Earnings Call: Q1 2017

May 4, 2017

Ladies and gentlemen, welcome to the Shell First Quarter 2017 Results Call. It is a pleasure to be on this call today. I came into this role about 2 months ago. The handover went well, and it is good to be here today to talk about the company and our Q1 results. Before we start, let me highlight the disclaimer statement. We are making good progress in reshaping Shell towards the goal of a world class investment case, with a focus on delivering a higher return on capital employed and free cash flow per share and reducing debt. Simply put, higher returns for shareholders. The strategy we have outlined to deliver a world class investment case is working. Following the successful integration of BG, we are pushing ahead to transform Shell rapidly at all layers. Through consistent and disciplined execution of our strategy. This includes investing some $25,000,000,000 this year in the delivery of new projects with an expected $10,000,000,000 in cash flow from operations by 2018 from start ups since 2014. We are on track to deliver on the 2020 expectations set out at the Capital Markets Day last year. 2016 was a transition year and 2017 is the year in which we will follow through on the delivery. This is not just about managing the down cycle. This is about transforming Shell through the reshaping of the portfolio and a structural change in our culture and ways of working. We want Shell to be more competitive and resilient through the cycle. The Q1 of 2017 was another strong quarter for Shell. Our Q1 CCS earnings, excluding identified items, were around $3,800,000,000 with cash flow from operations of $9,500,000,000 and free cash flow was 5 point $2,000,000,000 at an average Brent price for the quarter of around $54 per barrel. And in Q1 for the 3rd consecutive quarter, free cash flow more than covered the cash dividend. Our results today show that we are successfully pulling on all powerful on powerful financial levers. We continue to reshape Shell's portfolio and to transform the company with some $20,000,000,000 of divestments completed or announced that strengthen the balance sheet as they are completed. We continue to reduce our operating costs with underlying operating costs at around $9,000,000,000 in Q1, lower than Q1 2016 despite higher production levels. Stepping back from the results for a moment, we also want Shell to be a leader to reduce Shell's carbon intensity and to contribute to shared value. We need to succeed in each of these things to deliver the world class investment case. Turning to our Q1 results. We've seen a strengthening of oil prices. Brent was almost 60% higher than year ago levels. Our realized gas prices were some 10% higher than year ago levels. And on the downstream side, refining margins were higher than a year ago in all regions except for the U. S. West Coast and Singapore. And in Chemicals, industry cracker margins strengthened across all regions. In summary, excluding identified items, Shell's CCS earnings were $3,800,000,000 a more than 100% increase in earnings per share from the Q1 of 2016. On a Q1 to Q1 basis, we saw higher earnings in all business segments. In Integrated Gas, our earnings, and an increased contribution from trading, partly offset by and an increased contribution from trading, partly offset by lower Pearl production volumes and the accounting reclassification in Q2 2016 of Woodside. In Downstream, our results improved, driven mainly by chemicals, where earnings excluding identified items were some $800,000,000 up more than 120% from year ago levels. This was driven by better asset availability, improved operational performance and a stronger margin environment in Asia and the U. S. And to a lesser degree in Europe. Return on average capital employed was 3.3 percent excluding identified items. And cash flow from operations was around $9,500,000,000 or $11,300,000,000 excluding working capital movements. Our dividends distributed in the Q1 of 2017 were $3,900,000,000 or $0.47 per share, of which $1,200,000,000 were settled under the scrip program. In this quarter, we again delivered and sustained the cash flow momentum, driven by a focus on the 4 levers: divestments, reduction in capital investment, reduction in operating costs and delivery of new projects throughout our integrated portfolio. Cash flow from operations on a 4 quarter rolling basis was some $29,000,000,000 Excluding working capital movements, this is around $34,000,000,000 Free cash flow on a 4 quarter rolling basis was $11,000,000,000 at an average Brent price of around $49 per barrel. Turning to the Upstream business segment in more detail. Upstream earnings, excluding identified items for the Q1 2017 were $500,000,000 which is some $2,000,000,000 higher than in Q1 2016. This figure includes a $1,600,000,000 oil and gas price impact. Q1 to Q1 also saw a $300,000,000 increase from higher production volumes mainly from new assets, but also from improved operational performance. In the quarter, upstream cash flow from operations excluding working capital effects was some $4,700,000,000 On a 4 quarter rolling basis, this is $13,000,000,000 which is almost $8,000,000,000 higher than in Q1 2016. In Q1 2015, Brent was at the same level for the quarter, dollars 54 per barrel and compared to Q1 2015, our CFFO, excluding working capital, was $2,800,000,000 higher, dollars 4,700,000,000 versus $1,800,000,000 more than double the cash generation at the same oil price, with only part of this driven by increases in production. Let me reiterate that our upstream operating performance continues to improve. Our focus on reliability and uptime improvement as well as operating cost reduction is paying off in the form of higher production, better margins and stronger cash generation. Moving to our cash flow priorities. Shell's financial framework is a key element of our overall strategy. There is no change to the priorities for cash flow: reducing debt, paying dividends and turning off the scrip, followed by a balance of capital investment and share buybacks. We are working 4 performance levers to manage the financial framework: divestments, capital expense, operating expense and new projects. These levers are adding significantly to cash flow. We are demonstrating good delivery against these levers and I want to further strengthen the momentum with a strong focus performance management, simplicity and costs. Fundamentally, this is an important opportunity to improve Shell's competitive performance irrespective of oil prices. This is about transforming the company for the future, more value and bottom line focused and nimbler to drive change and improvement across the business. Our debt reduced at the end of Q1 2017 from Q4 levels, and our net debt position was $72,000,000,000 Despite no material divestment proceeds, this quarter we have reduced our debt levels and gearing at the end of the quarter was 27.2%. Dividends declared over the last 12 months were $15,300,000 In Q1 2017 for the 3rd consecutive quarter, free cash flow more than covered the cash dividend. Turning to divestments. We are using asset sales to reshape the company and better match our portfolio with our strategy. Asset sales are an important factor in reducing our debt and have my strong attention. Divestments are important for three reasons. Firstly, reshaping the portfolio to better align with our strategy, being more competitive, differentiated and resilient. Secondly, accelerating cash flow to reduce debt and lastly, simplifying the company. During Q1, we announced several large transactions. Examples are shown on this slide. The split of the Motiva joint venture was completed on the 1st May. From this date, we will now fully consolidate the retained businesses and fully integrate the Norco and Convent assets and the other businesses into our downstream portfolio. The full end to end integration of our Downstream assets is essential to maximizing value across Upstream, Refining and Trading, Retail and Chemicals. Another example, the oil sands mining divestment where we reduced our share in the Athabasca oil sands project from 60% to 10%. It provides a net consideration of $7,250,000,000 with benefits for buyer and seller. It reduces the 8 strategic themes to 7 and contributes to reshaping Shell and simplifying our portfolio. Our asset sales program is expected to total $30,000,000,000 for 2016 to 2018 combined. We completed $5,000,000,000 in divestments in 2016, and we have announced some $15,000,000,000 in the last 4 months, ahead of the 5 plus 5 plus more than 5 expectations set at the beginning of the year. You can clearly see we are on track to achieve at least half the target by mid-twenty 17. We are confident that we will deliver. Developing new oil and gas should, of course, drive new cash flow and free cash flow over time. Our portfolio is geared to deliver an improvement in production and more importantly, in cash flow from operations and free cash flow in 2017 and beyond. We have several projects under construction for start up, particularly in the 2017 to 2018 time frame. For example, Prelude, 4 new FPSOs in Brazil and in the Permian as well as Gorgon Train 3, Clara Phase 2 and Shehalyon. By 2018, start up since 2014 and the combined portfolio should be producing more than 1,000,000 barrels per day, some $10,000,000,000 of CFFO annually at average $60 oil prices. 