殼牌 (SHEL) 2019 Q2 法說會逐字稿

Welcome to the Royal Dutch Shell 2019 Q2 Announcement.

(Operator Instructions) As a reminder, today's call will be recorded.

I would like to introduce the first speaker, Mr. Ben Van Beurden.

Please go ahead.

Thank you very much, operator, and ladies and gentlemen, thank you very much for joining us.

Welcome to our second quarter results call.

Jessica and I look forward to updating you on the continued delivery and performance in the short term but then, of course, also on the continued confidence that we have that we will meet our 2020 organic free cash flow outlook.

Before we do all of that, let me highlight again the disclaimer statement.

Within today's call, I will take you through Shell's performance across the businesses.

We'll give you some updates on performance and safety and then on our portfolio project delivery.

Jessica will then cover the financial performance in more detail.

Let me begin with our earnings for the quarter, which were, of course, lower than recent levels of profitability and were mixed across the businesses, which is an outcome from 3 distinct drivers.

First, the macro environment.

So our Q2 results reflect lower realized oil, gas and LNG prices.

We've also seen weaker industry conditions in Downstream, particularly in refining and even more so in petrochemicals.

The macro conditions of these businesses are, of course, cyclical in nature, and we have seen these types of declines and in subsequent recovery before in oil and gas but definitely also in refining and chemical margins.

And our strength is the ability to see the macro headwinds and to respond appropriately.

The second driver is the underlying asset performance.

And this quarter, we experienced some underperformance and operational issues as well as some planned maintenance events.

So for example, although our year-on-year production was higher, this particular quarter, we faced some wells underperformance mainly in the Gulf of Mexico.

And where required, we are making interventions to enable higher sustained levels of production and of course, cash flow.

In Q2, we undertook a major turnaround at our Moerdijk chemicals facility in the Netherlands, which was then further impacted by the industrial workforce action there.

And earlier in the quarter, we also had an unplanned shutdown at our Jurong Island chemicals facility in Singapore.

Now both of these issues have since been resolved, but all of this is reflected in our Chemicals operational performance with an availability of around 85%, and that's down from 93% in the same quarter last year and around 95% last quarter.

Now while these operational events are one-offs in this quarter, we expect to deliver the operational performance we need to meet our 2020 organic free cash flow outlook.

And we can see this delivery in the customer-facing part of our Downstream business, where Marketing generated very strong second quarter earnings, and this further strengthens our confidence in our strategy to continue growing this part of the business.

Now the third and final driver are the one-offs and the unusual items that we have experienced this quarter, and that totaled around $500 million.

So for example, in Q2, we signed a Heads of Agreement with the government of Trinidad and Tobago which will impact our earnings this quarter, and I will talk about this a bit more later.

We also have taken some provisions for tax and receivables, which also will impact earnings in this quarter.

Also, with our assets starting up, depreciation will commence, and we will see increasing revenues as we progress through the ramp-up phase as well.

Now on to the cash flow from operations, which, for this quarter, excluding working capital movements, was USD 10.5 billion, demonstrating continued good performance in cash delivery.

We will talk later how this demonstrates our ability to deliver the 2020 organic free cash flow outlook.

And as both Jessica and I highlighted at Management Day in June, the foundations of our financial framework remain the same.

And we are pleased to announce the next $2.75 billion tranche of our share buyback program.

Moving onto our other strategic ambitions for Shell to thrive through the energy transition and to sustain our societal license to operate, we must fulfill a number of commitments.

And one commitment for us is to keep in line with society as it strives to meet the goal of the Paris Agreement.

We believe we must all play our part, so let me highlight a few of the milestones in this quarter.

So in June, we signed an agreement to deliver the world's first carbon-neutral cargoes of liquefied natural gas to both Tokyo Gas and GS Energy.

We did it using nature-based carbon credits to compensate for the carbon dioxide emissions that will be generated by these cargoes.

And in early June, I attended the Vatican climate summit and agreed, in partnership with other leaders in the energy sector and the global investment community and some other organizations, to further support government-led carbon pricing mechanisms through industry collaboration in order to encourage low carbon choices for society.

So progress on a number of fronts this quarter.

But before I give you more detail on our performance, first, I want to focus on safety.

Health, safety, security and the environment are, of course, of the utmost importance to Shell.

And it is with deep sadness that we report 2 fatalities in June, both at the Shell Auger Tension Leg Platform in the U.S. Gulf of Mexico.

There, two of our colleagues died during a routine and a mandatory test of a lifeboat launch and retrieval capabilities.

And as you can imagine, this was absolutely devastating news.

So our sympathy and our condolences go out to the families, to their friends but also, the many colleagues that they had.

Now this follows 4 other fatalities in Shell-operated ventures earlier in the year, two contractors in our Upstream operations in Nigeria and two employees at separate Downstream sites in the United States.

And it's a terrible reminder of the importance of a relentless and an uncompromising quest to improve our HSSE performance and to ensure that we all have in the front of our minds that Goal Zero is our goal, zero harm to people, zero harm to the environment.

Despite marked improvements that the industry has made as a whole, it is events like this that shows how much further we all have to go.

So we must do better and believe me, we will.

So I've talked about our strategy.

I've talked about how HSSE is vital to everything we do, how we must never let up on our safety standards.

So now let me turn to the financial summary for the first half of this year.

So our organic free cash flow for the first 6 months of this year was $9.6 billion, and that includes around $2.9 billion negative working capital impact.

There will naturally be differences quarter-to-quarter in our cash flow profile.

But importantly, if you look at a 4-quarter rolling basis, our cash flow performance is on track to deliver our 2020 organic free cash flow outlook and that remains unchanged.

Jessica will talk about this in a bit more detail.

Turning to share buybacks.

We have now reached around $9.3 billion in total since we started this program in July 2018, and this is in line with the progress that we expect towards completing the $25 billion of share buybacks by the end of next year.

Our 2019 earnings are around $8.8 billion, and that's at an average Brent price of $66 per barrel.

And our return on capital employed was 8.2% at the end of this quarter with gearing at 27.6%.

So Jessica will talk about gearing and the increase in a bit more detail later, but I can already say this includes an additional negative impact of 0.4 percentage points, which is arising from an IFRS 11 accounting interpretation.

And finally, our year-to-date cash capital expenditure was around $11 billion, continuing our investment momentum but within the expected range of $24 billion to $29 billion of cash CapEx per annum, both for this year and for next year.

Now let's move to some recent portfolio highlights.

