Earnings Call: Q4 2019

Mar 16, 2020

Hello, and welcome to this audio webcast discussing Saudi Aramco's Full Year 2019 Results. I'm Fergus MacLeod, Saudi Aramco's Head of Investor Relations. We're joined today by Mr. Amin Nasser, Saudi Aramco's Chief Executive Officer and Mr. Khalid Dibbar, our Chief Financial Officer. Our webcast today will comprise a presentation followed by a question and answer session, and we anticipate the entire call lasting around an hour. And just as a reminder, this webcast and conference call are being recorded. Before we start, I'd like to draw your attention to this cautionary statement. During results and outcomes could differ materially due to factors we note on this slide. Please also refer to our regulatory filings and website for more details. That, I'll now hand over the call to our Chief Executive Officer, Amin Nasser. Thank you, Fergus. Welcome, ladies and gentlemen, and you for joining us from all around the world. This is our first earnings call as a publicly listed company, and it is a pleasure to be with you today. I will provide some reflections and start by outlining why 2019 was a historic year for Saudi Aramco. Khaled will then take us through the results and then I will conclude before we take your questions. The spending. I am sure many of you have lots of questions on this subject and we will address them in the Q and A segment. Moving on, I want to stress that our vision is clear as shown in this slide. Our unique scale, low cost, low carbon intensity and resilience deliver growth and outstanding returns, while maintaining our position as the most reliable energy company. For example, we have more than 5 decades of reserve flight. In other words, we don't face the same production question marks others may do. These Together, they allow us to deliver our goal of growing free cash flow and dividends over time despite world saw what the company is made of, the spirit of our world saw what the company is made of, the spirit of our people, our guiding principles and what Saudi Aramco means to the future of energy. Saudi Aramco reserves were certified for the first time by one of the industry leading auditors, de Goyler and Magnocton. We were especially pleased that their audit showed that the company's oil and gas reserves are even larger than our previous estimates. Our chemical strategy took a major step forward with the purchase agreement to acquire Republic Investments Fund's 70% equity interest in SABIC. Upon area. For example, with the audited data showing we have 1 of the lowest upstream carbon footprints per unit of hydrocarbons produced. We have built further on that track record with the inclusion of a sustainability chapter in our annual report. I will touch more upon this important subject later. Safety, reliability and resilience are and always have been core to our DNA. We saw a powerful demonstration of this when our facilities at Abdi Abgei response and restoration after those attacks showed our commitment to response and restoration after those attacks showed our commitment to meeting the world's energy needs safely, IBO, the largest the world has ever seen. The global visibility from the successful bond issuance and the IBO represent a historic transformation and gives investors an appreciation for the first time of the strength of our company, our people and our operations. Today's earnings call is another step in that journey. Since the end of 2019, we passed another major milestone with the regulatory approval for the development of Jaffora, the largest unconventional gas field in the kingdom to date. Jaffora contains an estimated 200,000,000,000,000 cubic feet of gas resources, which will provide valuable feedstock for the petrochemical and metallic industry. It underpins the growth of our gas business for decades to come. The field will be gradually developed in phases. The start of production of the first phase will be in early 2024. Turning now to some key highlights of our 2019 performance. Operationally, the business continues to perform well. We delivered robust profitability and strong cash flow despite lower oil prices and challenging refining and chemicals margins. Our full year 2019 net income was around $88,000,000,000 and our free cash flow was more than $78,000,000,000 CapEx for the year was around $33,000,000,000 lower than last year due to optimization of activities and solid 2019 performance enabled us to distribute more than $73,000,000,000 in dividends. Our environmental performance in both carbon and clearing intensity of our upstream operations improved. Our focus on technology and innovation is demonstrated by a record 524 patents granted. I will now turn over to Khalid to provide more details on our financials. Thank you, Amin, and good afternoon, ladies and gentlemen. I am pleased to share with you some financial metrics that clearly show how truly and uniquely differentiated Saudi Aramco is, not only from our peers, but even when compared to the leading global icons. In all four key 2019 financial metrics, 80 $8,200,000,000 net income, dollars 78,300,000,000 free cash flow, 28.4% return on average capital employed and $73,200,000,000 dividends. Our performance surpassed all of the 5 largest international oil companies combined. Whilst these numbers are impressive, we never rely on past success and push to drive further value from every molecule of hydrocarbons. Let me now discuss net income, which was unparalleled and resilient despite a weaker environment. Our net income for 2019 was $88,000,000,000 versus $111,000,000,000 in 2018. Compared to the previous year, financial performance was impacted by lower oil prices of $5.40 per barrel and lower