Shell plc (LON:SHEL)

CMD 2016

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Jun 7, 2016

And ladies and gentlemen, thanks very much for coming and coming in such great numbers. It's wonderful to see such a strong turnout on this day. I've actually been looking forward to this for quite some time, and I trust you are as well, judging by some of the reports that I've read, because it's really the first time we have the opportunity to update you about the direction of the company following the acquisition of PG that we completed, of course, in February of this year. And we're going to do that actually in quite a bit of detail today with you. It's a very exciting time for us in the company. Actually, for almost everybody in the company, this is a very exciting time. And I'm sure it's also going to be a very exciting time for you, our investors. Now before I start, the disclaimer. You will be familiar with this. And let me say that I believe that we achieved a lot in the last few years, but we must continue to improve further the resilience of the company at all points in the commodity cycles that we are exposed to, of course. And this means growing free cash flow per share, delivering higher returns on capital employed, and it means creating what I would like to think of a world class investment opportunity, so simply put, higher returns for shareholders. But of course, at the same time, we also see there are substantial and pretty lasting changes underway in the energy sector and not just in the far future. These changes will have and are having implications for Shell today. To respond to these changes, we have a portfolio strategy that is set in multiple time horizons, as you will see, and which also contains pretty firm steps to manage the down cycle, including a hard ceiling for our capital spending and more predictability also in our capital spending. And all of this, you will also come to see, is very much enabled and accelerated by the acquisition of P and G Group. So Simon and I will take you through the group overview, and then we will have Jon Abbott, Andy Braun and Martin Wetzler to give you summaries of downstream, up stream and integrated gas, respectively. And then after these presentations, we will do a plenary Q and A. We'll have a short break. And then we'll have more detailed panel sessions with Q and A. And I hope that the plenary Q and A that we will do in this room here, we can keep at a relatively high level because you will have plenty of opportunities to ask much more detailed questions in the subsequent panels that we will have. So we have with us today Peter Sharp, who is our Executive Vice President from Wells, and he will be joining Andy in that panel. We have Istvan Kapitani, who is in charge of Shell's 43,000 retail sites around the world. He will be joining John Abbott. And then we have Steve Hill. And some of you might know Steve from his days in BG. Well, he can talk an awful lot with you about LNG trading, so he will join Maarten in the panel there. Now the downturn in the oil prices obviously had an impact on Shell and the industry around us. And this chart here looks at some of the large and the important trends that we are currently witnessing in the energy sector, but also in society at large. And this, I think, will shape the industry and that for Shell in the next decade or even longer. Now of course, on top of the chart, you will see a pretty familiar driver. So growing population, we will go from 7,000,000,000 people to 9,000,000,000 people by mid century. But at the same time, hopefully, we'll also see a much higher quality of life for many of them. And they are incredibly powerful drivers that inexorably will drive for more energy demand in the future. At the same time, governments, businesses and society at large expect that this increased energy will also come with less CO2. So this results in a pretty robust demand outlook for oil and gas and over the longer term also a transition of the energy system to a much lower carbon intensity. Now simultaneously with this, we also see strong demand for petrochemicals, petrochemicals that are the building blocks of many of the things that people take for granted in modern life. And also building blocks that in many ways will be the enablers of the carbon intensity reduction that modern society expects. And within all of this, traditional value chains between energy suppliers and customers are also seeing considerable change, and in some cases, actually quite a bit of disruption, driven by factors such as energy storage, the digital world, which altogether leads to much more choice by customers. And this will not only impact how energy gets consumed, but it will also impact where investment in energy is made and by who. And while all of this is happening, we're also seeing an era of sustained volatility that we have entered. And part of this is the result of OPEC policy, the advent, of course, of very large oil and gas resources in shales, the speed of information flows and trading, the inevitable need for large scale resource developments, and each category of oil supply that I just mentioned here has different response times to price signals. And it's therefore making it very hard for market forces to provide price stability against these three types of response times. Now our traditional role in developing more complex projects, of course, is impacted by the shales plays and by the lower oil price generally. And therefore, we must make sure that our cost structure, that our portfolio choices and our business models are adapted to allow us to thrive also in this particular setting. Now let's make some comments first on the energy supply mix. There's a lot of interest in this, particularly, of course, following Paris in December. So today, oil and gas and coal supply over 80% of primary energy worldwide. We all know that renewables is growing, it's growing fast, but it's growing from a very small baseline. So renewables altogether supply around 4% of primary energy today. And 2 thirds of that 4% is hydro. So less than onethree is wind, solar and other renewables that we know. Now Shell strongly supports the agreements that have been made in Paris to limit global warming to 2 degrees C compared to pre industrial temperatures. But we're also concerned at the same time that the commitments that were made at COP21 will actually not go far enough to meet those important goals. We also think that we can thrive in a 2 degree world, and we have a strategy that will allow us to do so, whatever will play out here. And if you look at the 4.50 PPM scenario of the International Energy Agency, which is essentially that version of the 2 degree C scenario that we all hope to see, which is a pretty ambitious change in the energy mix, and a demand picture for oil and gas that is lower than what we are predicting in the or that we are looking at in our scenarios, there is still quite a bit of running room in oil and particularly in gas investments for decades to come. And that is, of course, alongside very substantial growth potential in renewables that we also expect to see. And that is the context for Shell's sustained investment in oil and gas today and for putting more focus also on new business models in renewables going forward. And we'll talk about that in a little bit more detail later on. So that's some of the sort of big picture stuff, how we see the context in which we have to operate. And let me now talk about how we are responding to this landscape that we are in. And more fundamentally, at the heart of all of this, let me also be very clear about what we really want from Shell. And in my mind, that's actually pretty straightforward. So for the 1st 90 years of our existence, when the company in its current form more or less was formed in 190 7 by merging Shell Transport and Trading with Royal Dutch, We were the industry leader for 9 decades in total shareholder return through the cycle, from 190 7 all the way to the late '90s. And we lost our position in the late '90s when the industry started consolidating, and frankly, Shell lost out in that consolidation round. But I'm determined to get us back to that number one position. Now of course, I can't set the share price. That's up to you, shareholders and markets, to do that. But I do think we can do a better job in delivering higher, more predictable returns and by growing the free cash flow per share and underpinning all of that with a pretty conservative financial framework. And then we can create a better investment case, a world class investment case that should increase our total shareholder return. But there are other areas that we want to focus on too, and think of these as an integral part of the investment case. First of all, I want Shell to be more relevant, a more valuable company, which means a large market capitalization and a more valued company, which means that we are listened to, right? We are respected for the things that we do and the things that we say. It means reducing Shell's carbon intensity. This is inevitable, and it's something we are working hard on today. And we will continue to put strong emphasis on reducing our carbon intensity. But we also need to establish, beyond any doubt, that Shell as a company provides shared value, that we are a force for good in society. It's very hard to express that in clear metrics, but it's also very, very hard to get it right in the minds of society. As you can imagine, these four themes or four aspirations that we have are not independent of each other. They're interconnected. We have to succeed in all four of them if we are to become a world class investment case. And this means being more resilient, more competitive at the lower end of the price cycle. So we need to continuously challenge ourselves to make sure that we are using shareholder dollars for position which are fundamentally advantaged in our sector, particularly in value chains. It's all about making the right choices. Now the downturn that we are seeing and the combination with BG that is allowed are great opportunities to fundamentally reset our cost structure, reset it down. This means lower cost, fewer advantaged growth projects underway at any given time, which I think will help continue to improve both on our project delivery as well as our operating performance. So pretty long list of things that we have to get right and clearly a lot of work to do. But the PG acquisition will play a very important role in all of this. And let me say a few things about that PG acquisition. So we've now owned the company for a few months, a bit more over 100 days, and we're very pleased with what we have seen since completion. Integration is going very well, and we now see more synergies than we previously announced. And we also see an earlier delivery of those synergies. And crucially, the BG asset value was pretty much what we had expected or even better. So post completion, we now see more value in BG than we saw before closing. And the chart here shows this as well as what we paid for BG on the 15th February in cash and shares and the debt that we assumed and what we therefore had to put it on the books for. So the valuations that you see in this chart, both how we put it in the books and also forward looking, are based on, of course, you can imagine accounting definitions, future curves, consensus oil prices, etcetera. So these are market participants' pricing assumptions as they appeared on the day of closing, so on 15th February. And if you base the outlook and the value of the portfolio that we now see on that 15th February outlook, there is $10,000,000,000 more value in that portfolio than what we paid for it on the day. But there is also more upside as we are using the BG transaction as a platform to reshape the company. I talked about this before, a springboard for change. And of course, there's some further value potential also if oil prices turn out to be higher than the average market participants' outlook had on the 15th February. So all in all, we're pretty pleased with the deal. The BG acquisition was, of course, the largest change that we had in the last few years, but it wasn't the only one. It was just one element in a much broader transformation that was already underway at Shell. And this transformation includes over 500,000 barrels per day of profitable new production. It includes the restructuring, remember, of our products and upstream, covering some $91,000,000,000 of capital employed. It measured and a thorough rationalization and reduction of the option set that we were working on, which should mitigate altogether around $45,000,000,000 of capital spending, and we delivered $22,000,000,000 worth of divestments already in the last few years. But underneath all of this, there is also a reorganization to sharpen accountability in the company and to align the entire organization individually much more to the bottom line. And we do that through embedding a much stronger emphasis on performance units in the company. But there's always more to do. Now we talked to you before about segmenting our portfolio into a number of strategic themes. And we have for each of these strategic themes, we have bespoke strategies. We have tailored technology approaches. We have, of course, distinctive markets that we serve at some of these strategic themes. And we have specific financial targets for each and every one of them. And we allocate our capital basically in accordance with these strategic themes to drive for an optimal cash flow and an optimal returns profile in the company. And then again, as you can see, they are themes that work over multiple time lines. And as we set our plans and aspirations, these need to hold and deliver, and not just for a couple of years, but for decades to come. Now we have made some changes in the priorities within these strategic themes, and I want to talk to you about these changes and give you quite a few numbers that will allow you to calibrate things going forward. So let me go each and every one of them. First of all, let me talk about the cash engines. So cash engines, we need they have to be strong and stable in terms of returns and strong and stable in terms of free cash flow so that they can cover the dividend, they can cover the buybacks throughout the macro cycle and then leave some money on the table enough to fund the future as well. Secondly, we need to have growth priorities. So these are themes where we have a clear pathway to delivering strong returns and strong free cash flow in the medium term. So they are those themes need to become cash engines by next decade. But thirdly, we also need to focus right now on selective future opportunities that will provide us with material growth and material cash flow per share in the next decade and beyond when the energy transition is playing out and opens up new areas for us. Running through all of this is our intention to be in fundamentally advantaged positions, which all have resilience and running room. And you can imagine that in doing so, asset sales have an important role to play as well in all of these strategic themes as well, of course, as the investment decisions that we make. I'll talk about it in a moment. Up to 10% of our oil and gas production is earmarked for sale at the moment. That includes around 5% to 10%, depending a little bit on how things will play out, total country positions that we will be exiting and of course, quite a significant number also of midstream and downstream positions that we will be divesting. And let me say again, this is a value driven program. This is not a time schedule driven program. It's an integral element of the portfolio reshape and the shareholder proposition that we made in December when we issued the prospectus. Let's look back a little bit. Shell's free cash flow in the last three years was $35,000,000,000 cumulatively over the last 3 years, and we had around 8% return on capital employed. So essentially, we covered the dividends and the buybacks here. But this was a period when, on average, the oil price was $87 a barrel. Of course, high prices in 'thirteen, pretty good prices in 'fourteen and, of course, declining prices in 'fifteen. But the cash flow is working, was working as it was supposed to do. At the same time, I have to be really frank here and say that this worked well when the oil price was high. Operating performance wasn't always as good as we wanted it to be, particularly in 2013. And really, the asset sales as well as turning on scrip on the dividend have been important elements of the overall free cash flow of the company and how we have been covering the dividends. So we have made a lot of improvements, including the turnaround in oil products, restructuring in shales, but it's also fair to conclude that we have to do more. We cannot rely on a recovery back to a higher oil price to balance the financial framework. So we have been and you have been seeing us reducing systematically our capital investment levels in a steady and measured way over the last few years. And this is to rebalance the financial framework for lower oil prices, of course, to