Q3 2019 Earnings Call

Please standby we're about to begin.

Good day, everyone. Welcome to this Exxon Mobil Corporation third quarter 2019 earnings call. Today's call is being recorded it just talking about a turn the call over to the Vice President Investor Relations and Secretary Mr. Aneel Hanson. Please go ahead Sir.

Alright, thank you.

Good morning, everyone welcome to our third quarter earnings call.

We appreciate your participation and continued interest in Exxon Mobil.

Neil Hansen, Vice President of Investor Relations.

During today's call I'll review, our financial and operating performance.

And provide updates on the substantial progress we've made on our major growth projects.

Happy to take your questions following my prepared remarks.

My comments this morning will reference the slides available on the Investor section of our website.

I'd also like to draw your attention to the cautionary statement on slide two.

And the supplemental information at the end of the presentation.

Moving to slide three let me begin by summarizing the excellent progress. We've made this year on plans to grow shareholder value.

The long term fundamentals that underpin our investments remained strong.

We generated nearly $9 billion in earnings through the first nine months of the year with a portfolio that is resilient to a range of commodity prices and margins.

We are investing an advantage projects that will grow the earnings and cash generation capacity.

Each of our businesses.

The nearly $23 billion of Capex year to date is in line with current your plans and reflects strong execution of key deliverables.

Liquids production has increased significantly from last year with volumes up 131000 barrels per day, or 6% driven by strong growth in the Permian.

<unk>, we remain on track to meet the full year outlook of producing 4 million oil equivalent barrels per day this year.

In addition efforts to high grade our portfolio are proceeding ahead of schedule.

Putting a consideration from the agreement we signed to sell non operated upstream assets in Norway Divestments now total nearly $5 billion.

Exploration success has continue this year.

Hi, significant deepwater discoveries foreign Guyana, and one in Cyprus and Weve reached final investment decisions for 10 major strategic projects this year.

Including projects from all three business line.

We also increased the quarterly dividend by 6%, marking a 37.

Second of year of dividend growth.

Finally, the strength of our balance sheet provides us with the capacity to invest through the cycle with leverage at just 12%.

The positive momentum we've generated so far this year is in line with a plan to we laid out in 2018 and reiterated in March.

And positions us well to generate long term shareholder value.

I'll now highlight third quarter financial performance starting on slide four.

Earnings for $3.2 billion in the quarter or 75 cents per share.

Including a positive seven cents per share impact from a onetime tax item.

Results were consistent with expectations, given the margin environment seasonal impacts and plan to maintenance experienced during the quarter.

Crude oil prices declined relative to the second quarter, while refining margins improved.

The broader margin environment remained challenging as short term supply and demand imbalances continued to pressure natural gas prices.

And industry chemical and loop based stock margins.

Cash flow from operations and asset sales was $9.5 billion in the quarter.

After adjusting for changes in working capital cash flow was $8 billion.

Capex for the quarter was $7.7 billion.

BP and he adds and net investments and advances, which is a proxy for cash capex.

$6.6 billion.

And that ratio is consistent with our rule of thumb.

Net cash Capex is generally 85% of total reported capex.

Free cash flow in the quarter.

Increased to $2.9 billion, reflecting higher cash generation and moderately lower investments in the quarter.

I will now go through a more detailed view of developments since the second quarter on the next slide.

In the upstream both liquids and gas realizations were lower in the third quarter.

Consistent with a decrease in liquids markers and continued gas supply Ling.

Production was inline with expectations.

With continued growth in the Permian.

The Lysa Destiny FPSO is currently being commissioned and Diana and we announced the fourth discovery of this year with a triple tail exploration well.

We also made considerable progress on our 15 billion dollar divestment program.

Reaching an agreement to sell our Norway non operated assets.

In the downstream refining fuels margins improved during the quarter with supply tightness and stronger distillate demand in Asia and Europe .

On the other hand, North American logistics differentials narrowed.

Primarily driven by the addition of Permian pipeline capacity.

Lower scheduled maintenance, most notably the completion of turnaround activities at our Joliet refinery.

And improved reliability relative to the second quarter contributed to stronger downstream financial performance.

Although long term fundamentals remain strong and the chemical business polyethylene and aerobatics margins continue to be impacted by supply Ling from industry capacity additions.

The recent startup of the polyethylene expansion at Beaumont is performing well and running above planned rates supporting efforts to grow sales of high performance.

Tell seem products that deliver sustainability benefits, including lighter packaging weight.

Lower energy consumption and reduced emissions.

Lower scheduled maintenance across us Gulf Coast sites continue to contributed to improved chemical earnings. Although this was partly offset by a reliability event at baytown.

We also progressed research and development of lower emissions technologies, we entered into an agreement with mosaic materials.

To explore breakthrough carbon capture technology using metal organic frameworks to separate carbon dioxide from there.

The agreement expands our carbon capture technology research portfolio and will enable evaluation of opportunities for industrial uses at scale.

We also signed an agreement with the NZ the Indian Institute of Technology.

This partnership will focus on progressing research and Biofuels and bio products.

Gas transport and conversion.

And other low emissions technologies for the power and industrial sectors.

This expands our portfolio of research collaborations.

Which now stands at more than 80 universities, five energy centers and multiple private sector partnerships.

Let's move now to slide six for an overview of third quarter earnings relative to the second quarter of this year.

Third quarter earnings of $3.2 billion were up $40 million from the second quarter.

Upstream earnings declined by approximately $1.1 billion, driven by lower liquids realizations and the absence of a favorable tax item.

Downstream earnings increased by nearly $800 million with lower scheduled maintenance and stronger industry margins.

Improvements in downstream earnings were partly offset by the decline in North American differentials.

Chemical earnings increased by $50 million with lower scheduled maintenance, partly offset by the reliability event.

Hey town.

Finally, corporate 10 earnings increased by $300 million due to the previously mentioned favorable tax item.

Ill review changes in upstream volumes on slide seven.

Production in the third quarter was $3.9 million oil equivalent barrels per day, an increase of 113000 oil equivalent barrels per day relative to the third quarter of last year, representing a 3% increase.

The higher volumes were driven by growth of 123000 oil equivalent barrels per day in the Permian.

Representing a 72% increase from the prior year quarter.

The third quarter cash profile is shown on slide eight.

Third quarter earnings when adjusted for depreciation expense and changes in working capital.

Yielded $9.1 billion and cash flow from operating activities.

