Q3 2020 Exxon Mobil Corp Earnings Call
Please standby we're about to begin.
Good day, everyone and welcome to the Exxon Mobil Corporation third quarter 2020 earnings call today's call is being recorded.
This time I'd like to turn the call over to the Vice President of Investor Relations and Secretary Mr. Steven Wilson. Please go ahead Sir.
Thank you good morning, everyone welcome to our third quarter earnings call.
We appreciate your participation.
Excellent.
Hi, Stephen Kim Vice President of Investor Relations.
I started I wanted to say that I hope all of.
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Charlie just a world continues to face.
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Joining me today are senior Vice President for where Trimble Andy Swagger.
Corporations principal financial Officer, and Jack Williams, who oversees the downstream and chemical business.
After I covered the quarterly financial and operating results.
And then Jack will provide their perspective, including an update on the steps, we're taking to navigate the current market environment.
Following those remarks I'll be happy to address specifics on a quarterly report results well, Andy and Jack will take your questions.
Coating market dynamics and the recovery corporations response.
After a strategic priorities progress on our Cryoport efficiencies.
It's all major projects.
This morning, we'll reference the slides are available on the Investor section of our website.
I would also like to draw your attention to the cautionary statement on slide two of the supplemental information at the end of this presentation.
I'll now highlight developments from the second quarter of this year on the next slide.
In the upstream liquids realizations increased by approximately 75%.
The man prices recovering from Bose.
In the second quarter.
That's more than offset lower gas realizations.
As market conditions improve all economic curtailments were brought back on line by the end of the quarter.
However, government mandated curtailments continued through the quarter.
Despite the considerable challenges associated with the pandemic.
I've been able to achieve our best ever safety and best reliability performance in the upstream in five years we.
We continue to progress industrial banished developments in Guyana with the I'm glad the apart.
In addition, we announced two new discoveries on the star bright yellow telegraphed joke, marking our 17th and 18th discoveries in Guyana.
In the downstream, we achieved the best reliability and safety performance in the last 10 years.
Fortunately industry refining margins fell to record lows, reflecting continued excess industry capacity and high levels of product inventory.
Psycho conditions persist in the chemical business.
Mark as far away from the second quarter, primarily impacted by higher feedstock costs demand remain resilient, but continuing strength packaging, an ideal segments and recovery in automotive and construction sectors.
Across the corporation, we reduce capex by over $1 billion for the second quarter, making.
Making further progress towards our 30% reduction target.
During the quarter, we signed an agreement with global clean energy holdings to repurchase 2.5 million barrels a renewable diesel for five years starting in 2022.
We also expanded a joint agreement with global thermostat through a grant in scale direct air capture technology that removes carbon dioxide directly from the atmosphere.
Let's move to slide four for an overview of our third quarter results.
A table that provides a view of third quarter results relative to the second quarter.
During the second quarter, the reported loss of $1.1 billion included favorable identified items.
At $9 billion driven by the non cash there were three adjustments we noted in the second quarter.
Excluding these items the second quarter was a loss of $3 billion.
Third quarter results were a loss of $700 million, including a $100 million noncash benefit from inventory valuation.
Excluding identified items, there was 800 million dollar loss in the third quarter a two.
2.2 billion dollar improvement from the second quarter.
Significant improvement in upstream liquids price was partially offset by lower gas realizations as well as lower refinery margins.
Higher volumes across all three of our businesses increased earnings by several hundred million dollars as demand continues to recover from the unprecedented levels seen in the second quarter.
Finally, lower operating expenses improved earnings by an additional $200 million compared to the second quarter.
It's worth noting that the benefit of Opex savings delivered by our organization increased earnings by $1 billion versus the third quarter of 2019.
On the next slide I will cover a brief summary of results for each business note that the earnings comments are excluding identified items.
True earnings increased by approximately $1.5 billion.
Lumbar higher liquids prices, partially offset by lower gas realizations, mainly due to a lag as crude index LNG contract pricing.
Five year impacts, including the recovery of economic curtailments increased earnings by $140 million.
Lower expenses, including the benefits of captured structural efficiencies improved earnings by another $110 million.
Moving to slide six the comparison of third quarter 2020 results relative to third quarter 2019.
Upstream earnings decreased by approximately $2.5 billion compared to the third quarter of 2019.
Correcting the current price environment.
The unfavorable volume impact was driven by curtailments and divestments lower.
Lower production and exploration expenses were offset by unfavorable one time tax items.
On slide seven upstream volumes increased by 34000 oil equivalent barrels per day compared to the second quarter.
With the challenging market conditions, we curtailed production and unconventional and heavy oil assets starting in April by the end of September both volumes were back online.
Government mandated reductions were implemented in May and continued through the third quarter. Those curtailments average 140000 oil equivalent barrels per day.
Right the environment, we achieved growth of 50000 oil equivalent barrels per day, primarily in the Permian.
Scheduled maintenance in a third party supplier outage occurred decreased by 19000 barrels per day.
The crime was partially offset by higher entitlements.
Moving to slide eight compared to the third quarter of 2019 upstream volumes decreased by approximately 230000 oil equivalent barrels per day.
Sales were lower due to curtailments mentioned on the prior slide as well as the divestment of our Norway non operated assets at the end of 2019.
Despite the current business environment, we saw continued liquids growth premium Abu Dhabi guidance.
Moving to the downstream on slide nine earnings increased by approximately $380 million relative to the second quarter.
Margins increased by $70 million, despite record low industry margins, which decreased earnings by $470 million favorable creating supply chain impacts and marketing margins more than offset these impacts.
Demand recovery, primarily a road transportation fuels and lubricants increased earnings by $300 million.
We spend about 25% of refining capacity in the third quarter.
Joost expenses, including savings from maintenance and turnaround efficiencies.
Fewer contractors increased earnings by $60 million moving.
Moving to the next slide I will discuss downstream results relative to the third quarter 2019.
Earnings decreased approximately $1.5 billion, primarily driven by the low industry margin environment. I. Just discussed this was partially offset by $400 million of favorable trading optimization and marketing margins lower volumes associated with COVID-19 demand destruction decreased earnings by 80 million.
Alice.
We continue to see the benefit of expense reductions and efficiencies, which improved earnings by $360 million.
Slide 11, I will discuss chemical results.
Okay earnings increased by almost $200 million for the second quarter.
Lower margins reduced earnings by $80 million, reflecting higher feedstock costs.
