Q4 2023 Shell PLC Earnings Call

Wael: A leaner, more agile organization that delivers more value. We are also leveraging new technologies, such as artificial intelligence, to improve the performance of our assets. We have millions of sensors collecting over 5 trillion rows of data that our AI models, combined with our conventional models, use to monitor equipment 24 hours a day, 7 days a week, alerting engineers to anomalies from a distance.

Amortization that delivers more value.

We are also leveraging new technologies, such as artificial intelligence to improve the performance of our assets we.

We have millions of sensors collecting over five trillion rows of data that our AI models combined with our conventional models used to monitor equipment 24 hours a day seven days a week alerting engineers to anomalies from a distance.

Wael: This enables us to intervene and fix issues early, improving our performance, and we continue to upgrade our portfolio and position the company for growth into the future. This past month, we agreed to sell our Nigerian onshore subsidiary, SPDC, subject to government approvals and other conditions. This is an important step for the company, and we hope to complete the deal as soon as possible. In 2023, we saw production growth with the startup of a number of key new projects in our advantaged upstream business. The projects, which came on stream this past year, at their peak, will add over 200,000 barrels of oil equivalent a day.

This enables us to intervene and fix issues early improving our performance.

And we continue to high grade our portfolio and position the company for growth into the future.

This past month, we agreed to sell our Nigerian onshore subsidiary S. P. D C subject to government approvals and other conditions.

This is an important step for the company and we hope to complete the deal as soon as possible.

In 2023, we saw production growth with the startup of a number of key new projects in our advantaged upstream business.

The projects, which came on stream this past year at their peak will add over 200000 barrels of oil equivalent a day.

Wael: They are part of our larger funnel set for startup by 2025. Together, at their peak, all projects will add more than half a million barrels of oil equivalent a day to our production, and they will enable us to continue providing the energy security that the world needs while delivering cash flow longevity into the future. We also continue to invest to help enable the energy transition in areas where we can create value. Last year, we invested $5.6 billion in low-carbon energy, such as our Nature Energy acquisition and the Crosswind JV, which will supply renewable power to Holland Hydrogen One, Europe's largest electrolyser. In short, we're working hard to deliver the energy the world needs today, and we're helping to build the energy system of the future. Our relentless focus on performance, discipline, and simplification allowed us to deliver compelling returns and create more value for our shareholders in 2023. Our shareholder distributions for the year were over 42% of our CFFO.

They are part of our larger funnel set for startup by 2025.

Together at their peak oil project will add more than half a million barrels of oil equivalent a day to our production.

And they will enable us to continue providing the energy security that the world needs, while delivering cash flow longevity into the future.

We also continue to invest to help enable the energy transition in areas, where we can create value.

Last year, we invested $5 $6 billion in low carbon energy such as our nature energy acquisition in the cross wind JV, which will supply renewable power to Holland hydrogen one Europe's largest electrolyze it.

In short, we're working hard to deliver the energy the world needs a day and we're helping to build the energy system of the future.

Our relentless focus on performance discipline, and simplification allowed us to deliver compelling returns and create more value for our shareholders in 2023.

Our shareholder distributions for the year were over 42% of our CFO.

Wael: And today, we increased our dividend by another 4%, taking our total increase over the last 12 months to around 20%. We continue to progress towards our destination of a net zero emissions business, and our preliminary results show that we have further reduced our Scope 1 and 2 emissions in 2023.

And today, we increased our dividend by another 4%, taking our total increase over the last 12 months to around 20%.

We continue to progress towards our destination of a net zero emissions business.

Our preliminary results show that we have further reduced our scope one and two emissions in 2023.

Sinead: We are only halfway through the timeline to our 2030 target, yet we have already achieved more than 60% of the reductions needed to reach the target. With that, let's go to Sinead for more financial results. Thank you, Wael.

We are only halfway through the timeline to our 2030 target, yes, we have already achieved more than 60% of the reductions needed to reach the target.

Speaker Change: With that let's go to <unk> for more financial results.

Speaker Change: While.

Sinead: We delivered strong results in Q4, driven by our strong trading and optimization in LNG and robust operational performance. One of this quarter's highlights came from QGC in Australia. This quarter, they had their highest ever LNG production, which helped deliver cargo number 1,000 since start-up. Moving to our financial results, our adjusted earnings were $7.3bn for the quarter and $28.3bn for the full year.

Speaker Change: We delivered strong results in Q4, driven by our strong trading and optimization and LNG and robust operational performance.

Speaker Change: One is this quarter's highlights came from could you see in Australia. This quarter, they had their highest ever LNG production, which helped deliver cargo number 1000 since startup.

Speaker Change: Moving to our financial results, our adjusted earnings were $7 $3 billion for the quarter.

Speaker Change: And $28 $3 billion for the full year.

Sinead: In the fourth quarter, we saw $4 billion in post-tax impairments driven by macro outlooks and portfolio choices in line with what we announced at Capital Markets Day. We generated $12.6 billion of cash flow from operations, contributing to a total of $54.2 billion for the full year 2023, our second best year ever. Our strong performance allowed us to return $23 billion to our shareholders, delivering in excess of a 30% to 40% CFFO range. And today, we have announced a new $3.5 billion share buyback program, which we expect to complete by the time of our Q1 results announcement in May. We have also announced a dividend increase of 4% in line with our progressive dividend policy. Our balance sheet remains strong, with net debt reducing by $1.3 billion year-on-year, and looking forward in 2024, we will continue to target shareholder distributions of 30 to 40% of our cash flow from operations through the cycle, while maintaining our focus on delivering more value with less emissions. Now I will hand it back to Wael for more on what's coming next. Thank you, Sinead.

Speaker Change: In the fourth quarter, we saw $4 billion in post tax impairment driven by macroeconomic and portfolio choices in line with what we announced at capital markets day.

Speaker Change: We generated $12 $6 billion of cash flow from operations contributing to a total of $54 2 billion for the full year 2023, our second best year ever.

Speaker Change: Our strong.

Speaker Change: Performance allowed us to returned $23 billion to our shareholders delivering in excess of a 30 to 40 per cent CFO ranch.

Speaker Change: And today, we've announced a new $3 $5 billion share buyback program, which.

Speaker Change: Which we expect to complete by the time of our Q1 results announcement in May.

Speaker Change: We have also announced a dividend increase of 4% in line with our progressive dividend policy.

Speaker Change: Our balance sheet remains strong with net debt reduced by $1 3 billion year on year.

Speaker Change: And looking for it in 2024, we will continue to target shareholder distributions of 30% to 40% of our cash flow from operations through the cycle.

Speaker Change: Maintaining our focus on delivering more value with less emissions now I will hand back to while for more on what's coming next thank you Shen aid. So this was another year of strong results for shell marked by one of our highest ever annual adjusted earnings and cash flow from operations. We achieved this and much more despite volatility in the energy market.

Wael: This was another year of strong results for Shell, marked by one of our highest ever annual adjusted earnings and cash flow from operations. We achieved this and much more, despite volatility in the energy market. In 2024, we will focus on delivery of our first sprint through performance, discipline, and simplification, building on what we achieved in 2023. By focusing on areas where we have differentiated capabilities and core competencies, we aim to be the investment case through the energy transition. In the coming weeks, we hope you can join us for our LNG Outlook and our annual ESG event, which will also cover the Energy Transition Strategy 2024 public. Thank you. We will now begin the question and answer session. People have dialed in. If you have a question, please press star 1. If you wish to be removed from the queue, please press star 2.

Speaker Change: <unk>.

Speaker Change: In 2024, we will focus on delivery of our first sprint through performance discipline and simplification building on what we have achieved in 2023.

Speaker Change: By focusing on areas, where we have differentiated capabilities and core competencies, we aim to be the investment case through the energy transition.

Speaker Change: In the coming weeks, we hope you can join us for our LNG outlook and our annual ESG event, which will also cover the energy transition strategy 2020 for publication. Thank you.

Speaker Change: We will now begin the question and answer session.

Speaker Change: People dialed in if you have a question please press star one.

Speaker Change: If you wish to be removed from the queue. Please press star two.

Wael: Phone callers are requested to mute the audio on their computer webcast and listen attentively to their telephone audio as we begin to progress through the telephone questions. Thank you for joining us today. We hope that after watching this presentation, you've seen how we delivered strong results and how we continue to focus on our guiding principles. Today, Sinead and I will be answering your question. And now, please, could we have just one or two questions each so that everyone has an opportunity? And with that, can we have the first question, please, Luke?

Speaker Change: Phone calls are requested to mute the audio on their computer webcast and listen attentively to their telephone audio as we begin to progress through the telephone questions.

Speaker Change: Thank you for joining us today, we hope that after watching this presentation you've seen how we delivered strong results and how we continue to focus on our guiding principles.

Speaker Change: Today, she Nate and I will be answering your questions and now please could we have just one or two questions. Each so that everyone has the opportunity and with that can we have the first question. Please look.

Michele Della Vigna: Our first caller is Michele Della Vigna from Goldman Sachs. Thank you very much and congratulations on the strong results and the ongoing commitment to the buybacks. I wanted to ask you two questions, if I could.

Speaker Change: Oh first cooler is Mckinley Tel Aviv here from Goldman Sachs.

Speaker Change: Yeah.

Speaker Change: Thank you very much and congratulations on the strong results and the ongoing commitment on the buybacks.

Speaker Change: Two questions. If I may the first one is about your lineup of new projects, you've got to one of the strongest pipelines in the industry in Brazil Gulf of Mexico, LNG, Canada, but also with the full restart of monarch and prelude I was wondering if there is a way to guide us on what you think could be the incremental.

Wael: The first one is about your lineup of new projects. You've got one of the strongest pipelines in the industry in Brazil, the Gulf of Mexico, LNG Canada, but also with the full restart of Monarch and Prelude. I was wondering if there is a way to guide us on what you think could be the incremental cash flow from these assets by the time they fully ramp up, let's say by 2025 or 2026. And then my second question is related to the European and the global gas market. We've mostly focused on price upside in the last few years and how to capture it, and Shell has certainly built a very good portfolio to do so. But what I was wondering is, in an environment where, especially for the second half of this decade, we could see an oversupplied LNG market that challenges a bit the arbitrage between the two sides of the Atlantic, does the change in contracting strategy and how well set up is Shell to effectively successfully navigate what could be a tougher gas market for the coming years? Thank you. Michele, thank you for the question and for the words. I'll start by asking Sinead to address the first one, and then I can take the second.

Speaker Change: Cash flow from these assets by the time, they fully ramp up let's say by 2025 26, and then my second question is related to the European and the global gas market, we've mostly focused on price upside in the last few years and how to capture retain shell has certainly built a very good portfolio.

Florida, but what I was wondering is.

Speaker Change: Environment, where especially for the second half of this decade, we could see an oversupply of LNG market challenges.

Speaker Change: Arbitrage between the two sides of the Atlantic does that change your contracting strategy and how well setup is shell to effectively successfully navigate what could be a tougher gas market for the coming years. Thank you.

Speaker Change: Thank you for the question and for the words.

Speaker Change: I'll start my asking <unk> to address the first one and I can take the second one sure. Thank you Mackenzie and indeed, thank you for the recognition of what is an incredibly strong and funnel going forwards you listed many of the different projects and as you say Gulf of Mexico, LNG, Canada, Monica up and running pregnant, but let's not forget as you go past 2025.

Sinead: Thank you for the recognition of what is an incredibly strong funnel going forward. You listed many of the different projects, as you say, Gulf of Mexico, LNG Canada, Monaco up and running, Prelude, but let's not forget as we go past 2025. We have until 25, we said greater than 500 KBU a day in terms of new projects coming in. And let's remember that we had more than 200 KBU a day at the peak, as Wael mentioned earlier, coming through as well.

We have up until 'twenty five we said greater than 500, K P. O a day intensive new projects coming in and let's remember that we had more than 200 K P. J at the peak as Wild mentioned are there and coming through as well, but beyond that as well. We also have things like crocs coming in we will have had the qatari volumes et cetera coming in since there's a great wealth coming through.