Our recent announcements show the continued progress that we have made.

We have previously said we would continue reshaping our refining portfolio, ensuring we focus on meeting the needs of our customers.

And in April, we announced the divestment of the SASREF refinery in Saudi Arabia.

We also announced an agreement for the sale of the Martinez Refinery in the United States, and both of these deals are expected to close this year.

But we've also recently seen the completion of various divestments, so the Greater Sunrise divestment and Caesar Tonga.

And just yesterday, we completed the divestment of our Upstream assets in Denmark for a consideration of $1.9 billion.

And these divestments support our ambition to complete more than $5 billion of divestments per year in 2019 and also in 2020.

And Shell's strategy for its refining portfolio, of course, also includes continued investment toward the long-term value and efficiency of growth that we have in the refineries that we will retain.

In the first half of the year, we successfully and safely completed several major plant turnarounds.

And at Pernis, we piloted a digital valve early warning system for the site's crude distillation unit.

And since it came online last year, this early warning system has identified potential issues that could have triggered unplanned downtime.

But instead, through this digital monitoring and then the subsequent preventative measures, this was aborted.

So it's a great technology.

We are taking steps to introduce it to other sites, including our Bukom refinery and Jurong Island chemicals manufacturing plant, both in Singapore and then also in other parts of our portfolio.

As I mentioned earlier, in May, we signed a Heads of Agreement with the government of Trinidad and Tobago for enhanced LNG revenues to the country, and this represents a significant achievement for both parties.

And crucially, it paves the way for further development of the LNG sector in Trinidad and Tobago.

So the agreement also helps us unlock key projects that are currently in development to supply gas both to the domestic markets but also into our Atlantic LNG facility for exports.

We've also taken the final investment decision on both Mero 2, which is a floating production storage and offloading vessel to be deployed at the Mero field in Brazil and the Powernap tieback in the Gulf of Mexico.

And these types of projects are expected to support our next phase of growth through 2025 and are excellent examples of how we are unlocking opportunities while at the same time, also lowering costs.

And during the quarter, we also made progress on 2 important projects, Prelude and Appomattox.

I personally had the pleasure of being in Perth in Australia for the official ceremony marking Prelude going into operations.

Prelude and Appomattox are 2 of the final large projects helping Shell achieve its 2020 organic free cash flow outlook, and Jessica will touch upon these a little bit later.

So in response to investor feedback on Management Day to better understand progress in our customer-facing businesses, it is worth highlighting Global Commercial as a part of Shell that is helping us generate resilient cash flows as we have also seen in this particular quarter.

So our Marketing business this quarter showed a further growth in earnings, increasing around $200 million since the same quarter a year ago.

And in our Marketing business, Global Commercial is our business-to-business organization, which serves about 1 million customers in 150 markets, and it is growing.

Global Commercial comprises 3 businesses: lubricants, specialties or bitumen and sulfur and aviation, and all have unique scale, unique strengths of brand and of capability.

Now let me focus on a few exciting innovations in lubricants that we introduced in the last few months, demonstrating our ability to innovate across the energy system, transport and in digital.

So lubricants is the largest of the 3 businesses in Global Commercial.

It has a global market share of 11%.

So to give you an idea of what it means, 1 in 9 machines and engines in this world is protected by Shell lubricants.

And one example of the performance and the protection that we promise drivers is Helix 0W, which is our premium ultra-low viscosity engine oil, which is made from Shell's GTL base oil from natural gas, and this oil makes internal combustion engines more efficient.

It makes it cleaner and thereby, improving the fuel economy by up to 4%.

This fully synthetic premium lubricant belongs to one of the fastest-growing categories of lubricants, reflecting high customer demand.

And another significant innovation for this quarter is the introduction of our new range of fluids developed specifically for electric vehicles, and we call them Shell E-Fluids.

It may not always be obvious, but even electric vehicles need greases, they need transmission fluids and increasingly also high performance coolants.

We launched our E-Fluids range at the Formula E Championship in Berlin in May.

And these projects are designed to make electric vehicles perform better and to make them more efficient.

And next is strong demand.

We have 2 advantages in this field.

First, of course, our long-term relationship with major car manufacturers across the world; and second, our investment in research and development, which enables us to work on new products, often co-engineered with car manufacturers, allow us to bring them to scale in 150 markets.

So Global Commercial is a significant component of our marketing growth.

We're very happy with our progress there, both in terms of the products and services that we provide.

So let me now hand you over to Jessica.

Jessica will talk you through the Q2 results in a bit more detail.

Thank you, Ben, and welcome to everyone on the call today.

I would like to start by reminding you that the results are prepared using the new IFRS 16 accounting standard.

For Q2, cash flow from operations, excluding working capital movements, was $10.5 billion.

This is at an average Brent price of $69 per barrel and a mixed price and margin environment, which is overall down from Q2 last year, particularly in gas, refining and chemicals.

Our organic free cash flow for the quarter was $6.2 billion.

This includes a positive working capital impact of some $0.6 billion.

Earnings amounted to $3.5 billion, and our return on average capital employed reached 8.2%.

As Ben highlighted, refining and chemicals margins are weaker than we would have hoped.

While we may see differences quarter-to-quarter in profitability, we continue to demonstrate progress towards ROACE of around 10% by the end of 2020.

For Q2 2019, our gearing is 27.6% or 23% on an IAS 17 basis, in line with what we expected from the IFRS 16 accounting change.

This quarter, we also saw additional lease liabilities recognized on our balance sheet based on the recent final decision of the IFRS Interpretations Committee.

The decision means that as operator, we should recognize the total liabilities regardless of actual equity interest.

For Shell, this required an incremental $1.4 billion of lease liabilities to be recognized on our balance sheet, resulting in a 0.4% increase to our gearing in Q2 2019.

Our cash capital expenditure in the quarter was $5.3 billion with the 2019 outlook within the range of $24 billion to $29 billion.

Our share buyback program is progressing with some $9.3 billion in shares purchased to date since the start of the program in July 2018.

And the next tranche of up to $2.75 billion begins today.

As Ben and I have said at our Management Day, we expect to complete $25 billion in share buybacks by the end of 2020, subject to further progress with debt reduction and oil price conditions.

So in short, this quarter, we have seen challenging macro conditions, some operational challenges, as Ben has highlighted, and some one-offs, all of which prevented us from achieving the level of profitability we would like to see.

In terms of cash, we have seen this quarter generate good cash flow from operations.