Strong reliability, coupled with improved demand resulted in higher volumes, which increased earnings by $220 million.
It is worth noting in the third quarter polyethylene sales were a record high. This also highlights our strong reliability in the quarter.
We continue to capture market and supply chain efficiencies.
Reduced expenses, including reduced contractor utilization and activity pacing improved earnings by $40 million.
Turning to slide 12, chemical earnings increased by more than $300 million relative to the third quarter of 2019.
Earnings improved due to higher margins from lower feed costs and higher sales volumes.
We also benefited from our cost reduction efforts, which improved earnings by $170 million in the quarter.
The next slide provides an update on the progress we made reducing our costs.
In April we set a target to reduce 2020 cash operating expenses by 15% through.
Through the third quarter, we are on track to exceed the reduction target delivering additional cost savings.
Cash operating costs are approximately 20% lower versus the third quarter 2019.
Almost 15% relative to the first quarter of this year.
The cost reduction for effect decreased activity maintenance and program efficiencies reduce contractor rates and lower logistics and supply chain costs.
The reorganization of our businesses along the value chain has been critical in identifying and delivering these improvements.
Importantly, we have realized these savings, while improving safety reliability and environmental performance of our operations.
Now moving on to capital spend on slide 14.
Third quarter capital spending was down more than 20% versus the second quarter.
Reductions continue to be driven by pacing of short cycle unconventional investment.
In the third quarter, we also reduced downstream project spin as we ramped down activity.
Importantly, our corporate project organization in collaboration with our contractors have managed to more than offset the cost of deferral preserving the overall value of the projects Jack will share. Some additional details later in the call on this.
Let's turn to the next page, where you can see the impact of these activities on our cash profile first quarter cash flow from operating activities was up $4.4 billion from the second quarter with higher crude prices increased volumes and the benefits of Opex savings.
We also saw a benefit from working capital with lower product inventory.
Gross debt decreased by about $700 million to $68.8 billion.
We ended the quarter at $8.8 billion of cash.
Turning to slide 16, I will cover a few key considerations for the fourth quarter.
In the upstream production is expected to remain in line with the third quarter Vietnam.
The announced government mandated production payments are expected to average 220000 oil equivalent barrels in the quarter, an increase of approximately 80000 oil equivalent barrels from the third quarter.
Impacts of increased curtailments are anticipated to be offset by seasonally higher European gas demand.
In the downstream, we anticipate demand to be roughly in line with the third quarter.
Our scheduled maintenance.
In chemicals, we anticipate margins to be impacted by increased supply from capacity additions and improved industry utilization with the recovery from hurricane reliability events are scheduled maintenance is expected to be in line with third quarter.
Corporate and financing expenses are anticipated to be about $900 million.
Capital spending is expected to be higher than the third quarter with onetime milestone project payments with that I'll now turn the call over to Andy.
Thank you Stephen.
First and foremost we hope all of you and your families are safe and healthy.
As we've discussed on previous calls the challenges presented by covert die chain on like anything the industry has ever seen.
As is the response of our employees and contractors.
They have gone to great lengths to safely maintain operations manufacture and deliver the products so Saudi maze for sanitation poaching.
As well as provide the fuel cell ensure these and other critical supplies to the places they are needed.
They have responded to unprecedented market conditions with all three of our business is at or significantly below bottom of cycle conditions.
We could not be more proud of their exceptional efforts and response of our workforce.
We are navigating this near term uncertainty by.
Moving record safety and reliability performance.
Delivering better than expected cash savings that are on pace to exceed our 2020 opex and capex targets, while maintaining operational integrity and pacing projects to preserve long term value and position us for the eventual recovery.
This slide shows the demand impact of the pandemic.
Corresponding initial response and third party projections for the market recovery after the second quarter flows.
Crude and product inventories rose to a peak in June as the reduction in demand outpaced supply touch.
In the third quarter.
Inventories have started to fall as demand recovers and exceeds current supply levels.
Third party estimates suggest liquids inventory decreased by about 200 million barrels in the third quarter and they expect demand to return to pre covered levels and 2021.
Of course, the demand projection showing here through to a few critical questions.
How will have a supply response.
What will be the resulting supply and demand balance.
And what price as required to achieve this.
In light of this it is worth looking at the fundamentals.
Start with my next slide with upstream supply.
In the upstream which is a depletion business.
Total investment is required to add supply to offset ongoing decline.
This chart shows an obvious but sometimes overlooked relationship.
Industry investment levels rise and fall with price.
More specifically the industry's level of revenue.
Oh pricing environment slated to low investment levels, and therefore, less new supply to offset inflation.
Eventually available supply declines leading to a tight supply and demand balance and higher prices.
Over the past five years, we have seen a steady decline in conventional spending which has been somewhat offset by north American unconventional grows pretty pandemic. The industry was already investing at levels below historic range and below what would be required to meet future demand and overcome natural deflation all of this very strong.
Recent estimates from the International Energy Agency.
Overall, the impact of the pandemic. This year has been dramatic secondary.
Significantly reducing current investment levels, which exacerbates the problem.
Top of this industry exploration continues at multi decade lows.
Meanwhile, underlying production decline of 5% to 6% per year tenures relentlessly.
Looking forward if the industry has to be credible third party estimates for energy to match, we will need to significantly increase investments. This is shown here with a range of third party estimates for the required level of future investments for the industry to fund this level of investments prices will have to rise.
With that I'll now turn it over to Jack Thanks, Sandy moving to slide 22, I am going to extend the point and you just made on crude prices.
Refining and chemical margins this.
Discharge puts the current refining chemical margins into the context at the last 20 years.
Refining is a highly cyclical industry with significant ups and downs.
But today's net refining margins are below any level experienced in the prior 20 years.
And for diesel and gasoline has recovered much faster than jet, which.
Which is still 45% below pre cobot levels.
The large differences in the domain recovery for the different transportation fuels.
Significant pressure on refinery operations with excess yet production having to be blended into other products.
Which is driven second quarter and third quarter net refinery margins negative.
And to record low levels.
Chemical margins are also close to the bottom of cycle conditions.
Although chemical demand has remained strong, particularly in the packaging medical markets yes.
The excess supply from major investment from the Gulf Coast in Asia continues to pressure margins.
Industry is responding by shutting down capacity in refining and pushing out new investments in chemicals. This is a typical response, we've seen historically as producers struggle to maintain operations in very challenging financial conditions.
