Earnings Call: Q1 2014

Apr 29, 2014

Good afternoon, ladies and gentlemen. Eni's welcome to Eni's 2014 first quarter results conference call, hosted by Massimo Mondazzi, Chief Financial Officer. For the duration of the call, you will be in listen only mode. However, at the end of the call, you have the opportunity to ask questions. I am now handing you over to your host to begin today's conference. Thank you. Good afternoon, ladies and gentlemen, welcome to our first quarter results. Before I take you through the financial results, let me give you a summary of the main highlights of the quarter. Reported E&P production was flat versus the previous quarter. However, when taking into account the sale of our assets in Siberia that occurred at the end of last year, production was up more than 2.5%. In exploration, we have continued to record material successes, enlarging our resource base and increasing portfolio optionality. During the quarter, total discoveries, mainly oil, amounted to 200 million barrels. In line with our budget, the unit exploration cost was $2 per barrel. In gas and power, Q1 results benefited from the negotiation of Norwegian gas supply contract. Those retroactive effects, which will be cashed in during the second quarter, more than offset the backdrop of declining demand, weak prices, and a very mild winter. We continue to improve our performance in resilient segments, such as LNG and new structured products. Our refining and chemicals businesses were materially affected by a very weak scenario with lower demand and depressed margins. At the corporate level, we continued with our divestment program, selling a further 7% of Galp. Cash for this transaction will be accounted for in the second quarter. Now on to our results. The market scenario was overall weaker than the corresponding period of last year. Brent averaged $108 per barrel, down 4%. Refining margins were dramatically depressed, posting a 52% reduction when compared to the first quarter of 2013. Finally, the euro kept on appreciating, averaging $1.37 over the quarter. Looking at the overall results, adjusted operating profit was EUR 3.49 billion, down 7% versus last year. I will go through each component in the coming slides. Adjusted net profit was down 14%, also due to a three percentage points increase in tax rate versus the first quarter of 2013, as a larger share of taxable income was generated by exploration and production subsidiaries exposed to a higher tax rate. Turning now to the result of each business. E&P first. When netting the effect of the disposal of our Russian assets, hydrocarbon production of 1,583,000,000 BOE per day was up 1% over the same quarter of last year. Continuing ramp-ups of production, mainly in U.K. and Algeria, offset mature field declines. Compared to the previous quarter, production was up more than 2.5% or around 40,000 BOE per day, principally due to the resumption of the Wafa field in Libya, whose closure has weighted heavily on four quarters' performance. However, with renewed protests currently affecting Wafa and bunkering activity continuing in Nigeria, we confirm the guidance of a flat 2014 production profile. E&P adjusted operating profit was EUR 3.45 billion, down almost 14%, mainly driven by lower oil prices and by the appreciation of the euro against the dollar. Turning now to gas and power. Adjusted EBIT was EUR 241 million as compared to a loss of EUR 211 in first quarter 2013. The positive effect of the negotiation with Statoil was partially compensated by lower margins and reduced sales of gas and electricity, down 11.3% and 9.9% respectively, due to structural demand headwinds and the persistent condition of oversupply in the European market. Notwithstanding the weaker market environment, we confirm our previous guidance of a full-year reported EBIT in line with 2013. The refining and marketing division reported an adjusted operating loss of EUR 223 million, which was EUR 89 million worse than the corresponding period of 2013. The negative result was due to a sharp reduction in European benchmark refining margins caused by a persisting excess of capacity, weaker demand for oil products, and increasing competitive pressure. Refining throughputs declined by 15.5% due to the planned shutdown of Venice, currently under conversion into a green refinery, and maintenance activities at other sites. Overall, sales declined 5% year-over-year, mainly driven by sharply lower sales of gasoil and gasoline in Italy, only partially compensated by increased sales in Europe. Finally, the other businesses. Versalis reported an adjusted operating loss of EUR 89 million, a 41% deterioration from the first quarter of 2013, reflecting the continuing weakness in commodity demand and increased competition from Asian producers. The engineering construction segment reported an adjusted operating profit of EUR 128 million, down by 37% from the first quarter of 