Exxon Mobil Corporation (XOM)

Investor Day 2019

← View all transcripts

Mar 6, 2019

Good morning, and welcome to ExxonMobil's 2019 For those of you that I have not met, my name is Neil Hansen. I am the Vice President of Investor Relations and the Corporate Secretary. I want to begin by familiarizing you with the safety procedures here at the New York Stock Exchange. If you look around, there are 2 exits from this room, one to the left of the stage and one in the back. Both of these will take you to a stairwell down to the street level. In case of an emergency, there will be an audible message that will give instructions as to what to do and there will be stock exchange personnel available to provide us with instructions. Also, I would like to ask that everyone please silence any electronic devices, both phones and tablets, so we're not disturbed during the presentation. Next, I would like to draw your attention to our cautionary statement found in the front of the presentation material and our supplemental information at the back of the material. As you know, these statements contain information that is relevant to today's discussion, and I encourage you to read them. You may also access our website at exonmobile.com for additional information on factors that may affect our future results as well as supplemental information that provides the definitions for some of the terms that we will use today. Let me begin by reviewing the agenda for today. Darren Woods, Chairman and Chief Executive Officer, will lead the presentation today with members from the management committee. Darren will begin with a discussion of the business fundamentals supporting our investments and our plans for growing portfolio value. Following that, Neil Chapman and Jack Williams will provide updates on upstream, downstream and chemical business lines and then Andy Swagger will close with a discussion and a review on our financial and investment plans. We'll have an opportunity to take questions after the prepared remarks. And then at the conclusion of our morning session, we will have lunch on the 7th floor of the Stock Exchange. With that, it is now my pleasure to introduce Mr. Darren Woods, Chairman and CEO of ExxonMobil. Good morning, everybody. Welcome. It's good to be here this morning with all of you and have a chance to talk to you about our plans. Last year, we laid out a pretty aggressive plan to grow earnings, grow cash flow and improve returns at the same time. Today, we're looking forward to taking you through the progress we've made on those plans and showcasing the upside that we've identified in the year since we last met. As Neel said, each member of the management team is going to take you through their perspective of our plans, and then we will end with a group discussion up here answering any of your questions. Since last year, I've spent quite a bit of time engaging with our shareholders, making sure that people have a clear understanding of the direction that we're taking our business. And today, we hope to add to that understanding. We want to talk about what we're explain in a lot more detail than we've historically shared that for their businesses. And then Andy is going to wrap that up and translate that into the financial success that we see for our company. I'm going to cover 5 topics. I want to cover the progress that we're making on the plans that we've outlined and the exciting upside that we've identified. I want to provide a basis for the plans and by giving an overview of the business fundamentals that really underpin and drive our decision making. I want to explain how we're uniquely positioned to create unique value in this industry by leveraging our competitive advantages and generating industry leading value. I'll review our investment plans and our efforts to high grade our portfolio and then how all of that translates into growth in earnings, cash flow and returns in a flat price environment. That is with no help from the market. Let me start with the results from last year. Earnings were up 40% from 2017 due to higher prices, liquids growth and our North American integration. The solid blue bar represents the 2018 earnings potential that we shared with you at last year's meeting at $60 a barrel. To understand how we did relative to that, we have to normalize our 2018 results to that same basis, dollars 60 a barrel in 2017 margins. You can see that here. We met our earnings potential on that basis for the year. Overall, I'll tell you, I feel really good about what we delivered last year. We had some shortcomings in the first half, some disappointments, but more than made up for that in the second half. And as we finished the year, we're basically in line with where we expected to be. More importantly, much more importantly for us, we made very good progress on the project milestones that we outlined last year. And as I've said, as we were doing that identified additional upside, which I'll take you through here now. At a fairly high level, as I said, Neil and Jack are going to get into more details. I want to kind of just give you a broad perspective as we head into the discussions today. Bottom line, our plans are on track across all three business sectors. And in each business sector, we have identified upsides. In the Upstream, we made very good progress on our 5 key focus areas: significant growth in Guyana, more attractive acreage captured in the Permian and Brazil, accelerated value capture in the Permian, and then we've made advances in our strategic LNG portfolio. In the Downstream, we grew our logistics capacity in line with our growth in the Permian. We brought on 3 key projects and we stuck and delivered on our milestones for other projects that are going to end up upgrading our production to higher value products. We also met our plans in the chemical company. We delivered on our project milestones. We started up our new facilities, growing production and growing in line with the plan that we laid out last year, 30% increased by 2025. We'll have a lot more to say about this as we go through the day. But I want to stop now and step back remind everyone why the plans that we shared with you last year and we'll talk you through today is so important in growing the value of our company. And I want to start with a discussion of the underlying fundamentals. So the fundamentals begin with people, their standards of living and the economic activity that supports those standards. It's important to remember, we got to keep reminding ourselves, many people today do not have access to modern energy, over a 1,000,000,000 people. In the next 2 decades, we expect global population to grow by 30%, GDP to double and the middle class to close to double. That's expected to in turn result in about a 25% increase in the demand for energy. Oil demand is expected to increase about 0.7% per year, driven by commercial transportation and chemical feedstock. Gas demand is expected to grow by 1.3% per year and has to meet electricity and industrial demand. Now these demand projections to some seem like a low growth that our industry is a low growth industry. But I will tell you that, that discounts the impact of depletion. When you factor in depletion rates, the need for new oil grows at 8% per year and new gas at close to 6% per year. You can see this when I overlay these demand charts with the depletion curves. The dark blue areas on the chart shows existing supplies that decline over time. The light blue area shows the additional supplies needed to meet the expected demand. I think you can all see from this chart that under any demand scenario, the depletion nature of this business in and of itself supports the need for significant industry investment. Now over the course of the last year, I get asked a lot of times what about climate change, the risk of climate change and society's transition to lower emissions energy sources. A couple of points to make. First point I want to point out is on this chart, the demand line, the projections that we have built into our demand are in line with the government commitments made under the Paris Agreement. They incorporate what has been agreed to as part of the Paris Agreement. If society has a successful technology breakthroughs that put us on a 2 degree path. Demand in 2,040 is expected to be in line with the red dots on this chart. So even under a 2 degree demand scenario, depletion drives the need for significant industry investment. So for us, this suggests that perhaps the biggest risk to the industry today is underinvestment. Here's an additional perspective on the magnitude of this challenge. The amount of new resources required is extraordinary, estimated at 550,000,000,000 barrels of new oil and 2,100,000,000,000,000 cubic feet of new gas between 2016 2,040. In a 2 degree scenario, the need for new resources drops to 370,000,000,000 barrels of oil and 1800,000,000,000,000 cubic feet of gas. That is still a lot of volume requiring a lot of investment. The IEA estimates that $21,000,000,000,000 of investments are needed through 2,040. If you take ExxonMobil's relative production, it suggests that we should be investing at roughly $33,000,000,000 a year. We don't disagree with that. Our focus in the Upstream is in investing in advantaged resources and facilities that give us a very low cost of supply, so they're competitive under a variety of demand scenarios and price environments. Hopefully, the charts we just covered demonstrate why society needs us to make these investments. Let me turn to the Downstream fundamentals. Our view in the Downstream is formed by societal trends, policy evolution and technology developments. And it's that demand for higher value, cleaner burnt fuels will continue to grow. Demand for fuel oil, which is the bottom of the barrel, declines pretty significantly after 2020 as a result of the IMO low sulfur standards. Demand for distillates, we anticipate growing by 20% by 2025 due to the economic growth that I've talked about and the corresponding increase in commercial transportation and aviation activity. Significant growth for chemical products as people move into the middle class and their standings of living improve, drive an increase in demand for chemical feedstocks. And growth in industrial activity and transportation, all linked to economic growth, in turn drives the growth in demand for lubricants. While efficiency improvements and deeper penetration of electrification in light duty vehicles leads to a relatively flat gasoline consumption. So as you can see, when you step back and look at this chart from these trends, the Downstream is going to see some significant demand growth for some products, while in others, we're going to see muted growth, low growth or in some cases declines. This drives the need for changes in production yields through advances in technology and refinery investments, and that is what underpins our plans in the Downstream. Now here again, people often ask what about the impact of electric vehicles. Let me give you a perspective on that. This chart converts the relative demand growth that I just talked about into absolute levels. Overall, we expect a 30% growth in Liquids by 2,040, largely driven by Chemicals and Commercial Transportation. You can see that the light duty demand shown here is relatively flat, pretty constant. To look at the potential of electric vehicles, I'll take an extreme case. I'll assume that 100% of light duty vehicles on the road in 2,040 are electric, 100%. That would mean, by the way, that by 2025, every new light duty vehicle car sold in the world is electric. What's the impact of that? And all electric fleet reduces liquids demand by roughly 20,000,000 barrels per day in 2,040, which brings total demand back to where it was in 2013, with a continuing need to shift to higher value distillates, lubes and chemical feedstocks. So our downstream investment plans are robust, irrespective of what you want to assume with Electric Vehicles and their penetration into society. Let me turn to Chemicals. Chemical demand is expected to outpace GDP by roughly 1%, driven again by population growth and improved living standards. The growing middle class and the corresponding increased demand for packaging and consumer goods underpins the expected demand for polyethylene and the growth that we see there of roughly 35% through 2025. Polypropylene demand, we expect to grow by roughly 40% with automotive and appliance demand growth. And growth in polyester clothing supports the growth in paraxylene demand of roughly 35%. So our Chemical businesses are focused on these very strong growth sectors with an emphasis on unique performance products that leverage technology and command a premium. This is where we're investing in our Chemical sector. So you can see the investment fundamentals across all three of our business sectors are all tied to economic growth and people's standards of living and advances in those standards. This in turn requires significant new investments to meet the resulting growth in demand for oil, gas and higher value fuels, lubes and chemical products. This is a compelling case for industry as a whole. It's an even more compelling case for ExxonMobil. We can create unique industry leading value through a unique set of competitive advantages that we leverage to create low cost supply of higher performing products. This allows us to have advantaged businesses that outperform competition across the price cycles. And I want to take you through some of those advantages in a little more detail because they underpin the basis and the success of our business. First is technology. Technology results in industry advantaged assets, processes, products and application, And it helps facilitate our response to changes in demand and supply and the evolution of society's needs. It also leads to developments and advances in existing processes and products and it helps us to discover new ones. Technology is also critical in managing future uncertainties such as the risk of climate change. You may recall we had an afternoon session last year, where we talked about our technology portfolio and the robust effort that we had underway on emissions reductions. But you may also recall last year as we talked about this that breakthroughs are truly needed to tackle this challenge. Conventional technology is not enough. We're working on some potential game changing technologies such as biofuel for transportation and carbon capture for power generation and industry. We believe these could make significant and important contributions. With ExxonMobil's grounding in science and technology and all the advantages that come with it, we're confident that we can help meet society's aspirations for a less carbon intensive future. Let me move to another advantage. The size and breadth of our business gives us scale, which is absolutely critical to support our investment in technology. It provides a very large base to leverage the value of our technology developments. Our scale also results in us doing many of the same things thousands of times a day all around the world. This allows us to accelerate our learning and to implement improvements across our entire opportunities irrespective of where we find ourselves in the price cycle. Integration and our participation on multiple hydrocarbon value chains from wellhead through to finished high performance products provides us with additional scale and all the benefits that come with that. It also allows us to optimize and capture benefits all along the value chain, irrespective of where they may occur or where they may move to over time. Integration also allows us to increase both our product and sector diversification, making us more robust again to this commodity price cycles out there, and it provides synergies in facilities and in organizational capabilities and competencies. We define functional excellence as doing the right things the right way to a very high standard. You'll hear a lot of people talk about that. It's easy to talk about. It's very hard to do. We've been doing it across a very long history. It is a part of our culture. We translate the experiences and the knowledge that are enhanced through the technology I just talked about, through the integration that I talked about in our scale. And we take that and turn it into effective systems and procedures, which we then apply across every relevant facet of our business all around the world. This gives us a consistency in applying deep knowledge in a broad set of critical disciplines and it results in industry leading execution capabilities and projects and operations in all facets of our business. Finally, and of course, these advantages are only possible by our people and the commitment and hard work of our people. We've got world class capabilities that are developed through a broad set of challenging assignments all around the globe. Our folks are organized in a way to fully leverage their capabilities. And our strong retention and long term development approach results in industry leading capabilities and knowledge, which we build over the course of an entire career. Each of these advantages are significant in their own right. But when you put them together, you take them together, they provide an unparalleled strength. It's taken us generations to establish and they serve as the foundation to our strategies and they manifest themselves in every aspect of our business. And it enables us to have stronger financial and operating performance. We're taking and translating these competitive advantages into advantaged businesses and into advantaged investments. I'm going to talk about that in our capital program over the next several slides. So this chart shows the CapEx plan that we laid out last year, which reflected the industry opportunities that we captured in 2017. It also reflected the best portfolio of opportunities that we've had since the Exxon and Mobil merger, delivering returns of about 20%. In 2018, we delivered on the milestones underpinning this investment profile and captured additional high value opportunities to further grow value. You can see this year, we spent an additional $2,000,000,000 last year driven by the acquisition of Moore Brazilian Acreage and our lubricants business in Indonesia. You can also see it here, we expect to spend an additional $2,000,000,000 in 2019 to translate the improved opportunities in the Permian and Guyana to bottom line value. And finally, you see it here, we plan to spend between $33,000,000,000 $35,000,000,000 in 2020 to realize the value of the Guyana resources and the growth in those resources and the opportunity to redefine unconventional development in the Permian. Over this entire period, 2019 to 2025, we expect our capital to be up about $4,000,000,000 This additional investment along with the improvements that we've identified over the course of last year provides an additional $40,000,000,000 in net present value. Additional $9,000,000,000 in cumulative earnings, which I'll cover in a moment and $24,000,000,000 in cumulative cash flow over this period. Now I know over the course of last year and the conversations I've had with many of you, there's questions about the size of our investment program, particularly in relation to our peers. So let me provide some context to that. First point that I'd like to make, when you talk about CapEx and comparison of CapEx, you have to normalize the results for size, particularly in a depletion business. If you are not investing at the right relative rate, you're treating your business. This chart attempts to normalize industry investment rates by providing a view of CapEx relative to cash flow. And we start with a history from 2,009 to 2018. The y axis represents CapEx over cash flow as a percentage. The x axis represents average annual CapEx. So relative to size, using cash flow as a proxy, we've historically reinvested at a rate well below our peers, reflecting what we believe to be a more disciplined approach to meeting demand growth and in offsetting depletion. I want to stop here for a minute and talk a little bit about what we mean by disciplined investment because that term has been thrown around quite a bit here over the last several years. We don't think disciplined investment means putting an artificial cap on our capital expenditure. We think a cap like that reflects either a lack of resources and opportunities in those resources or the ability to execute those resources. Our business is a commodity business. In a commodity business, you got to have low cost of supply, that's how you win. Our competitive advantages have to deliver project advantages. And we measure that against 3 criteria. In order for us to progress a project, it's got to pass it over 3 hurdles. 