Q1 2024 Shell PLC Earnings Call

Operator: Welcome to Shell's first quarter 2024 financial results announcement. Shell's CFO Sinead Gorman will present the results, then host a Q&A session alongside Shell CEO Wael Sawan. If you would like to ask a question, please press star 1. If you wish to be removed from the queue, please press star 2. We will now begin the presentation.

Welcome to Shell's first quarter 2020 full financial results announcement.

Sinead Gorman: You'll see a fairly Sydney Goldman who presented the results then host a Q&A session alongside Chelsea I, while silwan.

Sinead Gorman: If you would like to ask a question. Please press star one.

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

Operator: We will now begin the presentation.

Operator: [music].

Sinead Gorman: Welcome to Shell's 2024 first quarter results. It's been nearly a year since Capital Markets Day when we showed you our plans to deliver more value, and in March, our energy transition update shows how we will do that with less emissions. This demonstrates our commitment to being a net zero emissions energy business by 2050, whilst delivering enhanced shareholder return. As we continue to turn our plans into action, I'm pleased that 2024 is off to a good start.

Operator: Welcome to shelf 'twenty to 'twenty four first quarter results.

Sinead Gorman: It's been nearly a year since capital markets day, when we showed you our plans to deliver more value.

Sinead Gorman: And in March our energy transition upped. It shows how we will do that with less emissions demonstrating our commitment to being a net zero emissions energy business by 2050 watts delivering in house shareholder return.

Sinead Gorman: As we continue to turn to our plans into action I'm pleased for 'twenty 'twenty four is off to a good start.

Sinead Gorman: We delivered yet another set of strong operational and financial results in the first quarter. In Upstream, our conventional oil and gas business performed very well, with many of our core assets delivering high controllable availability. We have also started production at our Rydberg field, which is connected to our Appomattox production, reinforcing our leading deepwater position in the Gulf of Mexico, where our oil production has some of the lowest greenhouse gas intensity in the world.

Sinead Gorman: We delivered yet another set of strong operational and financial results in the first quarter.

Sinead Gorman: In upstream our conventional oil and gas business performed very well with many of our core assets delivering high controllable availability.

Sinead Gorman: We also started production rydberg field, which is connected to our Appomattox production hub reinforcing our leading deepwater position in the Gulf of Mexico, where oil production has some of the lowest greenhouse gas intensity in the world.

Sinead Gorman: This is another project that supports the energy security the world needs and underpins the longevity of our cash flows. At Shell Polymers Monaca, our petrochemicals plant near Pittsburgh, we successfully ramped up to full operation in Q1 and are on a pathway to longer-term stability. In our renewables and energy solutions business, we have strategically diluted part of our stake in the Texan Brazos wind farm whilst keeping access to 100% of the office. As part of our Integrated Powers business, this allows us to build on our strengths and leverage our world-class trading and optimization capabilities. We continue to focus on maximizing the value of every electron and molecule.

Sinead Gorman: This is another project that supports the energy security, the Walgreens and underpins the longevity of our cash flow.

Sinead Gorman: Shell polymers Monaca petrochemicals plant near Pittsburgh, we have successfully ramped up to full operational Q1 until all of the.

Sinead Gorman: Way to longer times to go with it.

Sinead Gorman: Our renewables and energy solutions business, we have strategically at times is just part of our stake in the Texan breakfast wind farm, whilst keeping access to 100% of the off tick that's part of our integrated power strategy.

Sinead Gorman: This allows us to build on our strengths and leverage our world class trading and optimization capabilities. We continue to focus on maximizing the value of every electron a molecule to help us deliver on all our targets.

Sinead Gorman: They help us deliver on all our targets. Moving on to our financial results, we continue to deliver strong results in the first quarter of 2024. Despite above-average well write-offs, our adjusted earnings were $7.7 billion, and we generated $13.3 billion of cash flow from operations. Thanks to our consistent focus on performance. In the first quarter, we had high liquefaction volumes, even though market conditions were less favorable than in Q4.

Sinead Gorman: Moving onto our financial results.

Sinead Gorman: We continued to deliver strong results for the first quarter of 2024.

Sinead Gorman: Fight above average well write offs are adjusted earnings were $7 $7 billion.

Sinead Gorman: We generated $13 $3 billion of cash flow from operations driven by our consistent focus on performance.

Sinead Gorman: In the first quarter, we had high liquefaction volumes, coupled with strong seasonal trading and optimization in our integrated gas business, even though market conditions were less favorable than in Q4.

Sinead Gorman: In chemicals, we saw marked improvement in performance compared with previous quarters, and we still have potential for further growth.

Sinead Gorman: And it was a strong quarter for all products business.

Sinead Gorman: In chemicals, we saw a marked improvement in performance compared with previous quarters, and we still have potential for further growth, and it was a strong quarter for our products business, particularly in trading and optimization, where we were able to capture high margins due to global product supply disruptions. Moving on to our financial framework, we continue to be disciplined about our capital expenditure, and our balance sheet is strong. Regarding shareholder distributions, today we have announced another $3.5 billion share buyback program, which we expect to complete by the time of our Q2 results, and Ardy Allgood.

Sinead Gorman: Particularly in trading and optimization, but we werent able to capture high margins due to global product supply disruption.

Sinead Gorman: Moving onto our financial framework, we continue to be disciplined about our capital spend on our balance sheet is strong.

Sinead Gorman: Regarding shareholder distributions today, we have a nice another $3 $5 billion share buyback program, which we expect to complete by the time of our Q2 results in.

Sinead Gorman: In early August.

Sinead Gorman: That brings our expected shareholder distributions for the first half of the year to well over $10 billion. This demonstrates how we generate attractive shareholder returns in line with our guidance of 30-40% of our CFFO for shareholder distribution through the cycle. Q1 was a good start.

Sinead Gorman: That brings our expected shareholder distributions for the first half of the year well over $10 billion.

Sinead Gorman: This demonstrates how we generate attractive shareholder returns in line with our guidance of 30% to 40% of our CFO for shareholder distributions through the cycle so to summarize.

Sinead Gorman: Q1 was a good start to the year a quarter of strong operational and financial performance.

Sinead Gorman: Quarter of Strong Operational and Financial Performance. And for the rest of 2024, we will keep driving performance, focus on our strengths, and continue to deliver more value with less emissions. Lastly, there's an important upcoming event for your calendar. Our Annual General Meeting 2024 is on May 21st. We ask our shareholders to support our energy transition update. In which we outline how we continue to make good progress in reducing emissions from our operations, waltz and basking in areas where we have them. These investments are helping our customers to decarbonize.

Sinead Gorman: The rest of 2024, we will keep driving performance because all our strengths continues to deliver more value with less emissions.

Sinead Gorman: Lastly, it is important to upcoming events for your calendar our annual General meeting 2024 as of May 21st.

Sinead Gorman: Yeah cause shareholders to support our energy transition up there as well.

Sinead Gorman: What should we outlined how we continue to make good progress in reducing emissions from our operations, whilst investing in the areas, where we have strength.

Sinead Gorman: These investments are helping our customers to decarbonize with this in mind, we have seven new ambition to reduce customer michelle's from the oil products, we fell by 15% to 20% by 'twenty three.

Sinead Gorman: With this in mind, we have set a new ambition to reduce customer emissions from the oil products we sell by 15 to 20 percent by 2030. Therefore, we ask our shareholders to vote against the alternative resolution. By doing so, our shareholders will be endorsing this management team, our board, and Shell's aim of being an investment case through the energy transition. Thank you. We will now begin.

Sinead Gorman: Therefore, we ask our shareholders to vote against the alternative resolution.

Sinead Gorman: By doing so our shareholders will be endorsing this management team, our board and shelves and.

Sinead Gorman: The investment case through the energy transition.

Speaker Change: Thank you.

Operator: We will now begin the question and answer session. People dialed in, if you have a question, please press star 1. If you wish to be removed from the queue, please press star 2. 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.

Sinead Gorman: We will now begin the question and answer session.

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

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

Operator: Phone calls are requested to mute the audio on the computer webcast and listened attentively to their telephone audience as we begin to progress through the telephone questions.

Wael Sawan: 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 operational performance. Today Sinead and I will be answering your questions, but first, I'd like just take a moment to thank Jerk Hausinger for all the work that he has done for us here at Shell. Cherk has had a 35-year career, a very impressive career, and has been pivotal in integrating the external market perspective into our strategy.

Speaker Change: Thank you for joining us today, we hope that after watching this presentation you've seen how we've delivered strong results and how we continue to focus on operational performance today should I, then I will be answering your questions, but first.

Wael Sawan: I'd like to just take a moment to thank jerk zynga for all the work that he has done for us here at Shaw.

Sinead Gorman: Sure because how the 35 year career very impressive career and has been pivotal in integrating the external market perspective into our strategy. So we thought we would wish them well with a very strong quarter and thank him for all the efforts. He has put in and now if we move to the questions look can we please have one or two.

Wael Sawan: So we thought we would wish him well with a very strong quarter and thank him for all the efforts he has put in. And now, if we move to the questions, Luke, can we please have one or two questions, please, from every person on the call? And I hand it over to you, Luke, to let us know who the first is.

Luke: <unk>. Please from every every person on the call and I'll hand, it over to you to let us know who the first the first quarters. Thank you.

Operator: Our first caller is Michele Della Vigna from Goldman Sachs.

Luke: Our first caller is micheli Tel Aviv, yet from Goldman Sachs.

Michele Della Vigna: Thank you very much, Wael and Sinead, and congratulations on the strong delivery. And thank you, Czerk, for all of your help over the years.

Speaker Change: Thank you very much.

Speaker Change: She need then congratulations on the strong believer and thank you Chuck for all of your help over the years I wanted to ask you two questions. If I may the first one is if I look at the did either in this quarter you've strengthened your balance sheet by $3 billion at the time when most of your peers that should increase the gearing I was wondering.

Michele Della Vigna: I wanted to ask you two questions, if I may. The first one is, if I look at the delivery in this quarter, you've strengthened your balance sheet by three billion dollars at a time when most of your peers actually increased their gearing. I was wondering what would give you at this point the confidence to increase the buyback from the current level and take advantage of the really cheap valuation to continue to buy back shares and accrue value per share.

Michele Della Vigna: What would give you at this point the confidence to increase the buyback from the current level.

Michele Della Vigna: Take advantage of the really cheap valuation to continue to buy back shares and the crew value per share and then my second question is about the growing debate about releasing in the U S for some of the European oil companies I've seen your comment.

Michele Della Vigna: And then my second question is about the growing debate about releasing drilling rights in the US for some of the European oil companies. I've seen your comments. Total Energy has commented on it as well. I was wondering if you could walk us through perhaps what you think would be some of the benefits, but also some of the hurdles in considering such a potential material move. Thank you.

Michele Della Vigna: And as she has commented about well I was wondering if you could walk us through perhaps what would you think would be some of the benefits, but also some of the hurdles equals he during such a potential material. Thank you.

Wael Sawan: Great, Michele, thank you for that. Sinead, do you want to take the first one? I can take the second one.

Speaker Change: Great. Thank you for for that session I do you want to take the first one I can take the second one starting to entities and they carry what you saw with US put 3 billion towards the balance sheet. This quarter of course, there's a couple of reasons about that first of all in this quarter. What we saw of course was fantastic operational performance, which drive good cash flows.

Sinead Gorman: So if one part of it with a lower Capex of course, which gave a little bit of a bump in terms of free cash flow, but also of course in terms of our distributions in terms of the buybacks in terms of the phasing of them a little bit fell into April. So there was a little bit more that came through what we do of course with the balance sheet is and that's where you see our deaths and fluctuating a little bit when you say to demonstrate value.

Sinead Gorman: What we do, of course, with the balance sheet and with the debt, you see our debt fluctuates a little bit. We use it to demonstrate value whenever it comes through.

Sinead Gorman: It comes through but fundamentally your question is really about distributions and have the choice to new $3 5 billion of share buybacks. This quarter. As you know we tend to look through our various cautious on what you saw of course from the past couple of quarters as we've had quarters with lower CFO and fundamentally I still down $3 5 billion of buybacks at that point in time, So we're not allowed.

