Equinor ASA (OSL:EQNR)

Earnings Call: Q4 2018

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Feb 6, 2019

Ladies and gentlemen, if I can ask people to take their seats so that we can get proceedings underway. Thank you very much. Okay. Ladies and gentlemen, welcome to the Equinor Capital Markets Day. It's a real pleasure to see you all here today and also to connect to those of you who are dialing in on the phone. For those of you here, I would like to start with a brief but important safety announcement. If a building needs to be evacuated, a fire alarm will sound. On hearing the alarm, security and support staff will be on hand to direct you to the nearest emergency exit and assembly point. The assembly point is in Cockfall Close, which is next to the Apex London Wall Hotel, just across the side of this venue. I think it's right to say there are no planned fire alarms today. So if you hear anything, please follow those instructions. After the presentations, we will have the normal question and answer session in the hall but also on the phone, not only with those presenting, but also other members of the executive committee who are joining us here today. And there'll be an opportunity for everybody to meet at the venue afterwards over lunch and a drink. So with that, let me ask Elda Fetter, our CEO, to take the word. Thank you very much. So thank you, Peter, and good morning, almost good afternoon to all of you. It's really great to see you here. So this is the 5th time I have the pleasure of welcoming you to our regular Capital Markets Update here in London. But it is definitely the first time I do so as the COO of Equinor. So for us, 2018 was definitely a year of change, you could say, but some things will remain the same. We still take a lot of pride in delivering on our promises. And due to some really significant and sustainable improvements as well as a high quality portfolio, high value projects, our outlook is even strong. Today, we will show you that we are on track to increase returns and to grow production and cash flow to record levels, which also allows us to step up capital distribution, while at the same time strengthening our balance sheet. In short, we are delivering on our strategy, high value, low carbon and always safe. The safety of our people and the integrity of our operations remain our top priority. We have reinforced our efforts. And last year, we delivered our best safety results ever. We know what it takes: consistent leadership and a systematic approach across the company. We also know that relentless efforts to ensure operational quality is necessary both to further improve safety as well as efficiency. Past performance is no guarantee for future success, but we will use our improved results as inspiration because we know that we can and that we also must continue to improve. And our mindset is 0, 0, R. Last year, we set clear targets for 2018, And our people have responded very well. We have done what we said. In fact, we have delivered above and beyond even quite ambitious targets. We said that we, at an average oil price of $70 per barrel, would grow our return on average capital employed to around 10% in 2018 and 12% in 2020. As it turned out, we delivered 12% already last year, and we materially increased our organic free cash flow to well above $6,000,000,000 During the downturn, we also improved our project portfolio significantly. As a result, we sanctioned 7 new projects last year, delivering more than 1,000,000,000 barrels to Equinor at an average breakeven price of $14 per barrel, dollars 14. In 2018, we also took new steps to become even more carbon efficient. Equinor is already a leading company when it comes to CO2 effective oil and gas production with average emissions around 9 kilos per barrel, which is around half the global average and aim to reduce it even further to 8 kilos. In fact, the Equinor operated project that we sanctioned last year has average emissions below 1 kilo per barrel. Our methane emissions intensity is also industry leading at 0.03 percent, and we are pursuing further improvements. In addition, we are growing within renewables. And our projects today have a capacity around 1.3 gigawatts. In a recent external benchmark by CDP, Lectinor was ranked 1st among our peers when it comes to readiness for the low carbon transition, confirming that we are on the right track to face the future. I'm also convinced that our low carbon strategy will increasingly become a competitive advantage. Climate change is happening. The world needs a comprehensive transition of our energy systems and our industry has to be an integrated part of that transition. As a company, we are well prepared for this future and to meet high expectations from investors, from talents, political leaders, as well as the communities where we operate. Nobody can predict the future with certainty, but we must try to understand the drivers for change, and we must be prepared to be surprised. However, one thing we do know is that the demand for energy is growing. We need to grow renewables at scale due to natural decline. We must also find new resources of oil and gas and produce these resources with the lowest possible carbon footprint. Equinor is developing as a broad energy company. We are growing in renewables and we are well positioned to deliver competitive barrels at low cost and with low emissions. Equinor was built on the Norwegian continental shelf. We started out as what I would call an apprentice to the impressive leading global IOCs. And from there, we have developed into the strong global and industrial company that we are today. On the MCS, our home turf, we can develop new technologies and digital solutions. We can scale them efficiently, industrially and further develop our competitive edge to the benefit of all parts of our business. Anne Sigve will show you that even though the MCS is maturing, opportunities are still plentiful and highly valuable. In fact, in 2025, our NCS equity production is expected to be at the highest level ever. We continue to develop our international portfolio, and we are increasingly also taking on the role as operator, allowing us to leverage our industrial value drivers even more. Fulbrin will revert to this shortly, and Margaret will tell you how Brazil fits our strength perfectly and has become a core area for Equinor. You will see across our presentations today that we consciously seek opportunities to pace through our strength. And today, we are showing you mainly numbers and metrics, but our most valuable asset is our people. Their competence, deep competence and their values and their collaborative way of working. This is an essential part of our competitive edge. We used the downturn well, fundamentally strengthened our competitiveness by taking down cost, becoming much more efficient and radically improving our projects. Because we will never, never rest. So I've been in this industry now for almost 40 years, I think, Joseph, And I've seen oil prices record high and record low. That's a big difference. And I've seen how industry costs have followed right behind the commodity cycles every time. We are determined not to repeat the mistakes from the past this time because we know that we must be competitive at all times. The market volatility that we have seen in recent months is clear evidence, demonstration of the need for a consistent cost and capital discipline and for continuous improvements through the cycles. So Christian will revert to how we work diligently with continuous improvement in our organization, and you will also hear examples from business areas. So let me then give you the main points of reference on our financial performance over the next 3 years. In the period up including 2021, we can be organic free cash flow positive at an oil price below $50 per barrel. At 70 plus, we can deliver around $14,000,000,000 in free cash flow after investments and after dividend. This is $2,000,000,000 more than the 3 year outlook that we provided last year. Our return on average capital employed has already increased to 12%, as mentioned, 2 years prior to plan. And towards 2021, we expect to increase our returns even further to more than 40%. And by the way, this is substantially higher returns than we delivered at oil prices above $100 before the downturn, telling us that we are today a much more resilient and a stronger company. Let me then turn to our project portfolio that will come on stream over the next few years. And you have heard about Johan Sverdrup many, many times. And there's more to come. Because all these barrels, the income and the cash generation, love it, is all ahead of us. In November of this year, we will start producing from this 660,000 barrels a day the full field development. Since sanctioning of Tiguan back in 2015, we have increased resources as well as reduced capital expenditures by 30% for Phase 1 and 40% for the full field. These are, I would say, unprecedented improvements. And the full field can now deliver around 1,200,000,000 barrels to Equinor with an average breakeven price below $20 So you are sure this is truly a flagship project, but we have many more highly profitable projects coming. By the end of 2025, we will have started up a portfolio of projects providing around 6 €1,000,000,000 barrels to Equinor at an average breakeven price of around $30 and an internal rate of return of around 30% at $70 per barrel. Our annual production growth is estimated to around 3% in the period from 2019 to including 2025. We have increased production and improved our projects, but we have also strengthened our resource base. We are delivering a record high reserve replacement ratio of 213% and an organic RRR of 189%. Our reserves to production ratio is now almost 9 years. In addition, we have added around 1,600,000,000 new barrels to our resource base in 2018. And we are also well prepared for future resource growth. Last year, we acquired and won attractive exploration licenses in Norway, in Brazil, Canada, in the U. K. And in South America. We expect to spend around $1,700,000 on exploration this year and plan to do wells in several attractive basins, including some high impact opportunities in Brazil, in Canada and in Gulf of Mexico. An important part of our strategy is to capture additional value from cyclicality. We divested collected assets carefully when the prices were high and have been able to access highly attractive inorganic opportunities during the downturn. As a result, we have since 2012 capital gains of around $9,000,000,000 Today, we have a strong balance sheet, an attractive project portfolio for us and a competitive resource base, which means that we have the strength, the time and the patience to take a continued disciplined approach to consider acquisitions or divestments when the best opportunities are there, when the prices are right and also the industrial and the strategic fit is in place. Another part of our countercyclical strategy is to launch projects and award contracts when conditions are most attractive. Our strong financial position allowed us to mature and launch several projects during the downturn. And from 2015 to 2018, we awarded contracts totaling more than $100,000,000,000 which we will continue to benefit from also in the years to come in close collaboration with our suppliers. Equinor is developing as a broad energy company, and we are gradually building a portfolio also within renewable energy. Provided that we are able to access attractive projects, we expect that 15%, shifting to 20% of our capital expenditures can go to new energy solutions by 2,030. Today, we are delivering a competitive return of around 10% from projects in the UK, in Germany and Brazil. And looking forward, we are now maturing further opportunities in the North Sea, the Baltic