TotalEnergies SE (TTE) 2005 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen and welcome to the Total first quarter results 2005 conference call. [OPERATOR INSTRUCTIONS] I'd like to turn the conference over to your host today, Mr. Robert Castaigne.

Thank you. Good afternoon, and good morning to you in the States. I am pleased to report that we have had a very good quarter.

Our adjusted net income was $3.8 billion in the first quarter. Showing an increase of 57% compared to Q1 2004, which is [inaudible -- accent]. So it appears we are the highest, 26%. So overall we are pleased with our performance in the quarter. So we commence now [inaudible -- accent] and activities in the different segments.

First, [inaudible -- accent] Income is up by 49% to $5.3 billion. There is of course a benefit of the higher oil price and (inaudible) we are [inaudible -- accent] due to the loss of sale of light crude oil in our production stream. Production volumes in the first quarter may have seemed a little low as compared to the first quarter of last year. There was a decrease of 2.7%.

But this decrease was due essentially to the price effect on production sharing contracts and buy-back volumes. In addition to that, there was remaining impact of shutdowns in the Gulf of Mexico that were caused by Hurricane Ivan. The combination of these two factors, the accounts saw a decrease of about 3%. Besides that, there was [inaudible -- accent], mainly from Libya, Indonesia, Nigeria, Qatar. But this was mostly offset by some shutdowns and by declines in the North Sea, much of that being due to some technical problems.

Overall, we are in line with our development plans. Looking at production profile, 2006 will be a very significant year for our mid-term goals. We have 12 [inaudible -- accent] starting up at the end of 2005 and in 2006, that will add something like 300 [inaudible -- accent] equivalent of new prediction at plateau [inaudible -- accent]. By comparison, 2005 growth will be limited since most of the starters are in the second part of the year.

The first quarter has been very important to us, as we have taken several major steps to secure our long-term course. Notably, we have expanded our position in [inaudible -- accent] business, by signing agreements on two major projects, Yemen [inaudible -- accent] and Qatar [inaudible -- accent] and by launching the busy [inaudible -- accent] phase [inaudible -- accent] energy in and [inaudible -- accent] energy. This is something that we have announced recently. [inaudible -- accent] development has been launched and should be on time for what started late 2008. [inaudible -- accent] have begun.

And we have continued to have exploration successes. For example, [inaudible -- accent] appraisal in Nigeria [inaudible -- accent] on block 17 in [inaudible -- accent], which brings us closer to launching the development of what we call the third pool. And I think in addition to that we should be in a position to [inaudible -- accent] on more discoveries within a few weeks, more discoveries in West Africa, and in the North Sea.

[inaudible -- accent] now for the downstream. Operating income increased by 69% to $1.2 billion. Refining margins have been strong and we are very pleased with the refinery utilization rate, which increased for both 95% in the first quarter. Construction of the DH unit in Normandy [inaudible -- accent] is on track for what started next year and we are continuing to further integrate petrol chemicals with our refineries. We have increased our Cap Ex budget for refining and we'll have more news about all the projects in the future. So this was another good quarter, and [inaudible -- accent] downstream, which is generating a very strong net cash flow of about $2 billion for the first quarter.

Chemicals now. Clearly we are benefiting from crude oil improvement of the environment. The possibility is now looking good. Operating income was $700 million, showing an increase of 191% compared to the first quarter 2004. The chemical margins were very high in generally, and even so they have declined [inaudible -- accent]. They are still well above mid-cycle.

We have launched a program [inaudible -- accent] in Korea, and this should allow us to increase production capacity by about 25%. We are also continuing to work towards [inaudible -- accent] next year. We are now separating [inaudible -- accent] and operating income in separate cities. as you may have seen, and you can see some very soon improvement in its performance, which is mainly related to the environment and productivity gains.

On the corporate side, our net debt ratio was 23.9% at the end of the quarter. This is a relatively low number, but we have to keep in mind that we will pay about EUR1.8 billion for the dividend on May 24th. The balance sheet is strong. We will continue to buy back shares. So far this year we have bought back 6.3 million shares, all slightly more than 1%, in fact, 1.1% of our share base.

Since the beginning of the quarter, share buyback program late 2000 we have reduced the number of shares by almost 20%. Which represents an average buyback of 3% to 4% per year. The pace that we should be able to maintain within the type of environment that we have had over the past years. So today in the second quarter 2005, the market environment has remained favorable, with high oil prices and refining margins.