2016 project delivery was consistent with our expectations. Newfield startups and the continuing ramp up of existing fields, in particular Lula Central, Lula Alto and Lapa in Brazil, Kashagan in Kazakhstan, Saba Gas in Malaysia and Stones in the Gulf of Mexico contributed some 140,000 barrels of oil equivalent a day to production compared with the Q1 2016, which more than offset the impact of field declines. Before I talk about chemicals, deepwater Brazil and upstream operational excellence, let me briefly discuss the outlook for the Q2 2017. Looking forward, this slide has some indications for the Q2. The quarterly results announcement of today provides further detail. There will be various production and oil product sales volume effects related to the divestment program, as well as higher levels of availability in downstream. Now let me provide some more insight into Upstream's operational excellence agenda and our growth priorities. In Chemicals, Shell has delivered solid performance over the last 5 years with a record quarter in Q1 2017, and returns have averaged some 15% over the last 5 years. We concentrated our footprint of integrated sites from 133 to 15 and focused on Shell's core competences and advantaged feedstocks, which has become a real competitive advantage for us. Chemicals is a growth priority for Shell. Shell's chemical strategy focuses on activities with a clear competitive advantage. We optimize returns from using existing different feedstocks, invest in our existing 1st class footprint and continue to focus on enhancing our customer relationships and service. The global portfolio now offers both a regional balance and a balanced exposure to both gas and liquids and exposure to a range of different value chains. This ensures we can capture good margins in a range of market environments. Upstream continues to drive change throughout the organization. Operational excellence is part of this change. Cost reduction continues with 8% delivered in 2015, fully absorbing BG costs with no increase in 2016 and a reduction of another 2% quarter on quarter in Q1 this year despite volumes increasing. We value examples of substantial changes. However, this time, I'd like to share with you a few examples from the frontline of the upstream business. In Brazil, we embarked on a purposeful change in organizational culture and mindset in our operated business. Leveraging our upstream operational excellence program, providing a disciplined focus to deliver cost reduction and production optimization, with availability moving from 83% in 2016 to 96% in Q1 2017. In ONE Gas, the operator of offshore gas assets in the Southern North Sea, we improved availability from 74% in 2016 to 92% this year with a stronger focus on identification, prioritization and resolution of reliability challenges in an hourly, daily and weekly rhythm. We are simplifying existing platform equipment, reducing logistics costs such as the number of helicopters and marine supply vessels used. In addition, with what we have learned from our U. K. Operations, we unbundled an integrated service contract within 6 months and delivered $50,000,000 per annum savings and a reduction of almost 130 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es. Moving to deepwater and specifically Brazil. Shell's global deepwater business is a growth priority. An important area for growth is, of course, Brazil. In the Santos Basin, 3 new FPSOs started production in 2016, with the last one close to the end of the year, so still ramping up into 2017. Production in Q1 2017 was at some 325,000 barrels of oil equivalent per day against the average for 2016 of 230,000 dollars and we expect a further 2 FPSOs to come on stream as well as the Libre extended well test FPSO in 2017. In addition to an impressive project delivery track record, Petrobras is demonstrating significant gains around the learning curve in the pre salt, drilling wells and ramping up FPSOs much faster over time. Our teams are closely collaborating with Petrobras, for example, helping to optimize well designs and execution practices based on our deepwater experiences elsewhere within Shell. Our current program provides us good visibility on continued low breakeven growth into the next decade. Beyond that, we will review upcoming bid rounds as a potential opportunity to further extend our position. Let me close out. We are aiming with our strategy and performance to create a world class investment case for Shell. 2016 was a year of transition and we are now delivering. Our strategy is paying off. This year is another year of progress for Shell to become a world class investment. In the end, you will measure this as total shareholder returns, and so will we. I think that by doing a better job on delivering higher and more predictable returns and free cash flow per share and underpinning all of this with a conservative financial framework, we can create a better investment case, a world class investment case. With that, let's go for your questions please. Please could we ask that you just ask 1 or 2 each so that everyone has the opportunity. Thanks very much. Thank you. We will now begin the question and answer We will take our first question from Jan Rigby from UBS. Please go ahead. Your line is now open. Thank you very much and hello, Jessica. Two questions. The first is just looking at your operating cash flow in the Q1, I mean it's incredibly impressive. And it looks to me to be significantly ahead of oil price corrected implied operating cash flow that's in your plan for the 2019 to 2021 period. So what I wanted to understand is versus the assumptions that you have in that plan and obviously taking into account you're expecting a further $10,000,000,000 of operating cash flow from the start ups. Where are the areas of outperformance? Is it macro, I. E, in the Downstream? Or is it delivery of underlying performance in the business? If you could give or characterize some kind of color around that, that would be great. The second, just a small point. When I look at the Downstream, although Downstream is a very decent beat, I think, is the marketing number, it looks to me, looks a little soft if I look at it against a run rate historically. And given oil prices were fairly stable, and certainly on our markets, marketing margins as a whole looked okay. I just wondered, was there anything unusual in the Q1 that would have just softened marketing earnings a little bit that we should know? Thanks. Great. Thank you, John, for the question. To your first question on CFFO and what is driving the very strong performance for our business in this quarter. I'll point out a few things. You talked about outperformance. Certainly, there was the external environment, which supported all of our businesses. So we did see price help in both upstream and downstream in our integrated gas business. But importantly, it's underlying operational performance that you're also seeing coming through these numbers and our operational excellence agenda starting to pay off. There's a couple proof points on that Availability in our refining business and in our chemicals business went from some 89%, 90% last year to 93%, 94%, and that is certainly contributing to higher volumes and more cash coming to the bottom line. I noted a number of examples from kind of the cost agenda that's also supporting the margin environment, both in the downstream and in the upstream business. And of course, the $2,000,000,000 increase in earnings that we're seeing in the upstream business, which is a combination of growth coming through, improved performance, which I spoke to a bit in the North Sea and other parts of our upstream business coming through to drive that $2,000,000,000 increase in earnings and that's certainly flowing through to the bottom line as well. So yes, there was a good environment, but importantly, we're running the business really well. The operations are very strong and that is coming through to the bottom line. On your second question, marketing numbers are still very good, perhaps a little bit softer. The only thing worth note there, there was some softness in the margins, but also some FX impacts that you're seeing come through. But otherwise, if you look at the trend of that business, still very strong earnings and cash coming from the business. So we're we remain pleased with the performance of our marketing business, and there's really no performance issue to note, really just margin and FX impact making the difference. Thank you. And now we'll take our next question from Thomas Adolff from Credit Suisse. Please go ahead. Your line is now open. Hi, Jessica. Two questions for me as well. I guess the first one is what your first impressions are as CFO of Shell, obviously as a co pilot of the firm? Do you