become more selective on which projects will read a final investment decision and to establish also a more predictable spending profile. We've made changes in the way we allocate capital in the company, and I would like to give you also a little bit more visibility on our spending plans going forward. So we are planning to spend between $25,000,000,000 $30,000,000,000 each year until 2020. And we see $30,000,000,000 as the ceiling, which is all about, of course, reducing debt following the BGE deal, about meeting our intentions for shareholder distributions as well. And at the bottom end of the range, at $25,000,000,000 I think that reflects the spends we believe we need to maintain a medium term growth in the company. But if need be, we can and will go below that level if oil price is warranted. Of course, the final outcome for each given year will be determined by the pace and development of the portfolio, overall affordability considerations within that year. And at the moment, of course, we are seeing oil prices at a level where we clearly want to ramp down investment levels towards the bottom end of the range. And for 'sixteen, we expect to be coming out at $29,000,000,000 or less. So let's make some comments theme by theme. And then, of course, John, Andy and Maarten will go in a lot more detail, and then again, you will have much more detailed opportunity to talk about these themes in the breakout sessions. And let me start again with the cash engines. So these are really the financial backbone of the company. And since the majority of our productive capital is in these cash engines, they need to deliver a very strong return as well. You can't have a strong competitive company return if these cash engines do not deliver a strong return in their own right. But at the same time, we also need to make sure that these cash engines have running room and resilience. So this is not a lemon that we need to squeeze harder. This is the gift that needs to keep on giving. That's how we need to run this business or these strategic themes. I will measure the success of these strategic themes, 1st of all, of course, by the return on capital employed that they provide, but also the cash surplus that they continue to deliver. Now the BG deal, of course, has very much enlarged our conventional oil and gas business here. So here now, we need to high grade that strategic theme to the point that it offers really high returns. It offers strong free cash flow and also has still very significant running room. And this means, of course, asset sales, but it also means an increased focus on heartland exploration, especially near field exploration, to improve the resilience of this portfolio but also to sustain it well into the '30s. Integrated gas is now also a cash engine, and I'll touch on that in a moment actually. If you look at our products, we've been restructuring this strategic theme probably for more than a decade by now, but we're getting to the end of this restructuring, that is. The Oil Products business did very well last year. It shows that it can deliver strong double digit returns, but it now would also need to demonstrate that it can do this at all points in the cycle. Oil Sands is now also a cash engine. Previously, we talked about this as a future opportunity, but it needs to deliver free cash flow now, and it can. As a matter of fact, it can deliver more so than any of the other cash engines, but dollar off cash invested in that business. And of course, it is a business that offers a lot of upside to oil prices as well. Let's talk about integrated gas then. So as I mentioned, that's now also a cash engine. And that's a change because previously, we saw this as a growth priority. Now it needs to be generating a growing cash surplus, and it needs to provide for very strong returns. So Integrated Gas has a global footprint. We have a leading position of all the international oil companies in this area. The BG deal pretty much accelerated the strategy that we had before. That doesn't mean now that this is a cash engine that we will stop investing in new projects, of course. But it does mean that if this business is roughly onethree of the capital employed of the entire Shell Group, it better be delivering very, very strong returns, very strong double digit returns. And with relatively, relatively low capital maintenance compared to some of its upstream peers, I expect this business also to be a major, if not the major contributor to our free cash flow going forward. So those were the cash engines. What then about the growth priorities? Growth priorities are deepwater and chemicals. And here, we are only investing in those projects that are intrinsically advantaged, so projects with better fundamentals than those of our competitors in these sectors. So for Deepwater, this fundamentally means advantaged geology. And we have plenty of advantaged geology in Brazil, but also in the Gulf of Mexico and some other parts of the world. And for Chemicals, it means investing in fundamentally advantaged feedstock projects, such as low cost ethane in the United States. And you will have seen that this morning that we took a final investment decision on a 1,500,000 tonne per annum Pennsylvania project today. Now both of these businesses, Deepwater Chemicals, 1st class businesses in their own right, have very significant growth potential ahead of them, and that's simply because we have a large inventory of ready projects to undertake or because the theme supports tremendous growth in the sector. We will look at these businesses pretty much by the same metrics as the cash engines. We will look at them returns and free cash flow. But here more the trajectory. So how can we improve the returns from this business? How can we grow the free cash flow rapidly, how can we turn this business, in other words, into cash engines as quickly as possible. This is, of course, the highest gradation you can have in our portfolio. And managing affordability is a pretty important element in the pace with which we want to do this growth. This means we need to moderate the growth rate or if this means that we have to share equity with the right partners so that the growth priorities do not turn into significant drains of free cash flow or will significantly suppress returns, then we will certainly do so. And let me give you an impression of the scale of growth that we are looking at here. And here is a slide with volumes, but volumes, of course, are also a proxy for value. Let's first of all look at chemicals. With the investment decision that we made today on the new cracker per year on stream at the start of the new decade. That's a 30% increase of where we are today. And secondly, if I look at Deepwater, pretty much driven by Brazil, of course, and the Gulf of Mexico, we expect to see production of at least 900,000 barrels a day early in the new decade. And let me stress that all the growth that I'm talking about here is from discovered, established positions. So not something that we are still dependent on exploration successful or business development. This is already within the company. It's a matter of activating and delivering it. So let me then turn to the longer term themes. They are businesses that have material upside for Shell shareholders, have a pathway to profitability so that they should attract material growth spending in the future. And our future opportunities here are shales and a strategic theme that we call New Energies. In shales, you know we have around 12,000,000,000 barrels of resources and potential in North America and in Argentina. That's an attractive position. And today, we are working on the cost structure and the commercial development options here. At the same time, though, we are reducing our spending in Shells as a whole to manage the financial framework, of course, and maximize the advantages of the cost deflation in that sector that we are seeing today. So in a way, the strategic theme is purposely held back as it makes sense to accelerate investment in what are, after all, very short cycle businesses at the time of higher price realizations. We have the luxury to develop these resources at the time of our choosing when the time is right. And in New Energies, of course, we have been investing in renewables, such as and biofuels for many years. We even have a small solar business, not well known to many of you. But New Energies contains more than these traditional renewables. The theme also encompasses the digital revolution, so more electrification, especially in transport more customers with a wider choice in the energy mix And we've made the decision that we will build on our existing foundations in these renewable areas and that we will pay a lot more emphasis on new energies going forward. And we've really identified 3 areas in this space as good opportunities for our competency set. First of all, new fuels for mobility, think here are biofuels, but also hydrogen, where we are still one of the leading companies integrated energy solutions, so for example, wind and solar energy, which can partner very well with natural gas to tackle intermittency issues and completely new business models for energy, connecting customers with digitization and decentralization of energy systems. And Martin will cover this in a bit more detail in one of the subsequent sessions. Now that's a summary of the portfolio priorities. Now on the financial side, what will we invest in? And what should you, as our shareholders, expect from these investments? It's a detailed chart here, but it shows the returns and the free cash flow that we generated in each of these 8 strategic themes that I just laid out and the 3 categories of which they come, so the cash engines, the growth priorities and the future opportunities. And first of all, over the last few years, and then also you can see where we expect to be in the 1st part of the next decade. Now let me say again, maybe against better judgment, that these are not targets. The chart shows the possible shape of the company, and this is at a modest recovery in oil prices. So we're looking at $60 oil here. And of course, the environment could play a very different could play out very differently than what we are expecting and presenting here today. But around the end of the decade, we expect to have reduced debt by this time, of course, hence the free cash flow that you see here should be part of the dividend and the buyback program of the company. The cash engines will have stabilized in their portfolios. The main divestments and ramp ups are behind us. The growth priorities, deepwater, delivering free cash flow. Chemicals, still in the tail end of the growth mode that it will be in, but it will have a $3,000,000,000 per year or more free cash flow potential ahead a little bit further out. And you will see the shales and the new energy portfolios ready for more substantial growth investment if we decide indeed to take up that step. Now it's important to recognize that we have substantial assets at our hands today to deliver all of this. So we're not dependent on new developments here. As some of you may say, 2020 is a long way away. And some of you may emphasize that the reality is that we are still in an oil market downturn, and we are. And therefore, I think it's also important that we update you on our plans for the nearer term, for the financial levers that we are pulling for the company today, and Simon will update you on this next as well as on the details of the integration with PG. And then as I said, John and Andy and Martin will summarize the key points in their areas. And then after that, I'll come back for some Q and A. So Simon, over to you. Thanks, Ben. Good afternoon. It's great to be here and good to see such a good audience. As I was walking here this morning, I passed the location of the first of these events I attended 15 years ago. It was called the Brewery. Today, we're in the armory, and I wonder if that was a metaphor for the change in the asset management industry over those 15 years. But actually the armory is a very good analogy for the type of military planning and precision in execution that we need in the next 2 to 3 years and what I'm now going to talk about. The strategy, the financial framework, they are designed to manage through a multiyearmacro price cycle. That can be a short term cycle, but we have a multi decade investment and returns program. We have to balance near term affordability and the cost trends that we see with the fundamentally much longer term nature of the industry that we're in. Our financial framework is and will remain a key element of the overall strategy. It is embedded in it. The balance sheet must support the dividend and the reinvestment through the low points in the oil cycle, which of course is where we are today. And conversely, the strategy must support the balance sheet. The strategy that Ben just outlined defines our intention to generate sufficient free cash flow at the lower end of the oil price cycle to cover the cash dividend. We should not be dependent on anything more than a normal level of divestments to meet this objective. And the portfolio Ben just spoke about, numbers you've seen, should deliver this outcome by the end of this decade. And the company should also generate excess free cash flow above the dividend at mid to high points in the price cycle. But I'd like to stress that our overall aim is to create value for shareholders throughout the cycle with the financial framework supporting the leading shareholder returns. So that's generic. To be specific, this means through the cycle, we need to do the following. 1st, maintain a strong credit rating. Now we're currently AA and A plus were the 2 main agencies. And that means we need to deliver AA equivalent cash flow to adjusted debt metrics. May not lead to any particular rating outcome, but it's the metrics we must deliver. We must set investment levels accordingly for the foreseeable future. That means between $25,000,000,000 $30,000,000,000 a year or lower levels if the oil price remains at the current level for some time. It is an 8 month high today, by the way, if any of you have noticed. The return on capital across the totality of the portfolio needs to be double digit at the lower end of the cycle and in the mid teens average through the cycle. And the 3 year average free cash flow, including divestments now, that should exceed cash dividends, whatever the price is. We have to deal with the environment as it is, not how we like it to be or how we might have planned it to be. We expect the balance sheet gearing 0% to 30% through cycle. That's not actually changed even with the acquisition. And all of this is fully aligned with the dividend policy, which has not changed. So let me just remind you what that policy is. The aim is to grow the U. S. Dollar dividend through time in line with our view of the underlying earnings and the cash flow. And when setting the dividend, the Board and its fair choice looks at a range of factors including the macro environment, the current balance sheet and the future investment plans. So following an acquisition with an enterprise value of some $67,000,000,000 and in a low oil price world, clearly these metrics are different, the metrics I've just outlined as the Espipol framework, they are different from the recent history. But they are as we expected. I'll give you a couple of thoughts on the status of integrating and delivering value from the BG deal. And I'll also take you then through the steps to ensure that we rebalance the financial framework to that more conservative position as soon as possible. So the BG acquisition itself was designed to accelerate our existing growth strategy in deepwater and LNG, but also to enhance the free cash flow and create the platform from which we will reshape Shell. It's not a deal that was done for size sake. It's not about doubling down on the growth again from here. It's about value creation for shareholders. I mean, you can see the growth and scale here, but the purpose is value. Now we consolidated BG into our results in the Q1 of 2016, a couple of months ago. Immediate contributions, the legacy BG positions added $200,000,000 to the earnings and $800,000,000 to the cash flow in the only 6 weeks that we actually owned the company. But I think more importantly, you see the trend here. BG delivered a very strong performance in the 10 months or so that our offer was open. And for that, great credit to the BG team. You can see that growth. This really underscores our belief the timing was right for the acquisition and that we paid the right price. The first quarter bar here is when we first started to look at the acquisition and the uptick in production is shown from when we announced. You can see a 25% production increase in basically 1 year. You could also see the reduction in the capital spending. We knew both of those were going to happen. That's what drove the timing of the acquisition. So delivering the real value now, this is when we do get to precision of execution. I will not go through the details on this slide, but value from