Despite compression in petrol chemical margins, the chemical segment continues to benefit from the relatively volatile environment. Operationally, jet stream is progressing very well. The downstream is running smoothly. And in the chemicals, [inaudible -- accent] is improving and is on track to become an independent company, probably around this time next year. Therefore, we are confident that we can continue to execute our strategy of combining goals and possibilities. So now I am ready to answer your questions.

Thank you. [OPERATOR INSTRUCTIONS] Our first question comes from [Tim Whittaker] from Lehman Brothers in London. Please go ahead with your question. Good afternoon Robert.

Good afternoon.

First I'd like to ask about Novatech and what's happening there. I know Mr. [Demi] recently met Mr. Putin in Paris. I want to know maybe you can tell us what they said.

And you also said in the past that your 4% production target to 2010 could be achieved without Novatech. Are you still saying that? I was reading in the news wire you're saying 3% now.

Secondly, can I ask about your balance sheet. You've got very high cash balances. In the past, you've said you're able to make money from the money markets by investing that cash above your borrowing rate. I wonder if you're still doing that and what is the materialality of that activity?

Yes. Concerning Novatech, I would like to say that we still have not received an answer from the Russian [inaudible -- accent] service. Also, someone said it should have been the case in [inaudible -- accent] we are now in May.

In fact, we are concerned about the lack of response on such a simple request. Even though the issue is to take 25% of the company that does market share of 4%. Request has been under review for six months. So I will not add any more comment on this point.

Concerning now our production profile, we used to say that our target between 2004 and 2010 with NOVATECH should be 4%, in fact a little above. But we say now is that without the contribution of Novatech, the annual average growth rate would be between 3% and 4%, and I would like to add that if we take the conservative view on the timing of our major startups, probably we would be closer to 3% than to 4%. We may have opportunities or several opportunities that could lead us to grow by 4% on average between now and 2010, and this without Novatech.

Second question concerns the balance sheet. It is true that we have cash position something like EUR10 billion or EUR12 billion. But you have also to take into account the short term is EUR12 billion [inaudible -- accent]. On the liability side, [inaudible -- accent] short-term position something like, eight, probably something like that, which means that we have made some financial [inaudible -- accent] of which we make some money, but clearly this is very small scale of the group. And I think that we shouldn't take any more conclusion out of the cash position that we have on the asset side of our balance sheet. Okay?

Yes, thank you.

Thank you. Our next question comes from [Paul Fedding] from HSBC in London. Please go ahead with your question.

Good afternoon, gentlemen. It appears that you all have a relatively heavy maintenance program in Europe during May. I wonder if there's any way you could quantify the potential impact on that on the Q2 figures.

You mean in refining, yes, it's true, in the refining I think that we should have [inaudible -- accent] refineries, especially [inaudible -- accent]. For some of them it will be only [inaudible -- accent]. Which means that this would have negative impact [inaudible -- accent] refineries that was particularly higher in the first part of the 2005. In fact, as this maintenance will concern, should concern only let's say 5% to 10% of the refining capacity for part of the quarter.

Thank you.

Our next question comes from [Hugh Williams] from Cazenove in London. Please go ahead your question.

Two quick questions on the downstream businesses. Firstly, on chemicals, you indicated some -- you're saying some compression in margins into Q2. I want you to give us a feel of how that compares of what you saw in January and how much low we have compressed in Q2 and how you see the trend going the rest of the year. Secondly, on marketing margins, I think we're aware of the change in refining margins, but maybe you could also give us a feel for the trend in marketing margins.

Okay. Yes, concerning petrol chemical margins, [inaudible -- accent] if I take average margin on the (inaudible) for the first quarter 2005 we had something like $770 per ton on average. And I think in January we are a little above 800. And now in April, we were something like $670 per ton. Which is of course lower than the average margin for the first quarter, but well above the -- above the average for the last quarter 2004 that was $710. But again, well above the mid-cycle margin.

Concerning the marketing margin I think you asked a question. In fact, we asked for the first quarter 2005 on average the marketing margin that was a little above the margins that we had last year for the first quarter 2004. But margins that were significantly lower than the average margin -- than the average marketing margin that we had for the last quarter 2004. In countries where the marketing margins are pretty poor now, essentially in fact U.K. and Germany. In all of the countries the marketing margins of I would say satisfactory.