Sinead: But beyond that as well, we also have things like Crux coming in, we will have the Qatari volumes, etc., coming in. So there's a great wealth coming through. Rather than guide to some specific CFFO dependent on price, etc., what I'd suggest is we look at, you saw a promise of 6% growth on free cash flows through the decades. So that's the sort of number to look at.

Speaker Change: Other than Guy just some specifics he episode dependent on price et cetera. What I'd suggest is we look at you saw a promise of 6% growth in free cash flow, it's true and decades, that's the sort of number to look at and you can see we're easily meeting that intensive or promises so far I remember in terms of sprint won very much we're talking about a 10% and drive per share. So you can see of course.

Wael: And you can see we're easily meeting that in terms of our promises so far. And remember, in terms of Sprint 1, we're talking about 10% and growth per share. So you can see, of course, that's being easily met at the moment when we're doing things like 6.5% of the company being bought back last year in 2023. So great momentum going forward, Michele, and you're absolutely right. We have a wealth of projects to be delivered. Thanks, Sinead. Michele, to your second point, I think if I start just by re-emphasizing our conviction in the growing demand for LNG going into the future, underpinned both by energy security considerations in a place like Europe but also in Asia, continuing to see very strong demand, as well as to replace the declining domestic gas in several countries. In Vietnam, for example, the Philippines, and others have recently become recent importers of LNG as well.

Speaker Change: That's been easily met at the moment when we're doing things like six 5% of the company being bought back last year in 2023, so great momentum going forward in the carrier and you're absolutely right. We have a wealth of projects to be delivered sanctioning. The Magellan to your second point I think if I start just by re emphasizing our conviction in the growing demand for LNG going into.

Speaker Change: The future I think underpinned both by.

Called with energy security considerations in a place like Europe, but also in Asia, continuing to see very strong demand as well as to replace the declining domestic gas in several countries in Vietnam for example, Philippines and others have become recently importers of LNG.

Wael: So there is quite a lot of latent demand. And I think what you will find is that as the price, as it is happening at the moment, starts to stabilize again, and the market fundamentals reassert themselves, you will see a lot of that latent demand starting to come back into the market. So I think that, in the first instance, just gives a lot of confidence around the demand profile going forward. On the supply side, for the next year or so, there's very little in terms of new capacity coming in. But indeed, you see that stepping up both on the American and the Qatari side predominantly into the second half of the decade. As Shell, as you know very well, Michele, of course, we play across the commodity exposures.

Speaker Change: As well so there's quite a quite a lot of latent demand and I think what you will find is that as the price as is happening at the moment starts to stabilize again and the market fundamentals reassert themselves you will see a lot of that latent demand starting to come back to the market. So I think that in the first instance, just gives a lot of confidence around the demand.

Speaker Change: Our profile going forward.

Speaker Change: On the supply side for the next year or so theres very little in terms of new capacity coming in but indeed, you see that stepping up both on the American and lottery side predominantly into the second half of the decade.

Speaker Change: Shell is you know very well and the Katie of course, we play across the commodity exposures and so for us it's the ability to be able to pick up from Henry hub and to be able to be exposed to Brent or indeed.

Wael: And so for us, it's the ability to pick up from Henry Hub and to be able to be exposed to Brent or, indeed, across TTF and JKM and others. And so it is no bad thing to have a period of time with more supply coming into the market because it allows us to contract on the side of offtake agreements, which we have done in the past. And so we're not We're not looking to bet on one period or the next.

Speaker Change: Across DTF, and J Cam and others and so it is not no bad thing to have a period of time with a with more supply coming into the market because it allows us to contract on on the side of offtake agreements, which which we have done in the past and so we're not we're not looking to bet on one period or the next what we are looking to do is to continue to be.

Wael: What we are looking to do is to continue to build an advantaged portfolio that allows us to take advantage of those cross commodity exposures. And that has been the power of this LNG business for us. And we'll continue. Luke, if I can go to the next question.

Build an advantaged portfolio that allows us to take advantage of those cross commodity exposures and that has been the power of this LNG business for us and will continue to be thank you for the questions look if I can go to the next question. Please.

Baraj Borketaria: Our next caller is Baraj Borketaria from RBC. Hi there. Thanks for taking my questions. The first one is on the dividend. And I guess you've raised the dividend two times in 2Q and then 4Q. I'm trying to understand what the cycle is from here going forward. I guess if I think about the two reasons you'd raise the dividend, one is the underlying growth in the business, and then there's the share count reduction from the buybacks. So should we assume you do it once a year and combine both into one going forward?

Speaker Change: Our next caller is barrage focus area from RBC.

Yeah.

Speaker Change: Hi, there thanks for taking my questions. The first one is on the dividend.

Speaker Change: And I guess.

Speaker Change: Raise your dividend two times.

Speaker Change: In <unk>, and then <unk> Im trying to understand what the cycle is from here going forward I guess, if I think about the two reasons you would raise the dividend one is the underlying growth in the business and then the share count reduction from the buybacks. So should we assume.

Speaker Change: You do it once a year and combined both into one going forward and the reason I ask is because typically predictability is quite important there.

Baraj Borketaria: And the reason I ask is because, typically, predictability is quite important there. And then the second question is just on the venture global issues. This has been ongoing for a few months now.

Speaker Change: And then the second question is just on the venture global.

Speaker Change: Issues. This has been ongoing for a few months now we don't really have clarity on this whole process of the timing and so on.

Baraj Borketaria: We don't really have clarity on the sort of process or the timing and so on. So, obviously, seeing the letters flying around between the various parties and indeed anyone who's looked at the export data can see that the project has actually been much more reliable than other projects. And if you think about the ARBs between the U.S. and Europe on the gas plan over the last two years, you could be talking about multi-billions in lost earnings for Shell. So it seems like a strong chance that you have.

Speaker Change: Obviously, you've seen the letters flying around between the various policies.

Speaker Change: Indeed anyone who's looked at the export data and see that the project has been actually much more reliable than other projects.

Speaker Change: And if you think about the arbs between U S and Europe on the gas or the last two years it could be talking about multi billions in lost earnings Michele So it seems like a strong.

Speaker Change: That you have.

Wael: I understand this is a legal process, but can you talk about what happens from here process-wise and then the potential outcomes thereafter? Thank you. Great, thank you for the questions, Biraj. Let me start with the second one and then go to Sinead on the dividend.

Speaker Change: Understand this is a legal process, but can you talk about what happens here from here process wise.

Speaker Change: And then the potential outcomes after thank you.

Speaker Change: Great. Thank you for the questions be Russia, let me start with the second one and then go to shade on the dividend.

Wael: I think you characterized the issue well. I mean, as far as I can see at the moment in terms of what is publicly available, Venture Global has, I think, sold around 250 cargoes so far, 250 commissioning cargoes. And what we see is that the plant is at or near capacity and has consistently been so. So we're very much focused on continuing to enforce our legal rights and protect the sanctity of contracts that are there. I won't get into the details of the legal proceedings.

Speaker Change: I think you characterized the issue well I mean as far as I see at the moment in terms of what is publicly available venture global have I think sold around 250 cargoes. So far 250 commissioning cargos.

Speaker Change: And what we see is that the plant is at or near capacity and has been consistently so.

Speaker Change: So we're very much focused on continuing.

Speaker Change: Continuing to enforce our legal rights and protect the sanctity of contracts that are there.

Speaker Change: I won't get into the details of the legal proceedings suffice it to say that we have.

Wael: Suffice it to say that we have pulled on the lever of arbitration that is available to us and continue to have the required discussions to be able to fundamentally point out that this is not just an issue between two counterparts. Actually, it's many counterparts, all of whom are not receiving the offtake commitments that Venture Global had committed to. But also, it starts to undermine the confidence in US LNG for the longer term, something which, of course, with the recent announcement of the pause by the government and by the US administration, just continues to erode that confidence in the longer term potential of US LNG, which is a real shame, I think, given the potential it has. Let me pause there and maybe ask Sinead to cover the dividends. Indeed. Thank you, Baraj.

Speaker Change: Pulled on the lever of arbitration that is that exists for us.

Speaker Change: And continue to have the required discussions to be able to fundamentally point out that this is not just a an issue between two counterparts actually gets many counterparts all of whom are not receiving the offtake commitments that the venture global had committed to but also it starts to undermine the confidence in the U S LNG for the longer term and.

Speaker Change: Something which of course with the recent announcement of the pause by the government by the U S Administration, just continue all to erode that confidence in the longer term potential of U S. LNG, which is a real shame I think given the potential it has.

Speaker Change: Let me pause there and maybe ask Nate to cover the dividends. Indeed, thank you barrage and indeed, we're very much focused on ensuring we have a compelling distribution to our shareholders and actually you saw of course in 2023 from 23 billion of distributions back but did you raise the point that we did to actually increase our dividend by approximately 20% last year, what you've seen this quarter is 4%.

Sinead: And indeed, we're very much focused on ensuring we have a compelling distribution to our shareholders. And actually, you saw, of course, in 2023, some 23 billion distributions back. But you raise the point that we did actually increase our dividend by approximately 20 percent last year. What you've seen this quarter is four percent. And of course, many of you asked during Capital Markets Day last year, would we do something further? Would we do a bigger hike at this time of year?

Nate: And of course, many of you asked during capital markets day last year, which we do something for them would be to a bigger hike at this time of year and we were very clear now we have a very clear we will say what we will do what we will say and in fact, what we told you at that time was 4% progressive and that we've been very much focused on buybacks, that's pure and simple just a preference towards buybacks as you.

Sinead: And we were very clear. We were very clear that we would say what we would do and what we would say. And, in effect, what we told you at that time was four percent progressive and that we'd be very much focused on buybacks. And that's pure and simple, just a preference for buybacks, as you know, because of the value lens, just given where they are in terms of price, number one.

Nate: No because of the value lens, just given where they are in terms of price number one and secondly of course that we set the targets out there to say it is creating pershare value. So that's where we're focused as well so that should help with predictability. If you look at the buyback ranch, it's been pretty predictable over the last couple of quarters. So what you should expect from us is ever going to say something we will do it thereafter.

Sinead: And secondly, of course, that we've set the targets out there to say that it is creating per share value, so that's where we're focused as well. So that should help with predictability. If you look at the buyback range, it's been pretty predictable over the last couple of quarters.

Sinead: So what you should expect from us is if we're going to say something, we will do it afterwards. So I hope, and thank you for the questions, Biraj. If we can go to the next question, please, Lucas. Our next caller is Oswald Clipp from Bernstein. Bye.

So I hope that helps.

Speaker Change: Thanks Janet.

Speaker Change: Further questions barrage, if we can go to the next question. Please look.

Speaker Change: Our next caller is also a clip from Bernstein.

Speaker Change: [laughter].

Oswald Clipp: Yes, good afternoon, and thank you. The first one, just on the slides, some good slides there on progress relative to last year's targets on free cash flow growth. You have the 6% up to 2030 and the 10%. You've price normalized those, which is helpful, but I think you've removed the numbers from the y-axis.

Bernstein: Hi, Yes, good afternoon, and thank you. The first one just on the the slides some good slides there on progress relative to last year's targets on the free cash flow growth E, 6% up to 2013% to 10%.

Speaker Change: If price normalized those which is helpful but.

Speaker Change: I think you've removed the numbers from the y axis.

Oswald Clipp: We're playing around with it, and it looks like over $25 billion price normalized last year, which I guess is the target for next year. So the question is, are you surprised by this free cash flow delivery? Was there an expectation it might be front-end loaded?

Playing around with it and it looks like over $25 billion.

Speaker Change: Price normalized last year, which.

Speaker Change: Which I guess is the target for next year. So the question is are.

Speaker Change: Are you surprised by this free cash flow delivery was there an expectation that might be front end loaded.

Sinead: Certainly feels like the 2025 target is well underpinned at this stage. And then secondly, just on integrated gas and LNG, again, probably more 2024 focus if I could. I mean, the east-west spread could be a bit tighter this year, but now we have this particular issue. You want to take the first one; I can take the second one.

Speaker Change: It certainly feels like the 2025 target is.

Speaker Change: As well underpinned at this stage.

Speaker Change: And then secondly, just on integrated gas and LNG again, probably more 2024 focus if I could.

