Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Total second quarter 2019 results conference call. At this time, all participants are in listen only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, Thursday 25th of July 2019. I would like to hand the call over to your speaker today, Patrick Pouyanné. Please go ahead.
Good morning, everybody. I am pleased to join the call today. It's not every quarter, but it's a special occasion for the last conference call by P2 and, as well for the first conference call with Jean-Pierre, our new CFO, with his joining to start the transition. In fact, this transition has been organized and planned for quite a number of years, Jean-Pierre having been treasurer before becoming Deputy CFO. I think the time is also right for us and for myself to comment on the acquisition of Anadarko's African portfolio as the merger between Oxy and Anadarko is planned for August 8th. The format today will be as the following. P2 and Jean-Pierre will present the results, and then I will comment on the Anadarko deal, and then we will go to the Q&A session. Just a few words of introduction.
Since 2015, we have taken bold steps to move TotalEnergies to become best-in-class energy company, and the second quarter results continue to demonstrate this with resilience and more importantly for all our shareholders, cash flow growth, +10% with the same level of production than previous quarter. The Anadarko assets will contribute to replenishing our resource base and clarify the outlook for the coming years. The way forward is now clear to us, until 2025 at least, and it will be the theme of our September strategy presentation. Moreover, the transaction, which is cash additive and cash accretive in $ per barrel, will allow us to continue to actively manage the portfolio. Let's be clear, it's not a matter of volume growth for us, but it's a matter of value creation for all our shareholders.
Which is why we will sell at least $5 billion of non-core assets over the 2019/2020 period to continue upgrading the asset base, which is consistent with our fundamental goals of keeping our discipline and balancing profitable growth and balance sheet strength with improving shareholder returns. I will come back on our objectives on this matter at the end of the call. Now I turn the floor over to Patrick for the results.
Thank you. We reported, I would say as usual, solid second quarter results that demonstrate the resilience of our portfolio and the benefit of our best-in-class production growth despite an adverse environment in term of gas prices and refining margins. Adjusted net income was $2.9 billion, or $1.05 per share, an increase of 5% quarter-to-quarter. Debt adjusted cash flow increased by 10% compared to the first quarter to $7.2 billion. Organic free cash flow was up by 13% in the second quarter to $3.7 billion and up 9% year-to-date to $6.9 billion. The pre-dividend cash flow breakeven remains very low at less than $25 per barrel. The second quarter environment was marked by continued volatility. Brent was at $60 per barrel in June, down from a high of $74 per barrel in April.
In July it has been regaining strength with support from OPEC and geopolitical tensions. Natural gas prices, notably NBP in European and spot LNG in Asia, have fallen sharply in a move that we attribute mainly to mild weather in the face of ample supply. European refining margin were down in the second quarter but have recovered in July. Petrochemical margin have remained fairly stable quarter to quarter but are weaker year-on-year. In this context, we are continuing to reduce costs, and we are on track to increase production by more than 9% this year. Egina, Kaombo, Ichthys, the major drivers for cash flow growth this year are online and are ramping up. Culzean started in June, and we expect Johan Sverdrup and Iara to start up by year-end. Production is up by 9% year-to-date as anticipated.
Looking forward, we sanctioned the second FPSO for Mero in Brazil in the second quarter. At the start of the third quarter, we sold for $635 million some non-strategic North Sea assets that we acquired with Maersk Oil. We are continuing to grow and to upgrade the asset base. The E&P segment, and I remind you this E&P segment no longer includes the integrated gas activity, generated adjusted net operating income of $2 billion in the second quarter, a 17% increase compared to the first quarter. Higher liquid prices had a much larger impact than the lower gas prices, mainly domestic gas prices in E&P. Production growth from startups was largely offset by maintenance in second quarter, notably in Nigeria, Norway and Canada. Volumes were basically flat quarter-to-quarter. Cash flow from operations before working capital increased to $4.9 billion, up 15% from the first quarter.
I remind you that the new startups have a higher DD&A. You can see this in the accounts. There is more impact on cash flow than on the income itself. The positive impact on the cash flow is very accretive in dollar per barrel. Turning to iGRP Segment, this cash flow effect from new startups is more evident. Cash flow from operations before working cap increased to $0.9 billion, up 77% quarter-to-quarter, thanks mainly to the ramp-up of Yamal LNG in Russia and Ichthys in Australia. These massive projects are starting to deliver the cash. Adjusted net operating income in the second quarter was $0.4 billion, compared to $0.6 billion in the first quarter, reflecting mainly the lower gas prices as well as the higher DD&A.
Taking into account the addition of the Engie LNG portfolio and the strong ramp-up compared to a year ago, production increased by 63%, and LNG sales have more than double. iGRP is our fastest growing segment. During the second quarter, the first train of Cameron LNG started, and there are two more coming. In addition, we agreed to take over Toshiba LNG portfolio, which came with a payment to us for $800 million, signed a long-term sales agreement with Guanghui in China, and of course, agreed to buy the Anadarko assets, which includes Mozambique LNG. iGRP non-integrated gas activity, mainly renewable and batteries, were also profitable in the second quarter. Total Solar started up its second solar farm in Japan in June, and we are building a foundation for the future of the company across the energy spectrum, and iGRP is at the center of this effort.
Before I turn the floor over to Jean-Pierre, I would like to say that I am still enjoying my interaction with the financial community, with all of you, and I thank you for that. Jean-Pierre, this is for you.
Thank you, Patrick. Let's move to the Refining and Chemical segment performance. For this segment, adjusted net operating income was $0.7 billion in the second quarter. That means a decrease of 5% compared for the first quarter. European refining margins were down 16% quarter to quarter. Operationally, our refinery in Germany, the Leuna refinery, had to reduce throughputs due to contaminated crude from Russia. There was a shutdown at the Grandpuits refinery in France and some normal scheduled maintenance as well. As a result, refinery throughputs fell quarter to quarter by 14%, and capacity utilization decreased to 77% from 89%. Now Leuna and Grandpuits are back to normal. Despite the lower margins and lower throughputs, R&C generated $0.8 billion of cash flow from operations before working capital in the second quarter. First half cash flow was stable compared to last year at $1.9 billion.
