Thank you, everyone, for your interest in BP's third quarter 2025 results presentation. I'm here with Murray Auchincloss, Chief Executive Officer, and Kate Thomson, Chief Financial Officer. We're releasing our results today from Abu Dhabi in conjunction with the ADIPEC Conference, one of the world's largest and most influential energy events. Before I hand over to Murray, let me draw your attention to our cautionary statement. In this presentation, we will make forward-looking statements that refer to our estimates, plans, and expectations. Actual results and outcomes could differ materially due to factors we note on this slide and in our UK and SEC filings. Please refer to our Annual Report, Stock Exchange announcement, and SEC filings for more details. These documents are available on our website. Over to you, Murray.
Thanks, Craig. We have delivered another quarter of good earnings and cash generation, with operations continuing to run well and strong strategic progress being made. In the upstream, we have now started up six new oil and gas major projects in 2025, four of which were brought online ahead of schedule. Our success and exploration continued in 3Q with two more discoveries, growing our options for the future and enabling quality through choice. In the downstream, underlying earnings in the first nine months were around 40% higher than the same period in 2024. In customers, we delivered our highest 3Q on record and refining captured a better margin environment. We're making progress on delivering the $20 billion of gross proceeds from our disposal program.
Following the announced divestment of our non-controlling interests in Permian and Eagle Ford midstream assets, proceeds from divestments completed or announced to date are now expected to be around $5 billion. We continue to allocate capital with discipline. Full year CapEx remains around $14.5 billion, with organic CapEx on track to be below $14 billion. We also redeemed $1.2 billion of hybrid bonds in the quarter while holding net debt flat. We continue to make progress towards our four primary targets, but know there is more to do to accelerate delivery, drive simplicity and efficiency across our portfolio, and to maximize cash flow and returns. Turning to performance highlights, upstream production increased by around 3% quarter on quarter, supported by upstream plant reliability of around 97%. We now expect 2025 underlying production to be broadly flat with 2024.
Refining availability was also close to 97%, the best quarter in 20 years for the current portfolio. We delivered $2.2 billion of underlying net income and $7.8 billion of operating cash flow. And we have announced a dividend per ordinary share of $8.32 and a further $750 million share buyback for the third quarter. I'd now like to touch on our strategic progress. We are growing the upstream, strengthening our portfolio today while significantly enhancing our optionality for the future. With a safe startup of Murlach in the North Sea, we have added around 150,000 bbl of oil equivalent per day of peak net production capacity from our six new major projects in 2025. In September, we took the final investment decision on the Tiber Guadalupe project in the Gulf of Mexico, which will be our seventh operated hub in the region.
It will have a production capacity of 80,000 bbl of oil per day when it comes online, planned for 2030. Tiber Guadalupe will use more than 85% of the design of Kaskida, contributing to an expected $3 per barrel lower development cost compared to its sister project. In Kirkuk, the government of Iraq has activated our contract, setting the baseline production rate. This is a key milestone and means we can now begin the rehabilitation of these giant fields. In exploration, we've now had 12 discoveries so far this year. This includes the Volans Well discovery through our Azule joint venture in Namibia's Orange Basin and a non-operated oil discovery, Serapis, in the Gulf of Mexico. Turning now to our Bumerangue discovery, offshore Brazil, which we announced in August as our largest exploration discovery in 25 years.
You may recall we said at the time that we had discovered hydrocarbons in a high-quality pre-salt carbonate reservoir with an aerial extent of greater than 300 square km. We now have the initial laboratory and pressure gradient analysis, and it is extremely encouraging. They indicate a 1,000 meter gross hydrocarbon column, including around 100 meters of oil and around 900 meters of liquid-rich gas condensate. Given the presence of liquids across the entire hydrocarbon column, the high-quality rock properties observed, and our extensive technology and deep-water developments experience, we believe that the carbon dioxide in the reservoir can be managed. With this additional information, our confidence in the potential of this field has increased. We're continuing laboratory testing, another analysis to determine the fluid characteristics, gas to oil and condensate to gas ratios, and an estimate of in-place volumes, and we'll provide an update in due course.
We have a team in place and are accelerating work on proposed appraisal activities and potential development concepts, including an early production scheme. At this time, BP is happy to continue holding a 100% participation interest. All decisions regarding this discovery, including bringing in a partner, will be made on the basis of the best value for BP and our shareholders. Turning now to the downstream. At our capital markets update, we laid out our strategy to reshape the portfolio and improve performance to drive cash flow growth and strong returns. I want to update on the progress that we're making. In refining, we are in action to improve profitability and resilience across a range of market conditions.