There was a $1.6 billion release of working capital in the quarter.

Driven primarily by inventory effects related to maintenance activities.

Other items included the favorable onetime noncash tax item.

Our divestment program is progressing well and ahead of schedule third quarter proceeds from asset sales.

Includes a deposit for the four and a half billion dollar Norway asset sale.

And the cash receipts for the sale of our mobile Bay asset.

Third quarter additions to pp any and net investments in advances were $6.6 billion.

Gross debt increased by approximately $2 billion and cash ended the quarter at $5.4 billion.

I'll now provide an update on the excellent progress, we're making on key investments across all of our businesses. A summary is provided on slide nine.

Starting with the upstream growth plans in the Permian and Guyan at remain on track and I'll provide some additional details on these projects in the coming slides.

In Brazil, we expect to Petrobras operated we rep, who well.

To commence drilling in the fourth quarter.

In the downstream three new projects, our online and performing well.

Supporting increased production of cleaner higher value products.

We've made final investment decisions this year for four additional projects, including the Beaumont light crude expansion and the wink to Webster by pipeline.

Both of which will support our integrated Permian strategy and growth plans.

In our chemical business with the recent startup of the Beaumont polyethylene expansion.

We now have eight new facilities online.

For additional projects receiving final investment decisions this year.

Moving to slide 10.

Ill provide an update on our unconventional business.

Permian growth remains on track with production, averaging 293000 oil equivalent barrels per day in the third quarter.

Although we are in the early stages in the development of this significant resource results are encouraging.

Including continued strong well performance.

Construction of processing and takeaway capacity also continues.

Important milestone this quarter was the completion of the phase one.

The Delaware Central delivery point, and the pipeline to the week terminal.

I'll provide an update on Diana on slide 11.

Commissioning of the lives of phase one espresso is underway and on schedule.

The target for achieving first oil is December dependent on favorable weather conditions.

This was placed startup within five years of initial discovery.

Well ahead of the typical pace for the industry of closer to nine years.

Lies a phase two engineering and construction is progressing well following f. I'd earlier this year.

And we're also working with the government to receive necessary project approvals for Pandora with a plant startup in 2023.

The triple tail discovery, which we announced in September marks the fourth exploration success of 2019.

Well encountered 108 feet of high quality oil bearing sandstone.

And we're also pleased to highlight that with deeper drilling on the well additional hydrocarbon reservoirs we're encountered.

Providing potential upside to this to the initial discovery.

We continue to progress considerable undrilled potential in Guyana with a fourth drilling ship.

Which will commence exploration activity in the fourth quarter.

Three upcoming wells, who Aro maaco and Haso.

Plan to spud in the upcoming months.

Okay ones of those wells are highlighted here on the map.

I'll now provide some perspectives on the upcoming IMO 2020 implementation on slide 13.

The chart on the left highlights the coking capacity advantage, we have relative to our integrated peer group.

Position, we recently strengthened with a startup of the Antwerp Coker.

This new facility upgrades bunker fuel oil currently produced in our northern European refineries to higher value products, including ultra low sulfur diesel.

The Middle chart shows the clean dirty spread using Asia gas oil and high sulfur fuel oil.

As you can see the spread is expanding with the forward curve and third party estimate ranges showing further widening.

Which will favor more complex refiners with the capacity to upgrade heavier sour crudes to cleaner products.

And just to give you some additional perspective, a general rule of thumb for our portfolio is that for every dollar per barrel change in the clean dirty spread.

Downstream annual earnings will increase by approximately $150 million.

And a large portion of the benefit comes from the associated widening of the light sweet and heavy sour crude spreads.

And our ability to leverage coking capacity to run higher quantities of discounted crudes.

Now turning to slide 14, I'll provide additional details on our portfolio management activities.

We've made considerable progress on our 2021 divestment objective of $15 billion, reaching an agreement to sell our non operated Norway assets for four and a half billion dollars.

The sale includes ownership in more than 20 fields and is expected to close in the fourth quarter pending regulatory approval.

The sales price of $4.5 billion is subject to interim period adjustments with an effective date of January Onest 2019.

Estimated total cash flow from the divestment is approximately $3.5 billion after closing adjustments.

With expected 2019 cash proceeds of $2.6 billion.

And we will receive another point $9 billion of non contingent consideration and tax refunds over the next few years.

We're also progressing marketing activities involving but not limited to assets in the Gulf of Mexico, Azerbaijan and Malaysia.

I'll now provide some perspective on our outlook for the fourth quarter.

Starting on slide 15.

In the upstream we expect production to increase in the fourth quarter.

Largely driven by seasonal gas demand.

Ill provide some additional detail on the seasonality of gas demand on a following the chart.

With regards to the Norway divestment again, assuming regulatory approvals are received we anticipate the sale will close in December .

And that we will recognize and earnings gain of approximately three and a half billion dollars.

In the downstream, we see the potential for further expansion of clean Dirty and sweet sour spreads as preparations for the IMO spec change continue.

Higher scheduled maintenance in the fourth quarter relative to the third quarter is also expected to impact results.

Chemical margins will likely remain under pressure in the fourth quarter as the market continues to work through supply links from recent industry capacity additions.

Scheduled maintenance and the chemical business in the fourth quarter should be generally in line with third quarter levels.

And we expect continued recovery from the third quarter reliability event Baytown.

I'll provide some additional details on schedule maintenance on a subsequent slides.

The chart on slide 16 shows the increase in volumes on oil equivalent basis.

That we typically experience from higher gas demand in Europe in the fourth quarter.

And as you know gas demand is highly seasonal and driven by weather conditions.

Fourth quarter gas demand has been on average 150000 oil equivalent barrels per day higher than the third quarter and we expect a similar trend.

To occur this year.

Turning to slide 17, I'll provide some perspectives on our fourth quarter outlook for downstream and chemical scheduled maintenance.

As previously mentioned.

Scheduled maintenance in the downstream this year is higher than normal again in part due to preparation for IMO 2020.

Planned maintenance tends to be seasonal in line with demand patterns.

We expect the impact from scheduled maintenance in the fourth quarter to be higher relative to what we experienced in the fourth in the third quarter.

The estimated earnings impacts for the fourth quarter and first quarter 2020 for the downstream.

We are shown on the upper left chart.

In the chemical business shown on the bottom left chart, we expect scheduled maintenance levels to be generally in line with the third quarter.

And significantly below the peak, we saw in the second quarter this year.