Expect this will continue until supply and demand come into balance in margins recover.
So in summary, we see recovery on the horizon across each of our businesses.
We believe it is less the matter of yes, but more a matter of when.
This uncertainty led the actions we've taken this year, which underpins our plans for 2021.
As was mentioned on this call last quarter.
We acted quickly and decisively earlier this year to the challenging economic environment, while retaining flexibility and positioning the business for the recovery that will inevitably come.
Looking to 2021, we're focused on continuing this year's progress.
Despite the challenging environment, resulting from Covance, our operations are delivering world class performance.
Our safety and the reliability of our operations had been at or close to record levels in all three of our businesses.
We're committed to maintaining his performance in 2021 and two.
Terms of cash Opex in April we gave the organization and target to reduce operating expenses for the year by 15%.
We're well on our way to delivering even larger reductions and will achieve further structural efficiencies next year.
We reduced this year's Capex plan by 30% to $23 billion.
And similar to our Opex expect to finish the year below our reduction target.
To achieve this we took steps to delay or postpone projects in construction.
We challenged our organization and partners to offset any value impact from these delays with additional execution efficiencies.
And our project teams delivered.
In 2021, we expect to drive Capex lower than this year to between $16 billion $19 billion.
Portfolio high grading activities are continuing.
Current conditions are challenging, we're making progress and anticipate additional assets in the market over the next 12 months.
And finally, there will be no change to our capital allocation priorities.
Of investing in industry advantage projects, maintaining a strong balance sheet and paying or level dividend.
The progress we've made this year gives us confidence as we head into 2021.
The work done over the last couple of years to improve our organization and drive efficiencies.
First off in responding to the pandemic.
Let me cover this in a little more detail.
Critical change has been the move from an organization focused on our functions.
To an organization aligned along the value change of our businesses.
This reduced the senior leadership structure and associated overhead, while improving line of sight across the business and increasing efforts to drive higher value from our assets.
The new organization is also giving us the opportunity for deeper structural efficiencies, which we began working on the second half of last year.
As the pandemic hit we were well positioned to accelerate the implementation of these efficiencies.
Response to the significant deterioration I think.
Economic conditions.
The structural changes include a significant reduction in the size of our workforce driven by increasing spans of control highgrading activities.
Accelerating the use of digital technologies in leveraging the lower activity levels.
These workforce reductions had been developed on a country by country business by business basis.
As you are likely aware, we've recently made announcements in Australia.
Europe.
And then here in the US this week.
Overall, we anticipate a reduction in our global workforce, which includes employees and contractors.
15% by year end 2022 versus 2019 staffing levels.
The vast majority of these reductions are occurring and above field or above side organizations.
Our operating organization driving further cost reductions in areas, such as maintenance and logistics and supply chain.
Continuing their focus on delivering world class safety reliability and environmental performance.
Our global projects organization formed last year continues to build our industry, leading project execution competency.
Organization is focused on prioritizing our project portfolio and.
Maximize value are capturing efficiencies in the current market.
A single corporate organization for project execution has been critical in leveraging the scale of the corporations investment.
Effectively working with the contractor community our partners and host governments.
Fish gently reduced spend while preserving optionality and long term value.
Our projects organization is managing the industry's most attractive portfolio of projects.
We continue to aggressively advance our highest value projects and maintain exploration activities in both Guyana in Brazil.
We're also taking advantage of the more favorable cost environment to progress the Corpus Christi Chemical project and delivered ahead of schedule and under budget.
We're efficiently pacing short cycle Permian developments.
And working with our partners to defer other downstream chemical and LNG projects.
Importantly.
We are not canceling any projects that are in execution or in the funding process.
These remain attractive investments and while the value of these projects may be deferred.
Not be diminished.
Let me now turn to our progress in Guyana.
With the announcement of two discoveries on the Stabroek block during the quarter.
Yellowtail two in Redtail one.
Recoverable resource estimate is now approaching 9 billion oil equivalent barrels.
Positioning it as the largest new conventional liquids play in the last decade.
The Liza two project remains on schedule for 2022 startup the DSL is under construction in Singapore and the first offshore installation campaign is underway.
Also in the quarter, we sanctioned that power project, our third major deepwater development on the Stabroek block.
We anticipate first production in 2024 and will have a capacity of 220000 barrels of oil per day, and a resource base of 600 million barrels of oil yes.
The FPSO construction will follow Liza to utilizing many of the same contractors and fabrication yards.
And we're building out the in country community required to be successful over the long term.
In total there are now more than 2000, Guyanese citizens supporting the project activities in more than 2500 guidance. These companies registered with the projects center for local business development that is focused on building local business capacity.
Turning to the Permian our.
Our focus in the Permian is on preserving value as we continue to pace our activity levels. Thanks.
Permian production to total about 360000 oil equivalent barrels per day. This year, which is about a third higher than last year and consistent with our plan. Despite.
Despite a more than 35% reduction in capex spend and a 14000 barrel per day year to date reduction due to kogan related economic curtailments.
Our team has done an exceptional job in driving down drilling and completion cost through improved performance and productivity.
Currently operating about 15 rigs as we head into next year and we expect further reductions stabilizing at around 10 to 12 rigs.
We will obviously keep a close eye on the market and make necessary adjustments as the environment evolves at this time, our expectation is that our development activity level will hold fairly steady in 2021.
With current plans next year's production is expected to average approximately 400000 oil equivalent barrels per day.
At this time I'll hand, the call back over to Andy to talk about our portfolio prioritization.
Thanks.
As Jack just highlighted we have an attractive set of investment opportunities that is continuing to grow.
At the constraints brought on by the pandemic, we're actively managing this portfolio of investments with a focus on advancing our highest value projects.
As our opportunity set grows and conditions evolve we continue to reassess our investment portfolio and prioritize our spend each.
Each project must remain advantage versus industry and competitive with our other opportunities for work to ensure our assets remain at good strategic fit provide material growth potential and ultimately create differentiating value.
This is a continuous process and a central element of our annual planning process. It.
It is particularly important this year as we work to develop plans within the constraints brought on by the pandemic.
But the challenging price environment and our current debt levels added emphasis has been placed on evaluating our entire portfolio for the potential of additional asset divestments.
While continuing to progress our previously announced divestment program a $15 billion.
We may expand it to a reevaluation of our North American dry gas assets, which are currently included in the corporations long term development plan more specifically, we are evaluating the opportunity to bring the value of some of these assets for removing them from a development plan and marketing them through our diverse.