2013. Other activities in corporate posted an aggregated loss of EUR 126 million versus a loss of EUR 137 last year. Turning now to the debt. Net cash generated by operating activities amounted to EUR 2.2 billion. It has been negatively affected by the increase in Saipem's working capital for more than EUR 850 million, expected to be more than recovered before year's end. In addition, this performance does not reflect the benefit from the Statoil negotiation that will be cashed in during the second quarter. Our disposal program contributed with EUR 2.2 billion, following the sale of Arctic Russian fields, for which we received consideration at the beginning of this year. A further EUR 700 million related to the sale of 7% of Galp will be accounted for during the second quarter. Capital expenditure amounted to EUR 2.8 billion, out of which 83% in the E&P sector. As a result, net financial debt at the end of March was down EUR 1.2 billion, resulting in a leverage of 22%. Both on CapEx and leverage, we confirm our guidance for the full year. Thank you for your attention. Now I'll happy to answer your questions together with Claudio, Marco, and Daniele, that are here together with me. Ladies and gentlemen, the Q&A session is now open. I'd like to remind you that if you want to register for your question, please press star followed by one. To cancel the reservation, press star followed by two. Thank you. First question comes from Mr. Oswald Clint from Sanford C. Bernstein. Mr. Clint, please. Yes, hi, good afternoon. I guess I'll start with the obvious question about Kashagan, and if you could provide us with some details or updated details about what's happening with the project. My second question was actually on Mozambique. There has been some talk from Anadarko through the quarter about selling that gas on a Henry Hub and oil link pricing mechanism. I wonder if that's something that you would also consider for your Mozambique LNG asset going forward. Thank you. Thank you for your question. First, we talk about Kashagan. As we said during the starting presentation, at the beginning of the year, with the first result of the investigation, we started a very intensive repair works on the pipeline. Following with the results of the investigation of the gas pipeline in the onshore and transition zone and the oil line that finished in end of March, when the operator gave out the result, it was quite clear that the situation was worse than what we consider with the first result of the investigation. The most likely situation is to replace the two pipeline as NCOC, the operator, and the ministry said in the last weeks. The operator, meanwhile, while investigating, we also started a duty contest and tendering on the pipeline, and also on the spreads to be rated only the cap solution. We think to have, from the operator in June, a final situation on the cost and timing, and the timing on the project. It's clear that, as we said already at the beginning of the year, we didn't consider any production or marginal production in 2014, in term of guidance, production will not be affected. Looking forward for the 2015, we don't have still the results. We already put some contingency to cover a possible lack of production 2015. Other details on Kashagan, we can say that all the lab tests that we run in three different labs independently in U.K., in France, and in Italy, certified that the material we used, the carbon steel for the pipeline, was adequate and was in line for the Kashagan fluid conditions. The problems is related to some spot hardness point in the pipeline, but mainly in the welding. That is the issue. For the future, we are working with the suppliers, with the contractor, with the manufacturers to be sure that we don't have this kind of problem in the future again. For Mozambique, I think that you ask about the commercial issue. We are really working hard and with good result on the commercial side. A lot of interest. We prefer don't disclose any kind of formula or any kind of detail on what we are discussing with our buyers, clearly for competition issues. What I can say that there are a lot of interest, and by the end of the year, we will be ready to sign the first contract for Mozambique gas. Thank you, Claudio. Is it possible to be more specific on the contingency or the assumed numbers you have for volumes for Kashagan in 2015? What I can say at the moment, maybe I will be more clear and precise in the second quarter. I think that we are going to have a lack of production about between 50,000 and 60,000 barrels a day. That first, we are considering our contingency plan for 2015. Second, we had some good results in term of discoveries. Discovery that we can fast-track in Nigeria, in Congo, in Egypt. Above this contingency that we considered in our plan, we have this new production, new discoveries that will give a strong help and contribution to replace this possible lack of