Sea and on the East Coast of the U. S. A key value driver for us is to leverage some of the same strength that make us competitive within oil and gas. And in addition, we will pursue an optimistic approach to realize value from divestments. Renewables has opened up a new set of opportunities to create value for our company, while also diversifying our portfolio and making it more resilient. Let me also remind you that our global trading system supports value creation through the cycles. We have a clear strategy to secure flow assurance and access premium markets from highly cost effective and also highly flexible infrastructure. Growing our asset backed trading as well as capturing margins from an increase in trade towards Asia are important parts of this strategy. Last year, we sold more than 800,000,000 barrels of oil and 100 1,000,000,000 cubic meters of natural gas. And we are now also taking a material position in the electricity market. The Oskar Commodities, which we bought for around €400,000,000 is expected to deliver earnings before tax, interest and tax of around $18,000,000 in 2018. And I'm confident that this will be a strategically important and value adding transaction for us, not least supporting our renewables business. As a result of strong and sustainable results from our improvement efforts in the recent years, the Board proposed a step up in our capital distribution, increasing our quarterly cash dividend by 13% to $0.26 per share. This underlines our strong commitment to capital distribution, clearly demonstrated by the fact that we have always maintained or increased our dividend also in periods with low commodity prices. And as stated in our dividend policy, it's our ambition to grow the annual cash dividend in line with the long term underlying earnings. All in all, we are proud today to present what we believe is a strong value proposition. First of all, we are growing our cash flows and returns. Secondly, we are investing in world class projects at an average breakeven price of around $30 per barrel, and we expect 3% annual growth in 2,000 to 2025. And finally, we are stepping up capital distribution by increasing our quarterly dividend by 13% to $0.76 per share. And by that, I thank you for your attention, and I leave the floor to my friend, Anders Sigve, please. Thank you, Alain. Good to see you all. It's exciting times from the NCS. After 50 years, still going strong and the test is yet to come. NCS will grow and deliver significant value for many years and we have some of the largest and most profitable oil and gas projects in the world. The last year's improvements, our unique infrastructure, technological development and improved efficiency create a very attractive and valuable opportunity set on the NCS. We are seeing strong volume growth taking us through a historical high production in 2025. Who would have believed that just a few years ago? We already operate with a very competitive unit production cost, and we will continue to improve, maintaining a strong cost discipline going forward. Over the next 3 years, we will generate a substantial net cash flow of around $15,000,000,000 after tax. And to put it simply, our future on the NCS is valuable growth. You heard Eldar talk about Johan Sverdrup with its significant production and low breakeven. In addition to Sverdrup, several attractive projects will come on stream over the next years. Matinlinge, Toll Phase III, Snow Expansion, Johan Castberg, just to name a few. We have a strong non sanctioned project portfolio, a large set of exploration opportunities and a great potential from legacy assets. Our portfolio of non sanctioned projects currently has a breakeven of around $30 per barrel, And this portfolio is expected to deliver 1,800,000,000 barrels of oil equivalent for Equinor. But still early pace, we constantly look for further improvements as these projects are matured in collaboration with our partners and suppliers. We are continuously adding high value barrels from existing low cost infrastructure through increased oil and gas recovery from our producing fields. As we presented last year, we have a recovery ambition from our oil fields of 68%. And we have now also established a gas recovery ambition of 85%. These ambitions represent a total potential of 7,500,000,000 barrels with 3,000,000,000 barrels of these Equinor share. To capture this potential, we plan to drill around 100 new production wells for the year. The current well portfolio has a low breakeven with an average payback time less than 10 months. So the value creation potential of the NCS is significant. This is also the case for exploration. We plan to drill 20 to 30 exploration wells per year going forward, and we will actively explore for both oil and gas near infrastructure to low legacy plays while also testing new ideas and concepts with 2 to 4 game changing wells per year. 2018 was our best exploration year since 2014 with more volumes per discovery well. Our low carbon advantage is evident on the MCS. Last year, we talked about the 1,400,000 tonnes CO2 reduction since 2,008. This has now increased to 1,600,000 tonnes by implementing profitable portfolio of energy efficient projects. It is good for environment and reduces operating costs with around NOK1 billion, lowering environmental tax and focus. In addition to what we already have in operation and under development, we are evaluating new opportunities to further improve our low carbon advantage and capture more value in the years to come. I would like to highlight Hybren Pumpen, sanctioned. It will be the world's first floating wind farm reducing electricity to offshore installations. Bringing power to Snorre and Wilfax, the project underpins the full consolidation of the NCS. The digital transformation is well underway. Last year's revenue, we presented the field of the future concept with a 50% reduction in OpEx and a 30% reduction in facility OpEx. And we have matured the technology further. Let me just point to Hafla, where we have selected an unmanned production platform at 30% lower facility CapEx compared to a traditional concept. Automated drilling control reduces drilling costs and will be available on several rigs in 2019. In October last year, we established our new integrated operations center, utilizing data and digital tools, now supporting 5 fields we already see increased production and efficiency in our operations. By 2021, all Equinor operated fields on the NCS and onshore facilities will get support from this center. And we are still in an early phase, but see exciting potential transforming a way to work. Last year, we presented our mission of $2,000,000,000 of value creation by 2025 from the center. And I would say that we are definitely well on our way. We have also launched our new Geo Operations Center. Now geologists can work onshore, monitoring and controlling geooperations without traveling offshore, improving quality, efficiency and reducing cost. So we see a bright future on the NCS. We are capitalizing on our position, our competence and technology to deliver on our corporate strategy. Always safe, high value, low carbon. Thank you so much for your attention. Borgin, the floor is yours. Thank you, Arne Sigve, and good afternoon. It is very good to see you again. Today, I find myself between 2 great leaders, Arne Sigve and Margaret, that has truly shaped our company. That fits very well with what Amolte is talking about today, and that is about how we are going to apply the best of Equinor internationally. So I will cover 3 topics. So first, international business has become a true cash generator. Secondly, our share of operated production is going to double. That will enable us to apply the best of Equinor more broadly. And finally, international will grow with quality as cash margins increase further. So let's start with cash. So I am very proud of our people and how they have changed our business. Last year, we had a cash margin of $30 a barrel. That is a significant improvement. But we can achieve even more. And we expect to increase the cash margin by another 20% by 2025 in a $70 environment. Higher margin barrels will come on stream and a higher share of production with a low cash tax rate. For many years, our international business needed funding. Last year, we delivered $3,900,000,000 in net cash flow. And we will generate even more cash, approximately $10,000,000,000 over the next 2 years in a $70 environment. But no, we can't rely on $70 Our business has to work at fiscal. And in fact, from now on, we aim to be net cash flow positive below $45 per barrel in detail. So let me turn to our U. S. Business. 2 years ago, we promised a lot for 2018, and we promised from €90 to €50. And you will remember that we needed more than €90 to make money. And we were deeply, deeply in the red. So people responded, and we have made progress every year since and now it's time to report. I'm happy to say that our business now makes money at $50 We promised to improve the cash margin from 5 dollars to $12 per barrel in a $50 environment. Well, we got to $14 We also aim to grow our business by 50% and ended at 58%. So the U. S. Will continue to grow and from now on, also generate surplus cash. We will double our operated share of production to 40% in 2025 and reach 50% by 2,030. We will continue to have an impact as a partner, and this shift will allow us to have an even stronger impact and apply the best of Equinor more broadly, being always safe, creating high value and delivering low carbon. Adrian Ore is our first opportunity to operate offshore Canada, and we will use learnings from high recovery rates on the NCS and innovative FPSO design on Johan Castberg. Last year, we produced more than 750,000 barrels per day in DSI, and that is a record. We tripled our operated production in the Appalachian Basin in Ohio to 50,000 barrels per day. We learned from what we did in Norway and all the places in the U. S. To drive operational excellence. Our unit production cost is now less than $2 per barrel there, and our CO2 intensity is reduced from 7 to 2 kilo per barrel. This is actually oneeight of the industry average. This contributes positively to our quota targets as we aim to be an industry leader in carbon efficiency. Last year, we reported a 40% reduction in breakeven in our non sanctioned projects. And today, we report 14%. And we aim to reduce our breakeven further, which leads me to my third example, which is the Rosebank in the UK. So we divested Rosebank when prices were high because we saw that we could create more value. And again, using learnings from your own customers, we have reduced breakevens from $80 to less than $35 a barrel. So we bought Rosebank back and this time as the operator. So production will grow, but cash margin will increase much more. This is growing with quality. Growth in the U. S. Will offset declining production in West Africa. And by 2025, there are 3 more projects in the U. S. Planned to be on stream. In addition, Beydonor in Canada, Barrenor in the UK, north from Somolskaya in Russia and Block 17 satellites in Angola. Over the last 2 years, DPI has contributed 40% of the NTV improvements in our non sanctioned projects, and this is nearly $3,000,000,000 in NTV. We have a significant resource base to develop over the last next decade, 1,100,000,000 barrels. This does not include our unconventional assets. And we are encouraged by recent developments in Santander. Once we agree on a commercial and legal framework of the government, we can add another 1,400,000,000 barrels to this number. Now exploration is key, and we plan to drill 10 to 20 wells per year going forward. We will increase our international activity in 2019, including 3 high impact wells in prolific basins, 2 in the U. S. Gulf of Mexico and 1 in Canada. So let me conclude. GPI