Year to date, refining availability has improved by over 2 percentage points versus the same period in 2024, which reflects the recovery from last year's outage at Whiting and benefits from our multi-year investments and turnaround activity. Improved availability is an important contributor to our target of reducing our realized cash break even by $3 per barrel by 2027, translating to around $1.5 billion of pre-tax operating cash flow. We have already delivered over 60% of this reduction year to date. In customers, we are in action to drive cost competitiveness. In the first nine months, we delivered around $500 million of incremental structural cost reductions, which underpins expected delivery of a 4 percentage point improvement in our total cash cost to gross margin ratio by the end of the year.
We are also working hard to realize value and drive growth in BP Bioenergy and TA, which Kate will cover shortly. Across refining and customers, we continue to reshape our portfolio to focus on our most advantaged assets. We are ahead of our plan to exit around 10% of our company-owned retail sites, of which around 60% are now underpinned, reflecting disciplined execution and a sharper focus on integrated mobility in our core markets. Meanwhile, the sales process for Gelsenkirchen Refinery continues, and we are progressing the strategic review of Castrol at pace. Our plan is clear. We're focused on execution and know there is more to do. But as you'll hear shortly, we're seeing the benefits of our actions and our earnings delivery. And with that, over to Kate to talk through our 3Q results.
Thank you, Murray, and hello, everyone. I'll start with segment financial performance. In the third quarter, the gas and low carbon energy underlying financial result was broadly flat compared to the previous quarter, reflecting a lower DD&A charge, including a one-off benefit of around $100 million and higher production, partly offset by lower realizations. The gas marketing and trading result was average. In all production and operations, the underlying result was also broadly flat compared to the previous quarter, reflecting higher production mainly in BPX Energy, partly offset by higher exploration write-offs. In customers and products, the underlying result was around $200 million higher than the previous quarter. Now, looking at the businesses and customers, the underlying profit was around $100 million higher than the previous quarter, reflecting seasonally higher volumes, stronger integrated performance across fuels and midstream, and lower costs.
In products, the underlying profit was around $70 million higher than the previous quarter, reflecting stronger realized refining margins and a significantly lower level of turnaround activity, partly offset by seasonal effects of environmental compliance costs and the impact of unplanned Whiting outages due to exceptional weather conditions. The oil trading contribution was weak. Taken together, the group underlying replacement cost profit before interest and tax was $5.3 billion, slightly higher than the prior quarter. Now, below the operating segments, our underlying finance costs were $1.1 billion in the third quarter. That's around $30 million higher than the second quarter due to higher interest expense on lease liabilities, which reflects a full quarter of leases following the startup of GTA phase I in 2Q. Our underlying effective tax rate in the third quarter was 39%, including changes in the geographical mix of profits.
For the nine months to date, our underlying tax rate was 41%, and we continue to expect the full year underlying effective tax rate to be around 40%. Our non-controlling interest was around $50 million higher than the second quarter, reflecting the business results where we do not own 100% and the full quarter effect of the recently completed transaction to sell a non-controlling stake in our interest in the TANAP pipeline. Taken together, we reported group underlying replacement cost profit of $2.2 billion. We recorded around $1 billion of adverse adjusting items, including impairments of around $400 million, which largely reflect decisions we've taken to focus our portfolio in transition. On an IFRS basis, we reported a profit of $1.2 billion. Turning to cash flow in the balance sheet, operating cash flow was $7.8 billion.
This was $1.5 billion higher than the previous quarter and included a $900 million working capital release compared to a $1.4 billion build in the previous quarter. This was partly offset by higher income taxes paid, which is typical for the third quarter. Capital expenditure was $3.4 billion, bringing nine months' CapEx to around $10.4 billion. This quarter, despite redeeming $1.2 billion of hybrid bonds and with lower divestment proceeds due to timing of receipts, net debt remained broadly flat compared to the previous quarter. Earlier, Murray walked through our progress against the strategic priorities in the downstream. Now, I'd like to walk through how this translates to improving financial performance. As a reminder, at the Capital Markets Update, we set out to grow downstream operating cash flow by $3.5 billion-$4 billion by the end of 2027.
In the first nine months this year, we've delivered an uplift of around $1.6 billion after normalizing for environment, with a balanced contribution from both customers and products. Incremental structural cost reductions of $700 million this year have contributed to improved performance across both businesses, and this brings cumulative structural cost reductions to $1.2 billion, which is around half of C&P share of the group's 2027 target. In customers, we've seen stronger integrated performance across fuels and midstream, where our world-class trading capabilities and advantaged asset base continue to drive value. At TA, in response to continued margin pressure, we're implementing a targeted business improvement plan under new leadership and aim to improve adjusted free cash flow by $200 million-$300 million by 2027, compared with 2024, and at broadly flat fuel margins.
