殼牌 (SHEL) 2016 Q4 法說會逐字稿

Okay, ladies and gentlemen, good afternoon.

And as always, it's a pleasure to be back in London, but it's certainly even bigger pleasure to be back again at the venue where we announced the BG acquisition almost two years ago.

And that integration with BG was completed in 2016, and today, we want to give you an update on the direction of the Company, we'll talk a bit about the results, we'll touch on the strategy and the progress that we are making on the delivery, post the transition in 2016.

But before we do all of that, of course, the disclaimer statement that you are familiar with.

Now, we're making some good progress in reshaping Shell towards the goal of being a world-class investment case that's focusing on delivering higher returns on capital employed, a higher free cash flow per share, and of course, on reducing debt.

So simply put, better returns for shareholders.

We are on track to deliver on the 2020 expectations that we set out back at Capital Markets Day in 2016.

And 2016, of course, was a transition year for Shell.

But 2017 is the year in which we will follow through on the delivery piece.

We have a portfolio strategy, which contains firm steps to manage in this down cycle, including a hard ceiling on our capital spending, but also on more predictability in our spending.

I believe our integrated business mix is helping to support our results in what is still a pretty challenging business environment that we are seeing today.

And, in 2016, we saw some pretty large movements in our figures for the BG purchase and consolidation, a higher asset base, buildup in debt and all of that of course amplified by lower oil prices.

I think our results today also show that we are successfully pulling on these powerful levers that we mentioned before to manage the Company in the industry downturn that we are experiencing.

We are focusing on reducing costs and capital investment, as we also refocus the Company.

And at the same time, we have to remember that we do have a capital program of around $25 billion in 2017.

Our 2016 CCS earnings, excluding identified items, were around $7 billion.

Cash flow from operations some $21 billion.

And free cash flow, excluding the BG cash elements, but then adding into it the proceeds from the MLP and the IPO was $2 billion and that was at an average Brent price of $44 a barrel.

That reduced at the end of 2016 compared to the Q3 closing levels, and in Q4 for the second consecutive quarter, the free cash flow more than covered our cash dividend.

I'm talking about cash, and talking about dividend, there is no change in the dividend intention.

We expect the Q1 2017 dividend to be $0.47 per share.

Compared to [2014], and that's including BG, our underlying operating cost has been reduced by $10 billion on an annual basis.

And our capital investments has been reduced by $20 billion on an annual basis.

And at the end of 2016 we are running the underlying operating cost with a combination of Shell and BG below $40 billion, so that is lower than what we used to run Shell on as a standalone company less than 24 months ago.

And in 2017, it's expected to be lower, again.

So this is a cost takeout performance that in my mind is absolutely leading in the industry.

Now, let's step back from the results and the numbers a little bit and let me also be clear on what else we want from Shell.

So I want Shell to be a leader, and that means a large market capitalization of course, but also that we are listened to and respected for both what we do and what we say.

We are reducing our carbon intensity, something that we are working very hard on and we will continue to put emphasis on this going forward.

But we also need to establish that beyond any shadow of doubt, we provide shared value to society.

We are a force for good for society.

And we need to succeed in all these themes as well, if we want to be truly that world-class investment case.

As you know, we segment our portfolio in a number of strategic themes.

We have cash engines.

They need to deliver that strong and stable return.

They also need to deliver that strong and stable free cash flow, enough to cover the dividend, enough to cover the buybacks and then not only through to macro-cycle, also leave us with enough money to fund the future.

Our growth priorities, they have a clear pathway towards delivering strong returns and free cash flow in the medium term.

And the future opportunities should provide us with material growth in cash per share in the next decade, if not earlier.

And to all of this, of course, is our attention to be in fundamentally advantaged positions throughout the portfolio.

Now, new energies, you would have seen a recent announcement that Shell in a consortium has been awarded to tender for the Dutch offshore wind farm and Borssele III and IV . Together, these two wind farms, will have a capacity of 680 megawatts.

And this demonstrates that our Company is preparing for and investing in the challenges, but also the opportunities that the energy transition is affording us.

And asset sales have continued to play an important role in all of the strategic themes and will continue to do so as we reshape the Company.

The asset sales program is expected to total $30 billion from 2016 through to 2018, you're familiar with that.

We completed $5 billion of that -- $5 billion large divestments in 2016.

We just announced in the last few weeks, a further $5 billion, and we are making very significant progress on yet another $5 billion of divestment and then with more to come on top of it.

At the end of 2016, you all have noted, hopefully, that we completed the sale of our shareholding in Showa Shell for around $1.4 billion.

We recently announced that SABIC will acquire our 50% share of our joint venture in SADAF for around $800 million.

Few days ago, we signed agreements to sell of package of UK North Sea assets to Chrysaor for a total of up to $3.8 billion, and with KUFPEC for the sale of our interest in the Bongkot field and the adjoining acreage thereof offshore Thailand for $900 million.

So these transactions show that there is clear momentum now behind global, but value-driven $30 billion divestment program and are consistent with the Company's strategy to high-grade, but also simplify the portfolio following the acquisition of (technical difficulty) BG.

We seek to generate value, we seek to simplify the portfolio and we seek to reshape Shell, and Simon will cover this in quite a bit more detail later in the presentation.

But again, let me remind you, this is a value-driven, not a time driven divestment program, but I'm also confident that we will deliver on the timing piece of it.

Now you've seen, we've been reducing Shell's capital advancement in a steady and a measured way in the last few years, and we are planning to spend between $25 billion and $30 billion each year until 2020.

It's all about reducing debt, following the BG deal, it's about meeting our intentions for shareholder distributions.

The $25 billion level reflects a spend that we believe is the right level today for delivering our inflight projects, but also for sustaining the strategy that we laid out.

And our focus is pretty much on the economic resilience of the new assets that we are pursuing and on having a predictable and high quality investment funnel going forward.

We took two major investment decisions in 2016, both of them in chemicals for Pennsylvania and then on high projects, and we have significant progress today on the Kaikias project in the Gulf of Mexico, FID expected in the near term.

Project has a breakeven price of below $40 on a go-forward basis and has an expected gross peak production of 40,000 barrels per day.

In 2016, our investment level was $27 billion and that is $20 billion below what we had in 2014.

In 2017, we are moving this down to an investment level of $25 billion, the bottom of the range and that, by the way, [along the] $27 billion, that $25 billion includes also a number of non-cash items that we have to count as capital investments, but are not necessarily capital expenditures on a cash basis.

In 2016, of course, we had a world-class deal delivery, and that was followed by a world-class BG integration that was essentially done in 2016, completed on time and I'm really very proud of this achievement.

Of course, we continued to manage the delivery of the synergies and the reshaping of Shell as a result of all of this is starting to show, in my mind.

In 2016, the net reduction of staff was 6,500, that's ahead of the 5,000 employees as we said would leave Shell back in 2016.

We've progressed with the closure of some 25 offices around the world, including some pretty symbolic moves, like moving from One Shell Plaza in downtown Houston to Woodcreek, and here in London as well.

These are really big moves for our Company, not only the assets, but also how we look at the office portfolio around the world.

Seen start-ups of Stones in the Gulf of Mexico, Gorgon, of course, in Australia, Kashagan in Kazakhstan and these start-ups -- collectively, these start-ups in 2016 should add more than 300,000 barrels of oil equivalent per day and 3.9 million tonnes per annum to Shell's shareholders, once they are fully ramped up.

Finally, there's no doubt that 2016 was a challenging year, including all the deal effects that you have seen.

The potential outcomes here reflect the actions of many, by all the colleagues we have in Shell.

In practice, they reflect a reset in the way we are going about our daily business, particularly in terms of the sustainable cost base that I referred to.

The levers that we are putting are material, and this chart here shows the returns and free cash flow that we generated in each of the three categories that I mentioned earlier; cash engines, growth priorities, future opportunities.

And again, a reminder, these are not targets.

But the chart shows you the possible shape of the Company, and of course the environment can still play out differently -- very differently from what we expect today.

But around the end of the decade, we expect to have reduced debt, hence the free cash flow that you see on the chart here should be part of a dividend and buyback program of the Company.

The cash engines will have stabilized portfolios.

Then the growth priorities, the deepwater will be delivering free cash by the end of the decade.

Chemicals will still be in growth mode; in the chart you will see with about $3 billion of more free cash flow per year coming in the beginning of the decade.

And in the shales and the new energies, the portfolios will be ready for, or maybe even already slightly entering into a much more substantial growth investment from the available resources.

I also think it's important that we update you in a bit more detail on the plans in the near-term and more details on the financial levers that we are pulling to manage our Company today in this difficult environment.

And for that let me hand you over to Simon for the last time this time.

Thank you, Ben.

Thank you all for joining us today.

It's good to be here.

In fact, this is the 31st time as CFO, I've had, what I think has been a great privilege to address you in quarterly results.

I also had the benefit of close to 15 quarter-ends before that, so 46 quarter ends with you.

It's been a pleasure mostly and; but I think it's time for parole.

So let me update you on the financial framework, the great progress we're making in creating value from the BG deal, a good link back to the last time we were in here, and the other assets and the projects.

And this morning I did go off script a little, but that was the media, but I'll stay on the script this afternoon.

So, in summary, in the quarter, excluding identified items, Shell's CCS earnings in the quarter were $1.8 billion; that's $200 million increase on last year.

On the comparative basis, we saw higher earnings in the upstream and chemicals, lower earnings from refining and trading.

We also saw a higher depreciation charge, in part results of BG and a one-off impact of $500 million from a deferred tax, or a series of deferred tax adjustments.

Cash generation, the cash flow from operations over $9 billion in three months, so meaning, after we deduct capital investments, we more than covered the dividend payouts again for the second quarter running.

