Shell Q4 2025 Shell PLC Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Shell PLC Earnings Call
Speaker #1: If you would like to ask a question, please press star one. If you wish to be removed from the two. We will now begin the queue, please press star
Operator: If you would like to ask a question, please press star one. If you wish to be removed from the queue, please press star two. We will now begin the presentation.
Speaker #2: Welcome, everyone. Today,
Wael Sawan: Welcome, everyone. Today, Sinead and I will present Shell's Q4 and full year 2025 results. 2025 was another year of consistent delivery and real progress. We continued to execute with discipline and delivered against our targets in service of becoming the world's leading integrated energy company. As always, safety is a top priority. In 2025, 4 colleagues tragically lost their lives in our operated businesses. We owe it to them and everyone who works with us to learn from these incidents and to prevent such tragedies from happening again. On process safety, we continue to make encouraging progress, with 30% fewer incidents in 2025 compared to the previous year. Improving personal and process safety is a continuous journey and will remain our top priority. Turning to our strategy of delivering more value with less emissions.
Speaker #2: Shenade and I will present Shell's fourth presentation. quarter and full year 2025 results. 2025 was another year of consistent delivery and real progress. We continued to execute with discipline, and delivered against our targets in service of becoming the world's company.
Speaker #2: Shenade and I will present Shell's fourth presentation. quarter and full year 2025 results. 2025 was another year of consistent delivery and real progress. We continued to execute with discipline, and delivered against our targets in service of becoming the world's leading integrated energy As always, safety is a top priority.
Speaker #2: In 2025, four colleagues tragically lost their lives in our operated businesses. We owe it to them, and everyone who works with us, to learn from these incidents and to prevent it from happening again.
Speaker #2: On process safety, we continue to make encouraging progress with 30% fewer incidents in 2025 compared to the previous year. Improving personal and such tragedies from happening process safety is a continuous journey, and will remain our top priority.
Speaker #2: Turning to our strategy of delivering more value with less emissions, last year, we beat our ambitious CMD 23 targets and set out important new financial targets at CMD 25.
Wael Sawan: Last year, we beat our ambitious CMD23 targets and set out important new financial targets at CMD25. The first of these financial targets is to deliver structural cost reductions of $5 to 7 billion by the end of 2028. By the end of 2025, we had already achieved $5.1 billion of reductions, with more to come. Nearly 60% of the structural cost reductions came from operational efficiencies, a leaner corporate center, and faster value-based decision-making. Achieving this target 3 years early demonstrates the drive of our organization to deliver. The next target is disciplined capital allocation within a cash CapEx range of $20 to 22 billion, and we ended 2025 in the middle of that range.
Speaker #2: targets is to deliver structural cost reductions of 5 to 7 billion The first of these financial dollars by the end of 2028. By the end of 2025, we had already achieved 5.1 billion dollars of reductions with more to come.
Speaker #2: Nearly 60% of the structural cost reductions came from operational efficiencies, a leaner corporate center, and faster value-based decision making. Achieving this target three years early demonstrates the deliver.
Speaker #2: The next target drive of our organization to is discipline capital allocation within a cash capex range of 20 to 22 billion dollars, and we that range.
Speaker #2: This has ended 2025 in the middle of better capital allocation to enhance returns, and you see that reflected in tough choices like stopping the construction of the biofuels plant. In its annual growth in normalized free cash flow per share of over 10% through 2030.
Wael Sawan: This is about greater discipline and better capital allocation to enhance returns, and you see that reflected in tough choices like stopping the construction of the biofuels plant in Rotterdam. The third is annual growth in normalized free cash flow per share of over 10% through 2030. We are on track to deliver through a focus on performance and discipline by turning around underperforming capital, and we continue to focus on shareholder distributions through buybacks. This brings me to the fourth financial target, shareholder distributions of 40% to 50% of CFFO through the cycle. This remains sacrosanct, and in 2025, we delivered at the top end of that range. In short, we are on track to achieve our financial targets, showing that we deliver on what we say we will do. Now, turning to our portfolio.
Speaker #2: We are on Rotterdam. track to deliver through a focus on performance and discipline by turning around underperforming capital and we continue to focus on shareholder distributions The third through buybacks.
Speaker #2: This brings me to the fourth financial target. Shareholder distributions of 40 to 50% of CFFO through the cycle. This remains we delivered at the top end of that range.
Speaker #2: In short, we are on track to achieve our financial sacrosanct, and in 2025, targets showing that we deliver on what we say we will do.
Speaker #2: portfolio. In 2025, we executed several deliberate value-driven Now turning to our decisions to strengthen our businesses. In upstream, we completed the divestment of SPDC in Nigeria.
Wael Sawan: In 2025, we executed several deliberate, value-driven decisions to strengthen our businesses. In upstream, we completed the divestment of SPDC in Nigeria, the conclusion of a major multi-year effort. We also completed the Viaro joint venture in December, which, as of today, is the UK North Sea's largest independent producer and unlocks additional value. Finally, in chemicals and products, we divested our loss-making asset in Singapore and are working to reposition our chemicals portfolio to unlock further value. These decisive actions demonstrate our focus on value. At our CMD25, we also set an aim of growing our LNG sales through to 2030 by 4 to 5% per annum, and last year, those sales grew by 11%, supported by the highest number of cargoes delivered in a single year.
Speaker #2: The conclusion of a also completed the Adura joint venture in December, which as of today is independent producer and unlocks major multi-year effort. additional value.
Speaker #2: And finally, We in chemicals and products, we divested Singapore and are working to reposition our chemicals portfolio to unlock further value. These decisive actions demonstrate our focus on value.
Speaker #2: In 2025, we also set the aim of growing our LNG sales through to the end of the year, and last year, those sales grew by 11%, supported by the highest number of cargoes delivered in a single year.
Speaker #2: This record was supported by last year's startup of LNG Canada where ramp-up to full capacity is continuing. Beyond organic growth, we also completed the acquisition of Pavilion Energy last year.
Wael Sawan: This record was supported by last year's startup of LNG Canada, where ramp up to full capacity is continuing. Beyond organic growth, we also completed the acquisition of Pavilion Energy last year. We also committed to bring new oil and gas projects online that, at their peak, will add more than 1 million barrels of oil equivalent per day by 2030, and we're progressing well. By the end of last year, we had already started up more than a quarter of that new production. We have also further strengthened our deepwater position by increasing our interests in the Gulf of Mexico, in Brazil, and in Nigeria, and we took final investment decisions for the Kaikias water flood in the Gulf of Mexico and for Gato do Mato, now renamed to Orca, in Brazil.
Speaker #2: We also committed to bring new oil and gas projects online that, at their peak, will add more than 1 million barrels of oil equivalent per day by 2030.
Speaker #2: And we're progressing well. By the end of last year, we had already started up more than a quarter of that new production. We have also further strengthened our deep water position by increasing our interests in the Gulf of decisions for the CACUS water flood in the Nigeria.
Speaker #2: Mato, now renamed to ORCA, in And we took final investment Brazil. In addition, we have expanded our footprint for exploration, by acquiring acreage in Angola, South Africa, and the Gulf of America.
Wael Sawan: In addition, we have expanded our footprint for exploration by acquiring acreage in Angola, South Africa, and the Gulf of Mexico. Moving now to marketing, where we continue to high-grade our portfolio. Last year in mobility, we closed or divested some 800 lower-performing branded sites, and by focusing on performance, discipline, and simplification, both mobility and lubricants achieved their best-ever results in 2025. In power and low-carbon options, we've continued to high-grade the portfolio through the year, divesting projects like Atlantic Shores and ScotWind, while also diluting parts of the Savion portfolio. These steps are aligning our portfolio with our increased focus on flexible generation and trading. Turning now to the low emissions part of our strategy. At CMD23, we said we would invest between $10 to 15 billion in low-carbon energy solutions between 2023 and 2025, which we have delivered on.
Speaker #2: Moving high-grade our portfolio. Last year, in mobility, we closed or divested some 800 now to marketing, where we continue to lower-performing branded sites. And by focusing on performance, discipline, and simplification, both mobility and lubricants achieved their best-ever results in 2025.