BG projects. And we need to learn We need to get the value from BG Projects. And we need to learn quickly before sometimes the intelligence walks out of the door about the best working practices that are being applied throughout the BG company. We were fortunate in that we were able to put together a joint integration planning team with some great people from both companies together, small rented piece of real estate in Paddington, August last year to start to map this out, the key areas of activity, 19 work streams they worked on, 6 months, that meant on February 15, day 1, we hit the ground running. We were not looking around for things to do. We knew precisely what needed to be done. And we've made a lot of progress since then. There were around 5,000 staff and contractors in BG working in 22 countries. Every single one was touched by that process within the 1st couple of days. Our overall aim in this integration process is by the end of 2016, we will be 1 company. We will have adopted the best practices from both companies. We will have either captured or we will have detailed plans in place to capture the maximum value from everything that we see and clear accountabilities, including people you're about to hear from. So please feel free to ask them later for who gets the opportunity and hopefully the reward for delivering that value. So the synergies, back in April last year, remember at that time we've done 4 days of due diligence plus obviously everything you could do from outside the company. We identified $2,500,000,000 of externally verified pre tax synergies per year by on a run rate basis 2018. So that's basically 2.5 years away. At the end of last year, as we put the prospectus together, we'd seen a bit more, heard a bit more, but we still couldn't open the hood, see the details underneath. We upgraded the figure to $3,500,000,000 again by 2018. Since February 15, we literally have been able to go through detailed plans, activities and intent. And as a result, today, we can share we expect the synergies to be around $4,500,000,000 on a pretax basis per year in 2018, which is an increase of $2,000,000,000 or 80 percent over where we started just over a year ago. But actually, at least as important and certainly more important this year is we expect to achieve and exceed the $3,500,000,000 announced in December much earlier than originally expected, not by 2018, but by 2017, a whole year early, and deliver in practice potentially $4,000,000,000 of synergies next year alone. So turning now to the financial framework. There's no change in the priorities for cash flow that we set following the announcement of the BG acquisition, which were actually a change on the previous comment. Reducing debt, paying the dividend, followed by a balance between capital investment and share buybacks. We committed to at least $25,000,000,000 of buybacks in the period 2017 through 2020, subject to debt reduction and some recovery in oil prices. We aim to use in the shorter term extra cash for debt reduction to strengthen the credit metrics to the desired levels. And while these are complex, gearing of around 20% on the balance sheet is a reasonable proxy. And once we get there, we'll see our way through 2020, then we will most likely turn the script off first. We then, and this is sequential thinking, likely to move to buybacks. We will not let investments exceed $30,000,000,000 before we've executed a material part of that buyback program. This is going to take some years overall. But as we've said before, we will do whatever it takes to have a sustainable financial framework in whatever the actual oil price environment is. And we will stick with these priorities. So we're pulling all levers to manage the financial framework through this down cycle. But fundamentally, much of this is a really important opportunity and has turned out to be maybe a bigger opportunity than we thought to improve our own underlying competitive performance irrespective of oil prices. We are focusing on 4 levers: asset sales, capital spending, operating cost reduction and delivering the new projects from both portfolios that will add significant cash flow. Of course, there is a 5th lever that's not on the slide, and that is the oil price, but we don't control. But now a $10 move annually on the oil price can drive the cash flow up or down by $5,000,000,000 That sensitivity should and probably will increase over time. Very strong leverage. What we're actually planning on within the company and underpinning the messages and the data we share today is a low-40s oil price this year, dollars 50 next year and the mid-60s by 2018. I'll now run through the levers in a little more detail before closing. Firstly, on the asset sales, we're using the sales as an important element of the strategy to reshape the company, not just about reducing debt, but remember, grow to simplify. Up to 10% of Shell's oil and gas production is earmarked for sale, including several country positions you see on the slide, 5 to 10 country positions and selected midstream and downstream assets. This is a value driven, not a time driven divestment program. And of course, it's an integral element of Shell's portfolio improvement plan, underpins the shape Ben has just shared. So the sales, we do expect them to total $30,000,000,000 over $216,000,000 to 2.18 combined. Big number, but to keep it in perspective, it's about 10% of the balance sheet. It's also only about double our normal level of divestment. So it's a challenge, but it's not one we have not delivered on before. So we have a series of transactions underway now. We'd expect to see significant progress on around $6,000,000,000 to $8,000,000,000 this year in the sales agreements. We may not see the final cash proceeds this year. Asset sales are an important part of starting to reduce the debt and the timing of the divestments does depend to some extent on oil prices and hence the external asset market. But we're not planning for any asset sales at giveaway prices. Don't think you can come and get a distressed asset from us. So there's no reason today to think we can't deliver the $30,000,000,000 But if it takes a bit longer to preserve shareholder value, then so be it. So moving on to project flow. We see this as perhaps the underappreciated lever that will make a difference. Delivering new oil and gas, of course, is what we actually do. That's part of our it is our core business model. And it does drive new cash flow and free cash flow over time. The portfolio is geared to give an improvement in production and most importantly to cash flow from operations and free cash flow in 2017 and beyond. That's pretty much where Shell was prior to the BG deal. By 2018, so that year when we might see some recovery in the price, start ups since 2014, so anything that start up last year or later in the BG Plus Shell portfolio should be producing around 1,000,000 barrels of oil equivalent per day, 1,000,000 barrels. And more importantly, they're generally high margin barrels with price upside. It's a great opportunity set and has been considerably enhanced by the PG acquisition, also accelerated earlier delivery. So as an indication for you, and you might like to include this in some of your modeling, we expect to see an average cash operating cost in these projects, the 1,000,000 barrels of around $15 per barrel of oil equivalent, probably reducing as we ramp up as well. And an average statutory tax rate of around 35% from the growth profile. Now that compares to maybe around 50% on average for Shell. And I think this quality of barrel is sometimes missing in the market valuations. Let me move on to capital spending. And tough decisions on capital investment are driving the right outcomes here. Only the most competitive projects are going ahead, just 4 major final investment decisions made last year 2015. This year, just 2, one of which was today of course. Many potential projects and this is the main list have been deliberately delayed, rephased or just canceled. This is being done to manage affordability and to get better value from the supply chain in the downturn and also to get better returns on average. The exits and the postponements that you see on this chart, they are difficult decisions, but they do have a big impact. And just to quantify this for you, the deferrals on cancellations on this chart alone have mitigated, reduced $45,000,000,000 of capital spending in the period 2014 through 2020. That's a year and a half of capital investment reduced. Exploration spend. Essentially, we are embedded in these numbers announcing a substantial reduction in the exploration spend, but also a change in the priorities. Going forward, we'd expect to spend around $2,500,000,000 a year on the combined Shell and BG portfolio. That's a reduction of around $3,000,000,000 or 50% from last year, just from 2015 alone. What's driving this is focus on lowering cost, embedding the BG synergies, many of which were make choices between the two portfolios, which high grades the portfolio, but also, of course, the exit from the Alaska offshore activity within Shell. There's also a shift in the spend that we will make in emphasis towards producing basins, growing out from where we're already in a strong position. And within that totality of looking at new opportunities, the BG acquisition and our own recent exploration finds, they just mean simply that we rely less on exploration in the near term, medium, future than we have done in the past. The exploration that we do spend will be around 80% targeted on the heartlands, the basins were already present, including deepwater. The program is essentially right sized for the combined portfolio. We're reducing the major frontier exploration spend, not just Alaska, but we are keeping very selective positions where we have the geological insight and retaining options at low cost elsewhere where we're able to do that. So a little bit more detail on the capital investment. And Ben has already set out the framework. We will manage the €25,000,000,000 to €30,000,000,000 per year up to the end of the decade. We will improve capital efficiency, and we aim for more predictability in the flow of projects. This year's investment, 2016, expected to be $29,000,000,000 That's 35% lower already than the pre deal period of 2014 if we combine Shell and BG. In the current prevailing low oil price, we will continue to drive the capital spending down towards the bottom end of this range. But in a higher oil price future, we'll cap the spending at the top end of the range. So the bottom end is sensitive, the top isn't. It's an absolute limit. The track record here demonstrates we can respond quickly to the macro by reducing investments. And as Ben explained, we think 25 to 30 per year is sufficient to maintain the portfolio with a moderate growth potential and does assume that we can deliver some material capital efficiencies. If we need to go lower, we will. We can do that through further supply chain reductions, where costs are to an extent linked to lower oil prices, but also by deferring or canceling further projects if we need to. So as the final lever, operating cost. We've already delivered major reductions here already with more to come. We didn't stand and tell you what we were going to do. We just did it. The standalone costs in Shell were reduced by $4,000,000,000 last year, about 10 percentage points from 2014 to 2015. And if you then put the companies together, which you see on this slide, 2014 again as a base year pre acquisition. By the end of 2016, on a combined basis, we should be 20% lower. This is on ongoing operating expense on what is in practice a larger portfolio. And this is done from a combination of the synergies that we've talked about from the combination, both the hard targets and some of the follow on benefits that we see, but also from what we would term as what we endeavor to establish in the organization, which is a lower forever, not lower for longer mindset when it comes to thinking about cost. So just as a reminder, some 40% of our total operating costs are direct staff related costs. There are significant reduction programs already underway here still to deliver to the bottom line. These are tough. These are difficult leadership and management actions, but the whole of the organization is doing a great job in terms of delivering this in an effective and respectful way. Divestments and the new project ramp ups will also have an effect on the overall OpEx as well currency effects. And it can complicate the headline cost figure, which is why we don't give very specific targets around this. But in the end, dollars saved, they all feed through, they build into improved cash flow from operations. And overall on costs, there's clearly remaining potential for multibillion dollar per year, both before and after tax, as we go forward. So this final slide from me just summarizes the potential from the levers that we're pulling. And let's just not forget the impact that the oil prices can also have. Last year in 2015, the oil price was $52 on average. The combined companies, you just do a pro form a combination, together delivered some $11,000,000,000 of free cash flow before dividend in that 12 month period. That figure is coincidentally, but basically the same as we would expect for the combined cash dividend in 2016. So we covered the cash dividend at $52 There's no doubt 2016 is a challenging year, more challenging than last year as the oil price is lower despite today's recovery. So including all the deal effects and the reduction in the cash flow that we saw in the Q1 that was partly oil price 34 and negative working capital effects, It's going to be a tough year. Gearing is currently in the mid-20s. It was 26% end of March and is likely to go up before it comes back down again. The potential outcomes here reflect the actions by all of my colleagues in Shell. This is not a top down edict from Ben and myself. It is everybody with the right momentum, doing the right things in the right way. And in practice, what is we are already achieving, but what the future potential reflects is already a reset of the way of doing business, particularly in terms of the sustainability of the cost base. You've got a great chance to talk to my colleagues later today. So the levers that we are pulling today, they are individually material, all 4 of them, and they will make a difference. With that, let me pass you over first to John on the down who will then be followed by Andy on the upstream and then Martin on the integrated gas. John? Thank you very much, Simon. And it's good to be able to update you today here on the downstream in Shell. Our priority remains the improvement of our financial performance. And we have to remind ourselves that the downstream is an intensely competitive sector with fundamentally very narrow margins. And as Ben indicated earlier on, we have been restructuring our portfolio in the downstream now for some time. And the nature of the asset market has meant really that that process could not be instant. But we have made some $12,000,000,000 in divestments over the last 5 years. And in the last decade, we exited from 22% of our refining capacity. That's 900,000 barrels per day. So there has been a lot of change, but with the transactions we now have underway, I think we're now reaching a more steady state point in our portfolio. However, we will continue to scrutinize and upgrade our asset base as part of our ongoing business. In marketing, which we also class as a cash engine as part of the downstream, the businesses are delivering a very resilient and improving results. This is due to 3 things: investment in our strong brand, our differentiated products and also our premium fuels. To build on this, we plan on continuing to selectively grow in our networks in rapidly growing economies, particularly in Asia. And in refining and trading, again, a cash engine. We've done a lot in the past couple of years to improve the performance of our refineries substantially through self help programs and through further integration of our refining and trading activities. And that's both on the crude side as well as on the product side. And in chemicals, advantaged feedstocks have become a real competitive advantage for us. And as Ben has said already, chemicals is now a growth priority for Shell. This strategic position recognizes the attractive and different risk profile that the chemicals business has. This characteristic is underpinned by strong market fundamentals, and they are high growth rates, different end market exposures and attractive returns when projects are able to access advantaged feedstocks. Overall, our strategy to develop and maintain hubs where trading, refining and petrochemicals can be fully integrated is proving a very powerful and correct one. It has proved especially helpful in the periods of high margin volatility. The improvements I've just described have helped Downstream to deliver more than $9,000,000,000 of clean earnings, dollars 11,000,000,000 of cash flow from operations, dollars 7,500,000,000 of free cash flow, as well