crude production of 4 100,000 barrels per day. The entire industry experienced a weaker downstream environment with refining and chemical margins both under pressure as the year progressed. Our resilience during 2019 is underscored by the effect of external macroeconomic factors beyond our direct control, including crude oil prices, volumes and margins. In total, these accounted for over 80% of the reduction in our year on year net income. Turning to the balance between the sources and uses of cash. This slide compares full year 2019 with 2018. Sources largely met uses in 2019 despite a combined impact of $25,000,000,000 from lower operating cash flow and higher dividends. Net cash inflows from operations declined year on year by less than the fall in net income, principally due to favorable working capital movements compared to 2018. Capital expenditures of $33,000,000,000 were lower than a year ago and lower than the guidance we provided during the IPO process due to continued optimization activities. Free cash flow of $78,000,000,000 was further helped by lower capital spending than last year and was therefore down by only 9% compared to last year despite the weaker environment. Balance sheet gearing at the end of 2019 was negative, highlighting our balance sheet. All in all, this robust financial performance proves the resilience of our business model and financial framework with commitment to shareholders underpinned by the total dividends paid in 2019 of $73,000,000,000 I would now like to discuss our future capital spending plan, which demonstrate both our discipline and flexibility. With our strong financial framework and a disciplined CapEx governance process, we are able to successfully invest to meet the vision and strategies that Amin described earlier. We have launched a dynamic CapEx review response to prevailing market conditions. As you may remember, at the time of the IPO, we indicated that our expected 2020 organic CapEx to be in the $35,000,000,000 to $40,000,000,000 range. We have now optimized our spending plan, and I can today confirm that our 2020 organic CapEx is expected to be in the $25,000,000,000 to 30,000,000,000 dollars range. As yet, no one knows the precise impact on economic activity and energy demand from the coronavirus outbreak, especially in the longer term, and additional efficiencies may be required. Our CapEx budget for 2021 and beyond are therefore currently under review. Furthermore, for the longer term, we are examining plans to increase our maximum sustainable capacity to 13,000,000 barrels per day. It is worth highlighting that our low cost structure is a great advantage in facing the current challenges. Our upstream lifting cost in 2019 was only 2.8 per BOE produced and our upstream capital expenditures only $4.7 per BOE produced, both being the lowest in the industry. Given our low cost, our flexibility and our low sustaining CapEx, the company can sustain a low breakeven oil price. Turning to shareholder distributions, which I touched upon earlier. We remain committed to deliver affordable based dividends through crude oil price cycles in addition to any potential special dividends. When upside emerges, we have a strong track record of distributing excess free cash flow as oil market circumstances permit. For the next five years, a dividend prioritization mechanism supports nongovernment shareholders. If annual dividends declared are less than 75,000,000,000 dollars dividends to nongovernment shareholders are intended to be prioritized so that they receive the pro rata shares of $75,000,000,000 equivalent dividend. I hope you will agree that 2019 shows the robustness of our financial framework, a strong balance sheet, a disciplined and flexible approach to capital and our commitment to value creation. Before I hand back to Amin, I would like to recap the ways in which we are committed to value creation. We have guidance, we have shown our agile response to weaker market guidance, we have shown our agile response to weaker market conditions. And if needed, we have flexibility for further action. Our teams work hard every day and are committed to what makes Saudi Aramco a great and differentiated company. As Amin said earlier, 2019 was a landmark year. It was a year in which we truly showed our ability to create much, ladies and gentlemen, for being a vital part of our entry into the capital markets. Now Amin will provide his concluding remarks. Thank you, Khalid. Our goal is to deliver sustainable growth in our free cash flow to support dividends to shareholders. The 3 pillar of free cash flow growth are shown on this slide, liquids, gas and the downstream. We aim to deliver that growth sustainably by leveraging technology and innovation to optimize our crude and gas production unit costs and by carbon intensity. Turning to our ESG performance, we have included sustainability chapter in our forthcoming annual report containing expanded disclosure on these vital issues. Among the new disclosure is a further reduction in our upstream carbon intensity, which was already one of the lowest in the world. Our 2019 upstream carbon intensity of 10.1 kilogram of CO2 equivalent per barrel of oil equivalent is down from 10.2 kilograms in 2018. Our scope 1 and 2 greenhouse gas emissions and our energy intensity also improved. Our corporate values of excellence, safety, citizenship, integrity and accountability include treating all people with fairness and respect and embracing diversity. The company is committed to gender diversity, special needs and generational inclusion in our workforce. Female workforce participation has been steadily increasing. It includes engineers in the field, inventors in our