One quick follow-up. On the chemical margins, can you give us a view on how you think they'll trend for the rest of the year, please?

Oh, I think what we have in mind is that at least for the second quarter and probably also for the rest of 2005, we should be -- we should continue to be on average above mid cycle. After that, it will depend on the general trend of the economy. I would say both in the U.S. and in Europe.

Great. Thank you.

Thank you. Our next question comes from Dominique Patry from Credit Agricole Indosuez Cheuvreux, Paris.

Good afternoon, I have a question on your downstream performance, given the fact that [inaudible -- accent] on top of strong refining margin you have benefited from the discount between [inaudible -- accent] and the continuous sales program. So I was just wondering if you could maybe quantify as [inaudible -- accent]program during the first quarter, and maybe also the impact of the extent to which you have benefited from the discount between [inaudible -- accent] light?

I think you remember that we are fixed a new program last year or in 2003 consisting to make another EUR500 million for the downstream, for the year 2004, 2007, 4 years. That is to show an average [inaudible -- accent] and I would say that we are totally in line with this program.

Second question concern the advantage of the profit that we have been able due to make due to the difference of the increasing difference between heavy and light crude oil. More difficult to quantify that specifically, but I can say that refineries are very well-equipped. We managed to take significant advantage of that, especially in our refinery, which is practically well-equipped and well-positioned. We are ready to take advantage of the situation.

If I may, I have a follow-up question on the [inaudible -- accent] given the fact that in the first quarter you have had a strong performance from the [inaudible -- accent]. I was just wondering if there were something exceptional in this profitability, or is it more related to the underlying performance of [inaudible -- accent]?

No, I think it's essentially due to the very strong performance of [inaudible -- accent]. In addition to that, I must add that we have lost our share in the profit of company [inaudible -- accent]. Fortunately, we enjoyed a strong performance of [inaudible -- accent].

Okay, thank you.

Thank you. [OPERATOR INSTRUCTIONS] Our next question comes from Mark Gillman from Benchmark in New York. Please go ahead with your question.

Robert, good afternoon. I had two questions. Regarding the realization data, which I thank you for providing, are there any other exclusions from the liquids realizations, other than Nigeria, Iran and Abu Dhabi. Secondly, there is a reference to the fact that sales exceeded production in the first quarter and I was wondering if you could quantify by what amount.

The second point is important because we were overly [inaudible -- accent], which is unusual. And I think that the impact on [inaudible -- accent] profits of the upstream was something like EUR150 million. It's it's important to have that in mind because of costs unless we are still overly [inaudible -- accent] at the end of second quarter it's something that we will lose.

Second question, I think the answer is no, compared to the least that you mentioned.

Thank you, Robert.

Thank you.

Thank you. Our next question comes from [Irene Hamona] from Morgan Stanley in London. Please go ahead with your question.

Good afternoon, Robert.

Good afternoon.

Question first of all on the Samsun 25% rise in capacity. I was wondering if you could give us the time frame for this.

Secondly, I note that in the first quarter your downstream investment actually fell 10% versus last year. I understood that under IFRS, in fact, it would increase because you would be capitalizing maintenance spending. I'm just wondering what we should expect for group spending over the rest of the year.

And my final question, oil production in Europe in the North Sea down 7%. You mentioned some technical problems. Can you tell us what to expect the rest of the year on that area? Thank you.

Concerning Samsun, I think the issue is to [inaudible -- accent] in order to increase the production by 25% and we think that this should be achieved in probably in June in the second, at the end of the second quarter, 2005. That is to say, very soon. It is a relatively small operation that was launched in the middle of last year, something like that.

Concerning the investment in the downstream, in fact, I think that's a 10% decrease that we mentioned. In fact, it was referring to 2004 figures. The way we calculated with the [inaudible -- accent]. I think again those figures are totally comparable.

I think that I was also a bit surprised, but I just would like to say that in the downstream we have to distinguish the [inaudible -- accent] building, which is going very well according to the time schedule, and [inaudible -- accent] Cap Ex that we are late for the Cap Ex, which is not unusual. Usually in the downstream, [inaudible -- accent] Cap Ex are essentially done in the second part of the year.