production. Very clear. Thank you. Next question comes from Mr. Theepan Jothilingam from Nomura International. Mr. Jothilingam, please. Yeah. Hi, good afternoon, gentlemen. A number of questions, please. Just on the other big flagship project for yourselves, can you just talk about timelines on Goliat, if you're still on track for a startup later this year? Secondly, just you mentioned the Congo, if you could perhaps give us a little bit more color there in terms of the progress around the exploration appraisal program on Nene Marine. Thirdly, just on gas, an 11% decrease in volumes. Could you talk about the shape you see in terms of demand for the rest of this year, please? Thank you. Thank you. First, we talk about Goliat. Goliat, we are in progress with the commissioning. Our plan is still to be able to finalize, of course, arrive at a commissioning level of about remaining 500,000 man-hours before sailing away. The plan is still, we are working still to have this sailing way of the FPSO by June. What are the conditions to sail away this FPSO? The first is to achieve these targets of about 500,000 man-hours. The second one is to have a float barge, a float hotel in Norway, in the Barents Sea, by the end of October. That is something that we are working on because at the moment, it's not easy to find a barge for this period. We are still working on. Contractually, we have two options. We have the first window already contracted for the sail away in June, and we have the second window at the end of the year in January. What is the difference? The difference is that if I sail away in June, I arrive in location at mid-October, then I have to finalize the completion. If the barge is not there, I can use the second window in January, but if I sail away in January, I will sail away a FPSO completed, finalized in term of completion. As soon as I reach the location, that will be in February, March, the ramp up will be faster. The two situation, the two windows, have practically few months of differences in term of startup. That mean that the lack of production for 2015, considering the second region, will be marginal. As I said before, already covered as Kashagan by the contingency and by the additional production. Second point, Congo. For Nene, in line with what I said, we want to use what we found last year to rapidly get a first production. We are working on two different parts. The first one is to get an early production, if possible, that is quite new, in 2014. We are on the right track. We want to start production, initial production, then grow ramp our production in 2015. Already have a first production to test the reservoir. The last well was very good. We had a production of 5,000 barrels per day without any kind of stimulation or without any natural flow, that is really the good news. This well, Nene-3, not only gave us a very strong positive news in terms of production, but also increased the reserves of the field. We go ahead with this early production. We go ahead with the full field production, as we said, we'd like to have in production in 2016. We are going to ramp up until 2016, then we start the full production. In parallel, we have to drill other two wells to test additional potentiality in the field because we have other two structure, that we have to understand if they are connected or not connected with good dimension. We think to have a possible additional potential about 800 million barrels. That is an additional good news. We are going to drill these two wells in 2014, I think beginning 2015. The third question goes to Marco. Thank you, Theepan. On gas demand, we've seen a fall quarter-on-quarter of 18% in Italy. The Italian market has been 21.5 BCM versus 26.2 in the first quarter of 2013. Our loss of 11% is actually a gain in market share. I'd just like to take this question to make a comment that we don't use volume that much as a reference because the volume guidance on gas in the moment when we have a liquid PSV hub is no longer that relevant as a guidance. I think what Massimo said earlier is what is relevant. In the declining demand, we're able to confirm the guidance we'd given in February of replicating the 2013 result in 2014. In terms of where the decline was, I think the power has deteriorated significantly, the weather has been a lot warmer on the residential sales. Next question comes from Miss Irene Himona from Societe Generale. Miss Himona, please. Yes, thank you. Good afternoon, gentlemen. I had a couple of questions. Firstly, in the quarter, you had quite a material working capital cash outflow, EUR 1.7 billion negative working capital. Can you talk a little bit about what caused that? Would you expect it to reverse over the rest of the year? Any comment you can make on that would be helpful. Secondly, given the widening losses in Q1 in both R&M and chemicals, should we assume that we end up for the full year with bigger losses than in 