Restaurant program in.
Total the assets under consideration of carrying values of approximately $25 million to $30 million, which could be at risk for our impairment depending on the candidates for divestment and the current estimate of fair market value.
To complete their of year as part of our plan process, which will be finalized with the board in November and will be shared with all of you as part of future earnings calls and at our analyst meeting early next year.
Given the importance of the current market conditions on our plans and decisions I'd like to return to the price and margin environment and the earnings potential of the Corporation.
Historically, our three businesses.
Each significant in the industry are typically at different points in their business cycles, which helps mitigate the impacts of theyre down cycles.
This president of our electric all three businesses are similarly internationally experiencing prices and margins below the 10 year range significantly impacting the corporation's earnings.
We see the impact in the broader industry with mounting losses reduced investments increased closures and while questions remain around future demand recovery one thing is certain prior.
Prior to conditions cannot continue.
Supply and demand will eventually made.
Prices and margins will respond.
This suggests there is much more margin and price upside than downside going forward and therefore, an expected increase in earnings for perspective, the earnings range over the prior 10 year period has been between two and $8 billion per year in the downstream and between one and 5 billion.
In dollars per year, and chemical a far cry from where we are today.
And while we may not see a return to average earnings in the near term, we should at least move to the bottom end of the historic range, which we see as the minimum levels demonstrated by a decade of industry experience.
This is the basis upon which we are building next year's plan.
If we see a recovery just to the bottom of the chenier range and Brent crude price in the range of credible third party estimates, we won't be able to maintain the dividend while holding gross debt flat with second quarter levels. This morning, we've given you an overview of how we are navigating a challenging near term.
The market environment and discussed how market forces will restore supply and demand balances.
For the price and margin environment.
The longer term fundamentals remain robust.
Economies will recover.
People's lives will improve and that demand for NRG will grow.
In the short term, you're seeing adjustments in our capital allocation.
What our long term capital allocation priorities remain unchanged.
Staying at advantage projects, maintaining a strong balance sheet and.
Being a reliable and growing dividend or developing a 2020 one plan consistent with the uncertainties and in line with the simultaneous low margins and prices in each of our businesses our.
Our capex will be further reduced to the range of $16 billion to $19 billion or further reducing our cash operating expense with a focus on overhead.
We are looking to increase divestments and working to maintain the dividend while holding gross debt at second quarter levels of course, we all recognize the uncertainty in todays market.
We are keeping a close eye on developments and importantly on maintaining the flexibility to respond as conditions evolve.
With that I'll turn it back to Jack before we open up the line for your questions I want to reemphasize that we're pleased with the operational performance. We've achieved we're on track to better the spending targets. We established earlier this year.
And we're positioning our portfolio for the future.
And with that I'll hand, it back to Steven to begin our Q and a session.
Yes.
Thank you and your comments, Jack and Andy will now be more than happy to take any questions you might have.
Operator, please open up the phone lines for questions.
Thank you Mr. Shelton Mr. swagger and Mr. Williams the question and answer session will be conducted electronically if you'd like to ask a question. Please do so by pressing the star key followed by the digit one on your Touchtone telephone.
We request that you limit your questions to one initial with one follow up so they may take as many questions as possible.
We'll take our first question from Sam Margolin with Wolfe Research.
Good morning, Thank you for taking the question.
You bet.
So on the capital program you guys basically already gave US ahead, thats just sort of the categories that youre committed to at close depleted levels and the ones that you ever see.
The most allocated to that so I guess I'll just focus my first question on the Permian.
How much capital reduction in 2021 was already built in because you've completed a lot of your facilities and infrastructure stands by that point.
And then how much do you think is the reduction in activity than what was planned.
For the questions.
Yes, thanks for the question Sam.
I mentioned earlier.
15 rigs now going down to about 10, we think 10 to 12 rigs will be.
Where we're going to be in.
In 21 question.
Towards what the market does.
Thats substantially down from our earlier plans, where we're planning to continue to more or less stay at our rig level in that kind of 50 rig 50 to 60 rig level in the Permian boats is substantially down.
Look I just want to just reinforce that the decision to reduce the spend due to the cash flow constraints is not at all are reflection of our development results is quite to the contrary, we're very pleased with how things are going.
I mentioned the efficiency improvement that we've seen.
We're continuing to gain experience with the Cume developments and confirming those are.
A lot of value in that approach.
So we're very confident in the quality the resource including the.
Unique development plan, we have in the Delaware Basin and then also the logistics integration we ended the Gulf coast. So.
Yeah, we really like what we're seeing out there, we're just going to curtail activity because we have the discretion to do so and in deferred.
Some of that capital to other other opportunities.
Okay, Great and I think I have a follow up and I think its R&D, it's about asset sales.
A lot of your businesses are organized in Jvs and equity affiliates and from the perspective of the stock analyst that usually doesn't mean anything right now.
The dividend.
At Exxon's level is stressed.
Just given the environment and Thats a problem because it doesn't always align with the capital priorities of affiliates. So.
Thinking about disposals by asset category or segment as it makes sense to think about them from the perspective of asset class and maybe affiliate positions and Jvs are logical place to look for disposals, because that's a very needs to sort of align production.
Yes cash uses of cash priorities.
Sam Thanks for the question.
Our rest of year.
Divestment candidates this quite comprehensive and it looks across every sort of different way.
Correct the business.
In terms of what we think is no longer a strategic fit.
So the criteria for divestment, regardless of whether it's on our JV, an equity today or more conventional type arrangements. There. So as we go through this and thats, a process of changing or oral renewal and or you.
We don't really apply to this sort of categories that share suggested.
Representing any sort of a barrier to that analysis, there may be some friction depending on agreements and simulators arrangements and so forth.
By and large what matters existed or worked with the operator or the other partners.
Reach a resolution that they are able to put the right assets into the market at the right time.
Thank you so much.
Your next question comes from the line of Devin Mcdermott with Morgan Stanley.
Good morning Devin.
No no.
Hi, Kevin your line might be muted.
Okay, well move on to Phil Gresh with Jpmorgan.
Yes, Hi, good morning can you hear me.
Good morning, Phil.
Okay.
Andy I wanted to come back to slide 29 are you talking about it.
The dividend coverage.
Bench on 2021.
If I look at the oil price, you're implying for the third quarter.
Being at the low end of the historic range.
At $40 oil.