Speaker #2: And in Power and Low-Carbon options, we've continued to high-grade the portfolio through the year, divesting projects like Atlantic Shores and ScotWind, while also diluting parts of the Savion portfolio.
Speaker #2: These steps are aligning our portfolio with our increased focus on flexible generation and trading. Turning now to the less emissions part of our strategy.
Speaker #2: At CMD 23, we said we would invest between 10 to 15 billion dollars in low-carbon energy solutions between 2023 and 2025, which we have delivered on.
Speaker #2: We have created options in Power and Low-Carbon in areas such as CCS and bioenergy. We're now focused on delivering returns on those investments, helping our customers to decarbonize, and leveraging our trading capabilities.
Wael Sawan: We have created options in power and low carbon in areas such as CCS and bioenergy. We're now focused on delivering returns on those investments, helping our customers to decarbonize, and leveraging our trading capabilities. Last year, we also made significant progress against a number of our ETS24 emissions targets. Starting with our target to have Scope 1 and 2 emissions under our operational control by 2030, on a net basis, compared with 2016. We have already achieved some 70% of that target. Next, our target to lower the net carbon intensity of the products we sell by 15 to 20% by 2030. We're on track, delivering 9% in 2025, compared with 2016.
Speaker #2: Last year, we also made significant progress against a number of our ETS 24 emissions targets. Starting with our target to have Scope 1 and 2 emissions under our operational control by 2030, on a 2016 baseline.
Speaker #2: We have already achieved some 70% of that net basis compared with target. Next, our target to lower the net carbon intensity of the products we sell by 15 to 20% by 2030.
Speaker #2: We're on track delivering 9% in 2025 compared with 2016. Linked to reduce customer emissions from the use of that, we also set an ambition to the oil products we sell by 15 to 20% by 2030, and we met that 18% in ambition, achieving a reduction of 2025.
Wael Sawan: Linked to that, we also set an ambition to reduce customer emissions from the use of the oil products we sell by 15 to 20% by 2030, and we met that ambition, achieving a reduction of 18% in 2025. 2025 was also the year we achieved our target of eliminating 100% of routine flaring from our upstream operations. Once again, showing that we deliver on what we say. With that, I will hand over to Sinead, who will tell you more about our financial results and our financial framework.
Speaker #2: also the year we achieved our target of eliminating 100% of 2025 was routine flaring from our upstream operations. Once again, showing that we deliver on what we say.
Speaker #2: With that, I will hand over financial results and our financial framework. Thank you, Wael. Our financial results in the fourth quarter of 2025 were impacts and lower oil prices, which quarter of strong operational performance.
Sinead Gorman: Thank you, Wael. Our financial results in Q4 2025 were lower due to non-cash tax impacts and lower oil prices, which were partly offset by another quarter of strong operational performance. Our adjusted earnings for the quarter were some $3.3 billion. Upstream delivered a strong quarter in the current price environment, and as expected, integrated gas results returned to more normal pre-COVID levels, as we have outlined in previous quarters. Marketing results were seasonally lower and further impacted by non-cash tax adjustments and joint ventures. Products delivered strong results, helped by higher refining margins, partly offset by lower trading, which is typical in the fourth quarter. And in chemicals, we continue to face challenges due to both low chemical margins and lower operational performance. Fixing and repositioning this business is a key priority in 2026. Turning to cash.
Speaker #2: Dollars. Quarter were some $3.3 billion. Upstream delivered a lower result due to non-cash tax environment, and as expected, Integrated Gas results returned to more normal pre-COVID levels, as we have outlined in previous quarters.
Speaker #2: Marketing results were seasonally lower and further Our adjusted earnings for the impacted by non-cash tax adjustments in joint ventures. Products delivered strong results helped by higher refining margins partly offset by lower trading, which is quarter.
Speaker #2: And in chemicals, we continue to typical in the fourth face challenges due to both low chemical margins and lower operational performance. Fixing and priority in 2026.
Speaker #2: Turning to cash, Q4 repositioning this business is a key generated 9.4 billion dollars despite some of the typical year-end payments. Moving to the 2025 full year.
Sinead Gorman: Q4 CFFO was robust as we generated $9.4 billion, despite some of the typical year-end payments. Moving to the 2025 full year. From a macro perspective, Brent prices on average were over $10 a barrel lower than the year before. Despite this, we are proud that our stronger operational performance drove solid financial results in this lower price environment. Full year adjusted earnings were $18.5 billion, and we generated close to $43 billion in cash flow from operations, and we delivered just over $26 billion of free cash flow. Both integrated gas and upstream had a very strong year operationally, with high controllable availability, driving increased production. In particular, we saw increased contributions from higher margin upstream volumes, especially in the Gulf of Mexico and Brazil.
Speaker #2: From a macro perspective, Brent barrel lower than the year before. Despite this, we are proud that our stronger operational performance drove solid financial results in this lower price 18.5 billion dollars.
Speaker #2: And we generated close to 43 billion dollars in cash flow from operations, and we delivered just over 26 billion dollars of free cash CFFO was robust as we environment.
Speaker #2: Gas and Upstream had a very strong year operationally, with high flow. Full-year adjusted earnings were controllable availability, driving increased production. In particular, we saw increased contributions from higher-margin Upstream volumes, especially in the Gulf of America and Brazil.
Speaker #2: In downstream and renewables and energy solutions, mobility and lubricants delivered higher margins through increased sales of premium products whilst also reducing operating costs. As a result, both 2025.
Sinead Gorman: In Downstream and Renewables and Energy Solutions, mobility and lubricants delivered higher margins through increased sales of premium products, while also reducing operating costs. As a result, both businesses continued to improve their ROACE year-over-year in 2025, with mobility increasing to over 15% and lubricants to over 21%, and with both achieving their highest ever contributions to our results. Chemicals and products had a mixed year, with better refining performance being offset by continued low chemical margins and lower trading and supply contributions, while our renewables and energy solutions business performed in line with expectations. Now, moving to our financial framework. Our cash CapEx range for 2026 remains at $20 to 22 billion.
Speaker #2: With mobility businesses continue to improve their increasing to over ROACI year over year in 15% and lubricants to over 21%, and with both achieving their highest ever contributions to our results.
Speaker #2: Chemicals and products had a mixed year, with better refining performance being margins and lower trading and supply contributions, while our renewables and energy solutions business performed in line with offset by continued low chemical expectations.
Speaker #2: Now, moving to our financial framework. Our cash capex range for billion dollars. We continue to maintain a strong balance sheet with gearing of 21% or 9% excluding leases.
Sinead Gorman: We continue to maintain a strong balance sheet with gearing of 21% or 9% excluding leases, and our distribution range of 40% to 50% of CFFO remains sacrosanct. We continue to deliver compelling shareholder distributions, and today we announced a 4% increase in our dividend, in line with our progressive dividend policy, as well as a $3.5 billion share buyback program, which we expect to complete by our Q1 results announcement in May. This marks the 17th consecutive quarter in which we've announced $3 billion or more in buybacks. And with that, I will hand back to Wael.
Speaker #2: And our distribution range of 40 to 50% of CFFO remains sacrosanct. We continue to deliver compelling shareholder distributions, and today we announced a 4% increase in our dividend in line with our progressive dividend policy as well as a 3.5 billion dollar share buyback program, which we expect to complete by our Q1 results announcement in consecutive quarter in which we've announced 3 May.
Speaker #2: buybacks. And with that, I will hand back to Wael.
Speaker #1: Thank you, Sinead. Before closing out, I want to take a moment to thank our staff for their hard
Wael Sawan: Thank you, Sinead. Before closing out, I want to take a moment to thank our staff for their hard work, their commitment, and their delivery across the year. We're living in a rapidly changing world, but our business model is well positioned for these conditions. That confidence is underpinned by our balance sheet strength, which we've improved in recent years through stronger operational performance and disciplined spending. This has led to enhanced cash generation. We'll continue to focus on what we can control and ensure we are positioned for countercyclical opportunities where they might arise and meet our high bar for investment decisions. Ultimately, we hope it's clear that you can be sure of Shell. You can trust us to stay value focused and disciplined. We have entered 2026 as a more resilient organization. We have raised the bar on operational performance.