generated significant surplus cash in 2018, around $2,900,000,000 We will continue to grow and contribute with $10,000,000,000 over the next 3 years, And then we will double the share of operating production to 20% by 2025. An important contributor to this is Mariner. On the left of this chart, that will come on stream this year. Applying the best of Equinor is all about the people. We have spent the last 6 months traveling to meet our organizations around the world and there is one thing that stands out, and that is the quality of our people. And I see it in the way that we work with our partners. I see it in how we engage with societies and I see it in the trust that is built with governments. And this is how we are going to apply the best of Equinor. So thank you very much. And then I will leave the word to a good friend. She has earlier been called Technobabe. Before that, also called Breakeven Babe. And now she comes directly from Rio de Janeiro with a glowing suntan. And I'm not sure what I'm going to call you this time, Margaret. But please, the floor is yours. Thank you, Tawgm. And I just have to say, you really look good with your new George Clooney style. So it was done, Today, you will discover why I decided to leave the cold winters of Norway to become the girl from My main message today is about the unique opportunity set in Brazil and how Equinor has strengthened its position during the last years. Brazil has a huge offshore resort base. There are some seats there as well. I'll take it once more. Brazil has a huge offshore resource base, regular access to acreage and a large recovery potential from mature fields. During 2 decades, including 8 years of the green operations, we have built a strong local organization with proven operating competence, ability to manage risk and a solid standing in the local industry. Build some long term relationships with very important and key partners. We know what it takes to develop and operate in Brazil. Our oil and gas portfolio has high quality assets in all development phases with the potential to produce 300,000 to 500,000 barrels per day in 2030. In Ocador, a field with 10,000,000,000 barrels of oil in place, Together with Petrobras, we now aim to increase the recovery factor by 10 percentage points. Our non sanctioned portfolio has a breakeven below $40 per barrel and we want to improve it further. TIM believes exploration portfolio in Brazil is the best he has seen since NCS in the '80s. In the next 3 years, we will drill 5 high impact projects in the pre salt area. There is also applied potential from associated gas and some of Equinor's big gas professionals are in Rio working on monetization options. Like Torgrim said, it is really about buying the best of Equinor. Personally for me, it is an opportunity to utilize what I have learned in many different roles across the value chain on the Norwegian Continental shelf. I feel really lucky to start the journey again. Now with a bit more maturity than 30 years ago, but with the same enthusiasm. As always, story started with Peregrino, more than DKK180 1,000,000 Hamburg is safe to produce in a field, now we thought was possible. Ferrogio 2 comes on stream in next year adding more than 250 1,000,000 barrels. And we will bring gas into Peregrino to reduce the O2 emissions by more than 100,000 kilos per year, a good business case for the environment, but also for our financials. Our non cancer projects add up to BRL1.4 billion of share. By 2025, we almost double our production and only 5 years later, we could be producing up to 5 times what we are doing today. The steel portfolio is very competitive and resilient. In 2025, 4 of Equinor's highest NPV assets are in Brazil. 5 years later, we expect to generate a net cash flow about $2,500,000,000 with Brent at 70 or above 1.5 with Brent at 40. On the door is among the top 3 producing fields in Petrobras. Our strategic alliance creates business opportunities for both companies having safety as number one priority. Last year, our ambition was to increase the recovery tax by an additional 5 percentage points and that is 500,000,000 barrels. After 7 months of collaboration, we have agreed to double that ambition, now close to 40% recovery factor. On the NCS, we have increased recovery rates from 30% to 52% and DPN is now pursuing 60%. And honestly, you will be my benchmark. And I will incorporate all the leverage we have from Norwegian Continental sales. And we really enjoyed the collaboration with Petrobras, which is one of our kind combination. Petrobras deepwater experience and Equinor IOR toolbox. Increased recovery on Oncador is about optimized drainage strategy. It's about implementing a robust infill drilling program. It's faster and cheaper wells. It is optimized sensing solutions and is also applying best practices from top side and subsidy integrity to prolong the lifetime of their operation of the installations. And with our experience, we are confident it is possible to increase recovery and deliver very profitable sales. Carcara is the 1st greenfield project in the Brazil Preso to be developed by an international operator. And we are about to complete a first well in the North area that shows world class productivity. The value driver in a pre SOC is early production and high capacity. And since last CMU, we have taken decisions which improves our business case, A phased development to accelerate production, while continuing to fulfill appraisal and industry standard FPSO solution to enable faster execution and lower cost with the highest production capacity in Brazilian water so far 220,000 barrels a day. And we have simplified the subsea solutions based on our experience of Triesteak and Husqvarna and using standard Brazilian equipment. To remove the dependency of the gas value chain, we have decided to reinject gas for Phase 1. This will not only de risk the project schedule, but also increase our recovery. The project team has worked hard to reduce breakeven to below $35 per barrel and there is potential for more. Our ambition is to start up as fast as possible, and I'm sure Amnes will do its best to deliver. And no, Amnes, I am the demanding customer. We estimate around BRL 1,000,000,000 of recoverable resources from our current exploration portfolio in Brazil and Equinor share. These are world class reservoir with high quality oil, low sulfur 2 companies to enable cost efficient development solution. And our exploration efforts are not only about finding oil, but also understanding how the well will flow. We have established a pre salt central excellence in Rio to transform the way we work, speeding up the development of the assets. This includes integrated work between petroleum technology, exploration, drilling and well and research, which I think is quite unique. Targeting 1st wells that have the potential to be producers and utilizing 1 digital subsurface data lake to capture synergies from the different free zone hubs and to reduce the number of wells. You think we are done? There could be more and the calendar of our bid runs for the pre and the post saw have been confirmed for the coming years. And the transfer of rights, surplus volume could be an opportunity this year if commercially attractive. Guided by our values and strategy, we will work very hard to improve our portfolio further and deliver safe, high value and low carbon production to Equinor. With all of this, I have no time for Copernias or Gift Life. That's for sure. Now Lars Christian, where are you? Lars Christian will take you through the financials. Thank you, Margareth, ladies and gentlemen. Good afternoon. It's really great to see you all. This is my first couple of markets update as CFO. And in my 1st 6 months, priority number 1 has been to sustain the cost and efficiency improvements and further improve across the whole organization. In a more uncertain world with high volatility, improving our competitiveness is even more important to stay attractive. 2018 was another strong year for Equinor. We delivered strong results, further reduced the breakevens of our projects, announced value enhancing transactions, set up our cash dividend and strengthen our balance sheet. And as you've heard from my colleagues, we have a lot of exciting opportunities ahead of us, all building on our industrial strength and all with the aim of creating value. Let's start with the Q4 2018 results. As you have seen, we delivered adjusted earnings of $4,400,000,000 in 4th quarter, an increase of 11% from 2017. Gas prices in Europe and especially in the U. S. Were higher than 2017. And on average, we also realized somewhat higher liquid prices. But during the quarter, we expected the steepest fall in oil prices since 2014. In early October, Brentland was traded around $85 a barrel and ended the year below $50,000,000 Due to sales pricing mechanisms in the market, where prices are set 5 days after the actual transaction, the significant drop in the prices led to a one off effect with a higher than normal differential between realized liquid prices and Brent. This impacted our adjusted earnings from exploration of production in Norway to deliver $3,200,000,000 up from 3,000,000,000 dollars last year. Underlying OpEx and SG and A was, as expected, slightly higher than last year, mainly due to asset removal costs on Gasfled and pre updating costs from several fields, including Marfringlinie and Asda Ansel. In addition, we had a lower share of profits from associated companies, impacting the tax rate for the quarter. Exploration and Production International delivered adjusted earnings of SEK774,000,000 after tax adjusted earnings were SEK491,000,000, dollars an increase of 146% from last year. Increased production from Newfields and new wells coming on stream contributed to the strong results. Both in Norway and internationally, we had high exploration activity in the quarter, impacting adjusted earnings. Our mid and downstream business delivered ourself of $319,000,000 with a strong contribution from LNG and through trading. However, low gasoline prices led to low margins on our refineries and market developments led to a weak result from product trading in the quarter. Now let's move to full year. And for the full year, we are reporting solid adjusted earnings of $18,000,000,000 an increase of 42% from SEK12,600,000,000 in the previous year. Equinor's net income increased from SEK4.6 dollars to $7,500,000 Increased oil and gas prices and solid operational performance have contributed to this good result. We delivered record high full year production, DKK9.9 billion organic CapEx and exploration spend of DKK1.4 billion, all better than guidance. And in addition, we delivered 12% larger, already meaning meeting our 2020 ambition. It's also worth noting that our organic cash flow would have been positive below $50 And our financial robustness was rewarded with upgrades on both movies and standard of tours during 2018, a testament to our focus on resilience. Moving to our production. And more than 2,100,000 barrels per day, that is a record high production. New wells coming on stream, acquisition of Ronka Voigt and start of 8 new fields contributed to this record level. And among the new fields, there was by West Slanken and Stenfield. These are high margin barrels that contribute to our strong cash flow. In 2018, we delivered 2.1% underlying production growth. Let's take a look at the cash flow. In 2018, we generated DKK27.6 billion in operating cash flow and paid DKK9 billion in taxes. We delivered organic CapEx of $9,900,000,000 below our original guidance due to good project execution, achieved efficiencies and continued strict prioritization. We also only continue to execute portfolio enhancing transactions. The investment in noncore assets like Alba, Qingle and Alba and aligning ownership