And then the assumed recovery in refining margins there.
I think the 2021 would imply that $2 billion.
Of the two to 8 billion recovery there.
To get back to the low end, if I understood that correctly. So I guess are you trying to imply that you think you can if you get a little bit of a recovering assigning that you can cover your dividend and the low fortys.
Organically.
I think let me.
Really important point, that's a question that's on a lot of People's minds, So I'd like to take a little bit of time to go back through and really cover the way were thinking about this.
From an overall message endpoint and our objective is to maintain the dividend advanced the highest value investments and maintain that at a cost of 10 or 11.
With prices at the low end of historical ranges, we'll have those bars there at the low end of those historical ranges. The plans were working on accomplish this that we will accomplish this why is that the actions we have taken the opex reduction workforce reduction capital reductions to a level optimized for reserve.
Long term value.
Debt at a level that preserves flexibility and access to debt markets and prices and margins are set at historic lows across all three businesses. That's obviously not where we are today when you look at those diamonds.
But if you look at the mounting losses across the industry, the reduced investments, where Santa rationalizations, the project cancellations or deferrals.
Clear to us that we're going to see an improvement.
In the industry.
Our base plan conservatively us a gradual economic recovery and modest prices.
Unlike our.
Pass plants and consistent with third party ranges.
Florida price, which you asked about.
It's really hard to predict the patient on a path to recover from the businesses and they are offset to some extent talked about here as an example, our gas business is currently running ahead of our assumptions the.
The slotting as also up as you point out from the third quarter lows.
We have built some contingency into our plans and believe that we have enough to accommodate certainty.
Said, we'll keep a close eye on what developments.
I guess maybe to clarify this limit second question are you implying.
Any amount of asset sale proceeds in your ability to maintain the dividend.
Without increasing gross debt in 2021.
Last have a modest amount of asset sales and as I said, we have a lot in the market. We are in active discussions where it's coming in and again as I also talked about we're looking at.
Plans and finalizing the plaza potentially putting even more into the market. So there's a modest level of asset sales on those plans.
Net but thats, okay, and also the downstream oil across the businesses.
Right Okay.
And do you have about a broader view on Tony Tony one production overall.
And.
Just obviously you said the Permian is going to grow but at this level of capital spending.
16 to 19 billion, yes, how does that correlate to what production could look like.
Yes, Phil.
As you can imagine it's pretty difficult to.
Good grasp on what production is going to do in 2021 with all the curtailments and.
We're certainly not going to get to get out and try to predict when thats going to do it.
And we are producing and so those countries. So theres a lot of there's a wide band of uncertainty, but broadly speaking, we would see production staying around about flat year on year.
Yes.
Okay. Thanks.
All right next we'll go to Janine way with Barclays.
Hi, good morning, everyone. Thanks for taking my questions.
Good morning. My first question is just continuing on with.
With the balance sheet and dividend line of questions and I don't mean to keep hitting on it but I think it is important for the market and investor. So we appreciate all the details on 21.
There's still some uncertainty about.
Not intending to take on the additional debt, but can you just clarify that if in the event that realized prices and margins are lower than your expectation can you just clarify whether you would take on additional debt in order to find high return projects along with the dividend or is your comment intended to signal.
The company does not intend to take on any additional debt carried.
Jenna and thanks for the question as I said in the past, we really want to ensure that we remain competitive access to cost competitive access to debt.
Is that we do have refinancing its going forward in the future as term debt matures.
But we also want to maintain a level of balance sheet flexibility.
I believe that going above the $70 billion level that second quarter level is going to impact those objectives.
Again, when we think about what might happen to share a lot of hypotheticals. There Plas copper had a bunch of uncertainty we do need to get back.
Automotive cycle type conditions. This is not a cycle of pandemic as outlet cycle experience there.
Order to be able to to be able to continue to move forward in a way that we've talked about.
I would say that as things to along the way. They are if that were to persist as well and we don't think that world, which as Energous has survived.
A lot of measures being taken by a lot of people's to react to the situation.
Okay, Great Thats very helpful. My second question is maybe just looking out to the medium and longer term and sustaining capital and last quarter, you identified downstream and chemical sustaining capital adds about two to 4 billion collectively on the upstream side.
The second half plenty of run rates, then compare to what would be considered necessary to maintain the capacity over a longer time, we know that you're spending some money in the back half of this year.
Longer term medium term project growth like Diana and thank you for example, but well do those projects that you're spending on now will they contribute at a level that is necessary to offset declines elsewhere in the portfolio down the line. Thank you.
Thanks, Let me take that one.
As we think about where we're spending our money this year, our capex this year and where it will likely be in the next year, you mentioned 10 gies in Guyana.
The Corpus Cracker is another one back, allowing Brazil's another one and then continuing on with the Golden pass development as well and then we already talked about the Permian.
So those are kind of the headline large major projects that are attracting capital today and likely will be next year.
And then there is a modest amount of.
In in all three businesses that were spent at the kind of the local level at the plant level that local field level.
That's kind of in the low single digits of millions of dollars. So that that's kind of where we were standing right now and as I mentioned that thats.
We think productions largely done.
The fairly flat next year and Thats without really much contribution from any of these projects I just talked about.
No.
So we you know as we look forward obviously the rate in which we'll look at potentially growing our capex is going to be dependent on how the market evolves.
But we do see growing growing over time, we see going at a more moderate pace.
And we talked about before again, depending on where we see the market.
But we feel that the level, we've given for 2000 for 2021 provides sufficient capital to progress the big.
Development that we that we want to these these really industry, leading developments that were there are ongoing and still maintaining a modest amount of activity kind of in the base that just as you said offset decline.
Great. Thank you very much.
All right, we'll go back to Devin Mcdermott with Morgan Stanley.
Right. Good good morning, hopefully you can hear me this vital sorry about the phone issue or you can pay down debt.
Thanks.
Thanks for taking the question.
I wanted to ask on the place potential across many different business units in the deck you have a very helpful. Slide 29 talking about enterprise remarks, while the contextualize is what we're seeing right now relative to history, you think about those different buckets to areas. We've started to see a recovery back into the 10 year ranges would be chemicals and natural gas.
First question I have is on the chemicals side and.
Think about what differentiates exxon's portfolio of our slot appears historically you have this large very profitable high return chemicals business and it was historically a big cash flow generator and since we last had strong industry margin there had been some expansions and improvements across that business and its take heart from our seat too.