feel the strategy in place is sound and it is just about executing what is in place? Or in the 2 months you've been the CFO, have you already come up with new ideas to strengthen the stated strategy and perhaps you can discuss what they are and what this means? On the second question and you've given some examples on improved availability both in Brazil and the UK. And if I look back at the annual report, I think production efficiency delivered some 100,000 barrels per day and that's around 3% of group production. So in essence, you've offset your portfolio decline rate. Now if I look at operating efficiency, which obviously looks at the entire production process and captures maintenance, unplanned outages, etcetera, I think most of your peers would say it's still in the low 80s. Now if you purely look at plant reliability, which is just the utilization rate when it's operating, I think most of your peers would say we're already in the 90s. So perhaps you can comment where platform reliability is today as well as operating efficiency on average across your portfolio and where you aim to be over time. So what is the potential upside from what you still have today? Thank you. Thank you, Tom, for your questions. To your first question on the strategy, I feel really fortunate to be stepping into this role at this point in time. I think we've got a very good strategy, a very clear strategy and we've made great progress in the last year delivering against that strategy. The BG acquisition and the integration of BG accelerated that strategy in terms of our growth priorities, particularly around integrated gas and deepwater. That's coming through. And the overall reshaping of the portfolio to that strategy, which you're seeing happen, as we move our strategic themes from 8 to 7, and again, making choices with our divestment program to ensure we've got the right portfolio to match the strategy. So I absolutely believe we've got the strategy that's right for this company in terms of the capabilities and the assets that we have. And it is mostly around delivery of that strategy and execution of that strategy. Again, really good progress being made, really great set of results for me to have to present in my Q1. But I like to think, of course, that I'll have an impact, and I think there's still more value to come from this company. I think there's still more we can drive on the operational excellence agenda, continue to fine tune the portfolio and create differentiated value for our customers, our partners and our shareholders ultimately. So I think good strategy, good delivery, more to come and I look forward to being a part of that. In the Q2, when Ben and I are presenting, there may be some further reflections that we'll share in terms of where we see the company a year after the Capital Markets Day. Again, a lot of delivery has happened between now and then and a lot of things, frankly, have been derisked, if you will, in terms of where we stand today versus 12 months ago and a good time to reflect on that and share some further thoughts in terms of next steps. In terms of availability, obviously, we've got a big portfolio. There's a and it's there's a downstream piece, there's the upstream piece and the integrated gas piece across all of our businesses. Operational excellence is at the core of our strategy and the core of our priorities. It's part of the target setting for every asset in the company. And we are moving we're looking to move all of those to a top quartile range. And it would depend if you're talking about a liquefaction asset versus a refining asset versus an upstream asset. So difficult to provide one number. What I've shown are proof points of how we're focusing on it. As I said in the refining business and in the chemicals business where we've moved it from below 90% to 93%, 94%, expecting for that to continue going into Q2 relative to Q2 last year that's also referenced in the outlook statement. So clearly a priority. We're clearly delivering on that agenda, but likely more to come to ensure that's the case across the portfolio. Thank you. Thank you. And now we'll take our next question from Lydia Rainforth from Barclays. Please go ahead. Your line Two questions, if I could. The first one being on the cost side. I think in the statement you gave the adjusted cost base of about €9,200,000,000 which is well below that €40,000,000,000 run rate for the end of the year. Can you just talk through where you expect that to go as we go through 2017? And then the second question was just given all the delivery on the divestment process, how do you or where do you see gearing at year end? And do you think it gets to a level where it allows you to at least offset some of the dilution from the scrip by the end of the year? Thanks. Thank you for those questions. We're pleased with the cost reduction delivery we're seeing in the business and those trends continuing. You see that trend through 2016 going into 2017. We've indicated operational expense under 40,000,000 and that's the number that we're sticking with at this moment in time. There's, of course, ins and outs. We've got the growth happening in our business with Motiva split. We're going to move from being equity accounted to consolidating those numbers. So there a fair amount of movement associated a bit with the portfolio restructuring, but certainly with the growth. So catering for that, we feel the guidance of under 40 is a good one, but of course, we're doing all we can to make our operations, both the operational expense and the capital expense, as efficient as possible. So that agenda is not softening in any way. And as I come into the role, I certainly hope there's more opportunity for us to continue to push those paradigms. And what we have tended to find is that as we get on this journey, we surprise ourselves in terms of further opportunities. So I remain optimistic we can continue to move the needle there. But for now, that's good guidance. The divestment process and you're asking about cash generation, and I think you're going back to share repurchases or getting the scrip off, is that correct? Our as I mentioned in the presentation, our priorities for cash have not changed. So our first priority is debt reduction, followed by dividends, then taking off the script and then finding the right balance between capital and share repurchases. That's unchanged. We don't see that changing anytime in the near future. We have a number of debt maturities that are happening over the next 12, 24 months. I think you can see all of that in our reports for further insight. And we will follow that trajectory in terms of using our excess cash to pay down debt. The goal is to get the debt and the gearing down to some 20%. When we have that line of sight, we'll be looking to take off the script at that point in time. And then in the future, find the right balance between capital investment and repurchases where we think capital investment piece should be some $25,000,000,000 to $30,000,000,000 for the next couple of years. We think that's the right level in terms of delivering on our strategy. Thank you. Thank you. And now we take our next question from Lucas Herman from Deutsche Bank. Please go ahead. Your line is now open. Jessica, thanks very much. 2 as well, if I might. First, just can you give us some idea of where we are now in terms of the savings from the BG Group, whether you feel you've realized the full level that you'd anticipated at the time of the acquisition? And secondly, and staying with balance sheet and just thinking about forward accounting changes, I wondered whether you had any observations you'd care to make on IFRS 16 and lease accounting and how that may impinge upon your gearing ratios. I appreciate we're talking 18 months to 2 years out. I appreciate an element of its cosmetic as well. But to what extent that also alters mindset around gearing and levels? Thank you. Sure. Your first question on BG Savings Synergies, overall, as we've said before, really pleased with the delivery of synergies. They happened sooner than expected, so we had committed to 2.5. We got to 3.5. We're comfortable that we see our path to 4. We're still aiming for 4.5. But overall, very pleased with the delivery we've seen from a synergies perspective and again the pace we've seen that coming through to the business. Overall, again, the integration from my perspective couldn't have gone better. I was part of the Integrated Gas business last year and saw it firsthand and just really pleased with the portfolio that we have with BG, the future opportunities it presented and importantly, the team and the culture that came with those assets as well. So overall, pleased on multiple fronts and the savings piece exceeded original expectations and we see our path easily to about $4,000,000,000 which is well above what the original expectations were. In terms of IFRS 16, working through that, we don't see it having a material certainly not a material value implication. Things move around on the financial statements and not seeing that as an issue