2014? Is that what your guidance states at present? Thank you. Okay, Irene. Firstly, your question about the working capital. Yes, it's true. We justify significant deterioration in our working capital that amounted to EUR 1.7 billion in the first quarter. It has been due significantly by, as I said, the Saipem working capital increase, as commented by the company itself, due mainly to a lack of down payment in the first quarter, plus some credits that have been mature in some contracts that are expected to cash in the remaining part of the year. We are relying upon the forecast made by the company that will more than revert this cash absorption in the first quarter. Second, I would like to remind you that we accrued the agreement with Statoil that will be cashed after the first quarter. That's another very relevant element to justify the increase in working capital. Third, we factored a less receivable due to the decrease expected in the net debt at the end of the quarter. Having said that, our forecast is to see a significant decrease in working capital by year-end. On refining, Irene, I think it's obviously very much driven by the refining margin assumption. Looking at the forward curves this year, including the first quarter actual, we can expect an outlook to be in line with 2013, where we have on the upsides some of the cost reduction initiatives that we've initiated, some of the capacity reductions that we've initiated with Venice, and we have on the downside, some maintenance in the first quarter that we expect to recover. I think at the same scenario of last year, we should expect a very similar result. Okay. Thank you very much. Daniele, do you want to comment on the chemical side as well? Please, yes, sure. I was going to say that the chemical side is expecting an improvement versus last year. The fact that we made it in quarter one, a worse result compared to last year, is particularly due to the licensing business and the way that we account basically profitability on some of the licensing that we did last year. We are anyway acting on reducing capacities in line with other people, like the closure of Hythe for the elastomer business is our reaction to the shortage of demand in Europe particularly, and continuing to reposition our assets and products internationally where demand and profitability is in a better shape. We have also made an important agreement with Elevance Renewables to finish the reconversion of the Marghera site, which was the last of the three critical sites we were due to address this year. Okay. Thank you very much. My pleasure. Next question comes from Miss Lydia Rainforth from Barclays. Miss Rainforth, please. Thank you. Good afternoon, gentlemen. A couple of questions if I could. Firstly, on Libya, can you give us an update as to what you are seeing within the country at the moment? Secondly, Claudio, can I just invite you to talk through what your priorities will be when you take on your new role as we start coming to May? Thank you. Thank you for your question. About Libya, the situation is still really volatile. In the first quarter, we were able to perform quite well, in line with our guidance, because we produced about 250,000 barrels a day average. The situation now after March is a little bit worse because Wafa has been shut in, and now is shut in for about four weeks, and their production is declining to 170,000 barrels per day. The situation in Libya is still volatile. We think we have some contingency, we can use our contingency to compensate this lack of production in Wafa. It's clear that we cannot compensate for all the. We are working hard with the national oil company and with the authority to find a way to start again Wafa. We don't have any major problem. We don't have a total problem of our facilities. That is the good point. It's just the way that they shutting the valve. That is the first question. For the second question, you can appreciate that we are here to talk about the first quarter, and I prefer to start answering to questions about the future, first of all, after my recovery, that will be in May. Second, also after having the possibility to talk about my priorities with my board. After that, I will be ready to talk about the future. Thank you. Perfect. Thank you. Next question comes from Mr. Michele Della Vigna from Goldman Sachs. Mr. Della Vigna, please. Good afternoon, Claudio. First of all, congratulations on your new role. I was wondering if I could ask you two things. The first one is how you're progressing in terms of your West African pre-salt exploration. Kalimba has been a huge success. I was wondering what are you looking at next. Finally, whether you could give us an update of some of the key FIDs that you intend to take over the next 12 months. Pre-salt, we are still really engaged in the pre-salt exploration. As you know, we are drilling in Agbambie pre-salt target in the Block D4, which is