in Krakara contributed $1,800,000,000 to our cash flow. We spent $5,000,000,000 on acquisitions and signature bonuses and new licenses, so we can leverage our industrial strength. Roncador, Martin Linge and Carcara are examples of such acquisitions. Our free cash flow was $3,100,000,000 after CapEx and dividend. But before transactions, the free cash flow was $6,300,000 And then we also reduced our gearing then from 29% to 22.6%, a reduction of 6.8 percentage points for the year. Since 2013, Equinor has fundamentally reset its cost base and we are today a stronger and a more robust company. I further might be pleased with underlining the importance of keeping costs down and fighting off inflation. Our objectives are to collaborate with suppliers to safeguard the achieved efficiencies, develop and utilize digital solutions and drive further simplification and standardization. We believe that there's still significant industry improvement potential. And as a company, we have to be competitive at all times. The last couple of months of volatility in oil price is a clear confirmation of the need for continued cost and capital discipline for operators like Equinor as well as for suppliers. And in Equinor, we are on a journey from an improvement program to an improvement culture. We strive for efficiency in everything we're doing and are using lean principles as our way of working to improve safety, to increase value creation and to reduce CO2 emissions. Our unit production cost is industry leading at around $5 per barrel. And as we said in last year's EMU, the unit production cost would increase somewhat in 2018 2019 before reverting back to around 2017 level in 2020. On Johan Castries, Johan Sverdrup, we have reduced unit production cost by 35% since the plant for development operation of around $2 per barrel. This is truly a world class unit production cost. On Sigve, he talked about the digital transformation on NCS being a digital leader. Compared to conventional solutions, what we call the field of the future, and deliver 30% reduction in facility CapEx and 50% lower operating costs. Integrated operation sectors are a core enabler to deliver more than the $2,000,000,000 in increased value creation by 2025. In Equinor, we actively use benchmarks to drive performance, ensure that we deliver on our strategy, always safe, high value, low carbon. And we see that we deliver competitive results. As of the Q3 2018, we delivered 1st quartile corporate roachae, 2nd in our peer group. And whether you run total shareholder returns over the last 5 years, last 3 years or last 12 months, Equinor is ranked in the top 2, either number 1 or number 2. And remember, this has been in a period where the oil price has fluctuated between 1 100 and 13 dollars $27 And we hope to demonstrate today that there is more value to come. Next, I want to address the reserves and resources. We started 2018 with SEK 19,000,000,000 oil equivalent in total resources. And during the year, we have delivered record high production and done divestments. Even so, we increased our resource base by adding volumes in existing assets, discovering through exploration as well as executing value adding transactions. In total, adding 1,600,000,000 barrels, ending the year with a resource base of 20,000,000,000 barrels. And as Elda mentioned, we reported a record high reserve replacement ratio at 2 13% in 2018, and our 3 year average is at 153%. And if you look at the organic reserve replacement ratio for 2018, it was strong 189%. Our reserve life is 8.7 years, up from 7.6% last year. We are very comfortable with this level. As you have seen from Marie Gles, Paul Guirim and Arne Sigve's presentations, we have a strong focus on cost and capital discipline, a strong production outlook and we have a competitive project opportunity set. In combination with the resource base, this gives me an input in our future deliveries. Our portfolio not only offers optionality and flexibility, but also gives us time to look for the best opportunities and the best opportunities only. Equinor expects 2019 production to be around the same level, the same record high level as in 2018, followed by an annual average growth of around 3% from 2019 to 2025. At the same time, we expect CapEx to stay around SEK11 1,000,000,000 on average in the period 2019 to 2021. The cash flow in the same period is expected to be around $14,000,000,000 at an oil price of $70,000,000 And remember, this is after tax, after CapEx, after dividend and after announced transactions. Let me go into more details on the projects coming on stream. To the right, you see a strong and broad pipeline of projects, both in upstream as well as in renewables. And Equinor will be the operator for most of these projects. And ladies and gentlemen, operatorships are where we can leverage our industrial strength in order to drive down costs and ensure profitability, to shape development concepts, deploy technology and deliver low carbon solutions. This portfolio has decreased in value since 2017 by more than 30% as an average breakeven of $30 an internal rate of return of around $30 and a CO2 intensity more than 30% lower than our current producing portfolio. This is what we would call a portfolio fit for the future. At the very far right on this slide, there's a in the table, we have listed some non sanctioned projects. And let me go into more details and explain the slide to the left. On this slide, it's important to be on the low side and to the far right. The lower and further to the right, the better it is. And you see, we have improved over the years. And since last year, the portfolio of non sanctioned projects has increased further in value by another $7,000,000,000 achieving an average breakeven below $40,000,000 with an internal rate of return of more than 25% at an oil price of 70. And when sanctioned and on stream, these projects will add around 4,300,000,000 barrels of oil equivalent to Equinor, with us being the operator for 80% of the volumes. Our projects will be sanctioned only when the value is as good as it can get. And our project organization tells me this is a key learning to show good project execution and economics. Let's move to returns, balance sheet and capital distribution. Equinor is delivering growing returns and cash flow from operations, while at the same time, strengthening our balance sheet. We delivered our Roachja of 12% 2 years earlier than previously communicated and we expect Roachja to grow to more than 14% in 2021. Our balance sheet remains strong and continued to reduce our net debt ratio. And cash flow resilience is illustrated by our ability to maintain our net debt ratio in a $50 scenario. We are committed to attractive capital distribution to shareholders, demonstrated by Fundor always maintaining or increasing our dividend level, also in periods with low commodity prices. As you have heard Eldar earlier today, we proposed to increase our quarterly cash percent by 13% to 0.23 to 0.26 dollars per share. A 30% increase in the dividend represents a significant step up in the level of distribution to shareholders. This increase also reflects the with our improvements and improvement in the long term earnings outlook. And cash dividend is our highest priority in terms of capital distribution to shareholders. In 2019, we plan for around $11,000,000,000 in organic CapEx and exploration spend of around 1,700,000,000 and production around the same level for 2018 and a 3% compound annual growth from 2019 to 2025. Before I sum up, let me remind you that new accounting principles came into effect January 1. For us, the main impact from IFRS 16 will be on capital employed, net debt, net debt ratio and margin. But we will continue to report key metrics with and without this impact from IFRS 16. So let me sum up. And in and we believe Equinor let me sum up why we believe Equinor offers value to investors. 1, growing cash flow and returns. We have provided clear and quantifiable indicators on growing Russia to above 14%, free cash flow of SEK14 1,000,000,000 in the period 'nineteen to 'twenty one, And we have also created a more robust company able to be free cash flow positive at $50 2, investing in high value projects. We have extended the visibility well into the next decade. Production of projects until 2025 in the breakeven around 30, non sanctioned projects next 10 years, then IRR above 25%, CapEx as well as a 3% annual production growth. 3, we are committed to growing returns from internal rates of returns and projects and returns to capital employed to returns to shareholders by growing long term sustainable earnings, supporting a dividend, which we propose to increase by 13%. And finally, we have the people and organizational capability to execute. Thank you for the attention. And then I pass it over back to you, Peter, and I look forward to the Q and A session. Formal session, not just from in here but also on the phones as well. What we try to do is to circulate the mics here first, and then we'll do a batch from the phones. I always ask if we can keep the questions relatively short and one each. I never entirely succeed. So there'll be one and a follow-up, which preferably is on the same kind of question as you've just answered. So with that one, can I ask the questions here? We've got everybody who's made presentations. As I said, we've also got other members of the Corporate Executive Committee here as well. So feel free. And the first question I saw was from Lydia. Thank you. It's Lydia Rainforth from Barclays here. Two questions linked to cash flow. The first one is, if I look at the free cash flow into the $14,000,000,000 post dividend, what dividend growth rates do you have in there for 'nineteen, 'twenty, 'twenty one, if I think about that 3 year plan? And then the second one links partly to the free cash flow side around the standardization and cost saving digitization plan. How much cash benefit have you put in cash flow numbers to that? Okay. So when it comes to the dividend thought and the assumptions, I think what I can do is to refer to the dividend policy. It's a boring answer, so I won't give you a percentage. And in fact, I don't know, like, it could be an assumption. But the basic thing is that our ambition is to grow. That's firmly stated in the dividend policy. That's also explaining very much why we ended up 26% as a starting point where we can actually grow from. And exactly how this is going to look like going forward is yet to be seen. But there is growth in that dividend, but I can't give you a more precise number on that. Any other questions for you? On digitalization and the impact of it. We have a sort of a huge program internally of aggregating all the improvement initiatives, impressed by still the all the ideas that are coming up in the organization. And whether it's digitalization or lean or whatever it is, this adds up and is just included in the numbers that are being provided. On digitalization specifically, we said last year more than $2,000,000,000 in contribution and increased value, and we see that we are starting to close that kind of gap towards that ambition. It's John Ritchie from UBS. You indicated and it's a fairly compelling chart where you showed that you sell assets in high oil prices and buy in low. But you could also probably put a line of your organic CapEx on there as well. So you tend to be more inorganically active when your organic CapEx is low. And so it looks to me that you do, and not to say that this is not the appropriate thing to do, is you do use the market to supplement the longer term positioning with inorganic purchases. So as we look out through to 2055, you've given guidance on organic spend 'twenty one. Could we also assume that to be building and preparing for the longer term that a chunk of cash, maybe the sort