We've also progressed our project delivery, which will add to our cash flows in the quarters to come.

And of course, subject to progress with debt reduction and oil price conditions, all of this progress supports our Management Day ambition of growing sustainable shareholder distributions.

Now that we've seen the summary, let us turn to earnings in more detail.

Q2 2019 earnings were down largely due to the weaker price and margin environment which impacted each of our businesses, as seen on the chart.

Earnings this quarter were $3.5 billion, some 26% lower than in Q2 2018.

In our Integrated Gas business, total production was 3% lower compared with the second quarter 2018.

This is mainly due to divestments and the transfer of the Salym asset from integrated gas to Upstream.

This is partially offset by production from new wells in Australia and Trinidad and Tobago.

LNG liquefaction volumes increased by 2% compared with the second quarter 2018, benefiting from higher feed gas availability and partly offset by divestments.

Integrated Gas earnings were $1.7 billion, reflecting lower realized oil, gas and LNG prices and decreased production when compared with the same quarter last year.

Tax provisions in the Heads of Agreement with the government of Trinidad and Tobago mentioned by Ben earlier had a combined negative impact on our clean earnings of around $200 million in the quarter and are expected to lead to a cash outflow later in the year.

In Upstream, earnings were approximately $1.3 billion, reflecting lower oil and gas prices, higher depreciation from new field ramp-ups as well as increased receivables provisions, partly offset by increased volumes and lower taxation.

Second quarter Upstream production increased by 7% compared with the same quarter a year ago.

This is mainly due to higher production from our North American assets and as mentioned earlier, the transfer of our Salym assets from Integrated Gas to Upstream.

This production increase was partly offset by the impact of divestments.

Without these portfolio impacts, production was up 6% over the same period.

In Downstream, earnings were $1.3 billion in Q2 2019, down from $1.7 billion in Q2 2018.

This reflects lower realized base chemicals, intermediates and refining margins, partly offset by higher realized margins from our retail business.

In the Corporate segment, we have seen the additional impact of IFRS 16 with the interest recognition residing in this segment.

Again, this is consistent with what was previously communicated.

And with a better understanding of IFRS and tax impacts, we feel it is now the right time to adjust our outlook for the Corporate segment, which will now be $2.9 billion to $3.2 billion for the full year 2019.

Now that we've discussed our Q2 earnings, let me turn to cash flow.

Like our earnings, our Q2 2019 cash flows were also down largely due to the weaker price and margin environment, which impacted each of our businesses.

This quarter, our cash flow from operations, excluding working capital movements, amounted to $10.5 billion.

This is $1.1 billion lower than in Q2 2018.

In our Integrated Gas business, cash flow from operations in Q2 2019 was $3.4 billion.

This includes positive working capital movements and the impact of IFRS 16.

In Upstream, our cash flow from operations was $5.6 billion, slightly higher than in the same quarter last year.

Like Integrated Gas, our Upstream cash flow from operations was helped by positive working capital and IFRS 16 impacts.

In our Downstream business, our cash flow from operations was $2.4 billion, some $1.4 billion higher in Q2 2019 when compared with Q2 2018.

This largely reflects the negative impact on working capital in Q2 2018 resulting from the higher inventory price and volume movements as well as the positive impact in relation to the implementation of IFRS 16.

Now that we've compared this quarter with the same quarter last year, let us take a step back and see how we have been doing over a longer period.

On this slide, you can see across the extended period that all significant financial trends are moving in the right direction.

We've demonstrated continued delivery in the growth of our earnings and improvement of our ROACE.

Our cash flow from operations has more than doubled between 2016 and 2018 and we plan to further increase this.

A number of changes across the company have made these trends possible.

We have reshaped our portfolio, focusing on high cash value molecules, markets and customers.

At the same time, we are reducing costs and improving outcomes by expanding our business operations in Manila, Kuala Lumpur, Chennai, Bangalore and Krakow.

In these centers, we concentrate our HR, finance and IT activities, among others, and also our business processes.

These changes are helping Shell to transform into a simpler company, delivering higher and more resilient cash flows and returns.

Now looking at our gearing.

This was 27.6% at the end of Q2 2019, including the recent accounting impacts that I've previously discussed.

Our intention is to get our gearing to around 25% by the end of 2020 post-IFRS 16 and by 2025 with our continued delivery in the range of 15% to 25% through the cycle.

While we will see changes from quarter-to-quarter, our performance over the last several quarters brings us closer to this ambition.

This way, we plan to remain competitive through the cycle and ensure strong and sustainable shareholder distributions.

We have previously stated that we are derisking our cash flows, moving towards our 2020 organic free cash flow outlook.

It is worth reminding you how these connect to our 2020 outlook, as Ben highlighted earlier.

On a 4-quarter rolling basis, we have generated some $26 billion of organic free cash flow at an average Brent price of $69 per barrel.

This is adjusted for around $5 billion of working capital movements and IFRS 16 impacts.

To keep the view consistent, we then present all data on a $60 per barrel real-term 2016 basis.

This is again consistent with our Management Day view.

Adjusting for this price would mean a reduction in our 4-quarter rolling organic free cash flow of around $2 billion.

At this oil price, assuming a stable price environment, we would not have been subject to the working capital movements we have seen to date.

So against this lower oil price, our organic free cash flow would have been around $24 billion.

Taking into account the additional cash flow expected from new projects and the IFRS 16 impact, we expect to see organic free cash flow within the range of $28 billion to $33 billion by the end of 2020.

So the message Ben and I reiterated at our Management Day event is unchanged that our 2020 organic free cash flow outlook remains in place, and we have confidence in delivering these cash flows with the start-up of several key projects over the past few quarters.

The remaining 2 large projects adding to the cash flow from operations from new projects progressed further this quarter.

Firstly, with Appomattox in the Gulf of Mexico, commencing production.

We are very proud of this achievement.

It is a project that is key for our Deep

Water business, one of our Core Upstream strategic themes.

Appomattox was completed ahead of its scheduled start-up and around 40% under budget since the final investment decision.

And with discoveries at Dover, Fort Sumter and Rydberg, we will work to keep Appomattox full for some time to come.

And second, on July 11, the first LNG cargo sailed from Prelude, our floating liquefied natural gas facility offshore Australia.

This cargo was delivered to customers in Asia.

As of today, Prelude has produced a total of 3 condensate cargoes, 1 LPG cargo and 4 LNG cargoes, demonstrating how it forms an integral part of our growing global Integrated Gas portfolio and should provide LNG for the coming decades.