as 19% returns from the downstream over the last 12 months. Our marketing activities are providing a resilient and steadily increasing stream of earnings. And whilst refining and trading, which are intrinsically more volatile, are working well together as an integrated business. They are also enhancing our returns and cash flow. Restructuring our underperforming parts of the company is an important lever to improve our financial performance. And I'd like to talk about that now. As you can see on this slide, we have already had substantial successes in this area. Despite a refining footprint that is smaller by 20% on crude intake and a marketing footprint that has reduced by 30% in volume since 2007, the downstream clean earnings have improved by $1,500,000,000 And this is 23% higher. And we've picked a timeframe here where refining margins were almost identical during those periods. So this is a very powerful example of how the impact that self help can truly have on your portfolio and on your bottom line. We have achieved a lot. But I said before, this is a very competitive business, and we simply can't stand still. There's a major cost, capital efficiency and performance drive, which continues to go underway in the downstream business today. And the 60 performance units we have in place here really focus everybody in my business on the bottom line. We continue to exit from non core positions. These are assets which we don't necessarily see the running room in, we don't see the returns or the attractiveness of new investment dollars for Shell. And we have already announced the deals and MLP drop downs of over $2,000,000,000 in 2016, of which close to $1,000,000,000 has already been completed this year. And we continue to look for ways to improve the resilience of assets, such as those we hold in Europe and Singapore. This will include some very targeted investment programs in the manufacturing sites and also some very selective growth programs. So here are a couple of examples. And let me start with Motiva. So the Motiva joint venture, which as you all know is fifty-fifty Shell and Saudi Aramco is in the east of the U. S. And has significantly improved its performance over the last 2 years. However, earlier this year, after a partnership of 18 years, Shell and Saudi Aramco announced their intention to discontinue this joint venture and negotiate a division of the assets. The redistribution of the assets actually benefits both parties. It will allow each company to refocus their downstream businesses and more effectively pursue their respective downstream strategies. For Shell, this means we can efficiently and effectively integrate our share of Motiva within our broader Shell portfolio in the U. S. And optimize it. And as part of the proposed asset division, Shell would assume sole ownership of the Norco and Convent refineries, while Saudi Aramco will retain 100 percent of the Port Arthur refinery. Teams from both companies are currently working on these terms and on establishing a brand licensing agreement that will benefit both parties. And so the Shell brand remains visible and strong in the United States. The second example I want to highlight today is in Japan. And many of you will recall that Shell has had a share of a refining and marketing company called Shell O'Shell in Japan since 1900. We've decided to exit almost all of this position and return the cash to the Shell Group. We announced the divestment of some $1,400,000,000 to Idemitsu last year, and we are expecting to complete this in 2016. That is, of course, subject to obtaining the appropriate regulatory approvals. Both of these transactions are part of a strategy to optimize our portfolio within the overall context of capital ceilings that Ben and Simon have just talked about and described. So now returning to marketing to give you more detail in this part of the Downstream business. We are seeing very strong returns and strong growth in marketing. A 25% return on average capital employed in the last 12 months and more than $3,000,000,000 of free cash flow. And this, as I said earlier, is a result of our differentiated fuels and lubricants and actually our distinctive customer offer. Shell premium fuels, such as V Power, are the world's most widely sold premium grades. They're available in 68 markets globally. And Shell's premium lubes, which are marketed under the Helix, Pennzoil or Rotala brands continue to show very strong returns and increasing market penetration. And overall, we are number 1 market share in global retail and global lubricants, but what really matters is the value they deliver. Investing in strong brands and giving our customers choices in the kinds of products as well are all part of the relationships and the partnerships we are having with our global customer base. And these are capital light activities compared to refining and chemicals, and we plan to continue to grow around the world with a focus, as I said earlier, on the emerging economies. But now, I'd like to give you a little more detail on chemicals. Ben touched upon this. I'll take you a little deeper. In chemicals, Shell has had a solid performance over the last 5 years, supported by restructuring the businesses actually through the 2000s. And we continue to see strong market fundamentals in this business. Chemicals is now a growth priority for Shell, as you've already heard. And petrochemicals is the fastest growing hydrocarbon demand sector with an annual growth of 3.7% over the last 10 years. And we expect this to continue. And Shell's chemical strategy focuses on activities with a clear competitive advantage. We optimized returns from using different feedstocks, investing in our existing 1st class footprint and continuing to focus on enhancing our customer relationships and also our customer services. Through the 2000s, we concentrated our footprint on integrated sites, and we reduced it from 133 down to 16 and focused really on Shell's core competencies and advantaged feedstocks, which, as I said earlier, has become a real competitive advantage for us. Chemicals return has averaged 15% over the last 5 years. That being said, though, we have seen the impact from unplanned downtime, particularly in Singapore and in the Netherlands, which has held back our returns in the last 18 months. But coming out of this period will offer us upside on earnings and returns as early as next month. The global chemicals portfolio now offers both a regional balance and a balanced exposure to both gas and liquids as well as exposure to many different value chains. And this ensures that we can competitive edge in chemical feedstock, With a competitive edge in chemical feedstocks underpinned by strong product portfolio and proprietary shell technology, the business is entering a new period of growth. And let me give you some examples of that. For example, in the Gulf Coast, we've decided to expand our chemicals footprint at the manufacturing site in Geismar in Louisiana, making the site the largest alpha olefins producer in the world. And in China, where Shell and Sedol took the final investment decision in the Q1 of this year to expand the existing petrochemical complex, this project will increase ethylene capacity by more than 1,000,000 tonnes per year, about double the current capacity which we have in that location. It will become the largest petrochemical site in China, offering a platform for continued future growth with CNOC as a major strategic partner for Shell. And today, we are excited to announce the final investment decision of our petrochemicals project in Pennsylvania in the U. S. This site will use ethane from the lowest cost shale gas basin in North America to produce polyethylene@worldscale. The new facility will generate 1,500,000 tonnes of ethylene capacity per year, which, of course, is converted into polyethylene. It will be the most cost competitive polyethylene producer in the U. S. And it has 3 components of competitive advantage over the U. S. Gulf Coast investments. And let me describe those to you. Firstly, we will use locally sourced ethane with a very significant supply cost advantage. Secondly, a location advantage as it sits right in the demand center of U. S. Polyethylene. More than 70% of the North American polyethylene market sits within a 700 mile radius of Pittsburgh. And customers will benefit from shorter supply chains with more dependable supplies compared to the options in the Gulf Coast. And the 3rd competitive advantage is economic development, job creation and investment incentives from the state of Pennsylvania as the project adds new growth and, of course, jobs to that region. Main construction will start in about 18 months' time as we manage capital affordability in the current low oil price environment. And commercial production is expected to begin early in the next decade. We will continue to focus on selective and prudent investments with a competitive advantage to ensure profitable growth in the future. And I think with an improved chemicals business in our downstream, that the downstream overall will be a world beater in terms of financial performance and scale. But let me close with an update on the competitive position. As I mentioned earlier, returns are improving in oil products as well as in chemicals and I'm pleased to see that. And we're also improving our brand preference with our marketing businesses, which you'll also see in this chart. But the reality is that the competitors around us are also improving their returns as well. And so there is more to do here. We are continuing to reduce costs and improve our operations excellence. We are also continuing to execute a significant divestment program to improve our returns, deliver more free cash flow and provide ultimately a far more robust portfolio. And we're continuing profitable growth, particularly in marketing and chemicals. And that should continue to help us to close the gap with the competition. So a lot has been achieved, but we recognize there is more to do. And I have described what we have to do. And we are absolutely committed to deliver it. And so on that note, let me hand over to Andy, who will talk about the Upstream. Thank you, John, and good afternoon, everyone. It's a real delight to be here. And I'm really looking forward to your questions later. But this year marks the moment where we have created a new and global upstream business in Shell. And this sets a platform on to build on what has already been achieved on a truly global basis. Upstream is divided into 3 strategic themes, and these encompass all three categories that Ben has outlined. So 3 rather different strategic timescales, 3 quite distinctive sets of financial drivers. The conventional oil and gas business is a cash engine for Shell. It's a legacy portfolio of assets. Think of the more traditional businesses like in the North Sea, Nigeria, Malaysia, Oman and Brunei as well as the more recent positions such as in Iraq and Kazakhstan. These are positions that need to deliver resilient and attractive returns and free cash flow. And it's here in particular where we have opportunities for asset sales in the enlarged Shell BG portfolio to high grade this portfolio. Deepwater is one of our company's 2 growth priorities. It contains distinctive and advantaged assets and acreage positions in the Gulf of Mexico, Brazil, Nigeria and Malaysia. The strategy here is to develop a material, attractive and resilient business over the coming years. Ultimately, deepwater should become a cash engine. And thirdly, shales in the Americas. Today, this is a restructured and more competitive portfolio, and we're maturing it into a new growth priority for the 2020s. The financial results you see in the Upstream reflect the very different stages of maturity in these three themes. Oil sands are in these numbers too, which we report in Upstream and is governed by John. Conventional oil and gas is typically a business with a large cash flow and higher returns. Deepwater and particularly shales have generated lower earnings as you would expect in growth orientated portfolios with relatively high unit depreciation charges. The low oil price is a significant opportunity for us in Upstream to drive change throughout the organization, delivering lower costs through operational excellence and also leveraging the supply chain. We have reduced upstream costs by $1,200,000,000 in 2015 or 8%. This includes a job reduction of at least 5,000 staff and contractors. In 2016, we expect to absorb BG's costs with no increase overall against the 2015 total and a further underlying reduction of $2,300,000,000 or 15%. I also want to make clear that particularly following the BG deal, we're having a very close look at the tail of the conventional up These charts show how the improvement in uptime and costs that we've already delivered with examples in all three strategic themes. And I am convinced there is more to come. For instance, we see an opportunity for new production of over 150,000 barrels a day from underperforming fields through targeted use of better technology and optimization. That's more than 150,000 barrels a day from just existing facilities. That's facilities. That's a substantial price for us on the table. Now let's look at the 3 themes in more detail, starting with shales. Now this is a portfolio that's really been built up since 2008 through a series of acquisitions and land deals by a period of drilling and early production, which is basically the Shell's equivalent of exploration. Now over the last 2 years, we've seen significant portfolio reduction, cost savings and performance improvement in these North American shale businesses. Today, we have around 12,000,000,000 barrels of resources and potential. This is over 750,000,000 barrels more than in 2013, despite the fact we have more than half the number of players we're in. Today, we're focused on continuing to increase the in direct overhead costs since 2013 and a 50% reduction in drilling and completion costs for liquid rich shales again since 2013. We're working hard to further enhance our performance and take full advantage of the sweet spot areas where we can harvest the potential of these assets through increased investment through into the next decade. Now turning to our growth priority, deepwater. Shell has an advantaged portfolio and a strong track record in deepwater. Our new projects are resilient across the cycle and competitive on the cost curve. On the development side, we are continuously driving down breakeven costs in deepwater projects, those on projects under construction as well as pre FID projects. Total well costs, which have historically accounted for about 50% of total project costs, have come down significantly as we are drilling wells faster and with lower spread rates. For example, in Bonga in Nigeria, over the past 2 years, we delivered 21 wells with savings of over $1,000,000,000 We continue to see deflation in the market and are leveraging that where we can. But more importantly, we see opportunities to reduce costs by changing our ways of working, improving performance and simplifying designs. All this results in the ability to lower cost of projects already under construction. And we now see average breakeven points in our pre FID projects, which are lower than the current oil price. Think of an average breakeven level of $45 per barrel. And Shell's deepwater volumes could grow to over 900,000 barrels a day by the early 2020s. This is not growth for growth's sake, but we expect these fields to deliver resilient returns and free cash flows once they've ramped up and to make a considerable contribution to Shell's bottom line. Let me now update you on Brazil. In Q1, we had over 200,000 barrels a day production on stream in Brazil, and substantial growth is to come from this pre salt area. This is one of the main reasons why we saw value in the BG deal. We expect to see a continued ramp up of production from capital that's already been invested with 7 FPSOs on stream and 2 more planned to start up this year. 1 of them, Sidade de Saquerema, is on its way to its offshore position on Lula as planned and will start producing shortly. The reservoir performance in the presold is exceeding our expectations with the top 10 individual wells flowing at over 35,000 barrels a day on average per well. Across all the wells producing of the 7 FPSOs, the average well rates are around 25,000 barrels per day. That's the average well rates of those wells across those 7 FPSOs with production steady. And in the presold projects under construction, we see breakeven prices under $40 on average as a result of these significant well flow rates and competitive project delivery and operating costs. Now if I turn to Gulf of Mexico. In Q1, Shell had over 270,000 barrels a day on stream here. And our production continues to grow in the Gulf of Mexico by ramping up Mars B and Cardenom. We are working hard to reduce operating costs and improve uptime in the Gulf. For example, in 2015, we restarted 4 shut in wells in the Mars Basin, which has since delivered 500,000 barrels of oil equivalent. One example on the cost