For Marketing & Services, adjusted net operating income was $0.4 billion, an increase of 23% quarter-to-quarter. Cash Flow From Operations before working capital for M&S was $0.6 billion in the second quarter and $1.2 billion for the first half, representing an increase of 12% year-to-year. Now for the combined downstream, I mean R&C plus M&S, Cash Flow From Operations before working capital was $3.1 billion in the first half, an increase of 3% compared to last year, and the ROACE was 24%. I will turn now to the group results. At the level of the group, debt adjusted cash flow was $13.7 billion in the first half, a 10% increase compared to last year. The P2 already commented, this is a result of strong production growth, more than offsetting lower hydrocarbon prices and lower refining margins.
We are on track to grow cash flow progressively over the year as our new projects continue to ramp up. A few comments on gearing. At the end of the first half, the gearing was at 20.6%. Obviously, there is a slight increase from the first quarter, and we are a little above the guidance of 20%. I'd like to remind you three elements. First one is that we made two dividend payments in the second quarter. In the third quarter, no payment will be done. We are clear the situation, and in the future from the Q4, we will have one payment per quarter. The second element, of course, as you probably noticed in the increase of the working capital, we have an increase of $0.3 billion this quarter, and we are working to reduce this working capital in the future.
The third element, of course, is the implementation of the IFRS 16 that has a negative impact on the gearing at 2.7%. Buyback were $0.4 billion in the second quarter, or $0.76 billion year-to-year, in line with our targets of $1.5 billion at $60 per barrel, over this year. Net investments were $6.5 billion for first half, in line with last year. Finally, in terms of profitability for the past 12 months, the group ROE was above 11% and the ROACE was above 10%. Now I turn it back to Patrick, P1.
Thank you, Jean-Pierre, and thank you, Patrick. I want to turn or to come back as I announced it in the introduction on the deal with Oxy that we signed in May regarding the Anadarko African assets. Let me be clear, at that time, it was in fact, when we announced it, beginning of May, just an option as we did not know what would be the outcome of the Anadarko battle. We did not comment on it until now because this option is obviously subject to the completion of the merger between Occidental and Anadarko. Even if it's not yet completed, as the Anadarko AGM is announced for August 8th, I took the opportunity of this call to comment this transaction today.
Similar to the Maersk and Engie deal, thanks to our agility, we managed to create an opportunity, which obviously was not very obvious at the beginning. It came clearly as a surprise. This opportunity fits exactly with our strategy by playing to our strengths. I really would like to insist on this point. It is because we are very clear about our strategy in oil and gas, which is playing to our strengths primarily. Together with our board of directors, we could act very quickly to have access to these high-quality assets. These African assets of Anadarko are really a world-class portfolio of assets in our African stronghold. We have access to them at a very attractive price. More than 3 billion barrels of resources for less than $3 per barrel.
100,000 barrel per day of current production, increasing to 160,000 barrel per day by early 2025. Free cash flow positive from day one, including the Mozambique CapEx. Free cash flow growing to more than $1 billion per year from 2025, with a Brent at $50, and next to $1.5 billion of free cash flow at $60 per barrel for Brent. Strategically, the Anadarko assets essentially light the way to better navigate the coming years. The crown jewel is Mozambique Area 1 LNG. For where we will become operator with 26.5%. This project is de-risked with the FID, which has been taken in June for the first two trains at a competitive cost of $850 per ton and will represent 12.8 million ton per year of LNG production that is already sold under long-term contract for 90% of the volume.
We know and we respect the Anadarko team, project team, we have confidence in them. As per our purchase agreement, Occidental is taking actions in order to retain the team at our request. The first two trains developed less than one third of the available resource, which are estimated globally at more than 60 TCF. Mozambique LNG will provide us high return, broad field, one field expansion opportunities into the future. Last but not least, it comes and complements our LNG portfolio. Total is now the second-largest player in this fast-growing LNG market. Adding this giant resource in East Africa will obviously create significant portfolio synergies for us. Regarding the Mozambique valuation, I would like to raise your attention on a few figures. We'll pay around $150 million per percentage of working interest for these assets. A little around $4 billion for 26.5%.
$ 150 million. For these assets and resource, and we buy them right at the time when the sanction is taking place. It de-risks for Mozambique, the first trains. The Exxon ENI transaction in 2016 was at $110 million per working interest, still some work to be done before sanction, which is not yet taken. On Area 1, our license, all transactions which took place between 2012 and 2014, PTT, PTTEP, ONGC Videsh, ONGC Anadarko, took place at between $200 million and $ 260 million per percentage of working interest. To be compared, it was 2012, 2014, to be compared to a price or value of $ 150. I definitely strongly argue that this transaction is done at attractive conditions and well in line with what we described as a counter-cyclical strategy that we put in place when we acquired the Maersk Oil company.
We know that there is a Wood Mackenzie paper, but it values only the first two trains, and anyone who is using this alone is grossly undervaluing this one-of-a-kind asset. To be clear, this is the operation for giant LNG projects that is already under development with its first two trains sold on long-term contracts and a lot, most of the resource yet to be developed in the future. This asset is really unique and fits perfectly with our strategy, our skill set, and our asset base. The Anadarko portfolio in Africa also includes currently producing assets in Algeria. Specifically, we have the operatorship and additional 24.5% interest in blocks in the Berkine Basin, where we are already present with a 12.5% interest after the Maersk Oil acquisition. We can anticipate some efficiency gains there. These blocks are currently producing more than 300,000 barrels per day.
The acquisition expands our presence in offshore West Africa with deepwater fields in Ghana, notably 27% of Jubilee and 19% of TEN, that are currently producing more than 140,000 barrels per day and will continue to ramp up in the years ahead, which is an area where our oil traders, in particular, can add some value. For these two assets, we will pay the $60 per barrel value, which is fair and attractive. We'll get also some exploration license in South Africa, near our recent Brulpadda discovery. May I add that beyond the asset revenues, we are expecting additional profit to come from the trading business, which will be developed around them, either for LNG or for oil trading.
We intend to take some LNG from Mozambique LNG projects, which will complement our worldwide LNG portfolio with a location in the Indian Ocean, well located to serve customers in India, where we are currently developing a position with the Adani Group and in Southeast Asia. Our oil trading arm, which is the largest trader of African oil, will also benefit of having access to Ghana oil for its arbitrage capacity and for developing relationships with GNPC, the Ghana National Company. Another important point that I also mention is that this portfolio, when we consider the portfolio of these three assets, the portfolio will be additive to our cash flow and accretive to our cash flow per barrel. The cash flow coming from Algeria and Ghana producing assets will more than cover the CapEx required by the Mozambique project. Breakeven is less than $40 per barrel.