laboratories, lawyers, chartered accountants and finance specialists, as well as traders selling our products around the world. We will maintain ambitious targets for these important metrics. On governments, this last slide shows the set of KPI to which the management of the company, including myself, measures of operational efficiency, business sustainability, health, safety the environment and of course value creation. Our interests are aligned with the interests of our shareholders. Thank you very much, ladies and gentlemen, and I and my team look forward to answering your questions. Thank you, operator. And our open. Yes. Thank you, ladies and gentlemen. Congratulations on robust results and thank you for an opportunity to ask a question. Now my question relates to the CapEx my first question relates to the CapEx split of the new CapEx. I remember that you provided the CapEx split of liquids 35%, yes, 40% and downstream 25%. I was just wondering in the CapEx guidance, which one part of this will be reduced and sacrificed perhaps? And my second question relates to the maximum sustainable capacity of 13,000,000 barrels per day. How fast do you think you will be able to achieve that level? And whether expenditures to Karen. Thank you, Karen. Thank you, first of all, for your kind words. But first of all, your question about CapEx and the split that you mentioned between liquids, gas and the downstream, I'd just point out, Siokhan, that, that term split actually referred to the medium term guidance that was given at the time of the IPO, so post-twenty 20 one. So it's a really good question for 2020 as well, although that wasn't the year that, that original guidance was given for. Then your second €30,000,000,000 includes anything for the expansion in maximum sustainable sustainable capacity towards the new goal of 13,000,000 barrels a day? Okay. Thank you, Karen. I think for CapEx, the reduction is basically as a result of in our between 35 to 40 and going down to 25 to 30 based on optimizing our spending plans and increasing our oil production, which means we will be increasing our associated gas significantly because we are going from almost 9,700,000 barrels to 12,300,000 barrels fixed at Avalon staying at that through the year. And based on that, there is a lot of associated gas. And with that, we can optimize our spending on gas. And also, we can cut further given our unique low sustaining CapEx. So we have a lot of flexibility in that. With the debt spend to 3,000,000,000, if that includes the 13,000,000 barrels, we have just got a request to expand our capacity, maximum sustained capacity from 12,000,000 to 13 any of that as of yet. Thank you, Karen, for that question. The next question comes from Christian Malle at JPMorgan. Christian, your line is open. Yes. Thank you, Fergus, and appreciate the questions. I mean, Khalid, congratulations on Marprilken on a very strong set of results, in particular given the reiteration of the dividend target in 2020 despite the unprecedented macro backdrop. As we think about that and I guess the intention to move above 12,000,000 barrels supply, there are a few questions. First, can you talk about what is the actual level of production you plan to deliver? Can you perhaps quantify the amount of inventory you plan to use to deliver 12,300,000 barrels as per the kingdom's recent announcement? The second question, it sort of comes back to sort of the call on CapEx in terms of the additional. Given it's not within the €25,000,000,000 to €30,000,000,000 What are you prepared to lose in terms of other parts of the portfolio spend, be it downstream or gas, to substitute to basically fund that incremental upstream CapEx? Can you quantify what that CapEx would be to sustain $30,000,000 And finally, what levels of oil price are you planning in a worst case scenario to sustain negative demand? I mean, given your pre dividend breakeven is around $15 a barrel, would it be fair to say that's a pain threshold we should be looking to? Yes. Thanks, Christian. Three good questions. So the first one, dollars 12,300,000 for April. Are we prepared to say if any of that will be coming from inventory? The second one is if we were to complete our studies on less than sustainable capacity, would that have to be the spending at the expense of anything else? I think that's sort of your question was, Christian. The third one is what's our oil price worst case? How low an oil price could we sustain for business? I'll take the first and second question with regard to expanding the 12,300,000 barrels. Our maximum sustaining capacity is 12,000,000 barrels. We announced that we will be in April at 12,300,000 barrels, 300,000 will be coming from our inventory. As you know, we are keeping significant Javan and Sommed and different enclaves in terms of so the 300,000 will be coming from our inventory. The second question is with regard to sustaining whether it is that MSC whether it is going to impact our capital? No. I think our maximum sustained capacity when it is when it's still based on it is sustained for 1 year without the need for any additional spending. Need any need any additional capital. If it is to be sustained further, we're talking about the addition of maintained potential that will be required after 12 months, and that should not be very significant. But it does not require any additional capital spending to maintain the 4,000,000,000 barrels, and that's reflected in our lower CapEx forecast for 2020 going to 25% to 30% instead of 35% to 4. Khalid will take the 3rd question. Thank you, Christian, for the question. Basically, this is to confirm, and as you are aware, that Saudi Aramco enjoys most ample resources. It has