of net 1 for 2 that you've been spending over the last cycle is likely to be spent again on inorganic opportunities. I think you've already referenced, for instance, transfer of rights, surplus volumes, etcetera. And then maybe if I ask my second at the same time, if it does link. I think there was some reports in the newspapers that you had expressed interest in entering Qatar, for instance. And I think one of the gaps in your portfolio globally seems to have been a material LNG footprint, which has been curious given your position in European gas. So just wondered whether, A, that was true and B, whether that does represent one of the strategic basis that you might want to expand into over time. So oil and gas is you produce a certain amount of barrels every year. And just to stay in that game and sustain that capacity, at some point, you need to replace that for new barrels. Exploration is the main priority. We really like to succeed on exploration and we are stepping up that. But we do see that we will we are not likely to compensate for the production all years only through exploration. That's the nature of what you see also globally that exploration resources coming down. So we depend on actually some high quality additions to that from inorganic acquisitions, purchasing assets. And that's where we say that how we do that, when we do that, the shape and form of these acquisitions is extremely important, because they need to create value for us. They have to be a good strategic fit, tap into the industrial strength that we pointed at the comps from the Norwegian continental shelf. And it's not just taking a bit on the oil prices, really that will get put into action from our company's and start improving from that point. So it's something that we it's a responsibility I have, we have to continue to look for these kind of opportunities. It also includes divestments, so optimizing the portfolio continuously through that. So it's something that you wouldn't be surprised that we will continue to look for that. And that's why we're also very precise that the guiding we give is an organic guiding. It includes the paying for the transaction that we have done, but nothing beyond that. So it's very precise that we will continue to look for these optimization of these opportunities to replace resources within our resource base. But we do have a strong resource base. So we are very patient on this. We illustrated the cycle thing, kind of a guiding thing. They are there. They are very fundamental. And they define sort of broadly speaking where things might be more attractive in terms of investment and acquisitions. But there is always opportunities, both wherever we are in the cycle, and that's what we have seen. So strategic, price right, hopefully, getting the cycle right as well, that is something we would work on. On Qatar, that is LNG is we have one asset in Norway. It's a growing theme and it's growing within the gas space. It's become connecting the regions of the world when it comes to natural gas. And we have the Tanzania asset that Torgrim mentioned briefly. It's down the road, quite a few years, and we're working now on the transit solutions. So we're looking for that. It's not something we have to do again, but we are looking, are there any LNG opportunities out there that make sense for us? If there isn't, I'm fine with that. But if there is, it would be still in a nice space between Smerviz back in 2007 and Tanzania, maybe 20 years later. So it's kind of things that would be useful because we need also to be in the LNG game. We also need to have an arbitrage trading system to make sure that you're not cannibalized in the gas market from LNG. So you need sort of sources of LNG or equity sources to have that system. So it's something we are looking at, but by no means desperately. And it's but it also means that we are screening LNG opportunities. It doesn't work. We don't do it. But to screen it, we need sometimes to be qualified to do that and sign in to certain things to just have a look at stuff. And that's basically what is the case with Qatar. It's no sort of conscious thing that we have to do. It's something that we would like take a look at when it comes to energy. Thank you. I've got Oswald. Thank you very much, Peter. Yes, 2 specific topics for me, please. First is Roncador. The kind of update from Margaret is pretty staggering, I think, an extra 5% recovery factor, if not filled, within the last 12 months. So but I guess, in the due diligence, you spent $2,500,000,000 to get that asset. You must have thought about better drainage and a much better infill programs and a 5% price. So 12 months later to have another 5%, I think it's pretty impressive. So maybe just flesh that out a little bit more. Was that something you thought was possible? Is it surprising the last 12 months? Could we stand here this time next year and see that 40% realization being discussed more concretely and kind of even higher? So I think it's a big number. And then secondly, to Rosebank, so obviously Roncador shows the importance of Statoil's capability. But Eldar, going back to your initial comments about not repeating the kind of sins of the past and having strength and time and discipline to make good acquisitions. I want to go back to Rosebank because, yes, you did some good M and A getting out of it, getting back into it. You talked about Johan Castberg, 80% to 35% breakeven. But it feels like Rosebank is potentially too complex, too difficult. I mean, this is challenging discovery west of Shetland. Chevron looked at it quite a lot. There's a lot of volcanics around it. Is this maybe a little bit too difficult or you're starting to chew up a little bit too much? Thank you. Okay. And maybe, Mario, but I want to say when we did that transaction, basically the price we paid was based on as is. So we obviously saw that we could increase recovery and we talked about that. That was really where the value creation was. Now we see more. Maybe, Margaret, you would like to comment a little bit on that. At least, I don't think it was a surprise, to be honest. But first of all, in such a collaboration, which I think is very, very good, we need to you need to build trust and confidence. And we have been working with Petrobras on technology agreement for many, many years. So I think we work in an efficient way together. And we have used the whole economic organization and use people from DPN coming to proceed to dig into all the details on Ocador to see and compare with what we have been doing on the Norwegian continental shelf. And we have suggested a lot of different measures we can take. And I think we have also agreed on an ambition, which is, of course, it is ambitious. But at the same time, that's how we are developing. When we put very ambitious targets and we really drive towards these targets. So I think it's very interesting. And what I also said on the what is really promising in Brazil is not only the pre salt, but it's a lot of field also on the post load where they have a pretty low recovery rate. So I think in that sense, it could be interesting for us to contribute. So it's a powerful collaboration. So Rosebank, I remember we were part owner in that asset when we made the discovery. I was so happy. That's a tough discovery, deep down and salt and so. So we know this asset quite well actually. So that means, as a starting point then, we can see how we can start from scratch. You also know the subsurface pretty well. So I think I now have some colleagues here. Al did the acquisition and Sorgen is going to run it and Anders is going to develop. So if you want to comment on this, I think I might give it a try. But I could say basically, we knew that we can come up with leaner concepts. There was a plan for this project, which we reviewed. And based on what where we come from, our experience from the downturn, we knew we can do this nicely and we have some great ideas on how to develop this and we know the subsurface. So really, it's based on this. So this is really not taking the concept as it is, but actually, which would be sort of potentially sort of taking a view on the oil market. It's really about improving the project. And we believe we can do that significantly. And we will also ask for more time to do that, so that we get time to get it right, as you pointed to those Christian. So I don't know if any of my colleagues would like Anders, looks like you want to comment on this. You both deliver that project, so you better. Yes, of course, we look at this project that means similar to both the Bay de Nore and the Casper, it's a harsh environment. When we looked at the reservoir, looked at the capacity on the Rosebank, we saw there is potential for improvements. So basically, we look through all of the value chain and see that if we work similar to what we have done on the customer feel, we're able to bring down the breakeven MRI alluded to. Next question is from Biraj from Sandler. It's Biraj Borkhataria, RBC. I have a question on CapEx. You've got into quite a good habit of putting a number there at the start of the year and then coming in lower and lower and lower as you move through the year. And so I'm not expecting you to do that in February, but thinking about it alongside the production growth. So your production is going by 3% per annum and you want to manage within a flat CapEx flowing mode. That seems to be quite challenging over time. So do you I guess the question is, do you think you have sufficient momentum on the efficiency side and reducing the capital intensity further from here, but flat CapEx can stay flat over time over the medium term or should we be setting upside pressure to that number over time? Thank you. So I think we'll go back to last year. We guided at 11 for this year, this range now this year, including 2020 as a level, as we still are. So we are on the same level as it was. Then it happened that last year came out $1,000,000,000 lower. Efficiency, we see that we still managed to take down cost within our overall project portfolio. It's getting tougher and tougher. And but we have done so. And that is savings. It's not something that we have deferred into this year. So you don't see that $1,000,000 on top of the $11,000,000 that we have talked about last year for this year. So I think that is important. It's basically the same level. So high level transparency of this. And then longer term, no, we can't be precise beyond 'twenty one because we don't know exactly the portfolio, don't know exactly how cost is going to go in. But we know that we can do continue to do a lot on improving the efficiency of our projects. So we talked about the digital solutions, how we can develop Krafla and so on with the lower cost. I think that's obviously drilling more efficient, this is how we can drill more wells to capture more resources and so on. That's what we are talking about. And how is that exactly going to play out beyond C1 is exactly the same. But there are different forces and we believe strongly believe in what we can do, what we can influence, also contractual strategies. We see opportunities to further enhance our collaboration with our suppliers, innovate how we have this, how we engage with our suppliers, incentives and integrated contracts and so on and length of contract optionalities. So this is also and also then obviously the digital relationship with our suppliers and how that works out. So I think where this is going, I can't say it. I think we're proud to just stick to €11,000,000,000 And I'm also happy that what the savings we did, almost nothing of that. It's delaying project into its excess CapEx. It's like to No, no, one comment. I mean, we have contracts of a value of SEK 100,000,000,000 already agreed to. So in many ways, we are covered over the next couple of