We'll generate around $300 million of free cash flow for between 2020-2023, at $50 per barrel. It will increase to $1 billion at $50 and next to $1.5 billion at $60 per barrel when the 2 trains of Mozambique LNG will be on stream. As I said, the acquisition, like the others we've done recently, plays to our strength. It's Africa, deepwater, LNG, and fits to our strategy to continue high-grading the asset base and to reduce our breakeven. It gives clarity on our 2020-2025 profile. The Anadarko assets will increase our 2P reserve life to well above 20 years, which we consider is more than enough. It ensures reserve replacement and provides flexibility for active portfolio management. Once again, our priority is not volume growth, but value growth.
We will take benefit from this growing production coming from Anadarko assets, 100,000 barrels per day growing to 160,000 barrels per day to sell some non-core and higher breakeven assets in order to focus our teams on the most profitable assets on our portfolio and also to continue to lower our global breakeven to be more and more resilient. This is why we announced that we'll divest at least $5 billion of assets with the majority, more than $ 3 billion, coming from upstream on the period 2019, 2020. It is part of the necessary discipline linked to our capacity of being agile to seize opportunities. We have demonstrated since 2015 our discipline on costs. We have today the lower OpEx per barrel among the majors, $5.5 per barrel, and on profitability, the better return on capital employed.
While at the same time, we have been able to grow by taking counter-cyclical opportunities. While most of our peers concentrate their CapEx spending on U.S. shale, we are looking to the rest of the world. Have been first to move in Brazil, on Maersk Oil, in Libya, on Engie LNG portfolio, and now on Anadarko African assets. Always in the disciplined framework we set to ourselves. When we will close this deal in the coming months, it might be possible that some of the assets could be closed in 2019, as we agreed that we could close the assets in a staged manner according to the various approval process by the different countries. Our gearing will increase temporarily by 4% and raise to 22%-23% at $60 per barrel. Consistent with our guidance that I reaffirm today, under 20%, we reduce the debt and restore balance sheet strength.
Firstly, because we are continuing to deliver strong cash flow growth, as this quarter demonstrates, and there is more to come for the next few quarters in 2019. Up 10% year-to-date. This acquisition will again be additive to our cash flow. Second, because we also confirm at the same time, it's one we can confirm at the same time, our 2018, 2020 shareholder return policy is not affected by the acquisition, including the 10% dividend increase we announced in February 2018 and the $ 5 billion share buyback at the Brent at $ 60 per barrel that we are clearly implementing and delivering quarter after quarter. We'll go into more details, obviously, about allocating future cash flow growth at our Investor Day in September. On investments, some comments on investments. You should not expect significant changes going forward.
Largely because even as we grow the portfolio, the organic CapEx is more efficient, and we do more for less. Since the start of 2015, we have sold more than $16 billion of assets. We have demonstrated our capacity to execute our sales program in a disciplined manner, and our commitments. We will continue to execute it in the same way with our new program for 2019, 2020. We recently announced that we sell some mature North Sea assets earlier this month, the high grading will continue. Net acquisitions on average over the years have been and will continue to be managed at a disciplined level, consistent with our goal to combine profitable growth in targeted markets with a strong balance sheet and competitive shareholder returns. We intend to confirm in September our guidance for CapEx investments, which means organic CapEx plus acquisitions minus sales.
For the period 2019, 2023, we should confirm $ 16 billion, $18 billion as a guidance, a range of guidance over this period. Obviously, including the Anadarko acquisition on the combined next two years, 2019, 2020, it will be closer to the high end of this range. Total is best in class among the majors, in large part because we have moved faster to recognize and capture some M&A opportunities. These have been key to lowering the break even, improving our resilience, fueling profitable growth. Given the fundamental nature of our industry, resource depletion, we believe that sustainable shareholder value is created over the long term by making disciplined investments, not by avoiding them. The Anadarko assets are mainly gas, LNG, and we believe in the transition to gas for power generation, particularly with LNG. These acquisitions helps also to take us further into the future.
As a conclusion, I would say that we really consider that this is a very compelling opportunity to upgrade the asset base with a unique world-class portfolio of assets, and we are confident that the value creation will be evident to our shareholders in the years ahead, like it is with Maersk Oil and Engie. We'll come back on that in September. Now we are ready, I think, to start the Q&A.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced by the operator. The line of Irene Himona from Societe Generale is now open.
Thank you. Good afternoon, and thank you very much, Patrick, for your support over the past decade, and all the best in the future. I had two quick questions. Firstly, on tax. Group tax this quarter was particularly low, there are different moving parts in there. The tax rate in Marketing & Services in particular is quite high this quarter, you continue to have tax credits in corporate. I wonder if you can give us a sense of any unusual tax items this quarter, and what should we anticipate for the rest of the year? My second question, you had mentioned before, I believe possibly at the Q1 stage, that you would give us a sensitivity to natural gas prices. I wonder if that is something you're able to do today, perhaps. Thank you.
Thank you, Irene. As usual, I have a question about taxes with you, so we were prepared to answer that question. Actually, tax rate was quite low this quarter. You were right. It is not only the fact that oil prices was lower than previous quarter, which is part of the answer, but this is not only that.
In the E&P, we benefit from the Kaombo-Sul startup with a large uplift mechanism, if you remember those mechanism in that country. In downstream, we benefit also from a $50 million capital gain on WEPEC sale with no tax. On top of that, June is the time for us to reconcile our tax estimate made end of the year and the actual numbers that we have by end of June. In the downstream sector, we offload one provision that we had on the downstream, a provision on taxes which was put in place previously. That's my answer on taxes. Sensitivity to gas price. That's a difficult question. On 100% of our production, oil plus gas, 75% of it is linked to the oil price. Let's have a look to the 50% production coming from gas.
You have on this 50%, 50% of it oil linked, 20%, 25% of it linked to the spot prices, NBP in the U.K. and in continental European. You have about 20% of prices linked to domestic prices, that you have, for instance, in Thailand, in Burma, in the U.K. or in Norway. No, it's not in the U.K.
Argentina.
In Argentina, sorry. The remaining part is 5%-10% on NBP. Even if I'm not fully able to answer your question, with those exposure to the different type of gas prices, I think you could figure out what could be our sensitivity.