side is the optimization of support vessels and improved materials management in the Gulf of Mexico, which has resulted in almost $300,000,000 of operational capital cost savings over the last year and a half. This includes over 50% reduction in support vessels and almost 40% reduction in the helicopter fleet just through better integration, planning and optimization. And on the project delivery front, Stones, our 1st FPSO in the Gulf, is scheduled to start up in the second half twenty sixteen. And Aframatics, which was sanctioned last year, will come on stream towards the end of the decade. Beyond this, we continue to see considerable potential for tiebacks such as North Kepler into Nikkika, Caicos into Ursa and new hubs such as Vito and more exploration. I think there is great potential for Shell remaining in this high margin province. Let me now update you in the conventional oil and gas portfolio, one of the Shell cash engines. There's a large range of assets here ranging from selective growth positions such as in Kazakhstan and West of Shetland in the UK to late life positions like places like the North Sea or New Zealand or Gabon. Our growth projects in conventional oil and gas should add some 250,000 barrels per day of production in the next few years. This, combined with lower spend, should improve our performance in free cash flow and returns. Conventional oil gas is as much about cost, uptime and portfolio management as it is about competitive growth projects. Exploration is an important element of Upstream and we have added 6,500,000,000 barrels of contingent resources over the last 6 years, including £1,500,000,000 from deals, with a finding cost of around $4 per barrel and an average success rate of 44%. Most of these barrels are within Shell's heartlands, where we have infrastructure and detailed subsurface knowledge, facilitating early monetization. Shell's recent successes, especially in the Gulf of Mexico and Malaysia, demonstrate there is still running room in the producing basins of our heartlands, where large, high value discoveries can still be made. In the GOM, more than 60% of the 1,200,000,000 barrels oil equipment discovered in the last 6 years is already post FID and 10% is already on production. And following the BG deal and our exit from Alaska exploration spend has reduced to around $2,500,000,000 per year on a combined Shell and BG portfolio. We've reset the strategy. The majority of our exploration dollars will be focused on sustaining our Hartland positions with near field targets and selective wells aimed at new geological plays with material potential, both in the Heartlands, but also a few in the frontier basins. Let me sum up. There are 3 very distinctive elements in the Upstream business today with different timescales for profitability. Running through all of this is a major performance drive focusing on cost, uptime and breakeven levels. We are aiming at a breakeven level, which is lower than $45 in the new deepwater fields. 50% or more of reduction in liquid rich shale well costs with breakeven prices now falling fast and opportunities for drilling in sweet spots increasing. And a major drive to reduce costs and sell tail end positions in the conventional oil and gas business. I'm looking forward to talk to you more about this later in the day. And now, Martin Vetsler will talk about integrated gas and new energies. Martin, over to you. Thank you, Andy, and good afternoon. It's good to be here and talk to you today about the Integrated Gas business and particularly how we are changing the priorities in that business to focus on growing free cash flow and growing returns going forward. Shell is the IOC leader in LNG and Gas and Liquids. The acquisition of PG underpins our leading role as both the leading producer and the leading marketer of LNG amongst all independents. It also accelerates the growth strategy that would otherwise have taken into the next decade to put the LNG business up to scale. Today, Shell is present across a full value chains the LNG business covers globally in what is still the fastest growing sector of the natural gas market. And in Gas to Liquids, we take gas through the full value chain again into our Oil Products business, as you saw, John, with GTL into lubricants, attracting an increasingly growing premium over the oil price. Going forward, our primary focus now shifts to growing our free cash flow and growing our returns and to creating and serving new premium gas demand, whilst at the same time, we moderate our capital spending, spend it wisely and moderate the pace of new FIDs. And in so doing, we will optimize for growing free cash flow and our returns. We've also established a new growth opportunity called New Energies in Shell that will explore and invest in new low carbon energy opportunities that, in many ways, complement our Integrated Gas business. It's an exciting and fast moving landscape. We'll put a lot more emphasis on the options in this business going forward, and I'll go into details a bit of detail in the business a bit later on. Running through all of this, we have a major drive, including with the BG synergies, push down the cost and optimize the margins in our business. Let me talk first about the recent financial performance of Integrated Gas. On this slide, you can see the earnings and return profile, and the impact of the lower oil and gas prices are clearly visible in the trends. But it's also visible that in the last 12 months, with oil prices averaging $48 this business generated $8,000,000,000 cash flow and a 6% clean return on capital employed, which illustrates the resilience of the business model and the portfolio that we hold, and most of this is pre BG, of course. With BG in default, the integrated gas capital employed now stands at approximately $90,000,000,000 which includes about $20,000,000,000 of capital under construction, not yet generating earnings or cash. And indeed, with $90,000,000,000 this now stands at about 30% of Shell's balance sheet. Now we expect to deliver a robust and competitive cash flow and returns from that substantial balance sheet, And we will build on a strong legacy of operational performance in our Shell LNG plants that typically operated availabilities in the top quartile range of our industry when we look at benchmarks. Let me now turn to LNG supply and demand dynamics before returning to the Shell portfolio. The global LNG market is growing and continues to grow and diversify with more and more countries importing LNG, new customers in existing importing countries choosing LNG and LNG accessing more market sectors such as transport. In fact, since 2000, LNG demand has grown by about 6% per year every year, last year reaching 250,000,000 tons. 30 countries now importing LNG with about 20 exporters, and this is expected to grow to 50 25, respectively, early in the next decade. With these trends in mind, we expect global LNG demand to double from today by 2,030 to 500,000,000 tons, assuming there is sufficient investment in supply to meet that demand. Those are the long term trends. But as for the nearer term, where I think a lot of the interest and attention in the room will be focused, We expect the LNG market to be supply driven for the rest of this decade into the early parts of the next. And this is down to more than 100,000,000 tons of LNG liquefaction volume under construction or recently coming on stream, coming into the market, primarily from North Africa North America and Australia. And despite that most of this volume has been contracted either to end users or to portfolio players, this is leading to a near term softening of the LNG market. Let me now update you on the LNG portfolio that we and Shell have today. As I've mentioned, the acquisition of BG further strengthens our lead in this global LNG market. Just as BG did, Shell plays an aggregator role, whereby on top of our own liquefaction volumes, we buy 3rd party volume under long term contracts, often from other joint venture partners, and we market it to our worldwide customer base. We also purchase and sell spot LNG volumes to further optimize our business through logistics and market optimizations. You can see on this chart that the gap between the LNG that we liquefied ourselves and the LNG that we sell has grown over the last few years, and the trend increases with the BG in our portfolio, the difference between the red and the yellow line. It emphasizes the increased importance of providing flexibility to secure new market positions in this growing market. This is a business that benefits from scale and diversity of source and market positions as it increases the number of options that we can trade around and optimize globally. Clearly, there is more potential to add value here from the combination as well as cost synergies from the combined shipping operations and trading platforms. Turning to pricing. Here's a snapshot of the LNG contracts that we have in place. In 2015. The vast majority of Shell and BG combined LNG is currently sold on long term contracts, here defined as between 2 20 years duration, linked to oil and gas prices, 75% oil, 25% gas, as you can more than see on the right hand of this slide. Now while some volumes are sold on a short term basis or spot sales, they are mostly offset by spot purchases, an optimization game that we play. Now remember that this is not a deep or liquid spot market like you see in oil or other liquids markets or commodities. Most of these spot volumes actually originate are as resales of LNG cargoes originally delivered under long term agreements between suppliers and customers. Now through our marketing and trading arm, we are actively securing additional long term sales for our portfolio to underpin future FIDs as well as developing new market entry positions that I will come back to in a moment. As of today, looking forward to 2020, our portfolio 5 years away is about 10% unsold. We will pursue new long term sales agreements or keep that volume available for spot trading, and we have a choice to make that. Now the fundamentals of this market are changing but remain robust. LNG producers continue to look for long term offtake from creditworthy buyers to underpin the financing of their projects. And LNG buyers are looking for competitive and reliable supply constructs that provide increasing flexibility and different pricing constructs that Shell is very, very well positioned to supply into this market. And let me also stress that in this software market, Shell has sold almost all of its LNG portfolio already on long term contracts. So we have limited exposure to the softening spot price that we see in the market. On to developing new gas demand. At Shell, we actively develop and secure new gas markets and outlets for our gas. We already have capacity rights of around 40,000,000 tonnes in 10 regas terminals around the world, and we are targeting new terminals, particularly in the emerging LNG markets. Now as well as pursuing further classic long term sales agreement with agreements with big customers. We're also going further down the value chain behind the terminals, securing new gas demand and using our marketing and power trading capabilities in order to increase our market. We're also part of the creation of a new segment for LNG called LNG to transport. LNG for transport, particularly in heavy trucking and the shipping market, is a very promising and potentially material segment that Shell is well placed to serve as we know most of the customers through John's business. Now turning to our portfolio of new supply options. We have a very rich and diverse funnel of opportunities for both greenfield and brownfield LNG growth. Here's an overview of the combined BG and Shell portfolio. Our onstream LNG sales are in the mid-50s in terms of 1,000,000 tonnes per year, comprising of about 31,000,000 tonnes of LNG that we liquefy, about 18,000,000 tons of long term supply contracts and the balance in spot trading, if we look at last year. We've slowed down the pace of new investment decisions in this business, and we're redesigning projects to offer even better returns. This is in order to help manage Shell's affordability overall, but also to make sure that we remain competitive in evolving LNG markets and that we only add the most competitive supply positions to our portfolio. In the last year, we've already delayed more than 3,000,000 tonnes of LNG FIDs, and our plan is to continue to slow down the pace of new investment in a strategy to improve free cash flow and returns from Integrated Gas. But it will take time to rebalance this mix, with several projects already underway post FIDs and some important investment decisions coming up quickly. But the intention here is clear. Now before I close, I want to make some comments on the New Energies business. Shell's capital employed in New Energies activities is from $1,700,000,000 today, mostly in biofuels. And we are currently spending around $200,000,000 a year on research, development and very selective investment in low carbon opportunities. We think that a position in low carbon opportunities or renewables will be very important for Shell and its shareholders in the long term as the energy transition unfolds in years decades to come. And we are determined to be a winning company in that transition. I believe energy new energies will play an important role in that, but it will take time. Our focus will be largely on asset light plays that share adjacencies with our current business, such as location, adjacent value change, maybe existing relationships or ease of fit with existing infrastructure where we already have an energy business. And all these elements that Shell already have can be a key source of advantage, of competitive advantage, for a new energy business in Shell compared to a specialist investor in this industry who doesn't have these adjacencies. With new fuels, we've already invested in 1st generation but also 2nd generation biofuels made from non edible plants and crop waste. We've also invested in hydrogen as a transport fuel with a joint venture in Germany and options in the U. S. A. And the U. K. As for Integrated Energy Solutions, Shell has interests in wind the wind business onshore in the U. S, offshore in the Netherlands, and is a major renewables power trader in North America. We're also exploring ways to deploy solar technology into our operations, lowering the carbon intensity of our operations, but also helping broaden our offering in Downstream Gas and Power Markets. Natural Gas can, of course, be a perfect partner to the solar and wind power generation opportunities as we aim to deliver nonintermittent power to customers. And finally, the 3rd leg is that we aim to deliver and to use our brand and customer reach to maximize the opportunities that are offered by the increased digitalization and decentralization of energy offerings. So there's some interesting opportunities to develop here, but it will take time, and we will manage the pace of exposure to this business in accordance with our financial framework and the opportunities we find. Let me hand over to Ben for closing remarks. Thank you. Okay. Thanks for that, Maarten, and thanks, colleagues. We covered a lot of ground here. I realize that. But before we close, let me update you a little bit on the competitive position. Remember, all the things that we just talked about, we are doing to create a world class investment case for Shell. And in the end, I know you will measure this as total shareholder return, and so will we. And I think that by doing a better job on delivering higher, more predictable returns and cash flow per share and underpinning all of that with a conservative financial framework, then we can create a better investment case, a world class investment case. And what we are doing here today is setting out a pathway for you for the next several years, which is ambitious, but it's also transformational for the company: higher returns, higher free cash flow despite lower oil prices. And on this chart here, you will see a lower ratio of capital investment needed for free cash flow. So from around 3x in 2013 to 2015 to around 1x to 1.5x around the end of the decade. So basically meaning more bang for the buck. And there's a lot of energy and enthusiasm in Shell to deliver all of this. And PG is a wonderful opportunity. It's a natural way for all of us to really focus and align to what needs to be done. And I can also tell you that I personally, all my colleagues on the executive team and the board is really fully committed to this journey and, of course, updating you on the progress to becoming a real world class investment case and a transformed company. And with that, let's do some Q and A. Simon will join me here. So I have a good hour, I think, or a bit under an hour to go through questions. And of course, remember, you can go in a lot more detail in the breakout sessions that we will have after short break that we will have here in London. So who can I give the first question? I think there's a handout from John. This is Jon Rigby from UBS. Two questions, please. One is, I