Sinead Gorman: But fundamentally, your question is really about distributions and the choice to do 3.5 billion share buybacks this quarter. As you know, we tend to look through various quarters. And what you saw, of course, in the past couple of quarters is that we've had quarters with lower CFFO. And fundamentally, I've still done 3.5 billion buybacks at that point in time. So we're now at 10 quarters where we've done buybacks of at least 3 billion dollars. So you see the pragmatic approach coming through and see some form of.

Sinead Gorman: 10 quarters, where we've done buybacks of at least $3 billion. So you see the pragmatic approach coming through and see some form of consistency.

Wael Sawan: Thanks Sinead. Michele, it's your second question about real estate. I think firstly, maybe just sort of split it up into two. I think we should start with the fundamentals, the valuation of this company, and what we said at Capital Markets Day last June is our focus is on how we're going to grow those fundamentals both on the free cash flow side, absolute, as well as the free cash flow per share.

Sinead Gorman: Sure.

Sinead Gorman: Mkay, let your second question around the real estate.

Wael Sawan: First of all maybe just to sort of split it up into two I think let's start with the fundamentals the valuation of this company and what we have said in capital markets Day last June is our focus is on how we're going to grow those fundamentals both on the free cash flow side absolute as well as the free cash flow per share.

Wael Sawan: The latter being something we want to grow 10 plus percent per annum through to 2025, and the former all the way through to 2030, growing it at roughly 6 percent per annum. That is what our focus is. So, what we have said is performance, discipline, and simplification are at the core of what we need to be driving. And you already see, through this quarter, for example, the outcome of that.

Wael Sawan: The latter being something we want to grow at 10 plus percent per annum through 2025 I'm. The former all the way through to 2030 growing at roughly 6% per year that is what our focus is.

Wael Sawan: So what we have said this performance discipline and simplification are at the core of what we need to be drawn I think and you already see through this quarter for example.

Wael Sawan: You're starting to see more stability in operational performance. You're starting to see the cost move in the right direction. You're starting to see the discipline on capital start to shine through. And, of course, all the subsequent benefits of a stronger balance sheet and so on and so forth.

Wael Sawan: Come up that Youre, starting to see more stability on the operational performance, you're starting to see the cost move in the right direction Youre starting to see the discipline on capital start to shine through and of course, all the subsequent benefits of a stronger balance sheet and so on and so forth that is what the focus and that's what the priority is then there's a second bucket, which admittedly.

Wael Sawan: That is the focus, and that's the priority. Then there's a second bucket, which, admittedly, we acknowledge that we see our share price as being below what we think is a fair market value at the moment. And what we are doing there, again, what we said on Capital Markets Day, what we're going to do is to continue to lean into buybacks. And once again, here's another $3.5 billion buyback for this quarter, which I think underpins that commitment that we have going forward.

Wael Sawan: We acknowledge that we see our share price is being below what we think is a fair market value at the moment and what we are doing there again, what we said in capital markets day, where we're going to do is to continue to lean into buybacks and once again, here's another city in the half billion dollar buyback for this quarter, which I think underpins that commitment that we have going forward.

Wael Sawan: The simple realistic it's not going to address the first point around the fundamental valuation it could potentially play a role in this disconnect that we see but for now what we're focused on very much is the buyback and so of course as a management team. We have a duty of care is to continue to look at all opportunities to bridge that valuation.

Wael Sawan: The simple relisting is not going to address the first point around the fundamental valuation. However, it could potentially play a role in this disconnect that we see. But for now, what we're focused on very much is the buyback. And so, of course, as a management team, we have a duty of care to continue to look at all opportunities to bridge that valuation. And so, you know, we will always have something like a list or other elements under review.

Wael Sawan: And so you know we will always have something like a listing or other elements under review, but I can tell you that there's not a lot of discussion at the moment for us our absolute focus is on driving the strategy more value with less emissions to make us that the investment case with you, but it's sort of the energy transition.

Wael Sawan: But I can tell you, it is not a live discussion at the moment for us. Our absolute focus is on driving the strategy, more value with less emissions, to make us that investment case through the energy transition. Michele, thank you for the question. Luke, could I have the next question, please?

Luke: Okay well. Thank you for the question look can I have the next question. Please.

Operator: Our next caller is Biraj Borkhataria from RBC Capital Markets.

Luke: Our next caller is barrage bookstar you from RBC capital markets.

Biraj Borkhataria: Hi, Thanks for taking my questions. The first one was just on the on the LNG segment, it's encouraging to see the LNG volumes at the top end of the guidance. After you narrowed it to the trading update but I noticed that in addition to the higher volumes the gas realization in integrated gas was there was quite a bit higher than I would've expected.

Biraj Borkhataria: The last few quarters has been quite predictable and I guess, the big change is probably lead a quarter on quarter. So is that what is driving him. You know can you just talk a bit about what's what's driving that that'd be helpful or if there's something else.

Biraj Borkhataria: That would be helpful, or if it's something else. And then the second question is on OPEX, which you've just highlighted. You continue to drive it lower. I was just wondering, at the group level, can you talk about the difference between the structural cost reductions that you're seeing relative to the inflationary pressures that are coming through? Because the net result is lower, but I was trying to understand how you think you're performing on the controllables? And then maybe a cheeky third question, but you've removed some of the pressures on mobility. I'm just wondering why that was. Thank you.

Biraj Borkhataria: And then second question is on Opex you just highlighted you continue to drive it lower I was just wondering at the group level can you talk about you know the difference between the structural cost reductions of what you're seeing relative to the inflationary pressures coming through because the net result is lower but I was trying to understand.

Biraj Borkhataria: How you think you're performing on the on the controllable and then maybe a cheeky question, but you're you've removed some of the disclosures on mobility.

Biraj Borkhataria: I'm just wondering why are why that was thank you.

Sinead Gorman: All right. Thank you, Biraj. Do you want to take these, Sinead? Sure.

Raj: Alright. Thank you Brie Raj do you want to take those should not sure on your first one brush. So actually let me just take the last one is really quick one.

Sinead Gorman: On your first one, Biraj, so actually, let me just take the last one, it was a really quick one, just very clear. We're trying to simplify everything across the organization at the moment, so we looked at our disclosures, which are quite extensive, as you probably know, looked at our data book in some detail, and we looked at which ones are actually used most and where we get the questions, so we simplified across everything. It's basically ban And on the LNG side, you asked about the realized price, you're right, you saw that change between I think it was eight and nine dollars, you saw that coming through on the realized price. Really, simply put, for us, what you see, of course, is that we're quite heavily weighted in terms of the Brent price or oil price markers on some of this.

Sinead Gorman: Very clear, we're trying to simplify everything across the organization at the moment. So we looked at our disclosures, which are quite extensive as you probably know looking out but in some detail we looked at which ones are actually use nice to where do we get the questions and simplified across everything, especially Bang for Buck you know how much capital put into ensuring that we have all of this up to the etc. So nothing more than that.

Sinead Gorman: So some of them are oil, some of them are pure JCC, and of course, others are gas prices. But in Q1, what we saw was, of course, Brent relatively flat, but JCC with that lag, that really played through now, and that completely overweighted or compared or covered for, in effect, the slightly weaker gas prices as well. So that's what played out.

Sinead Gorman: I'm on the LNG side, you asked about in terms of the realized price you're right you saw that.

Sinead Gorman: Between the I think it was eight to $9 you saw that coming through on the realized price.

Sinead Gorman: Really simply put for us what you see here of course is that we're quite heavily in terms of Brent price of oil prices Mark Christmas. Some of this so some of them are oil some of them are pure J C C and of course, others, a gas price, but in Q1, what we saw was of course, Brent relatively fast, but J C. C. What's that like that really played through and not completely over with its or compare.

Sinead Gorman: On the OPEC side, in terms of just where we are in terms of differences in structural performance, etc. You saw OPEC come down this quarter, you're right, but I would say remember this phasing. So you always see, in terms of us, Q4 OPEC's going higher.

Sinead Gorman: Ours are covered for and in fact, the slightly weaker gas prices as well. So that's what played out on.

Sinead Gorman: On the Opex side in terms of just where are we in terms of different systems structural performance et cetera, you saw opex come down this quarter Youre right, but I would say remember the phasing so you'll always see in terms of US Q4, opex going higher.

Sinead Gorman: Just to remind you last of course, Q4 is always and decommissioning and restoration updates country. A few on bonuses largely basically people billing off towards the end of that come through as well. So we are still good progress when he talks about the Q4 of 1 billion done off the total of two to three that we had talked about where are we seeing it come on we'll do another update for you at the end of Q2.

Sinead Gorman: Just to remind you that, of course, Q4 is always decommissioning and restoration updates come through, a few on bonuses and largely basically people billing us towards the end, and that comes through as well. So we're seeing good progress, and we talked about it at Q4 of a billion down from the total of two to three that we had talked about. Where are we seeing this come out?

Sinead Gorman: I'll walk you through some detail on that but we're seeing good progress it's beginning to filter through the organization you already saw the portfolio side of things, where we play.

Sinead Gorman: We'll do another update for you at the end of Q2 and walk you through some details on that, but we're seeing good progress. It's beginning to filter through the organization. You already saw the portfolio side of things, where we play. Now, how we play in terms of structural change is coming through. It's the simplification, one of the ones I just gave you earlier, in terms of what we disclose, what we spend our time on, and trying to focus on that which makes most sense.

Sinead Gorman: How we play in terms of structural change is coming through it's the simplification one of the ones. I. Just gave you are there in terms of what we disclose what we spend our time on and trying to focus on that which makes it a nice sense. So you see a simplify trying to speed up accountability and make sure actually the business to focus on what should be which is really about delivering value at the end of the day and each part of that is.

Sinead Gorman: So you see, simplify, try and speed up accountability, and make sure actually the business is focused on what it should be, which is really about delivering value at the end of the day. And each part of that is different per asset.

Sinead Gorman: Different per asset.

Sinead Gorman: Thank you, Sinead. Biraj, thank you for those questions. Luke, can we go to the next? Our next caller is Lydia Rainforth from Barclays. Thanks and good afternoon to you both. And clearly, very, very good 1Q. But just an observation, 1Q does tend to benefit from limited maintenance and better trading volumes, which don't always repeat in 2Q and 3Q.

Speaker Change: Thank you Shannon Burns. Thank you for those questions look can we go to the next question. Please.

Operator: Our next caller is Lydia Rainforth from Barclays.

Lydia Rose Emma Rainforth: Our next caller is lithia rainfall from Barclays.

Lydia Rose Emma Rainforth: Thanks, and good afternoon to you guys and clearly very very good one key but just an observation when Keith does tend to benefit from limited sense best of trading volumes, which doesn't always repeat in <unk>. So can you just talk to what we can expect from that sprint one program that really keeps the momentum go.

Operator: Fish out into the rest of the year and I spend probably linked to that on the cost space I'm just coming back right.

Operator: Producing a new processes of July the shavings has kind of seen inflation sensitive really simplifying things what sort of impact do you expect that to have thanks.

Operator: Well I think Mr sure.

Operator: In terms of yes. So the other comment off Q1 tends to be I am higher. So there is an element for us with Q.

Operator: Q4, and Q1, we are skewed towards particularly from a trading point of view the northern hemisphere winter for our LNG.

Operator: LNG business. However, what I would say is actually some of the trading and optimization, which you referred to place at different times actually just different aspects come through so there are elements for instance of maintenance play at different times. So you see maintenance heavier in one quarter to another but youll see seasonality around for instance, driving season. So we would expect to see of course, our marketing.

Sinead Gorman: that play at different times. So you see maintenance heavier in one quarter than another, but you'll see seasonality around, for instance, driving season. So we would expect to see, of course, our marketing results come up with driving season increasing within the US as well. And then, of course, beyond that, we see different things like, for instance, for loops. It tends to be about industrial maintenance and industrial activities.

Sinead Gorman: Let's come up with driving season, increasing with M D.

Sinead Gorman: The U S. As well, we then see of course beyond that we see different things like for instance, fourth loops.

Sinead Gorman: It tends to be about industrial maintenance and industrial and activities. So for instance, Q1 tends to be a little bit higher than we see Q4 also higher so that spreads out across the various assets. What you will see though and what is key here is that this is an organization. He was looking to deliver on what its promise so what youre going to see Lithia is us continues to be focused on quarter. After.