Speaker #1: Delivery across the year. We're living in a rapidly changing world, and this marks the 17th for these conditions. Our confidence is underpinned by our balance sheet, performance, and disciplined spending.
Speaker #1: Cash generation—we'll continue to strengthen, which we've improved in recent quarters—focus on what we take control of, and ensure we are positioned for countercyclical opportunities where they might arise, and meet our high bar for investment decisions.
Speaker #1: Be sure of Shell. You can trust 2026 remains at 20 to 22, disciplined. We have entered 2026 as a more resilient organization. We have raised the bar on operational performance.
Wael Sawan: We are showing more discipline and making great progress to deliver more value with less emissions. There is so much more to come. Lower costs, further performance improvements supported by the transformative potential of AI, and a higher returning portfolio of world-leading franchise businesses. All of this gives us confidence for the road ahead. Thank you.
Speaker #1: world-leading franchise businesses. All of this gives us confidence for the us to stay value-focused and you.
Operator: We will now begin the question and answer session. People dialed in, if you have a question, please press star one. If you wish to be removed from the queue, please press star two. 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.
Speaker #3: session. People dialed in, if you have a question, please press star one. If you wish to question and answer be removed from the queue, please callers are requested to mute the audio on their computer webcast, and listen attentively to their telephone audio as we begin to progress through press star two.
Speaker #3: the telephone questions.
Speaker #1: Thank you very much for joining us today. We hope that after watching this presentation, you've seen how we delivered a strong set of results in
Wael Sawan: ...Thank you very much for joining us today. We hope that after watching this presentation, you've seen how we delivered a strong set of results in 2025, and how we are firmly on track to deliver the targets that we set ourselves at Capital Markets Day 2025. Now Sinead and I will be answering your questions. So please, could we just have one or two questions each so that everyone has the opportunity? With that, could we have the first question, please, Jake?
Speaker #1: track to deliver the targets that we set ourselves at Capital Markets Day 2025. And now, Sinead and I will be answering your questions, so questions each so that everyone has the opportunity?
Speaker #1: With that, could we have the first question, please? Please, could we just have one or two?
Operator: Our first caller is Alastair Syme from Citi.
Speaker #2: Our first caller is Alistair Sim from
Speaker #2: City.
Speaker #2: City.
Alastair Syme: Thanks. Hi, Wael and Sinead. Like, I feel obliged to kick us off on reserves. You've listed a huge amount of portfolio refocus in the upstream, and, but, you know, I guess for Shell, we've had three years of sprint and cost takeout, but at the same time, reserve life has fallen 15%. And if I take you back a couple of years ago, you used to say there was no portfolio problem. And I think now the message has morphed into one that sort of acknowledges there is a bit of a problem to address, but there's no hurry. So I guess the question is: what is the plan? You know, how do we frame the timeline around hurry? And yeah, how can you counter the market concerns that the business is simply shrinking? Thank you.
Speaker #4: Of portfolio refocus—thanks. Hi, Wael. We've had three years, but at the same time, reserve life has fallen 15%. And on sprint and cost takeout, if I take you back a couple of years ago, you used to say there was no portfolio problem, and I think now the message has morphed into one that sort of acknowledges there is a bit of a problem to address, but there's no hurry.
Speaker #4: So I guess the question is, what is the plan? How do we frame the timeline around hurry? And how can you counter the market concerns that the business is simply shrinking?
Speaker #4: Thank you.
Speaker #1: Yeah, thank you very
Wael Sawan: Yeah, thank you very much, Alastair. I'll suggest I kick off, and then maybe, Sinead, bring you in. Yeah, first, thank you for the question. I think I'll start with what you and I have talked about in the past. Where we start and what I keep saying, and I keep hearing back from my investors, is that at the end of the day, it's intrinsic value creation that we are driving, and it's particularly value creation per share that we are driving towards. And so there are a few elements of how we are unlocking that. I think you touched on one of them, fundamentally driving the performance culture in the company, the takeout of the $5 billion of cost reduction, and we are now driving towards the higher end of the $5 to 7 billion range.
Speaker #1: much, Alistair. I'll suggest I kick off and then maybe Sinead bring you in. Yeah, first, thank you for the question. I think I'll start with what you and I've talked about in the past.
Speaker #1: what I keep saying and I keep hearing back from my investors is that at the end of the day, it's intrinsic value creation that we are driving.
Speaker #1: And it's Where we start and driving towards. And so there are a few elements of how we are unlocking that. I think you touched on one of them.
Speaker #1: particularly value creation per share that we are Fundamentally, driving the performance culture in the company. The takeout of the $5 billion of cost reduction, and we are now driving towards the higher end of the $5 to $7 billion range.
Speaker #1: There's more to be done on capital, efficiency. There's more to be done on improving the returns on the significant value uplift on that side of it.
Wael Sawan: There's more to be done on capital efficiency. There's more to be done on improving the returns on the actual capital employed, so there's significant value uplift on that side of it. We also showed, of course, in Capital Markets Day 2025, the trajectory to 2040 for both integrated gas and marketing, where we see our cash flow growing from around $20 billion last year to close to $25+ billion at a slightly lower capital diet. So all of that is showing the growth. But then let me come specifically to the heart of the question around resource. What we have tried to do is look at the resource as an important KPI in the overall mix, but most importantly, look at the cash flow that's coming from it.
Speaker #1: We also actual capital employed. showed, of course, in Capital Markets Day 2025, the trajectory to 2040 for both integrated gas and So there's marketing.
Speaker #1: Where we see our cash flow growing from around $20 billion last year to close to $25 plus billion at a slightly lower capital diet.
Speaker #1: So all of that is showing the growth. But then let me come specifically to the heart of the question around resource. What we have tried to do is look at the resource as an important KPI in the overall mix, but most importantly, look at the cash flow that's coming from it.
Speaker #1: I mentioned in Capital Markets Day that we had a gap to 2030 that was close to $100,000 barrels per day to be able to, for example, keep our liquids flat.
Wael Sawan: I mentioned in Capital Markets Day that we had a gap to 2030 that was close to 100,000 barrels per day to be able to, for example, keep our liquids flat. I'm pleased to say that with the $2 billion of deep-water bolt-ons that we did in 2025, and improved recovery from some of the reservoirs we have, we already have largely plugged that gap of the 100,000 barrels per day. So that actually gives us the runway to be able to de-risk the 10% free cash flow per share that we talked about in Capital Markets Day. Your question, though, is a fair one when you look at the 2035.
Speaker #1: I'm pleased to say that with the $2 billion of deep water bolt-ons that we did in 2025, and improved recovery from some of the reservoirs we plugged that gap of the $100,000 have, we already have largely us the runway to be able to de-risk the 10% free cash flow per share that we talked about in Capital is a fair one when you look at the 2035.
Speaker #1: We still have a Markets Day. Your question, though, resource gap there that we plan to fill. But we want to make sure to fill that gap.
Wael Sawan: We still have a resource gap there that we plan to fill, but we want to make sure that the bar continues to be high there, and we have a few years to be able to fill that gap. So this is not ignoring the issue, but this is de-risking what we can see in front of us, what we can control, and making sure that we deliver on our commitment to our shareholders to do it in a highly accretive way. And that's what we want to be able to work on. We are, we are liquefying 1 million barrels per day of new capacity we're bringing in. Last year, we brought a quarter of that. We have another 750,000 barrels per day to bring online.
Speaker #1: So this is not there. And we have a few years to be able ignoring the issue, but this is de-risking what we can see in front of us, what we can control and making sure that we deliver on our commitment to our shareholders to do it in a highly accretive way.
Speaker #1: day of new capacity we're bringing in. Last year, we brought a And that's what we want to be able quarter of that. We have another 750,000 barrels per day to bring online.