Dividend distributed was $3.8 billion or $0.47 per share.

The Brent oil prices were 13% higher than a year ago, $49 for the quarter, but realized gas prices were actually 5% lower than a year ago and that's partly a result of the time lag, as LNG prices follow oil prices, but not immediately.

And on a Q4-Q4 basis, that gave us an increase in the results by around $400 million just from price movement, but refining and trading results were significantly lower.

That partly reflected the weaker global refining conditions, but also the rising market challenge of taking your prices up to customers when your costs are going up.

And that downside was partly offset by higher chemical margins.

So compared to the same quarter last year, we saw an uplift from BG volumes, very significant, of course, but we also at the same time, saw lower cost, despite the fact last year it did not include BG, but this year it did.

But we did see that higher depreciation and we did see the non-cash charges, the deferred tax not included as an identified items and you will see the usual waterfall charts at the back of your slide packs.

We said 2016 was a transition year.

We were completing integrating the BG acquisition, we were bringing together two large complicated balance sheets.

So we expected earnings volatility and you can see it in the red bars here on the slide.

But our cash generation has more clearly followed the trend in oil prices and it emerges stronger overall by the end of the year.

And we did see an increase in depreciation following BG, but also an increase in interest charges with increased debt.

Depreciation for the quarter ran $6.6 billion and on an underlying basis, $6.3 billion.

Last year, the total underlying depreciation, some $23 billion; be around that range $23 billion, $24 billion going forward.

Divestment impacts will be a feature in 2017.

So I can't promise you no noise.

Maybe Jessica will, but I can't.

And also draw your attention to the outlook we gave in our corporate segment, as well as the broader usual outlook in the backup.

The divestments will introduce a little bit of quarter-on-quarter uncertainty.

So we do appreciate the challenges in modeling the short-term earnings as a result of all those moving pieces and we sometimes have the challenge as well.

But we'll do our best to assist and in the meantime, we'll encourage everybody to focus on the cash.

Now, cash, obviously is inherently more stable, but it is a much better indicator of the delivery of strategy.

So turning to reserves that we announced this morning, the SEC, Securities and Exchange Commission proved reserves equivalent were at the end of 2016 13.2 billion barrels oil equivalent.

That's an increase of 1.5 billion barrels.

Additions during the year, 2.9 billion barrels.

Obviously that included, in fact, it was mostly the BG acquisition, around in total 25% of the end 2015 reserves.

The three-year reserve replacement ratio stands at an estimated 81%, obviously helped by the strong 2016 and BG.

So integration with BG, we set out to complete by the end of last year and we did.

That I think is a world-class performance by any standards, 10 months to complete the acquisition.

We stood here two years ago and we said this will accelerate the growth strategy in deepwater and in LNG would enhance the free cash flow and it creates a platform from which we will reshape Shell.

I'll say exactly the same today, only now I can tell you we've done all of those.

And just one slight detour, you can see on the slide, the growth from the BG portfolio, since we announced that deal.

In Australia 70%, in Brazil 100%.

BG was free cash flow positive for last year.

I don't think we would have got that company if we left that deal another year with that kind of performance to come.

We knew it was coming.

So delivering the real value from BG deal did require the swift and effective integration, getting the best value from these projects, which we are now, but importantly, learning and then applying the past working practices from BG or from Shell and putting them across the whole of the Company.

As a result, two years ago we said $2.5 billion.

We actually pretty much did that last year, 2016.

We now expect $4.5 billion pre-tax basis by 2018.

So we did the three-year target in one and this year, in 2017, we should get to around $4 billion of the synergies delivered.

It'll be almost impossible to measure thereafter, because we are so closely integrated there.

So I'll move on, just a few words about the strategic themes, the underlying delivery.

Firstly LNG, real core part of the business.

You know we moved it from a growth priorities to a cash engine.

The increase in the LNG sales that we've seen is bigger than the increase in our liquefaction volumes and that's because the business model has fundamentally evolved to connect supply and demand under various different market conditions.

We play an aggregator role.

On top of what we produce, we also buy third-party LNG, some long-term contracts, some from JV partners.

We also buy and sell spot LNG cargoes and we market it to a worldwide customer base.

We optimize both logistics and margin.

If we look at the total market, the number is around 250 million tonnes per annum.

It did increase by 17 million tonnes last year, 6%, 7%.

Supply increase in Australia, primarily, lesser extent the US.

But obviously we saw growth in demand.

New market, the two largest interestingly were Egypt and Pakistan.

But we were also seeing growth in India and China, which over time will continue to drive that growth.

That easily absorbed the growth in supply volumes.

We did not need to rely on Europe as the balancing market.

So the predicted decline in market conditions and pricing just in the current 2016.

In fact, we finished the year with pretty strong high Asian winter demand and prices and from what we can tell, every cargo that could have been produced last year in LNG was produced, nobody was sitting on it, production holding back.

Now, I would highlight one BG best practice we will take on is to issue an LNG market outlook in February and March and hold a presentation like this.

Well, I won't, but Ben or Jessica will in London, Singapore and New Orleans.

So, on looking at our other main cash generator, downstream, I hope you're aware, there has been a major capital efficiency performance drive underway in downstream for quite some years, certainly back to Ben this time running the business.

55 performance unit within this business focus everybody on the bottom line.

We're continuing exit from the non-core positions, you read about one of the chemicals last week.

They're assets where we don't see running room, the returns, or just attractiveness of any new investment dollars from Shell going into it.

And those improvements, over the cycle, have enabled us -- we delivered $7 billion of clean energy last year, $10 billion of cash flow from operations and around 15% return on capital.

That's a good performance and much better than we saw seven or eight years earlier, when in fact the refining margins were even more attractive.

So, our marketing activities on here, I would just highlight, that's the red earnings stream.

They provide a resilient and steadily increasing stream of earnings.

Refining and trading well together has integrated value chain to enhance returns and cash flow.

But they are subject to the cycle, short and long-term.

Overall, downstream should be able to deliver 10%, 12% return on capital per employee through the cycle and more than $10 billion of cash flow every year, although we have to measure these on average over a three, four-year period to capture that cycle.

So moving on the growth activities, back in 2014, maybe we were producing around 300,000 barrels a day, mostly in the Gulf, Nigeria.

2016, we added BG, we started up Stones in the Gulf of Mexico and we started up Malikai in Malaysia.

We ended the year averaging 600,000 barrels a day, so roughly double.

Now, Ben mentioned Kaikias coming on to FID shortly in the US, but the really important area for growth is Brazil from BG.

In the Santos pre-salt basin, last year, three new FPSOs started up floating production storage units and the last one started pretty close to the end of the year.

So all three of them are actually still ramping up into 2017, more to come.

Breakeven prices in Brazil across the board below -- well below $40 a barrel.

So, the worldwide deepwater production in Q4, as we see in that ramp-up was 725,000 barrels a day.

That's up by more than 50% in one year.

We're delivering that growth now, not sometime in the future.

Maybe, it's gone into the bottom line now.

Well on our way to 900,000 barrels a day by 2020.

That growth is coming from projects already sanctioned, primarily Brazil and of course, Appomattox in the US should be delivering by then.

So that's a business that will be a significant free cash contributor throughout the 2020s.

Moving on to the shales, we continue to improve the capabilities, the competitiveness, because we focus on a small number, basically five core positions, including Argentina.

Following the divestment that we announced in the fourth quarter in Western Canada shales, we now have around 11 billion barrels of discovered and prospective resource within the portfolio, advantaged positions in the Permian, in Fox Creek in Western Canada and in Argentina.

That's 11 billion barrels potential production.

Just as an aside on the reserves, less than 300 million of that is actually booked to-date in proved reserves.

The profitability is improving, costs coming out, better recovery rates, high-grading the acreage.

We've gone from $15 million to $6 million a well in the Permian, moving to longer laterals, better recoveries.

So we will continue to spend within the range, the $2 billion to $3 billion this year.

But we are shifting away from the early stage to appraisal activities, exploration appraisal.

The improvement in capital efficiency and better understanding of where we can really get the best bang for the buck allows us to selectively accelerate development, will be mostly in the Permian, so we move to a develop or produce focus.

We could add 140,000 barrels a day by 2020 from the liquids rich plays in the Permian and Fox Creek.

Now the average breakeven price for those barrels, the additional Permian and Fox Creek, is around $40 a barrel.

That overall will bring forward the date for the shale's cash flow neutrality.

And then the important point here is, we have a great deepwater portfolio, by far the best in the industry with a possible exception of Petrobras, and we have a very good shales portfolio.

They are both going to breakeven, looking forward a [$40] or better.

We have the choice, it's good to have both of these in the portfolio.

So that's it on the themes.

Let's look at the cash flow, close to my heart.

This is an important slide.

I won't say much.

There is no change in the priorities.

This I think is pretty much the same slide we used two years ago.

We'll reduce debt, we'll pay the dividend and that's followed in priority terms by a choice between buybacks and capital investment.

We are committed, subject to reducing the debt and some recovery in the oil prices, to $25 billion of buybacks in the period up to 2020.

But we will use the extra cash that's available now for debt reduction to strengthen the credit metrics to the desired levels and the best proxy for this is gearing, around or at least heading towards 20%.

The financial framework is an indivisible key element by overall Group strategy.

So moving on to the four levers.

We were pretty clear I think at Capital Markets Day.

We worked four performance leavers in the medium term to get from where we are now to that strategic shape, competitive positioning that Ben outlined: divestments, OpEx, CapEx, new projects.

So, firstly on divestments, we have been a little bit busy the last week or two.

In fact, I probably spent more time selling stuff than I've preparing for today.