1st and foremost, it has to be advantageous versus competition. We've got to be competition. We look at our each investment not on the basis of what other alternatives we have, but on what industry alternatives are and whether or not we can compete. We then look at how that compares to our other alternatives and make sure it's attractive versus those. And then we make sure that it's robust across a wide variety of price scenarios and price environments. We don't plan for market help. We rely on sustainable structural advantages. Once we decide on an investment, we put in our portfolio, we work to upgrade that and high grade it either through additional opportunities to optimize or by replacing it. That's what we mean by capital discipline. With that context, let's look forward. This chart now shows what we and our peers have announced for the next couple of years. Our reinvestment rate is in line with our history and consistent with our size. But as you can see on this chart, we have moved ahead of our competition. Our investments reflect quality opportunities secured when much of the industry pulled back with the last downturn in the commodity price cycle. These investments are needed across a wide range of demand scenarios and frankly are in line with many of the 3rd party estimates out there about what is required for this industry. So when you step back and look at this, think about the demand projections under a variety of outlooks, couple that with industry depletion, this chart can lead you to legitimately question whether or not industry as a whole is underinvesting. Additional industry perspective can be gained by looking at the service sector cost. This is another area where we see us gaining some additional advantage. This chart provides a sample of investment cost drivers, the price of rig rates in 3 d seismic over time indexed to 2013. The decreases you see here are material, and they're providing us with significant advantage across many of our key growth areas, namely the Permian, Guyana and our other deepwater exploration. It again suggests low industry activity, which we're taking advantage of to strengthen the returns on our projects. This is very consistent with our desire to move countercyclically. Bottom line, we feel very good about what we're doing in this area and our CapEx profile. By leaning in as our competitors have leaned back, we're gaining advantage and we're filling that project pipeline in the Upstream with very attractive opportunities. And this is also giving us the opportunity to high grade our portfolio with divestments. Now again, over the course of last year, I spent a lot of time talking with our investors about our divestments and our approach to divestments. I know that it is an important area, and it's one that frankly as a company we've been focused on for many, many years. Although I will tell you and admit to the fact that we have not talked a lot about it. So I want to start the discussion on divestments with a little bit of perspective by looking at our track record. This map gives you a view of our operational footprint back in 2,008. Now we routinely evaluate our assets for strategic fit and relative value And we assess that value versus our alternatives that are available and also alternatives available to 3rd parties. And if there's an opportunity to realize more value through a 3rd party, we look to sell and bring that value forward in time. With this constant focus on portfolio high grading, we realized annual average proceeds of about $3,500,000,000 in divestments over the past 5 years, with a very heavy weighting on the Downstream and Chemical. The cumulative impact of this is shown on the chart. Opportunistically high grading the portfolio over the past 10 years has led to divestments equivalent to about 20% of our capital employed. As our Upstream project pipeline has grown more robust, it's unlocked additional opportunities to monetize some of the existing inventory. So as a result, we expect more Upstream divestments in the next 3 years, roughly 5 times the Upstream's average annual proceeds that we've had over the last 5 years. If successful, we would anticipate Upstream asset sales of roughly $15,000,000,000 in 2021, giving us an even more productive and competitive asset portfolio. Now given our increased focus in the level of commitment, we've built these divestments into our base plan and their impact is reflected in the charts and numbers that we'll show you today. This change coupled with the improvements that we've made in our investment portfolio have generated upside earnings and cash flow projections on the projections that we showed you last year, which I'll take you through now in this next chart. Last year, as you know, we laid out these plans to grow earnings, cash flow and returns through 2025, all in a flat price environment. The red lines I show here reflect that potential that we shared with you last year. As we further develop those plans last year, our confidence in delivering on them grew as did the potential. The blue bar represents our view of earnings current view of earnings potential over the time period and earnings are expected in the near term to grow more than $4,000,000,000 from 2019 to 2020. The cumulative impact through 2025, as I mentioned earlier, is $9,000,000,000 in incremental earnings. Of course, all these projections in the data on this page, we've put on the same price and margins that we shared with you last year, dollars 60 Brent in 20.17 margins to allow you to compare. Obviously, the results are going to differ depending on the price environment we find ourselves in. I would tell you now, as I told you last year, we do not try to predict what that price environment is going to be or we do not use the price environment to justify our plans. Our plans have to be robust to a variety of price scenarios. And there's a great example that we're living through now if you look at our Downstream, the current margin environment seeing there, year to date, industry refining margins in the Downstream are roughly half of what they were in 2017 in 2018. I can tell you we didn't predict that. And while that's going to have an impact on our quarterly results, they no way undermines the long term fundamentals that we see in the Downstream in the charts I shared with you, our investments that we're making in the Downstream or the value of those investments in the Downstream. I'd also point out to you that even in a low crude price environment, dollars 40 a barrel, we expect our earnings to grow by 40%. Now consistent with this increased earnings, cash flow potential also increases. This is the same cash concept on the cash flow. Red lines indicate the potential that we communicated last year. The blue bars represents this year's update, steady growth over the next few years, ultimately reaching more than $60,000,000,000 of cash flow in 2025 at $60 Brent in 2017 margins. In the short term, cash flow potential in 2020 is $5,000,000,000 higher than the 2019 levels. And the upsides that we've identified here add an incremental $24,000,000,000 over this entire time frame. Now again, as with earnings, we expect prices and margins to vary. That's going to translate to additional upside on this chart or some downside. But bottom line, fundamentally, we are improving the cash generation capacity of our business over a variety of price scenarios. Let me start my wrap up with one last perspective. This is a capital intensive business. Good management of this business over time and across price cycles has to be reflected in solid returns on capital employed. We have historically done this. Our return on capital has consistently led competition. Our plans going forward continue to deliver this. As we grow earnings and cash flow, we're also improving our return on capital. In a flat price environment, return on capital ratably grows is doubled by 2025. This reflects the competitive advantages that we've discussed and their translation into advantaged businesses and investments. We are absolutely confident in our ability to deliver this. It leverages established capabilities applied to an attractive set of new opportunities. Before I hand things over to Neil, let me just provide a very quick recap. We have delivered on the milestones we set out last year and we've identified significant upside, which I can tell you we're going after. The investment fundamentals remain strong as do our competitive advantages, which we are translating into improved business performance and advantaged projects. As we do this, we're creating additional value through portfolio high grading and divestments. And again, bottom line, we are structurally improving our business, resulting in growing earnings, cash flow and return on capital. Again, all in a flat price environment, no help assumed from the market. So with that, let me turn it over to Neil. He'll give you some Upstream. Thanks, Darren. Good morning, everybody. So next 45, 50 minutes, we're going to look at the Upstream. I'm going to follow a similar approach to Darren's charts, reflecting mostly back on what I said last year and how we're doing versus those plans. There's going to be another level of transparency in our plans, another level of transparency in terms of how we're doing versus those plans. There's way more information on the charts in front of you that I'm going to cover. So I'm going to be quite selective to get through this in terms of what I cover on the charts. So let me start with the key messages. And these key messages really serve as a structure for what I'm going to talk about during the next 45, 50 minutes or so. Let's start with the point that Darren was making. We laid out a plan last year. How we're doing versus that plan? It's simple. We're doing better than the plan. We're exceeding the plan. The plan that I laid out here last year, 12 months ago in this room, was based on 5 outstanding developments. I'm going to provide updates on each of those. Of course, the Upstream at its core is an extraction, depletion, capital intensive business. To win in this business requires you to have the most competitive portfolio in the industry. And so that extends way beyond these 5 outstanding developments. It's all about maintaining a competitive portfolio, which means bringing in quality at the front end of the portfolio. It means addressing underperforming assets within the portfolio. And it means at the other end of the portfolio, where there are assets that don't have the same growth potential, don't have the same materiality, not such a good strategic fit and have more value to others than they do to ourselves, that's when we should be divesting them out of our portfolio. And I'm going to give a level of transparency on how we're managing the portfolio towards the back end of this presentation. Before I do that, let me start by picking up this theme of competitive advantages that Darren highlighted across the corporation. And on this chart, I have a few examples of how those competitive advantages can manifest themselves in the upstream part of our business. I'm not going to talk about even all of the ones on the chart, just the 3 that are highlighted. Of course, I'll start with technology. Everybody who follows this business understands the challenge in the history of the business in terms of understanding the subsurface. Everybody understands it's not just about shooting seismic. It's about developing geological concepts to know where to shoot the seismic. It's about processing vast quantities of data to try and get a better interpretation under the ground. And that has required a constant investment in new technologies to improve our techniques of understanding what's under the surface. We're very proud of the fact it's been a continuous investment in technology in understanding the subsurface in our Upstream business for decades. And over time, we're absolutely confident it pays dividends. And as we talk about our success in exploration over the last 5 years and plus, we will see why we're so confident in that technology investment over the long term. It also applies to the unconventional. You still have to understand the subsurface and the unconventional. I'm going to talk about that at length in a few moments. The great prize in unconventional is how much hydrocarbon you can recover from the rock. Unconventional business is very different to the conventional business. Industry typically recovers about 10% of the hydrocarbons from the rock in the unconventional space, which means 90% of the hydrocarbons are left in the rock. So the math is utterly compelling if you can find a way to improve that recovery. If we can just take the recovery from 10% to 15%, that's like a 50% increase in your acreage in the Permian. ExxonMobil have 1,800,000 acres in the Permian. Anybody who follows what's happening in the Permian understands the cost per acre if you're going to expand. So if you can improve your recovery by 50% 10% to 15%, it's like a 50% increase in acreage, 900,000 acres equivalent. So I'm going to touch on that point as we go through and the progress we're making in terms of recovering more hydrocarbons from the rock. Integration Darren talked about the importance of integration in our corporation. Of course, integration manifests itself in many different ways. To me, it's all about understanding markets, translating the insights into opportunities, acting on the insights. In West Canada and the Permian, where we're a big upstream player, very high growth businesses, we understood that in a landlocked resource, there is potential for the logistics capacity to get out of kilter with the resource growth. In other words, you can producing far more volume in the Upstream than you can get through the pipe and the rail and the logistics. We saw that. We understand we're in the upstream, we're in the downstream. And so what we did is we secured logistics capacity for the Permian and for West Canada evacuation. And as you heard in our quarterly results, it paid considerable dividends last year. That's what integration is all about. It's not just about moving molecules between refineries and chemical plants. It's about understanding the whole end to end value chain from resource to product. Finally, I'm just going to pick up on people and organization. We recently announced that we are restructuring reorganizing our Upstream organization. Now I want to tell you this is built on the successes of the past. It is built on the capabilities of the some 5,000 graduate and postgraduate engineers and geoscientists that we have in our Upstream organization. What's different is this provides more focus on value capture. It provides more focus on execution of our strategy. As I say internally, the Upstream business is not just about producing oil and gas. It's about creating value. It's about creating shareholder value. It's about generating money and it's about managing risk. But I've had a lot of questions, more questions frankly than I anticipated on this upstream reorganization. So I've inserted this slide just to make just to give you all a perspective on what we're doing and why we're doing it. First of all, this is streamlining the top of our organization. Our Upstream had 7 functional companies with 7 presidents reporting into members of the management committee. We've streamlined that. We've gone from 7 to 3, all reporting into myself on the Exxon's management committee. The organization is built on 5 global businesses. You can see them listed under the blue box on the left hand side. We believe each require different approaches to be successful. In the upstream in the Permian, it's about stamping out. It's a manufacturing mentality to stamp out resources to drill and complete. Very, very different from a liquefied natural gas business. Very short cycle in the Permian, longer cycle in liquefied natural gas. You've got to manage the whole value chain all the way to the customer, big customers, long contracts, large contracts. There are different skill sets required. What is common about these 5 businesses, each business is responsible for their own destiny. Each business is responsible for the P and L, for the performance, for the results, for the end to end value chain from product to customer, from discovery to depletion. 5 global businesses that sets the foundation, but it's not sufficient in our opinion because of the importance of this portfolio that I mentioned further. It is critical in the Upstream business that we have the most competitive portfolio. So we have a group that looks across these 5 global businesses. Their responsibility is to ensure we're bringing quality in at the front end of the pipeline. Their responsibility is to make sure that when appropriate, we're divesting assets when it's more value to others than it is to ourselves. And all of these are supported by global functional support groups. This is this functional excellence that Darren talked about. The best way I could describe to illustrate will be the drilling organization. We have great competencies in drilling. It's arguably what the highest risk area in the upstream business. I don't want to dilute that by putting drilling organizations in all 5 global businesses. We keep it concentrated, and we allocate those resources out to the global businesses. This organization reduces the interfaces internally and externally. It's much more focused on value creation. In addition, across the corporation, we've taken the opportunity to bring all of our projects organization into 1 group. Historically, we've had a downstream and chemical projects organization and an upstream projects organization because of the level of the activity and because of the desire to make sure we're focused on the most important investments with consolidated projects at the same time into 1 group. So let me go back to the main point, which is to focus on where we're doing, how we're doing versus what I said last year. On the chart in front of you, that's the high level recap of what I said when I stood here last year. Darren mentioned it. We have the best portfolio of opportunities since the merger of ExxonMobil. They were based on 5 opportunities: 1 in the unconventional space 2 liquefied natural gas 2 deepwater. All of these are attractive across the range of prices. In other words, as I said last year, they're going to generate more than double digit return at $40 a barrel crude oil for liquids, dollars 5 per 1,000,000 BTU for gas. So right at the bottom of the cycle, these are double digit return projects, which illustrates the quality of the projects and it illustrates the robustness. And if we sum all of those together, what I said last year is those 5 projects would generate 50% of the upstream earnings by 2025, a pretty big change. The update is simple. As I said, we're exceeding those plans, and we have identified very significant upside in the Permian and in Guyana in the last 18 months. I didn't show our plans in this format last year. This is something we look at internally. What's important for us is we have competitively advantaged portfolio. And this chart represents what we said last year. The red lines are ExxonMobil. The gray bars are the range from our major peers, the 5 other IOCs. And this is looking at operating cash flow, top total operating cash flow at a constant $60 a price $60 a barrel price. So you can see in 20 nineteentwenty twenty period, the plans that I laid out last year, we would be middle of the pack in terms of cash flow versus the peer group. And I said at the end of this period, we would be leading the pack. And that's why that red line is at the top of the gray bar. When we roll over and look at what we've done in the last 18 months, you can see there is quite considerable upside. We're up something between 6% 7% in the 20 nineteentwenty twenty period. We're up close to 10% in the 2024, 2025 period and put a very significant gap between ourselves and competition. This is all based on WoodMac 3rd party data. Our average cash flow growth over this period is quite an extraordinary 7% per year, significantly ahead of the peer group of course. So let me pick up each of these in turn and I'm going to start with unconventionals and I'm going to start with the Permian. This is the volume outlook that I laid out last year. If you remember, we had the Bakken at the bottom of about 200 Koebd And I said we would grow this Permian business to 600 Koebd at the end of this period. And remember, I said there's some high side flexibility. And why did we say that? Well, one of the reasons was we've made a very significant acquisition from the Bass family in the Delaware Basin in 2017. So we based our plans on what we knew at that time. We've significantly changed those plans, enhanced the plans in the last 12 months. Let me start with the red squiggly line first, and that represents our actual production over this period. And you can see the red line in 2018, we met our plan. Our volumes in the Permian were up about 100% from the end for Q4 2017 to the end of Q4 2018. As we go forward, you can see the capacity we've added as a result of better understanding or delineating this resource. We're now up to 1,000,000 barrels a day in 2024 in the Permian alone. And I would tell you, our $35 a barrel. That's how competitive the Permian has become. So how come Chapman, That's how competitive the Permian has become. So how come Chapman you end up telling us this last year and you've increased it so much in a year? And I would tell you it's a combination of 2 things. 1 is this delineation, this understanding of what's in the Delaware Basin, And we've done a lot of work in that area. The other one is what I describe internally as applying the ExxonMobil machine to this resource. And I'm going to come back and explain what I mean about the ExxonMobil machine in the subsequent or following slides. Let me first remind you of the resource and remind you of our position. I showed this little graphic last year. The red blobs are ExxonMobil's acreage. I said we have 1,800,000 acreage in the Permian Delaware basins. As everybody who follows the Permian understands, most acreage ownership in the Permian is somewhat of we call a checkerboard acreage. People have a square mile here and they have a square mile here and a 1.5 square miles there, but different ownership between those blocks. What makes our blocks different is the contiguous nature of the blocks and the large scale or the large size. You can see that in the Delaware in that sort of Central North Plateau. I like to call it a figure 8. I know you've got to be pretty imaginative to see it as a figure 8, but it's a large contiguous block. And to illustrate the size, that's about 50 miles north to south and anywhere to 10 miles plus east to west. It is very, very different from typical acreage in either the Midland or the Permian Basin. In fact, I would tell you, if you draw the map for all of competition, there are very few blocks like this. Importantly, it's not only large, we operate it. We can control our own destiny. A lot of acreage is in joint ventures or operated by others. We have a very high percentage. Ours, as we go through this development plan, will be well in excess of 90% operatorship. So that is our acreage. We currently estimate still about 10,000,000,000 oil equivalent barrels of resource, but I would tell you we haven't done we haven't really looked at that estimate in the last 6 months. We know there's considerable upside. We will probably come to that in the coming months. I would also tell you that this is our acreage as it stands today. We are extraordinarily active in terms of bolt on and expanding that acreage to increase the size of these large contiguous blocks. It's not just large. This resource is complex. And I would suggest to you, it's often oversimplified by the observers. The graphic on the left hand side illustrates these stacked pay intervals or stacked pay or horizontal benches. There are varying reservoir characteristics, not just between the Delaware and the Midland, but within the Delaware and within the Midland. There are different characteristics on each of these horizontal benches. And how does that manifest itself? Well, there's different levels, different percentages of oil, different percentages of NGLs, different percentages of gas. And when you just look at KOEVD, which is a statistic that's often talked about in this industry, it doesn't tell you the value. In some areas, there is a much higher gas content. And when there's a higher gas content, it would appear that you have much higher volumes. We are very fortunate that in our Delaware Basin, we have a very high concentration of liquids, which brings considerable value. We spent a lot of time delineating this resource, and that manifests itself in a whole range of tests, some of which I've listed down here. It's very clear to us that maximizing resource recovery from this play comes from efficient development of the stacked benches. We observe in the industry, there are plenty out there who will drill up and they will complete the most prospective horizontal bench. They will get great initial production. You can get great initial production. It's very, very easy to do. The statistics look terrific. And then they go off and they go down 2 miles down the road and they'll drill another Wolfcamp A or Wolfcamp B to get really high IP. When you do that, you leave a lot of resource behind. There was a recent article in one of the national media about this parent child phenomena. It is we think it is absolutely correct. If you drill up 1 bench or 2 bench and then go away and expect to come back in years to come to drill up those other benches, you will find you will not be able to extract the same amount of resource. There is communication between these benches. There is a certain amount of energy in this reservoir. And when you drill some up, that energy starts to dissipate. You need the energy. You need the gas to drive the liquids out. So a little graphic there of what we call the gun barrel diagram suggests and I'm not saying we do this in every location, but