I'll conclude my prepared remarks with a few key messages.

Slight 18.

In the upstream we are delivering on plans to grow liquids production and Highgrade the portfolio.

Recent project start ups and downstream and chemical continue to perform well.

And we reached final investment investment decisions for eight keep projects so far this year.

We are also leveraging our significant financial capacity to progress advantaged investments through the cycle.

Maintaining constancy of purpose.

On our commitment to grow longterm shareholder value across a range of market environments.

Finally button importantly.

We are building on her extensive network of partnerships to develop new technologies.

To address the dual challenge of providing reliable and affordable energy.

Oh mitigating impacts to the environment, including the risk of climate change.

And I'll be more than happy to take any questions you might have [noise].

Thank you Mr. Hansen the question to answer session will be conducted electronically if you'd like to ask a question.

So by pressing the Starkey followed by the digit 100 touch tone telephone request that you limit your questions to one initial with one follow up so that we may take as many questions as possible.

Are you using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment. Additionally, please lift your handset before asking your question.

Preceding the order that you signal us and we'll take as many questions as time permits once again that star one on your touch tone telephone to ask the question.

First question will come from the line of dug terrorists in with Evercore I.S. I.

Good morning, everybody.

Hey morning, Doug.

Neil in U.S. upstream you mention the the key factors. This period were realizations divestures output gains, but also higher growth expenses.

You know this point I wanted to see if we could get more color on the last on since we can gauge the others to some degree and specifically are these higher growth expenses, primarily the <unk>. Yeah. So do you consider them to be transitional in nature and when will they become less significant and then thirdly, oh, they tracking with your expectation so.

The questions on the higher growth expenses.

Item in in U.S. upstream.

Yeah, Yeah appreciate the question dog.

So just focusing on on U.S. upstream so.

Look at the change.

In the third quarter relative to the second quarter earnings declined by roughly $300 million.

Most of that was price it was about 190 million dollar impact on on price in the upstream. We did have a few other factors, including some downtime and maintenance and non or unconventional non <unk> unconventional assets, including.

Large and Prudo Bay that had an impact as well and then we did have some higher growth expenses most of that does relate to the the progress that we're making and the Permian and maybe I can just touch on that really quick I mean I think.

Obviously, we feel really good about about the volume growth that we see out there the resource continues to respond very well.

We're making good progress on on the development plan that we have in place.

You know, including.

Making sure that we we capture the full value of the resource you know using our logistics position.

To bring barrels chore refineries and chemical plants. The pace of development is consistent with the plans that we laid out I think we've finished the third quarter with 55 rigs and roughly 10 frat crews and as I mentioned volume growth relative to last year in the same quarter was.

72%, but yeah. We're we're early in the development, we've only drilled I think a few hundred wells and that's on a well inventory in excess of 8000. So so it's pretty early days, but we feel like we're making really good progress where leveraging the full strength of the corporation and bringing our unique.

Competitive advantages the scale the technology you know, we're leveraging sophistication in the sub surface using reservoir modeling.

Ringing <unk> you know drilling engineers from all the world that that have expertise in in dealing with some of these environments and of course, our project management capabilities. So I think you know in terms of of pace I think the topics is where we would expect it to be you know when we think about the development. We're we're trying to balance.

Certainly well productivity you know, we want to do well there, but we're balancing that with ensuring we excel in terms of ultimate recovery and then of course capital efficiency. So that those are the you know the the three elements were trying to balance.

I think we feel good about where we are I think we said that this is a very resilient asset even that you know $35 a barrel, we expect to generate a 10% return so.

I would expect even though you feel like we're we're where we should be at this point.

You can fully anticipate as we bring technology to this as we bring expertise ends rolling in the sub surface or.

Our project management capabilities, we will only become more efficient overtime and drive down those costs I mean, we're we're never satisfied.

With where we are and we always can feel like we can get even better. So it's a really good progress, but but I'm also a very high expectation from the organization that will only get better and developing the resource. Okay. So it seems like is the production curve Steepens and 2020 and beyond mostly pretty strong results from that asset so.

Well, thanks, a lot anew.

Yeah. Thanks to appreciate the question we welcome.

X. will go to send Margolin with Wolf research.

Hey, the morning, Hey, Sam.

I'm good. Thanks, so thanks for the color on the Norwest cell I mean based on the gain there it looks like this asset was pretty much.

Created and it sort of.

Stimulates a question about maintenance spending around some of these longer tell assets, you know whether or not the whole industry has kind of deferred that activity and these assets that are mature sort of changing hands into more local entities that are incentivize differently to spend so is that sort of the right read.

On the overall landscape for divestitures and if so you know what does that mean for.

Your baseline spending.

Irrespective of of the growth columns now you have and maybe even a macro tangent a if you have time to.

Yeah I appreciate the the question Sam.

Yeah again, we feel really good about about the progress for making on that divestment programming. In fact, Norway was was accelerated so that's why we feel we're ahead of schedule, we didn't anticipate being able to execute that divestment. This year. So I think the organizations done a nice job, but progressing that that objective <unk>.

The the reason we're pursuing investment program.

Primarily is is given the fact that we are brought so many attractive assets into the portfolio thing about you know Permian and Diana Yeah. One g. projects that is placed pressure on the organization to highgrade, even more so than we have in the past.

When we look at it asset sales and and what assets we might consider highgrading.

You know Sam is generally going to be driven by strategic fit.

It's going to be driven by the materiality of the asset its growth potential. We also taken into account things like whether or not we we operate and have control afford investment plans I you know I don't want to convey certainly from from our perspective room from an industry perspective that they're forgoing needed maintenance doing.

Sure that these facilities are running well and that were you know maximizing production from them. So I think it's probably more so for us Sam it's it's more a factor of this pressure that we feel because the portfolio has really increased in terms of attractiveness and value. We feel like there's an opportunity for us to highgrade the portfolio.

And and and even you know have this opportunity even grow more the overall value by highgrading out out assets.

Okay. Thanks, so much and then my problems sort of on the other side on the acquisition front you know.

In mind, the comment about resilient returns in in the Permian double digit down to 35 dollar oil I think that has more to do with your development plan unnecessarily prevailing trends in the industry because certainly doesn't look like the independent can make similar claims so what does that mean in terms of where.

Where at in the cycle for you too.

Think about bolting on some assets here. It seems like you can add value to to some distressed situations like you.