Sure. Thank you very much. That's very helpful.
The line of Oswald Clint from Bernstein is now open.
Good afternoon. Thank you. Patrick, thanks for all the comments on Mozambique. I just wanted to ask around Mozambique, because what your thoughts were about actually delaying or actually seeing if you could retender and perhaps get a cheaper construction cost for that plant, or, if that wasn't possible, your thoughts around sharing some of the onshore work with the Exxon ENI project as well. If you could just discuss that side of it. Is that something that could happen, at least from a sharing perspective, after the FID of the other projects? Then just linked to Mozambique, you kind of gave the throwaway comment about South Africa, and I just wonder, was that a throwaway comment or is this something interesting really about this deal?
Have your geologists looked into the Anadarko block and see some type of extension of the success you've had in your own block in South Africa? That's my first question. Secondly, maybe one for the chief financial officers. Just looking at your gas, renewable, and power business and just starting to look at the unit cash flow margins, the kind of cash flow per ton that you're starting to generate here as you split this business out, and you're making around $100 a ton this quarter. I'm assuming there's not very much for renewables or power just yet. As I think about Cameron and Toshiba and Tellurian coming in, which is difficult for us to model, but also Yamal taking onto oil-linked contracts over time, just trying to think about the accretion or dilution of that number.
Should we think about this $100 a ton as a sustainable number? Do some of these North American contracts coming in perhaps dilute that number or some of your oil linked contracts coming in, it kind of stays about that number? I'm just trying to get a sense of what happens to that unit margin. Thank you.
For Mozambique, let's be clear. Our intent, and this is one of the interests of this project, it has been delayed, it was sanctioned. Contracts have been awarded to Saipem and mainly, we are fine with the way that the project has been engineering, designed. The teams of Anadarko, which is managing the project, is a team which built for BG in the past, most of them, the Queensland project, and it was done in good conditions at the end. We did not intend at all to retender anything. That we want to move forward. We trust people. Of course, we trust the job. It has been done properly. That's the first point on the project for itself. It's important in terms of value creation. We don't want to derate. We don't come there to put another delay of the project.
The second point, on the same time, yes, we understand, I had already an exchange of views with Darren from Exxon. I think there is probably things to be done onshore. By the way, there are shared facilities onshore, according to some agreements. We have an experience to potentially discuss and share facilities like in PNG with Exxon. I'm very open to that. As I said to Darren Woods, if it's a matter of efficiency, Total is always there to discuss about efficiency. It's not a matter of ego. We can operate the train, we'll see. If we can be efficient together.
I think we have joint interest, obviously. It's a long-term story. I think there is more than another 20 Tcf, 60 Tcf per area. We are speaking on something for the long term, so it would be good, like we have done it in the past, in Qatar, to be smart together. I'm very open to that. Of course, without derailing the first two trains, which will be built according to Anadarko plans. A very sort of second point. On South Africa, let be clear, it was not at the core asset we buy the portfolio. I can tell you, we spent some time on Mozambique, we spent some time, Algeria, we had the data. We understood the Ghana story. South Africa was part of it. Oxy and Anadarko wanted to sell the whole portfolio, we took it.
In the meantime, we have access to some data. We also had the good news, because Shell has joined this license, so it means that it has some interest. It's in the clear vicinity from Brulpadda. It's not exactly the same thematic, so it's exploration, quite at early stage. Honestly, I would say it's an add-on in the acquisition. It did not impact the price of the acquisition per itself. Having said that, I can just give you an information. We will drill a new prospect in this license next to Brulpadda, next year. We are not appraising the first one, but going to try to find more gas in vicinity of Brulpadda discoveries, try to know how much we have in this license.
For your questions about dollar per ton in the middle of something moving, I think I would answer that it will be better tomorrow, always better. I will give the floor to my Chief CFO. Pitou is ready to answer.
Well, partially, actually. Because I'm quite tired. This is my last call. Two elements on iGRP. First, Ichthys and Yamal are cash accretive. The volume is going up. We are ramping up those projects. This increases the cash flow. On the other side, quite high DD&A because we just started the assets. The effect of the lower gas prices has a negative effect on the net operating income coming from iGRP. You have to know that our low-carbon electricity business is profitable. It's making around $150 million this quarter. That basically is the information I can give you. I know this is not sufficient, I'm sure Jean-Pierre will be able to answer in more detail in September.
Just to come to that, obviously, as we have created iGRP, I think you have more granularity on LNG. Remember, in February, we gave you more details. We'll come back on it. It's becoming a very important part of the business portfolio, the production, and we are doubling the volumes. We will reach next year 20 million tons and more to come, reaching even by 2025 will be around 50 million tons in our portfolio. I understand why you ask the question. Remember what we told you, I think it was in February or September, that we target a free cash flow by, a CFFO, sorry, a CFFO by 2020 of around $ 4 billion in that segment. Like Patrick said, we started Yamal early, but the early volumes were going on the spot markets in Europe.
Since this quarter, we have activated the long-term contracts, which are oil-related contracts. It's much better. You will have good news from this point of view in terms of cash flows. I will know that on the comments on net results. Okay.
Fantastic. Thank you.
The line of Thomas Adolff from Credit Suisse is open.
Good afternoon. A few questions from me, please. Firstly, correct me if I'm wrong, but I believe your investment criteria is a minimum of 15% IRR at $50 per barrel Brent. I wondered whether the African deal actually meets this criteria and whether you will also be subject to capital gains tax in Mozambique. Secondly, you have so many LNG projects in your hopper. I don't even know where to begin. Maybe you want to comment how large a player you are likely to be by 2030. Finally, you've mentioned improving shareholder returns. Specific on the $1.5 billion buybacks you're doing. Do you think that's sufficiently attractive? In fact, if you look at the overall distribution policy, do you think that's sufficiently competitive, especially as you look out to 2021 plus? Thank you.
Okay, Thomas. First, you know that we used different criteria for LNG projects. We don't use the IRR. We use enrichment mostly because they are very long-term projects, and we look to the level of enrichment in capital rather than the IRR. By the way, LNG project with 15% return, I don't think there are many projects like that because it's very capital-intensive up front, but value creation is on the duration because you have long plateau. That was the first point. The capital gain tax, let's be clear, most of the capital gain tax will be carried by Occidental according to the purchase agreement we signed with them. Secondly, on energy policy. Yes, we have a large portfolio, that's clear. This is the only segment of the hydrocarbon industry which is really growing quickly, 10% the last three years. Everybody's planning at least 5% in coming years.