in some locations, it will make far more sense to get the maximum recovery to drill up all the horizontal benches at the same time. You need to understand the resource to know the best way to get the best value. So what's all this led to? It's led to a unique development plan that we have established during the last 18 months. It is significantly different from competition. And why is it significantly different? Because it's based on this contiguous large acreage. You can't do what I'm going to talk about unless you have large blocks of contiguous acreage. That enables you to develop this resource on a very large and very efficient scale, and it allows you to apply the ExxonMobil machine. What I mean by the ExxonMobil machine is ExxonMobil's large project capacity. We have been involved in the largest projects in the world more successfully than any of our competitors in the last 2 decades. We can now apply that capability to this resource. We can leverage the corporate scale. We can leverage the financial capacity of this corporation. We can then leverage the technical capacities to go after a very complex resource in the most efficient way. And as Jack will describe later on, because of our refining and chemicals footprint, we can link the resource to our refining and chemicals footprint through participating in the logistics network and therefore ensuring that when there's a price connect in the Permian, it doesn't impact ExxonMobil because we get the full value of the Gulf Coast. And I want to go into a little more detail on this. The southern section of what I call my figure 8 is an area called Poker Lake. And I'm just going to blow that up and briefly going to show you how this all translates into our development plan. This plan is based on efficient multi well pads arranged in what we call development corridors. These corridors are up to 10 miles in length, not possible unless you've got 10 miles in length of contiguous acreage. The blue squares here represent multi well pads. The number of well pads, I can tell you, varies. It varies dependent on where you're drilling. But the key is to develop all the geography. So these well plants are drilling north, south, east and west, a big circle to make sure that we're covering all the geology geography. They're also looking at how many horizontal laterals or benches we are drilling going into the ground. And that will depend on your understanding of the resource. In some cases, as I said, we're going to drill all of those benches all at one time. And then we're going to move the drill pad further. The key here is to maximize the resource recovery in the most efficient way, and it involves understanding the resource and extraordinary planning. So let me pick up one of those horizontal wells, these development these package of wells that you see on the chart here. Because what it enables you to do is to get great efficiencies in capital and operating expense. We drill and complete in what I describe as the optimum fashion. We move the rigs from one pad to another. We don't have to pick them up and move them across somebody else's property. Typically, these rigs are about quarter of a mile well pads, quarter of a mile apart. Once we've drilled several of these pads, we'll move the drilling rigs down, then we will bring in the frac crews, the fractionation crews. What that will result in, and I'll give you the heads up, in a lumpy volume profile. It won't be a smooth increase. You'll see it lumpy as we bring in the frac crews after drilling up a lot of wells. It then allows us to design the optimum size for all the associated separation facilities and compression facilities. In this business, when you pull out the oil and gas, there's oil, there's gas, there's NGLs, there's water, there's sand. You've got to separate all this stuff. You've then got to compress it or pump it to wherever the destination is. What this approach allows you to do is design 1 and build many. The costs in the Permian Basin obviously will come under inflationary pressure with this amount of activity. If you can design one set of modules like the separation facilities you see in the small picture here, we modularize them, build them outside of the basin and then we bring them in. It's a much more efficient way of doing it. It allows you to simplify your set of logistics, pipeline and evacuation facilities. Unlike most producers, we plan to control our own destiny in this area. We're going to put our own logistics and capacity in. It reduces downtime. It reduces production interruptions. And more importantly, it retains value for us. Each production area such as Poca Lake that I've described here has this one central collection point. On the Delaware, all those collection points tie into the Wink Terminal. That's the terminal major terminal we purchased last year. It's a very capital efficient gathering system. And of course, we've not stopped at Wink. We go all the way to the Gulf Coast. So this approach is different, and it relies on those components of scale and having the large acreage. We spent a lot of time in 2018 delineating, and I would tell you we're not finished doing that. It does result in a larger, higher initial upfront investment in infrastructure. You will see that with our development plan and you did see it last year. But we think it's the most capital efficient way to go and you can run up volumes quickly. That's the basis of the development plan. I have no doubt it will change in time. We also anticipate the application of fundamental technology on this resource will bring additional value. I have three examples here. I'm not going to have time to talk about them. The first one is what I said earlier on about understanding how to frac the rock with the application of fundamental physics, which we have in the corporation, which we believe will point us in that direction of getting that recovery from 10% recovery of hydrocarbons to something higher. On the right hand side, I just illustrate the use of digital. We recently announced a partnership with Microsoft. There is an enormous quantity of data in the Permian, enormous quantity. But data is only as good as your analytical capability to understand it and use it. Of course, sensors are very cheap these days. And what we're doing with Microsoft is an enormous analytical capability, not just of what we're understanding, but the industry as well. We see the potential in this area as to be very exciting. And then in the spirit of transparency, I decided I would show you the financial results that we expect from this development. So on the chart here, we're just looking at the Permian. This is all at a constant $60 a barrel, dollars 3 per 1,000,000 BTU gas. And you can see on the left hand side is our estimated earnings. On the right hand side is our estimated operating cash flow. And I've also drawn in the line at $40 a barrel. You can see even at $40 a barrel, it's a very significant earnings contributor. On the right hand side, just to turn to cash flow, dollars 10,000,000,000 at the end of this period. We expect $3 plus 1,000,000,000 at $60 a barrel price set this year in the Permian. Underneath the operating cash flow, I just referenced 2 bullets. We expect after capital expenditure to breakeven in 2021 in this business. And by 2023, after capital expenditure, we'll be generating something in the region of $5,000,000,000 So that's the Permian. It's a big change from last year. Let me now talk about our deepwater developments. And I'm going to talk about Guyana and Brazil, of course. But I thought this was an interesting way of starting. Again, this is 3rd party data. It's WoodMac data. And it compares our investments in Guyana and Brazil. And Brazil is just the Cacara investment. It's none of the future investments. And what WoodMac have done is they've compared all the deepwater growth projects that are going to be FID'd between 2019 2023 all around the world. And it compares them on rate of return on the vertical axis and the brent even price cost of supply for a 10% return on the horizontal axis. The size of the bubble is the NPV-ten of the projects. So I think if you just stand back, you can see the quality of these two developments compared to anything in the industry. As I will talk about in a moment, both in Guyana and Brazil, we don't believe this represents where we're going to end up. Let me start with Guyana. My headline on Guyana is simple. The success story that I highlighted last year has continued. We ended up with 5 new discoveries in the Stabroek Block in 2018. We've already had 2 new discoveries in 2019 in Halmara, which is right down on the border with Suriname and Tilapia. I would tell you we're still to quantify those last two discoveries. But last year, I said we'd increased our resource 3,200,000,000 oil equivalent barrels. As you can see from the number that was on the chart, we've close to doubled that in just 12 months. And I would tell you, there's considerable potential remains. The more we discover, the more we're understanding about the geology, the more prospects we think there are in this basin. We're already planning for at least 10 more exploration wells in this block in 2019, 2020. We have 3 drill ships in the basin today on exploration, on appraisal and on development. And I did include this little map to make an important point. This is a very large block. You can see end to end, it's close to 300 miles. Also looking at that block, you can see where our discoveries are. They're all in the southeast corner of this block. It has been well noted in the public around the border dispute with Venezuela. It's a long, long way from where our discoveries are and where our activity is. And there's no dispute between countries around the area where we are exploring and where we've had our discoveries so far. How does that translate in terms of production? Well, this is what I told you all in the second half of this year. From last year's analyst meeting, investor meeting, we said there was going to be 3 FPSOs. We upped that to 5. We've increased our outlook production from 500 to 750. But I've already been asked the question since I came in here this morning. Are you still sticking with the 750? Well, the answer is, yes, I'm still sticking with the 750, But I've already told you that we've had a whole series more discoveries and we haven't put that into a development plan yet. Last year, I said we were moving very, very quickly to get this oil into the market. We've had really strong support and a great partnership with the Guyanese government. President Granger implemented a new Ministry of Energy last year. Doctor. Bino is heading that up. There's a great partnership between the operators, ourselves and the government. We're getting great support. Our first production our first oil production, I said last year, would be less than 5 years after discovery. That's 4 years ahead of the industry average for deepwater from discovery to production. We're pushing to do better. I said we would have that boat online in the Q1 of next year. We will certainly do that and we're hoping to do a little bit better than that. This chart gives you more update on each of those first three phases of development. The first boat is 120 kilobytes D. That's the one that will be in Guyanese waters in the Q3 of this year. As a little picture, we can see it's under construction there. The top side modules have been installed. All the integration process is going in place. The 2nd boat, Liza Phase 2, is about double the size of the first one. We're going to FID that this year. Our plan is to FID that in the Q1 of this year. That is on schedule for start up in 2022. The 3rd boat is Payara or a combination now of Payara and Pacora discoveries, similar sized boat. We also plan to FID that boat this year as well with an expectation that we'll start that up in 2023. And of course, I know a lot of you want to know, okay, what are you doing about Boats 45? Well, we're in the early stage development planning of Boats 45, but the more discoveries we make, the more it's impacting, of course, those developments. But we will have them online certainly before the end of this period, 2024 2025. In terms of Brazil, Cacara is the development that we talked about last year, very, very attractive resource. We did what we said we were going to do. We farmed into the BMS-eight block. You can see that block on the little map there right next to North Caccarat. In the North Caccarat, we drilled an appraisal well last year. The analysis of that is ongoing. We'll drill a second appraisal well in North Caccara. We drilled an exploration well in BMS-eight. All of that is confirming of what we thought before. Our design concept is going to be finalized in the Q2 of this year. We anticipate 1st oil boat. Currently, we're still on this 220 kilobytes D boat We'll be in production sometime in 2023 2024. Very attractive double digit return of $40 a barrel. Also in this area, we captured an adjacent block called Uropuru last year, and we're going to do some exploration planning drilling on that this year and next year. Darren talked about the exploration acreage that we added. The chart on the right there illustrates the scale of our activity versus last year. We acquired an additional 840,000, what I call, highly prospective acres in the 3 bed rounds last year, more than anybody else. So why did we do that? Well, we can see something under the surface. You never know until you drill it. You never know until you drill it, but we absolutely see something in there, which caused us to bid at the rates to secure that acreage. And I think it just reinforces the concept I was talking about earlier on, this continuous investment in technology to understand the subsurface. Exploration is no guarantee of success, But that's the basis we did this and we're getting after it. We plan to drill more than 5 exploration wells in the next 2 years in the Campos, Santos and Sergi basins. We talked to LNG. The chart on the left hand side, Darren showed the demand line for gas earlier on. This is the supply and demand for LNG for the industry. Of course, gas grows at, Darren said, 1.2%, 1.3% per year. Liquified natural gas grows at closer to 5% a year. It's by far and away the highest growth part of the gas business. Industry expects that demand will exceed 460,000,000 tonnes a year by 2025. We anticipate the projects that are under construction today will satisfy 90% of the 2025 demand, which means significant capacity is required after that. This is a fast growing market. And our focus is to ensure that we have the most competitively advantaged liquefied natural gas capacity in the industry. So our gas has to be at less than $5 per 1,000,000 BTU to get a 10% return. And that's what PNG and Mozambique are. On the right hand side, you can see the IOC production capacity and growth plans through 2025. Again, this is WoodMac data. You can see where the SAAR is 2nd largest in terms of equity capacity today and we're adding an additional 12,000,000 tonnes equity by 2025. And I'm going to discuss the 3 projects we have in that mix: Mozambique, Papua New Guinea and Golden Pass in the following slides. I would also tell you this is a fast growing business. We are well aware that there are other potential liquefied natural gas opportunities out there in the industry. It is well documented. But this is all about managing the portfolio that I talked about before. If we see value accretive opportunities out there and and it's an important and if we believe that we can execute those projects to the quality that we expect of ourselves, we have the capacity to go after them. We know that some of these projects won't meet the same time schedule. We in the liquefied natural gas business. In Mozambique, what I told you last year, we're on track. It's a very large 85 Tcf of gas in place, the potential for more than 40,000,000 tonnes of capacity. The first stage, which is the floating LNG vessel Coral, will be online on schedule for 2022. We're then planning 2 liquefaction trains, 7,600,000 tonnes each. We'll be onshore. We expect to FID those projects this year with a start up in 2024. We've already started construction of the camp. It's not easy. It's not easy developing projects in frontier countries. It's not easy, but this corporation has a great history of doing that. Frontier countries are where countries have no hydrocarbon development. Think Chad, think Angola, think Papua New Guinea, think Guyana. Mozambique is just adds to that list. And we have a history of being able to execute big projects in complex areas, and this is part of the same. And you can see also on that map, we've expanded our exploration position by acquiring into 3 new blocks offshore Mozambique. That's 4,000,000 gross acres, and we're going to start drilling that up as well in 2020. We turn to Papua New Guinea, which is the 5th of these major developments. This is the 2nd major LNG development in Papua New Guinea. Before I get into the new projects, I do want to reflect a little bit on what happened last year. This country experienced an enormous earthquake in the first half of the year. And if you have seen pictures of Papua New Guinea, you'll see whole mountainsides collapsed completely. And recognize that you can see on the map, our development is right up in the Highlands, and we have a pipe that runs that gas all the way down to the coast and under the water to the liquefaction plant at Port Morrisby. This plant, it's a great credit to the engineers who built it and to the people who operate it, survived that earthquake untouched. The recovery was astonishing, not just from the organization that operates it, but also the partnership with the government. In the second half of the year, this operation ran virtually flawlessly, 99% uptime, and we're now running at 8,500,000 tons, which is 20 percent above the design capacity. It can be done in developing and frontier countries. In terms of our development plans, we've aligned on this 3 train expansion, 2 trains for the Elk Antelope development, 1 train for the Penangi development. We've had further exploration success in Papua New Guinea at Penang and at Muruk and Muruk 1 and 2. Muruk 2 well, we have just finished drilling now. It's a significant reinforcement of what we've seen previously, more hydrocarbons, and we'll be quantifying that further in due course, on plan. Let me touch briefly on Golden Pass. Golden Pass, we FID ed in January of this year. This is a 3 train 15,600,000 ton capacity facility, 70% Qatar Petroleum, 30% ExxonMobil. We expect to have this online in 2024. And the marketing will be through a joint marketing company Ocean LNG, which is Qatar Petroleum and Ourself. This is a really important investment in the strategic partnership between Qatar Petroleum and ExxonMobil. I didn't discuss it last year, but it was built into our risk capital expenditure program. We've been working this for some time. We believe this will be the most advantaged U. S. Gas exporting facility. It's built on a low cost conversion of our existing import terminal. It will provide a critical supply point to the Atlantic Basin. 1 of the costs of liquefied natural gas is moving it around the world. And this gives us great flexibility to supply the Atlantic Basin at a much lower transportation cost than moving it from the Middle East. It's all about optimizing that supply network. This is a key component of our desire to optimize shipping and cargo costs and movement of material around the world, both for Qatar Petroleum and for ourselves. Also importantly, it gives a diversity of supply to those major purchasers of liquefied natural gas around the world. If you're a country and you're putting more and more of your eggs in the basket of liquefied natural gas, you want supply diversity. This provides additional near this, do believe that in a fast growing market like this, there will be supply disconnects. There will be price disconnects. And this is going to be an important component of our long term supply model. Okay. Turning to the portfolio briefly. I've got about 15 minutes left. I discussed at the start the importance of managing a portfolio, value growth portfolio, the most competitively advantaged value growth portfolio is the way to win in this Upstream business. That means bringing in quality opportunities at the front end of the pipeline. It means divesting opportunities that have more value to others at the other end of the pipeline. I'm going to address a few of those points here. This illustrates the success of our exploration team. I touched on that and the importance of the investment in technology. Our exploration success has continued in 2018. You can see from the chart, the total commercial discoveries in the last 6 years, ours are 3 times the average of our peers and 50% higher than our next competitor. It's a similar story in terms of resource additions well above our peers. With this great acreage, we plan to increase our exploration drilling. On that top left hand side is our exploration drilling gross wells in the past and in the future. And you can see most of those wells going forward are deepwater wells. The map on the right illustrates the globally diverse nature of our exploration portfolio. And I really like this chart on the bottom left, which looks at the costs spent on exploration going back over the last 10 years. The gray area is the range of expense by our competitors. The red line is us. This is all on an SEC 10 ks basis. And you can see that consistency on exploration, the consistency in terms of how much we spend on exploration, and that's mirrored by the consistency in terms of how much we invest in technology. You can see during that period, there was a peak from the industry in 20 11, 2012. We stayed at the same level. It's no guarantee of success, but I believe it's a large part of what we have coming forward or coming in the future of our portfolio. You can also see that I've said we expect our average capital expenditure to remain at about $2,500,000,000 And you look at the map and you see the number of deepwater wells are going up dramatically. How that math work? It goes back to the numbers that Darren shared earlier on. There's not a lot of drilling going on in the world. So those drilling rates are much lower now. I think Darren showed a chart of some 50% lower than they were in 2030. This is when you take advantage. We can drill much cheaper at this time of the cycle and based on very attractive acreage. Briefly touch on Kearl. I touched on Kearl last year. I said the key to Kearl is to get the operating cost down and to get the volume up. I laid out a plan. We met that plan last year. We said we wanted to produce 200 kilobytes D last year. We produced 206 kilobytes D. We're on track to increase that 240 kilobytes D last year. We produced 206 kilobytes D last year. We produced 206 kilobytes D. We're on track to increase that to 240 kilobytes D. One thing I want to talk about this year is the effort we're putting into technology in this space, technology step outs to significantly improve the financial performance of mining operations in Canada. The challenge with mining is you're producing bitumen. It's thick. It's bottom of the barrel. You have to bring diluent in to be able to move that bitumen down the pipeline to the market either in Canada or elsewhere in the country. Upgrading the bottom of the barrel, that's in the DNA of