Yeah. Appreciate it Sam So you know I think if I, if I stepped back with what we're trying to do yeah. We're we're managing a portfolio.

And as good as we feel about the opportunities that have come in and you mentioned Permian you know guyan on some of the other assets, we've been able to bring in.

That's good we feel about that the objective remains trying to grow the overall value of that portfolio, we're trying to increase the pie.

And so we never sit still we're always looking at additional opportunities that we think we can bring in into the portfolio.

So I think that certainly would include them in a includes you know looking at at any other additional opportunity that's out there now for it to to come into the portfolio. Obviously, it's going to have to compete with was already is in our portfolio that that's certainly one measure.

Of consideration and the other thing is for US we have to.

See an opportunity where we can bring a unique value where we can leverage our competitive strengths.

To offer something that the industry can't provide or can deliver.

So you know it's something we're we're looking at very closely we're in a fortunate position given.

Given the portfolio that we have that we can be very choosy.

We're very fortunate in that we have the financial strength to balance sheet capacity to tranzact at any level in any cycle.

So that gives you a a nice nice spot to be end to be very very selective in what you're pursuing and very selective in what you're trying to do because whatever we bring in.

There's going to have to compete with what's already and and the portfolio. Sam I. You know the environment is generally pretty good. The there are a lot of things to look out there's a lot of things to to consider I think for us. It's just a question of whether or not we can transacted the right value whether or not we can add unique value to the to the asset given our competitive.

Advantages and our strengths, but but have no doubt. The objective is that we want to continue to find ways to grow the overall value of what we have.

Eating bringing things and that also includes highgrading the portfolio as we've talked about and the other thing we may not talk enough about it also includes making sure that you execute the investments in the project. So you have well you you bring them on budget on schedule and that you run your existing base well that that as well.

We see is the the objectives in terms of being able to grow that that overall value.

Like so much.

Mm.

The next question comes in the line of Neil made up with Goldman Sachs.

Good morning, Neil Thanks for taking the time I get in the first question I had have is just a round I am a 2020.

Certainly seem a lot of other companies, including yourself point forward maintenance <unk> 2019, So you can maximize upside to I'm now so yeah, ultimately think that will tap the up side that return a report as you go into 2020 and just any early thoughts from from Exxon standpoint about how how this.

Right now.

Yeah I appreciate the question you know I.

Maybe you step back a little bit and talk about what what we're seeing we we mentioned it in our prepared remarks, but you are starting to see certainly early transition with I.M.L. on the product side, we've seen hi sold for fuel oil cracks.

False significantly to clean Dirty spreads recently reached near tenure highs and so.

I think you know the market will be dynamic in the early stages of of this transition, but certainly on the product side, you're already seeing some of that that widening of that spread and afford curves are indicating that as well on the crude differentials. You know this difference between heavy sour light Sweet we'll also follow those same trends right I mean.

You know low conversion refineries are going to be incentivize to run those sweet crudes, which will will obviously widen out that spread in the future is curve is is showing that but again, we anticipate you'll see some choppiness. Some volatility are a lot of variables at play here, it's a global market, but I don't think that we have any.

Expectation that you wouldn't see those two key factors that widening of that clean dirty spread widening of the.

Heavy shower in light Sweet I don't you know I think over time. The response to that will be refining industry will have to add coating capacity. That's certainly something that we've done I don't know if there's any level of maintenance that that could be done that would minimize the impact of this I think the market impact is.

Big.

Be able to respond to it with just pure maintenance I think ultimately the industry will have to add have to add cooking capacity and that's why we feel really good about where we are you I mean, we've got.

More cooking capacity than any of our peers done the maintenance we've added Antwerp. So we feel like we're very well positioned are conversion <unk> capacity in the U.S. Gulf Coast is very high I mentioned, the the coker in in Europe , and we're also looking at upgrading rigid in Singapore as well so.

So I think ultimately that is what is going to have to to be the response from industry.

Yeah. Thanks, now Nepal up there's you know one if you were capabilities as a company is managing regulatory and political risk. It was as we go into an election season here in the United States. How do you think about lists around federal public lands, what that means for your exposure thinking about them the context as new Mexico.

Alaska in the Gulf of Mexico.

Yeah. Thanks Neo appreciate the the question I think.

It's it's difficult to speculate on the impact of a policy without details on implementation.

I think any efforts, obviously to ban frakking, but we'd have a negative impact on industry efforts to develop a resources like the permit and there's there's no doubt in that.

But when you look at the motivation of those policies I mean, if the underlying concern is about risk of climate change and emissions reduction, we certainly share similar concerns, but we think there are more effective policies.

And we also think their technology advances that are required you know for example have we been a very long term vocal advocate of a revenue neutral carbon tax it's uniform, it's transparent it'll incentivize the market to find solutions.

I think any efforts to ban frakking or restrict supply well not a removed demand for the resource if anything it will shift the economic benefit away from the U.S. to another country.

And a potentially impact the price of that commodity here and globally.

So we think there are better policies. The policymakers can put in place and we certainly spend a lot of time advocating for those policies.

You know if if it's a concern about responsible resource development and we we share that same interests you know we hold ourselves too high standard.

We work with regulators to improve industry standards.

And we advocate for policies that will be effective enough space as well you know I think maybe about political risk one of the ways. We approach that is working with policymakers.

To help them understand the policy decisions and help them understand the potential consequences of those you know we've been in the business for a long time and I think with our experience in the industry. We have a good line of sight on what policies. We think would be would be effective you know the other thing we try and do Neal is help policymakers.

Understand the tremendous benefit.

Resource development brings to economies that brings to employment and to society. In fact, a recent study was done I don't know if you saw this but.

The development in the Permian our development in the Permian Basin for New Mexico.

Well generate approximately $64 billion and net economic benefits over the next 40 years.

So I think helping helping policymakers to understand what policies are more effective to address some of these concerns is important and then I think also helping them recognize the economic benefit from responsible development of the resource.

The other thing, though I think it highlights you know there there's political risk almost everywhere, where we operate.

And and having a global portfolio like we have helps us mitigate risking any but to potential or specific jurisdiction. So.

Yeah, I think I certainly understand if if I'm all your eggs in one basket and and you have a lot of political risks there that there would be concerned, but we feel like we can mitigate it with our portfolio and then having this approach by working with policymakers.

<unk>.

Thank you kneel next.

Next we'll go to fill gresh with J.P. Morgan.

[noise] Hey, good morning, they'll hang weren't feel how are you.