Sinead Gorman: So, for instance, Q1 tends to be a little bit higher, and we see Q4 also being higher. So that spreads out across the various assets. What you will see, though, and what is key here, is that this is an organization looking to deliver on what it promised. So what you're going to see, Lydia, is us continue to be focused on quarter after quarter being distinctly boring about this and delivering on exactly what we said.

Sinead Gorman: Quarter being sticky boring on this and deliver exactly what we said so what you also see that as each asset knowing exactly what they need to deliver in terms of value I'm playing to that strength. So that should provide the consistency across their of course, you're going to see a drumbeat of further announcements coming through as we continue with delivering on exactly what we were and we told you we would do.

Sinead Gorman: So what you also see, then, is each asset knowing exactly what they need to deliver in terms of value and playing to that strength. So that should provide consistency across there. And, of course, you're going to see the drumbeat of further announcements coming through as we continue with delivering on exactly what we told you we would do.

Sinead Gorman: The second part, of course, was around cost and the pace of it and taking things out. A good catch, indeed, around Sime, and I think Wael referred to it last quarter as well, where we talked about changing, and this is about, for others, it's about many of the standards that we have linked to the assets. What we basically said is, how do we reduce those down to what is the bare minimum? What is really required to hit our values? Safety and actually correct operation for the environment, etc.

Sinead Gorman: The second part of course was runs cost and the pace of it and I'm, taking things like cause catch disease Orion female I think while refresh with last quarter as well, where we talked about changing and this is lidar for others. It survived many of the standards that we have linked to the assets. What we basically said is how do we would use those times.

Sinead Gorman: What is the bare minimum what is really required to hit our values safety.

Sinead Gorman: Correct operation for the environment et cetera, but what is needed has to be fit for purpose for each asset and it's not the thing between onshore offshore deep water assets or mobility assets, where refinery. So that's the sort of thought process. So they've seen standards or would you think myself, 70%, but it's much more than that it's not just about 70%. It's been how does that taken out.

Sinead Gorman: But what is needed has to be fit for purpose for each asset. And it's not the same between an onshore asset and a deepwater asset or a mobility asset or a refinery. So that's the sort of thought process. So those same standards are being reduced by some 70 percent. But it's much more than that. It's not just that 70 percent.

Sinead Gorman: It's then how is that taken by each of the assets to do what they think is correct? It comes down to what assets need in terms of management information, what they need in terms of staffing levels, what they need in terms of legal support, etc. And that's the change that you're seeing. Each asset, each part of the business is looking at what the risks are and, therefore, what they need to cover those and to maximize value. So that culture change will come through, and it's already being done very well.

Sinead Gorman: Each of the office to do what they think is correct. It comes down to what assets need in terms of managements information what they need in terms of staffing levels, what they need in terms of legal support et cetera, and that's the change that you're seeing each asset each part of the business just looking at what are the risks therefore, what they need to cover those and to maximize value so that cultural change will come.

Sinead Gorman: That's done very purposefully.

Sinead Gorman: Thank you, Sinead. Lydia, thank you for those questions. If we can go look at the next question, please.

Speaker Change: Thank you Shannon and thank you for those questions are if we can go to the next question. Please.

Operator: Our next caller is Alastair Syme from City.

Sinead Gorman: Our next caller is Alastair syme from Citi.

Alastair Roderick Syme: Thanks Sinead, well, look, I'll definitely share my best wishes with Chirk. Our powers have intersected on several occasions over a long number of years. Sometimes we've agreed, and sometimes we haven't, but it's always been first class interaction, so I look forward to sharing a drink in a few weeks.

Alastair Roderick Syme: Functionally well look out we'll definitely share my best wishes to check wells.

Alastair Roderick Syme: The wells have intersected on several occasions over the longer view.

Alastair Roderick Syme: Sometimes we've agreed and sometimes we havent always been first class a direction.

Alastair Roderick Syme: Sure you drink it a few weeks.

Alastair Roderick Syme: A quick question: where do we stand on Bookham? Can you give us a little update on that? And then a longer one, as you think about the strategic plan for year one, I wanted to know whether your assumptions and the competitive landscape have remained broadly within your range of expectations, or has there been anything out there that's made you tweak your plan, push or pull harder in any one or more areas?

Alastair Roderick Syme: Question, where do we stand and what can.

Alastair Roderick Syme: Can you give us a little update them up.

Alastair Roderick Syme: Then a longer one.

Alastair Roderick Syme: Well as you think about the strategic plan in year one.

Alastair Roderick Syme: I wanted to know whether your assumptions on the competitive landscape has remained sort of broadly within your range of expectations or has there been anything out there.

Alastair Roderick Syme: You to tweak your plans push you pull harder.

Alastair Roderick Syme: Any one or more areas.

Wael Sawan: Thanks for that, Alastair, and thank you for the kind words for Chirk as well. Would you like to say a quick word on Buchan first?

Speaker Change: Thanks for that foster and thank you for the for the kind words for a truck as well did you want to say a quick word on Bocom first yeah, well one line or not I think we had said previously that we were going through a strategic review and that we completed that and that our preferred option was towards divestments were continuing to pursue that which at this moment.

Wael Sawan: Yeah, one line on that. I think we had said previously that we were going through a strategic review and that we'd concluded it, and that our preferred option was divestment. We're continuing to pursue that route at this moment, and I look forward to being able to give you an update at some point in the future. You'll understand I can't say more than that.

Wael Sawan: I look forward to being able to give you an update at some point in the future you'll understand like how to say more than that right and to your second question there Alastair.

Wael Sawan: And to your second question there, Alastair. Look, I think the world around us has continued to be uncertain and volatile. And what you have seen is a number of things. I'd say one is the amount of geopolitical risk that has played out, the accentuation of the Russia-Ukraine issue, what we are seeing, of course, in the Middle East at the moment, and the challenging relationship across the US-China axis. All of this, of course, has just meant that that volatility, that uncertainty that we had expected has been magnified, and we need to be able to adapt to that.

Wael Sawan: Look I think.

Wael Sawan: The world around US of course is continues to be uncertain and volatile and what you have seen.

Wael Sawan: It is a number of things, let's say one.

Wael Sawan: Amount of geopolitical risk that has played up.

Wael Sawan: Accentuation of the Russia, Ukraine issue, what we are seeing of course in the middle East at the moment and the challenging relationship across the U S. China axis all of it of course.

Wael Sawan: <unk> has just meant that that volatility that uncertainty that we had expected has been magnified and we need to be able to adapt to that and this is where I think.

Wael Sawan: And this is where I think it's reinforced my own conviction in the strategy that we have in something like LNG, where our ability to be able to have multiple supply points, our ability to have multiple demand points, and our cross-commodity exposures afford us quite some resilience when you have such volatility. Also, what we're seeing, of course, from an external perspective, is that different countries are dealing with their own respective challenges, whether that's fiscal challenges, whether that's the need to step up, for example, defense budgets, or health care services. Therefore, the pace of the energy transition in some of those countries is varying.

Wael Sawan: It's reinforced my own conviction in the strategy that we have in something like LNG, where our ability to be able to have multiple supply points, our ability to have multiple demand points, our cross commodity exposures for this quite some resilience when when you have such volatility.

Wael Sawan: Also what we're seeing of course it is from an external perspective is different countries are dealing with their own respective challenges.

Wael Sawan: Whether that's the school challenges whether that is a the need to step up for example, defense budgets are health care services and therefore, the pace of the energy transition in some of those countries is varying and once again I think our strength of being really focused on the global picture, but then honing in on the local realities has been key.

Wael Sawan: And once again, I think our strength of being really focused on the global picture but then honing in on the local realities has been key. And so what does all this mean for the way that we are responding? I think we're doubling down on what we saw coming into capital markets. We said at the time that there are some core basics we need to continue to follow through. We need to unlock the full potential of the asset base we have in place.

Wael Sawan: And so what does all this mean for the way that that we are responding.

Wael Sawan: I think where we're doubling down on what we saw coming into the capital markets day right.

Wael Sawan: We said at the time, but there are some core basics, we need to continue to follow through we need to unlock the full potential of the asset base. We have in place and I think Q1 offered us a good glimpse of what that looks like when monarch is up and running what when it's up and running and so on and so forth.

Wael Sawan: And I think Q1 offered us a good glimpse of what that looks like when Monaco is up and running, when Prelude is up and running, and so on and so forth. We need to continue to keep that funnel of opportunities coming through. LNG Canada, our Brazilian project, our Gulf of Mexico project, and our ability to continue to buy back more of shell over the coming years when, in particular, our free cash flow yield continues to be a comfortable double digit one or mid-double digit.

Wael Sawan: We need to continue to keep that funnel of opportunities coming through LNG, Canada, our Brazilian projects, our Gulf of Mexico projects, we need to continue that cost momentum and brings us bring down the structural cost and we need to keep that discipline. So all of those elements continued to play up in my mind and critically to to contribute to the direction we're going.

Wael Sawan: With all of that we continue to see that disconnect between what our share prices and what that underlying valuation is which is why if anything you know we have become a hungry to continue to go for even more of a I think it was Martha Rogers has eating show our ability to continue to buy back more of shelves over the going over the coming.

Wael Sawan: Yours when in particular our.

Wael Sawan: Our free cash flow yield continues to be a comfortable double digit one or mid double digits. So all of us I think reinforces our direction and reinforces the need for that cultural evolution that we have committed to make which I see some real green shoots and and growing in confidence that we can move at the pace.

Wael Sawan: So all of that, I think, reinforces our direction and reinforces the need for that cultural evolution that we have committed to make, of which I see some real green shoots and growing confidence that we can move at a pace even faster than we had anticipated. Thank you for the questions. Luke, can we go to the next one, please?

Luke: Even faster than what we had anticipated.

Luke: Thank you for the questions.

Luke: Can we go to the next one please.

Operator: Our next caller is Paul Cheng from Scotiabank.

Wael Sawan: Our next caller is Paul Cheng from Scotiabank.

Paul Cheng: Thank you. Good morning, or good afternoon, your time. Two questions, please, way that your Pittsburgh you think cracker you're saying that in the first quarter is now running at full capacity so at this point on to improve the result in that what is the operational improvement that we should expect or that is just going to be a function of selling the non-profitable asset and also hoping for the margin to improve that's the first question second question curious that it looked like the pace of energy transition perhaps is going to be a bit slower than previously assumed and oil production may not peak until sometime next decade you've been looking for your production in liquid production essentially flat about 1.4 million per day for the rest of the decade should we revisit whether that is the right target and whether that we should also eliminate the artificial ban of looking at the exploration regions outside the existing area by 2025 or 2026 thank you

Paul Cheng: Thank you good morning, or good afternoon news offering.

Paul Cheng: Two question piece.

Paul Cheng: Wade.

Paul Cheng: Your Pittsburgh, you think cracker.

Paul Cheng: Same thing in the first quarter is not running at full capacity. So at this point on to improve that we saw in that what is the operational improvement that we should expect or that is just going to be a function of selling the long pole vocal on that and also how painful the margin to improve.

Paul Cheng: That's the first question.

Speaker Change: Second question <unk>, what's that.

Paul Cheng: It looked like the peso and the transition perhaps is going to be a bit slower.

Paul Cheng: Than previously assumed and oil production may not peak until sometime next decade.

Paul Cheng: <unk> been looking forward your production again.

Paul Cheng: Yes.

Speaker Change: I'm, sorry, Brett about one 4 million barrels per day for the rest of the Becky should we'd be visit with it that is the right Oh okay.

Paul Cheng: With it that we should also eliminate.

Paul Cheng: The artificial ban or looking at the exploration.

Paul Cheng: All regions outside the existing area by 2020 final 2026. Thank you.

Wael Sawan: Great. Let me try to cover both of those, Paul. And firstly, let me make a quick apology. My team here informed me that it was actually Lucas who said we were eating ourselves, not Martijn, so I stand corrected. Paul, on your point about Monaca or Shell Polymers Monaca.

Speaker Change: Great Let me I'll try to cover both of those Paul.

Wael Sawan: Firstly, let me make a quick apology my team here informed me that it was actually Lucas who said we were eating ourselves not more time so I.

Wael Sawan: I stand corrected.

Wael Sawan: Paul on your on your point around monarch or shall polymers Monaco.

Wael Sawan: A couple of things. I think firstly, this first quarter was one where we were indeed trying to drive up the performance of all the trains. In particular, that third train, which you'd recall had the equipment failure or equipment faulty realization, which we were working to improve. And now that we have been able to fix that, we have seen all three trains at or above capacity.