ExxonMobil's refining business. Darren touched on it. You're going to hear Jack talk about the investments we're making in the downstream refining business is all about upgrading the bottom of the barrel. In our case, to improve the quality, to reduce the amount of diluent. These are technology step outs. We believe we can apply our downstream capability to this. And as long as we can do it at the right capital level, we think it's a potential step out. I discussed the success of the integration between our Alberta and Canadian assets with the market and that we had secured a logistics position, which covered all of our capacity. And obviously, you heard on the earnings call that made a significant financial contribution to our results last year. Briefly on divestment. Darren gave you the headline number that we plan to divest $15,000,000,000 of assets over the next 3 years. This slide provides more perspective on that number. Again, the reason we're doing it, we're focused on establishing the most competitive portfolio in the industry, which means not just adding, but divesting as well. And we're basing our decisions on what we divest based on is it the right strategic fit, Does it have the right level of materiality? Does it have the right growth potential? How important is simplifying our asset portfolio such that the upstream resources people are not spread across too many assets and they're focused on the ones with the highest growth potential. And of course, we're only ever going to sell if the asset has more value to someone else than it does to ourselves. So I provided a little more portfolio. I would tell you some of the most productive portfolio on the left hand side, the very highest I took off because you lose the scale on the chart. The gray line illustrates the portfolio that we have today and the red line illustrates what it will look like after this risked divestment program. What do I mean by risked divestment program? Well, if you look at the bar chart on the bottom left, this is WoodMac's WoodMac data where they break down the number of assets in each of the upstream portfolios of us and our competitor. And the bar to the right shows that what our risk divestment program would result in. That is the top of that hashed bar. But we know that we're not going to be successful selling everything. So our unrisked is at the top of that pink bar, in other words, the bottom of the hashed line. And so we anticipate order of magnitude about a 60% success. That's why we're confident that we can deliver on this $15,000,000,000 of asset sales. I'm not going to dwell on volumes. I will continue to say volumes is an outcome of our plans. It is not an objective. Value creation is the objective of this Upstream business. Last year, we produced in line with what we said. We said we would produce the amount we have on the left, 4,000,000,000 barrels 3,950,000 oil equivalent barrels, but that excluded the impact of divestments and entitlements. Chairman showed in the Q4 earnings conference call after entitlements and divestments, we were on plan. The chart to the right, the other bars show the impact of our investment programs, all of the projects I've been talking about, but it also includes the impact of the divestment programs. So in 2020, we anticipate producing 4,200,000 oil equivalent barrels after the divestment plan, which will take out 100 kilobytes D. So if you go all the way to 2025, you can see our divestment program. The impact of that divestment program is to reduce our total volumes by 300 kilobytes D in 2025. If you put a perspective on where that growth is coming from, that is what we have in the bullets on the right hand side. Darren talked about depletion. So if you just look at depletion and you take our 2018 base volumes, that base volume of 3.8 would be 2.7 at the end of this period. So how do we take 2.7 up to the top of that bar in 2025? About 40% of the increase will come from the Permian, about 20% from the deepwater, 10% from LNG and then 30% from work programs and a variety of other projects that you have listed in the back of your backup information. This plan is then reflected in some of our high level outlook metrics. I'm not going to discuss these in detail. I think the charts speak for themselves. Our earnings per barrel, we anticipate at flat prices going up by 50% over this period. Our unit operating expenses, we anticipate as a result of these plans will go down by about 15%. So that summarizes the Upstream business. I'll finish where I started with these key messages. The plan we laid out last year, we're doing better than them. We've got considerable upside potential. The portfolio is driven by those 5 outstanding developments. We laid them on the table here last year. We're on plan or exceeding plan with all 5 of those. But most important even more important in my opinion are those 5 developments. It's making sure we have this portfolio balanced for the long term. It is the most competitive and has the most growth value in the industry. Thank you. Great. Thank you, Neil. At this point, we're going to take about a 20 minute break. So if you can be back in your seats at about 9:50, about 10 till. And then we'll continue the presentation with Jack Williams. Again, Jack will cover the Downstream and Chemical businesses. Again, thank you very much and we ask you to be back about 950. Okay. Welcome back. Let's change gears a little bit and go to move to the Downstream and Chemicals businesses. Over the last 5 years or so, the Downstream and Chemicals, if you combine them, they've earned between $7,000,000,000 $11,000,000,000 a year. The average has been a little bit over $9,000,000,000 And if you look at 2018, that's about where we came in, a little bit over $9,000,000,000 between the two businesses. And on that basis, we can most appropriately compare to our IOC competition. This is a ROCE earnings cross plot over the last 5 years, the average of the last 5 years, and our earnings over this period were 30% higher than the nearest IOC competitor and 70% higher than the next one. And as you can see by the 2020 projection, we're growing these businesses. We're investing about $4,000,000,000 in each over the next couple of years, and that's going to result in significant earnings growth. And the reason is because we have advantaged opportunities because of these competitive advantages that we have talked about that you've heard a lot about today already. I'm going to reinforce some more and 3 of them are listed on the slide right here. This proprietary technology in the case of downstream chemicals is catalyst and process technology. It's this globally integrated footprint and I'll talk about this higher value product portfolio. In the downstream, what we're moving to with our yield change and the chemicals with our Performance Products. I have not put 2025 on this plot, But let me assure you, we're still planning on doubling our earnings by that time period along with a strong ROCE contribution. In fact, if you look at the earnings projections between now 2025 for Downstream and Chemicals, it's up about 5% over the period versus what we said last year. But I wanted to focus on 2020 because the Downstream and Chemicals businesses deliver significant earnings growth between now and then. So I want to discuss the 2 businesses separately. There's some big differences. I'll start with the Downstream. This is a picture of the new Rotterdam advanced hydrocracker that started up at the end of the year and was the subject of the video that you just saw. So starting with a couple of distilled messages here. Our Downstream organization delivered on the plans that we outlined last year to upgrade products to higher value distillates and base stocks. The competitive advantages we have, including this organization structure that was put in place at the beginning of last year, is enabling more value capture across our major value chains. Earnings growth is being driven by advanced projects and our logistics positions and the growth markets for our products. And we're continuing to build on our industry leading lubricants business, especially the Group 2 base stocks and in the high end synthetic finished lubricants. So let me talk about these competitive advantages a little more. Same format that Neil talked about earlier. I'm also going to mention 3 that are highlighted here. Start in technology with this catalyst and process technology. And I'll use an example here. This technology enabled development of a Singapore ZIT upgrade project. I'm not going to talk about that project anymore throughout the presentation because it doesn't come on till 2023. But it's a very unique project. No one else has the capability to develop it. Nobody else could do this project. And it results in a much higher return than a typical resid upgrade project. We're taking basically taking resid all the way up into Group II base stocks, premium Group II base stocks. It's also a very good integration example because we're upgrading steam cracked tar from the crude cracker that we have in Singapore and which will make that the most advantage or the most competitive liquids cracker in all of Asia. Benchmarking consistently shows that our refining cost is well below that of industry, very important, and this continues to be a very, very high priority for us. And then in that last column is the value chain focused organization structure. As I said, that's been in place for over a year. We've really seen tremendous benefits for this organization change. With the focus in the organization across around opportunity generation and around capturing that value throughout the whole chain, in the fuels chain and the lubes chain. And the fingerprints of this change is really all over the earnings growth that I'm going to talk about over the next several slides. So let me now move to the commitments. This is a slide that Darren showed earlier. I'm going to hone in on the downstream. In short, we have progressed activities consistent with what we said last year. So specifically, we have a 300,000 barrel a day logistics position in the Permian and it will grow further this year. On top of that, we're progressing this Wink to Webster pipeline that will move 1,000,000 barrels a day over 1,000,000 barrels a day to our Gulf Coast refineries. Of the 6 large refinery projects we talked about, 3 are online now. We're growing our retail business in new markets. And then synthetic lubricants, our sales were up 12% in 2018, a very key part of our lubes value chain. So a big part of the commitment we talked about last year was this upgrading of our product mix. And this graph shows the percentage change in our product yields between 2017 2025. And then the green portion shows the progress in 2018 that we with our projects we completed at Antwerp and Beaumont and Rotterdam. So we're well on our way with this significant yield pattern change. And this shift really positions us extremely well for this IMO spec change that's going to come in the 1st of next year. We have the most coking capacity of any of the IOC competitors. So as a reminder, in terms of the impact of IMO spec change, our earnings outlook, and I'll show you a 2020 outlook later, are based on 2017 margins, flat 2017 margins. So the effects of the IMO spec change are not baked into those projections at all. So here's a rule of thumb. For every dollar of the clean dirty spread grows, that's about an extra $150,000,000 to $200,000,000 of earnings for the Downstream. So clearly, changing this product mix is improving our profitability. And another way is through further optimizing our large global refining footprint. Our 4,700,000 barrels a day of refining capacity provides scale advantage, clear scale advantage. Several years ago, to better optimize on that scale advantage, we set up these global optimization teams along our refinery technology platforms that are shown in the pie chart. So these are in addition to our local refining technical support teams. And we cast these teams with comparing each unit and there's 274 shown here, 274 units across the globe. With looking at every single one of them and comparing them to the industry's best, and sometimes the industry is best for our units and sometimes they weren't. But comparing to the industry best and look and see look at dual GAAP analysis and see what opportunities come out of that. We have always been the lowest cost refiner. We want to make sure that we were taking advantage of every opportunity our footprint was offering us. Our technology organization has been heavily involved in this. Sometimes we're taking today's technology, putting it in 30, 40 year old units. So the technology organization is all around this effort. And it has spurned 100 of low cost, high value projects, 350 completed by the end of so far and another 400 by the end of 2020. So when you combine that with our ongoing molecule management process, ongoing optimization process that we've talked about before, this initiative is expected to add $600,000,000 of earnings in 2020. It's further improving our competitiveness of our refining circuit, which adds to our scale advantage, and that's especially true in the U. S. Gulf Coast and in Singapore. And these low cost refineries result in advantaged product offers in adjacent markets. So 2 of these are shown here. So Indonesia, which is close to our integrated complex in Singapore and Mexico, which is obviously close to our U. S. Gulf Coast refining circuit. So in Indonesia, in addition to our Singapore cost advantage, we're working with our JV partner on an innovative retail approach that involves a microsite concept that caters to motorcycle customers. If you've been in Indonesia, there's quite a few motorcycles around. So it's kind of think kiosks, which are very small individually, but we're talking about growing to 500 by the end of this year, we're talking about growing to 10,000 by the end of 2025. So big growth entering a market that's really not catered to right now. And then in Mexico, obviously close to our Gulf Coast refineries get a nice advantage there. And we have another advantage we didn't fully appreciate, which is this mobile name brand in Mexico based on our long standing lubricants presence there. So good growth going on there, plan to be at 400 site spot by year end and continuing to grow beyond that. So another way that these advantaged U. S. Gulf Coast refineries are delivering bottom line impact is through their contribution to the Permian value chain. We really have a unique position here. From the upstream production that Neil talked quite a bit about earlier, down to the logistics down to the Gulf Coast, down to our refining and our chemical manufacturing complexes, down to customers in our retail network here and also the customers all around the world, our fuels products, our lubricants products, our petrochemical products. The table in the bottom right kind of quantifies this position for you. Our refining and logistics capacity right today are greater than our equity production and all of those grow. Equity production grows significantly as Neil told you, our refining and logistics capacity grow as well. And then the liquids rich gas benefits our chemicals business, all our steam crackers on the Gulf Coast. And you can see that's growing as well. A key project here is our Wink to Webster pipeline that I mentioned earlier. It provides the lowest cost, highest value transportation to our Baytown and Beaumont refineries on the Gulf Coast. It's going to be a 36 inches diameter pipeline that will move over 1,000,000 barrels a day to the Gulf Coast. Planned start up is 2021. In addition to our ownership position, we plan to make a shipping commitment of at least 500,000 barrels a day. So the other project listed here is the Beaumont Light Oil Expansion project. Let me talk a little more about that. This project is very attractive because it has several footprint advantages. The first is the location of the Beaumont refinery close to where the Permian production is being moved for export. 2nd is we have some available gas plant capacity that we can leverage for this project as we bring in more light oil. And the third is that Beaumont is part of this U. S. Gulf Coast circuit that is short distillation capacity relative to our conversion capability. So we're currently buying intermediate feedstock. We'll back out some of those intermediate purchases. And when this project is done, we're still net short distillation capacity relative to conversion. So this project is basically lower cost because we're putting in a 250,000 barrels a day pipe still and only putting in 100,000 barrels a day of conversion capacity. That's going to be some hydro trading to manufacture diesel, and we're going to have the logistics to export that diesel. So the plot on the left here shows net cash margin for all global refineries. So the X axis is all global refining capacity. And the net cash margin estimates cash profitability using the feedstocks in the refineries, the complexity of refineries, the products that are generated and then estimated OpEx based on the complexity. So you get kind of a proxy for cash profitability, not a proxy for earnings because it doesn't consider the CapEx that went into building that complexity. But you can see from a cash property standpoint where Beaumont where this project moves Beaumont. We go significantly over to the left hand side of this net cash margin chart. It significantly improves the Beaumont site's competitiveness. This project has been FID ed, expected to start up in 2022. And speaking of start ups, let's talk about that new advanced hydrocracker at Rotterdam that was in the video. This project has been started up and has delivered first product to customers. Again, and I think Darren talked about this a little bit on the Q4 earnings call. Proprietary technology, very unique, utilized for this project. It really is the driver for the economic attractiveness. Results in much lower unit costs. I'll show you that in a minute. And we show the same net cash margin slide here and you can see Rotterdam goes from kind of middle of the pack to one of the best. It's a really good visual about why we're investing in our refineries. We want to make them not only the lowest cost refineries, but also among the most competitive in the world. At 2017 margins, this project delivers $300,000,000 in annual earnings. It's the only world scale Group II lube base stocks plant in Europe and it adds to our global Group II manufacturing capacity. So let's talk about that base stock market. We are the global market leader in lube based stocks. These are 2 cost of supply charts for Group 1 on the left and Group 2 on the right. Our sites are red and our competitors are blue. Group 1 demand is declining. It no longer meets the specifications of today's higher performance engines. And so you can see in 2025, the demand projections are below today's production level. But still a long term market for industrial applications and our sites are cost advantaged. Now the higher quality Group 2 demand is expected to grow at about 3% to 4% a year. That requires new supply and that was what our view was when we drove our investment our decisions to invest in both Rotterdam, we've talked about in Singapore that I mentioned earlier that's going to be coming online in 2023. And due to the advantaged technology, these new projects will be the lowest cost Group II supplies in the market, which is shown, I think, very clearly on this graphic. So now let's talk about the rest of the lubricants value chain. The graph on the left shows the base stock market position cross plotted against the finished lubes position, and we're strong in both, which provides a unique scale to our lubricants business. In total, the lubes value Chain delivered over $900,000,000 of earnings in 2018, and that's down about a third versus the average of the last 5 years due to a tough base stocks market and a rising crude environment. The plot on the right shows the growth of our industry leading synthetics product lines. Our lead here is pretty formidable. It's based on this Mobil 1 brand that has been the industry leader for the last decade, basically. We're expected to build on that lead. We're going to grow at about 10% a year in an industry that's growing at about 4% or 5% a year. So this really matters because if you think about synthetics, it generates about half of our loose value chain earnings. So very material in terms of our earnings and it's going to be growing at 10% a year. So now I walk through a lot of the earnings growth activities for the Downstream. Let me quantify this a bit for you. This pie chart shows the activities that are expected to generate $3,000,000,000 in operating earnings growth in 2020 versus 2017 at 2017 flat margins. So I kind of walk around that pie, starting with the major projects wedge. This is the impact in 2020 of the 3 projects that we've already completed. We've talked about 306, this is 03, and this is the earnings impact in 2020. And quite frankly, this is really all I quantified last year. So I'm going to keep walking around the pie here and fill in the blanks and show you the rest of what's going to be delivering this earnings growth by 2020. The next wedge is the manufacturing optimization that I talked about earlier. So these refining platform optimizations that we talked about that's delivering about $600,000,000 of growth in 2020. The market's wedge includes the Indonesia and Mexico market entries that I mentioned as well as some other retail fuels growth and lubricant sales growth. The last two wedges I have not mentioned yet, so let me just take a little bit of time on those. Revamps are projects that are smaller than those 3 major projects shown in that lighter blue wedge. These are highly attractive projects, average returns of about 30%, typically small debottleneck revamps, small projects that are very good rate of returns. A couple of examples of those are in Baytown and Baton Rouge, we are debottlenecking our pipe stills to be able to take more Permian crude, about 70,000 barrels a day more Permian crude through those pipe stills. Much, much smaller projects than the Beaumont project, but still very economic and very attractive. And then that last wedge is logistics and trading, and that includes the transportation commitments in the Permian, also in Western Canada, and then also the asset backed trading activities that have kind of picked up a bit over the last year or so. Now, I will say on that wedge, the Western Canada differentials that were used to generate this projection were back when Western Canada had a free market. And so that is a bit of a vulnerability, Permian position in the logistics in the midstream area is actually growing. So we'll see how that plays out in 2020. So beyond 2020, we have a further $2,000,000,000 of earnings growth potential by 2025. And it's largely in these same categories. So we have 3 additional major projects coming online between now and then. We have the Wink to Webster line that will be coming online. We have a lot more optimization projects that we're going to be doing. And then we have further growth in new markets and in our Blue Brooks business. So these same factors are going to drive further earnings growth between 2020 2025. So with that, let me wrap up the Downstream. We're delivering on plans to upgrade products. We're capturing earnings growth opportunities across the full value chains. We're progressing attractive projects and logistics positions in new markets, and we're growing this industry leading lubricants business. So as a result, we have an increase in downstream earnings potential of 60% by 2020, then we have earnings potential nearly doubling by 2025. That's versus 2017, again, at 2017 flat margins, which as Darren said earlier, are above the margins we're seeing today in the Q1, but also did not include any impact of the IMO spec change. So with that, let me move on to our Chemicals business. Shown here is the new ethane cracker at Baytown, started up back in July of last year running at about 1.6 MTA right now, which is about 5% above design capacity. Short summary of our chemicals growth plan. In 2018, we grew our sales by 6% with 3 new projects online. We have 4 olefin derivative projects underway in the U. S. Gulf Coast. I'll talk more about those. We have 2 major new steam cracker complexes that are under development. One is an ethane cracker in South Texas and the second is a liquids cracker in China's Guangdong province. Our intent is not just to grow sales, but to preferentially grow our performance products. These are unique technically innovative products that are real differentiators for our chemicals business. And we're going to leverage our scale and integration advantages to help our customers improve their products their businesses with our products. So let me start with our long history in the Chemicals business. This graph shows the annual earnings history all the way back to before the ExxonMobil merger. And you can see by the variability that the Chemicals business is cyclical. Now the increase in demand has been much more steady, but supply additions have tended to come in waves of investment and temporarily oversupplied the market. And you can also see from this plot that over time and through these cycles, we've grown earnings and we've grown ROCE. And that's the view we take as we invest in this business, that there's a steadily growing demand for chemical products and investing through the cycle is the way you win in the long term. And we invest with some really unique advantages. Again, I'll mention 3 that are highlighted here. I'm going to come back to this proprietary catalyst technology. It underpins this slate of 200 performance products that are really a differentiating strength in our Chemicals business. And the technology and market facing required with those performance products are enabled by our scale. Over 75% of the markets that we sell our products into, we hold the number 1 or number 2 market position. 