Speaker #1: We have exciting new projects like Bonga Southwest that is also coming to work on. are liquidating the million barrels per We in the post-2030 timeframe.
Wael Sawan: We have exciting new projects like Bonga South West, that is also coming in the post-2030 timeframe. We need to be able to move those things through, but the core continues to be one of real focus on proper capital stewardship as we unlock that future cash flow. Sinead, maybe you want to add a few words?
Speaker #1: We need to be able to move those things through. But the core continues to be one of real focus on proper capital stewardship as we unlock that future cash flow.
Speaker #3: Yeah, just a
Sinead Gorman: Yeah, just a little bit on that as well, because I think you covered indeed how we're closing the gap. Let me just talk you through our thinking a bit, and I think as Wael positioned very well, of course, things like reserves or R over P are important metrics, but there's only one metric as we look at the depth of our portfolios. Let me go specifically on R over P. So roughly speaking, we're at about 7.8 years, as you know, now, which it came down from 9. How did we... And what, what were the decision-making between coming down from 9? Two main elements of that.
Speaker #3: A little bit on that as well, because I think you, Sinead, maybe you want to add a few words? We’ve covered, indeed, how we’re closing the gap.
Speaker #3: Let me just talk you through our thinking a bit. I think as Wael positioned very well, of course, things like reserves are over P are important metrics, but there's only one metric as we look at the depth of our portfolio.
Speaker #3: So let me go specifically on R over P. So, roughly speaking, we were at about 7.8 years, as you know, from 9. How did we, and what were the decision-making factors between coming down, you know, now, which is—it came down from 9?
Speaker #3: Two main elements of that. One was the SPDC sales, so the sale in Nigeria of assets, and the other, of course, was the move with respect to oil sands.
Sinead Gorman: One was the SPDC sale, so the sale in Nigeria of assets, and the other, of course, was the move with respect to oil sands, both of which we've talked over the last year or so with you. And of course, both were very conscious decisions. And of course, the reason they were conscious decisions, if we'd kept them, we would have stayed at about the same level, given all of the additions that we had as well. But we consciously chose not to do that. And that $2 billion of CapEx instead, that we moved towards deep water, what did that do?
Speaker #3: Both of which we've talked over the last year or so with you. And, of course, both were very conscious decisions. And, of course, the reason they were conscious decisions—if we'd kept them, we would have stayed at about the same level, given all of the additions that we had as well.
Speaker #3: But we consciously chose not to do that. And that $2 billion of CapEx instead that we moved towards deep water, what water and that was Gulf of America, that did that do?
Sinead Gorman: The fact that we put it into deepwater, and that was Gulf of Mexico, that was Brazil, that was Nigeria as well, and a number of other aspects, those ended up with very high-margin barrels, but of course, didn't have quite the same length in terms of the R over P or the impact on the R over P. We chose to go with high margin, therefore, creating value rather than just trying to manage to a metric. And of course, as you know, when we talk to the shareholders, it's very much about focus on, not moving towards one metric, but actually generating value.
Speaker #3: well, and a number of other aspects, those ended up with very high margin barrels. But of course, didn't have quite the same length in terms of the The fact that we put it into deep therefore creating value rather than just trying to P.
Speaker #3: well, and a number of other aspects, those ended up with very high margin barrels. But of course, didn't have quite the same length in terms of the The fact that we put it into deep therefore creating value rather than just trying to P. R over P or the impact on the R over know, when we talk to the shareholders, it's very much We chose to go with high margin, about focus on not generating value.
Speaker #1: And so let me close then
Wael Sawan: So let me close then, Alastair, and thank you for that, Sinead. What I will say is we are, of course, at an inflection point as a company as well. We have really been focused on the performance drive, the embedding the performance culture, and I think made great progress. What I can say, and what I will be saying to our investors is, both Sinead and I will bring that same focus and rigor now as we have really gotten the self-sustaining performance loop into the company. We will now look at portfolio reallocation, how we are going to be reallocating capital to the opportunities that allow us to unlock even further growth post-2030, and that's where our attention will continue to go in the coming years. Thank you for that question, Jake.
Speaker #1: inflection point as a company as well. on the performance drive, the embedding I will say is we are, of course, at an the performance culture.
Speaker #1: And I think made great progress. What I can say and
Speaker #1: investors is both Sinead and I will bring that same focus and rigor now as we have really gotten the self-sustaining performance loop moving towards one metric, but actually what I will be saying to our into the company.
Speaker #1: at portfolio reallocation, how we are going to We will now look opportunities that allow us to unlock even further growth post-2030. And that's where our attention will continue to go in the coming years.
Speaker #1: Thank you for that question, Jake. Let's have the next question, please.
Wael Sawan: Let's have the next question, please.
Speaker #4: Our next caller is Josh Stone from...
Operator: Our next caller is Josh Stone from UBS.
Speaker #4: UBS. Yeah, thanks.
Josh Stone: Yeah, thanks, and good afternoon. Just a question on the buybacks. I'm curious as when you set up the buyback, how much of a close call that was this quarter? 'Cause I understand you've got a strong balance sheet, prices seem to be holding up better than expected, but also for the first time in a while, we've got more people buying energy stocks, and your shares have clearly rerated with that, and they're more expensive. So was that considered at all in your decision to leave it flat? And how much, how close was that call? Thanks.
Speaker #5: And good afternoon. Just a question on the buyback. I'm curious as when you set the buyback, how much of a close call that was this quarter?
Speaker #5: Because I understand you've got a strong balance than expected. But also, for sheet. Prices seem to be holding up better the first time in a while, we've got more people buying energy stocks and your shares have clearly rerated with that and they're more expensive.
Speaker #5: So was that considered at all in your decision to leave it flat? And how much how close was that call?
Speaker #5: Thanks.
Speaker #1: Thanks for the question,
Wael Sawan: Thanks for the question, Josh. Sinead?
Speaker #1: Sinead?
Speaker #3: Yeah, no, happy to take that. Thanks, Josh.
Sinead Gorman: Yeah, no, happy to take that. Thanks, Josh. Really good question, and what I like is you're asking us about how we think about it. And it is a conscious decision in terms of capital allocation each quarter, of course. I mean, with respect to the buybacks and where do we go in the buyback, I mean, one of the first things I would say is what we've looked at is the fact that we've bought back roughly, what? 25% of our shares, I think, over the last 3 years. And of course, that's at some 20% below where our share price is today. So you can see the allocation around that. So that thoughtfulness is there. The frame that we use has been sort of quite clear.
Speaker #3: Josh. Really good question. And what I like is you're asking us about how we think decision in terms of capital allocation each quarter, of course.
Speaker #3: I mean, with respect to the buybacks and where do we go in the buyback, I mean, one of the first things I would say is what we've looked at is the fact that we've bought back roughly, what, 25% of our shares. That's at some 20% below where our share price is today.
Speaker #3: So you can see the allocation around that. So that thoughtfulness is think, over the last three years. And of course, there. of quite clear.
Speaker #3: The frame that we use has been sort of—We've always said to you that sort of 40% to 50% in terms of CFO distribution is sacrosanct.
Sinead Gorman: We've always said to you that sort of 40 to 50% in terms of CFFO distribution is sacrosanct. And of course, that varies a little bit quarter to quarter, because it is through the cycle. So you see that in our thinking, and of course, this quarter it was 52%, but, you know, you have volatility, with price and everything else coming through. So we're very comfortable and very focused on staying within that. But indeed, we still see the buybacks as, particularly at this sort of price, as very much value-led. And of course, we have such a strong balance sheet, as you know, when we're sitting at some 20% of gearing as well.
Speaker #3: quarter to quarter. Because it is through And of course, that varies a little bit the cycle. So you see that in our thinking. And of course, this quarter it was volatility with price and everything else coming see the buybacks as particularly at this sort of price as very much through.
Speaker #3: Sheet, as you know, when we're sitting at some value-led—and of course, we have such a strong balance, 52%. But you have well.
Speaker #1: Thank you for that, Josh. Next question, please, Jake.
Wael Sawan: Thank you for that, Josh. Next question, please, Jake.