Really drive the difference between moving some of the benchmark margins underlying profitability and cash flow in the business and my question is given what's changed in that portfolio to the extent that we see a recovery in chemicals margins back into those historical ranges or something in my update we saw in 2017 2018 are.
Are there material differences in the big US now that would drive cash loan earnings higher or lower as you look out over the next few years.
Thanks Devin.
Great appreciate the opportunity to talk with the chemicals business a little bit.
If you look at where why were doing as well we are this year and in chemicals.
Related as polyethylene waiting we have it's holding up very well in this this kind of cobot environment. We're in.
As well as some reductions in operating expenses.
It's all the businesses, including chemicals and that certainly providing a tailwind.
We're also running very reliably this year.
Referred to that earlier.
That has benefited us because others have had difficulties and so weve really benefitted from from from the good strong.
Formats, and then the other kind of unique part of our chemicals business is this integration with the downstream and that has benefited both the downstream and chemicals. This years, we've been able to.
Really nimbly kind of optimize the feedstocks and into our to our crackers and sometimes cracking some distressed refining strains in moving between chemicals and gas a bit as those as those feedstock prices and the ground. So having a really good year this year.
In the chemicals business, and certainly helping us helping us get to this environment.
As you look forward as I mentioned, the corpus cracker that will be coming online.
At the end of 2021, that's certainly going to be helpful. As we look going into the next cycle and.
And then we have these other projects that are.
Pause not certainly not cancelled.
The.
Polypropylene expansions and then some specialty chemical expansion.
Down.
And then further out we are still looking at the opportunity to add a cracker in China. So we are adding.
We are looking at investments today, leading foreign investments today that will be substantially adding chemicals earnings capacity and cash flow capacity going forward. So as we get into that next kind of top of top of the cycle conditions I would expect this to be at or above quite frankly of where we've been back in that 26.
17 down period.
Got it that makes a lot of sense.
Very helpful color. The second question I have and it's on the other pillar Weve seen a sharper recovery here is on the natural gas side a couple.
Comments on the call about the pension the best Europe, North America us that dry gas assets that the bigger recovery here I think that we've seen as a global LNG moving pretty sharply off the lows in terms of where prices have trended over the past few months some of the deferrals and capital also push out somebody else.
Angie projects I think you had previously in the plan I just wonder if you could address.
The wall the natural gas LNG specifically.
Having your portfolio going forward and your views and you have some on the sustainability of some of this stronger pricing that we're seeing right now globally for that gas.
Okay. Thanks for the question.
Obviously, the phenomenon of if I look just parse it North America questions LNG.
Driven by people and supply demand balances related to the relative.
Relative under investment that's been going on there for a while that's that's important.
Because it's it's also in the long term way to think about LNG that will come into play down the road as well North America is an important source of LNG supply.
But the concept of order investment fading to supply and demand issues in the long term as well so fundamental to the LNG business as well absent a blip business continue to go forward and LNG a lot of the businesses John related to.
Linkages with crude price index prices occurred and so forth. So it's rebounded.
It is rebounding what the current price run up in the third quarter. There. That's a good thing I think as the oral ore zones economic growth is going to continue to say the LNG business grow very strongly probably above GDP as it was before there is no reason not to play if thats going to happen as it works its way into more power generation around or.
Our old industrial applications, so forth and to the extent that there is a hiatus and LNG investment we are deferring some of our projects on a short term Todd.
The other piece as a strong continuing strong fundamental future for that business.
Great. Thank you very much.
Alright. Your next question comes from Jon Rigby with yes.
Yes, hi, good morning, guys.
Two related questions.
Quickly on the Rep.
A couple of times is your ability.
Downhole projects booked right.
Great Pain Valley.
Classically.
That being the case.
The Bible on people and contractors.
There's nothing like that.
Our topic later, putting cost overrun.
Well typically whether you could go through how you are correct.
So the guidance.
Lisa Hook up it was related to that.
I think Alan.
The third quarter because of that.
Yes.
Good.
With the balance the EBITDA.
On the dividend.
You made the point that the rightly that capex.
Hi.
EBITDA.
So what we've.
It will be flat.
Yes, we can.
Hello.
But.
Cobots in the.
With that along the way Greg value creation or both.
On the other business yes.
How much what have you got to keep pushing out what multiple.
Multiple me.
Welcome.
Oh very good politics.
You got to keep pushing road project.
Thanks.
Okay John.
That's a bit of a mouthful there. So let me take the first piece on the projects and then.
I'll, let Andy address that second the second question you had.
On the projects and the ability to.
Differ take calls and some of these projects and not and not.
Not reduce the value.
Let me just talk about the global projects organization and the value that organization brings in as I mentioned earlier.
Kind of a single face to the contractor community I.
I think this organization is increasingly unique in the industry.
A lot of project management expertise and experience in this organization.
And and we are going to be as were continuing to look at the workforce, making sure. We're keeping that competency. We think it's very important for fundamental competitive advantages we had going forward.
So we really leaned on that organization hard as to how we can manage through this period.
Pause some of these projects and as I mentioned earlier.
Retaining that retained value and so a lot of this is number one leveraging a different environment, we have a much different supply demand environment on the Gulf coast today than we had last year much different downs.
Something like 20%.
That creates a different competitive dynamic and those labor costs are coming down.
We're able to leverage that not only for the pause project for projects will continue into two.
Execute.
With with negotiating with those rate approaching rates will be so we had it we had a bit of a kind of a stress situation. The Gulf coast that has eased considerably and that has helped us lower cost.
The other thing were doing is were pausing these projects.
Looking at the scopes of projects and making sure that gives us extra time to go through and scrub those and make sure that they're they're absolutely fit for purpose and that weekend.
We can.
They are absolutely minimum minimum kids. So like for instance, I mentioned before that we had we had taken a pause on the project and fall in the UK and there is one where we lived the scope and we decided we can we can remove one tank from the scope.
And that reduce cost so things like that that we're reliving scopes and then the other thing is in these in these pause times, we're able to completely finish engineering.
Go out into the field restart and have complete engineering done and really have efficient execution once we get back to construction.
So the organization worked very hard.
Took a lot of time and major for every single project.
Lets go do we want to finish blends.
Blends the right time to restart work are we going to do that.
To get to lead the project in a good shape, where we can do in the meantime, we restart in line all that out and when you add all that up.
We're able to preserve all the value.
With that let me hand over to going into the second part of the question sure.