Wael Sawan: A couple of things I think I think firstly to recognize this first quarter was.

Wael Sawan: It was one where we were indeed trying to drive up the performance of all the trains in particular that sort of train, which you would recall had the equipment failure or equipment 40, a realization, which is what we were working to improve and now that we have been able to fix that we have seen all three trains at or above capacity.

Wael Sawan: As we go into the next quarter, it's all about reliable operations now. It's stabilizing that facility. What I'm particularly proud of, I spoke earlier about culture change. And this was a great example that the team in Monaco showed that this is a culture change that is not just top-down.

Wael Sawan: As we go into the next quarter, it's all about reliable operations now it's stabilizing that's facility.

Wael Sawan: What I'm, particularly proud of I spoke earlier about culture change right and this wasn't a great example that the team in Monaca showed that this is a cultural change that is no longer just talked down but actually you know what you see is truly across the organization people grabbing onto the mantra of a mantra of how are we going to.

Wael Sawan: But actually, now what you see is truly across the organization, people grabbing onto the mantra of how are we going to achieve our values and drive value? And what the team there did was, you'll recall, we had talked about the facility potentially allowing us to produce around 40 different grades of polyethylene. The current cash generation opportunity given the disconnect between oil prices and gas prices is just about flow. It's just about how much we can get polyethylene through. And so the team pivoted to be able to drive what they call a faster for longer strategy. So, sorry, fewer for longer.

Wael Sawan: Our chief our values and drive value.

Wael Sawan: And with the team there did was you'll recall, we had talked about the facility potentially allowing us to produce around 40 different grades of polyethylene.

Wael Sawan: The current cash generation opportunity given the disconnect between oil prices and gas prices is just about flow. It's just about how much we can get polyethylene through and so the team pivoted to be able to drive what they call a faster for loan growth strategy. So I'm, sorry, if you work for a longer strategy.

Wael Sawan: And in essence, what they're doing is going for a handful of grades where we know the operating envelope is working well, and they will drive that to the limit so that we can get as much volume throughput as we can to be able to generate cash. A really nice example of how they were able to adjust to the circumstances in the market to unlock value. And so expect that to play out; expect us to continue to drive value through that as we stabilize the facility and, over time, continue to improve it.

Wael Sawan: And in essence, what Theyre doing is theyre going for a handful of grades where we know the operating envelope is working well and they will drive that to the limit. So that we can get as much volume throughput as we can to be able to generate the cash really nice example of how they were able to adjust to the circumstances in the market to unlock value.

Wael Sawan: And so expect that to play out expect us to continue to drive value through that as we stabilize the facility and over time continue to premium price. This is a journey of multiple months and years of course, but we are moving very much in the right direction.

Wael Sawan: This is a journey of multiple months and years, of course, but we are moving very much in the right direction. On your broader point around liquids production, the pace of the energy transition is consistent with what our beliefs have been. So there hasn't been a fundamental change. This is not a new revelation.

Wael Sawan: On the on your broader point around liquids production.

Wael Sawan: The pace of the energy transition is consistent with what our beliefs have been so there hasn't been a fundamental change. This is not a new regulation. We have always said that we want to be able to be resilient to different degrees of or different pieces of the energy transition simply because both the shape and the pace of the energy transition are uncertain.

Wael Sawan: We have always said that we want to be able to be resilient to different degrees of or different paces of the energy transition simply because both the shape and the pace of the energy transition are uncertain. And so our strategy has been one that is resilient to that. And so what we have done on the LNG side is to say we are going to grow that LNG business by 20 to 30 percent through to 2030.

Wael Sawan: And so our strategy has been one that is resilient to that and so what we have done on the LNG side is to say, we are going to grow that LNG business by 20% to 30% through to 2030.

Wael Sawan: On the liquid side, on the oil production side, to your point, we see that continuing to be a delivery of around 1.4 million barrels per day, plus or minus. And that's a focus that we have to be able to continue with high grade and make sure that it's not just about liquid production or volumes. It's all about making sure we continue to focus on those highest-margin barrels, the ones that we have enjoyed in our portfolio, the ones that have given us the leading CFFO per barrel compared to our peers.

Wael Sawan: On the liquid side or the oil production side to your point, we see that continuing to be a delivery of around the $1 4 million barrels per day, plus or minus and that's a focus that we have to be able to continue to high grade and make sure that it's not just about liquids production or volumes. It's all about making sure we continue to focus on those.

Wael Sawan: Highest margin barrels the ones, which we have enjoyed in our portfolio are the ones that have given us the leading <unk> per barrel compared to our peers peers.

Wael Sawan: And our reserve base, of course, given it is preferentially skewed towards the Porter and LNG, allows us to do more of that. On your point around exploration, the focus of our exploration is to tap into basins where we feel we have a true competitive edge. And you've seen that in particular in the Atlantic Basin, where we are leveraging the Gulf of Mexico, Brazil, and Nigeria into a place like Namibia, and we will do more of that.

Wael Sawan: Our reserve base of course, given that this preferentially skewed towards deepwater and LNG allows us to do more of that on your point around exploration.

Wael Sawan: The focus of our exploration is to tap into our basins, where we feel we have a true competitive edge.

Wael Sawan: True competitive edge and you've seen that in particular in the Atlantic Basin, where we are leveraging Gulf of Mexico, Brazil, Nigeria into place like Namibia, and we will do more of that so we are not necessarily constraining ourselves, but we are focusing on the areas, where we have we can get the highest bank for our book and in a world of making sure that we have.

Wael Sawan: So we are not necessarily constraining ourselves, but we are focusing on the areas where we can get the highest bang for our buck. And in a world of making sure that we are focused and constrained in how we allocate every dollar of capital, I think that's a wise move for us to continue to follow suit. Paul. Luke, let's go to the next question, please.

Wael Sawan: Our focused and constrained in how we allocate every dollar of capital I think that's a wise move for us to continue to follow the suitable.

Speaker Change: Thank you for the questions Paul look let's go to the next question. Please.

Operator: Our next caller is Josh Stone from UBS.

Wael Sawan: Our next caller is Josh stone from UBS.

Josh Stone: Yeah, thanks. And good afternoon. Two questions, please. One on LNG; you'd be connected in the press with a couple of transactions that would expand your LNG portfolio. I understand you won't be able to comment, but maybe more broadly, can you talk about why now would be the right time to add to your LNG portfolio through acquisition? And how you would ensure you get a fair value given what seems to be a competitive process?

Josh Stone: Yes, Thanks, and good afternoon two questions. Please one on LNG.

Josh Stone: In the press with a couple of transactions that would expand your LNG portfolio.

Josh Stone: The study will be able to comment, but maybe more broadly.

Josh Stone: Why now would be the right time to add to your LNG portfolio through acquisition.

Josh Stone: And how you would enjoy.

Josh Stone: So I've already given it seems to be a competitive process.

Josh Stone: And second question on the departure from New York from power market in China, maybe just talk about what was it about this business, let your system that's parked.

Josh Stone: And second question on your departure from the power market in China, maybe you could just talk about what was it about this business that led to your decision to depart? Also curious, you haven't exited the EV charging business. So is it the case that maybe you don't see the need to integrate your power business and your EV charging business for the portfolio more broadly? Thank you.

Josh Stone: Also curious you havent text the EV charging business. So is it the case that maybe you don't see the need to integrate between your power business EV charging business.

Josh Stone: Portfolio.

Speaker Change: Thank you.

Wael Sawan: Thank you, Josh. I'll take the first one. Sinead, if you want to take the power market, I suspect, I have a sense of the deals that you have referenced there, Josh, that are being talked about in the press. I'd sort of be, I'd separate them. I think one, for example, has been talked about Ruwais LNG and Abu Dhabi. That's one which Abu Dhabi is developing on a greenfield basis. And so we would be looking at any of these opportunities, of course, being accretive to our overall delivery as an LNG business for sure. I'll leave it at that and maybe leave it to you, Sinead. I think this was quite an interesting discussion.

Speaker Change: Thank you Josh I'll take the first one show that if you want to take the power market.

Wael Sawan:

Sinead Gorman: So I suspect.

Sinead Gorman: I have a sense of the deals that you have referenced there Josh that are being talked about in the press.

Sinead Gorman: I'd sort of be.

Sinead Gorman: A separate them I think one for example.

Wael Sawan: Ben talked about through waste LNG in Abu Dhabi, That's one which Abu Dhabi is the other thing on a.

Sinead Gorman: On a greenfield basis, I wont give any specific comments other than to say.

Wael Sawan: Organic opportunities to continue to grow our LNG portfolio of opportunities that potentially can add more supply points of the port for you in attractive locations, where the carbon intensity is low and the value potential is high and are very much down the lane that we want to continue to grow we we have a fundamental conviction that this is not a.

Sinead Gorman: And LNG sprint is a few years, but the LNG will be required for decades to come and this is why continuing to find those differentiated opportunities as something we will look at and.

Sinead Gorman: We are indeed, not looking at big M&A in that space whenever we're looking at LNG opportunities.

Sinead Gorman: We're looking at bolt ons to our existing portfolio, where we feel that.

Sinead Gorman: The capabilities, we have the portfolio we have the positions that we have built up over the years would allow us to be able to unlock more value than maybe a center would be and so we would be looking at any of these opportunities of course being accretive to our overall delivery as a as an LNG business for for sure.

Sinead Gorman: Leave it at that that maybe a devaluation. It I think this is quite simple in the sense that what we talked about with respect to power is that we will be very disciplined in this area will be very focused and I think it was last quarter, but I actually talked trade that will stay in a select number of lockett's, which I reference you to places like the U S places like.

Sinead Gorman: Potentially parts of Europe et cetera, and we went through that in some detail last China remains attractive. It is a very different market as well of course on what Youre drawing is they the linkage between the funds of my fundamental selling THB linked to EV and those are of course very very different. So why are we exiting one and staying in the EV side.

Sinead Gorman: And what you're drawing is the linkage between fundamental selling B2B linked to EV. And those are, of course, very, very different.

Sinead Gorman: So why are we exiting one and staying on the EV side? So in terms of the exit, we want to stay in markets where we bring differentiated capabilities, where we have the ability to deal with intermittency, where we have the ability to use our trading and optimization capabilities, battery power, a range of different things. And we didn't have that skill from a dedicated perspective in China. That wasn't one where we were going to have a capability versus somebody else.

Sinead Gorman: In terms of the exits we want to stay in markets, we bring differentiated capabilities, where we have the ability to deal with intimates and see where we have the ability to use our trading and optimization capability battery powered a range of different things and we didn't have that skill from a dedicated perspective.

Sinead Gorman: China that wasn't Huawei, where we were going to have the capability versus somebody else. However on the EV side, that's where our brand our experience and our partnerships have really really played is of course trying to slightly different its very high utilization rates compared to anywhere else frankly confined to the U S or Europe, and therefore, what we see as very attractive returns but of course that's good.

Sinead Gorman: However, on the EV side, that's where our brand, our experience, and our partnerships have really, really played out. Of course, China is slightly different. There are very high utilization rates compared to anywhere else, frankly, compared to the US or Europe. And therefore, what we see are very attractive returns. But, of course, that's going to change over time. So it will all depend on how policies play out across the world. But specifically to your China point, we're very comfortable decoupling what was a B2B business versus, in effect, linked to the EV side of things, where, frankly, our brand plays out in a very strong way.

Sinead Gorman: To change over time, so it will all depend on high policies playoffs across the world, but specifically to your China point, we're very comfortable decoupling what wasn't be steepest that's versus an effect linked to the EV side of things, where frankly, our problem, placing us in a very strongly.

Operator: Let's go to the next question, please, Luke.

Speaker Change: Thank you Shannon.

Speaker Change: Let's go to the next question. Please look.

Irene Himona: Our next caller is Irene Himona from Bernstein.

Operator: Our next caller is Irene homeowner from Bernstein.

Irene Himona: Thank you very much and congratulations on these very strong results. Two questions. First, on Upstream, you refer to improved performance and higher controllable availability. How sustainable do you think that is and what drives it, if you can talk about it? Is it a change in processes or working practices and so on. And then my second question: trading was strong in power and products, in your 2023-20 if you very helpfully quantify the contribution last year of trading for both power and products. Can we hope or expect, perhaps, a similar annual disclosure regarding LNG trading? Thank you.