Operator: Our next caller is Irene Himona from Bernstein.
Speaker #4: is Irene Himona from So we're very comfortable and very focused Our next caller
Irene Himona: Thank you very much. Good afternoon. I had two, please. So first, can you please speak around the key financial impacts of the Adera venture in the UK in 2026 on key metrics like, perhaps your, cash dividend receipts or upstream tax rates, et cetera. And then secondly, looking at group return on capital, obviously, it is below double digits. It's clearly not helped by widening chemicals losses. The chemicals down cycle appears to be a really prolonged one, which is clearly something that cannot be controlled. So I wanted to talk around what you are controlling in chemicals, and in particular, to ask about progress on the announcement you made that CMD25 of the restructuring intention for chemicals. So how far has that progressed? Thank you.
Speaker #6: you very much. Good afternoon. I had
Speaker #6: you very much. Good afternoon. I had Thank on staying within that. two, please. So first, can Bernstein. you please speak around the key financial impacts of the Adura joint venture in the
Speaker #6: UK in 2026? On key metrics like perhaps your cash dividend tax rates, et cetera. And then secondly, looking at group return on capital obviously it is below double digits.
Speaker #6: UK in 2026? On key metrics like perhaps your cash dividend tax rates, et cetera. And then secondly, looking at group return on capital obviously it is below double receipts or upstream widening chemicals losses.
Speaker #6: The It's clearly not really prolonged one, which chemicals down cycle appears to be a is clearly something that cannot be controlled. So I wanted to talk But indeed, we still chemicals and in particular to ask about progress on the announcement you made that CMD25 of the restructuring intention for chemicals.
Speaker #6: So, how far has that progressed? Thank you.
Speaker #1: Thank you very much, Irina. I'll take the second one. Maybe you want to start with the first one on
Wael Sawan: Thank you very much, Irene. I'll take the second one. Maybe you want to start with the first one on Adera.
Speaker #1: Adura? Certainly.
Sinead Gorman: Certainly. Indeed, Adera, really pleased, Irene, to see that actually up and running with our partner on 1 December. Teams are doing well there. It really is a standalone venture, of course. You can see them out there looking at raising debt to be able to continue to grow that business and to be able to use capital very efficiently there as well. But you specifically asked about how would we see that play out in some of our metrics. What you see, of course, is because it is a standalone entity, you see a lot of the normal aspects pulling out. You see the production reduced coming through in our outlook. Sorry, production being reduced in our Q1 outlook as well. So you see that in the upstream numbers.
Speaker #3: Indeed, Adura really pleased, Irina, to see that around what you are controlling in actually up and running with our partner on the 1st of December.
Speaker #3: Teams are doing well there. It really is a standalone venture, of course. You can see them out there looking at raising debt to be able to continue to grow that business and to be able to use capital very efficiently there as well.
Speaker #3: But you specifically asked about how would we see that play out in some of our metrics. What do you see, of course, is because it is a standalone entity, you see a lot of the normal aspects pulling out.
Speaker #3: You see the production reduced coming through in our outlook or that production sorry, production being reduced in our Q1 outlook as well. So in contrast, what you will see as you exactly you see that in the upstream numbers.
Sinead Gorman: And in contrast, what you will see, as you exactly rightly say, we'll see dividends coming in. Now, we don't tend to give guidance. Of course, it's a standalone venture, as you know, but we expect to see considerable dividends coming through. And of course, I saw yesterday, of course, our partner, of course, made some comments in that respect as well. Venture is strong. It has the ability to grow. It's the largest, you know, standalone producer, independent in the North Sea now, and they're looking at many more opportunities, and they're driving hard to be able to return to the shareholders, the dividends that they've rightly promised us.
Speaker #3: rightly say, we'll see dividends coming in. Now, we don't tend to give guidance. Of course, it's a And standalone venture, as you know, but we expect to see considerable dividends coming through.
Speaker #3: And, of course, I saw yesterday, our partner made some comments in that respect as well. Venture is strong. It's independent in the North Sea now.
Speaker #3: And they're looking at many more opportunities. And they're driving hard to be able to return to the shareholders the dividends that they've rightly promised us.
Speaker #1: Thanks, Sinead. Irina, to your second then the chems. So a couple of question around group Rawatchi and points maybe. Firstly, in my response to Alice's
Wael Sawan: Thanks, Sinead. Irene, to your second question around group ROACE and then the chems. So a couple points maybe. I mean, firstly, in my response to Alice's question, I talked about our real focus on performance, right? We want this company to be the best performing, best returning company in our sector, positioned for longevity and positioned for sustained growth. And so we've been focusing very much on the performance, and actually that's also starting to show through on the returns. You saw that, this past year at 9.4% ROACE. By the way, that was up compared to 2024, despite a $10 drop in oil price. And that shows you we're making progress.
Speaker #1: question, I talked about our real We want this company to be the best focus on performance, right?
Speaker #1: Performing, best returning company in our sector, positioned for longevity and positioned for sustained growth. And so we've been focusing very much on the performance and actually that's also the returns.
Speaker #1: You saw that this past year at 9.4% Rawatchi. By the way, that 2024 despite a $10 drop in oil price. And that shows you we're making progress.
Speaker #1: Some of that progress is coming through, for example, in mobility. Where we had put a target of getting to 15% Rawatchi, we're up from 12% to 15% in 2025.
Wael Sawan: Some of that progress is coming through, for example, in mobility, where we had put a target of getting to 15% ROACE. We're up from 12% to 15% in 2025. Lubricants is up from 19% to 21%. RES, despite the fact that it is still nowhere close to where we need it to be, is up 4 percentage points on ROACE as well, between 2024 and 2025. So we're making progress. And chemicals is not where it needs to be. And there's a couple of elements around chemicals that you touched on. Let's talk about, firstly, the strategic element of chemicals. Nothing's changed from what we talked about in Capital Markets Day.
Speaker #1: Lubricants is up from 19%, but it is still nowhere close to where we need it to be. It's up 4 percentage points on Rawatchi as well, between 24% and 25%.
Speaker #1: RES, despite the fact that Let's talk about firstly the strategic element of chemicals. Nothing's changed from what we talked about in capital markets day.
Speaker #1: So we're making chemicals is not where it needs to progress. And 21%. be. And there's a couple of elements around chemicals that you touched on.
Wael Sawan: What I also said in Capital Markets Day is we are going to be patient because while we know where we want to go with it, we do not want to be selling at bottom of cycle conditions. We have promised our shareholders to be good stewards of their capital, and what we are looking at at the moment is constructs that could potentially work. I won't update you at this stage on where things are, because there's nothing specific to update on, but you can rest assured that we continue to look at opportunities around that. Where I would say I have less patience is in our own self-help. I already indicated a couple of quarters ago that we are looking at what more we can do, so the team did some great work around that.
Speaker #1: What I also said in capital markets day is we are going to be patient. Because while we know where we want to go with it, we do not want to be selling at bottom of cycle conditions.
Speaker #1: We have promised our shareholders to be good stewards of their capital. And what we are looking at at the moment is constructs that could potentially work.
Speaker #1: I won't update you at this stage on where things are because there's nothing specific to update on. But you can rest assured that we continue to look at opportunities around that.
Speaker #1: Where I would say I have less patience is in our own self-help. I already indicated a couple of quarters ago that we are looking at work around that.
Speaker #1: Q4 what more we can do. was a bit more difficult as well So the team did some great because we had a plan down a Monaco.
Wael Sawan: Q4 was a bit more difficult as well, because we had a planned downtime in Monaca. But as we come out of that, we hopefully get a bit more tailwind there. But most importantly, we have identified $a few hundred million worth of cost reductions, CapEx reductions, to be able to just ensure that we get closer and closer towards free cash flow neutrality. So at least it covers its costs in a difficult macro like we have at the moment. Hopefully, that also sets us up for a better performance when we see chemical margins come through.