in shallow water, but it's pretty good. We are finalized drilling in Angola, in another important block, we are just reviewing the results, I hope and I think that very soon we are going to issue a press release on the result. We are continuing also other activity on the onshore pre-salt in Congo and also in Angola. I think that we can say that we are going to drill additional six wells this year on the pre-salt. In exploration we are on track to reach our target of 800 million barrels discovered. We already discovered 200, practically all the oil, at a very interesting exploration unit cost of $2 per barrel. Exploration, so far, so good. For the main FID for 2014-2015, we have the OCTP project in Ghana. We have also in Italy, Argo-Cassiopea, that is a very important gas field in Italy. We have Indonesia, Jau, and also in Indonesia, a project that is not operated by us but by Chevron, the IDD project that we hope to be able to sanction this year. As I told you before, we have the reproduction of Nene in Congo that we want really to start as soon as possible. In 2015, we have to sanction also the full field of Nene. We have also the block in Mozambique. We have Mozambique, the Block 4 and Coral we have to sanction by the end of the year. Bahr Essalam, Kunene and Bonga South West. That are the major projects that we are going to sanction. Thank you. Next question comes from Mr. Thomas Adolff from Credit Suisse. Mr. Adolff, please. Hi. Thanks for taking my questions. I've got a few questions, firstly, on Mozambique and the FLNG. There's still a few regulatory things that needs to be sorted out, like the petroleum law. Could you perhaps talk about how you think the FLNG will be treated from a tax perspective in terms of will it be ring-fenced? Also just following on your earlier comments just now on FID. Your base case is the FID, the offshore first before the onshore. Can you perhaps talk about what your base case is for FID on the onshore part of Mozambique? That's on Mozambique. Another question, just briefly on Iraq and Zubair. What's the point of sticking around? Isn't that really distracting you from more interesting projects in your portfolio? Finally, I didn't quite hear you well earlier on. Could you again say what you have assumed in terms of production or cash flow from Kashagan for 2015? Thank you. Thank you. Thank you for your questions. For Mozambique, we have two projects in parallel. For Coral, we don't have any discussion ongoing, any engagements on the fiscality or any, because for Coral, the FLNG will be inside the EPC contract. Will be treated as a cost gas in the PSC contract. We are not discussing this specific issue, and that is the good news. For the onshore, what we were discussing is mainly the fiscal stability, because the existing law in Mozambique practically cover all different points or different aspects of the project. I'm talking about the LNG onshore. We are discussing, first of all, we want to be this existing law could be confirmed for our big investment. Secondly, more important to have a fiscal stability all along the project life. That is the main discussion. The engagement with the different authorities, started last year with Anadarko at each level. It's clear that for the onshore LNG is one of the main condition precedent to have the FID. We think with the discussion we have the authority that we'll be able to have a final document approved and valid by the end of the year. Zubair, Iraq. You said that we can't use better our resources. Sometimes I think the same, that our engagement in Iraq was a strategic move. We move in Iraq not just for Zubair, but we thought, we still thinking that Iraq is a very important oil country, and gas, but mainly oil country. The situation must improve in the future. There are a lot of interesting opportunity, not only in term of brownfield, but also greenfield. It's clear that we are suffering some bureaucracy and some slowdown in our action. At the end, now we got the approval for all the full field developments, that through which we have to produce 850,000 barrel per day. We had the approval of the FDP, we had the approval of the three out of the main five contracts. We are still discussing the remaining contracts on the gas plant and all the drilling and on the water supply. I'm confident. The exposure, there's no exposure. Practically, we invested equity EUR 1.9 billion. We recover already EUR 1.7 or EUR 1.6, we don't have an exposure because every three months we are able to recover through the cost oil, through selling the oil, our investment. At the moment, we are still there. We are discussing. I think that in the last four months, situation improved. I think I see that as a long term investment for the future. It's clear that in the next year we are going to see and understand if the right investment or the wrong one, we are going to take a decision. At the moment, we are still there. We are