from a gearing perspective. We take all of these things into consideration. But again, that is more kind of accounting and moving things around, but that shouldn't be an issue in terms of our ability to get down to our gearing levels that we're targeting in the near term. Thank you. Thank you. And now we'll take our next question from Christian Malek from JPMorgan. Please go ahead. Your line is now open. Hi, good afternoon. Thanks for taking my question. Jessica, just when you look at Shell's CapEx plan in 2017 and arguably with a fresh take, do you think there's more to doing cutting both your spend as well as tweaking that CapEx number, specifically on OpEx? And can you be more specific on the run rate target of below €40,000,000,000 I understand it's sort of there's a range. Any way you can quantify that and give us more detail as to where you think that's trending to would be good? And the second question is, as you look at the whole portfolio, is there any particular area that you would like to make a change to have an impact on now that you're in the seat? Thank you. Your first question referenced CapEx and OpEx. I'll try and answer what I think your question was. So on the CapEx side, we've had a significant impact in terms of the capital efficiency of our business. So the lower numbers reflect to a large degree what we've been able to do in terms of better design and better contract and better build projects versus doing fewer projects. And we're seeing those effects happen before we make the decision to go forward with the project as well as after making the decision to go forward with the project in construction, we're able to affect that change, and we're continuing to affect that change. That's been a combination of, as I mentioned, scoping. It's a combination of managing demand, managing specifications better and some effects around the price environment as well. But to a large degree, our capital efficiency has been driven mostly around how we're doing things and doing things differently. And from that perspective, I think it will stick going forward. On the OpEx range, I'm not going to give you a new number. So I've already indicated below 40. As I mentioned, there's things that are coming in and out. But that's not to say that our ambition level is not significant and that we don't see further opportunity both on the capital and the operating expense side. I certainly do and believe that more is possible. But I think the guidance we've given is prudent. From a portfolio perspective, as I indicated before, I think we have the right strategy. I absolutely do. And I believe we've got the right assets for that strategy. From my perspective, it's primarily around fine tuning more than any significant adjustments that's needed. So we've got a pretty privileged position in our Integrated Gas business in terms of our access to supply as well as our access to markets. And we're continuing to build more access to markets, both in terms of customers and new countries and new products. In our deepwater business, I think a pretty privileged portfolio as well. What we brought in with BG and our Brazil portfolio is impressive, our Gulf of Mexico portfolio impressive. And in addition to that, we've got a number of future opportunities, future growth opportunities across our businesses, NIG, Integrated Gas, in Deepwater, where we can take further decisions in terms of growing the portfolio going forward. So I think we've got good assets now. We've got a good portfolio of future growth choices, We're at the moment the focus is more on how do we ensure that those are the most competitive projects, and that's really where a lot of our energy is going into. We're not needing to go put a lot of energy into finding new options. We've got a lot of really good options. It's right now about how do we make those options across our business as competitive as possible and to make the most capital efficient and capital effective decisions going forward. And now we'll take our next question from Oswald Clint from Bernstein. Jessica, thank you. Yes, I just wanted to ask about the cash flow again, but really in context of some of the newer upstream assets like and I know you won't talk about specific projects, but if you could maybe characterize the contribution in the quarter from big projects like Gorgon and Kashagan and say, were both those projects producing and contribute actually contributing in the Q1? And were they potentially, were they offset by Pearl? Some way that we can think about the contribution from those three assets, please. And then secondly, again, on CapEx, year over year numbers come off in most of the regions except North America, where it was still a large number and still relatively stable. Could you just talk about the main projects that are still seeing CapEx going in here in North America? And what that number might do in the second half as you start to take the reins when it comes to the Permian Basin? Thank you. Good. Thank you for that. So indeed, our cash flow is steadily increasing due to the coming on stream of a number of projects. I spoke about that during the presentation and mentioned some of the projects. Again, you mentioned them as well. So indeed, Gorgon ramp up over the last year, that is coming through in the numbers. Cash again is coming through in the numbers. The FPSOs are also coming through in the numbers as well. So absolutely that is making a difference. And what we've indicated before between 2014 2018, we expect another 1,000,000 barrels of oil equivalent a day of new production associated with growth that is either ramping up or will be coming on stream in that timeframe. And so between now and 2018, that's another $5,000,000,000 plus of CFFO that should be coming through from those new projects. And the further projects that will be coming on stream in 2018. So that's on the cash flow piece. And as you said, that more than offset the Pearl impact. On CapEx, so in 2017, a mix, of course, between asset integrity small projects, which is the kind of bread and butter of running the company and ensuring we maintain our assets and the quality of our assets for ongoing production. Then there's, of course, the growth piece coming through. And in North America, you have the Permian, the investments happening in Permian, to some extent, also in the Utica as well. We had the Appomattox is under construction as well. We've taken FID in Cakias and we're starting to ramp up the Pennsylvania cracker project as well. So a number of things happening in the U. S. We're fully integrated in terms of most of our business is in the United States. We've got our deepwater business, our unconventionals business, our chemicals business, our downstream business are all present. And all of that contributing terms of the capital profile that you're seeing in 2017 and likely we'll see to some extent for the next couple of years because of some of the projects I've already referenced. Thank you. Thank you. And now we'll take our next question from Jason Gammel from Jefferies. Please go ahead. Your line is now open. Yes. Thanks very much and hello, Jessica. I wanted to come back to Slide 12 in the presentation on divestments. You've not really had any material inflows from divestitures yet in the year and you make reference to the $15,700,000,000 of consideration that's been announced so far. My question is how much of that $15,700,000,000 will be a reduction to net debt in the near term? And really what I'm getting at is that, for instance, with the AOSPU partially accepted equity in from the purchaser And in the case of the Motiva JV, I believe your partner just accepted a larger share of debt that wasn't being consolidated. So I assume that 15.7 will not be fully reflected in net debt reduction in 2017. Second question I had, hopefully, is fairly quick. You made reference in the press release to Pearl still being in a restart right now. Can you comment on whether you would expect Pearl to be at full economic capacity in the second half of twenty seventeen? Good. Thank you for that. On your first question, to be clear, we've announced $20,000,000,000 in divestments, just to make sure everyone's oriented around the same number. And in terms of net debt reduction in relationship to divestments, what I would say is we've generated $5,000,000,000 in this quarter from operating our business and that did not include any cash from divestments. So very strong free cash flow generation, which can support debt reduction on its own, if you will. The other point I'd mention is we've got $19,000,000,000 of cash on our balance sheet. So that's another source of repayment, if you will, for debt during the year and going forward. And then in terms of the likely cash profile of the divestments announced, most, the majority of will be cash and will come through as they close. We've got a number of contingent payments and upsides and things like that. We're very careful in terms of how we define our divestment proceeds. A lot of those contingent things are not included in those numbers and so