to hold up very well given the high prices in your own network and more broadly across Spain? What are you seeing?

Thank you. Going to your question about Libya, I have to mention that We had the peak of production in many years in August, 34,000-5,000 barrels a day gross, roughly speaking. And these 45,000 barrels a day net, they are fitting with a figure of 315,000 barrels a day gross. You know, they were not impacting directly to our assets, but there was a pipeline We are working in different directions. Of course, we have spotted a lot of wells in the area. Six new wells were connected during this quarter in El Salara in the production, adding some additional Thank you very much for your time. The important contribution of General Haftar and the Libyan army in this positive evolution of the country. And that is not only important for Libya, I mean, that is also important for Europe in a time where, I mean, controlling and combating terrorism, stability of the Mediterranean and so on is very important. So this contribution from the Libyan army is not only important for Libya, it's important for the whole Mediterranean basin and it's very important I think that Europe has to recognize this effort that the Libyan army and General Haftar are doing in that country. So, because we believe in Libya, we are also betting in favor of exploration. You know that we are going to, this November, the Oaxaca-Praisal war is going to be started in November, in one of the blocks in El Chalara. So that's a way to go on growing in the future in our production. Last year in another well, the P3, it was spotted and we encountered and discovered a good oil column. All that remains under evaluation, but that could be another way to grow. Cobra. was some months ago also in the area declared successful. We have another spotted whale, Ural, that was apparently positive and is now under evaluation. We are working with the ministry in extensions for these two blocks with some exploration commitments and so on, but they are very positive. And let me say that, I mean, Some months ago, we were also awarded with two new exploration blocks with further growth potential. One of them is onshore in the Sirte Basin. Here, we are the operators with a 60% with the Turkish DPAO company as a partner. And another one with the same partner plus more, the Hungarian guys, we are also operators there. In this case, in the offshore in the northwest of Benghazi. So again, stable country. We believe in Libya. We have a very good position in the country. We rely on the future of unstable Libya, and we are growing and investing in the exploration to grow these figures in the future. Thank you, Harry. Sorry, the second question I forgot. I was excited. Speaking about Libya, you know, it's a country and an operation I love so much. I mean, what we have seen going to the fuel demand, is that even in this consideration of higher prices, demand remains resilient. I mean, road transportation fuels are broadly in line with last year. I think that's reflecting the resilient mobility demand. Aviation demand remains strong, probably supported by all the travel activity, The increase of tourists in Spain that is also impacting in a positive way. I have to say that the measures that government took in terms of reducing taxes for customers, they have been also very positive in terms of helping consumers, Spanish consumers in these difficult times and maintaining volumes. We are also contributing, as I mentioned before, with our own strong and important discount campaigns where we have already invested a figure close to 80 billion euros in the last five, six months in discounts. We have the growing discounts for everybody going to our service stations only using only the requirement of using the app. Of course, we are increasing these discounts for people that have a multi-energy approach to Repsol. So, all in all, we are seeing a good resilience of fuel demand. I don't know what is going to happen next year, but at the moment, the situation is like I described.

Thank you very much, Henri. Our next question comes from Shadnan Ali at HGVC. Please, Shadnan, go ahead with your question.

Hi there, thanks for taking my questions. Two, please. The first one, just going back to refining, are you able to give us the indicator and premium achieved on a monthly basis over the quarter, and any commentary you have on those as well, please? And how much have you been proactively adjusting your slate for certain products in the past few months? And secondly, on production, I just want to clarify, if I heard correctly, I think you guided an early range for 2027 production of 580,000 to 600,000 KBD. Obviously, with an October average of 590 and today at 600, directly speaking, that's suggesting a flat or decline in production on average next year. So just want to reconfirm that that's the right direction we're heading in. Thank you.