Irene Himona: Thank you very much and congratulations on these very strong results.

Irene Himona: Two questions first on upstream hue.

Irene Himona: You referred to improved performance and higher controllable availability.

Irene Himona: How sustainable do you think that is and what drives it if you can talk around easy to changing processes are working practices.

Irene Himona: And so and then my second question trading was strong in power and project.

Irene Himona: In New York.

Irene Himona: 2023 'twenty, if you very helpfully quantify the contribution last year was trading for both power and products can we.

Irene Himona: Hope or expect perhaps a similar annual disclosure regarding LNG trading. Thank you.

Wael Sawan: All right, thank you, Irene. I'll take the first one and then... leave what I suspect will be a short second one to Sinead.

Speaker Change: Alright, Thank you Erinn I'll take the first one and then.

Speaker Change: Leave what I suspect will be a short second want to Shannon.

Wael Sawan: I think firstly, on the upstream side, a lot of work has gotten us here. This is not a question of months or even a year. This has been a multi-year journey that has brought this level of reliability and focus across our assets. We're seeing it, by the way, in our deep water business. We've seen it in the conventional oil and gas business, and it seems to be now really sort of coming across many of the assets. And that's very pleasing.

Speaker Change: Look I think firstly on the upstream side a lot of work has gotten US here. This is not a question of months or even a year. This has been a multiyear journey.

Wael Sawan: It has gotten this level of reliability and focus across our assets, we're seeing by the way in our deepwater business, we've seen it in the conventional oil and gas business and it seems to be now I'm really sort of coming across many of the assets.

Wael Sawan: I think it's a tribute to some of our leaders, someone like Zoe, who's leading the integrated gas upstream business, and her executive vice presidents, who have made this operational performance an absolute key focus area for them. And what are they doing with that?

Wael Sawan: And that's very pleasing I think its attribute to some of our leaders there is someone like Zoe who's leading the integrated gas upstream business and and her executive Vice Presidents, who have made this operational performance an absolute key focus area for them and what are they doing with that theyre looking at indeed, the processes and making sure that the processes are pointing the different.

Wael Sawan: They're looking at, indeed, the processes and making sure that the processes are pointing the different contributors to reliability in the same direction. You see it, for example, in the way that some of our project and technology teams are working with our asset teams. We've seen it in the deep water space recently.

Wael Sawan: Contributors to reliability in the same direction that you see it for example in the way that some of our projects and technology teams are working with our asset teams. We've seen it in the deepwater space recently the objectives are much more aligned.

Wael Sawan: The objectives are much more aligned, and the goals are much more aligned, and you're seeing the power of that coming through day in and day out. By the way, does that mean that all is fine? No, of course, we have a long, long way to go. It's helped us in the LNG space, as I've mentioned in the past, to the tune of 1% to 2% improvement in reliability at no cost. All of that is just building that next level of rigor when it comes to operation performance and something that I think we are growing in confidence around and starting to be able to sort of embed on a much more consistent basis throughout the company.

Wael Sawan: The goals are much more aligned and you're seeing the power of that coming through day in and day out.

Wael Sawan: Does that mean that all.

Wael Sawan: All of US find no of course, we have a long long way to go but we are institutionalizing over them over the quarters one quarter at the time.

Wael Sawan: That real rigor in the way that we are that we drive operational performance and element of it is how also we reward folks where the consistency of excellent delivery rather than just thinking about the next new project is an important part of it but I also have to recognize some of the improvements that we have made in areas like over.

Wael Sawan: Our proactive maintenance, where for example, using some of the.

Wael Sawan: AI capabilities, we have we have five trillion rows of data that are being fed from some 5 million sensors across the organization with 17 AC 18000 pieces of equipment that are feeding into it with our nerve centers that are sitting in places like are the U S and in Bangalore.

Wael Sawan: Looking to be able to create capabilities that allow or that create signals for our operators to intervene ahead of certain.

Wael Sawan: Upsets, it's helped us in the LNG space as I've mentioned in the past to the tune of 1% to 2% improvement in reliability at no cost.

Wael Sawan: All of that is just building that next level of rigor when it comes to operational performance and something that I think we are growing in confidence around and starting to be able to sort of embeds on a much more consistent basis through the company.

Sinead Gorman: And on your trading question, Irene, one of the reasons, of course, that we disclose a little bit more in terms of the res sector, in terms of the information there, is simply because we don't have as many underlying assets there. So that's why we give you a little bit of the breakdown. But fundamentally, across our assets, our T&O, our trading and optimisation works because of the underlying assets.

Speaker Change: And on your trading question one.

Sinead Gorman: One of the reasons of course that we disclose a little bit more in terms of the and the rest sector in terms of the information there is simply put because we don't have as many underlying assets. There. So that's why we give you a little bit of a breakdown of course fundamentally across our assets our T N O our trading and optimization works because of the underlying assets. So it's not to say you can have one without the other.

Sinead Gorman: It happens when we linked the two together because they're taking the products and ensuring molecules electrons whatever it may be in the right place at the right time and a huge part of that is coming from the underlying assets slightly different in the us in terms of disclosure of course, what we gave you was two to four per cent geraci uplift for our P&A business, which he another partial to the organization.

Sinead Gorman: He said, specifically, which is a bit that you should probably look to me is that integrated gas or LNG. Pos is up mid to upper end of that and of course all of our products. Pos is up mid to lower end. So I think there is some discretion that was good. Thank you.

Sinead Gorman: Great, thanks Sinead, thanks Irene. Can we now go to the next question, please, Lucas? Our next caller...

Speaker Change: Thanks, Shannon, Thanks, Irina and can we now go to the next question. Please.

Operator: Our next caller is Ryan Todd from Piper Sandler.

Sinead Gorman: Our next caller is Ryan taught from Piper Sandler.

Ryan Todd: Thanks, maybe a follow-up on the comments on trading and optimization and in your integrated gas business, as you think about the outlook over the next one to two years, given an LNG market that seems to have settled into a more, maybe a more modestly priced LNG environment with maybe a little less volatility than we've seen over the past couple of years. How should we think about the trading and optimization outlook for the integrated gas business in the medium term?

Ryan Todd: Hey, Thanks, maybe.

Operator: A follow up on that.

Ryan Todd: Comments on trading and optimization and your integrated gas business.

Ryan Todd: As you think about the outlook over the next one to two years given the LNG market the things have settled into a more.

Ryan Todd: Maybe more modestly priced LNG environment with maybe a little less volatility than we've seen over the past couple of years, how should we think about.

Ryan Todd: The trading and optimization outlook for the integrated gas business in the medium term.

Ryan Todd: And then maybe a second question on CapEx, the last year you reduced the targeted medium-term outlook for capital spend. You've done a great job instilling confidence in terms of cost control and downward pressure there. What are you seeing in terms of cost inflation across your portfolio, particularly in LNG and deepwater? And what risk or tension does that pose as you try to drive capital costs lower across the portfolio?

Speaker Change: And then maybe a second question.

Ryan Todd: On Capex the last year, you reduced the targeted medium term outlook for capital spending you've done a great job of instilling confidence in terms of cost control.

Ryan Todd: And downward pressure there.

Ryan Todd: What are you seeing in terms of cost inflation across your portfolio, particularly in LNG and deepwater.

Ryan Todd: And what risk retention does that pose if you're trying to drive capital costs lower across the portfolio.

Speaker Change: Alright, alright.

Speaker Change: How about do you want to take the first one I can touch on the cycle, let's say.

Ryan Todd: In terms of sort of the trading and optimization ILEC and Tencent going forward on LNG I think it comes back again to the fact that we marry the two parks together as you know Ryan said he is that underlying and equity story. So the volumes that we've got and of course, then depending on the length that we have how much we can actually play into the market well. We are seeing of course is that this sort of.

Sinead Gorman: Particular in Southeast Asia. So, of course, interesting that at these sorts of prices, you're seeing parties like Vietnam, Pakistan, and even India coming into the market more and therefore creating more demand and, of course, inching the price upwards as well. It's quite small, but you can see that changeover coming from coal often as well. So the small changes in supply will actually have an outsized impact on price from time to time because it is a tight market that we see going forward.

Ryan Todd: Price points, you're seeing latent demand actually lift, particularly in southeast Asia. So of course interesting at these sort of prices, you're seeing pockets like Vietnam, Pakistan, and India coming in more into the market and therefore, creating more demand and of course inching the price upwards as well, it's quite small but you can see that change you are are coming from coal often as well so the small changes in supply.

Sinead Gorman: It will actually have like fist and impact on price from time to time, because it is a tight market that we see going forward you know I go back to them with Freeport last year or just before that but it was just an immense change of timing volume frankly, but you saw how much it played out in the market.

Sinead Gorman: You know, I go back to when I was at Freeport last year or just before that, but it was just an immense change, a tiny volume, frankly, but you saw how much it played out in the market. And that, for us, is where it's an interesting one, because given the size of the assets we have, so not just the liquefaction assets and the production, but we also, of course, have an amazing number of vessels. And those vessels allow us to be able to move the product where it needs to be, or, in this case, the LNG where it needs to be.

Sinead Gorman: And that for US is why it is an interesting one because given the size of the assets, we have and not just the liquefaction assets under production. We also of course have an amazing amount of vessels and those vessels allow us to be able to move the product where it needs to be or in this case, the LNG, where it needs to be so windows that volatility or those changes with disruption from the market happen.

Sinead Gorman: So when that volatility or those changes or disruptions in the market happen, that's what we manage to take advantage of and actually make even more returns. So it's very difficult to predict what's going to happen in the next two years in terms of the LNG market, but we see more demand, an element of rigor and capital allocation discipline that's important here. On the inflationary end of it, what we see at the moment is inflation quarter from portfolio basis, the portfolio level at around the 5% mark, plus or minus.

Sinead Gorman: Where we manage to take advantage of it actually make even more returns. So it's very difficult to predict what's going to happen in the next two years in terms of the LNG market, but we see more demand coming in.

Speaker Change: Thank you Shannon and then Ryan on your.

Sinead Gorman: Inflationary question, where what we are Theres a couple of things I think firstly, it's just becoming much more rigorous in the way that we allocate capital and you see that I think coming through we've had opportunities where we could have accepted lower returns because of the inflationary pressure, where we decided to pause got to d'amato in Brazil is a good example, where we said no we want to reach.

Sinead Gorman: Cyclists and we're going to get a better price point, otherwise, we're not going to simply invest for the sake of it and so I think there's an element of rigor and capital allocation discipline. That's important here on the inflationary and with what we see at the moment is inflation quarter from a portfolio basis portfolio level at around the 5% Mark.

Sinead Gorman: There are certain elements or certain categories that are more in the 6 to 10% range. You see it, for example, in FPSOs; you see it with subsea hardware. But by and large, on a portfolio basis, you're talking about 5%.

Sinead Gorman: Plus or minus there are certain elements.

Sinead Gorman: Certain categories that are more in the 6% to 10% range you see it for example in S. Dsos you see it with subsea hardware.

Sinead Gorman: And large on a portfolio basis, you're talking about 5% and so a big focus for US is what can we continue to do to be able to at least mitigate a portion of that difficult to mitigate all of it but a portion of it.

Sinead Gorman: While we continued to exercise enhanced discipline in the way, we allocate that capital.

Sinead Gorman: And so a big focus for us is what can we continue to do to at least mitigate a portion of that, difficult to mitigate all of it, but a portion of it, while we continue to exercise enhanced discipline in the way we allocate that. Thank you for the questions, Ryan. Luke, let's go to the next question. Our next caller is Alejandro Vigil from Santander. Hello, thank you for taking my questions. One question about Namibia has been a very exciting quarter.

Speaker Change: Thank you for the questions there Ryan look let's go to the next question. Please.

Operator: Our next caller is Alejandro Vigil from Santander.

Alejandro Vigil: Our next caller is Hello, Hunter vigil from Santander.

Alejandro Vigil: Hello. Thank you for taking my question one question about the media has been a very exciting.

Alejandro Vigil: It was for some other players into Adi's, what can you tell us about your exploration works there an update on your activity.

Alejandro Vigil: The second question is about the divestments, you have announced $1 billion this quarter, which of your expectations for the rest of the year synthesis Garcia from divestments. Thank you.