Good.

So the first question you're talking earlier about you know execution on the existing portfolio and had opportunities that one of your peers today, just highlighted a 25% increase in capital spending costs of 10 geese. Obviously you are on that project, but I'm just wondering how you view general inflation.

Risks.

Across the portfolio from a capital spreading perspective or would you.

Characterize tongue gaze as more of a one off thank you.

Yeah I appreciate the the question Phil look I'd I'd recommend any you know specific questions on project cost and schedule.

More appropriate for those to be directed to to Chevron as the operator.

What I can say is we certainly expect and I mentioned this on the call we expect to meet our Catholics outlook for this year.

This this increase in 10 geese cost does put upward pressure.

On future capital programs future your capital programs, we're doing everything we can working to accommodate that within within our programming and will provide an update on where that stands at the investor day in March.

Talk about inflationary pressures I think is dependent on on where you're where you're operating I think we've generally seen a fairly good cost environment and the deep water. For example, you know out and the permission and the unconventional business I think for the most part we've seen a very good operating environment, we have seen a fairly hop market.

The Gulf Coast, given all the.

Capacity additions in the chemical business, you don't want them to finding side and I think.

No we foresee those cost pressures and we try and leverage our scale in our functional excellence to do everything we can to to mitigate was cost pressures. Let me just give you a couple examples maybe.

Maybe the most relevant one on the U.S. Gulf Coast, If you look at the.

Team Cracker that we're putting in place down near Corpus Christi again, recognizing the cost pressures on the Gulf coast that influenced the location of that that steam cracker. It also allowed us to leverage our capabilities globally. You know for example, one of the things we often during the upstream.

To avoid a hot cost environment as you build modulars and lower cost locations and then bring him to the side. We're doing the same thing with that seem cracker on the U.S. Gulf Coast. The result of that is that project would be 25% lower than the industry standard steam cracker and so I think you know you're you're always going to.

Find different environments, depending on where you operate and I think we try to use our our global per camera organization our project expertise.

To make sure that we mitigate those costs, but it is something you have to watch very closely because you can undermine the value of any given investment if you're not executing well and not delivering it on time and on schedule.

Okay.

Understood second question on chemicals, obviously, you hide it highlighted multiple times to [noise] tobacco pressure. So you're saying here are some of your peers highlighting this as well [laughter]. What's your latest thoughts nail as we look out into 2020, and considering that 200 million or so of earning each of the past two quarters. So there's looks like there's some hire me.

That's in the next two quarters, but just generally what you're kinda view of 2020 relative to the Runrate every supporters. Thank you.

I appreciate it film.

Yeah, I think that if you look at polyethylene industry margins, they were relatively steady versus a second quarter, but they absolutely remain.

We are due to industry supply likes.

That that has continued to be continue to be the issue. We don't expect that current market environment to improve certainly before the end of this year, but.

We are starting to see some competitors delay.

Or cancel investment plans and that certainly could impact supply demand balances and 2020.

And the other thing, we're saying that that's important is that demand remains robust and and certainly if you have delays in capacity additions and we continue to see strong demand growth that could impact margins going for 2020 plus.

Yeah. The other thing you know in a in a cyclical business, we try to focus on the long term fundamentals and in the chemical business. They remain very strong you know, we expect growth to remain above GDP.

As in the Middle class continues to grow.

So that's that's certainly a key element of it and and we focus on those long term fundamentals. The other thing is we recognize that in a cyclical business any commodity business you win over the long term with the lowest cost the supply.

So when we make these investments I mentioned the steam Cracker Corpus Christi, we we endeavor and do everything we can to keep those projects on the left hand side of the cost of supply curve. So that they are resilient to different pricing margin environments and that certainly as the case with with our chemical portfolio.

The other thing we we try to gain into vantage is on the product side is you know our sales growth for the most part is on high performing products that have some sort of technology barrier of some sort of unique application for our customers, where we can garner high margin and we can we can have a a a strong portfolio those those types of product so.

Again, I I think we feel really good about it the other thing I'd highlight you know if you look at the recent investments that have come online the steam cracker on the Gulf Coast Valmont polyethylene expansion I just mentioned.

Assets are performing really well, they're running above planned rates and there are creative durning, even in a in a challenging environment.

So again I you know short term certainly we continue to see pressures due to capacity additions.

But long-term demand fundamentals remained strong.

And we feel like our portfolio is is advantaged and well positioned to continue to perform well across the across the commodity price cycle.

Alright, Thanks now.

Thank you fill.

[noise] now we'll go to <unk> with U.B.S.

<unk> you're onto questions I do a couple of questions <unk> on on the downstream I mean, you reference.

Improving cracked spread slight heavy spreads hole.

Products, I guess would fit exactly into the kind of profile of the new project you brought tones of the hard to find out of the Coca erupted I'm hydrocracking I'm, a little surprised we still not really see.

Significant delta and earnings open above the full to more generic stuff, you'll you'll you'll highlighting in the A.K. <unk>, just materiality or would if we revisit the full q. and look into the COVID-19 versus 18 would we start to see the effect of those.

<unk> within your winnings.

Then maybe if I should second question as well just from the garden phone disposable proceeds is that's a figure 15, you will receive or is that gross of of selling costs taxes et cetera.

Okay right. Thanks, John I mean, let me take the downstream question first.

You're absolutely right. This you know when we make investments when we consider how we want to tranzact within our portfolio, we remain very grounded in the long term fundamentals.

In the long term fundamentals and the downstream are that you will see a shift in demand away from products like fuel oil into distal let's into based stocks and into chemical feedstocks with the investments were making and have made certainly Antwerp Rotterdam are good examples the Singapore.

Is it upgrade project that I I mentioned earlier.

All of those are intended to capture the growth in that in that demand and improve the complexity of our refineries and the competitiveness of those refineries, we were absolutely investing to capture that long term demand growth.

Yeah I you know, it's relatively early days and in some of these major projects that have come on line or they're performing well. There you know obviously have been in a different in a lower margin environment up to this point, but operationally, they're performing well, which is impressive, especially in some cases like Rotterdam.

That project was reliant on new technology, New catalyst technology that allows us to upgrade again fuel into higher distillate projects. So the fact that we've been able to execute that project well executed with new technology. <unk> is is pretty impressive than we feel very good about that and and we fully expect you know over time, especially in the <unk>.

Environment improves we'll see significant contributions from those from those projects.