So let me summarize the quarter.

In Q2, we delivered key milestones from our portfolio such as the start-up of Appomattox and first LNG from Prelude, and we continue to high-grade our portfolio, aligned with our intentions from Management Day.

This quarter, we delivered resilient earnings growth in our customer-facing marketing businesses with good trading results.

We also experienced more challenging macro conditions across other parts of our business.

And at the same time, we did not reach the full potential of some of our assets.

We will respond appropriately to further strengthen and grow our cash flows from these assets.

Finally, this quarter saw bookings in relation to various settlements impacting our earnings.

The key is to look at the overall trends and outlook.

And with the resilience of our Upstream and customer-facing businesses and their ability to generate cash, this supports the delivery of our 2020 outlook, which remains unchanged.

With that, let's go for your questions.

(Operator Instructions) Thank you.

Okay.

Thanks, Jessica.

Operator, can we please have the first question?

We will take our first question from Oswald Clint with Bernstein.

First question, please, I'd like to ask around Chemicals.

Particularly weak net income this quarter, and I think actually one of the lowest since 2014, the fourth quarter where I think the actual Moerdijk plant was responsible back then as well this quarter.

So I'm kind of thinking, from back then, you've had a lot of cost reduction.

You have non-high starting up guys where -- I would have suspected that one plant going offline per quarter wouldn't have necessarily evaporated the earnings in the Chemicals segment.

So is Chemicals still actually so dependent on this one facility?

Or has it not been kind of improved over that 5-year period is my first question, please.

And then secondly, just on CapEx, a lot of the companies recently, last 2 weeks, are kind of narrowing and decreasing their CapEx for the year where -- I guess we're in August, and we still have quite a wide $5 billion range on Shell's CapEx.

I wonder what big payments or what big projects are still to be kind of allocated towards for the next couple months of the year or whether it's possible to just kind of guide on that $24 billion to $29 billion for 2019.

Okay.

Well, thanks, Oswald.

I'll take the first one, Jessica, the second.

Yes, on Chemicals, it's -- indeed, you're right.

We had an outage in Moerdijk.

Let's just put a bit of context around it.

So that was, first of all, a planned turnaround that we undertook.

But in the lead into the turnaround and partly during the turnaround, we were also confronted with industrial actions.

So that turnaround actually turned into a longer turnaround.

And of course, Moerdijk is one of our high-quality, high-margin assets.

So that actually generated an impact in Europe.

But more in general, Oswald, if you would also look at sort of the more pure play chemical companies, of course, chemicals is going through a very significant downturn as a result of the challenging macro environment, the slowdown in Asia, the trade war, et cetera.

Chemical slowdowns tend to indeed be vigorous or violent.

We haven't had one, of course, for some time.

Last time was probably 10 years ago, in 2009.

I remember it well.

So it is not just an -- it is definitely not only an asset performance issue.

That is actually the smaller part of it.

The largest part is just the macro that we are facing in the industry.

Jessica?

Good.

And just to build on that point on the Chemicals results and the impact of the macros.

So just on a margin perspective, the delta Q2 to Q2 is almost $400 million.

So just to emphasize how much the margin environment is playing into the results, which were in addition to whatever operational issues may have been at play.

In terms of capital, the range is put in place partially to deal with some of the unpredictability about the timing around booking of certain leases.

And in fact, we have the Elba lease that will be coming onto our books most likely in the third quarter.

Some of these things aren't entirely in our control and also has to do with how our partners are advancing certain elements of it in a contractual arrangement.

So that's part of what drives the range in general.

And also to give a signal in terms of some of the pickup in the second half of the year, particularly around that number, which is over $1 billion, so that's relatively significant.

But I'd say in general, we're probably heading more towards the lower end than the higher end of that range but again, giving us a little bit of space because some of the inflexibility or unexpected nature of some of the bookings that may occur in respect to these leases.

We'll move on to our next question from Lydia Rainforth with Barclays.

Two if I could.

The first one, just on the cash flow outlook for the rest of the year.

Clearly, you have -- you've had -- hopefully you have recoveries for the operational issues.

Prelude's coming onstream and Appomattox coming on -- rounding up as well.

Can you just talk through how you think that cash flow profile looks towards the second half of the year?

And then secondly, just in terms of the wider LNG market, clearly, there are concerns around that level of oversupply.

Can you just talk to what your perspective is and whether Shell is still positioned to take advantage of some of that trading opportunities?

Okay.

Jessica?

Good.

So thank you, Lydia, for the questions.

In terms of our cash flow outlook for the second half of the year, we are expecting for it to be stronger than the first half for a couple of reasons.

One, as you pointed out, Appo and Prelude coming onstream in the second quarter.

Of course, we should benefit from being them onstream for the full second half of the year, and that will be -- that will certainly contribute to stronger cash flow in the second half of the year.

We've also signaled that we didn't get everything we thought we could from the Gulf of Mexico assets.

And the expectation is some of those operational elements will be addressed and we should be seeing the benefit of those high cash value barrels coming onstream in the second half of the year.

And as you mentioned also, some of the operational issues we'd look to address, particularly in the Chemicals business, which should support higher cash from our Downstream businesses as well.

I'd also point out that our divestment program in terms of cash proceeds has been relatively weak for the first half of the year.

That should pick up also in the second half of the year.

You've seen a couple of the announcements that were -- we just had closings in this month.

Of course, we -- the cash has come in now, and that will show up in the Q3 results as well, so just to expand the kind of the cash profile of things that should be supporting the second half level of cash flow from operations as well as free cash flow more broadly.

I think on the LNG market, I think our outlook for the market in the mid- to longer term remains unchanged, Lydia.

I do still see a very strong growth, 4% per year compounded into the 2020s.

Just this morning, I had an outlook -- or not an outlook, a -- just the results on how China has done.

So that's a 50% increase year-on-year, half 1 to half 1. I don't think that trend will continue to be that.

I think what we have to recognize, the weakness at the moment in what is called spot market and the short-term cargo market is very much the effect, of course, of the ramping up of supply, which is happening.

We all saw that coming, of course, and at the same time, following on the heels of a relatively weak winter season in -- from North Asia.

So there will be some weakness for time to come in this year, but we are both a beneficiary as well as affected by it because on the short-term markets, we buy and sell.

Of course, the bulk of our contracts is long term, is linked to oil prices or linked to gas hubs, and that is not going to be affected.