Speaker Change: I mean, the east west spread could be a bit tighter this year, but now we have.

Speaker Change: The Red Sea logistical risks just on top of it so.

Speaker Change: Could I just get your outlook around business expectations in this year, especially with rerouting transportation Opex or.

Sinead: Yeah, no, indeed, and thanks, Oswald. Yes, you're right, we did actually remove the numbers, very much conscious of doing so. Largely, you're right, we're exceeding where we expected to be at this point. There's a lot of noise in there, as you can imagine.

Speaker Change: Does your portfolio size helped mitigate against this can you pass on some of these calls just how should investors think about this particular issue.

Speaker Change: Do you want to take the first one that I can take the second one yeah, Indeed, and thanks Oswald Yes, you're right. We did actually remove the numbers very much conscious of doing so largely you're right, we're exceeding where we expect it to be at this point, there's a lot of noise in there as you can imagine that's a typical normalization that one needs to do it for working capital et cetera, but yes true.

Sinead: It's the typical normalization that one needs to do for working capital, et cetera. But yes, true delivery in there is mostly from a range of things. It's, of course, the CapEx reductions that have come through. It's some OpEx coming through, and, of course, we share the current reduction. But let's not forget some of the growth that's actually coming through as well. You saw us bring new volumes in this year as well, the TIMI, the Vitos of this world, of course, Pierce redevelopment coming. And you can see that future build as well with the FIDs of Perdido 2, Victory coming through, and just a range of them are coming, Sparta as well.

Oswald: Delivery and there is nicely from a range of things. It's of course, the capex reductions that have come through some old tax coming through and of course share count reduction, but let's not forget some of the growth that's actually coming through as well he saw us bring new volumes on this this year as well the Etame and features of this world of course past redevelopment coming and you can see that future build as well with the F ideas of print.

Oswald: Deter victory coming through and it's just a range of them are coming sponsor as well 17 do I have confidence in terms of delivery, yes at the moment and looking forward to driving it even further in terms of the things we can control in terms of taking out opex et cetera, as we continue to deliver what we promised.

Sinead: So indeed, do I have confidence in terms of delivery? Yes, at the moment, and I'm looking forward to driving it even further in terms of the things that we can control in terms of taking out OpEx, et cetera, as we continue to deliver what we promise. I think on your second question, just where the LNG markets are, particularly in the context of the Red Sea, by and large, we are not seeing massive amounts of disruption yet to LNG flows because of the reality that, in particular, with a portfolio like ours that's blessed with supply points on either side of the Red Sea as well as on demand points, we are able to optimize and do swaps across the portfolio, which, of course, has always been our strength

Oswald: I think on your second or your first question I'm sorry. Your second question. There was work just where the LNG markets are in particular in the context of the Red Sea.

Oswald: By and large we are not seeing massive amounts of disruption yet the LNG flows because of the reality that in.

Oswald: In particular with the Port for you like ours, that's blessed with supply points on either side.

Oswald: The Red sea as well as on demand points, we are able to optimize and do swaps across the port for you which of course has always been our strength, we can truly through our trading and optimization organization create value from discontinue with these with.

Sinead: We can truly, through our trading and optimization organization, create value from discontinuities. But maybe I won't project that into the rest of the year. I think it suffices to say that Q4 was a very, very strong quarter for us on trading and optimization in the LNG space, particularly because of the opening up of the ARBs across East-West, as well as the fact that, as you know, we typically have length this season in the Northern Hemisphere. Now, those ARBs have compressed since the start of the year. The absolute prices of gas are lower at the moment.

Oswald: Maybe I won't project into the rest of the year I think suffice it to say that.

Oswald: Q4 was a very very strong quarter for us on trading and optimization in the LNG space, particularly because because of the opening up of the arbs across east West as well as the fact that as you know we typically have length. This this season in the northern hemisphere season.

Oswald: Now those those arbs have compressed since the start of the year, the absolute prices of gas or.

Oswald: Lower at the moment and so the question will be how much more volatility we will see whether triggered by geopolitical considerations are higher than predicted demand in China. All of that will be an important an important determinant of where the LNG in the IGT business, particularly performs but I think it's always fair to say we have.

Wael: And so the question will be how much more volatility we will see, whether triggered by geopolitical considerations or higher than predicted demand in China. All of that will be an important determinant of where the LNG and the IG business, particularly performs. I think it's always fair to say we have good production at the moment. We're pleased with where Prelude is at after the turnaround. We're pleased with the progress we're making in Trinidad and Tobago and pleased with the progress we're making in Nigeria.

Oswald: Good production at the moment, we're pleased with where probably use this app. After the turnaround we're pleased with the progress we're making in Trinidad and Tobago pleased with the progress we're making in Nigeria.

Wael: And so the fundamentals around the focus on performance, discipline, and simplification are coming through. And now we'll need to see where the market goes to allow us to create the value we would hope to create from that. Thank you for the question. If we can go to the next question, please, Luke. Our next caller is Alistair Sim from City.

Oswald: And so the fundamentals around the focus on performance discipline and simplification are coming through and now we need to see where the market goes to allow us to create the value we would hope to create from that market. Thank.

Speaker Change: Thank you for the year for the questions.

Speaker Change: If we can go to the next question. Please look.

Speaker Change: Our next caller is Alastair Sim.

Speaker Change: City.

Speaker Change: Thanks.

Alistair Sim: Thanks. Well, Sinead, the spend in the res steps up quite considerably in 2024, certainly in line with what you said at the June CMD. You know, I know you've got some strict returns criteria in this business, so the question is really, as you scale up the spend, you know how you're finding the headroom versus those hurdle rates, and you know it certainly doesn't feel to me as if it's getting less competitive, but maybe you've got a different perspective. And then, secondly, look, I won't disappoint you, well, congratulations on turning the corner So my question to you is, you know, how do you think about the underlying picture? And how would you think about the gap analysis sort of over the next five years, presuming you don't get another opportunity like Qatar? Thank you, Alistair. Do you want to take the first one?

Alastair Sim: Well sure.

Alastair Sim: Spend in the res steps up quite considerably in 'twenty four but its certainly in line with what you said at the two CMT.

Alastair Sim: I know you've got some strict return criteria in this business. So the question is really as you scale up the spend.

Alastair Sim: How are you finding the headroom versus those hurdle rates.

Alastair Sim: Yes.

Speaker Change: It feels to me as if it's getting less competitive, but maybe you've got a different perspective.

Speaker Change: And then secondly.

Speaker Change: I want to support you will congratulations on turning the corner on reserves the last two years.

Speaker Change: On the call it's been a big part of that perhaps as much as half.

Speaker Change: And while the financial terms they look pretty good there's also to some extent and unusual almost one off situations.

Speaker Change: So my question to you is how do you think about the underlying picture.

Speaker Change: And how would you think about the GAAP analysis sort of over the next five years presuming you don't get another opportunity to look at though.

Speaker Change: Thank you. Thank you Alister did you want to take the first one sure intensive rise I think it's a great question Alastair we have all seen.

Sinead: Sure. In terms of REZ, I think it's a great question, Alistair. We've all seen many, many discussions in a variety of media and otherwise around the returns that are available in this space. I think what I would say is we're being very disciplined around it. So what you're seeing is between 2023 and 2022, you will have seen effectively that our CAPEX did go down in terms of REZ spend, but it was varied. So remember, it differs depending on which region you're talking about specifically, so we can't make it a binary conversation.

Alister: Many many discussions in a variety of media and otherwise run returns that are available in the space I think what I'd say is we're being very disciplined around it. So what youre, saying is between and 2023 and 'twenty 'twenty. Two you will see effectively that are Capex did go down in terms of rest spend but it was buried so remember it's different depending on which region you're talking about specifically in semi cap.

Alister: Can't make it a binary and conversation so what we're saying is we walk away from things, where we just don't see the necessary returns for the last German wind auction that we discussed previously we just couldn't get there at the end of the day I was in Australia are really seeing some decent returns coming through in Australia, where we have an integrated value chain. So we're being able to see the side of things, where we have the demand in our own assets. We also had the custom.

Sinead: So what we're seeing is we walk away from things where we just don't see the necessary returns. So the last German wind auction that we discussed previously, we just couldn't get there at the end of the day. Whereas in Australia, we're really seeing some decent returns coming through, and that's really where we have an integrated value chain. So we're able to see the side of things where we have the demand in our own assets, we also have the customer book, but we also have battery power as well. So between all of the different elements with renewables, we're able to see end-to-end.

Alister: OPEC, but also we have battery power as well so between all of the different elements with the renewables, we're able to see an end to end just a significant return coming through here and this is about remaining disciplined and we will be very very focused on that so very much ensuring that can we hit the hydro plants do we believe we bring something different and what's our confidence level in doing so.

Actionaid: Actionaid answer to your question around resources I think the discussions you and I have also had in the past I mean in my mind.

Wael: Alistair, it's your question about resources. I think the discussions you and I have also had in the past. I mean, in my mind, resources are ultimately a proxy for cash flow. And that's where our focus is, the quality of the resources, rather than whether it sits under the 1P or 2P. We still have a very attractive funnel of resources, as indicated by 20 plus years of commercial production. By the way, that is even post an SPDC sale in Nigeria as well. So we will continue to have north of 20 years of commercial resources. And what's critical is it's high quality barrels. You are talking predominantly deep water barrels, predominantly energy barrels. What gives me particular confidence in the coming years is that you're talking about some very attractive, high margin projects coming in. You have, for example, Mero2 that just started up in Brazil at the turn of the year.

Actionaid: Resources are ultimately a proxy for cash flow and that's where our focus is the quality of the resources rather than does it sit under the the one P. R to P. We still have a very attractive funnel of resources as as indicated by 20 years of 20 plus years of commercial resource by the way that is even.

Actionaid: Post an SPD say SPD see sale in Nigeria as well. So we will continue to have north of 20 years of commercial resource.

Actionaid: And what's critical is its high quality barrels you are talking predominantly deepwater barrels predominantly energy borrowers and what.

Actionaid: It gives me particular confidence in the coming years as you're talking about some some very attractive high margin projects coming in you have for example, mero two that just started up in Brazil.

Actionaid: At the turn of the year you have meera three coming through marrow for we have got to d'amato after that Vito is up and running and delivering within the first year of top quartile schedule top quartile availability.

Wael: You have Mero3 coming through, Mero4, we have GatoDomato after that, Vito is up and running and delivering within the first year at top quartile schedule, top quartile availability. We have then Whale coming after that, Sparta coming on top of that, even before you go into the Qatari projects. And then, of course, you have LNG Canada that is also sort of making good progress.

Actionaid: We have then a whale coming after that sparked the coming on top of that even before you go into the pottery projects and then of course, you have LNG, Canada that is also sort of making good progress in LNG, Canada.

Wael: And LNG Canada, while it does not have a lot of, if any, bookable reserves, you can imagine how much value that is going to create. So we continue to be very, very focused on the overall cash flow potential of this company. And as indicated by our confidence giving a 6% per annum free cash flow growth between now and 2030, you can see the confidence that we have going through that. Of course, from now to then, we will continue to look at the right opportunities to be able to both hopefully discover resources and to acquire the right resources, all within the capital discipline that we have outlined, which is the $22 to $25 billion over the next year. I think that's all I wanted to cover. Maybe.

Actionaid: While it does not have a lot of if any bookable reserves you can imagine how much value that is going to create so we continue to be very very focused on the overall cash flow potential of this company and as indicated by our confidence, giving a 6% per annum free cash flow growth between now and 2030, you can see the confidence that we have going through that of course from.

Actionaid: Then we will continue to look at the right opportunities to be able to both hopefully discovered resources to acquire the right resources all within the capital discipline that we have outlined which is the $22 billion to $25 billion over the next two years.

Speaker Change: I think that's that's all at once at the cover maybe thank you for the questions honestly, maybe a maybe look we can go to the next one please.

Irene Jimona: Thank you for the questions, Alasdair. Maybe, maybe Luke, we can go to the next one. Our next caller is Irene Jimona from Societe Generale. Thank you very much. My first question is really one of clarification. You indicated that with your forthcoming annual ESG event next month, you intend to cover the energy transition strategy. At last year's CMD, obviously, you retired all the many operational targets relating to that transition. So we kind of lost visibility on what the path looks like.