the lowest cost, and it has a tremendous ability to flex its CapEx. So in a nutshell, Saudi Aramco can compared to others in the sector. Thank you, Christian. Thank you very much indeed for that question, Christian. I think the next question, I think, is coming from Martin Ratz at Morgan Stanley. Martin, please go ahead. Yes. Hello. Thank you. I had a few. First of all, I wanted to ask you about the OSPs because, of course, you've dropped OSPs very, very significantly about a week ago. And I was wondering if you see those normalizing in the coming months. And also, I wanted to ask you about the expansion of the MSC to 13,000,000 barrels a day. Over what kind of time frame would you think that is likely? How long does that take? Okay. Those are two questions. And just so the first one, how do we set OSPs? I think if I could summarize your Martin. And how does that is that changing anyway? Or is that going to carry on as it has in the past? And the second question is going ahead with the 13,000,000 barrels a day objective for maximum sustainable capacity, what time frame might we be looking after that? With regard to our OSB, it's always what as a response to our market condition. Basically, we look at the supply demand fundamentals each month, and based on that and based on the feedback that we get from our customers, we decide on decide on our OSB. So it takes into consideration what is the supply and what is the demand and what is the customer's feedback and which in place we would like to lease our crude gen. With regard to your question about the 12 to 13, we are currently assessing that. And hopefully, we will be coming back later with the time frame for delivering the 30,000,000 barrels of maximum sustained capacity. We are doing the pre engineering right now in preparation for that acceleration of MSC. All right. Thank you, Rajvind. Thank you. I think the next one is coming from secondly, more of a strategic question. With the development of the giant low cost Jafura field, I was wondering, does this, to some extent, make your global LNG expansion less relevant because you've got such a large low cost domestic development? Or on the other side, does it make it more relevant because having an asset like this one, you want to have a bigger role in the global gas market. Particularly, thinking about the flexibility in your CapEx budget, I was wondering how the global LNG expansion figures there in terms of priorities. Great. Okay, Mihaeli. So the two questions I think I had to say were, first of all, is anything changing in terms of the guidance we've given for the timing of the completion of SABIC? And what's the update on the potential transaction with Reliance? And then secondly, would the go ahead for the Jafura, the largest unconventional gas field developed so far in the kingdom, would that impact our views about the gas strategy? Could it support gas exports? How does it interact with our thoughts about an international gas strategy? Thank you. With regard to the SAVIC deal, we regulatory requirements. We are doing a few things, and we are hoping that will be able to close that transaction in the Q2 this year. With regard to the Jaffora and LNG, global NGE is a potential growth area we continue to monitor. It is very important. And Jaffora, as you know, will start and will continue to come on phases through 2,036. We are gas is very important and critical for Saudi Aramco. It is going to be important part of our energy mix over the long term. The growth is look for opportunities outside Saudi Arabia, if any, to expand our position not only in Saudi Arabia but also globally. Good afternoon, Michele. Just on the Reliance whenever the teams complete their evaluation, then it will go for the next gate within Saudi Aramco's approval process. Thank you. Thanks. Thank you, Michele. Next one comes, I think, from Alastair large future developments that were sort of planned through the next couple of years. So I guess is the message that we're starting mothball some of this activity? Are we going slow on that? Or is the revision of CapEx mainly coming from the more shorter term drilling side of the business? Yes. So again, your question is another question really, I think, about CapEx flexibility, how we manage to exercise a degree of flexibility because we have a very low level of sustaining CapEx. But what were the levers within that? Does it impact on any of the major projects that we've talked for the next increment? As I said earlier, we are optimizing all elements, including the phases that these projects are coming in. We are ensuring that our strategy continue to come as planned with regard to our maintaining our MSC, expanding our gas as, for example, our gas plant, Fawoli gas plant came on stream started to come on stream late last year and it's ramping up. Hopefully, by next month, we will be at capacity, which is 2,500,000,000 standard cubic feet per day. So basically, there are certain phases of certain projects that extending them a little bit because of the additional gas that we have. We will have additional gas, additional condensate, additional NGLs, and we can afford to phase them out without having an impact on these projects in terms of significant impact on the in terms of significant impact on the time frame for these projects, while meeting our commitment for the different grades in terms of oil, gas or petrochemical. And also, the next one comes yes, please go ahead. Sorry, just clarifying on the 2020 budget. So that does include a half year of CapEx that relates to Sabik, is that right? So the business will go on a consolidated basis? Okay. That's absolutely correct. Yes. So that reduction is slightly bigger on a