increasing our production. We are really engaged, we are getting good result. Kashagan, the question was? The cash flow. Yes. The cash flow for 2015. This question, what I can tell you, that from a production point of view, I can say that we will be able to compensate the lack of production of Kashagan through our contingency and through the new project that we'll put in production. From a cash point of view, I think that we are quite sure to compensate the lack of cash flow. Confirming our guidance for the next couple of years, as you remember, we gave the guidance for the two years, 2015 and 2016. We are quite sure because we already have a recap plan, and we are going to accelerate the divestment. You remember that we present a plan of divestment of EUR 9 billion to four years. We are going to accelerate our divestment, especially in the exploration phase or also in other area of all the activities, to be able to compensate and confirm our growth in terms of cash flow. Perfect. Thank you very much. Next question comes from Mr. Jon Rigby from UBS. Mr. Rigby, please. Thank you. Thank you for taking my question. Two questions. First, I'm sorry to labor the point. Claudio, can you just walk me through the logistics of the pipe-laying exercises and also the tendering exercises? Because as I understand it, you can only lay pipe onshore during the winter, and I'm assuming, and you may correct me, that you can only lay pipe in the offshore during the summer. I guess you now become quite dependent upon hitting various weather windows, and I just wonder whether you could talk to me seasonal windows. I wonder whether you could talk to me about that, because I guess that gives us some idea about the actual effective replacement of the infrastructure. Just to go onto the gas side. Obviously, you've now completed the first round of negotiations and renegotiations successfully. I wonder whether you're able to let me know, one, to what degree your portfolio is now linked to hub pricing. The timeline you now expect in terms of the second round of renegotiations to get you to the point that you need to be. Thanks. Kashagan. I think I am not in the position now to really enter in the details of the logistical or the phasing of the project. It's clear that we are going to use what we did help in a different way in 2004, 2005, in that we are lay down in the good season in the offshore, and we lay down in the cold season for the onshore. We have the possibility and the flexibility to lay down. It's clear that the main issue is to phase the barge, the further availability with the season. What we are doing now is really rushing on the ability to find out the two barge. We already found one barge that is available, and we already identified the second one. That will be very critical in term of season, as you said. For the pipe supply, I think this is different. There are some different possibilities. In order to are using the 28 inches with the longitudinal welding. We are also studying the possibility to have a seamless pipeline that is a different size, 20 inches instead of 28, and is much easier to add and with less problem in terms of H2S. We are studying, and we are moving in parallel. We are studying the different possibility on each pipes, kind of pipe, and we are engaging the supplier. The operator is ready, supported by the co-venture, with different backup. Priority in find out the barges, and priority in selecting the different option in terms of piping. That's what I can tell you now. Jon, it's Marco. Thanks for your question. Absolutely, we do look at this in terms of round 1 and round 2. We have completed the round 1. You can assume that the Statoil is hub linked, that a big part of the GasTerra is hub linked, that our Italian equity is hub linked. The others remain oil linked. The biggest outstanding for this year is Gazprom, where we start from an okay agreement. As you know, the hub, since we last spoke in February, has deteriorated another 15%. All these oil-linked contracts need a rather deep second round. Nothing has changed in terms of our intention to bring all these contracts in line with market, and we will need, as we said before, 2014 and part of 2015 to achieve that target. Sonatrach will start in October this year, as we said previously. These are the two big outstanding efforts ahead. In terms of where we are with Gazprom, I think it's very much business as usual. We talk regularly, and we hope to bring this contract in line with, let's say, new market base in the coming months. Right. Is the issue with, I guess, Russia particularly, but any of the others that insist on continuing oil link, that you have to come up with a way of almost artificially creating a price mechanism that gets you to mimic the hub price but has an oil link calculation? Is that the complication on this? I wouldn't say so. I think we're happy to take oil exposure so long as the absolute