I think a large portfolio allow us as well to be, I would say, more patient on some projects when we have to negotiate. We know that it's sometimes these are very large projects, but in different countries, you could have sometimes to be patient in order to obtain the right condition, that generally the execution of the project could face some few delay compared to the ideal time scale. I think it's better to have more opportunities in this growing segment than not having enough, we have. We can potentially arbitrate if some of them do not fit with our return threshold that we have in mind. On shareholder returns. It's not only a matter of buyback. When I'm referring to shareholder returns, we look to dividend first, and plus the shareholder buyback.
That's true, and that we have in February 18th, the Board of director have reviewed all our policy, have decided that we need clearly to be more competitive and growing our returns from something which was mainly 30%, I think, of free cash flow to targeting more 40%. To do that, we use two tools. One is growing the dividend. According to my discussions with my investors, they love the growing dividend first. It's their first priority each time I'm asking the question. We do it, we do it regularly. You all know that we never decrease the dividend in Total for 30 years. It's in the DNA of the company, I repeat that, we will continue to grow it beyond 2020, even there is a. We gave a sort of bold guideline by giving freeze in advance, the increase.
Obviously, we will continue beyond it because our cash flows will grow, and the deal of Anadarko will help us even to grow. It's a good news for our shareholders. When I announcing that the only deal of Anadarko will give more than $1 billion at $50 per barrel of additional cash flow by 2025, and $1.5 billion. We'll not keep this cash flow just for us. Part of it will be returned to our shareholders. First dividend, then the buyback. We use the buyback in order to share with our shareholders the additional revenues that we get beyond $60 per barrel. Last year, we've done $1.5 billion of buyback instead of the $1 billion announced because the price was higher, the average price of the year. This year, we are not far from being at $ 60 because the gas price is lower than the liquid price.
We have executed since the beginning of the year with the program, and we monitor that quarter by quarter. My commitment is obviously, as I describe, I think the full shareholder return policy with these comments, and we'll execute the program. Beyond this, it's a decision which will be taken with the board of directors. Again, dividend growth first and global return targeting something in the range of something around 40%. We can keep that as a guideline.
Okay. Thank you.
The line of Lydia Rainforth from Barclays is open.
Thank you, and good afternoon to all of you. Two questions, if I could. On the $5 billion divestment program, how are you looking at what the criteria for those assets will be in terms of what you're looking to sell? Secondly, can I just follow up on the CapEx number, where you talked about that being $ 16 billion-$18 billion. Is that simply a reflection of the net acquisitions, or are you looking at a slightly different organic number to what it would've been without the Anadarko assets? Thanks.
I will not told you what is the list of assets. Sorry for that. Just because that's never been the policy. The criteria are clearly, as I mentioned in my speech, either non-core. One of the characteristics of the E&P portfolio of Total, we have quite a number of people in a number of countries, sometimes of small production. It absorbs some human resources, and one of our objective with Arnaud Breuillac, the president of E&P, is clearly to try to refocus on maybe less countries. If we can exit some few countries, we have a list of countries, small countries in terms of, I would say, revenues, production, where to depart. The second criteria is high breakeven assets. The one like we've done in mature fields in North Sea. We have sold a little production.
I'm not afraid at all to sell some production. We have some margin there. It's not at all volume driven. These are the two main criteria. In the downstream, we will continue to sell all these infrastructure. With P2, we were thinking in 2016, we had the list, we are discovering some piece of pipeline, piece of infrastructure, which frankly, we do not need to own. We need to have the rights of transportation of our gas, of our liquids. We have still some this type of assets. There's last field that I can mention, which is important in our policy regarding renewables. It's clear we described to you in February the business model about renewables, which is a business where we invest in some assets.
We took the risk of completion of the COD. We will divest at least 50% of it, because they are considered by infrastructure funds, and at the end, we'll keep 50%. We begin to have quite an interesting pipeline of these type of projects with the various subsidiaries who are working. We'll be in position also to divest part of these renewable assets in these years, from 2019 it will begin. Lydia, sorry. We joke together, sometimes I have difficulty to understand your English, but I think today you understood. I really understand that it's very difficult to understand the English of a Frenchman, I will repeat what I told just before, very clearly and loudly about CapEx. What I said during my speech, I was speaking about CapEx investment, which means organic CapEx plus acquisitions, minus sales.
It's organic CapEx with net acquisitions, minus sales, to be clear. This, I guided you that we should confirm in September. Consider if I should, as I am the CEO, maybe something would happen between today and September, but it's because we are taking some time, but nothing will happen, to be clear. I'm going for holidays likely too. Nothing will happen. We should confirm $ 16 billion to $18 billion for this aggregate on the period 2019, 2023. This is what I told you. I added that for the combined two years, 2019, 2020, including the Anadarko acquisitions, we will be closer to the high end of this range, $16 billion to $18 billion. I hope I've been better in English now, than before.
No, understood. Thank you very much as ever.
The line of Christyan Malek from JP Morgan is open.
Hi, good afternoon, gentlemen. Thanks for taking my questions. First of all, just on sort of the cash margin evolution of the new projects, including Kaombo and Egina. How do they compare to previously sanctioned projects in West Africa? Typically your average cash flow per barrel on a portfolio basis is within the sort of mid to high 20s. Would you say these projects are broadly in that range or higher? The second question, I just want to come back to, Patrick, your comment that the priority is not volume growth, but value growth. Does that suggest that you are prepared to step away from a volume target altogether? If so, is there a case to make now that now you've made the deal with Anadarko, you can potentially prioritize your capital framework around cash return over balance sheet and CapEx?
Finally, linked to that last question, I understand a target to increase returns from 30% to 40% of free cash flow. When I think about your yield in the context of dividend buyback over market cap, you sort of still sit within sort of the mid-range of the group and not necessarily for the top end. How do you think of it in that context?
It was the cash margin evolution on some projects, if I understand. Kaombo and Egina. I think on these projects, like Moho, Kaombo, Egina, which are projects on which we have invested a lot, and they are PSCs. Clearly, they are very accretive in terms of cash margin to our portfolio. It's above $40 a barrel for this type of projects, because we recoup part of the cost, plus we have the additional profits. This is clearly cash accretive in terms of dollar per barrel to our portfolio, and we will benefit of it. It's part of the explanation why we are growing. We are on a cash flow growing period. Sorry, I said more than 40 because I don't have all the details. Somebody is telling me it's more $45 to $50, so it's even more than that. The second question is about value over volume.