We'll take our next question from Biraj Borkhataria with RBC.

I had a follow-up on LNG.

You talked about some of the challenges in the very short term.

One of your peers has talked about having to reduce production at one of their LNG projects because the buyer didn't want -- well, the buyers didn't want to take their full nominations.

You're in quite a unique position because you're obviously both buying and selling volumes on contracts.

Could you talk about from either side whether you're seeing buyers not want to take their full volumes in the short term because the spot coverage is available or whether you as an organization have decided to hold back purchases in the market which is very well supplied?

That would be the first one.

And then the second one, just on the corporate cost guidance, maybe I'm not following this correctly, but just to clarify, the guidance of the increase, is that coming from the divisions into the corporate line?

Or is that things coming on the balance sheet or on the P&L that weren't on the P&L before from IFRS?

Okay.

Thank you very much, Biraj.

I'll take the first one and Jessica will address the second one.

Well, yes, of course, in periods like this, we do see in the markets, of course, difficulties.

As a matter of fact, as far as I'm aware, we don't have any difficulties with cargoes that are unplaceable, rather the reverse.

What then typically tends to happen is that we see is a trading -- a placement opportunity simply because of the range and the flexibility that we have in our portfolio.

So it wouldn't be the first time that either a buyer or a seller needs to dispose of a cargo with which they have no firm destination or solution or use of, and they are the cargoes that we take advantage of.

But the net effect is that we are able to place what we can place and we therefore have nothing like that to report.

Jessica, on the Corporate segment?

Good.

And I'll just make a comment also on the LNG business as there's been a couple of questions around that in the performance.

I'd point out the cash flow from operations, excluding working capital, of $2.8 billion.

I think it's very solid against the macroenvironment, demonstrating the overall resilience of that business in a difficult macro and the strength of our portfolio and the strength of the contracting that we have in place.

And also, as I mentioned a couple of times last year, there were some pretty special quarters driven by some weather events and unique opportunities in the market, and I highlighted them at that moment in time because we didn't want to kind of create that as a sense of the new normal.

So I'd just point that out that the fundamentals of the business is very strong, and I think very strong earnings and cash particularly against the macro, and just to note that there's a few opportunities last year that were somewhat unique.

On the corporate guidance, it's not a shift between sectors to corporate.

It reflects really two drivers, one is the impact of IFRS 16.

The interest associated with that does come into corporate.

Of course, all of that accounting change took place in 2019.

And so getting our arms around that and getting confidence in terms of what the total impact is, is important, and that's part of getting that settled down appropriately into the books.

And then there's been some tax changes as well that have -- that require an update.

So it's really reflecting a change in regulation in different parts of the world that's causing the delta in terms of the tax assumptions that we have for 2019.

We'll move on to our next question from Thomas Adolff with Crédit Suisse.

Two questions for me as well, please.

Just firstly, going back to operational performance.

You've mentioned your customer-facing businesses are doing well.

But when it comes to the complex physical assets, especially in the Downstream, seems to me that you face issues more regularly, especially over the past 3 to 4 years.

Is there something fundamentally that Shell still needs to do differently, perhaps more regular reviews of the performance units?

Or will that early warning system you plan to implement help fix some of these issues?

Secondly, just on LNG.

This might be a too specific question.

Just trying to better understand the cash flow estimates both in the near and the long term for LNG and whether these estimates are based on a similar contracting environment defined as the slope as we see it today, which obviously is a lot less attractive than the last cycle.

So said differently, do you assume a lower slope in the contracts following upcoming price reviews?

And how many contracts in terms of million tonnes per annum are subject to price reviews in 2019 and 2020?

Thanks very much, Thomas.

I'll take the first one.

Jessica will talk to the second one.

Without wanting to be too facetious about it, customers tend to be a bit more reliable than complex physical assets.

So in -- yes, in terms of deepwater wells, in terms of refineries, chemical plants, we do have unreliability from time to time.

I do not think that our unreliability is uncompetitive.

And what you have seen as a significant contributor this time around is industrial action, in this case in Moerdijk, which is a high-margin asset.

And that, of course -- well, you can also call that unreliability, but I think it is something that we manage and we know how to manage.

I don't think we have fundamental issues.

It doesn't mean that we are resting on our laurels when it comes to reliability, absolutely not.

And particularly, the example that I mentioned, I think it is a really nice example, and we have quite a few of these where we want to make use and want to take advantage of digital, whether it is, indeed, sort of big data approach that we have, an artificial intelligence approach that we have in this particular example that I mentioned or whether with this remote monitoring that we do through digital avenues to understand better how our large rotating equipment is behaving or other techniques that we have to improve.

I think there's always more to be done.

I'd like to think that in some areas, we're actually quite leading.

But it -- what also tends to happen and that's, I think, a little bit the example in the Upstream, whereas in aggregates, we may see a reasonably good reliability or a reasonably stable reliability around our Upstream portfolio.

If the mix of the unreliability tends to happen one quarter in the high-margin asset, then you see a bigger impact on the bottom line.

So that is not so much an indication that something is systematically going wrong.

It is just a matter that there's a mix effect between high- and low-value assets there as well.

Jessica, on LNG contracts?

Good.

So a couple of points, Thomas.

I think you know this, but just to make sure I'm getting every angle of the question because it's not always immediately clear what angles you're coming from.

But first of all, our performance today reflects the portfolio and the contractual structures that we have today, and that's essentially 70% oil-linked.

And as I mentioned just a moment ago, the strength of the earnings and the cash flow generation, I think, reflects the strength of the portfolio.

Whatever softness that's happening in the market is really a reflection of the contractual structure, which is a lag of 3 months.

And just on a quarter-by-quarter basis, if you look from last year to this year, that had about a $130 million impact.

So it's an impact, but it's not materially moving the numbers.

And as I said, I think the cash flow generation from the business remains very strong.

In terms of the outlook and how we're thinking about prices and modeling prices, and perhaps you have your mind on our management team '19 and thinking about our commitments into mid-2020s, I'd say that we're frequently reviewing our assumptions and adjusting when we think the market moves one way or another and reflecting that when we're thinking about the financial framework and the outlook.

We don't rely on any one price.

We ensure that there's resiliency in the overall financial framework and within each business for being able to meet the outlooks we put out into the market under a range of circumstances.

So I wouldn't say that the numbers we're presenting and our commitments or our outlooks reflect an aggressive view of where the market needs to go in order to achieve it.