think, understandably, there is no mention of upstream volume growth or volume targets in that, and you've not done that for a while. But is there a way that we can measure from the outside what is the effect of what you're talking about as a sustaining level of CapEx, one that grows the company and one that is a one that's driven by affordability? Because I think 25% to 30% you're talking about is one that is a steady state spend rate that you would expect to be growing the company at. It's not a slash and burn CapEx number. And I just want to be able to think about, as we go forward, how we differentiate between those 2. And the second is, you've talked a lot over the last year or so about this being a springboard to transforming the company. And clearly, you're talking about the external metrics that we can see. But internally, I presume there are some quite significant profound changes about the way you manage the company and set strategy and set targets, etcetera. So could you just talk a little bit more about that? Because clearly, that will inform your performance in the future as well. Thanks. Okay. Sander, why don't you take the first one? Let me talk a little bit first about the second one. You're absolutely right, John. This is indeed a transformation. I hope the numbers will speak for themselves. If we are indeed able to generate this type of financial outcome at a $60 oil environment at the end of a decade, this will be a company that is financially a lot more resilient, a lot more attractive and indeed a world class investment case. But at the same time indeed, we have to mobilize the internal forces in the company as well. And we have MER. Over the last few years, we have seen a very, very strong drive to better align everybody to bottom line outcomes. Very clearly, also, the follow through if we don't get a portfolio action. And I think as a result of all of that, we've seen a much more focused bottom line orientated organization. Now at the same time, BG is a catalyst for even accelerating that further. First of all, the colleagues that we received from BG, of course, had been waiting for almost a year to get into the Shell system and to contribute their piece as well. They hit the ground running. But at the same time, also, as we go through integrating the assets, working out a target operating model, understanding what sort of synergies we had in mind and how we can use those synergies to do even better, There is a tremendous amount of infectious energy inside Shell also to make these things happen. To learn, through benchmarks from their former BEG colleagues, to just say, well, how do you guys do this? And not just to see what are the metrics that tell me how I can do better, but to actually interrogate and how did you go about it. And at the same time, you see the other way around. We see BG colleagues deeply interested in the capabilities that we have in Shell, how we can do things better. And as a result of it, there is a tremendous amount of extra energy and extra potential that is being freed up. Now the key challenge that we have, Simon and myself, colleagues here, is to actually channel that. And what I recommend to do is to talk to some of our colleagues later in the day to see how they are channeling that energy into real outcomes. But I can tell you, it is a different culture, a different atmosphere that we have been building over the last few years. Simon? Sure. I'd endorse everything Ben says there. Upstream volume growth, no, we don't set targets. We set financial targets and then the upstream production or for that matter reserve replacement, unit finding, development costs, they're all just dropout numbers that are not targeted. In practice, we target the value that gets delivered from the things that we do. So how much CapEx is going into sustained versus growth? At the moment, you see from the slide, it's around $10,000,000,000 $11,000,000,000 a year plus exploration, plus effectively what's going into the shale business of a couple of 1,000,000,000. So 2,500,000,000 exploration, a couple of 1,000,000,000 on the shale. The strategy as we go forward in part is aiming to reduce that number, not so much on the shale and the exploration, but on the stay in business CapEx. Remember, quite a large part of that is John's in the downstream on the refineries, distribution terminals, etcetera. So the divestment program has helped there. In the upstream, the similar approach will also help. The focus in the divestment program is likely to be on assets that have a high sustaining CapEx and limited growth potential. So the divestment program has an impact and the fact that we've been taking CapEx down at the unit cost level, but also improving the integrity of the assets to improve the availability, as Andy just laid out, has all helped. So those factors coming together, we would expect to take the £11,000,000,000 down over time, but we don't have a specific number for that. Okay. Thanks. We can go next. Oswald Clint, Sanford Bernstein. Yes, I guess a high level question first, Ben, please. The CapEx ceiling comment. So I guess can you just clarify or confirm that you're really saying that no matter where the oil price goes to, 30 is that cap? And what is the process for maintaining that? I guess the skeptic will think of higher oil prices and that number breaching that level, at least if we look back through history. So maybe give us some confidence in what's happening there to keep that at €30,000,000,000 on a go forward level? And then secondly, maybe a question for Martin, but I'm sure Simon has the numbers. But you spoke about the scale benefits, the synergy benefits with LNG, trading benefits, transportation benefits. Any idea, any ballpark numbers that you can start to provide us for the LNG business joining it with BG, please? Let me take the first one, and Simon, maybe you can say a few words and then interrogate Steve, who is here, and who can talk about both portfolios in a bit more detail as well. Yes. So what comfort can I give you, basically standing here and saying it's no more than 30, so much what more do you want, yes? And really and that's what it is. We have been very, very clear as we have worked through how does this portfolio develop, bearing in mind that everything that we need well into the next decade is already within our reach. We don't have to go and look for stuff to spend capital on. We have everything that we need, but of course, near term exploration being a bit of an exception. We have everything that we need in the portfolio. Now. So now it becomes a matter of how quickly do costs deflate, yes, because that will still continue to happen. So if you see continuous low oil prices, cost will continue to deflate, and we will be able to trend it much more to the $25,000,000,000 end of the range. And we probably will have to also for affordability reasons. We probably will have to go beyond the $25,000,000,000 to lower numbers if we are looking at oil prices as we are having today, but we will be able also there to get more bang for the buck. Capital intensities will improve at lower oil price levels as well. Yes, if oil prices will go up, of course, we will have plenty more opportunities knocking at the door and say, I am a competitive prospect, please sanction me. And then it will be all down to not only our willpower to stay at 30, that's easy enough to just say, this is what we're going to do, but also how do we then sequence the opportunities in such a way that we will preserve as much as possible. It's not just a matter of discarding a competitive project that we just don't want to do an investment decision on, but making sure that we smooth out the capital program so that we indeed cap at 30% and have that extra free cash flow available to fulfill the other commitments that were part of the deal, yes? Now I'm sure that will be a bit of a puzzle because these things usually come in sort of big lumps, and you sometimes they come at a time that is not exactly your discretion. It is quite often users or losers. But we will have much more visibility also on that pipeline going forward. So I'm pretty confident that we can manage that quite well, and I'm absolutely committed that it will be €30,000,000,000 Thanks, Ben. The LNG opportunity, just briefly in terms of background, BG tended to have built their LNG value chain from backwards to the supply and Shell historically built from supply forward into markets. But over the last few years, as Martin has laid out, Shell has been a bit more market driven as well. So we've actually put together now a fantastic portfolio of supply points, market demand and some level of flexibility into how to join the 2. And that is the core of the potential value that you note. Most value is created or achieved and realized in a volatile price environment where there are regional arbitrage gas price differences. Surprisingly, right at this moment in time, probably the least volatility and the least arbitrage opportunity there have been for many years. We don't expect that to persist. Martin and Steve can give you a bit more later about their view on the shorter term market dynamics. We can see cost synergies clearly shipping. We have access to more shipping. Cost synergies in terms of the way Steve is managing that particular activity now on a global basis, but still based out in Singapore close to the markets. What we have not done, and even if we did it, would be quite difficult to evaluate and then track, is a specific number for an uplift from that opportunity set because it's essentially volatility linked and trading market linked, but we do believe it is material. And particularly as existing positions sort of unwind over the next year or 2, that we're already in place on both sides. And we can then really start to optimize. We should start to see the bottom line impact. Thanks, Simon. Question this side, Irene? Irene Niemann, Societe Generale. I had two questions, please. Firstly, downstream, When you took over then in 2014, I believe you said that the downstream should really be delivering 10% to 12% RACHA through the cycle. My understanding today is that what you're now saying is that it really needs to do that at the bottom end of the cycle. And in fact, you're guiding to a potential return of 15%. Is that interpretation correct? Are you saying that the business should be doing 10% to 12% at the lowest point in the cycle for margins. My second question on the upstream, I think it's Slide 29, which shows that your new barrels will have a $15 cash operating cost, 35% tax. Thinking about completing the plan by 2020, having sold 10% of the production, having got the ramp ups out of the way, can you talk perhaps a little bit about what the blended Upstream portfolio cash operating cost will be averaging and the blended tax? Thanks, Irene. Let me give Simon some time to work out the numbers there. Yes, in principle, you're right. So we have to see more from that downstream portfolio, yes? And it and I think we can. But it's also good to decompose the 2 components of Downstream. So in Ore Products, where we have a much lower investment load and a much more sort of long ranging business, yes, we should be able to get to strong double digit returns at the bottom of the cycle as well. Chemicals is a bit of a different story because we will be investing so much in it over the next decade or so. So returns will be a bit suppressed as we, of course, have a lot of fresh capital or capital under construction in that segment of the portfolio. But if you would turn that investment off, I think our Chemicals business should have the potential to be very, very strong double digit, possibly higher than 20% return. Now that would be almost a liquidation strategy, so you want to continue to invest in such a strong segment as well. So in aggregate, we expect the returns of Petrochemicals with a significant amount of growth going on to be somewhere around the 10% mark. And then, of course, it's just a matter of how much growth and for how long. And for the time being, we see no end to the amount of growth that we can put as an industry into Petrochemicals. Petrochemicals demand is growing strongly, as John says, and the drivers for that are very, very strong and fundamental. They have to do with increasing standards of living. They have to do with trying to reach the 2 degrees C warming target. A lot of it has to do with basically lowering carbon intensities, better insulation materials. You heard John talk about alpha olefins. A lot of you may not know what alpha olefins are. Well, they are the stuff that sit in detergents that actually work also at very, very low temperatures. So it's these sort things that will continue to drive the growth of petrochemicals in the segment that we are invested in. Now how long that will last? Let's see. But for now, the next decade, we think returns will be a little bit depressed because we grow so much in that At Upstream portfolio, probably need to think about the portfolio we're trying to create and then that helps explain. As we go forward, it is likely that more than half our upstream value will sit in 3 countries, Brazil, Australia and the United States. There will be another 10, maybe 12 countries with significant value and potential longevity. I think there, Qatar, Nigeria, Oman, U. K, Norway, countries that are long established in the portfolio. And then at the tail end countries that are either mature and declining or small and they just don't have the scale. Some have been nice little learners for a while, but they may be better off with other people. So in terms of the way we think about the portfolio, there's more focus as we go forward. And the tail end is something that will feed the divestment program over time. And our choices for those 3 countries and several of the next set of large countries has been quite deliberate for at least 10 years now, more stable, more predictable, lower tax rate type environment and a cost base that gives us a better margin per barrel. So one of the reasons we don't target proved reserve replacement is if every new barrel is worth $10 and every old one was worth $5 I only need to replace half the barrels for the same value. $15 cash was on those projects, effectively named projects that come on stream by 2018. Our portfolio average is just above 20 or has been just above 20. It's coming down anyway. If you're in the small print in one of Andy's slides, I think, Andy, the U. K. Came from dollars60 a barrel to around $30 Sorry? Now $20 Now $20 Now $20 That's over the last week or 2. So that's the pace of the progress that we're actually seeing. So the whole portfolio is coming down from 2020. The new barrels start at 15 and should come down. The new barrels are going to be, well, quarter or so of the portfolio, maybe between 25%, 30% of the portfolio. And it's likely that we divest some of the higher unit cost activities as well. The same is pretty much true on tax in principle. I mean, the 35% statutory tax rate on the projects that are coming on stream compares with an average of just over 50% in the portfolio today. So you can see the blended tax rate again will come down. I can't give a figure, but it's going to come down into the 40s over the totality of the portfolio and hopefully as well in regimes where that tax rate is stable. Although I would note, I gave you the U. K. Unit cash cost move. The U. K. Is probably the country in which the statutory tax rate has changed the most as well, up and now down again. So we are a little bit victim of circumstance, but hopefully that gives you a feel for the trends we're going to see. Thank you very much, Martin. And then I will go to the back. Yes. I wanted to ask you about 2 things. First of all, it's not a number that was mentioned today. But if I remember correctly, the total number of sort of planned job losses stands at 12,500. And if you look at Shell altogether, the vast majority of the company works in the Downstream, but it makes sense given how low oil prices is that the majority of this $12,500,000 will be in the Upstream. But if you start to put these numbers together, you could see that the percentage job losses in the Upstream could be rather large. And I was wondering whether that is indeed correct, also what that means for the capabilities of the organization how you manage the associated risks that come with that. The second thing I wanted to ask you is, with this new plan, whether there is also a new scorecard for the management committee and what things are on that scorecard, how are you and the rest of your colleagues measured on the delivery of this? Thanks, Martin. Yes, I think both very good questions. You're absolutely right. Most of our staff is downstream. If you or just that's the single largest number if you segment it like that. So you could argue that indeed the 12,500, which is a correct number, yes, so it's 7,500, which we already did last year. And now we think at least 5,000 this year as a result of the combination. And so it used to be 2,800, now more than 5,000, which is really a blend of more synergies faster, but also combined