years, broadly speaking, yes? And whatever beyond, is too early to judge. We've got quite a few questions to get through. So I'm going to do a batch of a couple of people in this side. I'm going to take some questions from the phone, then we're going to do a batch over this side. So Alwyn first and then Good afternoon. Alan Thomas here from Aker, MD and P Paribas. Just a quick one for me on the U. S. Business. Given some of the volatility in DBTI spreads, I just wanted to know, looking probably you talked about the $45 central breakeven. Do think you still have to go further than that in the sort of near, mid term as well as trying to drive volume with that? How do you think about that in the next sort of, I guess, 3 to 5 year period? Okay. This is a perfect question for Pilgrim. Fabienne. Yes, you're right. I mean the WTI and the spread and the discount in North Dakota has calculated a lot, dollars 50, dollars 20 at one point in time and always sort of coming back down again. So despite that, we have been able to make money after that business with those discounts. And on top of that, Ituran and her business is taking the oil and bringing it to the Atlantic to get price for it. So a significant reduction in the value chain attached to it. But clearly, we are monitoring the situation very closely and taking capacity when needed to be able to achieve a higher price than the local price. And then if I can pass that to Thomas over here. Yes, we're right in the middle there. Thomas Adolff from Credit Suisse. The first question is on benchmarking. I think Torgrim mentioned the word benchmarking. And presumably, you benchmark against your against peers inside the industry, but also outside of the industry. And when we think about offshore versus onshore, offshore, you're presumably Tier 1 already inside of the industry. What are the key takeaways from outside of the industry that you can incorporate into operations offshore? And then onshore, you've done an amazing job bringing down the breakeven. But understand if I'm correct, if I'm mistaken, that you operate the business differently to the independents in the U. S, a little less independent, if you will. It's more kind of corporate organization. Is that the right way forward? Or can you really adopt a more efficient approach at the independence in the U. S. Adult? And then the second question, I guess, is just on new energies. There's always a big debate around returns in new energies. But for example, if we were to electrify all your offshore operations on the NCS with wind, What does that mean in terms of value created from additional gas sales volume? Thank you. Okay. So I think when it comes to the U. S. Offshore, I told you, and we'll prepare his answer on that. So what did we learn from outside industry? We do that. Typically, the industry is where the family is always easier get shop with each other and we do a lot of that. And basically, the concept that we have developed through the downturn is very much based on what we actually learned from the U. S. Onshore, a very extensive benchmark from an industrial like type activity. And you can pick what is the best, what is it perfect, what is the perfect well, you translate that into the perfect facility And as a concept, we break it up and take individual pieces and define through benchmark and also internal benchmark what is the best available performance that we can compare with. And if you combine that and get the best well in total and the best facility in total, that's how we drive continue to drive towards the very best. We benchmarked, I think we have we do now and then we will do more extensive search outside of our industry. We've done that on safety. For instance, now last year, had a group that's really deep dive with sort of other companies. It's starting to slow down a little bit on improvements. We need to step up. We need to get more ITs from the outside. So really looking into what are the reinvest doing on safety, aviation, for instance. Digital, right. So we realize that our industry is not seen as sort of hasn't been seen as a leader when it comes to digitalization. So important to see the future, how can we learn from others. So again, we really deep dive into other companies and what they're doing, what kind of approach, what is important really at the core of it to get the priorities right. So we do that as much as we can also on industrial practices in general. But in terms of number, it's hard to get sort of practices that you from the outside. On electrification of the whole prepare for this, I don't think that, of the whole LGS. That is a no go. In a way, it's it doesn't fit for that. It's but basically electrification you need if it's offshore wind, you need floating wind parks, basically to float, you can't use from the seabed. So it's still a technology that we believe a lot in and cost is going to come down, but you still need sort of it doesn't run on soft. So it needed support and financial support. So the Highland Pumped project is, I think, a significant part of that will have support coming from the government as part of their low carbon strategy as well. So I think it's really but it costs to come down and that could sort of increase the opportunity set of the Norwegian continent shares and also beyond that. So now I leave the word to Arnaud Sigve to elaborate later on that and Torgrim is soon getting ready on the U. S. Onshore. Yes. Thank you very much, Alain. When it comes to electrification, there are a few projects that we have put in place. First, we look at the abatement cost, what is the cost of the project compared to CO2 tax and quotas. So that is one. The next one is really and obviously, if you do it, you can sell the gas to the market. But we do not have a figure for all the assets on the NCS, what it will mean when it comes to electrification, because as Eldar says, it's not practically possible due to the grid system. So we are looking at what can we electrify based on the available grid system and also looking at the basin cost. So if that adds up and we will have capital projects, we will do. And as a loss as one come to Hyatt and Hampta, that is a new opportunity that we're looking at and quite exciting that we will explore further, as I said in my speech. Thank you. And our business model for the U. S. Onshore has strong business model. So well thought through it, Torgrim. Explain why. Okay. Thank you very much. Yes, so I mean, the business is currently working well. I mean, deliver earnings and a good surplus cash flow in the current environment. And improvements have happened. But we still have a lot to do. I mean, we still have to learn from others and we see that we can actually do the things better than we do today. Then we have taken a more long term approach to our business, not optimizing initial production rate, but much more focus on recovery rates and technology application. So on this, he has an R and D team sitting in Austin, working closely together with him. And then the marketing and training organization is also deeply involved in that business. So the business model is partly separate from the rest of the company, but trying to capitalize on the previous system to find that balance. So that has worked okay so far. What we see now is that next level will take more technology. And if we are going to apply the best of Equinor, we need to bring that U. S. Onshore activities even closer to the rest of the company. And it's just around digitalization of operations, it's around subsurface technology applications and even closer linked to marketing of assets. So if we are trending anyway, it's actually to bring it closer to the rest of the company than it has been. Now I know we've got at least 4 people waiting patiently here, but we've got at least 7 people waiting, even more patient on the phone. So we're going to take a break from the room and take some questions from the phone. We've got a lot to get through. So I think if I can ask Edouard if we can keep questions and answers relatively smooth and efficient. We'll now take our next question from Anne DeGeo from Handelsbanken. Thank you. If you look at your guided production now, it's until 2025%, 2%. So it's rather long way out. Previously, it was until 2020, 3% to 4%. So I assume it's still the strongest growth in 2020. But if you look a bit longer out after 2025, I understand that you believe in peak oil demand within some years. But will you gradually position Equinor for growth in renewables and probably before that in natural gas? But are you still positioning also for oil production growth, hold until 2025 or even longer? Thank you. So when it comes to the 3%, we said that's an average over these 6 years. So we can't be precise. But obviously, 'twenty would be a good year with Bjorg Sur coming into IAM and Phase 2 and KOSPI in 2022 as well. So obviously, there is an energy transition going on. And at some point, the global oil demand will come down, so that will be down. And we say that's a good thing. But you need alternative storage to make that happen. Otherwise, the demand will be there and just go on. So this transition is really about developing alternatives that can compete and outcompete oil in the energy mix and before that hopefully coal. So that is really what this is about. It's not about stopping to produce because that doesn't help because there's a lot of hydrocarbons out there which is a higher carbon footprint than what we can produce in our portfolio. So I don't I can't say exactly how long we will continue to grow our oil production, but the world is still increasing its demand. And as long as we can do that with the lowest carbon footprint there is, actually highly competitive, but I think carbon footprint with the cost and regulations associated to that increasingly is going to be competitive advantage. But I think it is really important that the world is served by carbon efficient power than less efficient power as long as we need that. And then it's the transition that is going on and the shape and form is yet to be seen, but we will be part of that. We will follow this closely. And in the meantime, we will continue to grow our renewables business, our low carbon business. So we need to have 2 thoughts, at least in our heads at the same time. So we're very conscious about this with integrated into our strategy. I can't give a precise answer to your question, but it's a good strategic and important question, Alvaro. Thank you. We'll now take our next question from Anders Polley from Kepler Cheuvreux. Please go ahead. Your line is open. Yes. Thank you, guys, for taking my questions. Well, actually, question, Eduardo Schwartzman. Regarding Coca Cola, You previously talked about it as a new Johan Sager. And now we have lifted the tail on Phase 1 with 200 and 20,000 barrels per day, of course, oil production now. My question is more towards how many phases do you actually see at Parcora? And given that you have previously talked about this past the New York project, should we expect to see a Phase 2 and potentially a Phase 3 down the line? And also on the Carcara fields, I understand you drilled an appraisal well towards the end of 2018. I'm just wondering the results will that contribute in terms of recoverable resources? Thank you. Ipanema, Carcara, we believe at least we will have 2 phases for Carcara. The resource potential, we have as the same we had last year, dollars 2,000,000,000 oil equivalent. And what we have been doing last year is really to take a very prudent decisions on because the drivers for the pre source, the drivers for the profitability is really high capacity and early production. So now we have decided this standard, so we are using the gas. We are not we do not need to wait for the gas value chain to happen. And we have a very high capacity 