Thank you, Shannon. I mean, what I have in mind is that this $10 a barrel of premium over the quarter is quite good balance over the two, three months, July, August and September. But probably, I mean, it seems to me that it was slightly higher in September, probably closer to, sorry, slightly higher, I meant in July, close to 11, 12, $10 a barrel in September. The average in August and something in between 8.5 and 9 is a figure I have in mind in September. You can check that with Pablo and his team. And what you are going to see, I mean, I don't know the whole figure in October because you know that the final adjustment of the premium has to be done with the real accounting of the month. But my perception is that it's going to be higher in October because this freight Thank you so much. I'm going to your question. I mean, flat or decline production for next year? No. You have some kind of natural decline, of course, in some assets. I'm considering that oil price is going to be high in coming months. More than the first part of 2026. So in countries where we have the PSC contracts, you are going to have for the same, let me say payment, less barrels that are going to be accounted. This figure is going also to be there. So what we are seeing is a quite stable production comparing with this quarter, with fourth quarter, I mentioned that we were at around 590,000, 590,600. Let me be a bit prudent about the guidance for 2027. For that reason, I mentioned from 580,000 to 600,000 barriers a day. But we are seeing an instability between projects growing and the negative effect of some natural decline in some places like Brazil and some others. And also the PSC effect I mentioned before. Thank you, Sanat.

Thank you, Shadnan. Our next question comes from Ignacio Meneg at GB Capital. Ignacio, please go ahead with your question.

Hi, thank you, Josu Jon and the team for taking my questions. I have two. The first one is a follow-up on the Cartagena refinery, particularly on the fire at the distillation unit, because you mentioned that the insurance policy covers the cost, which if I'm not mistaken, that was roughly under tens of millions. I was wondering if it covers also unrealized profits as well, because this would be a materially higher amount, maybe roughly closer to 500 million euros. So if you could clarify that, please. And my second question is, related with the downstream in Iberia earlier this week we learned that some of your peers put to an end consolidation plans in Iberia so I was wondering what's your view on consolidation in the sector if you are comfortable with your already leading position in Iberia and if in the In the coming years, we could see further consolidation and just get your view there, which is always very interesting. Thank you.

Thank you, Ignacio. So, going to your first question, you are right. The insurance policy covers the cost and also the lost profits in that period. In a crystal clear way. For that reason, I can't give you the final figure of this insurance recovery because it's going to depend on margins and so on in coming weeks. The figure is going to be significant and high. And allow me, Ignacio, not having the capacity of giving you an exact figure, but it's going to be A significant figure. And let me say that you have a good approach for this kind of business. I'm not going to say more. Going to your... I was talking about the figure, Ignacio. Going to the downstream in Iberia first. I mean, Mueve and Galt, they are very good companies, solid companies. and what I have to express is my whole respect. They were engaged in a consolidation process. They decided a different thing at the end of the road and my whole respect to the decision they took some days ago. So in our case, I mean, respecting, of course, the strategy of every competitor in this case, as I mentioned before, good competitors. Our view is different. I mean, we are the leader in the market. That's good. But at the same time, we have more limits in terms of competition rules and so on to grow in an inorganic way in our market. But we try to improve our competitive position day after day. But again, my whole respect to what we saw these days. We are not fully comfortable, let me say, with the position in Iberia because we always want to improve this position. So we try to increase our multi-energy approach. We are growing in the retail power sector. We are increasing our multi-energy approach. We are trying to have always when we have, let me say, competition, we know for that better service stations, even small M&A transactions to improve In an opportunistic way, this position, we are growing in honor. So, always trying to improve the position, but with the, let me say, the position of the leader that at the same time have some competition rules that are not allowing us to grow in a significant way. Thank you. Gracias, Ignacio.

Muchas gracias.

Thank you, Ignacio. Our next question comes from Álvaro Bernal, Atalantra. Please, Álvaro, go ahead with your question.

Hi, thank you for taking my question. I have just one. It's regarding if you can give us an update on any potential windfall energy tax discussions that are ongoing with the government, if there is an update there. And that would be all. Thank you.