like to like basis 2019. Next one comes from Gordon Gray at HSBC. Gordon? Gordon, the line is yours. Hi, and thanks for taking my questions. A couple of quick ones, please. Firstly, if you could let us know any detail you can on the cost of repairs for the September attacks and maybe what went through as OpEx, what is CapEx? And secondly, if you just clarify that despite the macro environment, there's no intended change to your balance sheet gearing targets? Okay. So two questions. Any update on the costs of the remediation to the tax on our paid countries last year? That was the first part. And the second one was just remind me what you just asked, if you didn't mind, Gordon. It was just a point of clarification that there's no change to the balance sheet gearing targets. Oh yes, the balance sheet, the 5% to 15% gearing target, yes. Correct. Okay. With regard to the cost for the repair of that happened in Horace and UPBEK. We said before, it is insignificant and it's not material. Actually, when we say that, it came out when we finalized it's much lower than what we even estimated at that time when we say this is immaterial. With regard to the gearing ratio, the 5% to 15%, it's still our plan to maintain a gearing ratio of 5% to 15%, and that is the plan. The cost of across cycles, obviously, Jordan, you know, so you could go out and drive that a little bit, but the goal is to return to that through time. Next question, I think, is from Jason Kenny. Jason, the line is yours. Very much and well done on results today. How long do you think you will produce 12,300,000 barrels a day? Is it something we should assume from April for the Q2? Or is it something we should assume for the foreseeable future in terms of crude oil production? And then secondly, have is there any detail or insight on how refined product volumes have shifted or might shift and utilization rates in the downstream as well, if at all possible. Thanks, Jason. Now just to clarify your second question, is that about our own system or what we're observing on sort of the global picture? Your own system, if possible. Okay. The first one then is about how sustainable 12.3% for April. And then the second question is what's happening to our own downstream system as a result of the changes of taking place? We will produce at 12 our maximum sustaining capacity is 12,000,000 barrels, as I said. 300 is coming from our inventory, whether in kingdom or out of kingdom. We are looking at how long we can maintain that additional 300,000,000 as I said. It is definitely for sure in April, and are looking at other months maintaining higher production above our maximum sustained capacity of 12,000,000. We can sustain that, as I said, for 1 year without any additional CapEx or OpEx. And then after that, it can be sustained indefinitely if required. With regard to your second question, with regard to the products, we are there is definitely an impact on jet fuel. And for us, we can there is always you can look at jet fuel and mixing it with diesel if required. And that should maintain our requirements in terms of course there is a seller rate. Khalid will have would like to say something more. Yes. Thank you, Jason. We have However, in doing that, we also optimize the LP for each refinery to maximize products that provides higher yields and margins. Beyond that, as you would appreciate, we would not necessarily give details or comment on our own operations. Thank you, Jason. Thank you. The next one, next question is from Lydia Rainforth of Thar. 2, if I could. The first one, just come back to the acquisition volumes. With the press release that came out, is it the company expects that this will have a positive long term financial effect? And will I try to understand that, is that purely a volume effect? Or is it also about providing the cost base as well to that? And then the second one was, delivered, it's easy to get some of those long term ambitions. I was just wondering if you could talk a little bit about the low carbon side of things and maybe what you're thinking about in terms of the U. S. And hydrogen, what events that you've held recently? Your line is a little bit bad. So I'm going to try to summarize what you said. And if I get it wrong, then maybe you could step back and tell me that I've misheard you. I think your first question was the increase in production, and we made a comment in the statement when that was announced saying we expected that to have a positive financial effect on the company. Was that just a statement about the impact of higher volumes? Or was there anything else behind that statement, I think? And then your second question, I think, related to low carbon intensity, there's a further reduction that we've identified today in 20 19 versus 2018 from the 10.2 kilograms of CO2 equipment per barrel of oil equivalent in the Upstream down to 10.1. Is that right, Lydia? Or is your question? Yes. It is, yes. Thank you. Yes. Okay. I'll take the first question, Lydia. Yes, definitely, we see the increased level of production having a positive impact on our financials on the long term. And with regard to our low production I mean, low carbon intensity, we'll continue to drive it down. The drop from 2018 to 2019 from 10.2 Kilogram per barrel of oil equivalent to 10.1 is something reducing its carbon emission and carbon intensity, and we will continue to drive it down with regard to scope 1, not only scope 1, but scope 2, which comes from the utility sector that provide that comes to our facilities. We are also looking at through our R and D centers, 2 of our centers globally, the one in Detroit and one in Paris, is focused also in scope 3 emission by working with the auto