Speaker #1: But as we come out of that, we hopefully get a bit more tailwind there. But most importantly, we have identified a few hundred million dollars' worth of cost reductions, CapEx reductions, to be able to just ensure that we get closer and closer towards free cash flow neutrality so at least it covers its face in a difficult macro like we have at the moment.
Speaker #1: Hopefully that also sets us up for a better performance when we see chemical margins come through. But we are assuming that if there is a prolonged period of depressed chemicals margins, that we at least need to be able to avoid the bleeding in free cash flow from chemicals.
Wael Sawan: But we are assuming that if there is a prolonged period of depressed chemicals margins, that we at least need to be able to avoid the bleeding in free cash flow from chemicals, and that's very much our intent and what we're focused on. Thank you for the question, Irene. And Jake, if we can take the next question, please.
Speaker #1: And that's very much our intent and what we're focused on. Thank you for the question, Irina. And Jake, if we can take the next question,
Speaker #1: please. Our next caller
Operator: Our next caller is Biraj Borkhataria from RBC.
Speaker #2: RBC.
Speaker #2: RBC. is Baraj Bhuktaria from Hi, my name is Sinead.
Biraj Borkhataria: Hi, Alastair, Sinead. Thanks for taking my questions. My first one is just on operating costs. You clearly made that a priority in recent years, and there's progress being made. When I look at your divisional breakdown, the one thing that surprises me is that when I look at the renewables business, the OpEx still looks outsized relative to, you know, the size of that business and the contribution, and I guess the outlooks. So my question on that front is, you know, why aren't you moving faster to reduce costs specifically there, or is that building options for the future, or is there something else? And then just a second question, a follow-up to the resource one. In the past and even today, you've mentioned you want to be countercyclical.
Speaker #4: Thanks for taking my questions. My first one is just on operating costs. You've clearly made that a priority in recent years, and there's progress been made.
Speaker #4: When I look at your divisional breakdown, the one thing that surprises me is that when I look at the renewables business, the OPEX still looks outsized relative to the size of that business and the contribution and I guess the outlooks.
Speaker #4: So my question on that front is, why aren't you moving faster to reduce costs specifically there? Or is that building options for the future or something else?
Speaker #4: And then just the second question, a follow-up to the resource one. In the past, and even today, you've mentioned you want to be countercyclical.
Biraj Borkhataria: So I guess there's a balance between, you know, knowing where you are in the cycle, but also understanding the competitive landscape. As I'm listening to your peers talk about the same issue over recent months, a number of them have started to talk up M&A. So you could argue there's increased competition on the buyer side. So just some perspectives on your patience and the competitive landscape would be helpful there. Thank you.
Speaker #4: So I guess there's a balance between knowing where you are in the cycle, but also understanding the competitive landscape. As I'm listening to your peers talk about the same issue of a recent there's increased competition on the month, a number of them have started to talk buyer side.
Speaker #4: So you could argue
Speaker #4: and the competitive landscape would be helpful there. Thank you.
Wael Sawan: Biraj, thank you for those questions. Let me take the second one and maybe give you the first one, Sinead. Look, you know, I think you heard me, Biraj, in the third quarter results, open up the space much more for M&A as we start to get much more comfortable that we now have the internal performance to be able to unlock value better than others can. And that, that, to me, was an important element of what we needed to do, because I didn't want to simply add resource for the sake of it. Of course, we had started with a capital budget of $25 to 27 billion. We took it down to $22 to 25 billion in CMD23. We took it down to $20 to 22 billion in CMD25, and we haven't used the full capacity.
Speaker #1: Baraj, thank you for those questions. Let me take the second one and maybe give you the first one,
Speaker #1: Sinead, look, I think you heard just some perspectives from me, Baraj, in the third quarter results. Open up the space much more for M&A as we start to get much more comfortable that we now have unlocked value better than others can.
Speaker #1: And that to me was an important the internal performance to be able to element of what we needed to do because I didn't want to simply add resource for the sake of it.
Speaker #1: Of course, we had started with a capital budget of 25 to 27 billion. We took it down to 22 to 25 in CMD 23.
Speaker #1: We took it down to 20 to 22 in CMD 25. And we haven't used the full capacity— not because we can't buy barrels, but because we have said to ourselves that we're only going to go after us.
Wael Sawan: Not because we can't buy barrels, but because we have said to ourselves that we're only going to go after accretive barrels. That's what's core for us. Now, as we look at the landscape, I'd start off by saying the biggest thing we had to do was to continue to create the space for us to have the strategic patience. And to Alastair's question, we now have that line of sight to 2030, which means we've built ourselves a few years to be able to really be selective about what we go for. But we are hungry for growth. Don't get me wrong, but we want to do it on the right terms. And so where do we see opportunities to play?
Speaker #1: accretive barrels. question, we now have that line of sight to 2030, which means we've built ourselves a few years to be able to really be selective about what we go That's what's core for for.
Speaker #1: Now, as we look at, I'll start off by saying the biggest thing we had to do was to continue to create the space for us to have the strategic patience.
Speaker #1: But we are hungry for growth. Don't get me wrong. But we want to do it on the right terms. And so, where do we see opportunities in the landscape, I'd play?
Speaker #1: Where we can synergize—not simply buying the barrels, but technologies—where we have synergies with existing assets. You've seen us do deals in Brazil, in Nigeria, in the GoA.
Wael Sawan: Where we can synergize, not simply buying the barrels, but where we think we can bring particular technologies, where we have synergies with existing assets. You've seen us do deals in Brazil, in Nigeria, in the Gulf. Those are the sorts of areas where we can play in, but there are other areas where we are looking for that. We will continue. I can tell you, I have a lot of opportunities coming to my desk on a regular basis. And I would say I see more of them starting to screen now than we would have a year ago.
Speaker #1: Those are the sorts of areas where we can play that. We will continue. I can.
Speaker #1: I have a lot of opportunities coming to my desk on M&A.
Speaker #1: Regular basis. And I would say I, now than we would have a year, see more of them starting to screen ago. But we are looking at making sure that we do not fall into the pitfalls of the past, where we start to sort of do, rather than do deals that create deals for the sake of resource buildup, value through the life cycle, and allow our shareholders to be able to really get the most out of the decisions we're taking.
Wael Sawan: But we are looking at making sure that we do not fall into the pitfalls of the past, where we start to sort of do deals for the sake of resource buildup, rather than do deals that create value through the life cycle and allow our shareholders to be able to really get the most out of the decisions we're taking. Sinead?
Speaker #1: Sinead?
Sinead Gorman: Indeed, and thanks, Biraj. You're absolutely right in terms of cost being a focus over the last period, but it's been cost in, really in service of performance. So what have we done? As you know, we've taken some $5.1 billion out of structural costs, over the period. So actually heading into, the bandwidth which we had talked, or the band that we talked about as a target for, Capital Markets Day 25, so we've done it a couple of years early. So you can really see the business motoring in terms of just, as a company, how can we ensure that every dollar is allocated in the right way? And there's a lot more to come, that's clear, and there's a lot of pressure from the board, so making sure we do actually deliver on that as well.
Speaker #3: Baraj, you're absolutely right in terms of costs being a focus over the last—indeed, and thanks, period. But it's been cost really in service of performance.
Speaker #3: So what have we done? As you know, we've taken some 5.1 billion out of structural costs over the period. So actually heading into the bandwidth, which we had talked to the band that we talked about as a target for capital markets day 25.
Speaker #3: So we've done it a couple of years early. So you can really just as a company, how can we ensure that every dollar is allocated in the right way?
Speaker #3: And there's a lot more to come, that's clear. And there's a lot of pressure from the boss on making sure we do actually deliver on that as well.
Speaker #3: But specifically, it's very thoughtful about where we take it out. And as you say, in terms of our renewables segment, there is more to come.
Sinead Gorman: But specifically, it's very thoughtful about where we take it out. And as you say, in terms of our renewables segment, there is more to come. But we've actually taken $1 billion out of OpEx over the last few years there, and we're changing the portfolio mix, remember. So as we change that away from some of the generation assets that we would have had before, we're moving it more towards some of the flex and assets that we can trade around. So of course, what you're seeing is, as we make some of the divestments, as we change that portfolio mix, that comes down on that side, but it actually goes up in terms of the actual flex side. And actually, we had quite a bit of OpEx that came from our CCGT acquisition in Rhode Island as well. So that's coming through.