But it's a balanced view and considers different outcomes and doesn't rely necessarily on a very particular strong outcome for us to meet those commitments.

I'd also say that we're very actively building new opportunities in the LNG business, expanding our customer sets going into transportation and shipping, going into some of the smaller markets.

These are ways of expanding demand and ultimately supporting the higher prices in the future.

As that demand picks up, we expect fundamentals of the business to be -- continue to be strong through the 2020s, for overall demand growth to grow by some 50% between now and the early 2030s.

And again, we're trying to bolster that further by developing new markets.

So the fundamentals are strong.

A lot of new capacity will be needed.

We're at a moment in time where the weather has been relatively mild.

New supply has come onstream.

There's been some softness in growth with GDP and trade wars and things like that all happening at this moment in time.

But those things will evolve over the coming years.

And as I said, I think the fundamentals of the business are quite strong.

More demand -- more supply will be needed, and there'll be reason for, I think, some strength in prices going forward.

We'll move on to our next question from Christyan Malek with JPMorgan.

First and foremost, Ben and Jessica, my sincere condolences regarding Shell's loss of those that died in the Gulf of Mexico platform in June.

So I appreciate the reasons for the misses in the second quarter across the board.

But when I look back at the macro assumptions you framed in your CMD, I wonder whether this quarter and the performance somewhat [exacerbates] Shell's generally optimistic view on price across the commodity complex.

And in the military, they say you prepare for the worst and hope for the best, but this was also more symptomatic of a business that hopes the best and plans the best.

So forgive me, but what I'm trying to ask is what can you do better in as far as the way Shell optimizes trading and mitigates macro volatility to deliver the best-in-class result on quarters where the macro backdrop is just weak.

Or put another way, you can balance the dividend and CapEx towards a cash breakeven or below 50% over the medium term.

And this sort of feels like a one step forward, two steps back on a cash breakeven basis.

And sort of the second question is for LNG again.

While gas prices have been weak, have you seen any change in the pace of new LNG projects being funded and/or sanctioned, especially from those in the U.S.?

And how are you progressing and locking in customers to buy volumes from LNG Canada?

Is it giving you sufficient governance to sanction new projects, for example, in Qatar and elsewhere?

Okay.

Thanks very much, Christyan.

I'll have a stab at both of them, and then I'm sure Jessica will have some further thoughts to that as well.

Thank you very much also for recognizing the tragedy in the Gulf of Mexico.

I think we -- I don't think we have a hope for the best strategy.

I do think we have a realistic strategy.

We spent the last years actually having a very strong focus on the credibility of our outlooks and dealing with ranges of outlooks as well and even a range of macroeconomic outcomes.

We have said that our 2020 outlook but also the 2025 outlook that we put out there doesn't rely on a particularly aggressive set of macro circumstances, and that's not just the oil price, but because the oil price just happens to be more or less smack on, where we said it would have to be to meet our outlook, but of course, also other factors like gas prices and refining margins and petrochemicals.

Of course, if there is volatility and if there is value to be had, we will do that through our trading operations, but we can't offset a meltdown in petrochemicals.

If we are looking at some of the natural gas price realizations that we have in North America, which were a fraction of whatever a few quarters ago, you can't offset that by trading.

It -- trading is great for optimizing.

Trading is great for taking advantage of arbitrage opportunities and even volatility in the market, but trading is not meant to be an offset for macroeconomic headwinds.

That is simply not the way you actually can manage the business.

We obviously have a portfolio design and we -- and a high-grading process that makes that -- our asset mix is resilient, both in terms of its overall makeup but also the individual quality of the assets.

If you take a good look at what we got out of them, what we have left but also how we invest going forward, you see there are assets at low breakeven prices, the assets that can withstand the range of macroeconomic outcomes and still be okay at the bottom of the cycle.

And you see that we, of course, try to increase the segment of the business that is somewhat indifferent to the macro, which is our marketing business.

So I do believe that we have the company and the portfolio designs for a range of outcomes, but we can't ignore the fact that a range of outcomes will happen or a range of circumstances will happen.

In terms of weak gas prices in LNG Canada, yes, we will, of course, take the output of LNG Canada and some of the other projects that we have sanctioned before into our own portfolio and then lay that off.

And some of that, we do in markets that we develop or in positions that we can already see.

I think at this point in time, it is too early to start signing up definitive contracts for the LNG Canada outturn that will happen in years to come.

So it -- but again, with the fundamentals that we are looking at in the business and our track record that we have, I have no concern that, that volume would be unplaceable.

Jessica, anything to add?

Perhaps a few words on the first question around what can we do better.

I think one area for us to reflect on is ensuring a right level of expectations with the market as we have the conversation around consensus.

I think we've put a lot of effort in that in the last couple of years in terms of expanding our outlook by segments, expanding kind of our outlook on corporate and bringing that into a more consistent place than perhaps it was in the past, and I think we've made good progress.

And if you compare the outlook statements that we made in the prior quarter with what we actually did kind of from a fundamental operational perspective, we're in line.

But clearly, there's more room.

We're in all parts of the value chain of the oil and gas energy system and understanding how gas and NGL differentials play through in North America.

And how the Chemicals business and the base and intermediate margin changes in the different regions and how that all flows through, I think, requires a pretty deep level of engagement on the business.

And we need to play our part to make sure that understanding those relationships and how it flows through our numbers is at the highest place possible.

And then you have my commitment to do that.

I don't want disconnects where there doesn't need to be -- there don't need to be disconnects.

The things like the unusual -- our challenge for a company our size is being in 70 countries.

And again, in every part of the value chain, in substance, we're doing everything absolutely right.

We do things appropriately from an accounting and reporting perspective, and that will not change to the extent I have any control over that.

But again, it's about aligning around expectations in substance, things like the -- what we put in place in Trinidad and Tobago has a number of reporting implications.

But in substance, it's about getting a really solid value chain in place that works for the government and works for Shell.

And in substance, it's a great thing to do and a great accomplishment by the business.

However, it doesn't flow through from an accounting or reporting perspective very well, so how do we work better with the market to understand these things and have confidence in the substance of what's happening.

I think the last piece I'd mention is just on the asset performance.

And is there more for us to do?

I think I'd like to always be ambitious and to think there's always opportunity for us to improve, but I would note that our expectations as a company and our ambition for the company, I think, is higher today than it was perhaps a few years ago.

So if you look at the Upstream business, the availability for the quarter was at 90%; production's up 6%.