those are truly upside. So if things close according to schedule, I'd say the majority of these numbers will be showing up as cash. But as you mentioned, some of them are in shares and that will happen later in the year, but that is the minority, not the majority of the cash. We're looking for AOSP to close in the Q2. North Sea, we hope to complete in Q3 or Q4. And as you know, Motiva just closed. And now we'll take our next question from Michelle de la Vigna from Goldman Sachs. Please go ahead. Your line is now open. Jessica, congratulations for the strong results ahead. Two questions, if I may. The first one is, when you look at your future pipeline of projects pre FID, which ones do you see in terms of attractiveness already ready to go through the sanctioning process? And secondly, as we look into the second half of the year, there's a lot of LNG capacity coming on. We could see some weakness in the spot LNG price. I was just wondering on your LNG portfolio of long term contracts, how much of it does it come up for renegotiations by the end of the decade? Thank you. Thank you for those questions. I note that I failed to answer the second question and I don't want that to seem like that was purposeful. So I'm just going to go back and make a comment on the Pearl restart. Pearl is, as we explained last quarter in terms of the plan of addressing the issue and ramping the asset back up, it's going according to plan. We started the ramp up at the end of March. We hope to have it fully ramped up by the end of Q2, early Q3. So to your question, do we expect in the second half for Pearl to restart and to be in full production? That is what we're working towards and have reason to believe that that should happen. You're always a bit cautious until you actually deliver that, but that is the intention. And as I said, things are going according to plan. So that was to address the last question. Now going to the question around pre FID options, what I would say is we have a number of good options across all of our business segments, Integrated Gas, Deepwater, Conventional Oil and Gas. What we're working on is ensuring that each of those projects is as competitive as possible, and that's really where our energy is going into. We don't feel short options. We feel we have the luxury, if you will, to really focus on optimizing those projects. Also, there's tremendous amount of growth already happening in our company. So you see that coming through in our numbers today. You'll see that those numbers coming through in the coming years as I've already indicated in terms of incremental $10,000,000,000 of cash flow between $14,000,000,000 and $18,000,000 associated with growth. So we've got a lot of growth happening at the moment. We've got a number of good options in our LNG portfolio, in our deepwater portfolio in particular, but again, across the business. And we'll make those choices when we feel it's the right moment, it's the right project. Thank you. And now we'll take our next question from Biraj Borkhataria from Royal Bank of Canada. Please go ahead. Your line is now open. Hi. Thanks for taking my question. Afternoon, Jeff. I have a question on your reserve life. If I look at your reserve life relative to some of your peers, it's relatively low. So I was wondering if you could talk about resource to reserve conversion, specifically as your capital spend grinds lower and lower, are you confident that you can replenish your reserves place given the current resource set over the next few years? And on reserve life, is that number still relevant for Shell given the position you're in at the current moment in time, a little bit moving parts and divestments, etcetera? And then the second question, just going back to Slide 16, you showed some impressive numbers on Brazil availability for the operated side. I was wondering if you could talk about what availability levels are like in the Petrobras operated resource assets? And has there been any change there over the last year? Thank you. Thank you. I do believe that reserve life is not necessarily the most meaningful metric to understand our business and the potential for value creation. We've got a downstream business that generates significant earnings, significant cash flow that is not tied to that metric. In Integrated Gas, increasingly, there's opportunities to grow that business without necessarily the resource base specifically tied to it. And then in the unconventionals business, you have a conversion of resources to reserves, which doesn't show up in the reserve space. So I think in general, it's a more nuanced conversation in terms of understanding what drives value and cash for the business and reserves not necessarily being the right or the complete metric. We're very comfortable, as I said, with our current growth agenda and the projects we're bringing on stream to address decline, to address portfolio changes, you see that happening. As I mentioned before, we've got a suite of opportunities in terms of further growing this business in downstream, in upstream and in integrated gas. So we don't feel like there's a need for any inorganic activity to address growth over the medium term. We really, I think, have the right portfolio to drive growth. And as a company spending $25,000,000,000 this year and then $25,000,000,000 to $30,000,000 over the coming years, we still are investing significantly in our company and in growth, as I said, most of that, if not all of that, organic. So I think we're in a good position, and we're hopefully striking the right balance between commitments to shareholders, commitments to our projects, commitments to our assets and supporting growth and value creation over time. Thank you. In terms of Brazil, the indeed spoke to our own operated position. What I would say in general with Petrobras, very important partner, very impressive company and the way they operate really impressive. And we continue to learn from one another as I referenced in my speech earlier. In terms of the specifics about how they're operating their assets and availability, I would respectfully ask for you to follow-up with Petrobras. We don't like to make comments on behalf of other companies. But overall, we're really pleased with the relationship and the quality they bring to operating their assets. And now we'll take our next question from Christopher Copeland from Bank of America. Jessica, just 2 very hopefully quick ones. Please stop me from doing a stupid annualization mistake. So CapEx has come in quite significantly below last year's Q1. And I suspect BG's CapEx at the time was probably running at a little higher rate than it is today. So last year, it looked like a reasonably stable distribution of CapEx on a quarterly basis across the year. So please stop me from taking today's number times 4 and ending up with something that's below €20,000,000,000 And second question would be, I understand most of your disposal proceeds are still hitting your balance sheet before the year end. But can you give us a rough idea, even if it's just a range on at today's $50 oil prices and macro conditions, what kind of cash flow from operations and CapEx you expect to deconsolidate post the disposal of what we know, I. E, what you've already announced? Thanks. Thank you, Chris, for the questions. Indeed, CapEx $4,700,000,000 for the quarter. Relative to our guidance that seems a bit light. However, there is phasing involved and so we would expect that to trend up somewhat in subsequent quarters. So we're remaining comfortable with our $25,000,000,000 guidance that we've provided. And as I said, likely see this trending up because of phasing associated with the projects. That being said, as I mentioned earlier, we're continuously challenging the organization in a responsible way to look for further opportunity to become more capital efficient. So we continue to try and drive that number down from a capital efficiency standpoint, yes. But in terms of sanctioning work or going through with projects, we remain committed to our current growth program and the current capital investment levels that we've indicated. In terms of the impact of the divestment program on CFFO and other metrics, what I would say is to refer back to the guidance we provided at the Capital Markets Day last year, where we're moving the company over the next couple of years and the type of cash flow that we're looking to generate from this business, which fully considered the impact of the divestment program. So for 2020, we were indicating free cash flow from operations in excess of $20,000,000,000 That still remains valid for us. And as I said, that fully reflected the impact of the divestment program. I also hinted earlier that in Q2, Ben and I will be providing perhaps a bit more of a wider update with a reflection on where we stood versus last year. And so probably more to say on that in Q2. Thank you. Thank you. And now we'll take our next question from Irina Hiamona from S. C. Please go ahead. Your line is now open. Thank you. Hello, Jessica. Two questions, please. Firstly, on