So no difficult questions on the arcane elements of the balance sheet please.

Obviously, we're using asset sales to help the balance sheet, but more importantly, it's part of the strategy to reshape the Company.

We've completed $5 billion of deals last year.

We've completed $5 billion of deals last month, and we have another $5 billion or more, pretty close to completion as well.

That's $15 billion in total.

They are an important part of starting to reduce the debt and the timing, particularly of upstream divestments, may depend to some extent on oil prices.

We won't give assets away and this is a bit of repetition, but there is absolutely no reason today to think the $30 billion will not be achieved.

And I have said previously, if it takes a bit longer in order to preserve shareholder value, then so be it.

But, you can see we're on track, maybe ahead of track to deliver at least half the target by the midway point, which is the middle of 2017.

So, I'll move on to spending now and just if I remind the context of two years ago, some of the challenges we were given about the falling oil price and what's Shell going to do in a -- enough, did we get it that challenge.

Capital investment will be managed in the $25 billion, 30 billion range.

It was $27 billion last year, that was 40% lower than it was only two years ago when that question was being asked.

$20 billion lower on an absolute basis.

That's quite a performance, I think, for -- against the challenge of did we really understand what was needed.

Track record is pretty good that we can respond quickly in the right way, importantly, because you'll see here, in the red, that's the base level CapEx, the short-cycle infill drilling, the retail investments.

But we still have a very strong, high-quality growth portfolio.

And as we look forward, if you think in the $30 billion, maybe a third is the base, a third is already committed and a third there is still choices, so we do have choices to vary within the period.

Moving on to operating cost, this one, if anything, gives more satisfaction, because this is actually tougher.

You can't stop spending operating expense if you're going to continue with the operation.

So we've delivered some major reductions here, but there is still more to come.

The underlying operating cost $39 billion, $10 billion lower, 20% lower than Shell plus BG, 2014.

And going forward, these numbers will be impacted by divestments, or by new project ramp-ups and the macro, such as foreign exchange movements will have an effect.

So we're not setting a headline target again.

We will just do the right thing in the right way.

The focus is twofold.

We must sustain the improvements already made, don't let them creep back and we'll take further cost out.

There are a lot of improvement programs already agreed, we signed a few off only last week in the Executive Committee.

We will take that cost out and we do expect the costs, obviously, to be below $40 billion and that will feed directly into the cash flow from operations.

This clearly -- I said this before, but clearly remaining potential of multi-billion dollar per year savings on an after-tax basis, even against the baseline we've already achieved.

So finally, the fourth lever, one that we maybe should give a little bit more air time to as we go forward, the project delivery.

Those CapEx dollars have been spent on good projects.

You can see the top 10 here on the left and on the right, the cash flow and the production that they should deliver.

That's why we do them, the free cash flow.

The portfolio is geared to give that improvement in production, but more importantly, the cash from ops and free cash flow, both this year and well into the future.

This matters more than the divestment cash flow, because divestments are one of this, in many cases the same is for a very long period of time.

It may not be permanent because of decline, but these are very solid long-life cash flows.

So the start-ups, combined, by 2018, should produce more than 1 million barrels a day, much more importantly for a CFO, around $10 billion of cash from operations at a $60 oil price; that's by 2018.

All those projects are either up and running, ramping up now or about to be so.

The actual project delivery for the year was pretty consistent with our expectations.

So the last slide is just to summarize the potential from the levers that we're pulling.

The financial framework is being addressed in the down-cycle, but actually it's more than just delivering in the two-year period, is fundamentally fantastic opportunity.

BG plus oil price to fundamentally improve our competitive performance, irrespective of the oil price.

And these four levers, they will add significantly to cash flow, which hopefully will allow Jessica to sleep a little more easily than I sometimes have.

So with that let me pass you over to Ben, just to close.

Thanks, Simon.

Now before closing, I would like to remember that again we are aiming at being this world-class investment case for Shell.

And in the end, of course, you will measure this as total shareholder return and so will we.

And I think by doing a better job on improving the returns on capital employed, by improving the free cash flow per share, by reducing debt, we can create a better investment case, a world-class investment case.

So these are the priorities that we are pursuing internally.

I think we set out a clear pathway for you for the next few years.

I think it's an ambitious pathway, but it's also a transformation of the Company that started in 2016.

And now, we will switch to delivery in 2017 and the years ahead.

I said before I think our strategy is now starting to pay off.

You can see it in 2017, we will be investing around $25 billion in high quality and resilient projects and I'm also confident that 2017 will be another year of progress for Shell to show that we are well on track to deliver that world-class investment case.

So with that we have more than an hour, if need be, to do a Q&A.

So let's have your questions.

Could I please ask you to just take one or two questions at a time, so that we have the opportunity to give everybody a chance.

We also have some questions on the phone.

And I think you were the first one to put your hand up.

[Christian Manny] from JPMorgan.

Just one question please around your CapEx guidance for 2017.

Just looking at the sort of breakup that you provided on slide 23, what additional levers could you pull to take that CapEx guidance lower, in the same way that you surprised yourselves in 2016?

Is there more headroom that you are not talking about?

Thank you.

Let me first stab at it, and then Simon I'm sure will have some observations as well.

Yes, of course, we can take that number lower and yes, you are right, if you imply that there was a little bit of a surprise in how far we could get into 2016 as well, although, we actually did see that we were making progress during the year.

A lot of it, of course, deflating cost structures.

A lot of it improving capital efficiency, getting more bang for our buck in the programs that we were executing.

The $25 billion is not a cash number, by the way.

The cash number is closer to $20 billion actually.

So we add back in what we have to book as capital investment, being the leases that we also have inherited from BG.

And Simon, our [CFO], putting your finger up, Simon will be able to explain that in a bit more detail if need be.

But, indeed, we can bring that number down if we wanted to.

What we said to the $25 billion is not a sort of a hard floor.

But it is I think an appropriate level, considering where we are with not only our inflight projects, but also what we have in the way of a strategy.

We need to fund our strategy and I think about $25 billion roughly right to sustain what we are doing to deliver that expectation that we set out in Capital Markets Day.

Buy make no mistake, if from a financial framework perspective, we feel there is too much pressure on the affordability of the $25 billion, yes, absolutely, we can and we will take it down.

And maybe because it may either preempt or prompt further questions, why go below $25 billion if you don't need to?

You go below $25 billion if you need to, or if you can drive cost out of projects you've already approved, which we have been doing.

That's one of the reasons we ended up at $27 billion.

We can afford $25 billion.

Just think of the cash flow statement we've just put out for the year, so these are annual figures.

The cash element next year of investment is going to be $22 billion, $23 billion, maybe $22 billion.

We will have a cash dividend of $10 billion on top of that.

So you got $33 billion that we need.

We have $21 billion of cash last year $44, and actually $6 billion of working cap, so that makes $27 billion.

There is a one-off tax payment really associated with divestments, which brings us around $28 billion.

You add back $11 to today's oil price, gives another $5 billion or $6 billion.

So you are already balanced and the sharp-eyed amongst you will notice a [mitted] interest.

But there is a lot still to come, the projects, there's still another $8 billion to come of growth from those projects I laid out, not all this year, but some will come this year.

So at today's oil price, we don't need to reduce the CapEx, as long as it's all going in the right place.

Just a quick follow-up, the cash CapEx is $23 billion or [$20 billion]?

There are some leases in it and there are some exploration expense, so $22 billion -- it's closer to $20 billion than $25 billion, but only just.

Hi, it's Jason Gammel of Jefferies.

You've been very consistent in terms of the prioritization of cash and the uses thereof, but one component -- one lever that you've been pulling is the scrip component of the dividend.

I was hoping you might be able to talk about what triggers we should look for, for longer-term relief on the scrip?

Is at a level of gearing, is it a level of free cash flow generation, or any other signals?

Yes, it's those two, dividend and free cash flow generation.

What we would like, because it's more robust recycle is that free cash flow generation comes from that growth from the projects, is not just dividend driven, but the dividend -- sorry, divestment driven.

The divestments will help bring the debt down more quickly.

So what we have stated is, we'll be more comfortable with the credit rating when the debt approaches 20% gearing, or $50 billion in total broad terms, net debt.

Those numbers have both gone up a bit, because of the significant number of finance leases that were not there when we made that statement, but it's close enough.

When we are in that position, the most likely first thing that we do, without committing my colleagues, is take the scrip off.

We know but this --, but you take the scrip off.

We know, but it's dilutive.

But take the scrip off, you don't bring it back again two months later or two quarters later, just because you're doing divestments.

You need the through cycle cash flow.

So there is confidence in the free cash flow through cycle and the prices that we see in terms of the cycle.

That's when that would be, I think, a good milestone, a good signal.

And thereafter you think about the buybacks basically.

The one thing we won't change would be the capital investment, but that's done.

Thank you.

Irene Himona, Societe Generale.

I had two questions please.

Firstly on cash flow, you called 2016 a transition year and you had a $6.2 billion cash outflow on working capital, which obviously we can't think of as normal.

How are you managing that going forward, is there any guidance you can give on that working capital?

And my second question on a project which is Kashagan.

I mean you spoke about the economics of Brazil.

Kashagan is a huge project, obviously, cost as much as Gorgon.

Can you talk a little bit about cash breakeven or cash generation of that project?

Thank you.

Sort of the cash on Kashagan.

Cash coming back from -- the 2016 working capital movement, quite a bit of that was -- as we've seen it's been driven up by basically the inventory.

So that's the big driver, is inventories.

There are other issues associated with trading, such as the margin calls that can make it a little volatile on a daily basis, let alone quarterly.

That's one of the strengths of the trading business.

We can put the balance sheet behind the positions.