level is in line with the hub. The hub having collapsed recently doesn't help in the sense that we need to go back and readjust that pricing mechanism. The pricing mechanism is quite simple. We have, as with other suppliers, in Gazprom's case, the ability to trigger an arbitration, which is very straightforward in case we don't get to the right price. It's actually a simpler discussion because it's just about a number, which is the discount on the current formula. Okay. The effort right now is just to fix the contract number and bring it in line with the market. Thank you. Next question come from Mr. Giuseppe Rebuzzini from Fidentiis Equities. Mr. Rebuzzini, please. Good afternoon, gentlemen. I've got three questions, two again on Kashagan. The first is if you can give us a broad range of the incremental cost for fixing the problem with the pipelines, as long as you have some estimates. Today. The second is, if you have any possibility to recover part of the cost from insurance or part of it from the contractor doing the welding, in this case, and if you can confirm which was in particular or which were the contractors involved in this activity. The third question is, if you can remind us about your guidance for the tax rate for 2014. Thank you. Kashagan. The first question, as I said before, we don't have it still from the operator, a cost guidance or cost estimation and timing. We have some idea, because the operator and NCOC, they have to disclose and present officially to the first party, to the ministry, these figures, I think that we have to wait until June to know exactly about cost. In terms of cost recoverability, from a contractor point of view, you know that all costs incurred after the 1st of October without reaching the KCP are not recoverable. From an assurance point of view or from any other kind of view, we cannot disclose and talk about that because we don't want to create any prejudice to the party involved. That is an issue where I can't say anything at the moment. Okay. As far as the tax rate for 2014, I can confirm that our expectation is to have a tax rate of around 66%, well in line with what we experienced in 2013. Thank you. No more questions at the moment. Ladies and gentlemen, I'd like to remind you that if you want to register for your question, please press star followed by one. To cancel the reservation, press star followed by two. Thank you. Next question comes from Mr. Alistair Syme from Citi. Mr. Syme, please. Good afternoon, everybody. Couple of questions. Marco, or maybe it's a question for Massimo. On the gas business, given the losses in that business, are you building up some sort of tax credits that as that business returns into profitability, that you can help offset? Secondly, Claudio, can I ask about the E&P cash flows? If you look at unit cash flows over the last couple of years, they look to be deteriorating. They've come down around 8% from where they were in 2012. Is that just a loss of high margin production or is there something else going on there? Finally, Claudio, can you just quantify exactly what the level of contingency is that you have built into your forecast that you said- Can you repeat the last question? Because you can talk a bit loud because we are not able to hear you. Can you repeat the last question? Sorry. The last question was how much contingency is built into your forecast? I think you may have previously given some numbers for 2014. Yeah. About the fiscal losses generated by the gas losses in Italy, I would say that, we used to assess the overall losses in Italy, that come from refinery plus gas, compensated by the income generated by the E&P. There is an overall assessment made year by year based on the forecast, and we accrue only the taxes that we estimate we can recover in the next years. That's the exercise we perform year by year on this respect. You're not building up a big stockpile of accruals then? No, I would say no. The second question about the cash flow. I think talking about the cash flow, considering our forecast and full price, our cash flow per barrel is always above $30 per barrel. That is our figure at the moment. I don't see any reduction. As we said, what we see in the future, considering our guidance, this cash flow per barrel has to increase. There's no drop in the cash flow per barrel. Contingency, well, we talked about contingency at the strategy presentation, and we had some high contingency for the first couple of years. About $100,000 per day, the average, the first 2014, and something not far from that figure also for 2015. We are going to decrease because we have much progress projects coming in 2016 and 2017. That are the figures. EUR 90,000. Okay. Yes. Okay, yes. It's EUR 90 per barrel. Yes. Okay. Thank you very much. Thank you. There are no more questions at the moment. The control room confirms there are no questions. Okay. Thank you very much. Thank you. Bye bye, all.