220,000 barrels per day. So on that appraisal, we are not I don't think we are really doing anything on the wells at the moment. But if you listen to what I said, we have a very high or world class productivity on the well we have been doing in the North area. And we are looking now on 2 different phases. And the first phase, of course, we have chosen or as we will have a standard FPSO. Was there anything more on that? Was it good? Yes, Yes. Thank you. We have to say that every time to keep it. Thank you, Margaret. Next question from the phone. We'll now take our next question from Cielo Nelson from SP1 Markets. There's been a lot of discussion around both Brazil and the U. S. Today. So 2, There's been a lot of discussion around both Brazil and the U. S. Today. So 2 pretty specific questions on both areas. First one is, how much do you plan to spend in the sea load next few years you previously indicated that you will spend $15,000,000 until 2,030? Second question for U. S, I guess that's on full year, how much of the Q4 adjusted EBIT comes from the U. S. Activity? About it. So we have some trouble actually hearing the question, but maybe you did, Margaret, on the first one. Yes, I think we haven't done any changes to that one. We have said we are both $15,000,000,000 or $15,000,000,000 after 2,030. That's all we're done. And I must admit the second question. I didn't I think the second question was how much of the 4Q EBIT comes from the U. S. I think that was the question. If that was the question, we can't give that answer, I'm afraid. But it's a significant part. I don't I think we just have to so basically we still report on these segments and the international and then the answers and that's I think that is how we report. I need to interpret it. Thank you for those questions. Next from the time. We'll now take our next question from Christian Malek from JPMorgan. Please go ahead. Your line is open. Thank you for next presentation and for allowing me to ask questions. 2, if I may. The first on portfolio evolution evolution, not revolution. You've got plenty of opportunities both in Brazil and Norway and some fantastic routes developed. So just going back on the question Viraz asked, is $11,000,000,000 the right normalized level of spend in the medium term? And if so, is it fair to say that you will allocate the excess free cash flow towards M and A? It certainly feels like that as opposed to returning it back to shareholders through a buyback, for example. Second question is, I want to come back to the frame with which you model the evolution of project breakevens and Julia, great targets you're aspiring to and lowering and continuing to do a great job on that. But given the volatile OPEC drop on what appears to be a continuous improvement lowering the marginal cost of oil, which clearly is somewhat bearish oil itself. But I'm slightly confused as to how you frame a $70 oil price deck against your benchmarking to achieve a 25% return. So can you just walk me through the logic around or sort of the basis to your assumptions around your oil price and then the framework that you use to model for Cubans? So on the cash and the SEK11 billion, and we indicated SEK14 billion in pre organic cash flow, which includes the inorganic stuff we've done prior to this going into this year. So that is obviously cash available. It includes before that the organic investment program of $11,000,000,000 which is a high quality program. So that is really important and it's our highest priority. Then we are committed, I didn't give a number on dividend, but we are committed to actually grow the dividend in underlying earnings included. So we are left with cash and we indicated how our debt ratio could develop given that we don't do any inorganic measures, which I discussed a little bit one of the previous questions. So it's not unlikely that we will. So given $70 we will strengthen our balance sheet. And but there are a lot of question marks on that road map. And it has to do with commodity environment and the uncertainties related to that and the opportunities that are ahead of us and obviously in the end how our gearing is going to look like. We said very clearly that we give priority to the cash dividend. That has always been the legacy of this company back from going back to 2,001 and the IPO. And to get that back on track and actually on a higher level now than the trajectory that we left back in 2015. So it's competitive as we think it is and it's our ability to sustain that. And buybacks is something that we stated in our dividend policy. It's an additional tool that we might use given these conditions. And then you're back to the commodity environment and opportunities and the gearing. And our priority is still to improve the balance sheet, strengthen the balance sheet further. We are in the middle of the range now that we talked about. We definitely would like to strengthen that. But if the projected goals like sort of indicated on this slide and no additional sort of acquisition, we are heading towards a good place. But we'll have to take that when we get to that space. The $70 That's what you're looking at. Yes. It's not your invention, but your intention. I think when you want an answer and look at what you're doing, need to go back and see what we experienced during the downturn. And the strength of the resource base today means that we do not have to buy barrels. Eventually, we will, but we have the time to choose and go for the best stuff. And the strength of the balance sheet means that we don't have to sell. We can choose the timing of this and match it according to what we feel is we feel are good deals. And that is important. And then the $50 breakeven, cash flow positive below $50 that is important number. It's more important in many ways than what we do at $70 But we calculate on $70 because we have done it a couple of times and we would like to show you consistency over time. So we see how we develop and how we strengthen as we go forward. So that's the $70 why we use that. But internally, we use different numbers where you sort of hurdle rates and all of the $50 breakeven positive and see how that evolves forward. So just a clarification point. So when it comes to the assumptions that we made for accounting purposes and also for internal optimization of projects and activities, That is the planning assumptions and they're actually heading for $75 in 20.25. There's no change to that, been like that for several years now. Now to be comparable to say $70 just a number. It's not something we believe and I don't believe in. It's just a number so that you can have a reference point. $50 is not a criteria for us, but it's an illustration of what we have achieved in terms of resilience. It's portfolio thing and that might be projects that we might be above or beyond or below, but the portfolio is a very good start up, but in good place to be. And we would like to focus on resilience going forward. And not whatever we believe at any point might be the oil price. That doesn't take us to this place because I don't know. Sure. But just to follow-up this quick follow-up, your M and A assumptions. The next question comes from Pavel Najjar from SEB. Next question comes from Halvor Nygard from SEB. Please go ahead. Your line is open. My questions have already been answered. So thank you. Thank you. We'll now take our next question from John Ossian from ABG. Please go ahead. Your line is open. Good afternoon, gentlemen. May I have an indication of when we should expect PDOs for the all of the following main international projects in Geber North, North Dakota, Qatar and maybe Rosebank as well, please? I think there is an indication in your slide. I can comment on that, Lars Christian. Yes. I mean, the start of all, Carcara is 23, 24 and PGO, Margaret? PGO 2020. PTO 2020, gross bank, haven't said anything about because we are, as Seldaj said, asking for some extensions so that we can really work the concept to bring it forward as the best possible On project, North Platte, North Platte, we have said the row started in the 2022, 2023 area, but that's total target should respond to that such as an operator. And by the law, we will do the DG2 in end of this year and the DG4 around 25. We'll now take our next question from Trond Amdell from Fearnley Securities. Congratulations on the record cash generation and reduction and also partly reflected in your higher dividends. The question has been asked before, but I'll try in another way. Back in 2006, your cash dividends, including special dividends, it was DKK9.5 more than DKK9 and you also had a buyback program. And in 2014, you paid out when you were transitioned to dividends DKK10.6. Is there any learning, any you can share on the thought process on why you're not distributing more? Is it any features that you will have to go below 20%? Or is it also a reflection of the recent macro uncertainty that you want to keep the capital flexibility? 2nd question, since the other has partly been answered. I noticed that Envadoro popped up again, that's been in your portfolio since the 1990s. Is there any new developments there and you see that moving forward to the FID maybe ahead of Tanzania? So you're prepared for the Amador program or? So it's been a long time with us. So on the dividend, I realized people like to have predictability. So that's why we focused on the cash dividend because that is really a predictable thing that you can relate to your hedges or whatever because we have a clear policy statement from that starting point. I think that's an important aspect characteristic of referring that as the main way of distributing capital. So when it comes to share buybacks, it is an addition tool. It might be used. And we also have arrangements with the government so that we can actually push that button if we like to. It's how to do it with the government who would like to maintain their ownership in Equinor. So it's a complex consideration. It has to do, as you pointed to, the commodity environment, not only where we are, but the uncertainties and the volatility, and we have a lot of that we saw in the previous quarter. And as I said, the balance sheet, and I'm sorry, I can't give you a trigger because this is not only about the balance sheet, but also about sheet, but also about these other things including the opportunity set and how we see it. So I think this is something we just will have to look into and depending on how things have come together. But there will be no figures coming from us on this one. Pretty defined figures. Thank you for those of you on the phone. We're going to go back into the room. We are going to go a little over time, so we want to try and keep it efficient. So I'm going to ask people to hand the mic over to the next person. We'll start with Michele. And after you finish, can you pass it over to Rob? Oh, sorry. Envadora. Sorry. So Envadora is a very significant gas discovery that we had in Nigeria. It is within the quarters. And as in Tanzania, we are dependent on agreements with the government and establish deepwater gas conditions for that field. So that is what needs to happen. We are looking at it, but it will clearly take time and very dependent on discussions within Nigeria state. Michela Della Vigna from Goldman Sachs. Ester, you've entered the power market with a material position specific countries. I was wondering if that is on your radar screen as well. And last question, I was wondering if you could give us an indication of the tax installments in Norway for 2019. Thank you. Okay. So the tax and on the retail, we tend there on the crude side and the gasoline stations. And basically, as you see, it's a very different game. It's a very different competence and it's extremely competitive and a business model that we are really not set