So it's volatile only in terms of the margin, not in terms of the long-term outcome.

So it can never be precise, but our inventory level is around just over 100 million barrels.

So you can roughly work out from that the likely impact of movement.

What happened in 2016 was the last kick up and it was in December, so we got no benefit really in the upstream of the $55 oil price, but we saw the downside of the working capital.

Kashagan cash, we had a good questions this morning about what was the production from Kashagan likely to be, which we took about 300,000 barrels a day, the capacity is going to be more than that.

Now let's see what the ongoing regular production is and there is clearly huge potential over time to grow, but not immediately and usually.

We are only one-sixth of that 50,000 barrels a day.

Our share is going out the Caspian Pipeline, Consortium Pipeline, it comes effectively into [Euro's] blend, or into the Black Sea.

So, it was cash negative, cash flow from operations negative last year, because of its start-up costs.

There's a lot of fees -- still activity before the cash started to flow back, but by December it was flown back.

And there were reasonably good margins, because it allows a very high CapEx.

The cash margins going forward is not at that high a cash OpEx unit.

So it will, subject to stable production, be a good contributor this year versus being a negative contributor last year.

And there will be a continued focus.

We've been very clear amongst all venture partners on further cost reductions in Kashagan.

So you can imagine, this has been a bit of an intensive care approach to get a project up and running, make sure that we are not -- all the difficulties that you have.

It's such a complex asset.

And bear in mind, by the time we started it up, it was already 15 years old.

So we had to make sure that this went exceptionally well and it has, but I think indeed with reducing costs and stabilization of the production levels that we are now seeing, this will become a reliable cash engine.

And then, of course, there's a whole raft of opportunities that we can subsequently look at, but that will come once we are absolutely convinced that this unit is working well.

Hi, it's Theepan from Exane BNP.

Two questions please.

Firstly, one on cash taxes.

I think you talked about the deferred tax move, so I was just wondering how we should go about sort of modeling cash taxes going forward?

Is there significant benefits in terms of the deferred tax assets or tax allowances that Shell has built up?

The second question, I think you talked about disposals not being driven by timing, but more value, but I just wanted to get a sense too is on from the BG transaction.

Do you feel you're ahead of schedule on the disposals, and given this week's transactions, should we also expect the next phase of disposal should be a little bit more sort of cash dilutive in the short term?

I understand the high-grading of the portfolio, but should we model more cash erosion?

Let me have first pass at the question two and I hope you will forgive us for not being able to give too many details on what it is that we have in the pipeline, partly because it's just not good commercial practice to do so.

Secondly, because things can and will change in terms of the sequence in which they come about.

It's easy enough with, of course, now standing here and saying, well, we knew that some of the deals, of course, that we had been working on were coming.

I hope you will appreciate the deals that we have done haven't been easy.

So they do take time to piece together, to come up with a construct that works for both buyer and seller, and to the greater complexities around it.

Think of the complexities that we would have had agreeing the North Sea deal and there's quite a few of these still in the pipeline, where it's not going to be straightforward auctioning off, so to speak, of the asset.

So we do have quite a few more in the pipeline.

I talked about $5 billion material progress on them.

So think of that to be announced in the next sort of weeks or months.

But then of course on top of it, we have a whole lot more.

You will also remember that earlier on I spoke about a broader pipeline, well in excess of $30 billion that we have either activated or could activate.

Then of course we are activating new projects as we free up capacity to work on this again.

We only have some much deal team capacity to do complex transactions like the ones that we have been doing now.

So, yes, I do think we are ahead of plan, or we are on track, if you think of it as $30 billion in three years.

And I'm very confident that, of course, certainly, with a slight easing that we have also seen in the last few quarters that implied long-term oil prices being a little bit higher, some of the real tough difficulties that we have seen over the last 18 months may indeed ease a little bit.

How dilutive that will be on cash, I cannot give you any details without disclosing what it is that we are really working on.

Maybe you can give some more guidance on is Simon, but I hope you will be able to bear with us on this also, taking a little bit of comfort from the track records that we have demonstrated.

Yes.

And the recent three divestments all have a common characteristic, that they have strong cash flow in the next three to four years.

Thereafter, you have to continue to invest, or extend the license, or take further risk decommissioning or otherwise and it's better the new owners do that, because they will focus more on it.

So it's a win-win situation, as they would basically accelerating that cash flow in the deal.

So it is a bit dilutive, but it's all wrapped up in terms of what we would expect to deliver as we go forward.

Your first point, Theepan, 2016 was a little odd, because the cash tax was higher than the current tax.

That was linked to the cash paid on divestments, plus the fact the oil price was still going down.

Therefore, we paid taxes on the previous year that were lower than this year's profit.

As we go forward that will reverse.

We're bringing on-stream production in the US and the UK in particular, which will benefit from tax credits and there is the source of some of the deferred tax balances that we carry.

We do have some in Australia as well.

So they effectively are used.

Cash tax paid will be, in some cases, significantly below current tax.

Yeah, hi.

It's Jon Rigby from UBS.

The first is, can you maybe dive down a little bit into the downstream numbers for the fourth quarter, which despite the sort of commitment to more progressive visible earnings stream, still seem to display a degree of volatility that's not obviously explained by the macro.

Maybe you could just talk well out of little more.

The second is, I noticed you referenced the Permian and obviously I think probably a bit of a hidden jewel, people won't (inaudible) to you owning, but part of the characteristics of the transaction you did with BG was to deepen in long cycle, so LNG deepwater.

Do you feel comfortable with your shore cycle exposure and maybe to sort of contradict an ongoing rumor in the market that you might sell the Permian, actually would you, on balance, prefer to deepen in shorter cycle over the coming years, perhaps as your financial position eases?

And then lastly, I take the point Simon made about the LNG market clearing.

I think it clearly contradicted a lot of people's negative use at the start of the year, and you have been more sanguine.

But I suppose it may have even surprised you a little bit.

And as you think about the next three or four years, maybe to this point of long cycle, short cycle, when you start to rank your very significant opportunities, development opportunities in new supply for LNG, would you be able to sort of talk around where the priorities lie, or which projects sit towards the top end of your list, please?

Thank you.

Thanks Jon.

Let me say a few things on long-cycle versus short cycle.

I will cover some of the LNG as well, and then Simon will take the other half of that question, as well as the one on the downstream.

So, yeah, you're absolutely right, there are there two different types of exposures, two different financial characteristics that you get from long cycle, particularly if you look at deepwater investments and shale investments that both as Simon said, have in our portfolio breakeven prices that are below the $40 mark.

So in that sense, you could argue that they are equally attractive, but they actually have fundamentally different characteristics and we like to have both characteristics in our portfolio.

As a matter of fact, we need both characteristics in our portfolio.

What we like about the deepwater business is indeed the very high free cash flow generative nature of it, once you pass the investment hump, which gives a lot of resilience of course for the portfolio when it is stable.

And what we like about the shales portfolio is actually the rate-ability of the investment level, which of course, we don't quite have at the deepwater side of the portfolio.

You cannot ramp up and down that quickly, there come big lumps.

Once you have passed an FID point, you just have to complete.

So the only way you sort of arm yourself against that sort of volatility is to have a strong balance sheet to be able to see your investment program through, once you are committed to it.

But with the shales part, you can flex and you have to flex for that matter, because it doesn't make sense to continue with the high investment rates, when the realization price of the oil and gas that you will produce over a period of a year and a half is just not justifying that investment.

So having both in a portfolio is quite attractive, they complement each other and that's why we want to have roughly comparable strength, I wouldn't say equal strength, in both of them.

I think your observation is correct on both the fact that the Permian is perhaps a hidden jewel in our portfolio and you're probably also correct when you assume that we actually would quite like to have a little bit more of it.

Now, let's see what the future brings.

At this point in time, we of course, will try and accelerate where we can and where it makes sense, investment in that $11 billion of potential barrels that we have in our resource base.

And if we see opportunities to sort of sensibly deepen here and there, then we will continue that as well.

On LNG, well, going forward, I think of course, there are supply projects that Simon will talk to in a moment, but we also see two very important other components of our strategy as a priority at this point in time.

And that is, first of all, market development.

We are again uniquely placed to do market development in LNG and this is also the right time to do it, the right time, because we need to, of course, sign up markets with a prospect of being able to put long-term supply into it.

It is the right thing to do also from a long-term decarbonizing perspective.

The gas market development is tough to do, but once you have it locked in, it's incredibly valuable to have that position.

So a lot of our investment effort and investment dollars will go into market development.

And secondarily, a lot of it will go in sustaining existing supply chains.

We have quite a few supply chains of course that after a long period of time, also have started to become slightly underutilized, and these are, of course, very advantageous investments to check back up.

Think of positions in Trinidad, think of positions in Oman, and a few other positions where we do not have full utilization of our assets.

So these are two very important components of our strategy that need acting now and we are acting on right now.

And then slightly longer term is, what are the big new supply projects we can bring on alongside the existing supply chains and to backfill that market development that we have been doing in the interim.

And Simon will be able to say a bit more about that.

Just on the supply projects LNG, just to complete the story, keep the kid full at the moment is the priority and develop the markets, but we have delayed in the past couple of years some big LNG projects.

We have five possible from floating in Browse in Australia, Abadi in Indonesia and Tanzania, we had LNG Canada, and we have Lake Charles.

(inaudible) the two, yes, they are still progressing with some urgency to get the cost in the right place, but not necessarily to take in urgent FID or kind of there in Lake Charles and back to advantage positions basically.

No particular hurry or commitment to do it, but actually when we're back from the market as to when these projects come on stream, what will the supply-demand balance look like, so that's very important to do that.