75% number 1 or number 2 market position. And scale also enables this industry leading global supply organization. I'll show you a graphic on this too. We're moving products all around the world, in total over 500,000 product deliveries to customers in 130 countries. Now let's talk about how we're delivering on commitments in the Chemicals business. And again, I'll start with the chart Darren showed earlier and I'll hone in on the Chemicals section of that And start with projects and of the 13 new facilities we talked about last year, 7 of those are now online. The remainder are all on schedule and I'll talk about all 6 of them today. With the start up of the new steam cracker in Baytown and the polyethylene unit at Mont Belvieu, we delivered 6% sales growth in 2018. We grew our performance products in line with our long term plans, and we're well positioned for growth with the planned manufacturing capacity additions and then also very importantly with the innovative innovation pipeline that's required to create the demand for these products. So let me now talk to you about the plans for these 6 upcoming facilities starting with the new ethane cracker in South Texas. We're working with our partner SABIC on what will be the world's largest ethane cracker. It's going to be paired with derivative units to manufacture polyethylene and ethylene glycol. The site has a 25% unit cost versus advantage versus industry and is primarily due to 3 things: The scale advantage of building the world's largest ethane cracker, optimized design with a lot of modularization that's going to lower our construction costs and reduce our footprint, and then leveraging this extensive greenfield project experience and expertise that our upstream has built up over decades in how we're executing this project. The startup is planned for 2022. It's going to deliver annual earnings of $500,000,000 a year once it's up and running, And it's economically robust across a range of prices, including levels that are well below what we're seeing today. So we're well underway on a series of olefin derivative projects as well. I didn't really talk about these too much last year, so let me spend a minute on these. These are 4 projects that combined represent slightly below $4,000,000,000 of investment and are going to generate $600,000,000 a year in earnings by 2023. Hit all 4 of them real quick. The Beaumont polyethylene unit, it contributes first, comes online in the middle of this year. The ethylene feed for this unit is coming from the new Baytown cracker. We're planning another polypropylene plant in Baton Rouge to manufacture our premium impact copolymer polypropylene. It's a key component in vehicle lightweighting. And then the last two projects are both at Baytown and they're going to be executed together project for project cost savings. The first is a Vistamax unit, which is a unique proprietary propylene plastomer. Added to many plastic units and plastic products and also some nonwoven fabrics to improve like flexibility, elasticity and softness. And then much of the product from the LAO plant will be used in our synthetics lubricants chain. In fact, we're the largest LAO consumer today. So there's some back integration benefits of this project. All of these are world scale projects. They produce high value performance products and they benefit from integration from being built at existing sites. If you think about these together combined, it offers much of the economic punch, economic impact of a new steam cracker, a little more cost effective, a little lower risk given these are businesses we're already in at locations where we're already producing today, but similar in terms of scale and economic impact. And then the last one I'll talk about is the newest of these 6 projects, which is our proposed liquids cracker in China. We announced in the Q3 of last year an HOA with the Guangdong province to build a 1.2 MTA mixed feed steam cracker. And the plan is that this cracker would have the capability to directly crack crude utilizing our proprietary technology. And the only cracker that does that today is at our Singapore integrated complex. This project is still pretty early in the development phase, but should we make a decision to proceed? It's expected to start up in 2023. And as you can see, we generate $700,000,000 in earnings. And we plan to manufacture performance polypropylene and polyethylene products for the Chinese market. And we're currently supplying the Chinese market today with a wide slate of products. And let me show you how we're doing that. In terms of competitive advantages for the chemical company, I'd say technology is the greatest competitive advantage, but close behind that is its global footprint. It's 20 manufacturing sites, supplying products that are sold to 5,000 customers in 130 countries. And it gives us significant flexibility, flexibility to deal with geopolitical uncertainty or other trade flow interruptions. So for example, we can supply Chinese customers from our in country Fujian joint venture, from Singapore, from the U. S. Or if need be from the Middle East or from Europe. So that's a lot of flexibility. And this is one of the examples of scale advantage in the corporation. When you see this chart, you see where we're producing all around the world, where we're moving product to, significant, I think, good picture of scale advantage. And then I'll follow that up with one of the best examples of technology advantage in the corporation. And that's around these higher value performance products. By 2025, we plan to grow these performance products by 50% versus where we were in 'seventeen. And this is what it takes. The activities along this arrow are an innovation pipeline that's been built up over decades. It's been built up for a long, long time. The numbers alongside of it are what we accomplished in 2018. So 46 new programs initiated, 71 plant trials, 8 new products, 6 new applications, 2,500 new customer product application leads and 1600 customer trials. A lot of activity around this innovation pipeline. All of these rely on that first one, which is a constant flow of new innovation coming from our technology organization. And this gets back to that catalyst and process technology we talked about earlier. That is the core of starting this whole innovation pipeline. We got to develop continue to develop new products that offer new performance properties for our customers so they can improve their businesses and will increase demand for our products. And all of these activities require that ecosystem in the middle. With 80 application development teams working with these 5,000 customers and working with this existing slate of 200 products to keep developing new applications for these products. So the key to success here is developing additional value for our customers that will create additional demand for these products. It's an activity set that would be extremely difficult to replicate and provides a real sustainable competitive advantage for a chemicals company. So now let me wrap up the chemicals side of the presentation with an earnings projection. The earnings bars here are showing 2017 2025 broken out between Performance Products and Commodity Chemicals. The earnings potential doubles by 2025 versus 2017 with a combination of 30% sales volumes growth and a mix upgrade to higher value products. Now the outlook is consistent with what I showed you last year. However, two things have changed since then. First is the industry margin environment has softened due to oversupply. It's consistent with the history of cyclicality that I showed you earlier. We can't really predict what that margin is going to be in 2025 or in 2020 or in 2019. But so we're showing you the action this is based on the 2017 margin environment. And the second thing that's changed, and I would say this is pretty important, it goes back to a comment that Darren made earlier, is our confidence in this outlook has increased. You think about what's happened over the last 12 months, our Baytown cracker is now online. We have our work is well underway at the Gulf Coast Growth Venture. And all four of these derivative projects that I talked about, as they have progressed through our project gates, they have continued to look as good or better than what we thought they would. And then all the activity level I talked about around this innovation pipeline of Performance Products too, that significant activity level. That's the activity level we need. We're already at that activity level to generate that 50% sales growth. So it's really, really an exciting outlook for our Chemicals business. So wrapping up, the Chemicals business is on track with the growth plan described last year. We're growing our new sales volumes in North America and Asia with a focus on these high value performance products and leveraging the integration and scale advantages to anticipate and meet our customer needs. And versus 2017 and in 2017 flat margins, this plan yields a 45% earnings growth by 2020 and 100% earnings growth by 2025. So just before I hand it over to Andy and wrap up both the Downstream and Chemicals businesses, let me just reemphasize that doubling earnings is the outcome of an activity plan. It's an aggressive plan for sure, but we think it's very achievable given our large, talented, capable and very much motivated workforce that as I mentioned before is organized for success. So with that, thanks for your time. I'm going to hand it over to Andy Swager, who's going to share the investment financial plan. Good morning, everybody. The photograph on the screen behind me, quite beautiful. It shows a portion of our infrastructure associated with the Papua New Guinea liquefied natural gas project. As you can see, there's plenty of room for cost effective and profitable expansion. You've heard Darren, Neil and Jack talk about the fundamentals of the business this morning. You've heard them talk about our competitive advantages. Heard Darren discuss what capital discipline means as we define it, and you've seen bits and pieces of the financial performance illustrated throughout that. I'm going to wrap that up a little bit today and talk about our philosophy as we look forward. The investments we're making structurally improve the capacity of the business to generate earnings and cash flow while increasing returns. Let me stop and reiterate some of the numbers that you heard earlier on that, talk about from last year to this year. In the period 2019 to 2020, just 2019 to 2020, we see our earnings growth grow by $4,000,000,000 over what we had last year and cash is up $5,000,000 in that period 2019 2020. We take the longer period, 'nineteen to 2025, we've talked about an incremental $4,000,000,000 of CapEx, $2,000,000,000 of which is in 2019 and that produces $9,000,000,000 of incremental earnings over that period 2019 to 2025 and leads to $24,000,000,000 of additional cash flow. That's the performance period on period. As we mentioned before, all the investments we make are subject to rigorous testing. We can't predict prices. We test them at the low range. We test them at the high range. We look at resiliency, durability, all the key factors. Our investments are robust across a range of prices and scenarios. The carrier program like we're proposed to carry out, you need to have the financial strength and organizational capacity to enable that investment across the business cycle. We are a capital intensive industry. You have to have financial strength and organizational capacity to do what we do. And finally, value creation remains the priority. It is what ultimately generates free cash flow and provides the potential to increase shareholder distributions over time. Now, I'll sort of reconnect with the earnings that were described earlier. This is the earning profile that Darren went through, but expanded to show some sensitivity cases. It includes the $60 flat case, talked about before as well as a $40 a barrel and $80 a barrel price environment. As has been outlined, the advantaged investments we're making fundamentally enhance and expand and have expanded our earnings and cash flow generation capacity. Relative to when we started this journey back in 2017 as our baseline, the earnings potential grows by 140% in a flat $60 a barrel environment. When we look at the downside, testing those plans at $40 a barrel, even at that case, the $40 a barrel case, the earnings grow 40% by 2025 versus 2017 when crude averaged $54 a barrel. I move to cash flow. The cash flow from operations and asset sales story mirrors earnings. As I highlighted before, the cash flow potential adds an incremental $24,000,000,000 over the period versus the potential we identified last March. As shown here illustrates the downside and upside to these numbers as prices and margins will inevitably vary from our $60 a barrel basis. Both the $40 the $80 scenario It's a pretty exciting story of what has been a reshaped portfolio that is robust across a range of prices. Let me give you a couple of reference points. At $40 a barrel, cash flow from operations and asset sales in 2025 is still nearly 20% higher than our actual cash flow was in 2018 when Brent averaged $71 a barrel. If I look at the high side case at $80 a barrel, the cash flow in 2025 exceeds $75,000,000,000 Think about a reference point back in 2011, 2012 when crude averaged about $111 a barrel. Our cash flow at that time was $55,000,000,000 to $56,000,000,000 per year against the $75,000,000,000 case at $80 with this reshaped and advantaged portfolio. Talked a lot about earnings and cash flow growth, but it's important to keep in mind that returns on capital are increasing as well. In a flat price environment, returns double by 2025 with ratable growth between now and then. It all comes back to having advantage investments and the wherewithal and confidence to deliver. This chart provides a summary of the key projects we're executing over the next 2 years, which enable that earnings and cash flow growth. I've said before, our view of capital discipline is making advantaged investments in value accretive projects that will compete with industry and across a range of commodity prices and scenarios. To do that, we need to have robust processes in place that maintain discipline over those investments and investment decisions, including reappraising completed projects, learning the learnings and holding individuals accountable. As noted at the bottom of the chart and previously discussed, our CapEx to cash flow ratio is approximately 75%, in line with our historic average. Now I'll put the plans in context of how our organization will deliver. Execution capacity. The challenge of executing our portfolio of projects is critical to value creation, and it is one that our organization has proven over many years we can meet. We pride ourselves on a long history of project execution with experience in all the key areas we're investing in today: deepwater from years in the Gulf of Mexico, West Africa LNG in Indonesia, Qatar, Papua and New Guinea. We talk about unconventionals, the Permian, significant growth potential. We have tremendous capability when we combine the expertise and agility of XTO with ExxonMobil's experience in delivering large scale projects. Think about what Neil described in terms of the approach we're taking for that Permian development. It's very much a mirror of a large project development, the kinds of things we've been doing for decades. Advancing these investments at a time when others are pulling back also enables us to secure high quality contractor capacity in addition to the equipment and material savings and as outlined before in some of the index charts. This is the time to be leaning in, not leaning out. The data on this chart, one side of it, shows our total CapEx and our project resources, the people we had devoted to doing projects back in 2013 relative to what we see ahead of us in the period of time we're talking about. The mix of projects is obviously different, but I think that the bars clearly demonstrate that we are capable of managing this level of activity going forward. We've done this before, overheated environments, difficult environments, challenging environments around the world, put it all in context of what we have before us, we can do it. Neil talked about the upstream reorganization earlier, also mentioned the projects reorganization we announced at the same time. Let me elaborate a little bit on that. With this change, we have brought together all of the major capital project planning and delivery expertise across ExxonMobil. This is thousands of people with knowledge, deep knowledge and experience now in a single organization that will execute for the upstream, downstream and chemical segments. This allows us to optimize deployment of our global project expertise and ensure that the project learnings and experience are leveraged across the entire corporation. It is critical that we fully utilize the depth of our talent to get the most out of our investments. With that organizational strength, you also need financial strength. I'll talk about that. Our strong balance sheet affords us best in class financial flexibility. This chart shows a plot of leverage versus total capitalization for the competitor group with the ratings from the credit agencies. Maintaining specific ratings is not our objective. The industry we're in with long term investment horizons, is important to have constancy of purpose. The commodity cycle can be volatile. Our focus is on maintaining appropriate capacity at attractive terms to do what we want to do, to be positioned to invest through the cycle and to be able to take advantage when opportunities present themselves, particularly in down cycles. We are in a good place. We've been able to take advantage of a number of opportunities in recent years in the down cycle. Set up the growth potential we have before us, all while maintaining a reliable and growing dividend. Chart shows our dividend growth rate in recent history. We have significant growth over the last 10 years at rates well in excess of our peers. We remain committed to a reliable and growing dividend building on 36 years of increases. Now what I'd like to do is talk about our philosophy on the use of free cash flow. This chart shows a summary of our free cash flow potential between now and 2025 2019 through 2025 period, assuming a flat real $60 price environment and $25,000,000,000 of asset sales, which includes a $15,000,000,000 of upstream sales over the period 2019 to 2021. The total free cash flow potential is shown in the center of the donut and it totals more than $190,000,000,000 Now how do we think about that? We have a long history on the dividend side, which always takes some of that free cash flow. We can't presume what the Board will decide on future dividend payouts. But just to illustrate the point, taken 2018 dividends and held that flat over the time period. That results in dividend distributions of about 100,000,000,000 dollars So that's the top of the donut there. That leaves $90,000,000,000 of available capacity. Let me tell you how we think about that $90,000,000,000 of available capacity. This capacity can be used to fund additional accretive investments, grow the dividend, balance sheet maintenance or further distributions through share buybacks. We've talked this morning about the investments we're making. They're key to growing shareholder value over the long term. We have to continuously improve the capacity of the business to generate cash through advantaged investments. And indeed, as I said before and as Darren mentioned, we added an additional $4,000,000,000 of CapEx in this period to take advantage of some of those opportunities to accelerate the Permian to do more in Guyana having found more resource. We will continue to look for incremental accretive opportunities including M and A and we will retain the financial flexibility to pursue those. As I noted earlier, we have a record of paying a reliable and growing dividend. A portion of this capacity can be used to grow the dividend beyond 2018 levels. 