And your other question was for the decrease of the production in the North Sea. In fact, we have basically three elements. First, I would say the final shutdown, or the shutting of [inaudible -- accent] and this I think has an impact of minus half percent in the decrease of the production. There's a balance in fact of the decrease [inaudible -- accent] of about 6%. 50% due to technical problem and 50% minus 3% just to give an order of magnitude that are due to technical problems and another 3% which is just as a consequence of the natural decline. Before some new productions will come on swing, but I think this will be later on in 2006 and 2007 and should be essentially in Norway.

And your question was what can we expect for the rest of the year. I think probably of course we still have the [inaudible -- accent] of the natural decline, and we can expect to be in a better position and not to have the problems, the technical problems that we had for the first quarter of this year.

Thank you.

Thank you.

Thank you. Our next question comes from Colin Smith from Credit Suisse First Boston in London. Please go ahead with your question.

Hello, Robert.

Good morning, Colin.

Couple of things for you. First of all, can you remind me -- the overlifting, is that 150 million Euros or dollars?

It was Euros.

I just wanted to check. Second thing, on the production profile, you mentioned close to 3% with that Novatech. Can you confirm what oil price you're thinking of in that 3% number? Is that $25 a barrel or are you thinking something more like 40?

$25 a barrel now. Usually when we give a target for the production gross, we always assume a [inaudible -- accent] price. The difference is not very big if we take 25 and 40. But we have to take the same price to compare the projection. So it is $25 a barrel.

Can you remind us of the timetable for the prototypes due on the stream at the back end of this year and through the first half of next?

Concerning what we have waiting for the project start-ups in 2005. That would be coming out in the second quarter. The second phase of the middle of the year. The [inaudible -- accent] in the second part of the year. And at the year-end we should have [inaudible -- accent] of enough [inaudible -- accent]. That is to say, I don't think [inaudible -- accent], no. Of course, oil is production without an impact essentially in 2006 and 2007.

That's great.

Okay.

Thank you. Our next question comes from John Rigby from UBS in London. Please go ahead with your question.

Two questions. One on the upstream one on the downstream. On the upstream, to what level is the agreement between yourself and Novatech binding, and at one point does the issues come between you subsequently mean that the transaction sort of falls foul of them? And is there a sort of time limit on the agreement where it sort of falls down if you don't complete within a certain period of time?

And the second is on the downstream, are you able to give an idea of the shape of your earnings, the split between contribution from refining and the contribution from the other part of the downstream business? Thanks.

I think clearly the contribution of the refining is the biggest part. In addition to that, I remind you that there is some marketing and also trading and shipping. And the shipping went quite well. But the major part is clearly, especially when refining margins are so high, the major part comes from refining. Concerning Novatech, I think clearly the issue is [inaudible -- accent] and clearly the answer [inaudible -- accent] particular one. And I think I cannot say more.

Are you able to just give some rough indication in [inaudible -- accent] terms of the contribution of refining in proportion of your total downstream earnings?

I wouldn't want to be more specific. But clearly it's a major part. I wouldn't want to quantify.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from [David Klein] from [inaudible -- accent] London. Please go ahead with your question.

Hi, Mr. Castaigne.

Good afternoon.

A couple of questions on the upstream. To what extent was Synco productions still depressed in the first quarter by the gradual restart after the substantial shutdown in Q4 last year, can you quantify? Secondly, the upstream tax rate appears to have fallen sharply versus the fourth quarter of last year. Is that because the fourth quarter last year was unusual in this respect?

Yes, it was unusual, especially because I remind you that in the first quarter of 2004 there was a shutdown of Synco for maintenance, and the tax rate of Synco is something like 34%. I think that this is [inaudible -- accent] and this is why [inaudible -- accent] last quarter the tax rate [inaudible -- accent] was 69.4% to be very precise. It's true that it has fallen to 68.2%.

In fact, the first question concerns Synco. I can say that the production, that the [inaudible -- accent] successfully completed. Not only completed in line with the time schedule and with the project and the production is now back to the previous level and should raise up to 215,000 barrels per day. But I think that this should be reached very, very soon. I think that everything is going very well from a technical point of view with Synco.

Thanks.

Our next question comes from [Jason Kenny] from ING. Please go ahead with your question.

It's Jason with ING.

Hi, Jason.