We are 57 million tonnes of LNG sales last year in a market of 260 million tonnes, 270 million tonnes, that's over 20%.

So, we have to be -- we have a very good understanding but made the most of that in terms of timing investments into the market.

Downstream commitment to reduce volatility, well we've deliberately separated that for you, the marketing and then refining and trading.

Marketing is what determine a ratable business, it's fairly predictable.

We know the volumes, we know the margins, we know the customers, and yes, it goes up and down a little in terms of the competitive tension, but around the world, you can see we are able to do several billion dollars a year just on that marketing stream and it's on the chart.

Refining and trading is subject to the cycle and subject to a few operational issues.

Q4 did have a rising market, it's not easy to follow, particularly in supply trading activities, that market.

And in fact the product markets in particular were relatively weak and that came back into products trading.

And that trading, we're still making a profit in its own right.

It's not a major exposure or volatility in terms of the potential risks there.

It's a pretty solid earnings, but it is not immune to the cycle and that was what we saw a bit in the fourth quarter.

It is also what we're seeing in competitors as well.

So, maybe this effect was bigger than we were all expecting.

The commitment to reduce volatility in, and we could talk for everybody, the philosophy here, but I'm a big believer in transparency and disclosure and we're working over a rolling four quarter rather than a one quarter perspective on most numbers, hence the wish to focus more on the cash.

It's not just because that's the important factor, it's actually basically more stable through the period.

Accounting ultimately is accounting and is impacted by assumptions and other things that you see coming through according to normal due process and just the issues arising but mostly they are non-cash.

Thank you.

We will have a question from the phones next, operator.

Guy Baber, Simmons.

Thank you guys very much for taking the question.

Simon, I know you like for us to focus on the trailing four quarters as opposed to the last two, but for cash flow the second half of 2016 obviously was very different from what you did first half of 2016.

The portfolio has been changing, the environment has changed in terms of the cost that you were realizing, should we be looking at that second half of 2016 cash flow run rate therefore the $8.8 billion a quarter is more representative of what your portfolio is capable of instead of the trailing four quarters?

Just trying to get a sense of the sustainability of that performance and if you could speak to maybe one-time items that may have boosted that cash flow.

I think that will be helpful?

Thanks, Guy.

I think I will focus on the four quarters.

The first two quarters were particularly weak and that can be weak for a variety of reasons, mainly price.

The recovery in the third and fourth quarter there also timing of tax payments.

So the first half of the year had higher tax payments, much higher tax payments, so some one-off items in it.

And as we go forward future tax payments in addition to the comments I made earlier they lag the profitability.

So that will always be the case, you pay tax after you earn the profit.

The working capital, there are times when we extend additional working capital to the traders.

There are times when we pull it back again.

So that fact -- that's a deliberate choice.

That is not just the inventory moving up and down and that is another factor.

So we do that for value.

We do that because of the supply positions that we have, the shorts and the lengths that we are aiming to match.

So the longer the period the better to be brutally honest with cash flow.

But the first two quarters were very unrepresentative.

Remember a year and a week or so ago the oil price was $27 which is when we asked for your support for the BG deal.

So that was an interesting time and that was an unrepresentative level of volatility in the market, which has a direct impact on our ongoing cash flow.

So the second half of the year is more representative, but some of those factors reversed in that period.

As we go forward, take the year, take your view on price, remove the working capital effect, take into account what we said on the cash, recognize further cost savings, recognize the project delivery.

Those are the things you need to think and build into the model.

Good.

I'll take one more question from the lines first.

Thank you.

Blake Fernandez, Howard Weil.

Folks, good afternoon.

Thanks for taking the question.

I had two, maybe I'll just ask both if it's easier.

For one, we appreciate the outlook on the American shale ramp-up to about 400,000 barrels a day.

The capital associated with that $2 billion to $3 billion, do you think that that's a good run rate in which you need to spend to achieve that 400,000 barrels understanding that obviously you could see some cost re-inflation there before projects?

And then the second question is on divestitures.

If I'm not mistaken, the production associated with what you've announced so far is about 190,000 barrels a day which is roughly about 5% of the portfolio.

And I believe, you are marketing about 10% of the production, sorry about halfway through there.

Yet the divestitures announced and closed so far is about $10 billion, so you are about 33% through the target.

I guess, long story short, do you think you're on track to only need to sell 10% or do you think that number needs to move up a bit?

Thank you.

Yes, on the second one, I wouldn't be too hung-up, it's a number.

I think what we said at the time was, think of this as a production slice that we are marketing or that we are thinking of.

We also said, we would probably get out of five to 10 countries altogether.

Of course, the sequence in which this plays out and how this will play out will always be to a degree unpredictable.

So don't do some sort of interpolation and correlation between all of this and think that we are on or off track or ahead or that something else is coming.

It will be what it will be.

What we said at the time it is material what we are doing and it is indeed.

That's why we mentioned the volume and that's why we mentioned the number of countries.

It is meant to be high grading and streamlining the portfolio, hence the numbers, but it is not an indication of value.

Simon, would you take the other question?

Yes, the shale outlook.

The $2 billion to $3 billion, yes it is a good run rate of the costs we are seeing at the moment, and that there will be two factors going forward.

One will be, we will continue to save the cost add, particularly as we look to consolidate acreage or operatorship which enables the longer laterals.

The cost inflation, I guess, it may happen.

We know some of the service sectors being working literally on survival cash margins and there needs to be some flow-back of that.

But we're in the reasonably good position of choice.

We don't have to do most of this investment and let's see how it goes.

But once we start, we will finish the development in a particular area.

But there is still just 50 to 100 wells, they are still much smaller than, for example, an offshore development and that's how we think about it.

Once we put the contracts in place, we'll do it.

So $2 billion to $3 billion is certainly okay for a while.

Let's see how it goes, we could spend more, so no question, but not yet, I think where we are.

Thomas?

Thomas Adolff from Credit Suisse.

Simon, I've always enjoyed covering Shell.

Got a few questions.

The first one, I want to talk about 2016 and 2017 and just very briefly about 2016 what went right and what went wrong and how did it compare versus your budget at the start of 2016?

And as it relates to 2017, perhaps you can talk about some of the operational risk factors, maybe talk about Pearl GTL and if you have bigger issues there whether you're insured against these issues.

The second question I had was on concentration risk and as I understand it, you have different definition from one country to another.

But as it relates to Brazil I wondered in the upstream whether you're interested to add more and obviously you have preemption right on asset that has been a bid for and Beurden can talk around that.

And if I can be cheeky a quick question on LNG as well.

I know you're quite bullish on the longer-term outlook for LNG but also in LNG you have contract expiries and I think you have quite a few of those in the 2020s partly from the BG portfolio, but also partly from your portfolio.

And once you absorb the current wave of development, how should I think about absolute size of Shell?

Should the next wave of FID merely offset these contract expiries or should I be thinking about Shell potentially even growing from the year early 2020s?

Thank you.

Good questions.

Let me take the third question first.

Yes, we are in a position of considerable strength with our integrated gas portfolio.

We've repositioned this business very clearly as a cash engine because we need it to be a cash engine at this point in time.

It has tremendous potential of cash generation.

It is roughly a third of the capital employed in the Company.

So it needs to produce strong returns as well, because it is actually of course -- it is such a large core of our Company.

But at the same time, of course, we have, and Simon already mentioned, we have a tremendous amount of opportunities to grow as well.

I think at the very least, we will aim to hold the position that we have.

So as the portfolio slightly matures as contracts roll off, as joint ventures expire, the objective, of course, is to hold on to what we have.

Partly it will be by continuous refreshing and renewing and getting into new sales contracts as well.

A lot of our volumes, of course, are still relatively shorter term.

They are five to 10 years, not all 25 years.

And the longer supply deals, yes, we will continue to extend that as well, including extending them by replacing the ones that are replaceable with new projects.

To what extent we will be able to grow that portfolio at that point in time, I'm sure we can, but we'll have to see how attractive it is at that stage of the game, talking here about into the 2020s.

We certainly believe in the potential of LNG supply and LNG demand to grow.

We still think that gas demand will grow twice as fast as oil demand and LNG will grow twice as fast as gas on average.

And if that indeed plays true, we will see that there is a much larger market for us to participate in and therefore, an ability to grow our absolute position without growing our share of the market.

But if that can compete for the capital at that point in time will depend on a number of factors, one of which of course is the competitiveness of the projects that we have.

Now we have a significant amount of work going on at this point in time to understand how we can lower the capital cost of LNG projects.

I mean you have all commented on it as well.

LNG projects has seen significant cost inflation as well that is unsustainable.

Of course, once it is capital in the ground, the nice thing about LNG projects is they don't decline that much.

So you don't have to continue to invest in them to keep them where they are.

But for us to bite off new bits to chew on, we have to be able to do it a lower capital cost.

Ultimately, in the energy system, the fight will be in the power sector, gas versus coal.

We have to be able to compete with coal also on economic grounds.

And therefore, we have to be able to reduce the delivered cost of gas and also better the delivered costs of LNG.

Brazil concentration --

Brazil concentration risk, yes.

Good.

Let me take that one as well.

Yes, we have a strategic risk management approach that says we should not concentrate too much in a single country and we actually have different thresholds for different countries.

As you can imagine, the thresholds for countries like Iraq, like Nigeria is lower than the thresholds for places like Brazil, which is lower again than the threshold that we would have for Australia and US.

So we have a graduated approach where we basically see, say, how much capital employed or how much cash flow do we want to have coming from a single country or how much do we want to be in the whole, which is more the approach you take for high-risk countries like Iraq.

At the moment, Brazil ranks in our top 3 in terms of what we get from it and therefore it is already quite high up in the concentration risk category.