Speaker #3: But we've actually taken a billion dollars out of OPEX over the last few years there. And we're changing the portfolio mix, remember. So as we change that away from some of the generation assets that we would have had before, we're moving it more towards some of the flex and assets that we can trade around.
Speaker #3: what you're seeing is as we make some of the So of course, divestments, as we change that portfolio mix, that comes down on that side.
Speaker #3: But it actually goes up in terms of the actual flex side. And actually, we had quite a bit of OPEX that came from our CCGT acquisition in Rhode Island as well.
Speaker #3: And remember, that RES portfolio, or that renewables portfolio, is continuing to change. And actually, we've done more than 15 deals over the last two years in that space—more than half of them actually within the last year as that's coming through.
Sinead Gorman: And remember, that RES portfolio, or that renewables portfolio, is continuing to change. And actually, we've done more than 15 deals over the last 2 years in that space, more than, more than half of them, actually, within the last year as well. So more to come.
Speaker #3: well. So more to come. Thanks, Sinead.
Wael Sawan: Thanks, Sinead, and thank you for the question, Biraj. Jake, can we take the next question, please?
Speaker #1: And thank you for the question, Baraj. Jake, can we take the next question,
Speaker #1: please? Our next caller is Paul Chang
Operator: Our next caller is Paul Cheng from Scotiabank.
Speaker #2: from
Speaker #2: Scotiabank. Hi, good morning.
Paul Cheng: ... Hi, good morning or good afternoon. Can you talk about the new opportunity set? Seems like with the open up of Iraq, Libya, and Venezuela, and how attractive are those to you guys? And whether you are concerned the open up of these countries will compound the oil market oversupply. And if that is the case, how will you shape your capital allocation outlook, if any? Thank you.
Speaker #4: Good afternoon. Can you talk about the new opportunity set? It seems like with the opening up of Iraq, Libya, and Venezuela—how attractive are those to you guys?
Speaker #4: And whether you are concerned the open up of these countries will compound the oil market oversupply. And shape your capital allocation outlook, if any?
Speaker #4: Thank you. If that is the case, how will you—
Wael Sawan: Thanks for the question, Paul. Look, let's start maybe first from a longer term perspective. We continue to see growth in energy demand through to 2050 at the moment, so some 25% uptick between 2025 and 2050 in terms of overall energy demand. We see oil demand continue to grow roughly by that 1 million barrels per day tick, at least for the coming few years. Remember, we're losing around 5% of overall supply due to depletions. Every single year, you're having to refill 6 million barrels per day. Longer term, the fundamentals continue to be very constructive, I would say, on oil.
Speaker #1: question, Paul. Look, I'd start maybe first from a
Speaker #1: see growth in energy demand for, well, through the 2050 at the moment. So some 25% uptick between 2025 you. and 2050 in terms of overall energy demand.
Speaker #1: We see by that 1 million barrel per day tick, at least for the coming few years. And remember, we're losing around 5% of overall supply due to depletions.
Speaker #1: year, you're having to refill Every single 6 million barrels per day. So longer term, the fundamentals continue to be very constructive, I would say, on oil.
Speaker #1: In the shorter term, you're right to sort of hint to the The fundamentals maybe slightly in terms of being long but that's being by a lot supply , of balanced at the risk political geopolitical , Whether it moment .
Wael Sawan: In the shorter term, you're right to sort of hint to the fundamentals being maybe slightly long in terms of supply, but that's being balanced by a lot of geopolitical risk at the moment. Whether it is Venezuela, whether it is Iran or others, you're seeing more ships at sea, and that's creating, I think, a bit more balance and helping the oil price achieve what it has achieved. Now, turning to the specific markets that you've talked about, there is, of course, potential to unlock more production, but the world will need that production. So it doesn't concern me. It actually encourages me that we will be able to find the supply to be able to meet that demand.
Speaker #1: is Venezuela , is whether it Iran or others . You're seeing more sea . ships And that's and that's creating , I think , a balance and bit more the helping helping the oil price achieve what it has achieved .
Speaker #1: Now , turning to the specific you've talked markets that about . is of . There Course , potential to production , but the unlock more world will need that production .
Speaker #1: it doesn't So me . concern It actually encourages we will be find the supply , to be able to meet that Most able to importantly , we are I think very well positioned to be able in some of to play these .
Wael Sawan: Most importantly, I think we are very well positioned to be able to play in some of these, some of these theaters. I was in Kuwait just a couple of days ago, where the KPC announced the opening of some opportunities there, which we will be looking with interest in. We are in discussions, of course, with the Libyans. We have an MOU for some fields there. In Venezuela, we are well positioned, in particular in the gas side, given some of the work that we had been doing even before recent events, and so on and so forth. Iraq, again, we have a strong position there. So we see ourselves as particularly well-placed to be able to enter some of these theaters.
Speaker #1: Some of these theaters . was in Kuwait just a couple of days I ago where the opportunities opening of some announced the KPC we will be looking interest in .
Speaker #1: in We are discussions , of course , with with the have an Libyans . We MoU some fields . There in for are well Venezuela we positioned particular some , for , in in the gas side , given some of the work that we doing before recent so on events and forth .
Speaker #1: Iraq, again, and so we have a strong position there. We ourselves see as particularly well placed to be able to enter some of these theaters.
Wael Sawan: But again, it's going to depend on the entire sort of risk-adjusted return profile and our ability to be able to say to ourselves: Is this where we want to deploy our capital? It doesn't change our appetite. In terms of the longer term fundamentals around oil, we continue to be bullish, and constructive on that. Thank you, Paul. Jake, let's have the next question, please.
Speaker #1: But again , it's going to depend on the entire sort of risk adjusted return profile and our ability to be able to say to is ourselves , this where we want to deploy our capital ?
Speaker #1: Doesn't change our appetite in terms of the longer-term fundamentals, which continue to be around oil. We're bullish and constructive on that.
Speaker #1: Paul . let's have the next question , Jake , please .
Operator: Our next caller is Michele Della Vigna from Goldman Sachs.
Speaker #2: Our next caller is Michael Della Vigna from Goldman Sachs .
Michele Della Vigna: Thank you very much for taking my question. I wanted to ask you about LNG. It looks like we're going into a period of oversupply, where we may need the shutdown of some US LNG plants, at least for a few weeks in the summer. I was just wondering, how should we think about that potential outcome into the Shell portfolio, with the positive being probably on the trading side, some of the negative in terms of some of the spot gas exposure? And also, in a cheap LNG environment, we should see rising LNG demand, but one of the big areas of growth, which has been China, feels like it may be slowing down, and potentially with the geopolitical risk rising, they may not want to depend so much on a commodity which... where the US is the largest producer in the world.
Speaker #3: very much my for taking I wanted to ask you about question . LNG . we're going looks like into a period of where need shutdown of the US LNG some oversupply at least plants , the weeks in a few I was just summer .
Speaker #3: wondering , how think about that potential for outcome into the we may shell portfolio with the positive probably on being trading side , some of the negative in some of terms of the spot gas the exposure and in also cheap a LNG environment , we see rising demand .
Speaker #3: should LNG big But one of the areas of growth , been , feels like it may be slowing down and China geopolitical risk they may not want to rising , depend so much on a commodity which US where the is the largest in the just world .
Michele Della Vigna: So just wanted to have, if possible, some of your thoughts on that. Thank you very much.
Speaker #3: wanted to have , if So I possible , some of your thoughts on on that . Thank you very much .
Wael Sawan: Thank you, Michele, and let me maybe touch on that. So what do we see in the LNG markets at the moment? Again, if I take the long-term perspective, if anything, we are seeing even more constructive demand for LNG. We see it more and more playing the role of the stabilizing force in most energy systems. I mean, take Europe, for example. We do not have, of course, the coal assets of past. Nuclear will take a long, long time to be able to bring in. As Europe shifts its energy system towards more intermittent renewable energy, you will need more and more of that stabilizing force, which of course, LNG plays, and that's demonstrated just this year by the fact that we have had record imports of LNG into Europe.