industry in Europe and in the U. S, trying to reduce carbon emission by either better fuel formulation or more efficient car or carbon capture on top of car and then getting rid of that carbon. And we are looking at crude to hydrogen. So carbon and carbon emission and climate change issues, we have a leading position globally, and we'll continue to put that as a priority for Saudi Aramco, and we'll continue to drive it down. I'm sure you noted, Widdhi, that Mr. Nasse mentioned that there would be a sustainability chapter in our forthcoming annual report, and there is significant incremental disclosure in that. You have noted on the slide that we show that the Scope 1 and Scope 2 emissions, for example, are quantified as part of that. So we look forward to your feedback on that in due course. The next question is from Henri Patrico at UBS. Henri, please go ahead. Yes, everyone. Thank you I have three questions, please. The first one, just on your plans for production from April. As you mentioned earlier, the situation globally is evolving very, very quickly. It looks like we could have a very weak global oil demand. So I was wondering whether this point in terms of either oil demand or oil price at which you would drop slowdown that increase in production and sales from inventories? And then secondly, on the CapEx side and the increase in the MSC to $13,000,000 per day. Can you give us a sense of the split between onshore, offshore projects, greenfield, brownfield that you would expect to see expect a substantial increase from the $25,000,000,000 to $30,000,000,000 guidance here for April 2020? Or do you have more efficiency to put through after that as well? Okay. So the first one, Oli, was production plan. As you know, the government determines our maximum limited level of production, and the government has now raised that. So now that's, therefore, the reason why we're moving to maximum production. You're asking whether we might choose to produce at a different level as we move forward. The second question, I think, was about as we assess the options for expanding that sustainable capacity, how are we thinking about the balance between offshore and onshore, what's required in order to achieve that? And given the flexibility we have to achieve certain efficiencies, how does that balance against whatever might be required in order to implement the plans to increase maximum sustainable capacity, I think. Okay, Fergus. I'll take question 1 and 2. And Khalid will take will address question number 3. With regard to our production in Adderall and beyond, as I said, we always decide early in the month with regard for the next month on differentials to different markers and we look at the supply demand fundamentals. And based on that, the guidance that we received from the Ministry of Energy with regard to up to what production level they would like customers' feed with regard to their demand for different type of crudes. And since we have 5 grades and we have wide customer base the decision for April is 12.3. And I doubt if May will be any different, but we will evaluate it each month that we will be looking and deciding accordingly. And going beyond that, that will be the case. As I said, the maximum sustained capacity, 1,000,000 can be sustained for 1 year without any additional OpEx or CapEx requirement. Beyond that, it is only assembly maintained potential to maintain it. With regard to the going on our maximum sustained capacity from 12,000,000 to 13,000,000 and the split between onshore and offshore, As I said, this is currently under evaluation, and we're doing our reengineering, and then we will announcing our plans at a later date. Thank you, Henri, regarding your question related to the 'twenty one guidance, as you are aware, given the rapid changes in the in the markets in the last few months, we have internally put together a plan to flex our 2020 CapEx, and we were able to reduce it as was seen in our presentation. And this is also a result of putting our proprietary technology to good use in terms of how we take advantage of our differentiated cost structure. When it comes to 2021, as you are all aware, there are so many moving variables as we speak that affect supply, demand and pricing. And the company is in earnest going through a process to develop a guidance for 2021, and we will share it with the market when it's Maureen. Next question comes from Thomas Adolff with Credit Suisse. Thomas, please Just firstly, going back to the MSC, and I understand it's still in the early stages. Correct me if I'm wrong, the last time you expanded the MSC, it took you some 6 years from 2,004 to 2010. So is 6 years the kind of right time frame to think about for the next expansion? Secondly, just on CapEx, can you comment whether this finally, on gearing and And then just finally on gearing and you mentioned that you're sticking to the gearing target range, but you're also okay to be above that for a short period of time. Perhaps you can give us some guidance in a $30 or $40 Brent scenario with SABIC fully consolidated from mid-twenty 20, where you see gearing ending any sort of there any sort of historical precedence for how long it takes to expand MSC? 2nd one, how much further flexibility would it be in the $25,000,000,000 to $30,000,000,000 guidance for 2020? Imagine, for example, if prices stay very low for an extended period of time. And thirdly, is there sort of boundaries in terms of how high gearing might go in a lower price environment, assuming completion of SABIC around the next year by the end of 2020? I will take question number 1. Khalid will take question number 2. And 3, with regard to our MSC, yes, it took us a number of years to