I think beyond that you know beyond the major projects. We we continue to progress a lot of smaller capital projects at our refineries and we're constantly looking to optimize how we use those those units. So again I you know I would fully anticipate things progress will continue see good good progress and we'll endeavour to try.

Hi, like that more certainly and in the earnings.

In terms of the proceeds the 15 billion dollar objective, we set out to 2021 that that number is consideration and so to the extent we have divestments transactions that include closing adjustments that would obviously reduce that number in terms of the actual.

Flow that comes in but the $15 billion is consideration.

Thing I'd remind you is that it was a wrist number.

So certainly in terms of the level of activities should we succeed and transacting on everything that would bring in a lot more consideration then that $15 billion.

If it's depressing well you know to be at 5 billion already we feel good about the assets that are that are being marketed in terms of interest.

And we expect to continue to put more assets in the market as we are close to the end of the year.

Okay. The <unk>.

You know, we'll go to Douglas good with Bank of America.

[noise] Hey dog.

Neil I Wonder if I could change type just a little bit and <unk>. The latest update is growing again.

Obviously, you highlighted the seasonal rebounded gas production or a d., we used to going into the fourth quarter always there's been a fair amount of news again in the last several months, specifically, what I really want to get a target. If I may ask is the make whole provisions of the force.

So even no longer term production may be curtailed that we are what's happening to you or the net value in the net cash <unk> two x. on as a consequence about as we look longer term.

Okay. Thanks to appreciate the question, maybe he just to give a little bit of background, what's happened in growing again.

So first of all we certainly understand concerns residents of experience, you know or a tremors and the related damage and.

Go back about little more than a year ago.

We signed a heads of agreement with the Dutch government and and shell, our partner and and ma'am.

That would accelerate the end up production I think by 2030 at the latest is is the initial I was the initial timeframe.

There was another tremor that occurred in May of this year and after that tremor Dutch government informed us of their intentions to bring production to zero by 2022.

Yeah that that changing the acceleration of the production.

He has a significant departure from the heads of agreement that we signed roughly a year or so ago.

So we along with shell and the state have agreed for the need to you know put in place in a den them to that to that agreement and we'll work.

Responsibility to accelerate the lowering of the production and and we think will come to a final agreement on compensation, but but that's something that's that's underway dog you know I think what this highlights certainly.

Is the the advantage of having a a global portfolio that provide you with a lot of Optionality a lot of flexibility you know things are going to come in and out of the portfolio.

But we anticipate certainly to be able to to continue to grow the overall value that portfolio just to give you. Some sense I don't have specific dogs on earnings and cash, but the the production levels are about 90000 oil equivalent barrels per day on an annual basis. It does depend heavily in any given quarter on demand and whether <unk>.

Additions, but we don't anticipate any significant impact from this accelerated production in the fourth quarter, but we'll certainly work closely with all stakeholders to wind down production in accordance with a desires at the Dutch government.

I I appreciate the line P. on certain Neil My second one is probably a quick one given your your history and be able to answer these but I just wonder if there's any updates you can give on the guy on [noise].

Project visibility I mean, clearly meet your coffee on which they can you help in March.

Extraordinary success again.

I'm, specifically trying to see if you will give us any color on what you've learned so far.

<unk> because clearly that's a a potential game changer again in terms of development timeline and I'll leave it or not so much.

Dug I'll I'll try to exceed your expectations. So you know the news flow out a guy and as you know continues to be extremely positive.

And we talked about phase one and the likelihood that we'll have start up by December .

Been a tremendous success I think.

Is a good reflection on the project management capabilities that we have as an organization to be able to deliver that you know on time and certainly ahead of schedule.

Base too well defined F.I.D. engineering construction is progressing well and then we're working with the government phase three pay our project and expect to have early you know oil first of all some time in 2023, so really good project or progress on those first three phases you know we've said.

That by 20, I'm 25, we'd have at least five F.B.S.. So roughly 750000 barrels a day of production and if you think about where that could be.

There are certainly you have the pie are area.

That we're focused on developing you've got what we're calling the the eastern.

Southeastern area, which includes you know all the discoveries we've had around that turn about area and I think there's been roughly five discoveries.

And then if you move further east you have high Mora and then west you have hammerhead. So those are those are the possibilities. If you will around potential fourth and fifth about.

We're still working to define those I would anticipate sometime in the near future being able to provide more clarity on where those next boats will be.

No one of the one of the challenges that we have given all of the significant exploration success that we've had is making sure that we take the time to optimize the development. Yeah. We don't we don't want to rush in a way, where we do something that we might regret down the future. So as we have all these new discoveries.

We want to make sure were optimizing the right approach to create value not only for us, but also for all stakeholders involved.

And then you know as you know on top of that it's all the undrilled potential so we're trying to balance.

Progressing those developments while at the same time, making sure that we progress <unk> is becoming an even more attractive portfolio of exploration opportunities, but again dog I would imagine what will continue to provide clarities sometime in the next several months on on a range or I don't have as much on Ranger only because we're.

On the well location I think pouring operations of started and again I would expect.

We'll take those results and we'll be able to integrate them into what we know when the data that we have and we'll be able to provide and update in the future, but I I hesitate to give anything just because we're still on the well location.

Neil appears along on so just to be clear you're still holding 750000, then you're 2025 targets accompanied.

Oh that for for production, yes stuck that that is today that is the the number were still using again that's production that's not capacity of F.B.I. So that's production.

<unk>, Yeah, I spent <unk>, we'll talk about that makes me. Thanks, a lot appreciate it good thanks to.

Alright mix will go to barrage borkhataria with Royal Bank of Canada.

It takes taking my a question I had a few on you'll divestment plan just a couple of <unk> could you say, how much cash flow freak Asheville, you're going to lose from from sending those assets and then also just a clarification to 600.

<unk> tax repaid as part of the sailors that paid by the bio is that we payment from the government and also have one follow up in addition to that thanks.

Yeah, good things for us so.

And really really good progress the development divestment program with with Norway.

In terms of I mean, you're thinking about a right in terms of the impacts certainly there'll be there'll be an impact of volumes and I think we said production in Norway is roughly 150000 currently 150000.

Oil equivalent barrels per day, there will be an impact on earnings Castillo, but also a reduction in Catholics avoidance of Catholics and so.

What we're planning to do I think instead of providing specifics for every divestments that we do in terms of how that's affecting the overall portfolio, we're going to wait until March and we'll give a more folsom view of all of the divestments and the impact that's going to have on the overall the overall portfolio.