Chemicals in Q1. And I note it's the only division whose earnings came in well above the top end of the market consensus. In fact, it about 20% above the top end. I mean, I know you don't guide on divisional earnings, but how should we think about the performance of Chemicals going forward? Are there some metrics that you can perhaps guide us on? Secondly, going back to divestments, indeed, you highlighted how fast the progress has been and we're now looking at €20,000,000,000 plus €5,000,000,000 So €25,000,000,000 over the €30,000,000,000 You have over €400,000,000,000 of assets on the balance sheet. How should we think of the likelihood that by 2018, the EUR30 billion is exceeded not just because you want to pay down debt, but precisely as part of the process of simplification and reshaping of the Shell portfolio? Thank you. Thank you, Irene. Indeed, Chemicals had an exceptionally strong quarter, ties into why we see it as a growth priority for the company. So indeed, certainly market conditions were helpful. So I that's important to note. But as I mentioned during the speech, the underlying performance of the business very strong, the availability number that I mentioned going up to some 93% for the quarter. So in a good market, we were able to run our assets very well and take advantage of those market conditions. So clearly, that is the goal of the organization is to maintain those operating standards, those levels of operational delivery going forward. As I mentioned in the speech, we believe we've got competitive advantages from various perspectives. We continue to invest in that business and focus this business, as I said, as a growth priority because we believe that the opportunity that we're seeing in Q1 will be present going forward as well. And those are the kinds of results we're hoping to drive the company towards going forward. And again, that's why it is a growth priority because we believe the fundamentals of the business and the industry are attractive and are well suited in terms of our capabilities and our ability to create differentiated value in this sector. From a divestment perspective, what to expect going forward? Indeed, it's the divestment program wasn't driven by simply wanting to increase cash. It was really driven by the combination with BG and the opportunity to high grade our portfolio and better align our portfolio with our strategy. And that's really what we have been doing with this program. Yes, we're generating cash, which is going to help with the financial framework. But importantly, going back to the strategic rationale of the BG acquisition, bringing in deepwater assets, integrated gas assets that matched our strategy, that leveraged our positions, improved our positions, gave us an opportunity to then go around the portfolio and deal with the tail, if you will, and to move things that were perfectly good assets, but perhaps better owned by others. And the $30,000,000,000 program has really been driven by that high grading mentality. We'll continue to push that. I don't think we're entirely done and we haven't crossed the $30,000,000,000 threshold yet, but we are certainly getting closer. And on an ongoing basis, I think that will be normal course of business in terms of us always challenging ourselves. Do we have the right portfolio allocation, the right capital allocation that matches our strategy, matches our capability to ensure we're delivering the most value from those assets or are they better owned somewhere else. So I think there'll always be a certain amount of divestment activity that you'll see beyond 2018 and beyond 'thirty. Thank you. Thank you. And now we'll take our next question from Martin Blatt from Morgan Stanley. Please go ahead. Your line is now open. Yes. Hi, good afternoon. Two questions for me as well. First of all, I wanted to ask you where we are now in terms of the headcount reduction. During the course of last year, your colleagues talked about a redundancy program of 12,500 full time equivalents. The annual report that you published only gives average numbers for the year. And I was wondering if this program complete, have all the savings that are associated, but also the cost associated with it. Are they already behind us? Or are there more effects from that program to see over the next couple of quarters? And secondly, I just wanted to check, in a few answers, you've now said CapEx, dollars 25,000,000,000 this year, but $25,000,000,000 to $30,000,000 next year. And I know that is formal guidance. At the same time, how likely is it to see CapEx go to $27,000,000,000 $28,000,000,000 in 20 18 if oil prices do not move materially? I just wanted to make sure that there isn't a sort of underlying message there. Great. Thank you. In terms of the headcount reduction, indeed, we've made a lot of progress in terms of the cost agenda and the restructuring of our business with significant numbers, number of reductions happening, again across the business, across regions flowing through in the last couple of years. We're not complete. There's still activity going on and we'll see further reductions taking place. There's still some redundancy provisions that are in the numbers, which is also an indication that we're not entirely complete. So yes, as part of our ongoing effort to be competitive through the cycle, reset our cost base, there will be further reductions that you'll see going forward. Again, it's not just the current price environment, but it's really about how do we build the most competitive company, and there's still room for us in terms of certain parts of our business of further reductions happening. In terms of the capital agenda going forward, the 25 to 30, given the size of our company, given our strategy, seems like the right number. We believe that's the right number to support the growth and support the assets as well themselves going forward. You see the cash generation we're doing today at the current price environment and some would challenge that we're not spending enough. We are trying to find that right balance. As we I've mentioned, our first priority with cash is debt reduction, is the dividend and then removing the scrip. So the circumstances and conditions will be important for us to move to the higher or lower end of that capital range. But again, to support our strategy, to support the cash flow generation that we want into going into the 2020s, we've got a number of options in our IG upstream, downstream businesses in terms of growth opportunities where we could easily spend more than 25%. It's really getting the financial framework balanced appropriately, making sure we're picking the right projects and the right timing to support that growth going into the 2020s. Thank you. Thank you. And now we take our next question from Anish Kapadia from TPH. Please go ahead. Your line is now open. Thank you and good afternoon. My first question was following up on an earlier question on the cash flow. When I look at the cash flow from ops, it was over $11,000,000,000 in Q1 if I exclude working capital. So that kind of implies $40,000,000,000 to $45,000,000,000 of cash flow in 2017 in the current oil price environment. I was just wondering if that does that kind of feel reasonable? Were there some one offs in Q1? And can we potentially see things like cash tax, provisions, pensions being headwinds for the rest of the year? And also for kind of 2017, what's the impact in terms of the cash flow that will be lost from the assets associated with the disposals with the $15,000,000,000 still to come? And then second question on LNG. We're seeing quite a lot of projects being proposed still in Canada and in the U. S. I was just wondering how you see your projects in those regions stacking up versus it appears? And how much of an advantage is it you think that you could potentially sanction projects with a relatively lower amount of long term contracts than peers given your portfolio strategy? Thank you. Great. Thank you. Starting with the first question on cash flow in 2017 and the kind of ratability of it, if you will. Cash flow reflects the underlying operating performance of the business. There aren't any major one off items in those numbers. So I think they're fair to say relatively clean and again reflecting the underlying operational performance of the business. The 2017 cash flow impact associated with divestments, I would again point you to the guidance we've provided for 2020. Again, we fully contemplated this $30,000,000,000 divestment program in terms of the cash flow implications when making that disclosure, if you will. And as I've mentioned before, a whole host of growth projects still coming through. You see that coming through in our numbers today. We're not done. They haven't fully ramped up. There's more projects coming online and those numbers will be flowing through. In addition, we've got the operational excellence agenda. You're seeing that coming through in Q1. Continue to push that agenda. That will also be a source of incremental volume and value. Between the growth and the operational