Could you, based on the potential involvement to Total and Vancore, given the estimated recoverable reserves there have reported to have been doubled following recent appraisal. I know it's maybe on the back burner for Total, but [inaudible -- accent] suggesting a startup of 2007, 2008 now.

Secondly, should we expect a resolution of [inaudible -- accent] near term or this year at all? And indeed, would Total consider a move at EUR 28 a share to be attractive now, given the continued downstream robustness and potential of Algeria gas office, for instance.

Concerning [inaudible -- accent], I will not comment on the value of [inaudible -- accent], which is a given [inaudible -- accent] markets. We have our own ideas about the valuation of the company. Your question can we expect solution to be found with [inaudible -- accent] before the end of the year. Quite frankly, I don't know. I think you should ask this question to them.

As far as we are concerned, we have decided to launch an arbitration. You know that the decision has been very [inaudible -- accent]. That now the shares [inaudible -- accent] from the [inaudible -- accent]. We expect decision taken by the court of arbitrage probably at the end of 2005 or beginning of 2006. And that's all I can say, quite frankly.

You should ask them the question. As far as we are concerned, we have [inaudible -- accent] the decision. That should be taken by the court of arbitrage. Your first question concerns Vancore. You know we have some discussions with this company concerning both North Vancore and South Vancore, and I think given the status of our relationships with Vancore, so I'm sorry to say that I don't want to make any more comment.

Many thanks.

Okay. Thank you.

Thank you. Our next question comes from [Allister Seim] from Merrill Lynch in London. Please go ahead with your question.

Good afternoon, Robert.

Good afternoon Allister.

Two questions. In this morning's press conference you made reference to the transaction that happened last week and, can I ask implicitly is that based on a $25 long-term oil price assumption, or are you using something more akin to the [inaudible -- accent] when you look at those sort of transactions?

You mean what is your price?

First of all, I don't like other [inaudible -- accent] commenting what the others are doing. And I think that behind [inaudible -- accent] proposed by the winner there is clearly a long-term oil price assumption which seems to us very, very high. In addition to that, it is in the process [inaudible -- accent]. This is why we are not ready to put to this proposal a price equal to the ones that was accepted to pay by the winner.

But as far as you're concerned, you'll still use $25 long-term for all your planning?

[inaudible -- accent]

Absolutely.

In fact, specifically our main assumption, basic assumption is $25. I think when we study possibilities, possibilities that are under development, we are ready to take into account the price, to take into account the price which is given by the futures of the next three years. But this is very valuable when you have the producing property, when the issue is to assess fields that have not been developed, it's not very easy because you have to take some assumptions on the timing, and you are never sure of the timing and of the production corresponding to the building up. So I think in such a case it was not so easy to refer to the price given by the future to assess [inaudible -- accent].

Thank you. One other quick question. Has there been any resolution with the French government surrounding the tax implications on the [inaudible -- accent] spinoff?

In fact, you knew that we already got an agreement in principal for the [inaudible -- accent]. We should have another meeting very soon to have this agreement confirmed, and we are confident that we'll get positive answer, considering especially there's a way we are doing this spinoff. That is very good conditions for the company, for the management, and vis-a-vis the union.

So that would enable you to go down the preferred route of distributing to Total shareholders. Is that right?

Yes.

Thank you very much.

Our next question comes from Neil McMahon from Bernstein in London.

It's Neal McMahon Bernstein.

Good afternoon, Neal.

Thank you. First on demand, obviously you're more focused towards Europe and the Far East rather than North America. But have you seen any slowdown in terms of demand either in Asia or in Europe, or anywhere else in the world in terms of demand elasticity, even from a marketing point of view or a chemicals demand point of view. And I have a follow-up question as well.

From a marketing point of view, I think demand is week in Europe, especially for diesel and gasoline. It's clearly negative for gasoline in Europe, very slightly positive for diesel oil.

In the U.S. the demand both for gasoline and diesel oil is still increasing. Some think between 2% to 3% in the U.S. I've seen [inaudible -- accent] marketing.

In Asia, quite frankly, I think it should be more than that, but it depends also on where we are in Asia.

Concerning petrol chemical, it's clear that the demand is becoming qualitively weak in Europe. I would say lower than it was for the first quarter. It is not weak. It's lower than it was for the first quarter. [inaudible -- accent] in Europe. In the U.S. I think the prediction is a bit smaller. That is to say due to the fact that the economy is probably doing better for this type of activities in the U.S. rather than than it is in Europe. In Asia, I think the demand remains strong, maybe not as strong as it was last year, but it remains qualitively strong.