Irene Homeowner: Our next caller is Irene homeowner from Societe Generale.

Irene Homeowner: Yeah.

Irene Homeowner: Thank you very much.

Irene Homeowner: First question is really one of clarification, you indicated that with your forthcoming annual ESG. Then next month, you intend to cover the energy transition strategy.

Irene Homeowner: At last he is a C M D.

Irene Homeowner: You you retired all the many operational targets relate and does that transition. So we kind of lost visibility on what the.

Irene Homeowner: It looks like can we expect Q you will restore that visibility at this time each day day. Please.

Irene Jimona: Can we expect you will restore that visibility at this ESG day, please, and will present the new sort of longer-term transition strategy? And then my second question, a quick one on Q4 cash flows, very, very strong EBITDA. And then you had a one billion charge for derivatives and a larger 1.6 billion charge for other. I think that may refer to these biofuel certificates.

Irene Homeowner: We'll present, the new sort of longer term transition strategy and then my second question. A quick one on Q4 cash flows very very strong EBITDA and then you had 1 billion charge for derivatives and a larger one 6 billion chargeful other I think that may refer.

Irene Homeowner: To these biofuel excuse me, but can you, perhaps remind us briefly how that works and is there any any guidance you can give us directly for that going forwards. Thank you.

Irene Jimona: Can you perhaps remind us briefly how that works? And is there any guidance you can give us directionally for that going forward? Thank you. Well, I'd love to have taken the second one.

Speaker Change: While I'd love to have taken the second one I'll leave that to you should aid in a moment, but let me maybe I ran a cover your first one.

Wael: I will leave that to you, Sinead, in a moment. Let me maybe, Irina, cover your first one, where, if you allow me just a moment to reframe it, what we will be announcing in March is, in essence, the second leg of what we announced on Capital Markets Day 2023 in June. It's one strategy.

Speaker Change: Ware.

Speaker Change: If I if you allow me just a moment to reframe it.

Speaker Change: What we will be announcing in March is in essence, the second leg of what we announced in capital markets Day 2023 in June. It's one strategy, we focused a lot more on the more value side of it in June and we will focus a bit more on the with less emissions when it comes to March.

Wael: We focused a lot more on the more valuable side of it in June, and we will focus a bit more on less emissions when it comes to March. The retirement of a number of targets was not to create a lack of transparency but really was an intent, as we look to transform Shell into the company we want it to be, to focus on the key targets that matter, both the financial targets as well as the carbon targets that you will have seen when we announced them on Capital Markets Day. And so what you should expect coming in March is real clarity on what are the areas that we will continue to go forward with, not a whole bunch of new targets. That is not the intent of this post.

Speaker Change: The the retirement of a number of targets was not to a create lack of transparency, but really was an intent as we look to transform shell into the company. We wanted to be to focus on the key targets that matter, both the financial targets as well as the carbon targets that you will have seen when we announced them in capital markets day and so what.

Speaker Change: You should expect coming in in March is real clarity on what are the areas that we will continue to go forward with not a whole bunch of new targets and earn that is not the intent here, but the intent is to get clear on where we see value opportunities.

Wael: But the intent is to get clear on where we see value opportunities. Back to the question that was asked earlier around where we see, I think it was by Alistair, opportunities for investment in our low carbon spend, of which we invested $5.6 billion last year. We want to be very clear about where we see those value pools emerging, where we have particular strength to be able to compete, where we see customer demand evolving in a positive way, and where we see regulatory support that enables the overall investment to create the value that our shareholders expect. So expect more of that rather than a whole set of new targets in our annual reports. You will always be updated on the progress that we are making towards the ambitions that we have set for ourselves. So basically, what you're asking is in terms of the cash flow from operations excluding working capital. That's really where the question is going, what's unusual?

Speaker Change: Back to the question that was asked earlier around where we see them I think it was by Alastair opportunities for for investment for our low carbon spend of which we invested $5 $6 billion last year, we want to be very clear on where we see those value pools emerging where we have particular strength to be able to compete where we see customer demand.

Speaker Change: Evolving in a positive way and where do we see regulatory support that enables the overall investment to create the value that our shareholders expect so expect more of that rather than a whole set of new targets in our annual reports you will always be updated on the progress that we are making towards the ambitions that we have set for ourselves.

Speaker Change: Indeed, and things arena, so basically what you're asking is in terms of the cash flow from operations, excluding working capital that's really one of the questions going what's unusual so when you look at it the way I always try and separate in July is what is key for specific what is simply not so that you can see the price coming through when I look at it in terms of what is key for specific in terms.

Sinead: So when you look at it, the way I always try and separate it out is what is Q4 specific and what is simply not, so that you can see they're both coming through. When I look at it in terms of what is Q4 specific in terms of excluding working capital, it really comes down to just a number of things. It's really about timing.

Speaker Change: Excluding working capital it really comes down to just a number of things. It's really about timing. This is ryan the German emission certificates that country in the U S. Biofuels and program that were partially those two things happen every Q4, and you see them coming through and that combined with the extra tax that we pay.

Sinead: This is around the German emission certificates that come through and the US biofuels program that we're part of. Those two things happen every Q4 and you see them coming through, and that combined with the extra tax that we pay, pure and simple, in Q4, it's phasing out the tax payment, and of course, given how much profit we made, we had extra taxes that came through. Those three things together actually come to about 1.5 billion, so you see that hit coming through in Q4, which is unusual for us. Then, in terms of things that are not Q4-specific, what I would sort of direct your attention to is that it's really related to price moves, and it's twofold. One is COSA, so the cost of supply adjustment, which is really just crude prices going down, and the second one is derivatives, as you rightly pointed out, and that's around about 1.1 billion. So those two together are just over 2 billion.

Speaker Change: And simple in Q4, it's phasing of tax payments and of course, given how much profit. We may as we had extra taxes that cancer. Those three things together actually come to about 1.5 billion. So you see that had coming through in Q4, which is unusual to us and in terms of things that are not Q4 specific what I would direct your attention to is it's really relates to price moves that's twofold. One is.

So the cost of supply adjustment is really just crude prices going down and secondly, its derivatives as you rightly pointed out it's not the airlines about 1.1 billion. So those two combined are just over $2 billion.

Sinead: So going back to that, you saw a billion and a half that is Q4 specific, that's really around timing, and the second bit is really price related. Marina, thank you for the questions. Our next caller is Peter Low from Redburn Atlantic. Hi, thanks. Yes, I had a question on disposals.

Speaker Change: Back to that you saw a billion and a half as Q4 specific.

Speaker Change: And Iran timing on the secondhand is rainy and price where they are at so I hope that gives clarity. Thank.

Speaker Change: Thank you Shannon and thank you for the questions look can we go to the next one please.

Speaker Change: Our next caller is pizza load from Redburn Atlantic.

Pizza Load: Hi, Thanks, So I had a question on disposals of you announced Nigeria.

Peter James Low: You announced Nigeria just this month, but you've been linked with several other potential divestments in the press, and you yourself said you're looking to exit your Singapore chemical refining asset. Can you perhaps update on how that program is progressing, and perhaps how large disposal proceeds could be this year and in the coming years? And then the second question was on inflation.

Pizza Load: But you've been linked with several other potential divestments in the past and even though you said you're looking to kind of exit your cause Singapore chemical refining asset could even have snow days on how that program is progressing.

Pizza Load: How large disposal proceeds could be kind of this year that the company is.

Pizza Load: And then the second question was on inflation.

Peter James Low: In your kind of cost reduction slides, you show that inflation has contributed to an increase in costs in 2023. I was just interested where inflation is coming from in the business and sort of what level of inflation you're currently seeing and planning for. Thanks. Do you want to take both?

Pizza Load: What kind of cost production slide you show that actually kind of inflation has cultivated a crazy cold for 2020.

Pizza Load: Just interested where the business, that's coming through and sort of what level of inflation, you'll come at me seeing and planning for <unk>.

Pizza Load: Take both sure and in terms of Divestments, you mentioned, specifically ask D C and Singapore and SPT says, it's a great step for its gaining momentum very very pleased to see that as an outcome that will happen in the course of this year, we have waiting for those approvals et cetera. You'll also have seen we announced at a time that's approximately all of the proceeds that came with it so I'll leave the T shirt.

Sinead: Sure. In terms of divestments, you mentioned specifically SPDC and Singapore. SPDC is a great step forward, gaining momentum. I'm very, very pleased to see that as an outcome. It will happen during the course of this year.

Sinead: We are waiting for those approvals, etc. You'll also have seen we announced at the time that approximately all of the proceeds that came with it, so I'll leave the detail there because there's some financing in it as well. And in terms of Singapore, which is really the refinery, Bookum and Jurong, the refining and chemicals plant together, we've confirmed that we are divesting and we're progressing through that. So I'm hopeful to be able to update you later in the year on that, Peter. In terms of the proceeds, I, of course, wouldn't talk about commercials at this point, but both of them are more about ensuring that it fits our strategy rather than significant cash flows coming in from divestments. So that gives you a bit of an indication.

Pizza Load: Axis and financing initiatives as well and in terms of Singapore, which is really the refinery become and drawing the refining and chemicals time together. We've confirmed that we are divesting or progressing through that I'm hopeful to be able to update you later in the year on that Peter in terms of fee proceeds of course wouldn't talk about commercials at this point, but both of them are more about ensuring that it fits our.

Pizza Load: <unk> rather than significant cash that's coming in from divestments that gives you a bit of an indication.

Sinead: Secondly, in terms of inflation, yes, I'm glad you picked that up. If you look at our OPEX, what you actually see this year is that OPEX year on year has come down. We're really pleased to see that because what that means is not only do we deliver the $1 billion of structural savings that we've discussed and that we've promised on our route to our $2 to $3 billion, but more importantly, what we also did was beat inflation, and we managed to cover acquisitions coming in. And there were quite a few of those with Nature Energy, with Volta and many other things, including new production, which drives cash flow as well. So significant performance by the business, which is pleasing to see. But what are we seeing on inflation?

Pizza Load: Secondly in terms of inflation, yes, I'm glad you picked that up if you look at our Opex. What you actually see this year is actually that the opex year on year has come down we're really pleased to see that because what that means is not only did we deliver the 1 billion as a structural savings that we discussed them with promises on our routes are $2 3 billion, but more importantly, what we also potatoes as inflation.

And we managed to cover acquisitions coming in and there were quite a few of those with niche LNG with Volta and many other things, including new production, which drives cash flow as well so significant performance by business, which is pleasing to see what are we seeing on inflation. It is considerable we're beginning to see that come down of course as you go into 2020 for our own view on that is specifically the Apollo.

Sinead: It is considerable. We're beginning to see that come down, of course, as we go into 2024. Our own view on that is specifically that it'll probably be between 3% and 7%, roughly speaking, but the way we structure our company, we're very much comfortable that we will be able to try and absorb that with our contracts and the variety of things we'll do. We'll see how it plays out in the year. It's very sticky in certain areas rather than others.

Pizza Load: Maybe between three and 7% roughly speaking, but the way we structure. Our company. We're very much comfortable that we will be able to try and absorb that with our contracts and that the variety of things. So we'll see how it plays out in a year, it's very much sticky in certain areas other than than rather than others, where do we see it specifically Peter we're seeing it more in some of the electrical installations and some of the fabrication area.

Sinead: Where do we see it specifically, Peter? We're seeing it more in some of the electrical installations and some of the fabrication areas specifically, and, of course, RES, without a doubt, the renewable space. That gives you a bit of a feel.

Pizza Load: Specifically and of course, Ras with Eylea to item renewable spaces. There that gives you a bit of a feel I think fundamentally the message to take away is that we've done exactly what we said we've been able to instantly for the structural savings be able to eat in fashion and be able to absorb new production coming in or acquisitions coming in actually Nathan. Thank you Peter for the questions. Luc can we have the next question. Please.

Sinead: I think fundamentally the message to take away is that we've done exactly what we said. We've been able to deliver the structural savings, be able to eat inflation, and be able to absorb new production coming in or out. Thanks Sinead, and thank you Peter for the questions. Luke, can we have the next question?