I think the fact that I just explained to you that we are ready. On one side, we are acquiring what we consider are the good barrels with the African portfolio of Anadarko, and which will be accretive to a cash flow per barrel. It's not a matter of volume and sale. I don't want to put an objective of volumes as production. We are ready to divest some productions, and as I said, we have reserves, 2P reserves, which will be largely over 20 years. We think that it gave us some space in order to divest part of the assets, and that we are targeting, and I gave just before, what are the key criteria. About shareholder returns. Last year, we returned 38% of CFFO to our shareholders. I think it was very comparable to most of our competitors.
We have a yield and even in the high range of the competitors in terms of return, global return. I think from this perspective, we have a competitive policy in terms of returns to shareholders. Our yield is around 5.5%, I think today. I think it's already quite high. We are in a world where the cost of money is much lower today. I think that we have a competitive return policy to shareholders. We intend to maintain it. As our cash flows will continue to grow, obviously the share in absolute terms will continue to grow as well. In absolute terms, the returns to shareholders will continue to grow, which is what I can tell you. Pitou maybe wants to add something.
I'd like to tell you, Christyan, that I don't share the same figures as you because we do benchmark our cash return in comparison to our competitor, the Shell, BP, Chevron and Exxon. We did not set the 40% target from nowhere. It is a competitive shareholder return in comparison to what is made by our competitor. Maybe we should talk together to reconcile our figures.
I'd love to. Thank you.
The line of .
Okay.
The line of Alastair Syme from Citi is open.
Hi. Thank you all. Patrick, I wonder if you just update us on the situations in Uganda and Papua New Guinea. I think you made it a priority to move these assets forward this year. I just wanted to understand what the situation is in each country as it stands today. Maybe if you could also secondly just comment around the LNG market. We've obviously seen a big move in pricing over the winter. What do you think that's telling you about the state of the market? Are your customers saying anything on the fact that their contract pricing is substantially above where spot prices are today? Thank you.
Okay. These two projects are, as you know, PNG, we signed a gas agreement with the government at PNG in May, beginning of May, I was there. In the meantime, there has been a change of government. From my point of view, I think that these type of agreements are signed with the country, so we expect the new government to respect it. Various news in newspapers, but we are confident that it is in the best interest of PNG to respect the agreements which have been signed in order to move forward with the project. It's like you've seen, there are many projects, LNG projects around the world. We have also many projects in our portfolio, one more with Mozambique. Obviously, I think everybody has to consider the global planning of the LNG industry in order to move forward the various projects around the world.
On Uganda, I think, as you know, we spent a lot of time there. It's not an easy project. It's a project which is crossing borders with a pipeline between Uganda and Tanzania. We have to put in place, if we really want to launch a project, a number of agreements, in particular, and strongly, I would say, legal agreements, in order to be sure that we don't want to invest upstream if we are not sure to have the pipeline bringing the oil downstream to the sea. The situation has been, we cannot change the geography, but Uganda is a country which is not connected to, I mean, which is landlocked. We need to be sure that if we want to finance the projects, to have all these agreements being ready at the same time. It's a lot of work.
We are working on it. We need the support of both oil governments. We are spending a lot of time on it. The target is to sanction the project this year. I hope we will reach it. LNG markets. It's a market which is moving. Two or three years ago, everybody was convinced there will be too much LNG, so everybody was pessimistic. Last year, the price went up, and so then we've seen an influence on the long-term plan for contracts. I think the best answer we can bring onto that is our strategy to have a large portfolio. In our portfolio, most of the contracts are oil related still. I mean, and of course, we've seen an influence on what is happening on the spot of the capacity to negotiate some long-term contracts with some customers.
In Total, we have been quite patient in order to maintain a certain policy, not to make any dumping. By the way, because we are today managing a large portfolio, we can accept also to take part of the risk in our portfolio. I know you've seen that the Cash Flow From Operations from iGRP has almost double, I think, compared to last year. This is largely due to the exceptional job being done by the LNG trading teams. We begin to really see the impact on our cash flow generation of having a team being in charge of a much larger portfolio. It's not double, it's plus 77%, which is quite impressive. It's linked to the capacity to move around the world more volumes.
Not only, by the way, the long-term contract, but also some spot volumes, which are generating $ 0.20, $0.30 per million BTU additional revenue. I think, my answer to this volatility in the price in the LNG market is clearly that being able to have a large portfolio and to absorb the volatility is the best way also to benefit from it. It's not only, I would say, a producing business, it's also a trading business and a logistical business and a business to customer. We are well-positioned for facing this volatility. Thank you. Can I just wrap up by wishing Pitou all the best in his retirement? Thank you very much. Thank you.
The line of Michele Della Vigna from Goldman Sachs is open.
Thank you for taking my question. Thank you, Patrick, for all of your help over the years. Two quick questions, if I may. The first one, when I look at your P&L, the associates line has been a bit of a drag in the first half of this year, down about 30%, while EBIT was pretty much flat year-on-year. I was wondering what were the key drivers there, and whether we could expect some of this to reverse in the second half as Ichthys and Yamal continue to ramp up. Secondly, on Mozambique, I was wondering what kind of accounting you will want to use there. I think some of the companies there are using proportional consolidation for upstream, but associate for downstream. I was wondering if you would go for the same methodology. Thank you.
Yes. Let's try to answer on the equity affiliate. It is true that net operating income from the equity affiliate is below last year, this is basically due to the weaker gas price. We started, this is true also, a few projects like Ichthys or Yamal, but the gas price effect, you see it on the equity affiliate. That's the main reason. Yeah. Most of the equity affiliates are energy affiliates, in fact. I think it's giving you a hint to the way we generally account, accounting methods. Okay, it's linked also to the way the financing package will be structured. Honestly, at this stage, we have spent some time to understand the project by itself. The financing package, we have not been involved, and we could not for obvious legal reason.