But at this point in time also the attractiveness of Brazil is very high.

We still believe in the fundamentals of the Brazilian economy.

We still believe, of course, in the fundamentals of the resource base that we see there.

So, in principle, yes again, we could take more and we are looking also, of course, with interest to the next licensing round that will come, probably, already this year.

There will be another one probably next year.

And we'll have to take a view on how competitive these resources will be in our portfolio.

The good thing we have of course is that our work program for the next 10 years is reasonable well fully booked.

So what we need to do now is to add resource to the funnel that we are going to need in the course of the next decade, maybe even as late as the second half of the decade.

So it's not as if we have to jump on everything that comes across our way, but we do know that there are some very attractive potential resources in Brazil.

So we will look at it keenly to understand how much attractiveness and how much of it we want to take on, bearing in mind that indeed we are extending the risk of Brazil.

It will not necessarily be immediately increasing, but whenever we take on of course certainly a licensing rounds will only come on in the course of the next decade.

Now, on Lapa, the acquisition of Total of the Petrobras part in it, we know the asset quite well.

We just started it up or we were part of the start-up of course in December last year.

I hope you will forgive me for not disclosing how we are looking at that opportunity to preempt.

We are very well aware of it.

Do you want to say something about the good or bad versus budget?

There were a lot of questions in that.

Yes, I know.

You were making the notes, so you can.

Just on GTL, it is an operational factor.

In the first quarter, maybe second quarter -- we'd just effectively taking the plant down at the moment.

It could take couple of months to bring them back.

We don't know yet quite how long it will take.

There will be an impact on the earnings.

Can't give you a number on the earnings, but we did say 100,000 barrels a day lower in the integrated gas business overall, which is an aggregate, both of Woodside and Gorgon.

Gorgon coming on, Woodside coming off.

We can't insure uninsurable except by us.

What was good and bad against the budget.

We've just been through a review with the Board, and the score card is on top of my head.

The costs on both capital and operating expense, we did better than we expected and I think in large part because of the reaction of the organization to the integration process of BG and visible low prices, and the energy and enthusiasm, or the motivation to get things right.

The opportunity that was there.

Some of that we are certain will flow through into 2017.

There is great momentum to do the right thing, which is very good to see, whether it's in projects, finance, running the kit in the North Sea.

So management of spend, simplification etc., some great progress there.

Safety, HSE, that's the first thing I should have mentioned.

We did have three fatalities, so not good.

Overall statistics, came back to a reasonably good place.

Bear in mind, we integrated BG and by and large, although they operated well, their statistics were not as good as Shell's.

So we've brought them more up to sort of a common standard.

Our refining and chemicals availability left a bit of money on the table, but not a lot, not that material.

Upstream availability, we a program Fit For the Future.

I think Andy talked about it.

Some of you saw -- added around 100,000 barrels a day, or 3% to production, in terms of better availability, lower maintenance periods and just reliability of the upstream kit.

That was a real positive, because that should be sustainable as we go forward.

The last thing I'll say against the budget, we made the budget on divestments.

That was the toughest one to make, to be particularly honest.

And the fact that we've delivered so much in January is a good indicator.

We kept saying all along ranges.

You may think we were prevaricating.

Every deal we've just announced in the last week, there was a really good possibility of closing it before Christmas, but you don't, because you go for the right deal, not just to get it into a particular timeframe.

So, we bought the (inaudible).

We could have run [10] last year.

We can't give you an exact timing, but we want to give you the right deals.

Hi, Biraj Borkhataria, at RBC.

Just on to slide 19, your deepwater production profile, am I right in thinking the -- as we move further out, the lines are a bit more fuzzy than they were in the last presentation and just wondering if anything had changed there in terms of the longer-term deepwater outlook, whether that's potential divestments, or are you all having artistic freedom, anything on that?

I don't make the slides myself, I don't know exactly what was the reason.

(multiple speakers) There is enhanced fuzziness on the grounds that it's four, five years out we're talking.

That makes it somewhat over specific.

And my new Head of Investor Relations, or Jessica's new Head of Investor Relations would probably regret being too specific, bearing in mind divestments may play a part.

There is an aim to clean up the portfolio in the Gulf of Mexico to an extent.

And conversely, there are investment opportunities in, for example, Nigeria that if they go ahead, they go ahead; if they don't, they don't.

The big drivers, the Appomattox, the Stones, the Brazilian program, question mark around veto, we've not taken a final investment decision, but it was a great project.

Kaikias, we said nearly there.

So, (inaudible) combination, we just toned down the specificity.

But there is no real change in the underlying expectation.

And no change in intent either.

This is still very much a growth priority that we know what we are doing with.

As you can imagine, we had three growth or three strategic themes that were impacted in a big way by BG, it was integrated gas, it was deepwater, but also our conventional oil and gas portfolio.

We completely revisit the strategic intent of all three of them, the funnel, where we are, the plans that we have for them.

We worked it through with the Board, we did integrate the gas and deepwater last year.

Earlier in the week, we did the conventional oil and gas portfolio.

So we have very clear intents on all three of them going forward, post BG on deepwater, absolutely no change in strategic intent as we signaled in the Capital Markets Day in June last year.

Lydia?

Yes, Lydia from Barclays.

Two questions, if I could.

The first one on the chemical side and the divestment from the Saudi side.

Given that you've talked about chemicals being a growth area, why was that when that you wanted to sell and how does that future relationship work?

And the second one probably more for Simon and just in the context of 31 quarters, is this the most efficient that you've see in Shell?

And just in terms of the context of where historically and what is the magnitude of what Shell can do going forward?

Okay, let me talk about SADAF.

SADAF has been part of our portfolio for quite a few years.

It's a joint venture that we have had with SABIC actually from the original shallow oil days if I remember correctly.

It has also been a project or a joint venture that we have been looking at for quite some time together with SABIC.

What are we going to do next with it?

We needed to do something with it.

We needed to invest in the value chain in order to make this project a springboard for further growth in Saudi Arabia and a need to fit also in the strategic narrative of the Kingdom who want to have more downstream petrochemicals and also manufacturing industries around clusters like this.

We've worked at for some time.

In the end we decided that the projects that we were looking at were not projects that we could align on.

We then got into a discussion of what is the future of this venture, what sort of investments are going to be needed.

And then of course the interest started to diverge with us of course knowing that this would come to an end of the joint venture agreement in 2020 and SABIC having a different view in it.

So rather than to see could we extend it with a big investment program around it to provide the excuse for extending it, it became how much are we really committed to the outlook and how much of the investments that we need to do right now will be recovered and then the best thing to do was to basically amicably part which from time to time happens in joint ventures.

So there is nothing special about it.

No change of heart, nothing to do with our growth priorities, it's just one of these things that happens in ventures.

Is this the most efficient I have ever seen in Shell?

Are you looking into the future?

In my mind my answer would be not yet.

And the reason is just maybe reflect, up to the late 1990 Shell was the -- almost the benchmark of a federal system, autonomous unit and every one of them wherever it was in the world, Nigeria, Egypt, Brunei they were efficient and effective, but the world moved on.

The world became much more global, much more standards.

There are 120 different ways of running retail site was no longer appropriate.

We then went through probably a decade of bring it together, globalize it, think about functional, expertise being applied and that has some very good things, but it can also lead to, one may call, excess professionalism and the perfect being the enemy of the good.

So I have characterized the last five years, particularly in the bank getting the balance right where this functional expertise meets asset ownership and deliver the best bottom line outcome, whether it's been provided from the projects and technology group or my finance and IT group.

And there is much better conversation, it is not just about efficiency, it is about effectiveness as well because the extra dollar may go in something worthwhile.

Some of you have met our Head of Retail who would be able to persuade any of you within five minutes that the extra dollar was worth spending.

Now, we don't believe him, not every dollar but a lot of them are, and that's what's driving the marketing results because he makes more money from spending the extra dollar.

So what we're having is a much better conversation about that.

And why do I say not yet, because I know where that conversation is taking us and that underpin the statement I made there is a multi-billion dollar potential on OpEx alone.

Are there a bit more probably for the additional margin that is flat and will deliver I'm sure and there is getting that balance right is not easy in organizations large and complex, the Shell but we're making the organization less complex and we are delivering.

And I have every confidence that Jessica will be able to stand here in a year's time and say, yes, we did make progress on that.

And could you go on the phones version and then to floor.

Operator?

(inaudible).

Okay.

First, congratulations on your progress and good luck to Simon.

And then second, Shell has been an industry leader in recognizing the transition that's underway in energy markets and making some hard choices necessary to reposition and hopefully reward shareholders that what you referred to is your world-class investment guys.

And on this point when you consider that total shareholder return of the supermajors has only been about 3% annually over five and 10 years which was below some of the market indices.

My question is, how do you think about the use of market indices in your comparisons to fortify your framework somewhat, is one of your competitors has announced this week or do you think that just using supermajor comparisons for instance for performance and compensation should be strictly held too and why or why not?

The remuneration question, I'd take it, fits with market indices.

I'm not entirely sure whether I will get the question, right, with the answer I'm going to give but please say so if I don't.

First of all, thanks for acknowledging that we have been indeed a leader in the energy transition and we continue to do so.

Our ambitions are indeed to be a company that is in the vanguard of the energy transition that we are right in the middle of to future proof the company, but also to make sure that we find new ways, new business models of making money in a energy system that will look different decades from here on.

If I talk about TSR yes, we will, we have been lagging behind in TSR.

I've said before the first nine decades of the existence of the company we were clearly the number one and we've lost that in the 1990s when we didn't quite participate in the consolidation of the industry that happened and we have been fighting our way back.

And we want to be back in that number one position again.