Alejandro Vigil: Thank you Alejandro do you want to start with the divestments that I can touch on it but yeah very very short term that one indeed, and I think it's probably coming back to.

Sinead Gorman: Yeah, very, very short on that one, indeed. I think it's probably coming back to what we said at Capital Markets Day about where we play. We will play where we have differentiated capabilities. And you see us, you know, that exit that we talked about earlier, the question, great question earlier, Ryan, from Paul, in terms of China as well, moving out of that B2B business. You've seen that on other things.

Sinead Gorman: What we said at capital markets day, where we play we will play where we have differentiated capabilities and you see US you know that exit that we talked about earlier. The question Great question area Orion from Paul in terms of China.

Sinead Gorman: As well I'm moving out of the <unk> business, you've seen that all the other things that's this quarter, indeed, and <unk> wins in the U S where we just don't feel that we can play in the right way given the returns that we would see and we leave it to others, who can do so in a different manner to us. There's a number of things that you see coming through as well and of course, we've already announced the Pakistan and dive.

Sinead Gorman: This quarter, indeed, South Coast wins in the US, where we just don't feel that we can play in the right way, given the returns that we would see. And we leave it to others who can do so in a different manner to us. So the number of those that you see coming through as well, and, of course, we've already announced the Pakistan divestment. We're looking to go towards completion. So you'll see a drumbeat coming through of where we step back or exit and divest from certain aspects of the portfolio where it simply doesn't hit our hurdles.

Sinead Gorman: So we're looking to go towards completion, so you'll see a drumbeat coming through that's why we stepped back when accidents I've asked from certain aspects of the portfolio. We're simply it doesn't hit our hurdle and that comes back to what while the same discipline that we are showing to ensure that we have everything that we said to you that we were going to do performance felt promise as I've said it before that is.

Sinead Gorman: And that comes back to what Wael was saying, the discipline that we are showing to ensure that we hit everything that we said to you that we were going to do. Performance, not promises. I've said it before.

Sinead Gorman: That is playing out across the full portfolio, and we're doing that because we have a wonderful position to be in. When you're sitting where we are, where the business is delivering very well, as you've seen from this quarter, where you're delivering seven, over seven billion in earnings, over 13 billion in terms of CFFO, and more to come as we show the discipline on CapEx, our alternative is always going to be to have the ability to buy back shares. And you've seen us do that now ten quarters in a row.

Sinead Gorman: Across the full portfolio and we're doing that because we have a wonderful position to be and when youre sitting where we are whether the business is delivering very well as you've seen from this quarter, where are you delivering seven over 7 billion on earnings over $13 billion in times of C. F O and more to come as we.

Sinead Gorman: Show the discipline on Capex show the discipline of Opex et cetera are alternative is always going to be have the ability to buy back shares and you've seen us do that in the 10 quarters in a row, so above $3 billion, sometimes to divestments outcome. There is definitely more to come and of course, we look forward to updating you as we go through.

Wael Sawan: So, above three billion. So, in terms of the divestment that will come, there is definitely more to come. And, of course, we look forward to updating you as we go. For your first question on Namibia, Alejandro, what I would say is... We continue our de-risking program there. We continue to drill exploration and appraisal wells and study the results of them. And importantly, we continue to study the results from many of our neighboring blocks to be able to better inform our own choices.

Sinead Gorman: Your first question on the maybe Alejandro what I would say is we.

Wael Sawan: We continue our de risking program there.

Wael Sawan: We continue to drill.

Wael Sawan: Drill exploration and appraisal wells and study the results of it and importantly, we continued to study the results from many of our neighboring blocks to be able to better inform our own choices.

Wael Sawan: We're not in a race here to be able to put the facility in place. What we have been very clear with the team is this is a new basin. This is a complex reservoir. The significant volume is clear, but complex in terms of the porosities and the permeabilities.

Wael Sawan: We're not we're not in a race here to be able to to put the facility in place, which we have been very clear with the team on is this is a new basin. This is a complex reservoir a significant volume is clear.

Wael Sawan: Complex in terms of the porosity and permeability and so it is important that we continue to ensure that if we are to invest significant capital here, we want to be able to have sufficiently de risked it and and and made sure that we can deliver the sorts of returns with our shareholders expect of us and that's the mandate that the team is working on so work.

Wael Sawan: And so it is important that we continue to ensure that if we are to invest significant capital here, we want to be able to have sufficiently de-risked it and made sure that we can deliver the sort of returns that our shareholders expect of us. And that's the mandate that the team is working on. So working as quickly as they can, but with a clear objective to provide the right level of de-risking for us.

Wael Sawan: As quickly as they can but with a clear objective to provide the right derisking for us.

Wael Sawan: I think the recent discovery from GALP adds some excellent data points for the overall basin, and those will be taken into consideration as we think about where we go next in our de-risking program. Thank you for the question, Alejandro. I'll go back to you, Luke, please, for the next question.

Wael Sawan: I think the the recent discovery from from Golf I think adds some excellent data points for the overall basin and those will be taken into our broader considerations as we think about where we go next and our de risking program. Thank you for the question Alejandro I'll go back to you. Please for the next question.

Operator: Our next caller is Christyan Malek from J.P. Morgan.

Luke: Our next caller is cristian <unk> from J P. Morgan.

Christyan Fawzi Malek: Hi, thanks for taking my questions. And yes, just thank you very much for all the help over the years and also congratulations to Oswald.

Christyan Fawzi Malek: Hi, Thanks for taking my questions and yes, just thank you very much for all the all the help over the years and also congrats to old school.

Christyan Fawzi Malek: So the first question, if I may, is regarding what seems to be still quite a large degree of inconsistency in terms of cash flow. The cash flows from last quarter to this quarter have been 60% move. So if I compare your cash flow variability to, let's say, Exxon, it's far greater. And so I guess the question I'm asking is, what level or range of cash flow through the quarters are you comfortable with, given that volatility can be quite unpredictable? And within that same question,

Christyan Fawzi Malek: So first question if I may is regarding what seems to be still quite a large degree of inconsistency in terms of cash flow the cash flows.

Christyan Fawzi Malek: From last quarter this quarter at least 60% lease if I compare your cash flow variability to let's.

Christyan Fawzi Malek: Let's see Exxon, it's it's far more.

Christyan Fawzi Malek: So I guess the question I'm asking is what level of range of cash flow through the quarters, you're comfortable with given that volatility can be quite unpredictable.

Christyan Fawzi Malek: And within the same question.

Christyan Fawzi Malek: Where do you think a normalized level of cash flow should be? Because I'm also trying to understand when you say the sprint, when does the sprint finish? What are you happy with in the context of your case, as you say, we're done; we can now move to the marathon? Because all of the things you talk about are improvements that all businesses should be making, and it's wonderful to see them. I just want to understand what the end of the runway is on this first initial phase.

Christyan Fawzi Malek: Hum.

Christyan Fawzi Malek: Where do you think are sort of a normalized level of cash flow should be and because I'm almost don't understand when you say you. The sprint when does the sprint finish. So what are you. What are you happy with in the context of your Kpis to say we've done we can now move to the marathon because all of the things you talk about our improvements at all business should be doing and its wonderful.

Christyan Fawzi Malek: See it just slows down.

Christyan Fawzi Malek: What's the end of the runway on this first initial phase.

Christyan Fawzi Malek: And that sort of segues into my second question about your molecules. You sort of, the LNG business is exceptional. I just wonder whether you're planning to be as competitive and as scalable in the oil business, given your comments around the energy transition and what seems to be potentially a bullish scenario. Why aren't you thinking or talking about the potential for consolidation, given the window that we have to acquire oil barrels and particularly given the difficulty of building with a huge increase in capex necessary?

Christyan Fawzi Malek: Segways into my second question around your molecules you you you sort of the LNG business is exceptional.

Christyan Fawzi Malek: Wanted to whether you're going to I think you were planning to be as competitive competitiveness scalable in the oil business.

Christyan Fawzi Malek: Given your comments around energy transition in what seems to be potentially a.

Christyan Fawzi Malek: The bullish scenario.

Christyan Fawzi Malek: Why aren't you thinking or talking about potential for consolidation.

Christyan Fawzi Malek: Given the window that we have.

Christyan Fawzi Malek: Higher oil barrels and particularly given the difficulty in the building with a huge increase in capex necessary. So I just wanted to know what's your thinking around buy versus build are you comfortable with the molecules that you have currently particularly.

Christyan Fawzi Malek: So I just want to understand what your thinking around buy versus build? Are you comfortable with the molecules that you have currently, particularly in a scenario where oil doubles or we are in a strong cycle? Are you back solving from that today? Thank you.

Christyan Fawzi Malek: Let's say the scenario will double as we are in a strong cycle.

Christyan Fawzi Malek: Are you back solving for Matt today. Thank you.

Wael Sawan: Great, thank you for those two questions, Christyan, and for the recognition both of Czerk and Oswald. I'll take the second question first, and then I'm going to go to Sinead to have a moment to think about the first one.

Speaker Change: Yeah, great. Thank you for those two questions Christian and for the recognition both for four Churkin Oswald I'll take the second question first and then I'm going to come to <unk> to have a moment to think about the first one.

Wael Sawan: I think on the oil business. A couple of things I'd say firstly, over the next six years, we have guided, of course, to stable liquid production on the back of what we already have in the portfolio. So that's our, that's our base case. The consolidation question, I think, is a good one, and we continue to look for opportunities to be able to, of course, bulk up, as any good company should be doing. We have a couple of challenges here. One is, of course, our share price, which we don't think, is reflective of an opportunity to be buying somebody else and creating accretive returns for our shareholders. That, in my mind, is a must.

Sinead Gorman: The on the oil business.

Wael Sawan: Couple.

Wael Sawan: Couple of things I'd say firstly over the next six years, we have guided of course to stable liquid production on the back of what we already have in the portfolio. So that's our that's our base case.

Wael Sawan: The consolidation question I think is a is a good one and we continue to look for opportunities to be able to of course bulk up as any good company should be doing well.

Wael Sawan: We have a couple of challenges here one is of course, our share price. We don't think is reflective of an opportunity to be buying somebody else in creating accretive returns for our shareholders. That's in my mind. This is a must do.

Wael Sawan: If we start to sort of run on the back of value destructive deals, then we've lost the plot. So we want to continue to be doing the right thing by our shareholders in that context. The second point, of course, is that all the deals we're seeing out there at the moment pale in comparison to actually buying back our shares, against a double-digit free cash flow yield with a suite of portfolios, whether it's in Deepwater, LNG, our trading business, our marketing business, which we know very well, which is much more de-risked, which doesn't require as much of an integration effort and as much of a premium to be able to adjust, we can buy those at a discount.

Wael Sawan: If we start to sort of a run on the back of a value destructive deals than we've lost the plot. So we want to continue to be doing the right thing by our shareholders in that context. The second point of course is that all the deals we're seeing out there at the moment pale in comparison to actually buying back our shares against a dull.

Wael Sawan: <unk> digits.

Wael Sawan: Free cash flow yield with a suite of portfolios, whether it's in the deepwater LNG, our trading business, our marketing business, which we know very well, which is much more derisked, which doesn't require as much of an integration effort and as much of a premium to be able to adjust we can buy those at a discount today.

Wael Sawan: And so we will continue to do that until we actually see that the share price has responded in a way and that we have the currency to do anything else. And that's why we've said very clearly for this first sprint, it is all about getting the fundamentals right. And I'm sure Sinead will address the end point, but for my two cents, the first sprint is nothing more than a milestone.

Wael Sawan: And so we will continue to do that and we will continue to do that until we actually see that the share price has responded in a way that we have the currency to do anything else and that's why we've said very clearly for this first sprint. It is all about getting the fundamentals right and I'm sure <unk> will address the endpoint but.

Wael Sawan: For my two cents on it is the.

Wael Sawan: The first friend the first sprint is nothing more than a milestone there will be more that we need to continue to do well beyond that first sprint in terms of getting the business to its full potential there is an enormous amount of latent potential and that's what we're going to go after and unlock.

Wael Sawan: There will be more that we need to continue to do well beyond that first sprint in terms of getting the business to its full potential. There is an enormous amount of latent potential, and that's what we're going to go after and unlock.