Pizza Load: Yeah.

Pizza Load: Our next caller is Giacomo Romeo from Jefferies.

Giacomo Romeo: Yes. Thank you first question is on your payout.

Giacomo Romeo: Our next caller is Giacomo Romeo from Jeffreys. Yes, thank you. The first question is on your payout level in 2023, which is above the upper end of the 30 to 40 percent range. I'm just trying to frame this and understand sort of what your approach is and whether we are allowed to talk about 40 percent as a soft ceiling like we used to with the previous range and under what circumstances you'd be considering keeping it above that level. The second question is on Namibia.

Giacomo Romeo: Payout level, III, which came above the.

Giacomo Romeo: Upper end of the 30% to 40% range and just training.

To frame these I understand.

Giacomo Romeo: So what's your approach and.

Giacomo Romeo: Are we allowed to talk about 40%.

Giacomo Romeo: Okay.

Giacomo Romeo: So ceiling like we used to with the previous range and under what circumstances, considering keeping it above that level.

Giacomo Romeo: Second question is on the and maybe I just wanted to check what's what's what's your plan for this year I think there is one more exploration well.

Giacomo Romeo: I just wanted to check what your work plan for this year is. I think there's one more exploration well to go, and I just wanted to check what your plan is in terms of activity on Pelt 1939 this year. Thanks, Giacomo. Do you want to take the first one?

Giacomo Romeo: And Jessica just wanted to check what's what's your plans because a lot of activity on the on the umbrella.

Giacomo Romeo: Nine this year.

Speaker Change: Thanks, Jochen will you want to take the first one sure and.

Sinead: Sure, thanks Giacomo. My preference is definitely not to introduce any new targets or anything else in. Let's keep it to the fact that if we say something, we're going to do it, and that's what you see coming through. So 30 to 40 percent is through the cycle.

Speaker Change: Thanks, Chuck and I and my preference is definitely not to introduce any new targets or anything else and let's keep it to the fact that if we say something we're going to do with Jack in there and that's what you see coming through them.

So 30% to 40% is through the cycle, that's very much what we said in capital markets day, and that's what you will continue to see us deliver what is our thinking around that and we have a 4% progressive dividends as you know very attractive returns over all our shares remain undervalued by any metric that you want to look at and therefore, we're looking to preferentially allocate towards this.

Sinead: That's very much what we said on Capital Markets Day, and that's what you will continue to see us deliver. What is our thinking around that? We have a four percent progressive dividend, as you know, very attractive returns overall. Our shares remain undervalued by any metric that you want to look at and therefore we're looking to preferentially allocate towards those. Really clear why we would do that when you're sitting at, you know, 15% free cash flow yield. Of course, we're going to be going after the shares. Comfortable in terms of leaning on the balance sheet when I need to lean on it, but fundamentally, what I'm doing is looking through the quarter, so it's not specifically just on the individual quarter. I'm making sure that I take a pragmatic approach to it and basically have confidence in what the cash flows going forward of the company, hence the fact you saw the distributions that you saw. And Giacomo, on Namibia, a little to update at this stage.

Speaker Change: Really clear of why we would do that when you're sitting at 15% free cash flow yield of course, we're going to be going after the shares and comfort in terms of leaning on the balance sheet, when I need to lean on us and but fundamentally what I'm doing is looking through the quarter. So it's not specifically just on the individual quarter I'm, making sure that I take a pragmatic approach to it and basically have confidence and what are the cash flows going forward.

Speaker Change: The company, hence the fact yourself distributions that yourself.

Speaker Change: And Jakob on Namibia little to update at this stage I think.

Speaker Change: As you are well aware, we've been drilling some exploration wells some appraisal wells.

Speaker Change: We have a couple of actually that are that we plan to drill in the coming months.

Wael: I think, as you are well aware, we've been drilling some exploration wells, some appraisal wells. We have a couple, actually, that we plan to drill in the coming months. As I've said in the past, there's no question around the volume of the resource. The biggest question is around finding the sweet spots within that resource, within the rock, to be able to create opportunities for exciting developments there. And that's what we have to be able to find out.

As I've said in the past there is no question around the volume of the resource. The biggest question is around finding the sweet spots within that resource within the rock to be able to create the opportunities for exciting developments there and that's what we have to be able to find out.

Speaker Change: We will take our time and before and the way we look through that because these are significant capital investments and therefore, we want to make sure that we are able to deliver a return for our shareholders and this is why we want to really derisk the opportunity and of course it helps that we're not the only ones drilling there. So theres other activities in the basin, which will of course provide more data points that informs the <unk>.

Wael: We will take our time and be thorough in the way we look at it because these are significant capital investments. And, therefore, we want to make sure that we are able to deliver a return for our shareholders. And this is why we want to really de-risk the opportunity. And, of course, it helps that we're not the only ones drilling there. So there are other activities in the basin, which will, of course, provide more data points that inform the broader picture around the prospectivity of the basin and our ability to create value. I hope that helped. Thanks again for the questions. Luke, if we can go to the next question.

Speaker Change: Order picture around the prospective 80 of of the basin and our ability to create value from it I hope that helps a bit.

Speaker Change: Thanks again for the questions look if we can go to the next question. Please.

Speaker Change: Our next caller is Josh stone from UBS.

Alright, Thanks, and good afternoon two questions. Please firstly just the recent elections in the Netherlands, and essentially impactful Michele I. Appreciate coalition talks are still ongoing but do you see any risk to an impact to your green investments in the country with particular interest in the biofuel and hydrogen projects.

Josh Stone: Our next caller is Josh Stone from UBS. Hi, thanks, and good afternoon. Two questions, please. Firstly, with the recent elections in the Netherlands and the potential impact on Shell, I appreciate coalition talks are still ongoing, but do you see any risk of an impact on your green investments in the country? I'm particularly interested in the biofuel and hydrogen projects. Do these continue regardless of the regulatory environment, or could we see a slowdown in terms of changing mandates? And then, on nature energy, maybe you could just talk about how that business is performing versus your expectations and how the integration with the wider business is going, and if you've learned any lessons in the biogas market, in particular. Thank you. Thanks. I'll take the first one if you want to take the second one.

Speaker Change: It can be continued regardless of the regulatory environment or could we see a slowdown because of the change in mandates.

Speaker Change: And then second question on major energy and maybe if you just talk about how that business is performing versus your expectation and how the integration with the wider business is doing in essence is largely lessons in the biogas market in particular, thank you.

I'll take the first one if you want to take the second one.

Hum.

Speaker Change: I think what.

Speaker Change: It's critical to say is all of our investments irrespective of the country I think it has to be resilient to multiple administrations multiple governments coming in and coming out Josh I mean, that's the that's the reality for the specific projects that you talked about in the Netherlands of course are the underpinning of the regulatory support is EU support not just the Dutch.

Wael: I think what's critical to say is all of our investments, irrespective of the country, I think, have to be resilient to multiple administrations, multiple governments coming in and coming out, Josh. I mean, that's the reality. For the specific projects that you talked about in the Netherlands, of course, the underpinning of the regulatory support is EU support, not just Dutch support. A lot of what we tap into is the Renewable Energy Directive, numbers one and two, and potentially one day number three. These are what create some of the broader support for those projects, and so far, we don't see any moves away from that. And that's going to be a key determinant of the success of those projects. We will continue to look at opportunities to be able to, of course, engage with the government when it comes into power. For now, all the indications are support for the continued investment that we are making in the Netherlands, which is substantial, by the way, predominantly in the low-carbon space, as we also unwind our presence there in Groningen. And with respect to renewable energy, it's quite early to tell at the moment.

Speaker Change: Support.

Speaker Change: A lot of what we tap into our the renewable energy directive number one and number two and potentially one day number three those are what creates some of the broader support for those projects and so so far we don't see any any moves away from that.

Speaker Change: And that's going to be a key determinant of the success of this project.

Speaker Change: We are we will continue to look at opportunities to be able to of course engage with the government when when it comes into into power for now all the indications are support for the continued investment that we are making in the Netherlands, which is substantial by the way predominantly in AR and the low carbon space as we also unwind our presence.

Speaker Change: They're on the honing in field.

Speaker Change: And with respect to meet your LNG, it's quite early to tell at the moment. So we're into the fresh air fifth I'm not even finished the fresh air so far what we're seeing is the loves learnings going back and forth because what you may remember is when we actually bought nature anything Besides me, but actually for some of our renewable natural gas activities within Europe into it as well so it's a great opportunity for us to be able to see the information so that investors.

Speaker Change: <unk> and actually learn from the team there as well for them and for them to see the trading opportunities that we have as well so any days information flooding, making sure we actually got in place. Both the standards that we want to have from both sides and making sure that we have the ability to be able to move the molecules, where we want to say, we're looking for it to provide some updates in future as well.

Sinead: So we're into the first year of it, not even finished the first year so far. What we're seeing is a lot of learnings going back and forth, because what you may remember is when we actually bought Nature Energy, we said we would actually fold some of our renewable natural gas activities within Europe into it as well. So it's a great opportunity for us to be able to see the information flow in both directions and actually learn from the team there, as well as them, about the trading opportunities that we have as well. So, early days, information flowing, making sure we actually get in place both the standards that we want to have from both sides and making sure that we have the ability to be able to move the molecules where we want.

Speaker Change: Sanctioning thanks, Josh look can we get the next question. Please.

Lithia Rainfall: Our next caller is lithia rainfall from Barclays.

Lithia Rainfall: Okay.

Lithia Rainfall: Got it.

Lithia Rainfall: Uh huh.

Lithia Rainfall: Thanks.

Speaker Change: Last one.

Speaker Change: A lot of free cash flow with it.

Speaker Change: It's quite remarkable how much you're generating and I agree with that.

Speaker Change: Sure.

Speaker Change: Did you ever think about getting to the buyback and clearly have to take 40% of my forecast and get to the numbers.

Sinead: So I'm looking forward to providing. Thanks, Sinead. Thanks, Josh. Luke, can we get the next question? Our next caller is Lydia Rainforth from Barclays. Thank you and good afternoon, everyone.

Speaker Change: But just from your side why not have the confidence to Kevin.

Speaker Change: Thank you.

Speaker Change: On the acquisition side.

Lydia Rainforth: I've got a few questions, but on the first one, there is obviously a lot of free cash flow within the business, and it is quite remarkable how much you're generating, and I agree with that saying that your shares are undervalued. Did you ever think about giving an annual number for the buyback, and clearly, I can take 40% of my forecast and get to a number, but just from your side, why not have the confidence to give an annual number? This is vaguely linked, but on the acquisition side, we obviously have seen a lot of acquisitions across the globe. Is there any point where you think actually we're missing out on this and, secondly, on the chemical side of the Pennsylvania cracker, where are you now in terms of certification of some of those products, and it does appear that it's going to be difficult to meet that cost of capital hurdle, so when you're thinking about that process, what would you do again effectively, or how would you not make that sort of investment and one that looks like it's Bye.

Kevin: The housing of all acquisitions across the globe.

Kevin: Do you think we're missing out on that.

Kevin: And then secondly.

On the chemical side.

Kevin: Pennsylvania Cracker wherever you know certification of some nice products.

Kevin: And it does appear that it's going to be difficult to meet that cost of capital.

Kevin: So when you're thinking about that process self.

Kevin: What do you do it again, especially wheel house don't make stocks would have invested on London.

Speaker Change: That's like it's not going back.

Speaker Change: Thank you.

Speaker Change: Yes, thank you very much.

Speaker Change: Think are inherently three questions I'll take the last to start with those and then come back to you. She Nate on the free cash flow generation I think let me start with monarch I then go to the acquisition on on Monaca.

Speaker Change: You'll recall last update I provided was that.

Speaker Change: The first two polyethylene trains two and three we're running well.

Speaker Change: They are running at or above capacity and continue to do so which.

Lydia Rainforth: Thank you very much, Lydia. There are, in essence, three questions. I'll take the last two, start with those, and then come back to you, Sinead, on the Freecast Regeneration.