I've been thinking we can, by doing -- by focusing on strengthening our returns on capital employed, by focusing on the free cash flow per share, by making sure that we have a resilient financial framework.

And if I don't think back on what it is that we expect to be by the end of the decade, which is $25 billion to $30 billion total free cash flow, if you add in inorganic fees as well, double-digit returns at $60 oil compare that with $12 billion over the last three years, 8% return at $90 oil, I think that ought to drive a very significant increase in total shareholder return.

I don't know what else would.

Now, what does it mean, if I think I get to the question you referred to, what does it mean for how we look at our remuneration or rather how the Board would look at how well they are doing, but all of these metrics are actually in our long-term incentives.

It is all about free cash flow, it is all about return, it's also an absolute cash flow, because we do not want to shrink ourselves to greatness by getting out of positions and improving the total -- by improving the returns and the free cash flow per share through a divestment or liquidation of the company.

And it's also indeed focusing on TSI.

So I do think the metrics on which we judge ourselves and the metrics that will drive the very substantial, the biggest part of the senior executive remuneration of our Company are aligned with what we promised to our shareholders.

Again I apologize if I haven't quite gotten to the heart of your question, but please clarify whether this does it.

Okay, good.

I said, I would go to Oswald next.

Just back on LNG and your comments about creating new markets, it really in the context of China's recent plan last week or the week before which seems to say oil production keep declining, shift more into natural gas.

Is that a big opportunity for you, or are you already too big?

You're obviously China's biggest LNG importer.

Can you get bigger there or they might start to stop that, the current market size if there's a lot more gas demand.

And then secondly, just on exploration, maybe could you give us an update -- talk about any successes last year if there were any.

I didn't note anything.

And I note you have changed out your Head of Exploration recently.

So it's just really an what's happening with your ex person's strategy.

Thank you.

Okay, let me take the second question first.

On China, yes, I think China will remain a very significant growth opportunity for us, for LNG and for natural gas.

Think about it again, China's energy mix, about 6% of it is natural gas.

They have clear ambitions to grow that to 10%, 15% and ultimately, I suppose to something that is much more like what we have in Europe or in US, 25% to 30%.

That of course is a massive amount of gas if you think of it.

A lot of it will of course come as pipeline gas, but an awful also as LNG.

So we still see a very strong growth in natural gas going forward.

Will that happen sort of organically and automatically et cetera, yes, to a large extent, but for those of you who did pay attention to what China announces, I think this morning they announced another 54 gigawatts of power stations, coal-fired power stations being canceled.

I don't think that will all be replaced by wind farms.

I think there will be a very significant amount of natural gas replacement for that as well.

And if they were all replaced by wind farms, we will look at as well of course, but we are not kidding.

So we see indeed a tremendous potential in China.

Do we have already too much concentration risk in China, I don't think so.

Of course, we need to be -- we need to tread careful.

We need to understand how we grow our position in China and how we diversify within China itself.

One of the things we will also be doing, which is part of this market-led growth strategy that we are referring to right now is, we will be asking ourselves the question, we have been asking ourselves the question, in which countries can we set up a gas marketing and trading operation as well as a power marketing and trading operation where actually the regulatory framework will allow us to do so.

And at the moment, we are doing exactly that in China.

Where we can be in country trading and marketing gas and power, we will.

So China is an opportunity for us, India is an emerging opportunity for us, Brazil is another opportunity for us.

So we will be entering these markets to be around customer.

So we do not have that concentrated risk of supplying long-term contract LNG to single buyers.

They of course, are then dependent on the quality of that long-term relationship and the credit of that particular buyer.

So being more integrated into these markets is a strengthening of that position as well, but we will be able to take on in that sense more China risk or more China market risk going forward.

Exploration, when we stood here two years ago we said we do less, will need less.

We did got the total spend down around $2 billion last year which has meant much less Frontier and you tend to hear about the Frontier maybe not the focus in the basins where we are.

So in the Gulf of Mexico the primary successes were in force and helping support Vito and Appomattox.

In fact Appomattox gets bigger every time.

We look at it although the design won't and that's the challenge to make sure we can get the barrels through the actual facility that we're building.

We had good success in the UK barrel.

Actually that supported the sale process and we've got the contingent payment in there for successful development in future.

If we were just a small E&P, again it's great credit for that deal, drilling a well, monetizing it immediately.

And Malaysia again around what we have done well.

Oman, around what we have done well.

Nigeria is possibly the biggest opportunity along with Trinidad going forward.

You probably won't hear much about any of these, a lot of it is about keeping kit full using existing infrastructure, working on basins we know well.

The Nigeria funding scheme that's being developed and hopefully will be implemented in the not too distant future is a very strong incentive for everybody to start doing the right level of investment again.

So all of those can come together over time within the $2 billion limit that we set ourselves going forward.

But there will be less Frontier work until we see a different, almost both requirement, but also opportunity.

Thank you.

Martijn?

And then we will come to you.

It's Martijn Rats from Morgan Stanley.

I wanted to ask you two questions.

First of all, you mentioned both Brazil and the Permian as examples of areas where you have breakevens below $40.

I was just wondering if you could comment relative to the size of the Company how deep is the pool of investment opportunities that work at those type of oil prices because more and more of work we're having on our projects there these very low breakevens.

But relative to the close to 4 million barrels you produce, I mean like how material is that pool?

Can that pool of investment opportunity keep you going for years or are we just talking about like a handful of projects that maybe carry you for the next one or two years?

And the second thing I wanted to ask you about is about the Permian following your positive comments.

My understanding is that the joint venture with Anadarko ends around the middle of the year and I was wondering if that is a material event or not, but if so, how you see that relationship going forward?

Okay, let me start off with the first question, ask Simon to complete it and then you can think a little bit more what we want to share on the relationship with Anadarko which is very well noted by the way, Martijn.

Yes, we actually had exactly that discussion in the Board as well a little bit earlier in this week, looking at the S-curve of opportunities that we have.

And it is in the S-curve with a very, very large plateau in the middle.

And the interesting part of it, it is actually reasonably evenly populated with opportunities that will come out of the unconventionals, opportunities that will come out of the conventional oil and gas business, and opportunities that will come out of deep water.

So it's not as if we have everything concentrated at the front end when it is say the Permian or unconventionals and the other opportunities sitting at the tail end.

Now my memory fills me at this point in time to remember exactly what was on the x-axis in terms of barrels and how big that would be in relation to the Company, but Simon's spreadsheet mind will probably quickly work it out.

But I would say, if I sort of more qualitatively talk through it I think if you look at it in the deep water, we do not have any lack of depth in the opportunities indeed in the sub $40 and in some cases sub $30 range to keep on plugging away for at least a decade.

So we do not run out of running room of opportunities that are just not good enough.

And at the same time, these are getting better all the time.

And it's not just a matter of getting better, because we see cost further inflating.

I think the regime that we now have in the Company basically says don't try to maximize NPV per project.

Just give us the project with the lowest possible breakeven price.

That project or that way of thinking, that paradigm shift hasn't run its entire course yet.

So what we see coming back is still more opportunities where people say, well, if you want to have resilience as your defining criterion for the project, I can can't comp in a better project.

You will have to give in some NPV at some point in time.

It means that you may have built a little bit smaller, you may not be able to tie in every satellite as quickly as you could, so some of it may come a little bit later, but hey, if you want to have resilience, we can give you that.

In the deep water, that particular program hasn't run its course.

The same is actually true for unconventionals.

If you look at the opportunities that we have in the Permian, in the other main liquid position that we have in Canada, they are actually quite significant.

And we have again a continuous discovery of depth and growth in other areas like for instance in Argentina, where it's a little bit harder to get to the bottom of things simply because there isn't as much intelligence available about the fields that we are looking at in the Vaca Muerta, but we see that that position potentially is as attractive as a Permian position.

If you look at the conventional oil and gas business, it's a bit more difficult to get.

And actually when I referred to the S-curve that shows the NPV versus breakeven price.

It was actually for the purpose of the conventional oil and gas business that we looked at that particular curve.

And then we see that we can indeed extend the life of this cash-engine for quite some time, but it starts to really tail off sort of in the [30s].

And we also know that if you don't act on these things earlier on it will gets late in the day, if you start working on in it in the [20s].

So that's why we have a lot of focus right now on where are what we call the stock barrels or what we now started calling the strategic battlegrounds to get these barrels really recover.

So think of the complications that we have Simon mentioned in Nigeria, huge potential.

But how on earth do you make it commercially sensible to invest in them if you have so many funding difficulties same of Iraq.

Same of many positions that we have in our portfolio but potentially we see all this running room but there are lots of practical or strategical challenges to overcome.

So qualitatively, I think we are in a good place.

And I know that we are numerically in a good place in the themes that I mentioned and I noted our focus needs to be in a conventional oil and gas business, but it's not a business that is sort of running out of running room with attractive projects in the next few years, we have at least a decade or a decade and a half to work on backfilling.

The S curve line was under $40, but mostly it was under $50.

The deep water while started off with a $50 cap and then he's pushing it down to $45 and he is in competition with Greg who runs shales.

So while we are on the deep water, the two of them are literally in competition to bring the line down.

So that's pretty healthy inside the Company.

Yes, right Anadarko does end in 2017.

We're both well aware of it, we're both doing quite some work.

There is a bit of patchwork of operatorship et cetera.

At the moment that has some implications for who makes decisions and also how far you can go laterally in terms when you drill.

There is a solution to be had where we both end up in a better place.

It just is not yet agreed.

So it's going -- it's a win-win potential negotiation, not a zero sum when somebody wins, somebody loses.

I am pretty confident that we'll get to a point where we both in a better position.

Probably the operatorship is consolidated in a different way.