Sinead Gorman: Indeed, and thank you, Christian. This is where you'll always get me excited about it because, okay, so your comment, I can take it in two ways.

Wael Sawan: Right.

Sinead Gorman: And Dave and thank you Christian this is why you'll always get me excited about it because okay. So.

Sinead Gorman: Your comments I can take it in two ways. So the way I will refer to it is of course more than 13 billion of C. F a fire to spice.

Sinead Gorman: Approximately 3 billion just under 3 billion of working capital I see all right 16 billion of cash flow, there's an awful lot and indeed every quarter. There is a lot of cash flow coming through from this business and of course, that's what gives us the confidence to be able to see the buybacks and that's exactly what we're doing despite the volatility you've heard me talk about it before we actually welcome volatility in defense.

Sinead Gorman: So the way I will refer to it is, of course, more than 13 billion CFFO, despite approximately 3 billion, just under 3 billion of working capital. So you're right, 16 billion of cash flow is an awful lot. And indeed, every quarter, there is a lot of cash flow coming through from this business. And, of course, that's what gives us the confidence to be able to do the buybacks. And that's exactly what we're doing despite the volatility. You've heard me talk about it before.

Sinead Gorman: We actually welcome volatility in the sense that we have a strong balance sheet. We take the time to be able to delever from time to time. And we also, of course, manage to provide consistency, and that's the key point for investors in terms of the buyback. To remind you, since the Permian deal, including what we've announced now, we've done 40 billion, more than 40 billion worth of share buybacks. That's a huge proportion of what has come through. And this is ten quarters of three billion or more. So in terms of inconsistency or consistency, I would say absolutely not. You see that drumbeat time and time again.

Sinead Gorman: We have a strong balance sheet, we take the time to be able to de lever de lever from time to time and we also of course managed to provide consistency and that's the key point for investors in terms of the buyback to remind you since the Permian deal, including what we have a nice night, we've done 40 billion over 40 billion worth of share buybacks, that's a huge proportion of that.

Sinead Gorman: This country and this is 10 quarters of $3 billion or more so in terms of Ah inconsistency are consistently I would say I've seen or do you see that drumbeat time and time again, we are predictable in terms of what we do and how can we do that we do it because of the underlying cash flows off this business you're right. It does change quarter to quarter and that's why I looked at the quarter has to be.

Sinead Gorman: We are predictable in terms of what we do. And how can we do that? We do it because of the underlying cash flows of this business. You're right. It does change quarter to quarter.

Sinead Gorman: And that's why I look for quarters to be able to provide that stability throughout. And that's why we've provided targets out there in the market in terms of free cash flow and free cash flow per share. We have confidence in the levers of that. So that's exactly what we're doing. Stability in terms of CapEx, discipline, OpEx down, buybacks, and debt being able to be delivered as well, providing that overall investment case as well.

Sinead Gorman: Able to provide that stability thrive that's why we've provided targets out there in the market in terms of the free cash flow and free cash flow per share. We are confident in the lever. So fast so that's exactly what we're doing.

Sinead Gorman: The Bill is here in terms of the Capex discipline, Opex dawn buybacks that being able to be leveraged as well providing about overall investment cast as well. So am I worried what should I think in terms of free cash flow was key to me is to ensure that I have a balance sheet that allows me to invest through the cycle. Our lives me to be able to continue to buy back shares which at this price or frankly just under.

Sinead Gorman: So am I worried? And what should I think in terms of free cash flow? What's key to me is to ensure that I have a balance sheet that allows me to invest through the cycle, allows me to be able to continue to buy back shares, which at this price are, frankly, just undervalued. And I get excited about the fact that the share price today is not even representing the underlying value of the business today, let alone what we are going to do in terms of capital market state delivery as well. So, yep, all good on that. And you said, when does the sprint finish? As you can see, I can get excited about this. The sprint will finish at the end of 2025. That's what we've said.

Sinead Gorman: Values and I get excited about the fact that the share price today is not even representing the underlying value of the business today, let alone what we're going to do in terms of capital markets day delivery as well. So yep all good on that and you said went to sprint finish that you can say I can get excited about this spent it will finish at the end of 2025, that's what we said so far thank you.

Sinead Gorman: Excellent, thank you, Sinead. Christian, thank you again for the good questions. Can we go, Luke, to the next question, please?

Speaker Change: Thank you Shannon had Christian Thank you again for the good questions can we go look to the next question. Please.

Operator: Our next caller is Lucas Herrmann from BNP.

Sinead Gorman: Our next caller is Lucas Herrmann from BNP.

Lucas Oliver Herrmann: Thanks very much and eat away, Sinead, Wael, just keep eating away and make Chirk very happy in his retirement as a Shell shareholder. Don't stop. A couple of things, if I might. I just wanted to come back to chemicals and to try and, I guess it's back to Paul's question around utilisation.

Lucas Oliver Herrmann: Thanks, very much and thanks for the eat away.

Lucas Oliver Herrmann: Oils, just just keep eating away and make sure it very happy in his retirement as a shell shareholder.

Lucas Oliver Herrmann: Don't stop.

Lucas Oliver Herrmann: A couple if I might I just wanted to come back to chemicals into try and it's I guess, it's part of Paul's question around utilization.

Lucas Oliver Herrmann: Great, you've moved away from 60%, you're guiding towards 72 to 80%, and I'm presuming you're saying within that the moniker is running, if anything, it's on the above nameplate. So it's really trying to understand why the numbers remain as modest as they are. Is that a consequence of a very difficult margin environment, and you're actively deciding you're not going to run the

Lucas Oliver Herrmann: A great you've moved away from 60% youre guiding towards 72% to 80% and I'm presuming you're staying within that the mono curve is running if anything it sounded above nameplate.

Lucas Oliver Herrmann: So it's really trying to understand why the numbers remain as modest oil as they are is that a consequence of a very difficult margin environment and your activity you saw it and you're not going to run clumped.

Lucas Oliver Herrmann: Do you think that on the $25 billion of capital that's invested in that business, how much of that capital do you think can earn a cost of capital return? How much of it not? And secondly, and sorry to stay on some of the businesses where I don't quite understand what they're delivering in sectors and decarbonisation. But if I look back, that business used to deliver, you know, 600, 700 million of net income per annum.

Lucas Oliver Herrmann: Do you think that on the 25 billion of capital to invest in that business.

Lucas Oliver Herrmann: How much capital do you think can earn our cost of capital return, how how much of it not.

Lucas Oliver Herrmann: And secondly, and pulled it was always to stay on some of the business is what I don't quite understand what their delivery sectors I'm decarbonization, if I look back that business used to deliver 600 or 700 million of net income per annum is down $20 million in the first quarter or is it kind of a common area of experimentation and and developments.

Lucas Oliver Herrmann: It made 20 million in the first quarter. Has it kind of become an area of experimentation and development and spending for the future and for the power and progress strategy? Or what kind of level of net income do you think we should realistically anticipate from that business in the near to medium term rather than the long term? That's it. Thanks very much.

Lucas Oliver Herrmann: Spend for the future and for the powering progress strategy, what kind of level of of MS. Income do you think we should realistically.

Lucas Oliver Herrmann: Dissipate from that business in the near to medium term.

Lucas Oliver Herrmann: Rather than law, that's it thanks very much.

Wael Sawan: Lucas, thank you for that, and we will indeed keep eating away. Let me take the first one and then ask Sinead to address the second one.

Speaker Change: Lucas. Thank you for that and we will we will indeed keep eating away. Let me take the first one and then SG&A to address your second one on chemicals.

Wael Sawan: On chemicals You'll recall, Lucas, of course, in June, we talked about chemicals and how we were positioning chemicals. We had some assets in the portfolio that were, if anything, actually destroying value, their negative return on capital employed, others that were sort of coming out from a non-productive phase of capital deployment into a productive phase, such as Shell Polymers, Monaca, and others that were somewhere in between, like our European assets. And we had to sort of do some work on them.

Sinead Gorman: You recall Lucas of course in June we talked about chemicals on how we were positioning chemicals, we had some assets in the portfolio that were if anything actually destroying value their negative return on capital employed others that we're sort of at the coming.

Wael Sawan: From a nonproductive phase of capital deployment into productive face such as Ah shall polymers, monaca and others that we're somewhere in between like our European assets and we have to sort of do some some work on them.

Wael Sawan: I think it's fair to say that on all three, we're making good progress at the moment, right? So of the $25 plus billion of capital employed, we have already talked about the planned divestment of Bukimchurong, which is the Singapore asset base. We have announced a couple of things on a few of the units in Europe. And then the other 50% of that capital employed sits in Shell Polymers, Monaca. And there's a lot that we are doing in that space. We have talked about it. Selling or upgrading the portfolio by selling the assets that are underperforming. We have talked about other specific units that are underperforming. We will either shut them down or convert them.

Wael Sawan: I think it's fair to say that all.

Wael Sawan: On all three we're making good progress at the moment so of the 25 plus billion dollars of capital employed.

Wael Sawan: We have already talked about the planned divestment of Locums wrong, which is the Singapore asset base.

Wael Sawan: We have announced a couple of things on a few of the units in <unk> in Europe, and then the other 50% of that capital employed sits in shell polymers monaca.

Wael Sawan: There's a lot that we are doing in that space, we have talked about.

Wael Sawan: Selling or high grading the portfolio by selling the assets that are underperforming we have talked about other specific units that are underperforming, we will either shut them down or convert them. We have recognized that our cost structure in that business needs to be addressed and we've made some moves including for example, a few months ago, where we trimmed down significantly the commercial staff base.

Wael Sawan: We have recognized that our cost structure in that business needs to be addressed, and we've made some moves, including, for example, a few months ago where we trimmed down significantly the commercial staff base. We have shifted the interaction between our chemicals and products and our trading organization, where there are some elements where we had duplication. We have now removed that duplication and consolidated.

Wael Sawan: We have shifted the interaction between our chemicals and products and our trading organization, where there are some elements, which we have duplication. We have now removed that application and consolidated so we're doing all the things we can do to be able to bring this business to be the best it can be within the constraints that we continue to have.

Wael Sawan: So we're doing all the things we can do to be able to make this business the best it can be within the constraints that we continue to have. As we continue to step up on Shell Polymers Monaco, what you will see is continued improvement there. Of course, as we look to go into the next grade of products and the next grade of products, we will be locking windows with many of our customers. That typically happens in the late third quarter or early fourth quarter.

Wael Sawan: As we continue to a step up on shelf phone numbers Monaca. What you will see is continued improvement there of course as we look to go into the next a grade of products in the next grade of product, we will be locking windows with many of our customers that typically happens in the late third quarter or early fourth quarter. So all.

Wael Sawan: So all of that is yet to come. But right now, we're maximizing value within the constraints we have. And I would say, to your point, margins continue to be very challenged. The indicative chemical margin for this quarter was 150, better than what it was in Q4, but that is still woeful compared to the historic trends. And so we will do all we can within what we can control and position ourselves to have choices thereafter.

Wael Sawan: That is yet to come but right now we're maximizing value within the constraints, we have and I would say to your point margins continue to be very challenged.

Wael Sawan: They indicate this chemical margin for this quarter was 150 better than what it was in Q4, but that is still Wolfe will compare to the historic trends and so we will do all we can within what we can control and position ourselves to have choices thereafter.

Wael Sawan: Yeah, sexism decarbonization I'll keep it reasonably short it looks because I think there's a number of parts in here and you've got you know you've got parts like 'em horns hydrogen one you've got and they have a plant in the Netherlands, which you're right. They're not generally asking any net income at the moment that they will in the future and of course, you have to invest for that and you know the investment cast Ryan. This so no need to talk about that we have.

Wael Sawan: Of course, it had a difference between what would've been the voluntary market before in terms of the drop and of course, a different fuels youre right that has come down in recent times, but that all the guys. They have back and forth along the way. The other part of it of course is that rising sits there as well right and of course and what we've seen in Brazil over the last couple of cautious as we are.

Sinead Gorman: times, But that obviously goes back and forth along the way. The other part of it, of course, is that Ryzen sits there as well. And Ryzen, of course, in what we've seen in Brazil over the last couple of quarters, we've seen actually a lot of ethanol being injected into the market. Now I can either take that as being very worrying or actually take it as being we know there will be a change because, as Brazil typically does, you have the flexibility, of course, for cars to run their dual fuel, they can flip between ethanol and normal fuel, and they will change the requirements there, which is what they've done year on year.

