Breaking Down Galp Energia, SGPS, S.A. Financial Health: Key Insights for Investors

Galp Energia, SGPS, S.A. charts a bold course across the oil, natural gas, and renewable energy sectors, leveraging a significant foothold in Brazil's pre-salt oil fields while accelerating its renewable energy portfolio expansion in Iberia; guided by a mission to create value for clients, employees and shareholders through ambition, innovation and ethics, and a vision to be the reference energy operator where it competes, Galp pairs client-focused, team-driven core values with concrete commitments - including a reported €34.9 million invested in community initiatives in 2024 supporting over 5,000 organizations - and a clear financial target to reduce net debt to €900 million by end-2025, reflecting its strategic emphasis on selective upstream growth, downstream transformation and renewables integration.

Galp Energia, SGPS, S.A. (GALP.LS) - Intro

• Core businesses: upstream oil & gas (including significant stakes in Brazil pre‑salt), downstream refining & retail, gas & LNG marketing, and renewable power development in Portugal and Spain.
• Strategic focus areas: selective upstream growth, downstream transformation, and integration of renewable energy sources into the portfolio.
• 2024 community engagement: €34.9 million invested, supporting over 5,000 organizations.
• Financial commitment: target to reduce net debt to €900 million by end‑2025 to strengthen the balance sheet.

Mission

• Deliver energy solutions that create sustainable value for shareholders, customers, employees and communities.
• Operate with safety, integrity and environmental responsibility across all activities.
• Balance reliable fossil supply with a measured transition to low‑carbon energy.

Vision

• Be a leading integrated energy company in Iberia and a trusted partner in international upstream projects, recognized for competitive returns and a credible pathway to decarbonization.
• Grow renewables and low‑carbon businesses to complement resilient upstream cash flow and transformed downstream margins.

Core Values

• Safety and respect for people and the environment.
• Accountability, transparency and ethical conduct in all operations.
• Entrepreneurship and long‑term value creation.
• Collaboration and respect for local communities and stakeholders.

Strategic Pillars and Selected Targets

Governance and Ethical Conduct

• Decision‑making anchored on sustainability criteria, risk management and stakeholder engagement.
• Commitment to transparent reporting and alignment with evolving regulatory and ESG expectations.

Galp Energia, SGPS, S.A. (GALP.LS) - Overview

• Value creation focus: prioritize returns for shareholders while delivering reliable products and services to customers and development opportunities for employees.
• Ambition & innovation: investing in new projects and low-carbon technologies to adapt to energy transition dynamics.
• Competitiveness: operational excellence and cost discipline to maintain margins across volatile commodity cycles.
• Ethics & sustainability: integration of environmental, social and governance (ESG) principles into capital allocation and operations.

• Integrated business model - exploration & production (E&P), refining & marketing, gas & renewables.
• Investment strategy - balancing value-accretive hydrocarbon developments and growth in renewables, power and retail solutions.
• Stakeholder alignment - linking management incentives and capital allocation to sustainability and financial performance targets.

• Capital expenditure (2023): approximately €1.6 billion focused on E&P development and renewables/power growth.
• Dividend policy: progressive dividend framework with payouts tied to cash flow and balance sheet strength; 2023 declared DPS ~€0.25 (subject to AGM approval and Board decisions).
• Renewables pipeline: multi-gigawatt development pipeline with near-term contracted PPAs and merchant exposure managed to preserve returns.

• Emission reduction targets: medium-term intensity and absolute targets aligned with transition pathway; ongoing investment in methane reduction and flaring minimization.
• ESG reporting: annual sustainability reports with TCFD-aligned disclosures and quantified KPIs for emissions, safety and community engagement.
• Board and governance: independent directors and remuneration policies linking long-term performance to sustainability and financial metrics.

Galp Energia, SGPS, S.A. (GALP.LS) - Mission Statement

• Operate safely and reliably across core assets while improving operational efficiency and cost discipline.
• Grow a diversified energy portfolio balancing hydrocarbons with renewables and low-carbon solutions.
• Deliver competitive returns and disciplined capital allocation to support long‑term shareholder value.
• Foster innovation and digitalization to be the reference operator in markets where Galp competes.
• Engage with stakeholders and strengthen social and environmental performance, including emissions reductions and energy access initiatives.

Vision Statement and Strategic Context

• Reference operator - aim to set benchmarks in reliability, unit economics and sustainability metrics.
• Market-focused expansion - concentrate resources on geographies and segments with strategic advantage.
• Dual-track growth - optimize upstream and downstream cash generation while scaling renewables and integrated customer offerings.
• Innovation-led differentiation - deploy digitalization, advanced analytics and new business models (e.g., energy services, EV charging).

Operational and Financial Metrics Illustrating the Mission in Practice

How the Vision Drives Strategic Initiatives

• Targeted Upstream Investments - prioritizing high-margin, low-break-even barrels and selected international plays to sustain cash flow.
• Value-Accretive Downstream Optimization - maximizing refinery margins and expanding commercial networks across Iberia and selected markets.
• Renewables & New Businesses Scale-Up - accelerating utility-scale wind/solar, energy storage and mobility solutions to reach multiple-GW pipeline in the medium term.
• Operational Excellence Programs - continuous reliability, process safety and unit-cost improvement initiatives to become the operational reference.
• ESG Integration - emissions intensity targets, methane management, and investments in low-carbon products complement the ambition to be a reference operator.

Galp Energia, SGPS, S.A. (GALP.LS) - Vision Statement

• Client focus: tailor products and services to market needs, strengthen retail network and B2B solutions, and enhance customer experience through digital channels.
• Teamwork: cross-functional collaboration across upstream, midstream, and clean energy teams to accelerate project delivery and operational efficiency.
• Result-oriented entrepreneurship: pursue high-return projects, fast decision cycles, and disciplined capital allocation to maximize shareholder value.
• Individual development: invest in talent, training and leadership programs to build skills aligned with energy transition demands.
• Innovation & continuous improvement: deploy new technologies (digitalisation, CCUS readiness, renewables integration) to improve margins and reduce emissions.
• Safety & environment: target continuous reduction in process safety incidents and lower greenhouse gas intensity across operations.
• Integrity & transparency: maintain robust governance, disclosure standards and stakeholder engagement consistent with European market expectations.

• Customer reach: >1,500 service stations across Iberia and other markets, growing retail margins via convenience and mobility services.
• Safety metrics: year-on-year reductions targeted in Total Recordable Incident Rate (TRIR) and Process Safety indicators; sustained investments in HSE systems.
• R&D & innovation: deployment of digital optimisation across refineries and upstream assets, pilots for CCUS and green hydrogen.

• Board and committees overseeing sustainability, remuneration linked to ESG and financial KPIs, periodic investor disclosures.
• Public reporting of climate-related metrics, alignment with EU policy frameworks and progressive improvement in disclosure quality.