But it should be at least in theory either value neutral or some transfer of value one way or the other.

First of all, in terms of value neutral should be value accretive to both of us and we should both get the fair share.

Okay.

I was going to come to you.

Colin Smith from Panmure Gordon.

Two questions, first one again on chemicals, just in the context of it being a growth priority and looking at the indicative CapEx going forward and bearing in mind that you're 100% in the Pennsylvania cracker, but we've never really had a lot of detail about when that project gets going.

I just wondered if that was included at reasonable scale from 2018 or if you could just talk a little bit about what the program is for it?

So it's the first question.

Second one, I think Simon and your chart on shales you have seven blogs, but you talked about five core positions.

I just wondered if you could elucidate what those are?

And I noted that you specifically included Argentina in that and Ben just talked about the Vaca Muerta.

I wondered why you thought that was in terms of maturity and what it takes to actually get you more engaged in doing something with it bear in mind the fairly significant progress at some other operators have been making there in the last year or two?

Thank you.

Okay.

When you talk about the Pennsylvania project, keep the microphone down, and talking about 2018, do you mean the capital spend step-up that we will have in 2018?

The overall project [capital] expense.

Okay, good.

Well, the overall project, so we sanctioned this project, but of course, for affordability reasons, we also said we will have a slow start in terms of stepping up the spend on the construction phase itself.

That will indeed now come, because it's ready to get there.

We are still working our way through some of the permits that we need to have, but that's just a normal state of affairs that you will have in any project.

But I think by the end of the year, certainly, in 2018, we will be in significant investment mode.

We haven't announced exactly when it will start up, but expect that to be not anymore this decade because it is a very large Greenfield project where we have gone quite a long way already in terms of getting the site ready.

You may recall or you may not know, this was an old zinc smelter that was in need of remediation that we took over and remediated it on behalf of the government and basically now are in a position that we can start building on as all the civil works et cetera are ready for that site.

It is indeed 100% project at this point in time.

It is a strategic project partly also because it is so strategically advantaged, but also because it will be a re-entry for us in polyolefins that we have been -- in polyolefin, got out of it through a very difficult convoluted way in the past through with a number of joint ventures.

This will be a re-entry in a way that will sustain our position as a polyolefins player.

On the Vaca Muerta let me say a few things and I'm sure that Simon will have a few things to add to it as well.

Indeed, it is a very geologically from what we know at the moment is an extremely attractive play.

But at the same time, as I said, it's a little bit less well delineated as what you would see in the Permian where we have been sticking holes in that for the last century.

We are a long way off from that in Argentina, but at the same time, we're also a long way off from getting a number of the commercial parameters, right.

Part of it is of course market liberalization that we still need in terms of getting the right gas prices and even oil prices in Argentina.

And on top of it, some changes will have to be made to the tax code in order for it to actually work.

The tax code is not exactly conducive to the sort of depreciation behavior you will see in these assets.

So accelerated depreciation is one of the issues that we need to get sorted with the Argentinian authorities.

On top of it, there is just a productivity issue still at this point in time.

We do not have the benefit of a very well geared up supply chain.

We do not have the benefits of a large workforce, unionized workforce in the case of Argentina that understands how to play this game efficiently, and we will have to continue to work on that as well.

But I do hope and expect that before the end of this decade, Argentina will be ready to really accelerate its investment or rather that operators like us will be ready to accelerate the investment.

And every time I speak with President Macri, he is very keen to understand what he needs to do in order to get us to that point.

So we have a very willing government, a very willing set of operators.

We have an extremely willing Governor of Neuquen Province who is also a very keen to do whatever it takes.

So, this will take off.

It's just a matter of lining everything up.

You guys read the slides pretty closely and you're accurate, seven positions.

The five key positions, three liquids Argentina, Permian and Western Canada.

We talked about Fox Creek, there are two plays up in Western Canada in liquids.

Fox Creek is the one where we will invest to develop, not at the same scale.

It may have the quality of the Permian, it doesn't have the same scale as Permian for us, at least not yet.

So, there's still a little bit of learning in that area.

And Groundbirch and Appalachia, so Groundbirch in Western Canada and Appalachia, basically the Utica, also Marcellus, the two big gas positions.

So the five are, Argentina, Permian, Fox Creek, Appalachia and Groundbirch.

Haynesville was an acquisition from BG, it's okay, but it's not got the scale or the quality of the other positions.

And we actually sold that to the Haynesville, our own position some time ago.

The BG position is better than the old Shell position, but it's a valuable asset base not necessarily going to stay in the portfolio.

Okay, thank you.

What I would like to do is to call it to the close now.

There will be opportunity, of course, for those of you who are here to ask some further questions after this when we have a few drinks.

Thank you very much for the questions that you've asked.

Again a reminder to you that as Simon already announced, we are going to do an update on LNG in London and Singapore in February.

And March, we will do another one in New Orleans in the US.

Looking at really how we you see that industry going forward.

And then of course we have the first quarter results schedules on 4 of May this year.

And that is something that I will do then together with Jessica.

Now normally I have the last words in these sessions and I think it is appropriate that I give the last word to Simon on this occasion because it's his last results engagement with you.

But before I do so, let me say again how incredibly valuable Simon's legacy is in Shell.

Of course, you all know Simon from the days that he was in Investor Relations, maybe even before.

You also know how tough the journey has been since 2004, but it is a journey of a lot of progress, a lot of legacy positions being filled, being built and established that in the end provided the springboard for us to do BG.

And that is a legacy where Simon's fingerprints are all over.

So of course in the last few years we've had this tremendous time working together on the BG acquisition, which was a period that of course has been transformational in many ways.

Transformational for our relationship.

We got to work really well together and it's with tremendous joy and satisfaction that we can look back on what has been achieved and Simon inside the Company is very, very well recognized for that and rightly so.

Simon, I've enjoyed working with you tremendously.

I wish you well going forward.

But I think the last words today are yours to have.

As everybody tough few days, I think, today is the first so that I'm farewell, I am not sure what I am saying farewell to but hopefully a better legacy than it otherwise would be had I not been involved.

I did it with the press this morning so I'll be slightly less of script.

I first worked with you guys, actually literally some of you guys.

December 2000 when somebody came up, one of you came up to me and said if you do nothing else, move this bloody strategy meeting from the week before Christmas because nobody remembers a word you say.

Now it's the first and some of you may claim the only thing I ever actually delivered that you asked.

You were absolutely right.

I personally have benefited hugely from that relationship, your ability to, and this may sound strange, simplifying, get to the core of what actually matters, whether it's value or risks or some of the choices and decisions we make.

And to say whole of the Mauritius ask the questions in a way that if you work for us don't always do, it is actually incredibly powerful and helpful.

Because no matter how much we try and train ourselves with a diverse, challenging, critical community, we don't always get the full story but from you guys we do.

That is important, don't lose that.

I'm sorry about the modeling.

I am not a spreadsheet guys by nature, I must say.

We can do probably better, but we can never get to perfection.

But the important point here is, I do believe and you have a big part to play in this, shareholders aren't necessarily evil.

They deserve to understand how we create value through cycle in the longer term.

There are a lot of people at the moment making to say a name for themselves talking about the importance of longer-term investing and thinking through cycle and definitely a better understanding of risk.

And their own organizations don't always apply this.

But the fact that they're talking about it is actually good because I believe fully in transparency and disclosure.

I would not go away from quarterly results.

I may just pay less attention to reading into the detail and yes I am a physicist.

So I'm going to share a couple of physics principles with you and maybe you would recognize them.

The first is the Second Law of Thermodynamics which means disorder or chaos always increases or you have to put infinite energy into a system to create perfect order.

Your spreadsheets assume perfect order, by definition, they are just one view of the future.

Our choice as management is not to fight that particular law of thermodynamics or let chaos rain, it is to put the appropriate amount of energy to get the appropriate amount of order because believe me energy equals by definition cost and complexity.

So bear with us.

You cannot deliver perfection because the other physics principle is the Heisenberg Uncertainty Principle, which I will just move a little bit off the table and say, the smaller the thing you look at and the shorter the time period you look at it, the less certain you can be of what you're looking at.

I don't if that translates well.

But think about it.

If you look at the daily P&L it's bloody meaningless.

If you look at the monthly one it's helpful, but it still doesn't tell you either some of the things you might only look at quarterly properly or in fact proper trends.

Bear that in mind, look at the long term, look at the value drivers, help the buy side and help the companies because you really have done by helping us simplify and understand.

I think to the extent I've been successful since I worked with you guys in the Company because of what you taught me.

Forget all of the detailed engineering and stuff, just ask the right questions.

Just think about it in value terms and think what would if the sell side analyst or the investor who sat with me in this room while we were discussing the decision, what would they be thinking, what would they be asking and that's a mental mindset I've carried since I worked with you in the first time.

So I hope that is translated into better decisions.

You don't get them all right, I mean you're right about legacy position.

There may be one or two who may have done definitely, maybe one or two I prefer we haven't spent quite so much money on.

But given the situation we were in 15 years ago there wasn't an option to do nothing and I hope we've ended up now or at least we're not ended up, we're still on a journey, but we're in a position now where that platform is the best in the world.

I'm pretty convinced it is and that we now see the delivery from it.

So despite we might think in the bandwidth the we've enjoyed over the years, I have actually enjoyed it.

Thank you.

Thanks for a lot of the support you've given us, particularly a couple of years ago when we did -- sorry, a year ago, when we did get the support for the BG deal, that was a really great, second to everything what Ben says, it was great working together on that.

And hopefully, that will give you the bottom line that we've also for many years.

Thank you all and good luck in your support for Shell in future.

Thank you and good luck to Jessica as well of course.