Say, a three legged stool, you refer to that and talked about them and that is our capital allocation priorities.
Looking at advantage projects to maintaining a strong balance sheet and the.
Turning a reliable and growing dividend.
The capex piece of it is fundamentally important because as you're quite right that reflect the capex. We spend hours worked those investments in America or what part of the future dividends. We've worked very hard on the 20, Twond 2021, capex levels to get them to the point, where we're maintaining progress on just the highest priority investments wall.
Causing.
And before the remainder as Jack just pointed out during that very carefully to ensure that we're preserving those that were in all that so.
For the programs that Weve talked about in 20, Twond and 2021 that 2020 and warm erasure CIP stands and I can't say that as about an hour charge thats the level that we're sectors. The right. One there obviously as I said, we plan to add a little bit of continuous hit us a little bit of flex and all that but that's really the level that we have JUXTAPID.
Right, we want to balance getting through this crisis, where now the pandemic is way below the bottom of the cycle to let's say.
Preserve those options that are saying that there will start moving to capex up.
Outer areas.
As the conditions in the world improve elsewhere, so theres certainly lost.
Every industry is right now.
Okay.
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Okay.
All right well go next to Neil Mehta with Goldman Sachs.
Good morning team I guess first question, there's been a lot certainly.
That you guys had talked about and that's been written about carbon and in a lot of your peers come out with explicit carbon targets I just wanted to know where where Exxon is in that journey in terms coming out with carbon targets and how are you thinking about.
Setting them to an extent.
That that has that's the passes choose to go down.
Yes, Thanks, Neal let Lenny.
Thanks step back a little bit on on how we see things in what we're doing.
Yes, basically we see a world, where it's going to be more energy going forward.
The population growth through GE.
The growth in a lot of that was in the countries.
Energy Consumptions tied tied to the populations and GDP.
And we don't think the current solution set is really complete we think we need more solutions there.
And as you think about the size of the and the complexity of the infrastructure we have today.
Take some time to change that.
So to get to your specific question you know near term what are we focusing on we're focused on mitigating our missions from operations and with that we have a commitment to reduce our carbon intensity over time.
And.
And that's what we're working on and so we kind of roll.
Release that through our carbon energy summary, every year, how we're doing in that regard into.
In terms of absolute carbon emissions and also the intensity.
And that's that's kind of we're focused if you think about they.
All the assets that we had.
Overall, there were producing.
Back in I think 2005.
If you look at US today, we've had a significant reduction as assets now weve brought some new assets on the.
But that those reductions in the base through things like Cogen and energy efficiency had been able to offset the emissions of the new.
New assets and brought on.
And then and then longer term, we really think we need to be focusing on these high mission sectors Powergen commercial transportation industrial.
Where the technologies are just insufficient to drive deep emission reductions and that's where we're looking for.
Through technologies I don't know Andy if you want to talk a little bit about what we're doing there and thats. What we think we can uniquely contribute to society in terms of mid.
Mitigating the risk of climate change.
Yes, Jack you're absolutely right.
The world does not have to complete solutions.
To get to where we needed to make that dual challenge of or.
Meeting the news associated with economic growth, while reducing emissions.
Our focus is on Jack said, what we can do on our own operational targets up there.
Very much on the technology to fill those solution sets and we talked a little bit about an HR and quality talked about the global thermostat arrangement that will have a direct air capture upfront Steven mentioned that and you're saying otherwise from time to time, there, but we have a larger research program ongoing in these sectors.
Tibet Alpha in the past, we've talked about carbon capture and sequestration in general lending.
Many times these are the sanctions or what's going on there and those are the things that we have a unique capability in many cases to save a lot of the ideas that are out there as an aside.
People come to us and others with and lacks the specific capabilities or capacity subject to make the advancements in things like material sciences to him for something to protect our catalyst that might be necessary and they certainly lacked broad experience and process engineering that we have.
Sorry to bring some of these technologies to scale.
Thanks flight there a lot of it is already I think in a world that has patient for solutions, it's very hard to say.
Yes.
The patient to allow the R&D that happening, but we are and we have that posture towards it.
We certainly hope to be able to talk more and more about setting that coming here.
Here's.
Hey, Andy if you don't mind, I'd, probably give a little bit of perspective of the progress we've made since our targets that we set back in 2018.
What we said we were going to reduce methane emissions by about 15%.
And by 25% I can tell you, we're clearly on target to not only achieve that but exceed those targets. So it is a focus area is something that we take very seriously.
Let steven around carbon specifically it has that for many investors is a prerequisite in a world where he or she is an important part of.
Yeah and investing.
Great.
Okay and then the.
The follow up question here.
He is around refining this question is pre Jack.
As you look at the next couple of years recognizing demand.
Is is very uncertain.
How do you see the refining landscape playing out do you see the market has been structurally oversupplied with tight crude differentials.
Or do you actually see a path where capacity retirements can help to normalize margin overtime.
I think both of those I believe both of the statements.
Currently the interest currently oversupplied and rationalizations will will will work down over time.
Since the since.
The start of the pandemic, we've already had a million barrels a day of announced refining.
Closures so.
Again, as I think as I mentioned earlier, the refining industry is in distress.
And as you look to some.
Low to medium conversion refineries, especially those that are not in.
The geographical locations, where you have a growing demand there there.
They're all under water and so.
We've already had some closures I expected.
Maybe more.
And the deeper the longer we stay in this sort of environment. The more announcements will come out. So yes, I do think were oversupplied right now and and the market will.
We'll take care of that through these duties disclosures.
Thanks.
All right. We'll next go to Doug Leggate with Bank of America.
Thanks, Good morning, everyone on the Jacksons for both of you guys getting on the call and letting it run a little long appreciate you getting beyond.
On the on going to.
And a little bit on the dividend I'd like keep the face my question like this.
If the market is not prepared to pay for the recovery of the leading out which it clearly isn't.
Given where your stock is trading.
We tend to pay a dividend.
Thank you for your time starting volume.
Equity to debt basically your share price is going down and that's basically what's happening right now so if the market is not paying you for that dividend. Despite the 60 plus years that you hate.
Eight this dividend why would you continue to do that and I'm curious what the view will be boarded by the agencies out on this issue and I guess the bottom line is what conditions would it take for you to say, even while we're not getting paid for this dividend.
She's Cup mom and use the cash to preserve equity value.
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Well, Doug this is something that we have.