Speaker Change: Which is pleasing to see I also updated you at the time that there was equipment issues on the third train I'm pleased to report that the that piece of equipment now has been installed the compressor that we needed to put into place and is in the process of being started up and will ramp up through the course of the coming of the coming week. So that's that allows us hopefully to see.

Wael: I think, let me start with Monaca, then go to the acquisition. On Monaca, you'll recall the last update I provided was that the first two polyethylene trains, two of three, were running well. They are running at or above capacity and continue to do so, which is pleasing to see. I also informed you at the time that there were equipment issues on the third train. I'm pleased to report that that piece of equipment has now been installed, a compressor that we needed to put into place, and is in the process of being started up and will ramp up through the course of the coming week.

Speaker Change: Cable is the plant from their own our focus right now is on volume or just pushing the volume through the plant and why is that that's because of the differentials at the moment between the gas price and the the product price or are significant so even before we get a very forensic around the potential grades that we have.

Speaker Change: <unk> are that we can actually crack out there the real focus is on just getting flow through and that's what the team is focused on for the coming months.

Wael: So that allows us, hopefully, to stabilize the plant from there on. Our focus right now is on volume, on just pushing the volume through the plant. And why is that?

And then over time of course, we will continue to optimize value through through the opportunities that we have technically to do so.

Wael: That's because the differentials at the moment between the gas price and the product price are significant. So even before we get very forensic around the potential grades that we have that we can actually crack out there, the real focus is on just getting flow through. And that's what the team is focused on for the coming months. And then, over time, of course, we will continue to optimize value through the opportunities that we have technically to do so. On your question around acquisition, I think the worst thing you can ever do is get FOMO when others are acquiring.

Speaker Change: On your question around acquisition.

Speaker Change: I think the the worst thing you can ever do is get formal when others are acquiring we set out a very clear strategy at middle of last year, and if anything we stand today in a position where we are very pleased with not just the progress we are making but the momentum that we are building towards that strategy and we are absolute.

Speaker Change: Convinced that that strategy. If we can if we can continue to deliver on the peso are delivering will unlock significantly more value than any other acquisition and of course, you see that playing through you see it through the stability of our cash flow generation I mean, our Gulf of Mexico business.

Wael: We set out a very clear strategy in the middle of last year, and if anything, we stand today in a position where we are very pleased with not just the progress we are making but the momentum that we are building towards that strategy. And we are absolutely convinced that that strategy, if we can continue to deliver at the pace we are delivering, will unlock significantly more value than any other acquisition. And, of course, you see that playing out.

Speaker Change: This last quarter produced at a record high the highest in over two decades, our Queensland gas company asset base is producing at a record high the highest that since it started up 10 years ago. So the quality of the C. F. O is strong yes, there's more to do to get prelude in monarch up and running.

Wael: You see it through the stability of our cash flow generation. I mean, our Gulf of Mexico business this last quarter produced at a record high, the highest in over two decades. Our Queensland gas company Acidbase is producing at a record high, the highest since it started up 10 years ago.

Speaker Change: At the same time sure Nate has already alluded to the growth in C. F O coming from the 200000 barrels per day, and new projects that will be coming through.

Speaker Change: <unk> is coming down capex discipline are showing.

Speaker Change: So I think you see all the credentials to be able to really focus on unlocking that that value from the first sprint and were only two two quarters into a 10 quarter sprint.

Wael: So the quality of the CFFO is strong. Yes, there's more to do to get Prelude and Monaca up and running. At the same time, Sinead has already alluded to the growth in CFFO coming from the 200,000 barrels per day and new projects that will be coming through. Cost is coming down, and CAPEX discipline is showing. So I think you see all the credentials to be able to really focus on unlocking that value from the first sprint. And we're only two quarters into a ten-quarter sprint.

Speaker Change: And so I do think it's a unique opportunity for us to continue to use that surplus cash to be able to lean in and do more buybacks, which is exactly what you see us do and we will consistently do that in line with what we have said we will do.

Speaker Change: I think that's a perfect answer to the first question as well I think.

Speaker Change: So my sort of brief response would be when we set a target you can see that we're looking at performance no promises we will meet it and hopefully pieces and you can see that preference is to not a huge number of additional targets along the way just look at our track record. If you look back over the last however, many quarters six quarters whatever it may be it's a very tight range in terms of the.

Sinead: And so I do think it's a unique opportunity for us to continue to use that surplus cash to be able to lean in and do more buybacks, which is exactly what you see us do. And we will consistently do that in line with what we have said.

Sinead: I think that's the perfect answer to the first question as well. I think my sort of brief response would be: when we set a target, you can see that we're looking at performance, not promises. We will meet it and, hopefully, beat it. You can see that preferences do not set a huge number of additional targets along the way.

Buybacks I hopefully it gives you complete predictability in terms of what's going forward.

Speaker Change: Lithia as well, but fundamentally I'll always look at the performance of the company in the quarter I'm looking for it as well that's why you see a three and a half billion share buyback at this point. Thank.

Speaker Change: Thank you.

Speaker Change: And then and maybe a final point there Lydia as well you'd asked me would we do Ah Peng came again I think.

Sinead: Just look at our track record. If you look back over the last, you know, whatever number of quarters, six quarters, whatever it may be, it's a very tight range in terms of the buyback. So hopefully, it gives you complete predictability in terms of what's going forward. But fundamentally, I'll always look at the performance of the company in the quarter and look forward as well. That's why you see a three and a half billion share buyback at this point. Thanks, Sinead. And maybe a fine point there, Lydia, as well. You'd ask me, would we do PENCAM again?

We will continue to do is to be very clear, where every single dollar of capital is going to be prioritized as a go into a buyback or does it go into the projects. We have said, we're going to keep our capital employed in chemicals flat through the decade.

Speaker Change: Of course, that's a key consideration.

Speaker Change: And we will make sure that we do less of what we would call. The Mega Mega projects that is very much. The philosophy that we are adopting a small and replicable is beautiful and we see it in the context of a veto to away out of Sparta and so more and more of our capital expenditure is going to be in areas, where we feel we.

Wael: I think what we will continue to do is to be very clear where every single dollar of capital is going to be prioritised. Does it go into a buyback, or does it go into projects? We have said we're going to keep our capital employed in chemicals flat through the decade. So, of course, that's a key consideration. And we will make sure that we do fewer of what we would call the mega-mega projects. That is very much the philosophy that we are adopting. Small and replicable is beautiful.

Speaker Change: Can really get our hands around those opportunities and only in exceptional cases, where we truly see value add will we go for the bigger projects. Thank you for the questions are if we can go to the next question. Please look.

Speaker Change: Our next caller is Christopher Copeland from Bank of America.

Christopher Copeland: Thank you good afternoon.

Christopher Copeland: One each if I may while maybe you can tell us where your as you call. It 10 quarter sprint. So far is frustrating you what have you not made progress as you would've hoped I. Appreciate its early on asking you that question, but if you can give us a bit of color.

Wael: And we see it in the context of a veto for a whale, for a Sparta. And so more and more of our capital expenditure is going to be in areas where we feel we can really get our hands around those opportunities. And only in exceptional cases where we truly see value added will we go for the bigger projects. Thank you for the questions.

Christopher Copeland: Maybe.

Christopher Copeland: My particular hobby horse.

Christopher Koplentz: If we can go to the next question, please. Our next caller is Christopher Koplentz from Bank of America. Thank you. Good afternoon.

Christopher Copeland: Your experience from.

Christopher Copeland: What you did in Pakistan.

Christopher Copeland: Is that is that a model that youre, hoping to rollout elsewhere.

Christopher Copeland: When you think about cutting the tail in your retail network.

Christopher Koplentz: Just one each, if I may, while maybe you can tell us where your, as you call it, ten-quarter sprint so far is frustrating you. Where have you not made progress as you would have hoped? I appreciate it's early on asking you that question, but if you can give us a bit of color and, maybe, my particular hobby horse, your experience of what you did in Pakistan, is that a model that you're hoping to roll out elsewhere when you think about cutting the tail in your retail network? And one for you: I'm really sorry, Sinead, but I do have trouble calculating a 42% CFFO payout ratio It seems like you're giving yourself a lot of credit for working capital inflows, etc., so is it fair to assume that the underlying payout ratio is significantly higher once you go below the CFFO headline?

Speaker Change: One for you I'm really sorry, but I do have trouble calculating of 42% <unk> payout ratio on 2023.

Speaker Change: It seems like Youre, giving yourself a lot of credit for working capital inflows et cetera. So.

Speaker Change: Is it fair to assume that the underlying payout ratio is significantly higher.

Speaker Change: Once you go below the <unk> headline and.

Speaker Change: That to me would be a very bullish interpretation.

Speaker Change: Going forward when working capital changes, perhaps go the other way. Thank you.

Speaker Change: Thanks, Chris.

Speaker Change: Cover the first one and then option eight cover the second one.

Speaker Change: Hey, look I think I just outlined earlier Chris.

Speaker Change: The strong confidence I have but also humility to recognize in these we are early in the journey.

Wael: And that, to me, would be a very bullish interpretation going forward when working capital changes may go the other way. Thank you. Thanks, Chris. Let me cover the first one and then have Sinead cover the second one.

Speaker Change: What are the frustration is that let me, let me sort of provide a couple of maybe live examples rather than just the just talk theoretically.

Speaker Change: So one of the things that gives me confidence.

Wael: Look, I think I just outlined earlier, Chris, the strong confidence I have, but also the humility to recognize, indeed, we are early in the journey. What are the frustrations? Let me sort of provide a couple of maybe live examples, rather than just talk theoretically.

Speaker Change: Let me step back what we are doing well clearly on the cost reduction side is the portfolio and you know we are moving maybe I'll pick up your retail question. There. We are looking at every option for those tail markets or for those tail assets to be able to monetize them or shift the structures around them shift them into trademark license.

Wael: So, one of the things that gives me confidence, well, let me step back. What we are doing well, clearly, on the cost-reduction side, is the portfolio. And we are moving, maybe I'll pick up your retail question there, we are looking at every option for those tail markets or for those tail assets to be able to monetize them or shift the structures around them, shift them into trademark license agreements or the like, to really make sure that our capital employed, our energies, and our focus are on the right areas. So, we will continue to do that. The real focus, and we always do the hard yards, comes from structural cost reductions, and there we are really making progress in a number of areas. I'll give you one simple one, but I think it is iconic in the bigger scheme of things.

Speaker Change: Agreements or the like to really make sure that our capital employed and our energies and our focus are on the right area. So we will continue to do that.

Speaker Change: The real focus and we always knew the hard yards come from the structural cost reductions and there we're really making progress in a number of areas and I'll give you one simple one but I think is iconic in the bigger scheme of things and our asset managers have historically had some 1800 standards that they need to be complying by so we see.

Speaker Change: <unk> time last year really focused on how do we simplify those standards and we have reduced that requirement by 70%, while still living up to all of our safety and reliability expectations, but that's down from 1800 to 500 standards now I wish we could do that in a week I wish we could do that in a month, but that takes work because we really need.

Wael: Our asset managers have historically had some one thousand eight hundred standards that they need to be complying with, so we spent time last year really focused on how we simplify those standards. And we have reduced that requirement by 70 percent while still living up to all of our safety and reliability expectations. But that's down from 1800 to 500 standards. Now I wish we could do that in a week.

To go back and D. Bureaucratize a lot of the activities, we have and so I wish it could be faster, but there are other areas, where I look and say actually teams are getting at places like the Gulf of Mexico, I talked about the record production I would also reference either being able to for example challenge the way they do work reducing there over.

Wael: I wish we could do that in a month, but that takes work because we really need to go back and de-bureaucratize a lot of the activities we have. And so I wish it could be faster. But there are other areas where I look and say, actually, teams are getting it. Places like the Gulf of Mexico.

Speaker Change: They're all people movements offshore by some 35%, allowing us to reduce our demand on helicopters by 50%.

Speaker Change: Small examples of where you see the momentum starting to build.

Speaker Change: I'm sure I speak on behalf as well both of US would love to see that to go even faster.