excellence agenda, we should offset decline and the divestment program. So again, in total, when you bring that all together, that's what we tried to do with our Capital Markets Day aspiration that we provided of some $20,000,000,000 plus in free cash flow, again, taking all of those things into consideration, assuming a oil price of some $60 I think those were the your second question then on LNG projects in North America and the competitiveness of our projects, I believe that was your question, we believe we've got very competitive options in North America and in other places as well. So I think we've got a number of good opportunities that we're continuing to work. And we believe we put very competitive targets on the organization in terms of ensuring that the next project we sanction is the most competitive project in the industry. That's what we're aiming for. We're being very diligent in terms of how we're approaching these projects, both in terms of the design and execution and the timing. And so making sure we bring all of that together to ensure we pick the right project from a suite of very good projects that we have allows us, I think, to have some good options on the table and we'll make those choices in the next couple of years when we feel the timing is right and the project is right. Thank you. And now we take our next question from Thipan Jocelingen from Exane BNP. Please go ahead. Your line is now open. Yeah. Hi, Jessica. Two questions, please. Firstly, can you just talk about your activity levels in the Permian? And now sort of 4 months in, what you see as the outlook for the rest of this year in that play? And secondly, perhaps if you could also just touch on how Shell sees the outlook for sort of oil products and demand for the remaining part of 2017? Thank you. Thank you, Tifan. I'm sorry, could you repeat that second question? Yes. I just wanted to get a sense of how you see oil demand given the scope of your marketing and downstream business, just how you see that going through the rest of 2017? Thank you. Okay. Permian, very pleased with the position that we have in the Permian, very good acreage and importantly, very good delivery by the business. We have learned and improved markedly in that business over the last couple of years and are delivering competitively from a well delivery perspective as well as an operating perspective. So a good asset, a well run asset that gives us future growth options going forward. We've got between ourselves and our partners some 15 to 20 rigs in the Permian, fairly stable level of activity, relatively high level of activity that will continue through the year. And there's nothing kind of new to signal from that perspective. Again, great asset, business is running it very well, very competitively and provides us some flexibility and some options. But right now, we're comfortable with the level of activity, which is reasonable. And you'll be seeing more volumes coming through in our numbers from the Permian this year and next. Oil demand, a lot's happening in the oil markets. I think all of us read the news daily in terms of what to read with inventory levels moving or not moving on the demand side and what that means, is the market soft or not. I think that's it's interesting. We certainly keep track of it. I think the bigger issue or the bigger concept for us is to really be building a company that is resilient through the cycle. That's where we've got all of our energy. We're focusing on the things that we control, which is our capital efficiency, our operational excellence, our operating costs. And what you see is a company that's generating some $11,000,000,000 in cash flow from operations in a $54 world. So I think we've got the right levers to pull. We're pulling them. I think we're demonstrating good delivery today and likely further opportunity, as I said before, going forward, but very competitive results today and building a company that's resilient through the cycle. Thank you. And now we'll take our next question from Rob Vest from Redburn. Please go ahead. Your line is now open. Hi, Jessica. Thanks for taking my questions. I'd like to ask the first one about Pearl. Sorry to come back to it. One of the things I find amazing about it as an asset is how much it integrates with downstream and chemicals, providing a lot of feedstocks as well. And I was wondering if you can make a comment on what's the outage at Pearl in the quarter on balance and that negative for the Downstream and Chemicals businesses because it deprives them of feedstock? Or was it could you say actually there's some positives in there as well. If I look at some of the things coming out of Pearl, I think it's like 20% of Group 3 lubricants base stock. But I was wondering if you could comment around, is the impact on the downstream business are broadly positive or broadly negative and talk about that a little bit. The rationale being that if the products are both disrupted, it might have contributed some of the strong pricing and just the pricing that you see within that business? My second question is on the CapEx. So one of the things I find quite hard to get visibility on is the noncash component, which I think reflects sometimes finance leases coming onto the balance sheet and then having to make addition to PP and E on the other side of it. Could you just give us some guidance on are there any additional finance leases still to come onto the balance sheet within that cash CapEx versus nominal CapEx guidance? Just to help us understand that. Thank you. Indeed, Pearl is an example of our integrated strategy working. So as you mentioned, the base oil is flowing through into our downstream lubricants business, an important value chain for us. Difficult to give you just a couple easy numbers because there's various ins and outs going into the controlled shutdown. We had inventory in stock. So we've been able to use inventory. We also have another GTL asset that we can leverage as well. So you're right, there would be an implication on the downstream business. But because of inventory and other levers that we have, some of that can be managed. And as on the whole, you can see in our results that we more than compensated for the impact of the Pearl shutdown. In terms of CapEx and the noncash component, indeed, there is a lease piece in our numbers. It's some $2,000,000,000 in the numbers, and we will have more of that coming through in the coming years at about the same level. So that is true that is a non cash component in that capital number and that capital expense number guidance that we provide in 2017 and also going forward. Thank you. Thank you. And now we'll take our next question from Ian Rhee from Macquarie. Please go ahead. Your line is now open. Yes. Hi, Jessica. Thanks for answering the questions. Just back to Pearl again. Sorry about this. But I know you've answered those questions a bit. But can you give us a specific number in the Q1, which the shutdown of Pearl affected your overall cash flow from operations by? It doesn't sound like an awful lot given the various answers you've given, but just interested in what the number is in terms of that because obviously it doesn't just produce downstream products, it also produces condensate NGLs etcetera. Second question is on the $5,000,000,000 of further disposals. Just interested in what's your guess at when those will complete in terms of when we'll see the cash on that? Is it is some part of that going to be this year? Or are they going to drift into next year? Okay. So on Parul, I think you're aware we don't disclose that separately. So I think what's important to keep in mind is our delivery with Pearl being shut down for most of the quarter. We provided guidance in the Q4 to try and help understand what the potential financial implications were of that. We did that again in Q1 as well to provide a bit of a proxy to think about what the implications are with the activity happening at Pearl. And that's probably as far as we can go in terms of the specifics around it. But again, the turnaround the ramp up is going according to plan started in March, should be up to speed by the end of the Q2 into Q3 and fully ramped up by the second half. You've seen the business deliver more than compensate for that activity in the Q1 and we've provided some guidance to help think about what potential financial implications are for Q2. And I'll note that our guidance in Q1 was worked out to be a good proxy. In terms of the further disposals of $5,000,000,000 my expectation is the cash implications for that likely would not happen in 2017. These are in flight. And by the time you sign them and then close them, you're more likely looking at 2018 in terms of the cash coming through the door than in 2017. We'll always push to get the right deal and to get the cash as soon as possible. But just practically speaking, that's probably more early 2018 in terms of when the cash would come in from that $5,000,000,000 that I mentioned. And now we'll take our next question from Alastair Syme from Citi. Go