bring MSC depending at that time. It's a different time. That is same and depends on the capital availability at that time when it was decided to increase the MSC. We do have the flexibility to accelerate if required, and we are currently looking at that. It depends whether it's a within existing fields or it's the grassroots increment that we will be bringing in. All of that is being evaluated right now. And based on that decision, we will be deciding the time frame. And as I said, it is going to be done on an accelerated basis. Thank you, Thomas. With regard to your second question, I believe it was, would the 20 5% to 30% be final for the 2020 CapEx? To a large extent, yes. Not, of course, barring any massive aggressive violent change in the market that may or may not take place. We remain ready at Saudi Aramco to respond to whatever market conditions that prevail out there to deliver on our commitment to our shareholders. Going forward, I believe your third question relates to the gearing after we consolidate SABIC and at a $30 to $40 price range. Yes, it will definitely, irrespective of payment would be considered in our gearing calculation. It will increase definitely, but it will increase as we said, the 5% to 15% is a target that we aspire to preserve across cycles. There could be some time, whether it's weeks or few months, where it reaches the top end of that range, it could exceed it. But given our extensive amount of production and extensive extent of revenue, the cash coming erode that yield. Thank you, Thomas. Thank you. Next one is from Dheeraj Bohatarya at RBC. Dheeraj, your last question. Apologies if this has already been asked. I was cut off for a little bit. Just one quick one. As you're ramping up oil production, can you just talk about what you expect your output to be on gas and condensate for the year? So the question, I think, Biraj, was we've talked about liquids production or or liquid sales for 12.3 percent for April. So is there any guidance you're prepared to offer for going beyond oil into NGLs and condensates? Yes. Thank you, Biraj. It's definitely if you look at 20 19, our total barrel oil equivalent was 15.2 barrel oil equivalent for 2019. For 2000 for April, only vertically I'm talking about April. It depends on how we go further. For Avril, you're talking about 16,000,000 almost approximately 16,000,000 barrel of oil equivalent because our gas will be much more, our NGL will be much more, our condensate will be much more. So we're talking about almost 16,000,000 barrels of equivalent in average. That's just to give you the range between this particular month, next month and the average for 2019. Next Fellows, I wonder if I could ask you about the sustaining capital, the $13,000,000,000 that you laid out at the time of the IPO. That was for the sustaining the maximum sustainable capacity. How does that evolve after 12 months? And what are the issues you have to address to maintain that capacity in terms of incremental activity? Is it just incremental wells? Or is it new facilities? Just give us some idea how that $13,000,000,000 evolves. Yes. So just to be clear then, we talked about, during the IPO process, the same capital for Liquids business, exploration and development spend of an average of 13 to 14 over the last 2 years. And your question really is how does that move moving forward? And perhaps you want to ask about how it goes from not just the Liquids business to the gas business as well, to paraphrase you. Yes. Thank you, Doug, for the question. And you're right. We have stated that the actual bill that we have paid for sustaining CapEx in 2018 based on 2018 production and prices was $13,000,000,000 That was for exploration and development. Now this is for crude only. The going forward, as production would increase and as gas would come into play, we expect that sustaining CapEx to increase but not dramatically because, again, the nature of the resources that we have, it's ample. The cost the cost structure of our production, how the methodology that upstream adapt in optimizing their reservoir management and, as I mentioned earlier, the proprietary technology that the company has and how the company puts it to good use. So in summary, yes, it will go up, but it will not go up dramatically. Next question comes Vladimir Dodikov at AIG. I have three questions. Could you please comment, if you can, on the size of the reserves which you have from which you are going to cover 300,000 barrels per day? 2nd question is, as you ramp up production to 15 1,000,000 barrels per day, how would you expect your coal in cost to, I guess, increase? My understanding is that they are currently at 15 dollars per barrel. And the third question is, if oil Brent averages $30 per barrel for 2020, where would you expect your gearing to be at the end of this year? Okay. So your first question is that reserves, obviously, we've seen in the press release yesterday that our reserves actually increased in 2019 as of 2018. The second, I think you said that our all in costs were $15 a barrel, which I'm not sure. I mean, I know the basis of your calculation. I mean, our production costs are less than $3 and our capital costs less than $5 a barrel of oil equivalent. So I'm not quite sure, perhaps you can explain, Rob, that you meant about the $15 Exploration Yes. And then I think the last question is about the gearing at the $30 environment, which I think was also covered in the previous question. But yes, perhaps we probably need to talk to you offline about the second question because, as I mentioned, if you do the math on our valve oil equipment capital costs and our production costs, I think you'll find that the oil in cost