Castrol has delivered approximately 20% year-on-year earnings growth, maintaining momentum through nine consecutive quarters from both higher volumes and margin improvement. BP Bioenergy is integrating well and contributing to growth. As you may have seen, the industry in Brazil has experienced weather impacts, with an expected 15% reduction in our 2025 crush volumes compared to 2024. Our focus is on driving productivity and cost interventions to support the free cash flow generation. In products, refining improvements delivered around $1 billion of growth in operating cash flow, enabled by better reliability, structural cost reductions, and stronger commercial performance. This has been partly offset by higher turnaround activity compared to last year. And oil trading continues to deliver a steady contribution, largely in line with last year's performance. We have now delivered around 40% of downstreams 2027 operating cash flow growth target.
We're making good progress, but we recognize there's a lot more still to do. We'll provide a comprehensive update on operating cash flow delivery with our full year results, showing progress against the CMU targets across our businesses on a post-tax cash flow basis. Now, turning to our financial frame, which remains unchanged. We've spoken before on why a strong balance sheet is important to BP, as it enables us to manage and grow the business through the commodity cycle. We remain committed to our net debt target of $14 billion-$18 billion and how we optimize our capital structure holistically, including leases and hybrids, as it relates to the efficient financing of the company. This is all in service of increasing our financial resilience.
On shareholder distributions, firstly, our policy is to maintain a resilient dividend, and for the third quarter, we've announced a dividend of $0.0832 per ordinary share. Secondly, we're committed to sharing excess cash through buybacks over time. This policy enables us to share the upside in cash generation when the price environment is supportive, while enabling the balance sheet to remain resilient in a lower price environment. And today, we announced $750 million of share buybacks to be executed by the fourth quarter results. Our guidance remains for total dividends and share buybacks to be in the range of 30%-40% of operating cash flow over time. And we continue to expect to announce buyback decisions at the time of quarterly results.
As a reminder, shareholder distributions are subject to board discretion each quarter, and the board considers a range of factors, is mindful of the ongoing volatility in markets, including both the short and medium-term outlook for prices across the basket of commodities that drive our cash flow, and turning to guidance, looking ahead to the fourth quarter compared to the third quarter, we expect reported upstream production to be broadly flat. Within this, we expect production from oil production and operations to be slightly higher and gas and low carbon energy to be lower. In customers, seasonally lower volumes and fuels margins to remain sensitive to movements in the cost of supply and in products, similar level of refinery turnaround activity. Turning to the full year 2025 guidance, we now expect the reported upstream production to be slightly lower and underlying upstream production to be broadly flat.
Within this, we expect underlying production from oil production and operations to be higher and gas and low carbon energy to continue to be lower. We now expect other business and corporate underlying annual charge to be around $500 million-$750 million for 2025, and that's subject to foreign exchange impacts. With our recent announcement on the divestment of non-controlling interests in Permian and Eagle Ford midstream assets, we now expect divestment proceeds received in 2025 to be above $4 billion. All our other full year guidance remains unchanged. I'll now hand back to Murray.
Thanks, Kate. We are three quarters into our 12-quarter plan. We are making good progress so far this year, but we have a lot more to do to grow shareholder value and achieve our full potential. We have world-class assets and capability, and our operational performance has been strong this year. We have more to do to simplify our business, and we are carrying out a thorough review of our portfolio focused on maximizing returns and growing value. With the exploration success this year, our resource base is strong, and we have created significant optionality. We will focus on the highest quality projects within the hopper, making disciplined choices about the allocation of our capital in service of maximizing value and returns. On costs, we continue to make good progress against our target, and we are focused on delivering absolute savings to the bottom line.
We are advancing towards top quartile in all our businesses and functions by 2027 and ultimately aim for best-in-class performance while never compromising on safety. We have a target to strengthen the balance sheet and are moving at pace with our plan to improve performance, growing operating cash flow, and executing our divestment program with a view to increasing further the company's financial resilience and optionality. Finally, I've been spending time working closely with our new Chair, Albert Manifold, who took on the role effective the 1st of October. The Board and Leadership team are aligned and clear-sighted, with a deep focus on performance management and accountability across the company. As we deliver on our targets in the short to medium term, we expect to build further confidence for the longer term while communicating with clarity and transparency as we progress.
We are in action, moving at pace, and are demonstrating that BP can and will do better for our investors.