Today, we just buy an option, so we have not been involved in any way with, I would say, the ECAs and the final stakeholders of the financing package for Mozambique. This could take time because we will look at it, and obviously the way this will be structured could influence the accounting method. I think there is a link. Today, we don't have any position. You know the way we structure, we generally account LNG is through equity affiliates, but it's linked. All that is a related link, so we'll have work to be done in the future months after we are really. This is a job we can only do when we will have closed the transaction. Before, it's not possible to be involved with the various stakeholders.
Thank you.
The line of Jon Rigby from UBS is open.
Thank you. Thanks, guys. I have a question just on your sort of CapEx and LNG strategy now you're adding Mozambique to it. It looks like you're taking forward a whole host of projects all at the same time, the U.S. export projects, Nigeria Train 7, potentially Arctic, Mozambique now, Papua New Guinea, and I think you've spoken in the past of being interested in looking at the Qatari opportunities as well. I take the points, Patrick, that you said that not all of these go forward in a smooth way. Is it your thought that you can do all of these together, or do you think it will just work out that the sequencing sort of plays out for you, and you can incorporate those into the kind of CapEx budget that you're talking about comfortably without having to move spending up at some point?
Related to that, just on CapEx, and I guess sort of a more sort of philosophical question as we move into the September events. When you think about CapEx, it seems to me there's two schools of thought. There's those that say that they want to fund every single good project that makes money or makes a good return in the portfolio, and those that apply a top-down sort of maximum amount of spending in the sort of spirit of capital discipline. When you come to think about CapEx and the sort of medium to longer term CapEx, which school of thought do you belong to? Thanks.
First, let me be clear. The guidance I gave you, $ 16 billion to $ 18 billion of CapEx from 2019-2023, is taking into account the development of most of the projects you have mentioned. We have the capacity to take them on board, and you know why fundamentally. It's because of the capital discipline that we had from 2015-2018. We are spending a lot of money on projects which were sanctioned before 2014. We did not sanction a lot of projects because we were not in a position to add CapEx in the program to keep the discipline, the strength of the balance sheet. In fact, today, we can absorb these additional new projects. By keeping guidelines, which honestly, we are on 2015, 2017, we move to 2016, 2018. We keep the discipline. Why do we keep the discipline?
It's linked to your philosophical questions. On my side, I consider that I'm more on the school that we should not finance all the projects. We should keep a discipline because it's a global balance sheet and it's not only CapEx. Of course, we want to develop the company, but it's a mix between the CapEx, investments, return to shareholders, the gearing, and finding the right combination. I think we historically have done the other way, from 2010 or 2008 to 2014. We've seen the impact, in particular, on the profitability because mass of capital employed has grown a lot. Today, trying to manage this massive capital employed is very important as well. I think we try to find a way to, between creating more value, but also being strong. Creating value means for me, having a better profitability on capital employed.
This is the right combination. If I gave you a new guidance of 6%, 8% for the next five years, it's because we are willing to maintain this guidance.
Okay. That's clear. Thank you.
The line of Christopher Kuplent from Bank of America is open.
Thank you very much. P2, [Foreign language]. Interrupt your recovery from whatever made you so tired. I hope it wasn't us. Quick question for you, P1, and then one for P3. Your 40% payout ratio, which you're effectively giving us on CFFO at $60 Brent. Do you have a view on how much should come from absolute dividend payments when you talk about dividends should continue to grow? Should they only grow on a DPS basis, or do you actually think it's a good thing to increase your $8 billion roughly annual dividend cost? Any further thoughts you have in terms of prioritizing returning cash back to shareholders via buybacks versus dividends would be helpful. P3, the quest goes on. Networking capital only seems to work in one direction.
I wonder whether you can give us a little more detail on your introductory remarks, how it could actually release a little bit of cash into the second half. Thank you.
Yeah. Okay. I will not give you the full detail of your spreadsheet to allocate everything. I know.
For sure.
let's be clear. I think I've been clear with my answer. I told you that we want to have a competitive return to shareholders. As Patrick said, we have the objective that if we have the strong feeling that if we reach this to 40%, we are very competitive compared to our peers. I also said that dividends are clearly, when I discuss with our investors, their priority. We will continue to grow the dividends, and it might, yes, it will probably be, in terms of absolute value, we could spend a little more for dividends. Of course, when you may buy back, you eliminate some shares. At the end, my priority will be dividend, in order to return to shareholders. I will not go more in the details because it's a decision which is taken by Board of Directors about the various ways to do it.
The second question, I think first, second, Chris, thank you to have find a new nickname for Jean-Pierre. Definitely it will be P3. It's not Patrick, it's Pierre, it's not far. P1 and P3. It's good, Patrick, you have a new. We will not call him P2 Junior because we are in France, P3. P3 will give you some feedback. We'll explain you how we will eliminate with working capital burden like we've done last year. We have some seasonal effects. I leave the floor to P3.
That's true that we have increased the working capital this quarter. It was the case during the first quarter. We will work on the working capital. As P1 explained to you, we demonstrated in the past that we are able, by our hand, to decrease the working capital. We will give clear guidance, in particular to our trading, to reduce their working capital, I think I'm quite confident that we will restore the working capital by our hands.
Yeah, you have some inventories effect and things like that, but we have the discipline internally to know that we have some seasonal effect, and then we come back on this figure, on the right figure by the end of the year.
Okay. Thank you.
What else? Next question?
The line of Bertrand Hodée from Kepler Cheuvreux is open.
Good afternoon. Two questions, if I may. The first one on the LNG market. Going forward, there's a lot of projects that are getting close to sanction, you have a lot on your plate, Cameron extension, Papua LNG, Arctic LNG 2, PNG. You could participate also in Rio Grande LNG, Costa Azul, Arctic LNG 2 being almost FID, plus the Mozambique. The Qatar, do you believe that the market could absorb that, and that we are not running the risk by 2024 to 2025 to be in oversupply again, like we are today? The second question, more, I would say, data point. When do you expect Ichthys LNG, Kaombo South, and Nigeria Egina to reach plateau? Thank you.
Jean-Pierre?
We are involved in projects, many projects. There are some which are very near sanction, like Arctic LNG 2, like Mozambique has been taken. There are some others, like we speak about Driftwood, where today there is no date on the paper. It's more options we have in our portfolios. Honestly, on Cameron LNG that you mentioned as well, today's priority is more to start the 2022 and 2023 next year rather than preparing the sanction on 2024 and 2025. Even if, obviously, it will be, I would say, some priorities. As I answered previously, I think the energy market, again, there is quite a large roof. We observe not only China. India is buying more and more energy. Of course, it's linked to the price, so it's back to what assumption do we take when we sanction a project. We are cautious.