and accelerated, of course, cost takeout because of lower forever, yes? That's basically the mindset that we have. But it's hard to distinguish how much is truly BG, how much is just BG enabled, but it doesn't really matter too much. Most of it is just cost coming out. It's a substantial number. And certainly, if you put it in relation to the Upstream staff numbers, it is significant. And you're right, it is predominantly in the Upstream, although there's also Downstream continued savings there. But it's also, for instance, a lot of functional savings: HR, it's finance, all sorts of IT cost, etcetera, etcetera, all sorts of ways to reduce what we call the above asset cost, where we see most of the pressure, of course, for cost takeout and also most of the synergy opportunity. But it also does mean that if we do this, and on top of it, we have a major portfolio revamp as we sort of high grade assets, which are typically also operated assets, yes, we do have to look at some of the capabilities, also have to look at some of the business models that we have, some of the support models that we have. So you will see and you ask Peter Sharp, who is here as well, some completely new different models coming through on how P and T is going to support the business. Now all this will play out over a matter of a number of quarters, but this is not just a matter of let's just try and squeeze a little bit harder, shave a little bit more and see what results come out. This is actually thinking through what sort of fundamental support models do we need for this business. It's not a bad thing actually because we need to do it anyway, and we were doing that anyway. A lot of this thinking was actually driven by the transformation we're seeing in the shales. Basically, our shale colleagues said, we can't live with a way of working that is so bespoke shale. Our competitors are the small E and Ps who do things fundamentally differently. And of course, there, we have already seen a transformation of ways of working, not fully to the small E and P type model because we are, after all, shell. We have a different risk appetite, a different way of doing things, different reputational pressures on us that we look after. But nevertheless, it has been an important driver in that area as well. Maarten, as he will look at developing his New Energies business, looking after how we do large scale wind projects or integrated solar and gas projects, will have the same pressures. We cannot work in the same sort of technical assurance regime as we have on a deepwater well. So there will be new methods and new ways of working that will have to come in. It's fantastic that we are doing it at the moment on the back of this integration that we are seeing. Did I answer your second question? The news scorecard. The news scorecard. Yes, we are, of course, in the middle of reviewing what we are going to do with the remuneration policy that we'll have to put up to the vote for next AGM. Technically speaking, that's only for Simon and my salary. But of course, we make sure that whatever we do for Simon and myself is actually representative and the same for the entire senior executive group. And we will be looking at what sort of new ways, what sort of changes do we have to make to the entire remuneration package. The scorecard for this year, we have been pretty straightforward. We have said, let's just update the scorecard post PG, and let's make sure that there is a component in there for synergy delivery or dual completion. What that is exactly, we will report out in next annual report, of course, we always have done. But we've made sure that the targets have been updated to the targets that we set in the prospectus. It's Ian Reid from Macquarie. Just a question about disposals, Ben. I remember going back to the presentation in November, you seem to me quite bullish about your ability to do a a billion. I think you said you had coverage in terms of people expressing interest of more than billion. And you talked then about the potential for midstream and infrastructure disposals. And I kind of get the impression now you've got a little bit more cautious on that. Obviously, the upstream environment has done a bit of that. In talking to potentially people who are buying assets of you, they seem to be telling us that they're not getting very far in talking to Shell about buying upstream assets. But also, what's going on in the kind of midstream area? Because that seems to be an area which has gone rather quiet. Yes. Thanks, Ian. Let me say a few things. Maybe Simon will be able to activate as well. But first of all, yes, midstream and downstream, it's about onethree of that $30,000,000,000 if you're talking about are sort of non upstream assets. We mentioned that number before. And of course, it is it looks as if that's easier to do than the Upstream asset at this point in time. And of course, if you look at the MLP, which we consider a disposal route as well, even though technically speaking, it's a bit more complex than that, That is, of course, almost under our own discretion. So there are areas where we can just make progress, and we do. And you heard John talk about the things that we have been doing, Showa Shell, Motiva, and that's quite a long range of, of course, smaller scale individually, but never in aggregate, reasonable divestment program sort of coming through. On the Upstream, do you hear a more cautious approach? Well, yes and no. I think there has been so much focus on you guys have to do this. You're now with your back against the wall. There is time frame you set for yourself. I would say, no, hold on, hold on. This is not a time driven program. This is a value driven program. And on the value driven program, the progress that we are making, the assets that we have earmarked, the discussions that we are having, I don't see any reason to say that the €30,000,000,000 is not going to be met. Now in the time frame that we mentioned, if it just so happens, and of course, nobody knows how the markets will develop, how oil prices will develop, if it just so happens that it takes a slightly different time frame, then we will look at that as well. We are not with our back against the wall when it comes to selling assets. So therefore, we will optimize this for shareholder value. Jags from APG. I think I've got 2 questions. The first one is, if conditions warranted needing to spend €25,000,000,000 in CapEx, how quickly could you achieve that? And the second question is, I think in terms of portfolio high grading, Simon, you mentioned you'd also look to dispose of the higher cost barrels. I was wondering if there's a market for high cost barrels. Let me do the first one quickly and then Simon the second We could get there quite quickly. If we just stop taking any FIDs, we could be there in a very, very short period of time. We can if you just don't take FIDs, we will be sort of at $19,000,000,000 before you know. Is that the right way to go about it? No, definitely not, because in doing so, we will probably overshoot or rather undershoot. We will end up probably destroying quite a bit of option value. And with it also the capacity to sustain a strong free cash flow growth in the next decade. So therefore, we want to do it in a much more measured approach. But if you wanted to, we can get that in a relatively short time frame. Paramount also, the faster you get there, the faster you have to shed with the capability. The moment you shed with the capability, which you can do perhaps in a year, yes, it's also harder, of course, to grow it back if you need it. So in my mind, it is a much more measured way of getting there. It's preserving as much value as we have. It's, of course, doing only projects that are incredibly competitive. And of course, at the moment, it is easier to see those in the Downstream than it is in the Upstream because in the Upstream, we see still continuous cost deflation. But ultimately, yes, it is going to be driven by affordability. Affordability, more than anything else, has driven the chart that Simon shows, where a lot of the arrows move to the right. There's a lot of crosses of investment decisions that we haven't taken. Is there a market there for the higher cost barrels? Simple answer, paradoxically, yes, because to get a deal, you have to get some deal space between the seller and the buyer. The bid ask spread has to overlap. So we're doing a lot of pre marketing in the Upstream at the moment. There's a lot of thinking going on. And how do you create that overlap of interest? Well, either from different views about price, so somebody may be prepared to pay more. At the moment, most people are saying, well, we'll wait. There are distressed assets available, but very few deals being done. And there's a time window. I repeat, oil price is at an 8 month high today. So maybe we'll see some more deals coming through. But the other way of creating the value arbitrage or opportunity is in the hands of other people, they'd be prepared maybe to invest more, do things differently or take cost out. So oddly, it's perhaps the least efficient of our assets that may be the most attractive to other people. And the more mature assets, that is perhaps the case, particularly if they need some investment or initial thought, because it's difficult for those assets to compete for capital within our €25,000,000,000 to €30,000,000,000 both for specialists or niche operators in particular countries or asset types that can happen, that can be the case. It's more difficult to do $10,000,000,000 deals there, but certainly you can do $100,000,000 of dollars that builds up over time. This is Chris Coupland from Bank of America Merrill Lynch. Ben, just on your disposal message. I think it's well understood, value driven, not time driven. You've also given us your potential indication of producing €20,000,000,000 to €25,000,000,000 free cash flow. That presumably somehow, somewhere has made an assumption on how much free cash flow you're going to sell by the end of this decade. So I wonder whether you could give us a bit more detail we should think about the cash flow dilution from disposals by 2020. And I guess on the same topic for Simon on, again, value driven versus time driven, have you changed your previous reluctance on thinking about hybrid bonds. There is an unnamed competitor out there who so far issued €7,000,000,000 I wonder what you think about rates that are available in the hybrid bond market. Okay. Before we hear from Simon how we talk any things about this, let me address the first one. Yes, absolutely. We have factored that in, yes? You have to. We have looked at how the portfolio is expected to evolve. You have to make certain assumptions, but they're pretty safe assumptions because we've just factored in the success rate on the assets that we currently have earmarked for divestment. So you're absolutely right. Of course, the things that we currently have on the block to sell are free cash flow generative. Otherwise, they are just unsellable, yes? Of course, there are some elements in there that do have some growth potential and future potential as well. You can get a return on that too. And there are some assets in the BG portfolio that will fall in that category too. But by and large, yes, you will sell free cash flow. And therefore, we have factored that in into the expectation numbers that we have at the end of the decade. The expectation numbers indeed, €20,000,000,000 to 25 €1,000,000,000 free cash flow at $60 oil. On top of it, whatever number we think is reasonable for divestments, say another €5,000,000,000 and that's probably even conservative, you have to do a significant amount of ongoing portfolio maintenance also on a high graded portfolio. So I think indeed it is a very, very robust number that we are looking at under very conservative circumstances. Thanks. There are two numbers out there just to build on that in terms of the dilution to think about. Up to 10% of production and the total asset sales were around 10% of the capital employed. We obviously model divestments because we cannot be absolutely sure which assets will go. So there's a number for you to think about in terms of the CFFO impact. Hybrid bonds, let's look at our ultimate financing strategy. We are a long term company with a reasonable cost of capital, reduce that cost of capital by issuing more debt and buying back stock. Unfortunately, there are elements of the market that wouldn't be too pleased about that. But we just went to market to refinance some debt. We went to the U. S. Market, dollars 7,500,000,000 was oversubscribed by a factor of 2. We averaged just over 2% on an average tenor of just over 10 years. A week later or less than a week later, we went to the euro market, swapped into dollars almost $2,000,000,000 similar terms, in fact, slightly cheaper. We could do that few hours it takes us to do that at 2% fixed. That is quality debt. That reflects the track record in the market. That reflects an expectation and an understanding of how we think about plain vanilla finance is the simplest, the easiest to access, perhaps most importantly, the cheapest. Hybrid bonds tend to be required where, should we say, how they're going to get repaid is more complex, and therefore, the pricing reflects that. Thanks, Simon. Lydia? Thanks. Lydia Raimo for two questions, if I could. The first one just going back to the BG integration. When you think about the assets that you've acquired, what is the one thing that surprised you most positively? And everything is there anything that hasn't gone according to plan or that you're disappointed with so far from having seen the assets? The second one, and it's interesting just hearing different views around the CapEx side, but on the CapEx range of €25,000,000,000 to €30,000,000,000 if I go back to the original commitments about the share repurchase program, why not keep CapEx at €25,000,000,000 over the next 5 years rather than that range of $25,000,000,000 to $30,000,000 It would give you $25,000,000,000 over $17,000,000,000 to $21,000,000 to do all the share repurchase, particularly given your view of it being a world class investment case, why not prioritize the share repurchase over that CapEx flexibility? Okay. Thank you. Me take the first one. Simon, you want to take the second? Yes. I think by our lives, there's always pluses and minuses there, Olivia. But and there have been things where we came together and we looked at the asset and said, well, okay, so that clearly wasn't as good as we thought. And then there have been areas where it clearly was a whole lot better than we thought. In aggregate, it sort of cancels out. If you look at the big three, Brazil, Australia LNG, the LNG portfolio, in aggregate is worth a little bit more than we thought we were going to get. The rest is, of course, many, many smaller positions, probably a little bit less. And then the synergies, of course, have been a whole lot more than we thought. So I think altogether, positive surprises in aggregate, but there's nothing out there really where we just said, woah, both on the positive as well as the negative side. So I think we had it reasonably well sort of understood. And of course, when we did the due diligence just in the last 4 days before we made the announcement in April last year, we also had a pretty good understanding knowing what questions to ask. So we knew there weren't any sort of major issues lurking in the covers. And unfortunately, that indeed did prove to be the case. I have to say the biggest positive surprise was a fantastically collaborative and professional contribution of our new BG colleagues, not from February 15th, but from last April, where we've been able to work together in a very constructive forward looking and value driven approach, which has underpinned everything else we've said about the deal. And credit to Helga, Sami, Steve and the team there for being so positive about what was obviously a major transaction for them. And that really will play through for you as investors. Dollars 25,000,000,000 a year, why not do it now? Why not buy back the stock? Well, we do have an obligation to look after your future as well as the present. And I'll take the simple example to illustrate the point. The chemicals decision we've just taken today, this is clearly major capital, multibillion dollar over the next 4 plus years. But it will deliver $1,000,000,000 to $2,000,000,000 of cash, free cash flow per year for as long as anybody in this room is probably alive or certainly working. And that pays a large piece or good start for the dividend for many years to come. So not doing that project would be an easy way to take the capital down. But doing it protects the dividend for the future. It's also got all the benefits that John laid out in terms of diversity of market and risk exposure. So we do need to continue to invest. So why 25% to 30%? Well, the answer is because we think we can do that within the constraints of the financial framework. And we will drive to 25 if it becomes the case that we don't think we can make the framework work. So we do have almost by