So there's a lot of good that's happening in that business, but we want more and the -- when we know there's more potential, and what we're revealing to you is that we have higher expectations.

We could speak to those metrics as being good examples of operational excellence and how the business is performing, but we've repositioned the portfolio.

There's more cash available in that business, and we have higher expectations.

So I think we're also comparing ourselves against a higher bar.

We'll move on to our next question from Michele Della Vigna with Goldman Sachs.

It's Michele.

Two quick questions, if I may.

The first one is about joint venture and associates, which was particularly weak in the quarter, I think the lowest since 2015.

I was wondering if you could give us a bit more color there.

And then secondly, on your Power business which you are growing, I was wondering if you could give us a bit more information on what you're learning from First Utility, now Shell Energy, about your ability to profitably gain market share and profit -- and benefit from the Shell trading infrastructure.

Thank you, Michele.

I will take the second one.

Jessica will take the first one.

I think on Shell Energy U.K. or also previously known as First Utility, it's still early days.

It -- we have this business only for a number of quarters.

We rebranded it, of course, earlier in the year, and we have started bringing other value propositions to customers.

By the way, I hope you are a customer of it as well.

And what we have seen is actually a very positive response, not only to the rebranding but also to the value propositions that we are putting forward.

What we have seen since the rebranding is a growth of about 100,000 new customers, which is meeting the expectations that we had even on the somewhat higher end.

But then there is more that we can do.

We are not quite done yet with understanding what our customers want and how we can bring that to them, be it more sophisticated offerings or more sophisticated tools that we can bring to work with them also behind the meter.

I -- yes, it's -- of course, as you no doubt know, it's a tough market, the U.K., to be successful in the power business.

So we have set ourselves a high bar, but also we could believe that if we can make it in the U.K. with a successful power business and successful means for us 8% to 12% return, we should be able to replicate that successfully in other parts of the world as well.

So 30 days, but I think it is all going as planned.

Jessica, on the JV associates?

Good.

So Michele, the drivers behind our performance are being played through in our joint ventures as well.

So there isn't one part of our business or one entity that's having a particular challenge.

But in our Upstream and our Downstream ventures, we've seen some softer dividend levels and performance associated with those businesses as they're subject to some of the same macro challenges that Shell's been facing during the quarter as well.

We'll move on to our next question from Irene Himona with Societe Generale.

I had two questions, please.

Firstly, you referred, Ben, to the issue of performance of some of your deepwater wells in the Gulf.

It is your bread and butter.

But I wonder if you care to elaborate a little bit on how long do your interventions take to resolve those issues?

And importantly for us, is there cause for any concern about reaching and maintaining design capacity for the new major projects such as Appomattox?

And secondly, back to Chemicals.

In your comment, you said back to the 2008, '09 recession, can you share with us how you see that macroeconomic environment in Asia and not just in relation to Chemicals but importantly, in relation to oil demand as well, please?

Yes.

Thank you very much, Irene.

Let me start with the second one, take some on the first, and I'm sure Jessica will have a few things to add as well.

I think yes, it's incredibly hard to predict a recession.

And although it's not particularly hard to predict the beginning of a recession in petrochemicals, what tends to happen, particularly if it's a synchronized recession, which is a little bit what we are seeing here in markets and particularly when it hits China, is a massive destocking of the entire supply chain, and that is what is happening.

So essentially almost buying holidays where a lot of customers, whole segments, whole value chains basically run down their inventories and wait what happens.

Part of it because of the uncertainty that the downturn brings, but partly also because it is sort of good buying practice if you put a lot of pressure on prices and then resume.

If things play out as they tend to do, you have a bit of a U-type recovery in that.

So at some point in time, the entire value chain is empty.

People will have to buy, and then you get a bit of a sort of fast uptick in recovery.

How long that takes, I will not hazard a guess.

I'm afraid that depends on so many factors, some of which are actually, as you well know, geopolitical.

An interesting point to note though is that if you look at our Global Commercial and retail business, that's actually quite strong.

And quite often, of course, what we do see, if there is a massive macroeconomic issue going on with transportation also being affected, we see significant drops in our sort of commercial fuels, in lubricants, everything else.

We're not seeing that at the moment.

So I think at this point in time, it is maybe not as sort of complex and wide and challenging as we had 10 years ago.

It's -- again, I'm not predicting anything here, but that's the view we have.

So in a way, again, I must say, having run Chemicals myself, I'm unfortunately not surprised that it can go in the way it is, but I'm also, therefore, not spooked by it.

In terms of performance of our deepwater wells, I think most of it is actually either rectified or in the process of being rectified.

They are just, from time to time, well failures that happen.

It can be something to do with the activity, a downhole.

It can be other issues.

They -- again, they are not necessarily statistically in -- relevant other than the fact that when they do happen in deepwater assets, they tend to have big effects.

In terms of Appo, Appo is in the -- or Appomattox, I should say, sorry for using the shorthand here, it is ramping up.

I think it is all ramping up as we expect.

It will -- we need to bring on few more wells in the course of the next 12 months.

So I would expect Appomattox to be at design capacity in the course of 2020.

We'll move on to our next question from Jon Rigby with UBS.

Two questions.

The first is going back to LNG.

You have another question on that from about 2 guys now.

So in your predecessor business, when it was with BG or the big chunk of it that you -- and I guess this was because it was an even bigger proportion of their earnings, used to attempt to break out the sort of ongoing contractual oil into LNG business from the trading business, et cetera.

And I know you don't do that, and I don't expect you to.

But -- so obviously, we look for reference points and base points.

So it seems to me this is a good quarter for that because it looks to me, and correct me if I'm wrong, actually that the LNG business was pretty resilient in a quarter where trading opportunities would seem to be, on the face of it, actually quite small.

So my question is, is that figure that you turned out this quarter, if we adjust for Trinidad, sort of representative of the underlying contract LNG business plus the other bits of Integrated Gas like gas-to-liquids?

And actually, we have a quite a small contribution from the trading business.

So I'm just looking for a way of sort of triangulating whether this is an opportunity to triangulate the underlying profitability of Integrated Gas.

The second question is just on the Upstream.

Obviously, there's a big tick-up in DD&A, which, even if you adjust for impairments, is notable, particularly as volumes have gone down.

So there's quite a big unit tick-up.

And I wondered, is that related to this issue on wells?

And will that go away as we move forward into the third and fourth quarter?

Okay.

Thanks very much, Jon.

Jessica, would you have a go at it?

Good.