up to address. So I think we can try. I don't think we will be successful. So why try, anyway? So I think and I don't think it is necessary really to capture the values from our assets. What we do think is important is to be in the power markets, because we see larger risk coming into this renewable space, and we don't want to be cannibalized in that market. So have that strength to address that and capture these values and also tying it into the natural gas business, because you see hydrocarbons from natural gas and renewables, they're interruptible. Natural gas is a flexible resource and other ways of combining. If I just look at my colleagues here, if there are any additional reasons, they're very happy with the concepts, so I'm good to go. And then on tax installments, Norway, 1st February, April June, totaling NOK 32,500,000,000. And then we're also changing some of the guiding for tax internationally, down from 50% to 55% to down through then 30% to 45% due to more production from low or no tax income production. Around onethree of profits internationally will come from no or low income sort of no or low tax position properties. Thank you. Rob? Thank you. It's Ropelin from Morgan Stanley. May I ask about the NCS pipeline of opportunities, particularly as the backdrop CapEx steps down over coming years. Is there enough projects on the NCS to offset the increase in cash taxes we would otherwise see? And specifically gas projects. So it looks like your portfolio post trial in the mid-2020s will start to see declines. And certainly, I think it speaks to the question of Equinor's role in European gas supplies over the next couple of decades. Thank you. We've just put in place a major gas development that's going to stay there for a long time and opening up a new very gassy province in the Norwegian Sea as well. Just to mention that you mentioned that we're exploring for gas, but now you had enough time to think about this answer, Antigu? Yes. When it comes to TPS specifically, Troll Phase 3 is a very, should I say, good project reserves equal to the lower span of Johan Sverdrup. And it will go 50 years into the future. And we have Oseberg and looking for even more gas also at Oseberg and other fields. But as we say in our roadmap, we will look for oil and gas and that is why we have put into our roadmap a quite substantial amount of wells annually, both when it comes to production wells, but also exploration wells between 20 to 30. So we will explore, yes, we will develop our existing assets in an efficient way. But of course, it will be something that we will be working hard on going forward in the coming years. And roadmap is a perspective of 2 decades. I mean, if I add, the major big projects, they are sort of they're there. We need to make big discoveries to have new logos. But we have a lot of projects and a lot of stuff to work. We can enhance what we have and we can develop new ones, but probably smaller ones. So cost is really important that we can really can make these projects work even if they are smaller wells and lean concepts. Jason? Thanks. Jason Gammel with Jefferies. Just wanted to ask about the new energy portfolio. You talked about being able to achieve returns of about 10% of that business. That would be dilutive to the 14% target that you have on ROCE for the overall corporation. So I'm just going to ask you how you think about the desire to diversify your businesses into new areas relative to the dilute that you actually have on returns and how much capital you would actually be going to put forward in that type of investment? And then maybe just the final part of it, is there a point in time where you will start to disclose the results for the renewals business separately so that we can evaluate the financial performance of that business? So, you know that it's very different returns from what we see within the oil and gas. But it's also extreme volatility than oil and gas. So now it's good times and there are worse times. We definitely have been. So this risk reward is an important part of this concept. It has to be competitive in that space. As I commented, this is strategically meaningful. It's industrial meaningful because we can leverage the competence that we have and do good projects. And it makes us competitive in this space. It also engages in the energy transition. And I think that long term strategically is important. It's not something we as a major company with a long term horizon just can look at. We have to engage in that and take part in that transition. We don't know exactly the shape and form and I'd also talked about the oil developments going forward. So the returns are different. Competition is fierce. It has to work. That's why we will grow our investments into renewables. We indicate 15% to 20%. The growth from the current around 5% is probably going to be backloaded a little bit as we're heading towards 2,000 and 30, and we are working at full speed. Right now, we are in a phase of some major projects, but we've accessed a lot of projects. Maybe you would like to talk to that a little bit, Paul? I guess we have 3 regions that stand out on the renewable side and particularly on the offshore wind. So the UK is clearly an area where we have been growing and also where we see the potential for more growth. It's also country that's made a very deliberate step into renewables. You will also see that we have taken positions in the U. S. We have an upcoming auction in mid February in New York where we and that we look forward to. And then recently, we also took a position in Massachusetts. Both of those, we've gone in 100%, positioning in the region that we think is going to be important for offshore wind development going forward and also building on the footprint we already have in the Northeast of the U. S. And then finally, we have also taken steps into Poland. We are quite early in Poland, and we've gone in shape. And we think that is the region that's going to be the next wave of offshore wind developments where we can leverage the capabilities and strength that we think that we have. And on disclosure, when are you going to disclose during April? Well, that's way too early. We haven't had it on the agenda yet to discuss, I mean. It will take some time. But it will happen. It will happen one day. Okay. One last one from From Alastair Syme of Citi. Can I just ask on the Slide 45 on the creaming curve, you showed the 4,300,000,000 barrels of resource And you talk about a breakeven less than 40,000,000,000? Presumably that's a go forward breakeven, just to clarify. So can you think about what the acquisition costs that you've made over the last couple of years would do to that breakeven if you were to think about full cycle? And a related question, if I look at the 2017 curve, there was a very large flat line at about $40 of course, to 1,000,000,000 barrels and it's kind of disappeared from the 2018 curve. So You think about the flat line? So if I may, I sort of this obviously, this is forward looking as you That I would have to think about looking forward what we can do. And before that, there's been a wide range of access in these resources from exploration to acquisition that's a long way back in different markets and so to some newer acquisitions as well. So it's a wide range of access costs. So basically, then you're back to sort of how we think when we do acquisitions and build the portfolio, express the site hierarchy. On top of that, we're looking for these opportunities. And obviously, when we start, look at these projects, are looking at we don't look at $40 That's not the starting point. But that's sort of so you have to add back into account sort of that you don't have all the answers, where is it taking you. But you do know and we have to know that we can make a difference. But this project, well, this is what it looks like now and this is how we can enhance it going forward. So Rosebank was an illustration of that. Hong Kong Dor, when we started to look at that, how can we enhance that and see that it's that's what we can do. We can really take some costs, we've shown. We've done that over the last couple of years. And but you need to get into the project, you need to access it and you need to be very disciplined when you do that, but you also need to see that, well, this is an asset that we can't really work on start working on. And I'm sure you would say that $40 that is we can improve that going forward. But this is where we are now. It's a journey. Some projects, they tend to put them into the portfolio and might not have priority to work on it now. But we'll pick it up and really start working it. And then we move the needle on the costs, but putting our strength to work. And part of our ability to deliver on the CapEx is also strict price decision. So we do not necessarily work on all the projects all the time because this needs to be stacked capacity wise, but also from a sort of financial sound where you're running your business. When you look at these slides, there has been no sort of asset long flat line that has been sort of a reduction in volume. So I'm not 100% sure where on the line you are, but either it has been sanctioned and then there's a sort of out of the non sanctioned appropriately or it has been split because we are now talking about Phase 1 and Phase 2, but most likely split section and thereby sort of taken out with a non section. Now I'm going to we have to pause a hold for today. I know there's a couple of people who we didn't get around to, so I'm going to make sure that they get first chance to ask management direct to people we didn't get around to today. Before I pass the word back to Eldar to close proceedings, I'd just like to thank everybody on behalf of Investor Relations for coming today. I'd also remind you of the next couple of events that we've got scheduled. We've got our European Gas Seminar, which will be in London in here on the 21st February. And also our SRI day will be at the back end of May. So thank you very much. And Eldar? So thank you, Peter. And thanks to all of you for coming and seeing us and taking the time to do that, spend these couple of hours with us. I hope this has been pretty useful for you. I brought the whole team in today. Everybody hasn't been able to, but you have sort of there were opportunities to solve questions on exploration and on the mid- and downstream and so on. So but they're here. So really an opportunity for you to get on to sort of whatever you like to hear from our whole team. And this is and the reason why this is the whole team is here because this is an important event for us. It's really an event that we use extensively, also internally. I use this event as a motivation for the rest of Global Safety. Tomorrow, I do a global town hall for with 100 different locations actually tapping into that town hall and his ideas really to make sure that everybody is on board on the promises what we've said here today. So in the end, this is a slide that has been hanging on for some time. I want you to see this, bring it with you. I think it's pretty compelling actually. And I won't go through it now, but don't forget what is in the slides. So take bring it with you, and I'm sure you will reflect on this and write your report or whatever you do. We will also continue with our business and go back home and do our business day to day. And we're deeply committed to what we are studying today, bring the whole team on board and some also will also do some traveling and some roaches as the investors over the next few days. So we really look forward to that. So thank you very much to all of you for coming, spending the time with us and enjoy the rest of the day and have a safe travel. Welcome wherever you go. Thank you very much.

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