2nd on the priorities here. Earlier, I spoke about the strength of our balance sheet. We reduced debt by $4,500,000,000 in 2018 last year. We have best in class financial flexibility with a capital structure, which allows us to execute our plans with no need to further reduce debt. That leaves share repurchases, which we have always noted as an excellent vehicle to distribute value to investors. As we execute the plans we've talked about this morning, including the increased upstream divestment program, we would be we would expect to be in a position to commence a repurchase program. When and what level will be dependent on the business environment, including the results from the divestment program. That's the summary of how we think about the use of free cash flow. In closing, our investment plans drive significant growth in value that represent a structural improvement in capacity to generate earnings, an additional $4,000,000,000 in the 1st 2 years, 20 19, 20 9. Improvement in capacity and cash flow, dollars 5,000,000,000 of additional cash in 'nineteen and 'twenty and improved returns throughout the period through a robust and resilient set of investments. We are committed to maintaining financial strength that provides flexibility to deploy capital for value accretive projects. This ultimately generates significant free cash flow potential for shareholder distributions. We talked about what our philosophy is on that. I'll now turn back to Darren for some closing thoughts. Thanks, Andy. All right. Let me just wrap up here before we get into the Q and As. Hopefully, today you got a better understanding of where we're taking the business and the approach that we're generating and we're using to generate value. I have to tell you, we've been very excited about the additional opportunities that you heard about today, both in the short term with the growth that we're seeing in earnings and cash in the next year or 2, as well as the improvements that we've made over the long term. All of that is underpinned with our competitive advantage, which is allowing us to maximize the value of our assets across that full value chain and develop a portfolio of investments that outperform competition across the price cycles. The plan reflects the strongest set of opportunities we've had since the merger of ExxonMobil. We're making excellent progress on those plans. We're extremely confident in delivering on them and looking forward to your questions and the discussion that follow. So we invite the rest of the management committee up and take your questions and hopefully have a good discussion from there. Thank you. Thank you, Darren. We'd like to now open the floor to your questions. So when I call on you, I would ask you to state your name and your affiliation. We would appreciate if you would limit your questions to 1 and then one follow-up to allow sufficient time for everyone else to ask a question. Also, we do have folks with microphones. If you will just wait until you get the microphone so everybody can hear your question. So with that, let me start with Blake Fernandez over here. And I'm still learning everybody's name, so I will do my best. But if I don't know your name, I apologize in advance. Thank you. I appreciate the presentation. We've obviously got a very attractive resource base. And the only, I guess, question I really have is that given the size of Exxon, you're almost the size of an OPEC member. And by continuing to invest into the market, you're essentially adding an awful lot of volumes. Would it not make more sense to phase the investment to just kind of slowly add the resources into the market a little bit slower? Well, I think if you look at our size, while we are a big company, we're less than 3% of the global supply. And so I think as we look at it and the way we judge and think about our investment profile and how we go into the marketplace, it comes back to just making sure that what we are introducing is competitive across a broad set of price environments and is competitive with the alternatives that our competitors have and that we see potentially coming into the marketplace. So I think from our perspective, we're relatively small in the grander scheme of the market, and we're bringing in advantaged assets to compete in that big market. The only other follow-up was just could you clarify the 4.0 of production in 2019? Does that contemplate the Canadian curtailments? Yes, yes, it does. I mean the Canadian curtailments was originally, it was 8 0.75%, you might remember. They relinquished some of that right now, but that's all comprehended in that number. I think what I would add to you is the scale of that is within the accuracy or the flexibility of what we could estimate. Let me go over here to Neil Mehta. So my first question is around asset monetization and $15,000,000,000 won't call it target, but number that you put out there. Just your thoughts on whether that's more upstream oriented with the downstream pruning having already been executed? And any color in terms of geography or the framework for thinking about what assets you would characterize as more non core? Let me I'll start broad pitching and let Neil get into a little bit more specifics. I think historically, when I gave you the perspective of our divestment program, historically, we haven't built a lot of those into our plans until we were very close to executing an agreement. As we look going forward, as I mentioned in the presentation, we have built those that investment those divestments into our plan, and that is basically the Upstream divestment portfolio. The Downstream, there is work going on there. I would tell you though that because of the work that we've done historically, the size of the Downstream portfolio that we're interested in looking at is a lot smaller than the Upstream. And so trying to predict how those would come into the plan and when they would come in would be a heck of a lot harder. I think with the upstream now with the broader portfolio that we're now able to look at given all the new stuff that's come in, we can put a bigger piece into that divestment program and then risk adjusted, as Neil talked about. I'll let you talk a little bit about that. Yes. And frankly, I don't want to get into a lot of details on the specific assets. I don't think that's probably appropriate. What I would tell you is about 50% of those assets are already in the market. So we're already marketing them. The point of a risk profile is I don't know the results of what we're going to get for this. Obviously, we have estimated. I characterize the choices we've made in terms of those divestments. It's all about looking at opportunities where somebody else values an asset more than we do. To me, it's about focusing our resources on the higher growth potential of our portfolio. But it's a risk number. So if we do better than we expect, we'd be higher than that number. But we feel pretty confident that we can achieve the $15,000,000,000 Thanks, Darren and Neil. The follow-up is the shape of the Permian production curve. And so 2019, the growth looks linear, but by 2020, it's more hyperbolic. And so can you just talk about the shape of the curve, what you're doing now to ultimately set yourself up for that acceleration that you see in 2020, 2021? Yes. It goes back if I could tell you, it's Darren. It goes back to the development plan that we have in place. You may remember I talked about these development corridors. I talked about putting the infrastructure in place. It's about putting all of that machine on. So what we've done in 2018 and we will continue to do in 2019 is an element of delineation of understanding the resource, a lot of building the infrastructure such that when we bring those wells on, we have evacuation and we have separation facilities in place. That's what we've been doing in 2018. We'll do more of that in 2019. Once it's all in place, then we can unleash the hounds. I mean, that's really what it is. And that's why you get that inflection on the curve. Thank you. It's Paul Sankey at Mizuho. If I could just follow-up on that hyperbolic Permian curve. There is known tightness in labor in the Permian, and you're adding rigs in an extremely rapid rate. I would have thought there was a very high risk that your costs start to go hyperbolic as well. Would you then be downgrading those numbers? Or how or are you that convinced that your the framework that you laid out is actually going to deliver the volumes and you'll be okay on costs? Yes. Paul, I think it's all about anticipating and managing that. There's a tremendous activity going on in the Permian. You go to Carlsbad right now in New Mexico and you see the amount of activity. It's very, very visible to everybody. That's why modularization is such an important component of what we're talking about. People often talk about D and C costs drilling and completion costs. And you've heard the numbers in the industry. It's $10 a barrel, dollars 7 a barrel, it's coming down. Everyone's targeting that $5 a barrel. That doesn't tell you the whole story about the cost of operating in the Permian. It's much more than drilling and completion. It's all of that infrastructure. And while there always is going to be inflationary pressure, when you put in the amount of capital that we're planning to put in and we are putting in today with that growth potential, You mitigate it by modularizing, which means you build those facilities outside of the region. Understood, Darren. The follow-up sorry go ahead. Just to finish on that Paul. We're already I think running 44 rigs today. I think we're going to 55 rigs. So it's well within the capacity of what we've got available. Darren, if I could follow-up to Tunil, the conversation that we briefly shared, all these plans are really from your existing acreage. You don't need to buy anything. You might if you had the right opportunity, and we've seen you do it with BaaS, but it feels like a big deal is not what you need. Well, I think we talked about in the past, we're always looking for opportunities to find a value accretive acquisition or merger opportunity. And we continue to be very active in that space, testing to make sure there if there's an opportunity that presents itself. But as you point out, as we've talked about, it's not needed. We've got a portfolio of resources today that allow us to do what we need to do, and that's what we're focused on doing. If the market develops in such a way that an opportunity presents itself that we can see additional value through an acquisition, we'd pursue that. I think today, we don't see that opportunity pending, but we're always on the lookout for it. And Darren, I think I can just add to Darren's point. That doesn't mean to say we're not looking for bolt on opportunities. As we talked about and it's been much talked about in the industry, the potential of further consolidation in the basin. Well, that may or may not happen, but certainly there are opportunities for bolt on acquisitions for swaps and trades of acreage. I would tell you we're very active in that field. Do you want me to move up to the front here with the Dougs and we'll go alphabetical order and start with Leggate. Thank you. Doug Leggate from Bank of America. Guys, I wonder if I could start with Slide 69. I just want to make sure the arithmetic is correct. 2.7 plus 2.5, obviously, 5.2, that's net of disposals. And my question is 750 from Guyana, seems like you're being quite significantly conservative there. So I wonder if I could just ask you to speak to what's framing the 750 assumption right now. And if I look in the appendix, it's showing Phases 45 combined at 230,000 barrels a day. So something is not adding up. Can you elaborate as to what the upside case is for Guyana in the 2020, 2020? I'll take it. Well, look, Doug, as I said in the discussion, this is a very, very active area. We had, what did we say, 5 discoveries in 2017 already 2, which we have not quantified fully yet in 2018. And that's causing us to look even more closely at our development plans. Not the first three boats, we've defined those, but 45 and whatever comes beyond that. Yes, you can say it is conservative. It's very important that we work with our partners. It's very important that we characterize these discoveries appropriately to get the most capital efficient development plan. We went out and said actually, we said we were, I think, greater than 750,000,000 I think it was the number that we used in our press release or media release. We're sticking with that right now. This time last year, I told you it was 500,000,000. Now we're saying it's 750. We'll see how we characterize these in exploration successes. We'll see what we get going down the road, and we'll see if that changes in time. I know you want to push for a larger number. We've got to work with the stakeholders in this. It's very important that we get aligned with our partners and also with the government of Guyana. And that's what we're doing. Well, on the bottom line, Doug, I'll just add to that. The real story there is we're finding large resources that are economic to produce. And then how we translate that into our plans is the piece that Neil is talking about. But for me, the important part is that we're finding these economic resources in large quantities. And they are one of the advantages that we're seeing in this additional CapEx that we've talked about, and I mentioned this a little bit at the break, kind of channeling my Downstream experience. When you look at investments in the Downstream, we look for what we call brownfield investment opportunities, opportunities to on to things you're already doing because you find those are the most capital efficient, you get the highest return, the best value. The additional CapEx that we've talked about today, the $4,000,000,000 over this time frame is essentially that brownfield expansion. It's the Guyana resources that we're already developing. It's the Permian that we're already developing. And through the work that we've done over the course of the year, we found additional opportunity. That is low cost incremental capital for big returns, as Andy talked about, big returns in earnings, big returns in cash flow. And so that to me is the important story is that as we learn more and discover more, they are bolt ons to what we're currently doing. That is very highly productive, efficient capital spending. And that's what you see us doing. To be clear, Neil, the CapEx budget assumes 5 boats. There's no upside to the CapEx for the 5 boat scenario. Yes. Yes. For 2025. But I would say this, we have flexibility. And I really want to reinforce this whole portfolio concept that I talked about so frequently. We have choices. If we find something in Guyana that's more productive than something else, we have the ability to flex, to either switch out or add on. But switch out is definitely an option. The other point I think is really important in Guyana, and I'm not sure whether I mentioned this in my comments, the recent discoveries we've had have opened up some new geological concepts, which are positive and somewhat surprising to what we had historically. So and the reason I say all of that, it's a rapidly evolving field. To go from 3,000,000,000 barrels last year to nearly double in 12 months, We want to make sure that we invest capital efficiently. Thank you, Matt. My follow-up is either Andy or Darren. The list of the disposal number is actually €25,000,000,000 through 2025, reading your slide deck. 2025 reading your slide deck. That implies a little bit of a slowdown. So I wonder if you could address that. But also just to be clear on your messaging, Andy, are you signaling that debt reduction is done and surplus free cash is now available for share buybacks? First on the divestments, we've emphasized the $15,000,000,000 in the 2019 to 2021 period. And then just for modeling purpose sort of reverted to the mean, the average that we've been selling in the past. What we find as we go through the portfolio work that Neil is talking about, particularly in the upstream, we'll see. We'll see. But just to model it, we're stuck with the historical average after that period there. What I said about the balance sheet is, when we look at where we are now, we did what we've done over the past few years in debt reduction. We've spent a lot of time looking at our capital structure. We're comfortable that it meets all our needs to do what we need to do going forward. It gives us the flexibility. It gives us the ability to handle severe stress tests. It gives us the opportunity to pursue additional things that we need to. So we don't see the need to do any more debt reduction now. Now the implicit thing from that is that it does mean that free cash potential, at least for the near term and we're in that happy position, is not going to be allocated to debt reduction. Darren, you suggested that some of your peers might be under investing because of a lack of competitively advantaged investment opportunities and or execution capabilities, you might have mentioned something else too. However, supermajor returns on capital did decline by about 2 thirds during the past decade and they were below capital costs during the past 5 years, which suggests that lower spending might have been more beneficial to shareholders. And think that point is underscored by significant underperformance versus S and P 500 over both periods. So my question is, while you make a really compelling case, I think, for quality of your portfolio today, my question is what drives your confidence that you're going to be able to execute? Meaning, Andy talked about the reorganization, talked about a rigorous investment process, I think is the phrase that he used. What is it? Or is it more portfolio quality that makes you really confident that you're going to be able to perform in differential fashion, not only versus the past decade, but also versus your peers going forward? Yes. Thanks, Doug. Let me just kind of clarify because the point that I made about capital discipline was putting an artificial cap irrespective of what your opportunity set looks like is not capital discipline. The capital discipline as we look at it is making sure that you've got a you're investing in things that are going to generate value and a return under a broad set of price environments. And so it's not about the level, it's not about an absolute number, it's about how advantaged is your portfolio. To take your question then as you look back in time at the history, I think context is important. Where were you at in the price cycle? A lot of the numbers and the things that you're referring to in terms of the productivity of the capital happened in the peak of the cycle, which by the way, I would say is the trend that this audience tends to push that pull back on capital when you're in a low price environment, when there's spare capacity, get your capital spending down because cash flows are lower, be disciplined, which then leads you to an reinforces what I would say is unproductive capital spending. So the emphasis that I hear from a lot of the community reinforces the things that you're worried about that we've seen in the past, which is this pullback when prices are down and low and investment prices get high. That's exactly the wrong answer from our perspective. The advantage of having a large balance sheet is to allow us to take advantage of countercyclicality. And so what gives me the confidence today as I look forward, we're doing that. When everybody else pulled back out of the market because of this concern that you just talked about, opportunities opened up and we reached in and grabbed them. And now we're pursuing them. As I showed you with the price chart, the market and the environment is a good time to be out there. So we're happy with the way the rest of the industry is looking at this thing because it's given us an opportunity. And we're translating that into returns into our projects. So that's why I'm confident. You can go out and look at the macro indicators. You can look at the levels of investment. You can choose what you choose to look at. All of them suggest that the industry is pulling back in a time that we can see in the future, we're going to need some production. We're going to be there to supply that. So Darren, to be clear, I'm not advocating that companies overinvest at the peak and underinvest at the trough. I'm advocating for balance through the entire cycle because historically that's led to better returns and better valuation for everybody and that's worked pretty well. And I think you guys are communicating that today. So I just wanted to clarify that. Yes, that's fine. I would also say it's a function of what opportunities become available. And generally, in the down cycle, more opportunities available than in the up cycle. There's less competition for them. Okay. Let me go over here to Phil Gresh. Hey, good morning. Phil Gresh, JPMorgan. Darren, I thought you made an interesting comment when you're talking about the macro and how it relates to what the appropriate level of spending is for ExxonMobil over the long term, $30,000,000,000 to $35,000,000,000 number. And you also made the comment that the increment that you're doing this year is mostly towards brownfield opportunities, not a huge increase, but high returns to it. So if I put all that in context and where you feel you are, you had a really big increase last year and moderate increase this year in spending. So I know you don't want to give a cap and you said that in the very beginning very clearly, but is this kind of the range that you think is appropriate for the opportunities in the portfolio that you see right now over the next few years? Or do you think there are more opportunities that could be out there? Because Neil also mentioned the Golden Pass was in the numbers last year. We just didn't know it. So I'm just kind of curious how you're thinking about this more broadly. Sure. Yes. Thanks, Phil. Yes, I think the point I want to make on that, the 32% the 33% to 35% that I used to reference what IEA was suggesting, That in our mind is not a target or it doesn't suggest what we should be spending at. That's just to kind of frame an outside third party's perspective of what the industry required. And if we wanted to keep our market position, what would be required on our part. So there's more context than anything else. It doesn't really factor into how we think about what we should be doing because again, it comes back to what are the investment opportunities that we have. And then we look at that how does it compare to what, say, others are doing and where we've historically been, which is some of the charts we've been showing. I think the point I want to make, as we've looked at this portfolio, we've talked the increases here in the short term and we've shared that with you. When you blow that out across the 2019 to 2025 time, you basically seen the increases in the CapEx we're talking about. It's $4,000,000,000 That's that entire time frame. And then with that $4,000,000,000 comes the $40,000,000,000 of additional NPV, comes the $9,000,000,000 of additional earnings, comes $24,000,000,000 of additional cash. And so when I talk about the brownfield nature of it, it's that kind of returns that you're getting for that level of capital spending, which is why we have brought that into plan and why it's so exciting for us, because those types of opportunities in mature industry don't happen that often. And it's because of the success that we've had in developing the Permian and success that we've had in Guyana that makes that small incremental CapEx very, very productive. And I think what we've got today by sharing that 2025, we've got a good we've got a very good horizon of our portfolio. We like what we see. We like the pace that we've got. And as Neil said, one of the big differences today versus the past is we've got lots of optionality. In the past, when people criticized the industry for missing targets, it's because you had a fixed set of opportunities. And if something happened with one of those