So you're only seeing price elasticity driven by the high feed stock or crude or product prices really in Europe heading home at the moment?

No, pricing elasticity -- we -- I think it's a bit too early to say that we see now the consequence of price elasticity, that is to say demand related to the oil price. I have a feeling that in chemicals, for example, this is more linked to the general evolution of the economy rather than maybe both rather than to the elasticity of the demand to the price. But I think it's a bit too early to say that.

Personally, I think that given the decrease of the weight of GDP, I'm not surprised to see that this elasticity was at that time qualitively modest, [inaudible -- accent]. Probably it should be much higher if we were to go to the price of $70 to $80 per barrel. Having said that, it is clear there will be a negative impact of $50 oil price that we have now and generally [inaudible -- accent] the economy.

Also in addition to that, gasoline and diesel oil, given the weight of taxes for the consumers, the effect of the increase of the product prices is diluted I would say at the pump.

Absolutely. Certainly on the European side of the Atlantic. Just another question on Venezuela. Currently there's tons of news flow in terms of both tax changes and changes really the way the government is running the oil industry. Given your significant position, I'm looking forward to further expansion projects. Could you tell us if your strategy has changed and your general outlook for Venezuela, please.

Our strategy has not changed. You know that the government has decided to strengthen the tax regime and especially the Synco project is concerned, to [inaudible -- accent] and in fact, we were asked to accept this measure and we decided to accept it, and at the same time we have been given the possibility to negotiate the development of a Synco II operation. I just note that our discussions have already begun discussion concerning Synco II project.

And I think that's all in Venezuela saw the oil project, heavy oil and the upgrading of this heavy oil. Besides that, there is a plan to increase the taxes on service contract. First of all, I would like to say that we are concerned this production is relatively small. That's all I can say.

Thank you very much.

Thank you. [OPERATOR INSTRUCTIONS] Next question comes from Mark Gillman with Benchmark in New York. Please go ahead with your question.

Robert, I was looking at the increase in natural gas production in South America and Africa. Could you confirm the increases are being sourced from Argentina in South America and Nigeria in Africa or are they coming from other locations?

I think you are wise to say that -- in South America it's [inaudible -- accent] and in Africa it's Nigeria. I was about to forget something. [inaudible -- accent] increase of the production of [inaudible -- accent] in Venezuela and maybe something in Nigeria also as well. But fundamentally, it's [inaudible -- accent], Nigeria and [inaudible -- accent] in Venezuela.

Okay. One follow-up, if I could. The decline in Middle East liquids, is that entitlement related to the buyback contracts in Iran?

Yes. But in addition to that, we had to lower production in Abu Dhabi but we come back now to normal level, a better level.

That you, Robert.

Thank you. Our next question comes from Tim Whittaker with Lehman Brothers in London. Please go ahead with your question.

Hello, Robert. Hello. Couple of more questions. Could you update us on where you are on Stockman field. I haven't seen your name associated with that field lately. And secondly, could you explain the working capital movement, which [inaudible -- accent] your cash flow. A year ago you said we should expect a reduction in working capital in Q1.

Yes. Concerning working capital, it's true that we have seen an increase in volumes of our inventories in down stream and chemicals. And we have seen also an increase of receivables in chemicals and something we have to review cautiously. It's true that we have had some [inaudible -- accent] in chemicals. But we'll have to look at that. Concerning Stockman, you say you haven't seen our name recently. Probably you saw it, or you should have seen it at the very beginning, and I can't exclude that you will see it again in the future.

Have you submitted a proposal in line with some of the other companies?

Concerning maybe Stockman. I just said maybe I was not, I didn't speak clearly enough. I cannot exclude that you will see in the future. Excuse me, you will continue your question?

Well, I'm trying to understand if you still think Stockman is something Total will be involved in given its competition.

The answer is yes, and yes we are going to submit a proposal, if it was your question.

Thank you. Thank you.

Thank you. [OPERATOR INSTRUCTIONS] We appear to have no further questions at this point.

I'd like to thank everybody for being with us this afternoon. Thank you and have a good day.

Thank you, ladies and gentlemen. That concludes today's conference.