is more like less than $8 than 0.15 dollars So your question on that, as we start off with that? Yes. We're happy. Yes. I mean, those are, but we'll come back to, I think, maybe to deal with that off line. So I don't know. I think we've got a definitional issue there, but Thank you, Fergus. Thank you, Vladimir. Now we have amber reserves. And as Fergus mentioned, it is increasing. The kingdom has even more than that, but what we can book under the concession agreement, which is 40 plus 20, 60 years is limiting us, but there's ample risk. And are adding to it. Actually, what we have added in 2019 in terms of oil match, what we have produced in terms of gas is much more than what we have produced, which facilitate for us to bring new increments when it comes to gas. Gas is very important for growth, and we will continue to explore and identify more gas reserves to bring more on stream. With regard to our future increments, we do have in the plan over the next 5 years a number of increments, Bedri at 250, Zulu at 600,000 barrel per day, Arabian heavy, and we have Merjan, Arabian medium at 300,000 barrels per day. We don't disclose the cost per barrel for each of our increments. Khalid will answer that. Yes. Just to follow-up on the second question related to the cost. As Fergus said, he elaborated on what is the cost that we have per barrel. But just a point to keep in mind that as production increases, our unit cost would significantly go down. So the figures that we have shared with the industry the market, with the investors earlier on during our bond and IPO meetings would definitely be favorably adjusted to reflect higher denominator, higher production level. I believe, Vladimir, your question relates to gearing with Brent being at 30. We are very comfortable with $30 price in terms of our gearing. We are very comfortable that we can meet our dividends commitment, and we are very comfortable that we can meet our dividends commitment, and we are very comfortable that we can meet our shareholders' expectation at $30 and even lower. The gearing will not necessarily be impacted with the $30 It's the accounting aspect of consolidating SABIC with an arrangement that we have alluded to in our share purchase agreement with the PIF where the SABIC purchase will be financed. That will impact our gearing given the absolute amount of the purchase being 69 point $1,000,000 And this arrangement takes the payment over a period of 5 years. And however, like I mentioned earlier, while the gearing will increase given the massive free cash flow generation capacity, the engine that the company has with the amount of production that it puts on a daily basis into the market will rapidly erode that gearing going forward. Thank you, Vladimir. Thank you, Vladimir. And I think we've already gone beyond the hour that I think we said at this call in the last. So we're going to take one last question, which I think comes from Daniel Zaszavits of Barclays. Daniel, are you still there? Daniel, your line is open. I just wanted to ask you a question on the funding side. So we're still paying the large dividend and the lower oil prices, how are you thinking about your funding plans? Do you expect that you can just potentially run down cash holdings if you need to and you don't need any additional borrowings? How are you thinking on that side? Yes. Thank you, Daniel. As I alluded to earlier, we have committed and we are during 2020 and for during 2020 and for the 5 years starting from 2020. We are very comfortable with the current market prices. We would be able to meet our commitment to the shareholders, whether it's the majority shareholder or the public shareholders going forward. Our balance sheet is robust. It's resilient. As you may have seen from our 2019 financials, our E Rink is almost there's no gearing the gearing is minus 0.2 in our financials. We have massive capacity to borrow, but we don't necessarily aspire to increase our debt unless we have to. And as we speak now, we don't see need for additional debt. I would like to just add that we are different than other companies. We are very other than our strength in the upstream and our integration in the downstream is that we are able to increase our production significantly. Just last month, we were at 9.7, and average, we will be at 12.3. So the lower prices, yes, it will have an impact, but we will be benefiting from the additional barrels that we will put into the market, additional NGL, the additional gas, the additional ethane and the additional condensate. As I said, you have to look at it, 13,200,000,000 going to 16,000,000 barrel of oil equivalent. The other thing that is helping us to meet our commitment going forward is that we are able to reduce doing all of that and increasing our production significantly and at the same time, reduce our capital going from 30 $5,000,000 to $40,000,000 to $25,000,000,000 So these two things happening at the same time will allow us to comfortably meet our commitments in 2020 and beyond. I really don't know of any company that can increase its production by 20%, 30% without increasing cost, and that increase in production will directly translate to higher revenue and higher free cash flow. Hence, as Amin said, our financial posture is extremely robust and cannot be compared with others. Thank you, Daniel. So I just wanted to say that brings our first ever full year results earnings call to a close. Thank you very much indeed, everybody, for your participation, your insightful questions. Investor Relations team at Saudi Aramco are sourced available to follow-up any questions if required. And thank you, operator. You can now close the call. Have a great day, everybody.