opportunities, that was translated directly into your results. The beauty of what we've got today because of what we've been doing is, as Neil said, we can shift these things. We can move them around and make sure that we're comfortable with the pacing. So these projects are large. There's lots of variables that go into them. Things are going to move around. But having a very large portfolio allows you to mitigate any of that. So we feel pretty good about it. Yes. And I think also, Darren, we've got this combination now of short cycle and long cycle investments. That's we haven't had that historically. The Permian gives us the flexibility with short cycle investments versus the more traditional deepwater investments that you've seen historically. I'd also say on the Downstream and Chemical side, we're starting to look more and more beyond 2025. We've got a couple of more steam crackers in mind, but they'd be out in time a bit. So 2025 is what we're talking about, but we're looking continuing to look long term. My follow-up question is just on a bit more intermediate term looking into 2020 guidance that you provided, up $4,000,000,000 from 2019. And if you just kind of look at the last year to this year, up about $2,000,000,000 or so versus the prior guidance. If I look at the production for 2020 for the Permian, it's actually pretty flash. The escalation in the Permian starts in 2021, if I look at that slide. Guyana for 2020 is about the same. So I'm just trying to understand better what drives the 2020 earnings increase versus the prior guidance, given it doesn't seem like it's Upstream production, if I'm reading that correctly? Yes. I think that's a good read. I mean, we've talked about before in the Upstream capital intensive investments is that you can't it's hard to accelerate that if you're going to do it right and do it in the pace that gives you the maximum value for the investments that you make. So the shorter term things you're seeing is stuff that's in Jack's portfolio that we're going to bring online and see that ramping up and then some of the divestments that we brought into the portfolio. Yes. I did talk about our outlook for the period is up in terms of earnings for the Downstream Chemical. And so a good chunk of that is Downstream. And so those activities I showed you on that pie chart, they're all, again, enabled by this new organization that's looking across the value chain, we've got a lot more opportunities and we've been out prosecuting that plan. So yes, our 2020 outlook is up a bit. And maybe, Phil, I'll just add. One of the changes, which I'm not sure how well fully understood it is, has been kind of us communicating and then being understood. Neil today talked about the change that we're making in the Upstream from an organizational standpoint. Last year in 2018, we made a change in the Downstream. And the way to think about that and what you're seeing in the short term and the things that Jack just talked about is a direct result of that change that we did in the Downstream from an organizational standpoint. Let me give you some context on why we did what we did and why we're seeing value there. If you think back on the organizational construct we had prior to the changes that we've announced, they were formed after the merger of ExxonMobil. And they were formed primarily to take advantage of the fact that we had 2 good companies come together and have a broad array of opportunities that's value creation steps within the portfolio that we brought together. And so our organization was designed to take advantage of that and prosecute the benefits associated with bringing 2 companies together. And that drove a lot of the functional excellence that we talk about today, brought huge value to the corporation, very effective organizational concept for bringing those 2 together. What we're moving to now is hanging on to the functional excellence that we've created and move into a business model that allows our businesses to see along the full value chain rather than along the functional lines and then optimize across that. And that allows each of the functional companies that existed before that functional excellence to be applied across the whole full value chain, and that's where we're getting additional value. That's why we've got the additional trading that you've seen. That's why people can now put some of the optimization steps that Jack talked about in the refinery, put that in proper context and go pursue those. And that's the benefits we think we're going to see in the Upstream and Nils Organization with each of those businesses, leveraging the functional excellence but prosecuting across the value chain. It's going to make a big difference. Rosita, why don't we come back here to Paul Cheng. Paul Cheng, Barclays. Two questions, I think one for Neil and the other one for Darren. For Neil, the Permian, I think by the end of this year, you guys looking at 55 rig 16 crew. And in your program that is that going to stay constant for the rest of the period or that that's going to fluctuate? And also that you have a new partnership with Microsoft on the digitalization and all that. The earning and cash flow growth for the next several years, I mean, how much is that driven by the digitalization process? Thanks, Paul. Let me answer the question on number of rigs. Number of rigs out there is our estimate right now for the end of the year. That's the €55,000,000 is what we said. The important part about this Permian is there's a tremendous amount of learning going on all of the time. And that was the point I was trying to make in my topic, in my discussion. So we're estimating 55 rigs a day. That's what we believe. That's the basis of our development plan. Could it be less? Yes, it could. Could it be slightly more? Yes, it could. I think the observers on this industry talk so much about the number of rigs. I would just urge caution. Number of rigs doesn't tell a whole story about the cost in the Permian at all. People talk about D and C drilling and completion costs. They like to link the number of rigs to production. The quality of the resource geographically and by each horizontal lateral changes dramatically. The amount of money that you have to invest in logistics and separation facilities, Paul was, I think, getting to that point earlier on, is really, really important. So what I've done, Paul, is I've given guidance on the number of rigs. That's where I think we will end up. Could it go up the year afterwards? Maybe. But right now, we're looking as far as the end of this year at 55. How about the earning and cash flow growth? How much is driven by the digitalization? Sorry, yes, I apologize for second question. Well, I think we gave a number in the press release. I think we said something like 5% of our volume will be from the is analyzing the data from the wells that we have already drilled, from the wells that we have already completed is significantly impacting what we're doing going forward. And the partnership with Microsoft is how we use the cloud environment to analyze vast quantitative data and get those analytics quickly into what we're doing in the field. That's the value driver. I talked about this technology program about the desire to improve or increase the amount of hydrocarbon recovery. This is not a 10 year development program. What's so advantageous in this unconventional space is we get a concept, we test it in the lab, we test it in the field, we go back to the lab and we recycle and we recycle very, very quickly. That's the way we're handling this technology program. And the Microsoft piece is a critical part of that to allow us to analyze vast quantities of data very, very quickly and get it back into our development programs. Paul, if I could just add on to the digitalization story. We are really heavily investing in digitalization, and we think it's going to have a big impact, not just in the Permian and the Upstream, but across all the businesses. We have a digital organization set up in each of the Upstream, Downstream and Chemicals businesses, and they're knitted together. And so for instance, in the Downstream, we'll have by the end of the year, we'll have all our refineries will have pervasive wireless. And as Neil said, the sensors cost is coming way down. We're capturing a lot more information. We're feeding all that information into a central optimization team. That's been getting real time information out to make adjustments and our refiners to get that much more day in, day in, hour by hour, minute by minute. So I think you're just seeing the beginning of the impacts of digital in our business. And we've been really have been investing for several years now. We're starting to see a lot of the fruits of that investment. I'd just add to Jack's point on that. Given the scale that we have in our operations and the fact that we can do a lot of that in house and we can justify the investment in the technology centers to process that data is a big advantage for us within across the industry. Darren, second question for you is that, it's a very robust program that you just lay out and you're saying there's a lot of flexibility. So internally, that when you're looking at the program, what is the biggest risk in your mind that could derail your program? Thank you. Our approach to risk mitigation and risk management, which I mean, this is a foundational element of how we run our business, has always been, if you look at our company, diversification. Okay. We're diversified across the globe. We're diversified across the resource types, across nations, governments. We're diversified along the value chain. And so I would tell you, as we look at the risk associated with our portfolio in the upstream and the downstream, it's really thinking through the diversification and making sure that we've got a diverse portfolio so that as things develop, which we know they do, we have the optionality to move things around and to mitigate the impact of any specific area that changes. The other thing I would tell you from a risk mitigation standpoint is understanding the fundamentals. I can't emphasize enough to you the amount of work that we put in to making sure that we're objectively looking at what is driving the foundational elements of what underpins value in this industry. And I go I spend a lot of my time as I travel around the world engaging with government heads, and that's a big part of our conversation, making sure that we understand some of those foundational elements. And so the charts that I showed you and the demands that we put out there are not wishful thinking from our perspective. It is a fifty-fifty kind of P50 understanding of where we think the world is going to go. And if you look at the chart or the chart that Jack showed, I think it's a great example of it's very difficult for any one year, the one that had the earnings over time and the return on capital employed. We know year on year things are going to change. I think we could generate that chart for the downstream. We could generate it for the upstream. We're going to see the same type of volatility in earnings with the price cycle. But as you step back and look at that over time, you see that by staying the course and continuing to invest in value accretive investment opportunities, you improve the potential and the value of that business. And so I think by having that understanding, we can weather some of these short term price cycles because we've got our eye on what we know is going to drive long term value. And final point I'll make on that is that long term value is connected to something that every society around the world values, which is their standards of living. Our plans are based on economies around the world getting better and their standards of living improving and with that economic activity improving. That's a great good news story. That's what our plans are based on. Stephen, why don't we go here to Roger Read. Thank you. Roger Read, Wells Fargo. Looking at the overall investment approach, I guess, you could call it, you laid out in the macro, natural gas and chemicals grow much faster, but you've got fairly aggressive growth program in oil. And maybe thinking about the future disposition programs beyond the 2020 timeframe, is it possible that more balanced with that we should think about the asset sales coming out of maybe more of the oil side to sort of tie in with the longer term macro and then obviously the risk on the Paris Climate 2C program? Well, I think when you talk about the growth in oil, I come back to the point that I tried to make at the very beginning is the depletion nature of the business. When you when you bring in the depleting nature of both oil and gas, they're growing at pretty consistent rates because of the decline rate that you get in the oil side of the equation. And so the whole point of those early charts was to demonstrate that it's not just top line demand growth that you got to think about, it's the subtracting nature of the supply as these reservoirs and resources decline. And that gap is really what's driving our investment program and the opportunity set to invest. And then, of course, we've got to find projects that are advantaged within that opportunity set. And the point I also try to make in that chart is if you look at that red diamond, that red diamond is not our estimate of a 2 degree scenario. That red diamond is the estimate based on a Stanford modeling form. So we said let's go to some 3rd party academics to understand the economies in the energy system and what are their views around where the 2 degree scenario would take us in 2,040. And that red diamond is the average of those 13 modeling exercises done through independent university. That's their view. And what you can see even with that diamond with the 2 degree scenario, which frankly we don't know how to get to yet, society does not know how to get to yet and is not consistent with the Paris agreements yet. But even under that scenario, because of the depletion nature, there's a lot of investment required. So I wouldn't see us making short term divestment decisions based on that gap because the gap is huge, got to be filled. Okay, great. Thanks. And then the, I guess, call it unrelated follow-up on the cash flow side. The $100,000,000,000 of dividends assumes dividend flat from here, if I did the calculation right. So if you grow the dividend with the historical kind of rate, you'd be looking at a dividend approaching maybe $20,000,000,000 by 2025. Should we think about that in this overall process as we think about cash flow that may be available volatility of commodity prices during the cycle and that maybe either cash for acquisitions or accelerated CapEx somewhere along the line isn't quite I'm sorry, that eats up apart and then there isn't as much cash flow left over for share repos or faster dividend growth or something like that. Maybe kind of a quick thought around the flywheel there as to where we really do have the flexibility on the cash flow side? So I think as we've put that together, we've just made a flat line assumption, which is not to suggest what our plans are, but rather than preemptive decisions the Board makes on this is to say that's kind of the base. Our one of our commitments we've always talked about and Andy talked about, we want to make sure that we're continuing to find value accretive investment opportunities because ultimately, they underpin the whole value proposition for this capital intensive industry. So that's the first priority. The second is to maintain a reliable and growing dividend. So that will be a part of the mix, which we haven't reflected in that chart because we haven't made the decisions on that. But your point is not a bad one to kind of think about historically what we've done and what we might do going forward. The capital program, from my perspective, we've got a pretty good dial on that. I don't see that changing dramatically over this time horizon because of the opportunities that we currently got in the portfolio. We may high grade and move some things out, but that looks pretty good to us. As Andy said, the debt situation is pretty comfortable with that. We did a lot of I mentioned on the Q4 call that we were taking a hard look at our capital structure. We had some independent folks come in and kind of evaluate the robustness coming back to strategy of why do we want a balance sheet that size to make sure that we can run through these down cycles and that we don't interrupt what we view as being the right capital program because of where we find ourselves in the price cycle. We're pretty convinced through that independent work outside folks coming in that where we stand today is a pretty good position to do that. So we're in the right place in terms of managing that exposure. So all the upside that comes, I think, really comes back to share repurchases. And that's the way we're thinking about it. Okay. Matt, why don't we go over to Jason? Thank you. It's Jason Gammel with Jefferies. Your ability to vertically integrate in the Permian is pretty unique. So I just want to ask a couple of questions around that. The first is that one of your peers has talked about midstream investors being willing to take a lower rate of return. And so they're quite willing to have someone else build the pipelines, etcetera. Can you talk about why you see significant value in actually owning equity in the midstream infrastructure? And then the second question, it looks like you're pretty well matched between your crude output and your light crude distillation capacity in 2022. Now I would simplistically think that that's going to be giving you a lot more gasoline where your outlook for demand is relatively flat. But can you talk about whether that's correct? And I know in particular that you're talking about 100,000 barrels a day of incremental ULSD coming out of Beaumont with that expansion? And then maybe just finally, are you also looking to potentially export light crude oil because it has more value in a different market other than U. S. Gulf Coast refining? Yes. Let me address a couple of comments and I'll let Jack get into some more detail on it. I think in the long run, when you think about midstream assets, you think about more utility rates of return and lower returns, and I would not disagree with that in the long run or in what I would say are stable markets. But what we have found and our view as we look across that value chain is when you have rapid growth in markets, particularly when you have rapid growth with create let me just call them, spikes of large value. And that value that's why when I talked about being part of the value chain and capturing the value wherever it occurs and wherever it moves to is because in a dynamic market with fast growth with independent players, you're going to find that disconnect those disconnects happen. And our plan right in the short term is to be in each of those positions. So as that value moves from the upstream to the I would I would agree that, that becomes more of a utility type low return business. We probably wouldn't be as interested in that at that point in time, but we don't find ourselves there today. I don't think we're going to be there for some time to come. So there's value in that aspect of it. I would also tell you there's value in basically being able to control and manage what you move down those pipes. We think there's value in that, particularly when you've got a chemical plant and refinery sitting on the back end of those pipes. So we think there's some advantage in that as well that not everybody would see or realize. We're happy to kind of keep that piece of it as well. So the final point I would make on the refining capacity, I wouldn't tell you that a plan specifically is to match equity production in the Upstream with advantage for Gulf Coast based refineries. And again, we look at it in the long term, it just says what's the transportation differential advantage for Gulf Coast based refineries? And can you make money on just the trend forget about pricing and price disconnects and all the rest of it. Can you make money on just the transportation arbitrage? And the projects that we're doing on crude capacity reflect our ability to get a good return on just transportation, fixed structural transportation arbitrage. And then everything else that comes with it, all the discounting and the disconnects is icing on that cake. I don't know if you have anything to add to that. Yes. It's a couple of things. And so on that last point, when I talked about Beaumont, I talked about the location advantage. That's that transportation advantage. So it started there. And then all the other advantages added on to that where we ended up with a very, very attractive project. The other thing I'd say is on the pipeline, we will operate this pipeline. So to Darren's point, we'll control those molecules from out of our tank capacity at Wink all the way into Beaumont and Baytown. And with that, we do see some advantage in our refineries with being able to manage that. And so that's a key component of what we're trying to do. And on the refined product yields? The we're going to the net impact of the Beaumont is going to be 100,000 barrels a day of diesel, as you said, and that will be we'll be prepared to export that. I'm not sure we'll export all of it, but we'll be prepared to export it. We are just backfilling with intermediate product that we were buying before that was going to be generating MoGas, our FCC capacity. So we're not adding any MoGas conversion capacity. There'll be a little bit of gasoline coming out, maybe 10,000 barrels a day, but it's largely diesel. We're definitely not adding any MoGas generating conversion capacity in any of our Gulf Coast refineries. Great. Rosina, could you come up and catch Gordon? Thanks. Gordon Gray of HSBC. I had a question on Chemicals. This time a year ago, you gave us some guidance for some pretty decent short term growth in the petchem division. Obviously, earnings took a hit in 2018. Can you give us a sense of the scale of the price and margin hit? But I guess, more importantly, if you put margins aside and go back to your assumptions of 2017 margins, is there a number you can give us for shortage term guidance comparable to the EUR 3,000,000,000 in the Downstream you have from 2017 through 2020 in Chemicals? Well, I let me start with 2018. The margin hit was about $900,000,000 for 2018. So it was a big chunk, a big driver for our year on year performance. If you exclude that, we're pretty much in line with what we thought we'd be. In terms of 2020, I kind of gave you that 45% number. So down in general, Downstream and Chemicals are ratable to that period, maybe a little bit more than ratable, 2017 to 2025. Downstream is a little more than ratable, so it was 60% by 2020. Chemicals, 45%. So it's a little more back end loaded. A lot of those projects I was talking about, the Gulf Coast Growth Venture, all those Olyphant projects, all those come in line after 2020. So we really have projects online today that are going to be generating the earnings growth in 2020. Now the Baytown cracker just came online a little bit after midyear last year. So we have not seen a full year of that operating. Some other projects that came online earlier in Singapore and in the Kingdom of Saudi Arabia also did not see a lot of earnings benefits in 2018 that should be generating more and more