Thought long and hard about discussed with our board every quarter when we measure the dividend discussion.
But I'd say are we fully understand the importance of the dividend to our shareholders.
That's very important to them over a thoughtful on that.
What we've done is said to ourselves, let's look and say on balance sheet and capital allocation.
Balancing was how we see the likelihood of the oral evolving what the right plan is to be able to meet our shareholders.
Ill.
Its interest in the dividend at the same time moving that business forward. There so were constructed a plan.
Based on the Santoy see happening in the market.
The calibration of sort of what the business is to balance all those sort of things and were a tad a little bit of flexibility as it goes forward.
As we talked about before we do see ourselves going back to bottom of cycle conditions, but just the industry simply cannot.
Junior August is levels here.
And that plan will be able to maintain the dividend.
We'll get into some situation or back in.
And.
And the Orals like without a second third quarters, obviously, all bets are off I think that's true across the industry.
I also don't think Thats sustainable.
Thats really the rationale behind that and Thats the wireless talked about it with the board as where we talk about it went outside agency business, where we talk about it with our general investments last from where those discussions.
So sorry on the tissue on this what conditions would you see them how long would this help school on.
I had to say BBB can do those things longer.
Well, Doug as I said, we put the plan together for 2021.
Based on our best assessment of the market.
It has some contingency added flexibility at it we're going to run out of that continuously obviously would have to look to pull the next level.
Thank you for that.
So can I do my quick follow up is really just about visibility on the disposal plan you talked about the $50 billion you haven't done the whole heck of a lot yet. So I'm just curious if you can give us any visibility like insights to what you think is realistic.
Much variation about disposal plan over the next 12 months now we'd like you.
Yes, thanks that I'll say this that that one.
But we have we have quite a bit out in the market right now we talked about I think I think 11 out in the market.
Where continue learning and fairly advanced discussions on a few.
These assets. So we do think that they're going to have some impact in 21 and 22.
It's a it as you mentioned is a pretty difficult market on asset divestments.
We're going to make sure we get we get value, we have something above our attention value, we're going to be patient.
As Andy said, there's very little reliance on that in terms of.
Where we see things in 2021.
We're going to continue to have productive discussions with prospective buyers and we are seeing we are seeing good interest. There's no question, we're seeing good interest.
These leaders these diesel mix in.
These will make some somewhat some buyers and they're both portfolios pretty nicely, but we're going to continue on to have in that in that regard and.
And again, just stick to the fact that we're going to make sure we get we get value.
Assets or we'll keep them in our portfolio.
Thanks very much.
Okay. Operator, I think we have time for one more question.
Yes, I will take that last question from the line of Jason gave women with Cowen.
Yeah, Thanks for squeezing and.
Second time on the call I'll just leave it at that.
Actually my personal than just.
The cost reductions really haven't been touched upon that much and you kind of said.
Path to exceed 15% cost reductions.
Maybe achieved something close to 20%, but it's still unclear what the structural amount of those reductions are versus whats related to lower activity. So can you just kind of talk.
Talk a little bit about the different.
Buckets.
Those cost reductions fall into and I have a follow up.
Okay Jason.
Yes, I think clearly.
You look back in March and April were talking about these reduction targets clearly.
Clearly a good bit of that was was activity reduction.
We were sparing capacity in refineries and we were pretty failing.
Production and activity in some of the upstream areas as we were.
Having less chemical demand for that for the first month or two.
And the idea was okay, we're going to certainly make sure we capture all the opex reductions in those areas.
But also recognizing and quite frankly coming into the year Weve already working on these structural efficiencies.
Some of that culminated in the workforce announcement that we made earlier.
Reiterated in the prepared presentation.
And that those efficiencies have been brought about by by the reorganization to the businesses along the value chain versus versus the functions and it just freed up a lot of capacity in terms of our ability to really get line of sight to the assets and to really be able to operate more efficiently take away some friction.
Take away from what we call doing business with ourselves and that that kind of thing.
As I mentioned before.
And often presentations leveraging digital technologies to where we can be more flexible where we do work.
And and making sure we're doing that and most cost effective way. So clearly initially there was a lot of reduction based on activity.
And those are being replaced with structural structural efficiencies as we move forward and those will play out not just in 2021, but in 2022 going forward.
Got it is there a magnitude or a number you could put on those structural efficiency.
Missions is.
Not really a position to give you a number on that.
Okay and then my second question is just kind of tying to things that have been mentioned on today's call.
Paul will de carbonization effort and then globally.
Global refining overcapacity it seems like.
The.
Push to Decarbonise is focused in advanced economies and the areas where heavily concentrated agenda of your refining footprint. So does.
Do those two things kind of the fact that only CD economies are pushing to decarbonise.
Most of the energy growth is happening anomalies Judy on your footprint for refining this predominantly in all these countries.
It was.
Scenes brain, how you think about your refining footprint going forward.
No.
Subjects and there could be more pressure in your legacy.
Refining geography than some other places we're seeing underlying demand. Thanks.
Thanks.
Yes, Jason.
That's a good question.
It certainly plays a role.
As we look at our our refining circuit.
And think about.
Think about that going forward.
We are we are fortunate.
That we are we've had some highly complex refineries and very importantly, our integrated chemicals.
Chemicals integration is probably the overlying.
Factor that we look at in terms of.
Asset for fires that we think long term are going to be very competitive but.
But we are looking I think I've showed you before this net cash margin draw the refining our revised around the world and the fact that we need to be on the left hand side of that with all our refineries. So we the best we've made some investments in some of those and for our firm Rotterdam Belmont. These examples Singapore that make substantial moves too.
Got it and those are their foundries, we think long term.
Got to be competitive and long term belong in the portfolio. So we're making that that that call between ones, we're going to bet. The ones are already there.
Highly integrated.
Refineries in the Gulf Coast Beta.
Baytown Baton Rouge.
Increasingly belmont.
And then those were pushing that direction with some good strategic investments to shore up some of that conversion capacity gas event.
But clearly as you look at kind of a medium low complexity refineries in an LCD country, it's not integrated with with chemicals those are going to be challenged going forward and that certainly plays into our thinking.
Yes, Thanks, I appreciate the thoughts.
All right. Thanks for your time and thoughtful questions. This morning.
Appreciate you following us the opportunity to highlight third quarter results. We appreciate your interest and hope you enjoy the rest of your day. Thank you and please be safe.
And this concludes today's call we thank everyone again for their participation.
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