definition takes longer. We spend less in the Almost by definition takes longer. We spend less in the interim. But in that period, we're locking down lower cost as well. So we have to do both at the same time, walk and chew gum. Okay. At the back. Thanks. It's Blake Fernandez with Howard Weil. I had two questions for you. Back on the production profile, I understand you don't want to give an explicit target, but you do outline about 1,200,000 barrels a day of new projects coming online. Can you help us understand how to think about the underlying declines into that timeframe? And then secondly, on Deepwater, some of your peers seem to be deemphasizing Deepwater in this environment. And I'm just curious if you can elaborate a little bit about your strategic decision to really pursue that? Do you feel Shell has a competitive advantage there? And do you think these $40 to $45 breakeven numbers will continue given the long cycle nature of the business? Yes. Let me take the deepwater one, and then Simon can talk about the decline rates. Yes, I'm mindful of the fact that indeed some of our competitors deemphasize deepwater. I cannot speak on their behalf, of course. And in general, of course, if you look at a lot of market analysis, quite often the comparison about deepwater raw, onshore shale, what is the more competitive barrel, so to speak. If you look at our portfolio, though, in the deepwater, I think it is in parallel. We have not only very, very strong positions traditionally in the Gulf of Mexico, but if you look at and of course, where we have very, very significant low cost tie in capabilities as well. But if you look at the portfolio we have in Brazil, I think it's second to none. So if you do have you heard Andy, if you do have lots of investment opportunities that are in the low 40s or below that even, why would you deemphasize it? I mean, this is a much more competitive portfolio in terms of attracting investment than it is in the onshore shales. So that's why we are prioritizing deepwater over onshore shales. Also, of course, because it's a longer cycle investment, so therefore, we can enjoy these investments over a longer period of time. Decline rates, although they are fast compared to sort of LNG, they are, of course, much slower than what we are seeing in unconventionals. So therefore, it does make sense at this point in time to prioritize deepwater over unconventionals and wait for the unconventionals until such time as we have better price realizations. So on the decline rates, although it's tough to give a total number across the portfolio because as you've hopefully seen from the strategic themes, we're not a homogeneous company. Each particular strategic theme has a different, if you like, challenge and decline rates, with the highest challenge being in the conventional oil and gas, then deepwater. And then as you move to different types of assets, you need to think differently. So the total decline rate has been around 5%, it's moved to 4%, and it's probably heading lower. And you can think about it as a reason why. Activities such as Brazilian deepwater, Australian coal bed methane or coal seam gas, onshore shale production in the U. S. Pretty much declined free. Your limit is the capacity of the facility to move the molecules. You do have to invest, continue to invest. But at least in terms of the resource, there is very little actual decline in that type of assets. The new projects coming on, Gorgon and Prelude LNG, Clare and Skyhallion, again FPSO type arrangements in the North Sea and the U. K, Kashagan, Stones and other FPSO in the Gulf. Again, the aim is to keep the facilities full with some level of investment, but they don't going to decline for quite some years yet. And therefore, the net or the average decline rate is likely to come down a bit, but there is an ongoing investment level in some of those activities. And it's different in each of the portfolios and it's different as we progress the divestment again. And again, it is likely that the high decline assets are more likely to be on our divestment list because the investment required to maintain the production there may be better done by somebody else. Thanks, Simon. Thomas Adler from Credit Suisse. I have three questions, if I may. 1 is on LNG and the other being on CapEx. And finally, if I may, just on the Lower forty eight business. Basically, LNG is now part of engines from previously growth priorities. And I understand that, obviously, you're absorbing BG's portfolio. You're focusing on the existing developments Prelude and Gordon, but also in the context of the current environment. But if we just take a step back and look to 2,040 and we say the annual average growth rate for oil is 1% per annum, for gas is 2% to 3% depending on government policy and LNG probably a little bit more. How does Shell's profile look? How does Shell think about the longer term portfolio in LNG now that's part of engine as opposed to growth? On CapEx, out of the $25,000,000,000 to $30,000,000,000 I just wondered what is how much of that goes to LNG and oil sands? Obviously, the share of LNG and oil sands in the last cycle was pretty high. Well, obviously, things haven't played out the way it should have. It takes 5 to 6 years to develop LNG projects versus 3 to 4 years, 15 years ago. And the final question just on the Lower forty eight. Back in November 2015, when you've created this new unconventionals division, I was under the impression that you're giving it 1 or 2 years to see whether you can make a cost effectively. And if not, you'll decide whether it's part of Shell's portfolio. Now looking at your strategy update here, I might be wrong here, it almost feels like you're giving it until the early 2020s to figure out what to do. Perhaps you can give a bit more color on that. Okay. Let me take question 1, have a go at the first half of question 3, and then Simon will complete it and take question 2. So the LNG outlook, yes, so LNG or integrated gas has come from being a growth priority where it used to be before to being a cash engine. And the reasons for it, we explained. About onethree of the capital employed is in that business now. It has to be, therefore, a very strong returning cash flow generative business because it just has to pull its weight in the portfolio, and it can. Now does that mean that we will be taking no more FIDs in that segment ever? No, of course not. So this will be, as you say, a business that in the industry will still have very, very healthy growth rates. Indeed, about 1%, 1.5% oil, double that amount for gas. LNG, again, doubled that amount, and that will be for many, many years to come. So we still see LNG as the fastest growing segment in primary energy supply. And we want to participate in that growth as well. But we're not going to be participating in it perhaps in the same pace as you have seen us doing before. And that is simply because we want to balance our exposures. There's only so much of a good thing that you want to have. And I think now is the time to sort of complete the investment programs that we need to do in deepwater to harvest the value there that we can access in Chemicals also to diversify the free cash flow characteristics of the portfolio that we have. But sure, we will continue to invest in integrated gas as well. Now for in the short term, it will be a matter of completing the investments that we have post sanction. It will be follow on investments that will be needed to keep our existing value chains healthy. It will be maybe more disproportionately investing in new markets so that we can seed positions for future supply projects to backfill. And then, of course, over time also, we will participate in the supply growth that this sector still needs and demands. But we will do it at a more moderate pace, and we will be, which is the great position of strength and value that we have, we will pick the best opportunities that we have. Basically, we have a much larger funnel of opportunities than we have desire and capacity if you stick to the $30,000,000,000 to spend on. Now on the lower 48, again, let me try and explain it in a different way. Maybe let me use it in maybe a bit more of a metaphorical example here to sort of drive the point on. The strategy that we're having in the Lower 48 is not just try harder and try and figure out how it works. You figured out how it works. We can have very, very effective development with very low breakeven prices that are competitive in all the basins where we are. I have no hesitation to say that in the basins where we are, we're quite often the leading developer when it comes to unit development costs. And we benchmark that all the time. Quite often, you have to benchmark it because you are in there in joint ventures or you are in there in competition for acreage. So I know we can do better, and I challenge everybody to try and beat us with development costs when it comes to unconventions. So our strategy is not so much how much money can I invest in this as quickly as possible because I want to monetize these resources? I think our strategy is probably best characterized as a Sleeping Beauty strategy. So let this resource lie and let's wake it up at a time when price realizations are so much better that you want to invest in it. So we are again purposely holding back investment there because I think it makes more sense to activate all that resource with follow on investment that the price environment is right. Because remember, every drill, every well that we drill in the Permian is going to produce most of its oil in a matter of a few years, not a few decades. And therefore, the moment you activate your investment program, you better be sure that with a short cycle time, you're going to harvest at the peak of the value. Now some companies that you will also be talking to have no option but to invest in it. They have no option but to put as much money in it as they can in order to make their financial framework work in a fashion. We have the opportunity to basically let it lie. And of course, you can say, Well, that's a shame because that's capital that is in a way lazy or unemployed. But if you look at the value that we can still harvest from it, it's still the right thing to do, and it's not a massive burden on our returns. It is still less than 5% of our capital employed. Simon? Thanks. I'll just talk about CapEx in general, nothing really to add on the Shale's comments. How much oil sands in terms of the allocation of capital? Well, if you look at I think we've given the 2016 broad allocation of the CapEx in the $29,000,000,000 that we see for this year. Going forward, the allocation across strategic themes is going to be similar. May go up and down a little bit, but it's broadly similar. That's oil sands at around $1,000,000,000 a year being reinvested. One of the reasons it's moved in categorization from future option to the cash engine is the cancellation last year of the Carbon Creek project, which was a major 80,000 barrel a day Shell share, 100 percent development in oil sands. What we have in the portfolio now is 60% of the 255,000 barrel a day operation plus upgrading. The investment is all in tailings management, I. E. Handling the waste product and then the debottlenecking and the integrity of the facility. So it's around $1,000,000,000 it will stay around $1,000,000,000 as we go forward until further notice. You have to actually take new investment decisions on a big mine or a big in situ play, which is not the intent at the moment. LNG is slightly more nuanced. We have been spending $7,000,000,000 $8,000,000,000 that's coming down into the region of around $5,000,000,000 to $6,000,000,000 around half of which will be needed to keep current facilities full and to develop new markets. So if we invest in a regas facility, I'm looking at Martin slightly here because it's obviously an element of negotiation here. But expectation is we are not finished with major FIDs. It's just a question of timing them and choosing the right ones for return. We actually have in just greenfield, let alone additional brown field trains, 5 greenfields in the portfolio at the moment, 2 have moved backwards recently, Browse and Nabadi floating. Tanzania is still some way away. And we have Lake Charles from the VG Portfolio and Canada LNG. That's the discussion we have. In 2,040, the question maybe all five mine produced, but they certainly won't by 2020 or even 2025. So can you maintain those options so you can match the investment predictably through cycle on the best returns and get some level of matching with the growth in demand as well. The brownfield options that Martin showed are probably the most attractive in the short term if you can mature them. So I suggest that's a good subject to discuss with Martin and Steve as you see them later. Okay. Thank you. Shall we take the last question here? Gordon Gray, HSBC. A question about the financial framework, if I can. You've talked about when the balance sheet gearing gets to roughly 20%, reinitiating the share buybacks. Do you see that as a tool principally just to offset the dilution of the past in the next few years? Put another way, I guess, once you get to that point and you've offset the dilution, where do you instinctively see the financial structure? Is would your inclination be to take balance sheet gearing further towards the lower end of your target range just to build in some conservatism versus how sensitive are you to, say, the absolute scale of the dividend, which is obviously by far the biggest out there, versus would you actually just keep on with a level of buybacks? Simon, do you want to end on that one? Sure. Thanks. Gordon, because it's a really key question, but it's a question about when the good times roll almost. So in the short term, reducing the debt is the priority. I don't want you to take the view that 20% is some kind of mechanical trigger because it's the best approximation for the debt reducing with a good line of sight to 20 or lower, we might not actually be at 20, but we know we're going to get there either through delivery of projects or divestments or recovering the oil price or all 3, first thing we think about is switch off the script because that is a negative buyback essentially. These are sequential events. They won't all happen at the same time. After that, the CapEx isn't going above $30,000,000 It will be at what level it needs to be. We will consider the buybacks. The buyback program, we committed to $25,000,000,000 and that's a commitment. So that's where we start. We must eat into that some way before we think of where the investment might go up. And we're now talking several years hence. If you look at the 20 to 25 free cash flow that we've laid out as the possibility in 2020, what we're saying there essentially is within our own hands at a price around 60, we are able to make some of those choices. We will have reduced the debt. We will be producing more cash flow than we actually require for the dividend. And we should be into that position to make choices. We may get there earlier, particularly if the oil price does recover beyond 60 for any serious period of time. And the likelihood is that whoever is running the company by because it could be a few years out, we'll have the luxury of choice as to more buybacks or more investment. But the commitment to buybacks comes first because it's being made. Thanks, Simon. I know there must be many, many more questions out there. So some of them, of course, you can also direct into the breakout teams that we are having now. San and I, of course, will stay around. We will have a break now. We will have a break also or some drinks afterwards. So by all means, grab hold of me if you have some questions that you want to ask me or to Simon. Peter will explain what we're going to do after the break with the logistics around the breakout sessions. Thank you very much and turning up in such great numbers for very, very good questions as we go. Thank you. Thank you, Ben. We're about to break until quarter past 3, please. And after the break, we will go into groups. We've got 3 groups and a group session is with the directors of the company and senior executives. Every session will take about 40 minutes and then there are 5 minutes to move on to the next topic, but you will stay in the same room. Now you probably all have noticed that you've got lanyards around the neck and there are 3 colors. Everybody get a red lanyard. Can I ask you after the break to go to the room behind this screen? It's called East Albert. Then there are 2 more rooms, and they're actually located if you go through the doors over there. 1 is for the green lanyards, and it's called the NT room. You need to turn right. And then finally, there's the Queen's room where hopefully everybody with the blue lanyards will go to. So 40 minutes each, you stay in the room, presenters will come to you, and that will take us about to 5:30, and then we'll conclude with drinks. If you now would like to go to the area at the back, and we have some drinks. Thank you.

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