benefits through 2019 2020. So but the earnings growth activities that are going to generate the earnings growth in 2020 in the Chemicals business are online today, except for Beaumont. The Beaumont polyethylene that I mentioned is coming online this year. Great. Thanks. Hassane, while you're there, can you grab Sam Margolin? Up a couple of rows here, sorry. Sam Margolin from Wolfe Research. I have a question that relates to that inflection in volumes from in the Permian business post 2020. This is probably just fortuitous timing, it might not be designed this way, but do you see any change in commercial channels for light sweet crude that are materializing after 2020, maybe a global feedstock switch that's occurring as a result of the regulations or anything else that is good luck that it overlaps with the volume push here in that business. Do you want to cover that one, Jack? Well, let me talk about IMO for a second. I mean, as we'd see with the IMO spec change, we ought to see that clean dirty spread broaden out. And so we ought to see the high sulfur distillate high sulfur fuel oil be less valuable and distillate more valuable. And that goes all the way into the crude. So you would see light sweet crude tending to be more valuable and heavy sour crude tending to be less valuable. So all that will be factored in. And again, we're well positioned both in the Permian and with the way our refineries in terms of locations and in terms of conversion capacity are sitting. And that generates that incremental earnings as that spread widens out in 2020. A lot of the growth that I showed you in the fuels products, that lighter growth, chemical feedstocks, all lend themselves to lighter crude. And so that as that grows, that demand for lighter crude will grow. So I would expect to see that start to move more broadly around the world with that growth. Okay, thanks. And this is sort of a follow-up just as a broader market question. I think you clarified a lot, Darren, with your point that the dispersion in Exxon's spending trends versus the industry is really a result of the industry ratcheting down spending as a percentage of cash from operations relative to 2,009 to 2015. I think part of that is because at least consensus doesn't really see 2,009 to 2015 as comparable to the future just because you might not have those spikes in the price of commodities that we had over that time. And you don't need those spikes to underwrite your projects, but they definitely help with the economics over the long term. So do you think it's a fair characterization to say that the differentiation in your view versus maybe what's embedded in spending patterns across the world is that you see the future as comparable to the past as far as how the cycle progresses what sort of opportunities flow through as opposed to just kind of an entropic decline that people are modeling in for the future? No, I think, again, I want to come back to I just can't emphasize enough the impact of the depletion curve. And I would tell you that, that perspective and that understanding of how these resources deplete is not a unique ExxonMobil perspective. It is shared broadly within the community. I think the difference between what we're doing in our portfolio and others is the opportunity set that we have. And why do we have a different opportunity set? The difference there is we didn't come off a high peak and decide that with the market crash that we're going to pull back and just sit on our sit back and let what we've done be what we do going forward. We instead said this is an opportunity. This is an opportunity to go out and find value creative opportunities when everybody else has decided to step off the playing field for a little while. That's the difference. And I can tell you today, I go around the world, I'm not by myself traveling and talking to resource holders. So I don't think there's this fundamental view that I don't think our view about what's going to be needed in the future is that different quite frankly. I think it's a function of who's been able to generate the opportunities, and you don't do it when everybody else is out there looking. You do it when everyone else is at home. I think that's right. And I think that capital spend is so much as a result of the opportunity set that you have available. It's the opportunity set. And if you think about at the bottom of that cycle, the acquisitions we made in the Permian with the Bass, with InterOil in Papua New Guinea, we bought into Mozambique, we bought into the Cakra, that was all when that price was at $40 a barrel or thereabouts. You certainly couldn't have made those acquisitions at those prices in today's environment. Exactly. A lot of those culminated in 2017. A lot of that work was going on in 2014, 2015, 2016. Yes. Look at the deepwater rig rates that I showed you. Look at the seismic data that I showed you. That's industry data. That's not ours. What are we doing in this time frame when those prices are down? We're out there doing exploration wells and shooting seismic on opportunities that we acquired in the down cycle. But the point is, Darren, you can't do that if you don't have the opportunities. Exactly right. I mean, that's the reality. Stephen, can we go back here to Biraj? It's Biraj Borkhataria, RBC. Just a follow-up on asset sales. I think last year, Neil, you talked about wanting to aggressively ramp up the Upstream asset sales program, and we haven't seen you do too much since then. I was just wondering if you could characterize the market for upstream asset sales. I mean, obviously, you're on the other side of that for the last few years, but how do you view the world as a seller? Well, I would tell you post the discussion last year, we've done an extraordinary amount of work internally to prepare ourselves. You have to identify these assets. You have to value the opportunity. I actually think the environment is pretty decent, and I would say pretty decent. And it goes back a little bit to the question we just had now. There's a lot of folks out there who don't have a lot of opportunities. And the pricing environment is fairly reasonable today. So I think the combination of there being a desire and a need there out in the market, people are looking for opportunities, they're looking for assets and the pricing environment we have, I'd say, is a pretty robust environment for selling. But you never know. You never know until you put the data room together, till you get people in the data room, till you see what value you get for it. And that's why I have said to the corporation, we're going to have a risked number out there. And the risk number is one that we're confident we can achieve. And I think the environment is playing. It helps us in that case. Just a follow-up on Deepwater. And you mentioned that Guyana will be online 5 years from discovery. The industry average is 9 years. How should we think about that going forward for future projects? Should 5 years be the new industry standard? Or is Ghana a special case? Raj, I can't talk for the industry. But I will tell you, it is clearly a value proposition to get the resource into the market as quickly as you can. Just need to make sure you do it in a capital efficient way. And I think it's that balance between getting the value out of the resource into the market as fast as you can, but making sure you do it in a capital efficient way. But you know the size of our business. It's a capital intensive industry. So it's that combination of pace and making sure you have efficient use of capital. Having said that, you can see the time line, the cycle we have on these Guyana investments. And we would certainly anticipate at least mirroring liso1 going forward. I can tell you it's a new standard with me. Yes, it sure is. Rosina, if you can grab John Herlin right behind you. Yes, there you go. Hi, John Hernlund, Societe. And two quick ones for Neil. At Poker Lake, you showed a 10 mile production quarter. What's the length of the horizontal wells on the pads? Well, it depends. We're dealing we're going for 1, 2 and 3 mile laterals. It depends on the resource base. So it really depends, and it depends on the characterization. It depends which horizontal lateral you're working on. There is a range. On a planning base, I would say they're averaging something like 10,000 feet on a planning basis. But again, I'd come back. I really think this is important, and I reinforce this with our organization all the time. We're still in a learning phase. I don't want us to get locked in to 10,000 foot or 15,000 foot laterals and apply that everywhere. We must make sure and our organization must make sure we're extracting the maximum value in the most capital efficient way. So I'd love to give you a number and say it's fixed. It's not. Okay, great. The next one for me is on exploration. You gave a chart that showed cost incurreds for exploration being relatively constant. How much of that is deepwater? And are you going to address Cyprus again this year? Are you going to step out on Cyprus? Yes, we do. Actually, on the wells going forward, I actually highlighted the number that were deepwater. And I would tell you of our exploration drilling in the next 2, 3, 4 years, the vast majority is deepwater. A lot of that, of course, is in Guyana and in Brazil. In Cyprus, we had 2 prospects in Cyprus, Delphine and Glaucus. And Delphine turned out to be dry. Glaucus turned out to be a pretty nice discovery. I think we said it was 5 to 8 Tcf. The interesting thing about the Glaukos discovery is it's similar to what I was describing in Guyana. It's caused us to think a little bit more about the geological concept. What we discovered was we're obviously pleased with the discovery, but it's led us to think about other development opportunities in Block 10. Originally, we had planned to drill just those 2 exploration wells. We're now rethinking about that. It may I'm not saying it will it may cause us to do some more exploration drilling on that block. I want to come back and just touch on a point that Neil made on the Permian in this discovery mode that we're in. One of the drivers for bringing XTO down to our Houston campus was to make sure that we were integrating with the rest of the capabilities of ExxonMobil and that we brought to bear the full advantage. And one of those is the science and technology piece of it. But we're bringing some of that fundamental science and technology work into XTO, and that's part of that learning process. So we've got, in my mind, this marriage of 2 very powerful technical advancement processes. 1 is the what I'll call this fundamental science and technology. The other is the empirical, and we're marrying those two things together. And it's resulting in a different and better understanding of these resources, which then leads to a lot of the variability. These are not homogeneous plays. The recipe needs to change and the people who can understand that recipe and optimize it gets the best results. The other thing I'd tell you that we brought into this is we've taken a lot of the work that we did on reservoir simulation, which we use for the deepwater, and we brought that into the Permian to understand and characterize how best to develop these resources. So there's a lot of technology that sits behind that, which is going to lead to these this different mode. But at the end of the day, it's about maximizing the value of that resource. And I think it's something that we can uniquely do. Yes. And it's not finished. I mean, I think it's really important. What we have learned in the unconventional space, particularly in the Delaware Basin in the last 12 months, is quite extraordinary and way beyond our expectations. And I don't want to give you the impression that learning curve has finished it as not. We expect to continue to learn more, and we expect that will lead to more efficient development. As always, you get the question about, well, have you entered manufacturing mode yet? Well, partially, as Neil laid out those corridors, that's kind of you're kind of laying out for your future, how you're going to just go right through all those resource. At the same time, a lot of the organizations are spending a lot of time with continuing to learn, and we'll continue to feed that into the development plan. It's a really good base plan, but it's going to evolve over time as we get more learnings in. I mentioned to several people during the break the difference in the type of resource within the basin and on different laterals will lead to very different quantities of gas versus liquids in the development plan. And we'll hear, you will hear, you will read about KOEBD per well and it's a metrics that you like to illustrate. There are very large differences between the percentage of gas and the percentage of oil in these plays. And you can have big KOEBD numbers by having a lot of gas, but the gas, of course, has considerably low value lower value versus the liquids play. It's really important that you understand that. All right. Stephen, could you go back and get Alastair in the back? Thanks, Neil. It's Alastair Syme from Citi. I wonder if I could ask about Golden Pass. What's the intention visavis the feedstock on that facility? How do you view it within the broader shale portfolio? And are you helping your partner to source the gas in some way? And just if we can get one more, is also Golden Pass, is that within the economics of the $5 LNG that you showed on one of the introductory chart charts? Golden Pass is a very different model, as you're aware. So we're taking from a liquid market, Henry Hub gas, and we're putting it into liquefaction, and we're putting it into the Atlantic Basin. And it's all part of our portfolio to optimize our LNG business globally. We always look to integrate along the whole value chain, always. And that's what ExxonMobil do. You're all aware of our big onshore gas position in North America. That is changing as we produce more and more gas out of the Permian. You don't have to produce so many dry gas wells. In terms of what our partner will do, of course, you have to ask them, but they have been very public in saying that they want to get into the full value chain. And of course, we're a partner with them, and we're helping them in that regard. Andy, anything else? No, I think that's it. I'd just add to that. A little bit to the conversation we had around midstream and pipelines. In a fast growing market, and in this case, a global one, having the diversity of supply and making sure that you can optimize across any discontinuities that occur across that market. We think it's going to bring a lot of value into the LNG portfolio. And so just to be clear, where did it sit on the sort of the cost curve of projects that you showed in LNG? You sort of referenced that $5 number. Yes. And it all depends on how you assess that. We certainly think it's within that range. Otherwise, we would not do it. I said at the start, it's very, very important on every he holds me accountable. On every investment, we need to make sure what we call left hand side of the supply curve. With left hand side of the supply curve, we're the most competitive in the industry. And we've said you need to be in that $5 per 1,000,000 BTU range for all of our investment golden passes within that. Otherwise, we wouldn't be proceeding with it. Thank you. Rosina, can you get Jason there? Thanks. Jason Gilleman from Cowen. I had a question about the downstream assumptions you're using out to 2025. Do you see 'twenty seven downstream margins as a fair mid cycle number? And I'm asking that because you have gasoline demand kind of flat over your long term planning period and gasoline is obviously a big part of the barrel? Thanks. You mean 2017 margins? Yes. Yes. If you looked at that 2014 to 2018 5 year period I talked about, the 2017 margin was just above the midpoint of that 5 years. So it's consistent with the last 5 years In terms of where how that's going to play out in the next 5 years, I really don't know. And in terms of the Mogas situation, we've been saying for MoGas for a long time, flatter MoGas demand, growing distillate demand. So all our projects are going in that direction. We're adding more distillate capacity to meet what we think is a growing demand that's growing faster than MoGas. But the way I would ask you to think about it, it goes back to net cash margin curves that Jack showed where we showed where the Beaumont refinery is moving, where the Rotterdam refinery is moving. That curve basically shows you the global footprint of refining around the world and its competitiveness. Now having grown up in that world in the refining, our view was always the margin is going to smaller and smaller, so finally become more and more efficient. And if you go back in time and look at margins over time, you never saw that. Why was that? Well, when margins do go down and it gets things get tough, that right hand side of that net cash margin curve starts to treat and drop off and refineries close. And then what you end up doing is get very little prices move demand up, you get supply demand imbalances in the downstream on refining businesses like you do in the upstream and you see the margins move. And if you go back and look at the data, you actually see that in the data. The supply demand imbalance is driven by a different mechanism, but basically that curve shows you where you drop off. So as we look at our refining business and that net cash margin curve, you can think about the inversion of that net cash margin as being your cost of supply. You better be on the far left hand side of that thing. And so that as you go through those cycles and refineries start to drop off, you're not anywhere close to them. And then what you will then see are these margins go up and down. The reason why we pegged it at 2017 was not a view that, that's the right margin to use. It was a basis to allow you to see what we were doing to the base earnings capacity and cash flow capacity of that business when you take market out of the equation. Where the market goes, again, as I said, that's not we're not in the game of trying to predict that. We're in the game of making sure that our investments are robust to these tough competitive challenges, which we know they're going to happen. We know the price environment is going to drop out. We just don't know when. And we picked 2017 because that was the last full year when we talked last year. That was actual. That was history most recent history we had, and we wanted to stay consistent with that as we move to this year. And then to Darren's point, I did show the cost of supply curves on our base stocks market. So you think that group 1 base stocks and what's going to happen there, that could be where MoGas is sitting 10 years from now, where you have surplus supply. And again, it's those high cost locations, high cost supply points, and we're sitting on the other end. Okay. I think we have time for one more question. Stephen, if you could get it John here. Thank you. Just under the wire. It's John Rigby from UBS. Can I ask two questions around the financial structure that you discussed? The first to do with that, the first is on the disposal plan. Just so that we can sort of think about it as and when the disposals are announced, is it an approach that's basically tactical in that you are selling assets where you think there are buyers and you've got that discrepancy between what you think it's worth and what they think it's worth? Or is there something behind that that's rather more strategic where you can release resources internally within the organization that are perhaps better used somewhere else. You've clearly got a huge pipeline of things that you need to be working on. And so for instance, to close down countries or regions might actually release you to deploy those people somewhere else. And then the second question is on the buyback. What will trigger your thought process around when that should start? Some companies have talked about having visibility on the ability to buy back stock consistently quarter to quarter, year to year, which sometimes to me feels a bit like a dividend rather than a buyback. So is it to do with your visibility on CFFO basically covering CapEx and more? Or is it to do with successful disposal plan, therefore, balance sheet gearing dropping and therefore, you being prepared to start? And are you prepared to start and then stop? So I just want to get some idea about how you think about that buyback through the period to 2025. Well, I'll take a shot at both of those questions, and I'll let the guys kind of fill in some of the gaps. On your on the portfolio, the divestment portfolio and our approach there, I would the answer, I think, in my mind to your question is yes to both of those. I mean, there is a strategic element of thinking about which assets do we want to put into that divestment portfolio. There's also a tactical one to choose when we want to do that in terms of when do we think we're going to realize the most value for. The beauty of our divestment program is not driven by a need to fund our CapEx or anything else. It is it's a value upgrade opportunity. And so I think as we looked at that, we look at it from a perspective of how to maximize the value, which is a mixture of those two things. And I'll let Neil kind of go on that a little bit further. I think on the buyback program, we would want to have a view that the divestment program, which is really the additional funds coming in, which is kind of above and beyond what we see as being the base requirements to meet all the objectives that we've outlined around our capital structure. And we want to kind of see that beginning to materialize and feel confident that it's continuing on its path before we would start a divestment program. And I mean, my perspective is that's not going to be a straightforward ratable line. You're going to have some ups and downs with a divestment program that moves. We've got a balance sheet that allows us to manage that. I wouldn't see us turning on, turning off, turning it on, try to do more of a consistent approach. I just think I'd just add, yes, it's tactical in terms of execution. But to Darren's point, this is a very strategic part of absolutely critical and fundamental to the strategy to make sure that we're bringing quality in the front end and for all the reasons that we talked about why we would go into our divestment strategy. I would also add, to me, it's very, very important that we focus our quality resources on the opportunities that have the highest upside value creation. And it's always difficult to truly quantify what the value is on doing that. But I think we all know, if we focus more, the result very, very typically is to get better results. And so there is a big component in my mind of that of focusing our organization on fewer assets. And anything to add? Don? Okay, great. Thank you all for your questions. Before we break, let me make just a few comments. The ExxonMobil management team will be hosting lunch upstairs until 1 o'clock. If you'd like to attend, please exit through the back where staff will lead you up to the 7th floor. It's a buffet format and seating is open. So once you get your plate of food, please find a table and take a seat. Again, we thank you for your time today and we appreciate your continued interest in ExxonMobil. Please travel safely. Thank you.

• Slides