On the the cash cash refund is a is a repayment from the government.

At that 0.6 that you reference okay. That's very clear just to follow up I'll be able to disclose what a longtime oil and gas prices you use to test from payments on your balance sheet.

[noise] you know I think like like we do with with anything you're talking about impairments is that what she said.

Independent testing, okay, sorry about though.

You know monitoring from parents or something that is an ongoing.

Ongoing process.

And certainly is something that we follow very closely with a U.S. and gap I don't think we disclose any specific pricing that we use in terms of conducting those those impairments. We have very as you would imagine very stringent processes and controls to make sure we identify any changes in facts or circumstance.

That would indicate that an asset might recover its carrying value.

That includes you know annual planning and budgeting that that we follow it includes assessing trends in the underlying commodities natural gas crude et cetera.

And then certainly if through those processes that we have we we determine that there was some question about asset recoverability.

An impairment might be required, but I'm getting that there. It's very strictly controlled certainly we follow U.S. got very closely and doing.

Okay. Thank you.

Welcome. Thank you barrage.

Your next question comes to mind, Paul Chang with Scotiabank.

Hey, good money.

<unk>.

<unk> in part I mean can you tell <unk> <unk> <unk>, who you have one thing right now and also you in the data base and what pit sandals your position you see and <unk>.

[noise] right. Thanks for the questions Paul.

In terms of of you know rig and <unk>.

The pace of development continues along with the plans that we laid out I think at the end of the quarter. Paul we were at 55.

Rigs and 10 frat cruise okay. So those are the numbers that <unk> on the S.A. <unk>.

No I think it's I think it's a net number fall.

Okay.

Terms of of the Delaware I I don't think I have the percentage of the lands that are federal and the Delaware I mean, yeah. As you know we have a very large inventory out there, but I don't I don't have a specific number on on.

On federal lands.

That's something that you guys will be willing to share and that you maybe that often like that you can if someone got back to me.

Potentially I mean, obviously, we we would share with everyone, but I'll take it away, Paul and certainly and have a discussion whether or not that's something we want to share.

Okay second package them do that.

Second question in your you have a loan or okay.

She is not so you in your presentation you guys TWI to one I still have we see the with the me to component of that.

So pissed off.

Into your <unk> pacing heavy or if you have and be able to do you. What is the on the T., maybe <unk> you would be able to run.

Yeah. Thanks for question <unk>, you know, we have roughly 450000 barrels a day of cocaine capacity, but we also have a lot of flexibility to fill the capacity and we can do that certainly through heavy crude processing, we can do straight run resulted processing.

We can do direct import of Ah vacuum tower bottoms and fuel oil.

In terms of how we feed data, we we determine what goes into the Kocur's, we try to optimize the coke or fees light based on economics based on availability and based on quality of the feedstocks. So we do have the capability I think giving you a specific number wouldn't be helpful. Because it will change depending on what's the.

Appropriate what's the most optimal kurds like to run or what the optimal slight to run through through those kocur's, but I will say I think you know when you think about I am of 2020.

You know the key economic drivers is likely to be crude oil differentials.

And and our efforts to optimize the <unk> and I think you know the the general mechanism for that economic value will be the use of low you know less expensive heavy sour curved. So we we anticipate that's that's likely to keep the kocur's full you know providing advantage for us, but we certainly have the flexibility in capability to.

Respond to the market and use any of those different kinds of foods feed slides, but again, it's hard to give you a specific number just because.

It depends on what the market is telling us.

Maybe let me see and then not the way one off the May do we find that date sat technology wise that yeah. That's no problem that to one yet, but <unk> yeah. Many location that just being constrained by done much geez.

Structure <unk>. So I guess my question to you use that in your coastal we find them eat that what they use beta hung and all that do you have the capability to we see a mosque on the T. All we see yeah, you can normally gets day.

Yeah, I I, we would agree with that certainly in technology wise and capability wise, we we can do it I I think it's fair to say you you can be limited by.

Sticks, but we are again that that would be part of the.

<unk>, whether or not you use fuel oil in the coke or but again I somewhat limited, but I wouldn't say, it's completely constrain we do have the ability and have had the opportunity to run those in in the U.S. Gulf Coast and in Europe . So there's there's flexibility there there may be some constraints on logistics, but not enough to say you couldn't do.

If the market told you that's the right thing to do.

I find new question Corpus Christi Ah cool export capacity, a new that do you have on what the asked to me <unk> <unk> and how much.

In the near term, we would be able to <unk> before the something gateways I mean those dawn.

I'm talking about export capacity of <unk>, it's about capacity, yes in a coffee quickly we bought a new pipe my.

I mean going down Yep, it's data concern that that'd be come up on that and we couldn't <unk>.

[noise], Yeah, I don't you know I'd I'd certainly understand the concern obviously is production continues to grow in in the <unk>. There's only so much of that that will be consumed by industry on the Gulf coast with with manufacturing, both refining and chemical capacity.

But you know today, including US we've been able to export Kurds outside of the Gulf Coast in Tar refineries in in Europe and Asia.

I I don't again, I don't know if there's any.

View on your term constraints I fully expect that as you see growth.

Being out of the Permiam that the industry will respond to that and I think is responding that and and building out additional export capacity, but I don't think we anticipate any any near term near term constraints on the ability to tax board on the Gulf Coast.

So why things we have done Paul is you know, we're certainly investing to increase our capacity on the Gulf coast or run more of the like crudes.

Out of the Permiam, including you know the Beaumont expansion that we're doing and I think there's a few other smaller expansions that other refineries that we have to be able to run more of those like Kurds.

We're we're certainly able to take advantage of it in our facilities and export it out to our refinery. So no constraints currently and again, we would anticipate the industry would continue to respond to.

The additional lights coming out of the permanent.

Thank you.

Thank you ball.

Alright, well next go to Dan Boyd with B.M.O. capital markets.

Yeah the morning.

In How're you doing well thanks, I just wanted to going to fall back on the on the Permian, where you say you're kind of you training as a according to plan, but you're at 10 frat crews and I think your your plan was to go from 11 at the beginning of the year to to 16 at an exit rate. So or you just think more efficiency on the frock crew side because your production is run.

<unk> had a plan I'm just wondering what this signals are you going to be increasing completions going forward or are you able to just do more with a with less.

I think I think broadly and certainly for US I think you are seeing more efficient production out in the permission and I think you know the fewer number of frackers would be indicative of that but.