So Jon, I think the way that you're thinking about the Integrated Gas business and LNG is appropriate, and I was trying to signal something much like that, I think, earlier in the call.

Indeed, I think these are a good set of results against this macro context with earnings of $1.7 billion and cash at $2.8 billion.

So -- and as I -- and as you, I think, alluded to, the trading opportunities, either because of weather events or other kind of short-term contractual opportunities that sometimes surface within a year, have not materialized in the same way that they did in 2018.

And so when we had some of those particularly strong quarters last year, I made comments around that and said, "Please note that this is very, very strong."

And of course, we've also had some divestments that we need to keep in mind that are also playing through in terms of the results on a year-on-year basis.

So overall, I think it is a strong set of results.

It reflects the underlying business, and there aren't -- there haven't been the same level of market opportunities from a trading perspective as we saw in 2018.

In terms of the Upstream DDA, you're right.

A part of it is the impairments that are coming through.

The other part is Appo coming on stream.

So I think the $400 million increase that you saw, roughly half is coming from each.

And of course, the Appo piece, you would expect to continue on an ongoing basis.

Okay.

Thanks very much.

We...

Hold on a second.

I'm sorry.

Let me just -- let me clarify something here on the DDA.

I also need to -- sorry.

I need to point out that in -- relative to Q1, in Q1, we had a credit in our DDA.

So apologies for that.

So let me start over because I want to make sure that I'm not being unclear.

So between Q1 and Q2, the $400 million or so increase, you have to recognize that there was $200 million credits in Q1, and then we had the step-up in -- $200 million in DDA associated with Appo.

The Appo piece will continue.

Okay.

Excellent.

Thanks for the clarification, Jessica.

We'll move on to our next question from Christopher Kuplent with Bank of America.

I'll try 2 questions myself as well.

Firstly, you're not covering organically with cash flow your quarterly buyback rate, yet you're reiterating your intention to continue to run that.

Can you maybe a bit outline why you think you haven't reached breaking point at which you would want to signal that your quarterly buyback run rate might drop somewhat?

You've obviously seen gearing go up, but it doesn't seem to have hit that what I would call a breaking point where you would say, "Okay.

As a result, we might want to signal a slowdown in the buyback run rate." So perhaps you can talk a bit more widely around why you maintain communication on the buyback and how far away we are from such a breaking point that would require you to slow down the run rate.

And secondly, just very, very small detail, but your new outlook for more corporate costs is valid for 2019 or beyond that?

Can you give us a bit more of a medium-term outlook whether this is a new run rate on an annual basis?

Thanks, Chris.

I'll do the first one, Jessica the second one.

Yes, nowhere near our breaking point, that's number one.

Of course, every quarter, when we make a decision on the buyback continuation and the quantum, we do an assessment of how we see the next, in this case, 18 months going forward.

Believe me, we have a very detailed process to understand what is the range of outcomes that we can expect also from a macroeconomic perspective.

And therefore, how is this all affordable, not only from a debt reduction and a share buyback perspective, but also which levers do we need to pull in order to deliver on all the commitments that we make.

It will probably not surprise you that the Board is intensely interested in all of that.

So we could go through the process in extent so with the Board, and there is no way that I can sit in a call like this and say our outlook is unchanged without a very extensive documentation that we have in the company that everybody believes in, signs off on, including lawyers, et cetera.

So there is no breaking point.

The outlook has remained unchanged and it remains unchanged for good reasons, which is the reasons of confidence.

Jessica?

The corporate cost is the new run rate.

So assuming no further changes in tax regulation around the world, interest rates stay roughly where they are.

Our lease profile doesn't change materially, which we're not expecting it to than they should be the -- look going forward for '19 and going into '20.

And if not, we'll let you know.

We'll move on to our next question from Peter Low with Redburn.

It looks like there was a sequential step-up in production and manufacturing expenses in Integrated Gas and Upstream.

Now I appreciate quarterly numbers can be noisy.

So can you perhaps comment on the underlying unit operating cost trends in those divisions?

And then secondly, the Downstream marketing result was a bit of a bright spot in the quarter.

It also forms an important part of your 2025 aspirations.

Can you give us a bit more color on what led to that strong performance and then how you see that developing going forward?

Thank you very much, Peter.

Jessica?

In terms of the cost trends, the production cost, of course, will be impacted as new projects come onstream, so things like Appo and Prelude coming onstream.

In terms of our overall OpEx, very pleased with the overall trend.

There are things like write-off and provisions that are showing up in those numbers.

So it's important to look at the clean and underlying versus just the headline number.

So in terms of the underlying performance of the business, we continue to be focused on our cost of the programs we've put in place in the last couple of years.

We're continuing to run and overall very, very pleased with our cost program.

We'll have our last question from Henry Tarr with Berenberg.

Yes.

If I could just have a couple of quick questions, one on Refining & Trading.

Refining availability was up year-on-year, but results there were still a little bit weaker than I would have anticipated.

So just wonder whether you could comment around there.

And then also, what were the provisions for receivables in Upstream relating to?

Okay.

Let me take the first one, Jessica the second.

I think weaker results are very much a function of what we see as a weaker macro in Refining in some of the key centers that we operate.

It's a bit variable around the world, but it -- particularly in the East, we saw weak Refining margins in Singapore.

I think Refining margins were probably still the strongest as they typically tend to be in the U.S. West Coast.

But of course, we are more heavily exposed to both Europe and the East.

So therefore, we did see an overall weakening.

I believe at some point in time, the Singapore complex margin even went negative.

And to just give you an idea, so the way to make money in that environment is to buy products, blend them together, make crude and sell it.

So that shows you how tough the environment has been in Asia for a few weeks, if not months, of the quarter.

Jessica?

Yes.

So the provisions, the receivables provisions specifically related to our Integrated Gas business.

Part of that had to do with some of the Trinidad restructuring that I referenced and there was some also across a couple assets in our Upstream portfolio but nothing individually material.

Okay, very good.

Well, thank you all very much for your questions.

Thank you for joining us in the call today.

We're going to have third quarter results, as you are no doubt aware, in the third quarter.

We expect to do the call on the 31st of October, and Jessica will then be available to talk to you all.

Thank you very much.

I hope you enjoy a good summer for those of you going on holidays, and please come back safely.

Thank you very much.

Ladies and gentlemen, we do thank you for joining our Royal Dutch Shell 2019 Q2 Announcement Call.

We thank you for your participation.

You may now disconnect.