Gracias, Álvaro. Thank you. I mean, I think that now, everywhere is time for Thank you very much. Talking in a different reality because I was talking about investing in working capital, investing in guaranteeing the security of supply, transforming refineries and so on. But when I read what I said before, what the European Commission and Commissioner Jorgensen said yesterday, I mean, the mind of Commissioner Jorgensen yesterday was fully focused and fully aligned with what I was expressing now. Priority now is security of supply. In a period where, and also the Commissioner expressed that yesterday, we have lost almost 23% of the European refining capacity over the last years. More than 30 refineries were shut down because they were not profitable. The debate, the political priority, and I I believe that in the mind of our leaders is that is to guarantee the industrial activity and the security of supply. So I fully underline the words that yesterday Commissioner Jorgensen expressed and we are going to do our best in this dialogue he has opened with the refining sector to support this investment effort in Spain, mainly in Spain because it's part of our main focus of business. to improve this security of supply. We are going to deploy this effort and convince that we have also the right to win in entrepreneurial terms in this Spanish and Portuguese hinterland to do that. So, Álvaro, I think that that is the debate and it's going to be the debate in coming weeks. Thank you. Gracias.

Thank you, Álvaro. Our next question comes from Guilherme Levy. Please, Gui, go ahead with your question.

Hi, hello, thank you for taking my question. Many have already been asked, but I have just a last one, a follow up on the debate on shareholder remuneration. If you think about the total cash dividends that you pay, the commitment continues to be of 3% per year. However, that was also set in a very different market. I don't think that anybody is discussing $6, $7 per barrel refining margin next year and over the coming years anymore. Could we think of that commitment as being somewhat stale at the moment? Do you think you could do more than that, given the sustainability of current refining margins? Thank you.

Thank you very much, Guilherme. I mean, first, our commitment is going to grow in coming years. And the shareholder remuneration is going to grow in coming years. And it's going to grow because the cash flow from Operation Repsol is going to grow in coming years. And that is structural. That is not because the commodity prices are now high or refining margin could be higher or lower. I mean, our perception, as I mentioned before, is that it's going to be pretty good in 2027. But remember, when we present the Capital Market Day, our message was, this company is going to improve the cash flow from operations, you know, 25, 30% in coming three, four years, at the same oil, gas prices, at the same refining margin, because That is going to be the contribution of the new projects that are entering on track. On top of that, we have a customer-centric business that is growing and is growing in a significant way in cash generation. So that is going to increase the cash flow for our shareholders in coming years. We have new projects. I mean, this year, for instance, we are not talking today because we can't talk about everything every day, but about biofuels. This year, the biofuels business is going to have all in all including the customer side and including the trading side and new cash flow for operations of 450 million euros in 2026 with a capital employee that today could be at around 600 700 million euros for the whole company so the emp alaska venezuela libya the unconventional they are adding and gulf of america new uh new new cash flow so in a structural terms We are going to improve the cash flow from operations of a company. So in structural terms, eliminating and balancing these ups and downs coming from quality prices, the 30 or 40% in 2029 or 2030 is going to be higher than the 30 or 40% in 2025, 2026. So we are improving this. And if we have, of course, higher cash flow from operation, maintaining the framework that we committed in the capital market day we are going to have a higher figure for dividends that is going to grow at three percent year after year and we are going to have more money for buybacks and for our total shareholder distribution so I fully comfortable Guillerme including I mean of course for 2027 I have a clear view a view better said about refining margins I don't have a big number, of course, 2028, 2029, but independently of commodity prices, of refining margins, this company is improving day after day in structural terms. And you are saying this improvement in many businesses that are fully hidden in the company. I mean, when we presented the Capital Market Day, I remember that almost 40% of the total cash flow from operations of the company Thank you. Our next question comes from Paul Redman at BNP Paribas. Please, Paul, go ahead with your question.

Hi, yes, two quick questions, hopefully. You mentioned recovery of insurance for the Cartagena fire. I want to ask whether that's a cash-in event, or is there another way we should be accounting for it? And secondly, you released a press release this morning about €11.5 billion on Spanish projects. I just want to ask whether all of that capital is baked into your current CMD guidance for capital over the next few years. Thank you.