ahead. Your line is now open. Hi. Thank you. Two questions. Just coming back to the cash flow on the downstream, are you able to frame how big the contribution was from trading in the oil products? You made some comments around it in your prepared remarks. And secondly, can you confirm where you're at on Prelude given that it's one of your most important operated assets going forward? Thank you. Thank you. I expect you have heard this from us before. Trading is really integrated into our businesses, both downstream and integrated gas, and that's how we think about the contribution. So we don't independently or separately identify that. The trading contribution for downstream was softer this quarter. So I can indicate that much. But so what you're seeing in terms of the cash flow generation from downstream is the underlying operational performance of the business. But again, trading is really integrated in terms of how we manage the business, both internally and also how we disclose it externally. Prelude remains on schedule, if you will. So we've indicated that startup was in 2018 and we remain confident in that timing. There was a disruption that happened at the yard because of a very unfortunate incident, didn't have anything to do with our assets, but at the site. And condolences for the individuals that were impacted because, unfortunately, individuals were impacted. But again, that had nothing to do with our assets And that project itself is progressing well, and the time line for 2018 remains a good timeline. Thank you. And now we'll take our next question from Colin Smith from Panmure Gordon. Please go ahead. Your line is now open. Hi, Jessica. Thanks for taking my questions. First one is just going back to the BG acquisition, management made an undertaking to buy back $25,000,000,000 worth of stock at least between 2017 2020. I understand there's an oil price component associated with that. But I just wondered as you stand where you stand today, how you feel about being able to honor that commitment and whether it requires a higher oil price than the one we've got at the moment? My second question is on the disposals. Certainly, at the time of the strategy, there was sort of no indication that Canadian heavy oil was up for sale. As you said, it was highlighted as a strategic theme. And I just wondered to what extent the desire to be carbon responsible played in deciding to dispose of that asset? And if it was always in management's mind that in fact that was part of the €30,000,000,000 total? Thank you. Good. I'm sorry, your first question. I was writing down your second question. On the buyback question, our intent is unchanged. So we are we remain committed to that repurchase number. Indeed, it was tied to a price assumption and prices have trended lower than what was originally envisioned. But what you're seeing is complete focus in terms of the delivery of this business, the delivery of our strategy, the delivery of the synergies and the entire strategic rationale around that transaction. With that playing through and with consistent cash flow delivery, as I said before, paying down the debt, getting gearing to 20%, taking off the script and then looking to repurchase is our agenda. And we will do what we can in terms of creating the conditions for that to happen sooner rather than later. Q1, I think, is a good indication of the potential for us to do that. But again, we need to consistently deliver, generate that cash and manage the financial framework such that we can get to the point where we can turn off the script and begin the repurchase program. But as I said, that intent is unchanged. And now the second question, apologies. My question was with respect to the oil sands disposal and whether it was always mined within the and to what to move it out of the portfolio was connected with desire to reduce your carbon intensity of operations? Thank you for that. The oil sands decision reflects a number of things. I think the first thing to keep in mind is the clarity around our strategy, what are our growth priorities for the company, where do we see our capabilities and our ability to create differentiated value and how that asset sits in that portfolio. It's a good business. It was a well run business. Very pleased with the delivery. But thinking about our portfolio and our company and where we can create competitive advantage, we did not see that company, that business sitting in our portfolio over the long term. Now there's pieces of that business, the integrated value chain piece and the relationship with Downstream and the upgrader where we do see value, we do see the ability for us to create differentiated value in that portion of the value chain we have retained. So I think it's a story around being clear what your strategy is, where you're going to create competitive advantage and having your divestment program and your portfolio program match that. And that's really what drove that decision, and we're really pleased with the outcome. And as you said, it does speak also to the simplicity, simplification agenda that we have as we try and be more focused as a company in terms of our strategy, our portfolio and our business, which we believe will ultimately allow us to create more value and generate more value for our shareholders. Thank you. Thank you. And now we will take our last question from Jason Kenney from Santander. Please go ahead. Your line is now open. Jessica, Jason Kenny, Santander. So I remain a tad concerned by the extremely wide ranges for estimates on a full year basis, 'seventeen, 'eighteen, 'nineteen. And it didn't seem to fit with the sensitivity guidance you've given previously on the movements with oil prices or cash flow or earnings. And I'm just looking to see if there's anything you can do now you're in the CFO role sorry, CFO role to focus credible modeling of what shall reasonably be expected to deliver on a 3 to 5 year outlook. I mean, you've got a lot of guidance in play, but there does seem to be a lot of ignorance around that guidance and people just completely ignoring it. My second question, a bit shorter perhaps, When do you think that return on capital employed will be back above weighted average cost of capital? Thank you for the questions. To your first point, we are building a company and running a company that we expect will be a stronger company and a more consistent company in terms of cash flow generation going forward. And we're providing guidance in terms of expectations on a quarterly basis more so than we have in the past. But I think if you go back to the Capital Markets Day and the significant amount of change that's happened in the organization from a strategy perspective, the bringing in of BG and the integration of that large company into our business and the things we said we would do, the 4 levers we would pull, and you look at the performance today, I think you see a company that is delivering on its commitments and doing what it said it would do a year ago. And what you're also hearing is a company that's not changing its strategy. It's not changing the levers it's pulling. It's a consistent story. And what you have now are 3 solid quarters that demonstrate our delivery against that strategy and those commitments. Now there's a number of things that are out of our that are that will affect our business. So we're undergoing a fairly sizable portfolio reshaping, dollars 30,000,000,000 removal, if you will, from your balance sheet and your financial statements and assets is not inconsequential in terms of the changes that has on your business. We've tried to provide as much guidance as we can. There's a lot of ins and outs in all of that. There's timing associated with that. So that's one big change that we're trying to help provide transparency in terms of what that's going to look like at the end of the day. Then at same time, you've got a significant amount of growth happening. We're trying to give you insight in terms of what that growth looks like. Again, a lot of new cash coming in. So you've got a lot of assets going out, a lot of cash coming in, a lot of new business new growth coming in. And we're doing, I think, our best to try and give you the signals what that's going to look like. And that's why I keep pointing back to 2020 because all of this is happening live. And we can see a path where we're through the $30,000,000,000 divestment program and that reshaping of the portfolio and a ramp up of a huge chunk of projects, mostly coming online and more or less fully on stream in that 2020 time frame. And that's why we're picking that number as kind of a bit of a steady state in a moment in time where all of these things come together and generate significant cash even at a $60 oil price assumption. So I encourage you to focus on the delivery of our company the last three quarters, the significant cash generation, I believe higher than anyone else in the industry, the consistency of strategy and the consistency of delivery when thinking about what this business can generate in the next couple of years. Thank you.