We take assumptions which are linked, I would say, to a $50 per barrel world. We don't take assumptions linked to a high price of gas. That's the way to be cautious about it. This market, by the way, you have the feeling today of a supply. Last year, it was considered under supply. You know you have a weather effect, which is quite important. According to all analysis, by 2022, 2023, there will be a lack of supply in this market. We expect, on the contrary, to see, again, prices moving up in future years. By 2024, 2025, yes, there are today many projects around the world. The way to arbitrate a project for me is purely based on the cost curve.
Our criteria is that to be sure, we don't want to invest in projects which are, I would say, third or fourth quarter in cost curve. If our project, independently of returns, is competitive from the cost curve, which means more competitive than other projects around the world, we move on and we invest. This is a common characteristic to the project in which we want to invest in future years.
Okay. For the plateau, Egina and Ichthys are at plateau. Kaombo plateau is scheduled on Q3 and is currently producing 200,000 barrel per day, South plus North.
Thank you very much to you, and all the best for the future.
The line of Jason Gabelman from Cowen is now open.
Yeah. Thanks for taking the question. I just wanted to clarify the free cash flow guidance you gave for the Mozambique project. Is that including interest and post-tax? If not, can you please provide what that number is? Secondly, just on Mozambique, do you guys have concerns there with regards to security? Are you taking any measures to shore up your security around the project site? Thanks.
Okay. The guidance I gave in terms of free cash was for the portfolio of the three African assets, Algeria plus Mozambique plus Ghana. Obviously, it was a guidance in net cash flow, so after tax and interest. That's clear. Second question. Security, yes, we have, of course, made a full due diligence on it, and security of our people is the highest priority in our company. The situation there is, we know that we have to take it seriously. I think we have ways to manage it, like we've done in other countries. It's one area, by the way, somebody mentioned to me, are you ready to cooperate with Exxon? I answered yes. Obviously on security, I think we share the same values together with Exxon and the same ways to tackle this type of situations in Africa.
We have some operations in Angola, in Nigeria, and elsewhere. We obviously will put the level of investments which is required to ensure the security for all the people who will work onshore Mozambique. That's a clear priority.
The line of Henry Tarr from Berenberg is open.
Hi there. Thanks for that. I think most of my questions have been answered. Just very quickly, on the Toshiba LNG acquisition, it looks a bit like a sort of directional bet on LNG pricing. Would you characterize it in this way, or do you see it a bit differently? Secondly, just on the gearing target, how much of a constraint is it? If the right opportunity comes along, would you go above that target near term, or do you think, you talked about the sort of countercyclical M&A strategy. You're probably now more likely sellers than buyers of E&P assets looking forward. Thanks.
Toshiba was, honestly, I think it's just a matter of a very different situation for both companies. Toshiba is not really involved in the LNG business. It is not an energy company. They have five, by the way, other businesses where we have difficulties. I think they decided to sell, it was considered then a burden as a high risk. Honestly, from us, we are a big player in LNG. I think in our portfolio, additional two million tons of LNG in the U.S. on the standard pricing does not afraid us. We have that. Getting the benefit of the $800 million, if you divide $800 million by 2.2 million tons over the number of years, you will discover that in fact it allow us to have access to LNG from the U.S. at a super competitive price.
I think it's really a different approach of the risk of the LNG market. We are a strong LNG player. Toshiba was not and has decided to exit, we were agile enough to take this deal, and I'm quite happy that my teams were able to convince Toshiba. Thanks, by the way, to the strong balance sheet of Total, that we could close the deal and receive $800 million of these two million tons. I think it's a pure risk management approach and different. In fact, it's a core business to us. It was not to them. Gearing, for me, this target is really a clear target. It's more than a target. I strongly believe that the business model of an oil and gas company facing the volatility of a market require to be stringent on the gearing level. We set this 20%.
I was maybe not convinced in 2014. You know what? The events convinced me quickly that we were by that time, about 30%, and we made a lot of efforts. We have used part of the, I would say, flexibility we had on the gearing. We are at 15%. We have used it. Anadarko represent 4%. That means clearly that you will not see Total will make a pause in this type of deals because the gearing is, for me, an important target. We will come back under 20% as quick as we can. Which was a question, by the way, to us at the board level, I can tell you. Okay, we have a good opportunity for Anadarko, but if we do this one, we use part of our flexibility. If we use this one, we'll not have flexibility for another one.
As I don't see a better deal to be done for coming years, we decided to do this one.
Great. Thanks.
The line of Jason Kenney from Santander is open.
Hi, good afternoon. P2, thanks very much for your support. JP, all the best for the coming future. P1, thanks for your input today. I had a question to P2, probably. I think you said in a previous call there was no bump expected for the IMO support second half 2019 or 2020. I just wondered a quarter on, if you were seeing any potential support from IMO dynamics, and if so, if that was confirming your belief in refining margin assumptions second half 2019, 2020.
The answer is yes. Patrick wants to conclude. He has sometimes concluded the end, I did not attend a lot of call, but I understand that sometimes the last call of July before holidays, Patrick has one priority, which was to go to holidays. Today, he wanted to go to retire. I think yes, the answer of probably the IMO will be a support to refining margins. It's difficult to appreciate how much. We have already explained many times, but let's look to the market, and we'll benefit. We are in a good position. We have organized a company in order to take benefit from this IMO threshold. Just it gave me, as I was beginning to joke, the opportunity, I think there was no more call, if I understand. You were, Jason, the last one. Thank you.
I think I would like first to thank all of you for all your questions. I hope you have a better clarity about the business case of the company and the logic of this Anadarko deal, but also all that being supported by the strong results. I know we don't make headlines because we continue just to reach all the consensus quarter after quarter, even if this quarter we have been better on cash flows, which for me is really the nerve of the war. It's because we have more cash flows that we can envisage to continue to develop the company and high grade the returns to shareholders.
I would like to thank you again, Patrick, for the outstanding contribution to Total during his 12 years as CFO, and to pay tribute to Patrick and to demonstrate to Jon, which sent me a sort of joke yesterday, that yes, there are definitely bold people at the helm of Total. Now it is time to say vroom. Have good holidays, all of you.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating in may all disconnect.