So, thank you, Paul. First, yes, it's going to be a cash-in event. It's going to be cash flow from operations. It's going to be accounted as cash flow from operations. And probably it's going to enter in the first quarter of 2027. That is our central scenario today. Going to 11 billion euros of capital expenditure in Spain, yes, it's included. It's the capital market day. 26, 27, 28, similar figures for 29 and 30. And remember that in our Capital Market Day, year after year, we are investing at around 1.3, 1.2, 1.3 billion euros in the industrial business as average every year. On top of that, so that means in five years will be 6.5 billion euros, the figures of our capital market day. On top of that, we have an investment that was also in the capital market day under this assumption of self-financed low carbon generation business, where we could have at around 400-500 billion euros of investment per year in Spain. So all in all, you have 2.5 billion euros more, so we are in a figure that could be close to nine, 9.5. And the only addition, what is only new in that is that goes not reflected because the effect in 27, 28 is going to be very low, is the Aguayo project that we are considering as a high likelihood possibilities of taking in coming weeks The final investment decision about this fantastic battery of one gigawatt that could in some way help not only to capture low or cheap energy produced with solar in Spain over the whole day and selling this energy at the high prices time when we are depending on gas, but it's also be important to help the stabilization of the Spanish grid. And you know, after the blackout we suffered one and a half year ago in Spain, I think that that is also relevant for the system and we are seeing an appetite of investors and so on and to finance this project. So we are closing all the financial aspects of this project and I hope that we will be able to to take a decision about that. But the only, let me say, new that is not in the capital market, there is, remember, an important effort to invest in Spain because we believe in Spain and we believe in the Spanish economy to invest in this country. We think that we have the right to win to develop our activities here in Spain and Portugal is the Aguayo project. Thank you, Paul.

Thank you, Paul. Our next question comes from Viras Borcataria at RBC. Please, Viras, go ahead with your question.

Hi, thanks for taking my follow up. I just want to go back to the refining and 2027. Obviously, spot cracks have been really strong, but forward curves move quite a bit higher and has been more resilient in recent weeks. So just wondering if you were considering hedging any of your 2027 refining output and practically how much could you do Typically you put forward quite conservative indicator guidance and run the business on a conservative basis, but obviously if you were to hedge some, you could underpin a margin that's well above mid-cycle levels at this point. So just getting your thoughts on that and whether that's an option. Thank you.

Hi, Viras. So that is a continuous debate and a continuous work In our company following the future market to potentially hedge. And let me say that, I mean, we have to see very extraordinary things to take hedges in our refining business. That could happen. But I mean, first, we have a positive view about this business. Remember that one year ago, or nine, yeah, one year ago, we were seeing A future market of $10, $11, $12 a barrel for a refining margin that was significantly higher than our own budget. And I mean, we analyzed that and we decided not to do. I think that was the right decision. And of course, what is behind this as an analyst or an investor could expect from Repsol is to be exposed in some way to the refining margin. I mean, if you put With my whole respect to all businesses of the company, an element that is different from Repsol is a high exposure to the refining market. So saying that, may we take some opportunistic hedges from time to time in a part of this exposure, I don't know, cracks for diesel, cracks for jets and so on. Yes, that could happen. But in general terms, my general trend is to be As open as we could be to the refining margin, because that could be for you as an investor. I mean, it would be hard to explain that seeing refining margins at $36, $40 a year, we are not capturing that because we have a hedge, a fantastic hedge at $10, $12 that we took in December. So we could do these kind of things and I don't know the gas for the unconventional in North America, crude oil in the UK, and so on. But in general terms, we analyze every opportunity. I'm not saying no 100% because clear opportunities could appear, but our general focus is to be open to the risk and opportunities, of course, of the refining market. Thank you, Viraj.

That was our last question today. With this we will bring our third quarter conference call to an end. Thank you very much for your attendance.