Sinead Gorman: Actually a lot of ethanol into the market now I can either take that as being very worrying are actually taken the thing. We know there will be a change because what Brazil will do as it typically does you have the flexibility of course for cars to run their dual fuel they can flip between ethanol a normal fuel there was change the requirements, there, which is what they've done year on year and that will require basically more ethanol inputs interests.

Sinead Gorman: And that will require basically more ethanol input, which will increase the market as well. So you see that, but you're right; it's at a low price now. And beyond that, of course, there's things like aviation and marine in there. And, of course, what you typically see is that you'll see the ramp-up, particularly for aviation, coming towards the traveling season. It's pretty low at the moment. But to be fair, it has not come back since what we saw pre-COVID as well.

Sinead Gorman: Which will increase the market as well so you see that but you're right, it's not low price now.

Sinead Gorman: And beyond that of course, there's things like aviation and marine and that of course, what you typically see is that you'll see the ramp up of particularly for aviation coming towards the travelling season, it's pretty low at the moment, but to be fair. It has not come back since what we saw pre COVID-19 as well beyond that which I think is where you're going to as well investments going forward clearly there'll be at the hurdle rates and that's right where we're at.

Sinead Gorman: Beyond that, which I think is where you're going as well, investments going forward, clearly, they'll be at the hurdle rate. And that's where we're very thoughtful. What we've seen is the EVP for that business actually looking at where she can step back from certain things and say, do I have a differentiating capability? So we don't serve the mining sector for decarbonisation there anymore because that's not where we add a lot of value. We don't make good margins.

Sinead Gorman: We're very thoughtful what we've seen is actually the ADP from that business actually looking at where she can step back from certain things and say do I have a differentiation capability and so we don't serve the mining sector for decarbonization and that anymore, because that's not where we have a lot of value and we don't make good margins. So I'll keep it there. Thank you Shannon.

Sinead Gorman: Keep it there. Thank you, Sinead. Luke, I think we're close to time. Any more questions?

Luke: Look I think we're close to time any more questions.

Operator: Our final caller today is Christopher Kuplent from Bank of America.

Sinead Gorman: Our final caller today is Christopher Copeland from Bank of America.

Christopher Kuplent: Thank you I'll try and keep it short so Jack will speak later quick one maybe she made you can of course point to seasonality in Capex, it's been a light quarter, but maybe you can talk to that seasonality versus real underlying efforts of spending less oh.

Christopher Kuplent: A quick one, maybe Sinead, you can, of course, point to seasonality in CapEx; it's been a light quarter, but maybe you can talk about that seasonality versus real underlying efforts of spending less. I've noticed that spending levels have halved basically in mobility, for example; maybe you can touch on a few points there.

Christopher Kuplent: I've noticed that spending levels have half basically in mobility. For example, maybe you can touch on a few points there and maybe you referred to.

Christopher Kuplent: And maybe you refer to the AGM that's upcoming in your opening remarks, so I'll leave it to you, Wael, maybe to comment on how Shell is, this time around, at least, in the AGM season, setting an example amongst the big oils and the shareholder resolution that you're up against. Can you maybe put that into context, considering the conversation, whether live or not, about where your primary listing should be? Thank you.

Christopher Kuplent: The AGM that's upcoming in your opening remarks, so I'll leave it to you while maybe to comment on them.

Wael Sawan: How shall is this time round at least in the AGM season made an example, amongst the big oils and the shareholder resolution that you're up against them.

Wael Sawan: Can you maybe put that into context, considering the conversation with a LIBOR not about where youll primary listing should be thank you.

Sinead Gorman: Excellent. Thank you very much, Christopher. I will hand over to you, Sinead, for the first one.

Wael Sawan: Excellent. Thank you very much Christopher let me hand over to <unk> for the first one yeah I'll keep it short till I have enough time for the second one and you're right. Our Capex is absolutely the first quarter. It tends to be very lumpy that I was talking I think it was lithia in Q3 last year actually called US and asked for a bit more what we're seeing of course is just that and capital discipline is kicking in your oxy.

Sinead Gorman: Tonight, you'll see that in mobility et cetera, but it is about timing as well so a lot of our payments tend to be a little bit lumpy. So you see it at different times for Q4 as you will have seen was quite a an uptick there as well, but that discipline lands is going through the whole organization, you'll see lumpiness things like whale et cetera, and different payments will still have to come through in the course of the year, So I'm not reducing the guidance.

Sinead Gorman: as well. But that discipline lens is going through the whole organization. You'll see lumpiness, things like WAIL, etc., different payments that still have to come through in the course of the year. So I'm not reducing the guidance at the moment, keeping it at 22 to 25.

Sinead Gorman: At the moment, keeping us in times of 'twenty two to 'twenty five.

Wael Sawan: Thank you, Sinead. And to your broader question, Christopher, thank you for the opportunity, if I may, to comment on the AGM on May 21st. I want to say a few things. One is that we go into this AGM with, I think, real momentum in the share price. One of the, or a few of the comments that I received at the last AGM were many of the shareholders with a few shares, retail shareholders saying, "hey, we've been holding your shares for a long, long time."

Speaker Change: Thank you she made into your.

Sinead Gorman: Broader question Christopher Thank you for the opportunity maybe to comment on the AGM on may 21st.

Wael Sawan: So a few things I think.

Wael Sawan: One is we go into this AGM with I think real momentum and the share price one of the or a few of the comments that I received at the last AGM where.

Wael Sawan: Many of the shareholders with a few shares retail shareholders, saying, Hey, we've been holding your shares for a long long time, we want to be able to see some uptick and hopefully we can stand proud and say we have been able to continue to drive some of the valuation of the company while recognizing that there is a lot more to go and so we we're humbly submit that there.

Wael Sawan: We want to be able to see some uptick, and hopefully, we can stand proud and say we have been able to continue to drive some of the valuation of the company while recognizing there is a lot more to go. And so we will humbly submit that there's a lot more running room.

Wael Sawan: There's a lot more running room.

Wael Sawan: We will also, of course, be putting forward our energy transition strategy for a vote, and hopefully, everyone will have seen the thoughtfulness that we put behind it, the broader understanding of the energy system. What I would say is a company that is truly leaning forward in the energy transition, but in a thoughtful and profitable way, because ultimately, that transition is only going to materialize with scalable and profitable business models, which is what we are trying to unlock.

Wael Sawan: We will also of course be putting forward, our energy transition strategy for a vote.

Wael Sawan: Which hopefully everyone will have seen the thoughtfulness that we put behind it the broader understanding of the energy system. What I would say is a company that is truly leaning forward then the energy transition, but in a thoughtful and profitable way because ultimately that's where the transition is only going to materialize with a scalable and profitable business.

Wael Sawan: <unk>, which is what we are trying to unlock and that will require us it'll require a government that require customers to step to the plate.

Wael Sawan: And that will require us, it will require government, it will require customers to step to the plate. There is, of course, also the follow this resolution, I think, to your implicit point around, to make an example, I think there is a focus on on Shell, which we welcome, because at the end of the day, we have the opportunity to be able to, I think, tell a very compelling story, a story of how this company has invested 10 to 50, or will be investing 10 to $15 billion between 2023 and 2025, and invested $5.6 billion in the low carbon space last year, a company that is investing in the largest green hydrogen facility in Europe and looking to create real value out of that when when others have made promises, but have not followed through. And so it'd be a real opportunity to tell our story.

Wael Sawan: There is of course also the fall of this resolution I think to your implicit point around.

Wael Sawan: To make an example, I think that is a focus on on shell.

Wael Sawan: Which we welcome because at the end of the day, we have the opportunity to be able to I think tell a very compelling story a story of how this company has invested tentative or would be investing $10 billion to $15 billion between 2023, and 2025 and invested $5 $6 billion and the low carbon space last year, a company that is investing in the largest green hydrogen facility in.

Wael Sawan: But importantly, as well, a reminder that the resolution, while appearing noble in its intent, fundamentally hits a few key points for us. One is that it is bad governance; it looks at one specific metric without looking at the entire energy system. And this is where we would ask our shareholders to spend time just reading through the energy transition strategy and looking at how we are thinking about the broader positioning of the company.

Wael Sawan: Europe, and looking to create real value out of that when when others have made promises but have not followed through and so it would be a real opportunity to tell our story, but importantly, as well a reminder, that the resolution one appearing noble and its intent fundamentally hits a few key points for US one is it as bad governance.

Wael Sawan: It looks at one specific metric without looking at the entire energy system and this is where we would ask our shareholders to spend time, just reading through the energy transition strategy and looking at how we are thinking about the broader positioning of the company. We also think that that resolution is going to be very bad for shareholders, we will be giving up businesses.

Wael Sawan: We also think that that resolution is going to be very bad for shareholders, we will be giving up businesses to others just for the sake of it, and it will be bad for our customers, who are depending on us to actually support them in this transformation and in this transition. And it will not actually help the climate, because all it will result in is us getting out of businesses that others would serve.

Wael Sawan: Others, just for the sake of it it will be bad for our customers who are depending on us to actually support them in this transformation in this transition and this will not actually help the climate because all that will result in is us getting out the businesses that others would serve and so for all those reasons, you'll see in a unanimous.

Wael Sawan: <unk> supports our unanimous advice from both the management team and the board.

Wael Sawan: And so for all those reasons, you've seen unanimous support or unanimous advice from both the management team and the board for the eighth year in a row to say, do not support that resolution and support management's resolution. And I think, I hope that through the efforts and through the debate that is becoming much more qualified these days, and a deeper understanding of how we need to keep the balance through the energy system, our shareholders will vote in the right way in support of management's recommendations.

Wael Sawan: For the eighth year in a row.

Wael Sawan: To say do not support that resolution in support management's resolution and I think.

Wael Sawan: I hope that through the efforts and through the debate that is becoming much more quantified these days and a deeper understanding of how we need to keep the balance through the energy system and our shareholders will will vote in the right way and support of management's recommendations and I look forward to that very little of in terms of how this all impacts of this.

Wael Sawan: And I look forward to that very little in terms of how this all impacts listing. I think the ESG agenda, when done in the right way, should be done all over the world, so that's not a Europe or UK-specific thing.

Wael Sawan: I think the the ESG agenda, one done in the right way it should be done all over the world. So that's not a.

Wael Sawan: In Europe, our UK specific thing, but hopefully its more the investors leaning in and being able to truly get much more detailed in the way, we're thinking about our energy transition and not fall prey to what is too simplistic and to some extent a destructive resolution that has been tabled.

Wael Sawan: But hopefully, it's more investors leaning in and being able to truly get much more detailed in the way we're thinking about our energy transition and not fall prey to what is too simplistic and, to some extent, a destructive resolution that has been taken. Let me leave it there. Christopher, thank you very much for that. And apologies for those who haven't been able to get their questions in. I'm sure your questions will be more than adequately addressed by our IR team.

Wael Sawan: Let me leave it leave it there are of course, well. Thank you very much for that.

Speaker Change: And apologies for those who haven't been able to get their questions and I'm sure you have questions will be more than adequately addressed by by our IR team, let me close off by saying by saying. Thank you to all of you for the questions for joining the call and in conclusion, we have delivered yet another strong quarter.

Wael Sawan: Let me close off by saying thank you to all of you for the questions and for joining the call. And in conclusion, we have delivered yet another strong. We announced another three and a half billion dollars of share buybacks, which makes this, as Sinead has already said, ten quarters in a row with buybacks of at least three billion dollars. I think we are building a track record of consistency and are progressing well in our first sprint to deliver more value with less emissions, and we continue to aim to be the investment case through the energy transition. We wish all of you very well and have a pleasant end of the week. Thank you all.

Wael Sawan: We announced another city under half a billion dollars of share buybacks, which makes this SG&A as already said 10 quarters in a row with buybacks of at least $3 billion.

Wael Sawan: I think we are building now a track record of consistency and are progressing well in our first sprint to deliver more value with less emissions and we continue to aim to be the investment case through the energy transition.

Wael Sawan: We wish all of you very well and have a pleasant end of the week. Thank you.

Wael Sawan: [laughter].

Wael Sawan: Okay.

Wael Sawan: [music].

Wael Sawan: Okay.

Wael Sawan: Yeah.

Wael Sawan: Hum.