Like even if you look at what's happening in in in industry, you know rigs certainly have a flat and even come down, but you see continued growth and volumes and I think that's.

That's indicative of improved productivity indicative of longer lateral lakes indicative of using more more effective rigs. So I I think <unk> not only for us, but I think certainly in the industry, you're starting to see you know more more efficiency.

But but at the same time, you know, it's not heterogeneous resource and I think that's where we bring advantages by being able to apply sophisticated reservoir modeling.

We're able to I think optimize how we're developing optimize.

Things like spacing, you know our ability to understand the sub surface allows us to tailor the development or our understanding of the geology and so.

I I think it's still relatively early I think you're going to see as continue to learn I think you're going to continue to see us optimize how we're approaching the development. So I wouldn't read too much into any specific number around frat cruiser rigs again.

Isn't about volume for US. This is about what we need to do to create value for our shareholder and so we're going to respond to what we're learning we're going to respond to the application of technology and and drilling expertise and project management capabilities to make sure that over time, we're achieving that objective of creating value.

Okay. Thanks, and then yeah, we talked about this one before but when I look at your operating cash flow.

Date versus the plan back in March <unk>, <unk>, maybe running about call. It you know $12 billion to $14 billion, you know shy that obviously, we've been in a tough macro environment, but I was when her can you help us understand how much of that you know shortfall verse plan is purely related to price and how much is potentially related to operation.

We talked about increase maintenance, because what what I'm trying to figure out here is <unk> is there a potential for next couple of quarters to get back on track into their an operational catch up that we might see.

Yeah I. Appreciate the question you know, we're obviously in a in in a much different market environment.

Then the basis that we use for that Investor day, especially in in downstream and chemical.

When we look at it how we're performing relative to those numbers. If you if you adjust for that impact if you adjust for the fact that weren't a very different.

Firemen were generally pleased with where we are we have had as you as you highlighted some operational challenges, which which have been a detriment to that but broadly speaking we feel very pleased if you were to adjust for that for that environment.

You know maybe more importantly, Dan is we we continue to have tremendous success on operational milestones and and we highlighted.

Which growth of reaching 10 F.I.D.'s this year alone the the additional expiration discoveries.

So we feel really good about the progress or making on the underlying best underlying investments that will.

So the earnings and cash flow generation capacity of the of the organization overtime, but saying again you know for the most part we feel pretty good both on earnings in cash flow with the exception that were just we happen to be in a in a different environment, but we yeah, we fully anticipate.

Given that we are investing the structural advantages, we're not reliant on market help that that over time, those will begin to manifest themselves as as we get into different price some margin environments.

Alright, thanks for taking the question.

Extent, operator, I think we have time for one more question.

Well take that question from Jason gave them in with common.

Yeah, Hey, things, you're taking the questionnaire past the hour I wanted to address mosaic agreement. It wasn't really discussed on the call yet I mean, you guys have talking.

I've talked about carbon capture for a little while now and there's obviously concern in the journal investment community that all the resource you own will not be able to be developed because.

[noise] turned around greenhouse gas so your ability to develop a breakthrough technology I think would go a long way you just discuss the prospect of that <unk> technology, and kind of where you see that impacting the business and maybe the.

<unk> profile and I have a quick fall off thanks.

Jason that's a that's a good question to end the call look.

I mean, let me let me be clear first of all you know we recognize the risks from climate change and we recognize that something has to be done about it and you know we we were we are committed to providing affordable reliable energy, while minimizing the impact on the environment and that's specifically.

The need to reduce C.O. two emissions.

If you look at that you know, 90% of global energy emissions come from three sectors comes from power generation transportation and the industrial sector.

And the challenge the that we face is finding a comprehensive set of solutions that will allow us to reduce the emissions industry sectors.

But it's going to require advances in technology, and it's going to require a the implementation of effective policies by government. So if you look at where we think we can participate in that in that solution development is through our advantaged research and development capabilities and so we are attacking each of those three sector. So empowered gender.

<unk> you mention carbon capture and technology that is going to be critical to help reduce emissions and power generation.

We're doing not only internal research and development, but we're also expanding the portfolio outside the company you mentioned mosaic we had a similar agreement with a company called global Thermostat a few months ago I mentioned, all the partnerships, we have with universities national labs et cetera. So we are.

We have a very wide outfit, you're looking for opportunities to develop scale a bowl economic solutions on carbon capture.

The second sector transportation raise aware of the advanced as being made on the light duty side, but on the commercial transportation heavy duty aviation.

You think we need an allergy bio fuel solution and you're I'm sure very familiar with our algae program. We're also looking at Cellulosics bio fuels and.

And then on the end does India industrial side that sector, we're looking at new plant configurations, new processes, new cattle us.

The way, we we want to participate the way we are participating in this at a level.

A level that as much more significant than any of our peers is leveraging our technology capabilities to come up with those solutions.

And you know I think we've spent $10 billion on lower mission technologies I think since the year 2000.

I mentioned, we continue to advocate advocate for policy so.

That's why you're seeing as partner with with companies like mosaic Global Thermostat is we we recognize where those solution gaps exist.

And we believe new technologies are needed and we think we have a competitive advantage to participate and find those solutions.

While the same time, continuing decree value for shareholders.

[noise]. Thanks, I appreciate that answer if I could just squeeze in a very quick.

You cited do you 150 million dollar benefit to downstream on the clean dirty spread is there a corresponding impact on the upstream just trying to.

Understand the impact to the entire.

Portfolio. Thanks.

I appreciate that that last question <unk> as something we looked at I mean, obviously, we don't want to focus just on the benefit we're getting from the downstream.

When we look at our upstream portfolio. This is a a good example of having a very large global diverse portfolio and there will be pluses and minuses in that portfolio as it relates to the implementation of <unk>, but when we looked at it in the end it ends up being a neutral impact so really does not have an impact on our.

<unk> like I mentioned, you'll see pluses and minuses, but on the overall portfolio, there's a neutral impact.

Well, we we appreciate every one allowing us the opportunity to highlight third quarter.

And and all the the key milestones that we hit and the continued progress on our portfolio.

We look forward to your participation on our fourth quarter earnings call, where I will be joined by our chairman N.C.O. daring woods.

And we appreciate your interest and hope you enjoy the rest of your day. Thank you.

That doesn't who did this conference let me think everyone again for their participation.

Yeah.

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Yeah.