Wael: I talked about record production, but I would also reference how they're being able to, for example, challenge the way they do work, reducing their overall people movements offshore by some 35 percent, allowing us to reduce our demand on helicopters by 50 percent. Just small examples of where you see the momentum starting to build. I'm sure I speak on Sinead's behalf as well.

Speaker Change: But we also recognize we have to take an entire organization along and some of it is unpacking things, which we have ingrained into our business for a long long time. So this is this is a transformational journey, which is both exciting but also of course, one that is going to take its time.

Speaker Change: Yeah, and Heath and and thanks, Chris in terms of the question as Ive just your point on the calculation of the payout ratio, we actually haven't changed at year on year. So as you know if you look back at the previous USA 22, where we had actually and.

Wael: Both of us would love to see that go even faster, but we also recognize that we have to take an entire organization along, and some of it is unpacking things that we have ingrained into our business for a long, long time. So this is this is a transformational journey which is both exciting but also, of course, one that is going to take its time. Yeah, indeed. And, and thanks, Chris.

Speaker Change: Working capital outflows and quite substantial ones as well we calculation on the back of that when we looked at it in 'twenty three where we had in place we looked at it not so working cap. So you're right those vary with us It goes in the night and across the period, but we keep it pretty consistent what I'm, probably more interested in regardless of how I calculate there's just simply but am I getting a compelling.

Sinead: In terms of the question of just your point on the calculation of the payout ratio, we actually haven't changed it year on year. So, as you know, if you look back at the previous year, so 22, where we had working capital outflows, and quite substantial ones as well, we calculated on the back of that. When we looked at it in 23, where we had inflows, we looked at it in that. So working capital, you're right, does vary with us. It goes in and out across the period, but we keep it pretty consistent.

Speaker Change: <unk> returned to my shallow shareholder so and also I think with 23 billion across the year, we've definitely done exactly that in terms of that mix I hope, we can look through that to continue to regardless of the working capital like the working capital inflow this quarter or not I'm still looking through it to be able to say do I have confidence in the future cash flows of the company to be able to continue to distribute which is why the three and a half billion.

Speaker Change: So hopefully you'll see that tight range that I mentioned before and that track record coming through happy to work the details of the calculation working through IR at any point.

Speaker Change: Actually I didn't thank you Chris for the questions look let's go to the next question. Please.

Sinead: What I'm probably more interested in, regardless of how I calculate it, is simply put, am I giving a compelling return to my shareholders or not? I think with 23 billion across the year, we've definitely done exactly that in terms of that mix. I hope we can look through that to continue to, regardless of the working capital, so whether the working capital inflow this quarter or not, I'm still looking through it to be able to say, do I have confidence in the future cash flows of the company to be able to continue to pay, which is why the three and a half billion. So hopefully, you'll see that tight range that I mentioned before, and that track record coming through. I am happy to work out the details of the calculation with you through IR at any point. Thanks, Sinead.

My Tundra: Our next caller is my tundra from Morgan Stanley.

My Tundra: Yeah.

My Tundra: Hi, Hello, I've got two if I may.

My Tundra: If you look at sort of the four key results and also the full year 2023 results.

My Tundra: I have a question about sort of trading and optimization, because previously you've indicated that trading and optimization sort of 2% to 4% points of uplift to return on capital for the company at large, but I was sort of backing. This out is always just a tremendously difficult, but it looks to me like in 2023. It was it was either at or possibly even above.

My Tundra: That that range and I was wondering.

My Tundra: If that is indeed, the case and the reason why I'm asking is that if it is indeed.

My Tundra: Hum.

My Tundra: It is a very very large share of the company's sort of overall.

My Tundra: And the other one I wanted to ask is about the disposal of Oh.

Sinead: Thank you, Chris, for the questions. Luke, let's go to the next caller. Our next caller is Martijn Raats from Morgan Stanley. Hi, hello, I've got two, if I may.

My Tundra: Nigeria if you.

My Tundra: Could say a few words on how that might impact sort of earnings cash flow sort of going forward what are the what are the.

My Tundra: The implications of that that we should take into account from a little from a modeling perspective.

Martijn Raats: If you look at sort of the four key results and also the full year 2023 results, I have a question about sort of trading and optimization because previously you've indicated that trading and optimization is sort of two to four percent points of uplift to return on capital for the company at large, but sort of backing this out is always tremendously difficult, but it looks to me like in 2023 it was either at or possibly even above that range, and I was wondering if that If you could say a few words on how that might impact earnings and cash flow sort of going forward. What are the, you know, what are the implications of that that we should take into account from a modeling perspective? I think both.

Speaker Change: Well I'll take both yeah happy to Sandy's as I can for my time and in terms of trading and optimization, particularly this quarter. We saw a really great results from our LNG trading and optimization, it's pretty exceptional quarter Q4 tends to be very good as you know for them. So we saw that repeated again, you're right. We said to support 4% in terms of capital markets day in terms of the uplift that comes through.

Speaker Change: It's very difficult to guide quarter on quarter of course, because it means that volatility that come through the way I tend to look at it is it tends to be linked to either the opportunities that we have or in fact, whether and what we tend to see of course is that and with respect to the LNG side set up for the northern hemisphere that while I mentioned earlier Q4, and Q1 tends to be the stronger ones.

Speaker Change: Not surprising as gas at the end of the day. This is about the winter there and of course about the volatility and arb opportunities, which were very strong as you already alluded to as well in Q4, what we see in chemicals and products and particularly on the product side of course is that although there's a weather weather element of that of course with gasoline driving season, etcetera and diesel you see much more it's about.

Sinead: Yeah, happy to. So, indeed, thanks Martijn. And in terms of trading and optimisation, particularly this quarter, we saw really good results from our LNG trading and optimisation. It's a pretty exceptional quarter. Q4 tends to be very good, as you know, for them. So we saw that repeated again.

Speaker Change: The opportunities to come a biased Q4 tends to not be there and that's why we get that volatility over it can we see that change of 4% is a pretty good representation, but you're right I G is tends to be on the higher ends of the tissue, 4% within that range and you tend to see the chemicals and products more middle to lower end of it. So it gives a plan to cross it.

In terms of the disposals, you talked about particularly and Nigeria. What are you talking about that well in terms of the reserves just to give you a bit of a feel it's less than 5% of our reserve, but as we know when we talk about any of these barrels of less than 100 kept me day as an example, but of course it depends on price and it depends on your ability to get paid as well as it comes through for each barrel is not created equal and I think that.

Sinead: You're right, we said 2 to 4% in terms of capital market stay in terms of the uplift that comes through. It's very difficult to guide quarter on quarter, of course, because there is that volatility that comes through. The way I tend to look at it is that it tends to be linked to either the opportunities that we have or, in effect, weather.

Sinead: And what we tend to see, of course, is that with respect to the LNG side set up for the northern hemisphere that Wael mentioned earlier, Q4 and Q1 tend to be the stronger ones, not surprising as gas, at the end of the day, so this is about the winter there, and, of course, about the volatility and ARB opportunities, which were very strong, as he had already alluded to as well, in Q4. What we see in chemicals and products, and particularly on the product side, of course, is that although there's a weather element to that, so, for instance, with gasoline, drive-in season, et cetera, and diesel, you see much more. It's about the opportunities that come about. Q4 tends to not be there, and that's why we get that volatility over it. So we see that 2 to 4% is a pretty good representation, which you're right, IG tends to be on the higher end of the 2 to 4% within that range, and you tend to see the chemicals and products more on the middle to lower end of it, so it gives that blend across it.

Speaker Change: It's very much the case in terms of Nigeria. So we're not not worried about in terms of the impact coming out of the cashless and actually when you look at the disposals, we have announced and disposals, we've already done that gross element that while and myself talked about whether it's Timmy Vito LNG, Canada all of those different ones coming through they more than exceeds the cashless from the divestments, which is the key point.

Speaker Change: The takeaway here, but thank you my time.

Speaker Change: Thanks, Shannon. Thank you Martin for the questions look can we go to the next one please.

Speaker Change: Our next caller is Lucas Herrmann from BNP.

Speaker Change: Okay.

Lucas Herrmann: Yes, thanks, very much and afternoon as opposed to Q I Wonder if I could push you a bit on chemicals are a little bit more on chemicals or maybe you could help me out.

Lucas Herrmann: Well it looks like you lost about $2 billion at the EBIT level on chemicals. This year. So the losses were lower during the fourth quarter than they were in the spot your indication, indicating margin being improved and.

Lucas Herrmann: The comment that two of the three trains et cetera moniker.

Speaker Change: Can you help me understand.

Speaker Change: Monica comes on.

Speaker Change: Hopefully as Singapore goes out.

Sinead: In terms of the disposals, you talked about particularly Nigeria. What are you talking about there? Well, in terms of the reserves, just to give you a bit of a feel, it's less than 5% of our reserves. But as we know, when we talk about any of these barrels, it's less than 100 kb a day, as an example. But, of course, it depends on price, and it depends on your ability to get paid as well as it comes through.

Speaker Change: How do I think about the progress, but you know what might you expect to see in terms of EBIT cash flow improvement across that business and.

Speaker Change: Which chunks of the business that are actually making money at the present time if any.

Monica: Just just walk me through the business and give me to help me.

Monica: How to think about the profitability or otherwise the ones that are likely to see as we go through this year.

Sinead: So each barrel is not created equal, and I think that's very much the case in terms of Nigeria. So we're not worried about in terms of the impact coming out of the cash flows. And actually, when you look at the disposals we have announced and the disposals we've already done, that gross element that Wael and myself have both talked about, whether it's TIMI, Vito, LNG Canada, all of those different ones coming through, they more than exceed the cash flows from the divestments, which is the key point to take away. Thank you. Sinead, thank you, Martijn, for the questions. Luke, can we go to the next one? Our next caller is Lucas Herman from BNP. Yeah, thanks very much and good afternoon to both of you. I wonder if I could push you a bit on chemicals or a little bit more on chemicals, or maybe you could help me out.

Monica: Finally, if the macro behind.

Speaker Change: I don't think it's going to help you greatly unfortunately.

Speaker Change: Alright good.

Speaker Change: Was that it Lucas if I Miss anything that you wanted to ask as well.

Lucas Herrmann: No that was probably far too long anyway, well I appreciate it so much value at all I'll give a perspective and then invite chine tool side if needed.

Speaker Change: Look I think of course the the.

Performance chemicals has been something that is very much in the spotlight for us.

Speaker Change: And we haven't we haven't tried to sugarcoat that even as far back as capital markets day.

Speaker Change: And we still realize we have a long journey to go there, let's say there are three key levers that we are pulling their Lucas one is indeed the.

Speaker Change: The fundamental is making sure that the $14 billion or so of capital employed and Ah shall polymers Monaco. The pen can facility are generating the return and you don't see a lot of that coming through in Q4, you're right. Because Q4 was actually those units were down in Q4 as we were looking to complete all the main thing.

Lucas Herman: So, Wale, looks like you lost about two billion dollars at the EBIT level on chemicals this year. The losses, you know, were larger in the fourth quarter than they were in the third, despite your indicator margin being improved and, you know, the comment that two of the three trains, etc., at Monaca are working.

This work on the Cracker itself before we were about to bring up the third train and to repair things that we have discovered through the startup process and so.

Wael: Can you help me understand, as Monaca comes on... hopefully, as Singapore goes out? How do I think about the progress that one might expect to see in terms of EBIT, cash flow improvement across that business, and which chunks of the business are actually making money at the present time, if any? Just walk me through the business and help me determine how to think about the profitability or otherwise that one's likely to see as we go through this year, and try and leave the macro behind, which I don't think is going to help you greatly, unfortunately. Very good. Was that it, Lucas?

Speaker Change: Startup of those units was I think towards the tail end of last year in the December period and have gone through into the January period, and as I earlier said the third train is in the process of starting up so don't expect much at least for the first few weeks coming out of it until we've ramped it up.

Speaker Change: What we have said and we haven't changed our guidance is that you should expect that want to wanted to have $1 billion of EBITDA from Monaco, one that's up and running which is not going to be in 2024, it's more likely to be in 2025 2026, that's when that's when you should expect that.

Wael: Have I missed anything that you wanted to ask as well? No, that was probably far too long anyway, Will, but I'd appreciate any insights. Tell you what, I'll give you a perspective and then invite Sinead to also add if needed.

Speaker Change: The second key lever that we're using is the area that we're deploying of course is the port for you. One you talked about book them I won't address that that of course is bleeding and therefore, the the sooner we can move on that portfolio move the better. We're also looking to high grade our portfolio through something like the recent announcement on Ryan learned where we are shutting down one of the crackers and <unk>.

Wael: Look, I think, of course, the performance of chemicals has been something that is very much in the spotlight for us, and we haven't, we haven't tried to sugarcoat that even as far back as capital markets today. And we still realize we have a long journey to go before us. I'd say there are three key levers that we are pulling there. Lucas One is indeed the fundamental is making sure that the 14 billion dollars or so of capital employed in Shell Polymers Monaco, the pen camp facility, is generating a return. You don't see a lot of that coming through in Q4. You're right because Q4 was actually those units down in Q4 as we were looking to complete all the maintenance work on the cracker itself before we were about to bring up the third train and repair things that we had discovered through the startup process.

Speaker Change: Converting it into a high quality base, all units that will supply roughly 40% of germanys needs.

Speaker Change: So that portfolio transformation is also ongoing and then thirdly, there's a cost component, we just need to get sharper on cost and so what we're doing there is for example, reducing our it spend there as part of a broader corporate focus program on it where we have in essence reduced some 35% of our I T contractor.

Speaker Change: Or is some 3000 people since middle of last year, and really getting much sharper on where we want to focus our our scarcity of dollars that we have recently announced a significant downsizing of the commercial team in chemicals down by some 25% head count so are.

Wael: And so that startup of those units was, I think, towards the tail end of last year in the December period and has gone through into the January period. And as I earlier said, the third train is in the process of starting up. So don't expect much, at least for the first few weeks coming out of it until we've ramped it up. What we have said, and we haven't changed our guidance, is that you should expect that one to one and a half billion dollars of EBITDA from Monaco. One it's up and running, which is not going to be in 2024. It's more likely to be in 2025 or 2026. That's when that's when you should expect that. The second key lever that we're using is the one that we're deploying, of course, is the port for you. One you talked about, book him.

Speaker Change: There's a lot of actions to be able to do what we can control or.

Our fixed what we can control.

Speaker Change: The margins arent on great I mean, that's obvious and I don't know how long that lasts but what we have to be able to do is to do the best that we can within the constraints that we have.

Speaker Change: And so we are focused on that we also haven't changed the guidance that against the indicative chemical margin that we we presented in capital markets day, we expect to deliver around $3 billion to $4 billion of earnings coming out of the chemicals and product portfolio.

Wael: I won't address that. That, of course, is bleeding, and therefore, the sooner we can move on that port for you to move, the better. We're also looking to upgrade our port for you through something like the recent announcement on Rhineland where we are shutting down one of the crackers and converting it into a high quality base or units that will supply roughly 40 percent of Germany's needs. So that portfolio transformation is also ongoing. And then, thirdly, there is a cost component.

Speaker Change: So that's where we are and there is no shortage of attention nor effort to be able to get this to be the best businesses that can be within the constraints of what the business is today, while we continue to look at options due to do even better.

Jenny would you have wanted to add anything I think one sentence would be you're completely right. It is loss, making at this point in time and that's why you can see my confidence and our confidence as we talk about the free cash flow into the future of the company by stopping that loss, making side of things by turning it to Ron by doing the divestments by getting monarch up and running it just gets us that runway and Lucas into there.

Wael: We just need to get sharper on cost. And so what we're doing there is, for example, reducing our IT spend there as part of a broader corporate focus program on IT where we have, in essence, reduced some 35 percent of our IT contractors, some 3000 people, since the middle of last year and really getting much sharper on where we want to focus our scarce IT dollars. We have recently announced a significant downsizing of the commercial team in chemicals by some 25 percent of headcount. So there's a lot of actions to be able to do what we can control or fix what we can control. The margins aren't aren't great. I mean that it's obvious.

Speaker Change: Teacher in terms of being able to just see that free cash flow growth I think you've covered it well alright. Thank you very much Lucas for the question.

Speaker Change: Where can we go to the next question. Please.

Jeffrey Langdon: Our final caller today is Jeffrey language on from T. P H U K.

Jeffrey Langdon: Hi, everyone and thanks for squeezing me in.

Jeffrey Langdon: The first is a follow up on one of the projects you mentioned earlier LNG, Canada could you provide a status update there whether in terms of completion and startup timelines or however, you'd characterize it how do you see things today and then my second question is on the structural cost reductions because you mentioned you're already well in flight. Following a strong 2023 I know you referenced that this is going to be an ongoing initiative even beyond.

Wael: And I don't know how long that will last. But what we have to be able to do is to do the best that we can within the constraints that we have. And so we are focused on that. We also haven't changed the guidance that, against the indicative chemical margin that we presented in capital markets today, we expect to deliver around three to four billion dollars of earnings coming out of the chemicals and products portfolio. So that's where we are, and there is no shortage of attention or effort to be able to get this to be the best business that it can be within the constraints of what the business is today.

Jeffrey Langdon: On the 225 timeframe that powers, our near term target, but can you comment on how youre thinking about sources or timeline deliver ability for these reductions are the near term just at least as far as the visibility that you have and thank you sure. Thank you.

Speaker Change: Thank you very much Jeffrey I'll take the first one and then let shanaze address the second one.

LNG, Canada, you'll have you'll have we also address this last year, we have seen of course, the gas link coastal gas link pipeline completed mechanically last year and are ready and available to ramp up through the course of 2024.

Wael: While we continue to look at options to do even better, have you wanted to add anything? I think one sentence would be, you're completely right, it is loss-making at this point in time, and that's why you can see my confidence and our confidence as we talk about the free cash flow into the future of the company. By stopping that loss-making side of things, by turning it around, by doing the divestments, by getting Monika up and running, it just gives us that runway, Lucas, into the future in terms of being All right, thank you very much Lucas for the question. Can we go to the next question?

Shanaze: The facility itself at Kitimat is now just over 90% complete as per the report from the joint venture so they're making good progress and I would expect that we would expect that.

Shanaze: Later this year they would start up the commissioning of the plant.

Shanaze: That of course takes several months well into 2025, but it's it's comforting to see the progress that is being made.

Shanaze: Of course, once we start producing those commissioning cargoes will be made available from day, one to our foundational customers as a as you would expect so.

Jeffrey Lamberjon: Our final caller today is Jeffrey Lamberjon from TPH & Co. Hi, everyone, and thanks for squeezing me in. My first question is on one of the projects you mentioned earlier, LNG Canada. Did you provide a status update there, whether in terms of completion and startup timelines or however you'd characterize it? Did you see things today?

Shanaze:

Shanaze: Pleased with the progress, but this is no no no doubt. This is a very very complex facility that's going to be.

Shanaze: <unk> be ramped up and therefore, and we are going to be to watch it watch it and to support the team as they do that in the course of the coming 12 to 18 months.

Wael: And then my second question is on the structural cost reductions, which, as you mentioned, are already well in flight following this trial in 2023. I know you mentioned that this is going to be an ongoing initiative even beyond the 2025 timeframe that bounds the near-term target. But can you comment on how you're thinking about sources for and timeline of deliverability for these reductions over the near term, at least as far as the visibility that you have and can share? Thank you. Thank you very much, Jeffrey. I'll take the first one and then let Sinead address the second one.

Speaker Change: Thanks, Geoffrey you asked about Opex.

Speaker Change: You heard me talk about how pleased I am in terms of the progress to test 1 billion. After any seven months great progress, we talked about it in terms of where we play and how we play in.

Speaker Change: And hence why we play the portfolio moves on a predominance of that at the moment and you can see of course is ramping up with Pakistan coming through in Nigeria, coming through and many others that you'll see flow through as well so you'll see some of the opex come down. The reason I don't give you timing on that is of course, its dependent on approvals and when that will actually occur should we expect those to happen towards the backend of this year more likely.

Wael: LNG Canada, we also addressed this last year. We have seen, of course, the coastal gaslink pipeline completed mechanically last year and ready and available to ramp up through the course of 2024. The facility itself at Kitimat is now just over 90 percent complete, as per the report from the joint venture.

Speaker Change: 2024, the high we paid off a difficult stuff that's the bottoms up.

Speaker Change: In terms of three areas I'd look at leaner corporate center, while already alluded to I T and taking out contingent workers now but across all of the functions, making sure. It's fit for purpose. We of course look at it in terms of pacing the greatest in terms of our downstream business really going after things while talked about chemicals, etc.

Wael: So they're making good progress. And I would expect that we would expect that later this year they would start up the commissioning of the plant. That, of course, takes several months, well into 2025.

Speaker Change: Thoughts of taking cost out there but of course also you see it in terms of low carbon fuels. When we've got a mixture of actual growth coming through with niche energy, but of course moving away from some of the aspects of hydrogen into mobility in California. As an example, so you'll see a bit of a mix there and finally, we're looking at continued improvement of course in our upstream business, where you see the aspects of it.

Wael: But it's comforting to see the progress that is being made. And, of course, once we start producing, those commissioning cargoes will be made available from day one to our foundational customers, as you would expect. So I'm pleased with the progress. But this is, no doubt, a very, very complex facility that's going to be ramped up. And therefore, we are going to have to watch it, watch it, and support the team as they do that through the course of the coming 12 to 18 months. Thanks, Jeffrey. You asked me about OPEX, and you heard me talk about how pleased I am in terms of the progress to date. You know, a billion after only seven months. Great progress. We talk about it in terms of where we play and how we play.

Speaker Change: Going after hard where we spend money intensive maintenance, making sure it's really bang for our Buck et cetera. So those once you'll see come through in the course of the year, but the big meaty ones, what we probably towards the end of the year, what I hope you're saying on all of this is with giving you a promise in terms of two to 3 billion were already a billion three there are indeed, a supply of performance rather than the promises.

Speaker Change: Really continuing to drive that higher.

Speaker Change: It's a great way to end a geoffrey thank you for the for the questions and hopefully the theme of today you would have taken is this is a company that is truly delivering now on at sprint and <unk> and we are building. The track record that we said we want to build thank you all for your questions. Thank you for joining the call wishing you all a very pleasant end of the week.

Sinead: In terms of where we play, the portfolio moves are the predominance of that at the moment. And you can see, of course, it's ramping up with Pakistan coming through, Nigeria coming through, and many others that you will see flow through as well. So you'll see some of the OPEX come down. The reason I don't give you timing on that is, of course, it's dependent on approvals and when that will actually occur. So we expect those to happen towards the back end of this year, more than likely, 2024. The high we play, that's difficult stuff; that's the bottoms up.

Speaker Change: Thank you for your time.

Speaker Change: Yeah.

Sinead: Very much in terms of three areas I'd look at, a leaner corporate center, which has already been alluded to, IT, and taking out contingent workers there, but across all of the functions, making sure it's fit for purpose. We, of course, look at it in terms of pacing the growth in terms of our downstream and res business. They're really going after things while talking about chemicals, et cetera, and the thoughts of taking costs out there. But, of course, also, you see it in terms of low-carbon fuels where we've got this mixture of actual growth coming through with natural energy, but, of course, moving away from some of the aspects of hydrogen into mobility in California, as an example.

Speaker Change: [music].

Sinead: So you'll see a bit of a mix there. And finally, we're looking at continued improvement, of course, in our upstream business, where you see the aspects of going after hards, where we spend money in terms of maintenance, making sure it's really bang for our buck, etc. So those ones you'll see come through in the course of the year, but the big, meaty ones will probably be towards the end of the year. What I hope you're seeing through all of this is we've given you a promise of two to three billion. We're already a billion through there, so indeed it's about performance rather than promises, and we're really continuing to drive that. It's a great way to end.

Sinead: Jeffrey, thank you for the questions. And hopefully, the theme of today that you have taken away is this is a company that is truly delivering now on its sprint. And we are building the track record that we said we wanted to build.

Wael: Thank you all for your questions. Thank you for joining the call. Wishing you all a very pleasant end to the week. Thank you for your time.

Speaker Change: Yeah.