Speaker #1: Thank you , Michel , and let me maybe touch on that . So what do we see in the LNG markets at the moment ?
Speaker #1: Again , if I take the long term perspective , if anything , we are even more seeing constructive for demand LNG . We see and it more playing role of the more stabilizing force in most the on energy take systems .
Speaker #1: Europe , I mean , do not have , example . the of course , coal assets of past We nuclear for to be able to long time as shifts its energy will take a towards more system intermittent renewable energy , you will need more of that and more force , which of course , LNG plays .
Speaker #1: And just this year demonstrated by that we have had record LNG the fact into into imports of Europe . You consider now where we are also current cycle , even if in the you think prompt and mid-term , just at the moment , we're looking at storage levels Europe at the low 40% compared to the in five year average .
Wael Sawan: You consider now where we are also in the current cycle, even if you think prompt and midterm, just at the moment, we're looking at storage levels in Europe at the low 40% compared to the five-year average that is closer to 65%. So Europe will continue to play a big role. We see both China and India actually also still constructive on LNG, but at a certain price point, which is closer to the $8 to 10 rather than above $10. So I don't think they, the Chinese or the Indians are averse to taking more LNG, but they want it at the right price point compared to the alternatives they have, which typically is domestic coal. So where does that leave us as a portfolio?
Speaker #1: is closer That to 65% . So Europe will continue to play a big role . We see both China and actually India still constructive LNG , but certain at a on price point , which the 8 to $10 rather than above ten .
Speaker #1: So I the the Chinese or the Indians are taking averse to more LNG , but at the right price they point compared to the alternatives they have , which want it typically is domestic coal .
Speaker #1: So where does that leave us as a as a portfolio ? I think we are privileged to such a diverse set of of , supply the one of the best , One of have being opportunities .
Wael Sawan: I think we are incredibly privileged to have such a diverse set of supply opportunities, one of the best, of course, being LNG Canada, with AECO indexation that allows us to supply our markets, in particular in the East. We, of course, also have significant access to US LNG. I don't know whether there will be shutdowns or not in the summer, depending on demand levels and the wave of supply and how quickly it comes. But I would say we are very well positioned, given that balance of diversified supply, diversified demand. We have multiple different indexations to whether it's Brent, TTF, we can sell on Henry Hub or AECO, and so on and so forth.
Speaker #1: Canada with ACO indexation that allows us to supply to our markets in LNG East, then we, of course, have access to also LNG.
Speaker #1: I don't , significant access know whether there will be not in shutdowns or depending on on and the demand levels and how quickly it comes .
Speaker #1: I don't , significant access know whether there will be not in shutdowns or depending on on and the demand levels and how quickly it us But I would say we are very well given that balance of supply , diversified diversified demand .
Speaker #1: We multiple particular in Brent we can , if sell on on Henry Hub or so forth . ACO and so on and So the cross commodity be gives us exposure opportunities to value out of the able to volatility that comes with that LNG market .
Wael Sawan: So the cross-commodity exposure gives us opportunities to be able to create value out of the volatility that comes with that LNG market. So, do I expect a length in the LNG market? Who knows? There might be some, but we look through these cycles and create value over the long term for our shareholders. Thank you for that, Michele. Jake, let's go to the next question, please.
Speaker #1: So do I expect a length in the LNG market ? Who knows . some . But might be we look through these cycles we create and the long value over term for our shareholders .
Speaker #1: that . Thank you for Mikhail . Jake , let's go to the question , please .
Operator: Our next caller is Kim Fustier from HSBC.
Speaker #2: Our Kim is
Kim Fustier: Hi, good afternoon. Thanks for taking my question. I wanted to go back to chemicals. Last quarter, you talked about cutting several hundred million dollars from chemicals. I think you referenced that again today. But, I mean, this could be a very extended down cycle of up to another 4 to 5 years. So $ a few hundred million of cost reductions may not be enough, and presumably, somebody has to shut capacity. So what exactly would be stopping you from outright shutting capacity? Is it the benefit of integration with your refining plants? Is it the environmental cleanup costs or labor issues in Europe? And then I wanted to go back also to the upstream longevity point.
Speaker #4: wanted to go chemicals last quarter . You talked about cutting several hundred millions dollars from from chemicals . I think of referenced that
Speaker #4: today you . be a extended very But , I up downcycle of to another 4 to 5 years . So a few hundred million of cost reductions may not Good be enough again .
Speaker #4: And presumably somebody has capacity . to shut So what exactly create would be stopping you from shutting outright capacity ? Is it the your integration with benefit of refining plants ?
Speaker #4: cleanup costs Is it the labor or in Europe issues then I wanted to to go back the also to upstream longevity point environmental .
Kim Fustier: You've talked about that, and yet we're seeing Shell continuing to put assets up for sale on the market, such as Vaca Muerta in Argentina. I would have thought Vaca Muerta has a lot of running room, and you do have plenty of unconventional experience. So if you could help us understand the logic of that particular asset being put up for sale, that would be great. Thank you.
Speaker #4: You've talked about that . And yet we're seeing continuing to to shell put assets up for sale on the market , as such Argentina .
Speaker #4: I would have thought that has a lot of room . And you do running have plenty of unconventional So experience . if you us could help understand the particular logic of that being put up for sale , that asset Thank would be great .
Speaker #4: you .
Wael Sawan: Thank you. I will let maybe Sinead start with that second question and correct that fake news article that came out, and then I can address the chemicals one.
Speaker #1: Thank you . I will let maybe start with that second question and correct that fake article that came news out . And then address the chemicals .
Sinead Gorman: I think you just did it perfectly. Kim, I've seen the same article. I don't believe we've said anything about that specific asset at this moment in time. So indeed, lots of things I read in the paper on many other assets, apparently, that we're selling as well that I wasn't aware of.
Speaker #5: I
Speaker #5: did it One . perfectly ,
Speaker #5: I don't believe we've said asset anything about that at this moment in specific time . So of things I indeed , lots read in the paper or many Apparently , that we're other assets .
Speaker #5: selling as wasn't I can aware of .
Wael Sawan: Thank you, Sinead. And Kim, to your chemicals point, shame on me, I should have also mentioned that. Of course, we are also looking at unit-by-unit shutdowns where required. At the end of the day, we're looking at cash costs of each of these units and making the choices depending on where we are in the cycle. But nothing is off the table. Let me put it that way. We are looking at all the opportunities to be able to really get to free cash flow neutrality at some of these more severe realities around margin, and we are leaving no stone unturned. Thank you for those questions, Kim. Jake, let's go to the next question, please.
Speaker #1: Thank you .
Speaker #1: Sinead your , and came chemicals point well , that I . Shame on me . I should have also mentioned that of course we are also looking at to unit by unit shutdowns where where required .
Speaker #1: At the end of looking the day , we're at cash costs of each of these . Each units and making the choices depending on where we are in the of these is off Let me put are looking at it that opportunities to be able to really get the free cash flow neutrality at some of way .
Speaker #1: these more severe realities around margin , and we are leaving no stone unturned . Thank you for We questions . Kim . Jake , let's go to the question .
Speaker #1: next Please .
Operator: Our next caller is Martijn Rots from Morgan Stanley.
Speaker #2: is Martijn Rats Our next Morgan Stanley from caller .
Martijn Rats: Hi. Hello. I've got two questions here for me. I wanted to ask about trading. Sort of full year results, always sort of a good one. I know, throughout the year can be a bit volatile. But, looking back, 2025, group return on capital was 9.4%. But often, you're willing to provide a comment about the uplift of the trading created to the group ROACE, 200 basis points, 400 basis points. Usually, they live in sort of, that sort of, that sort of ranges. In 2025, broadly speaking, were we at the upper end of that range, lower end of the range? What was roughly the contribution of trading? And then the other one I wanted to ask, maybe a small point, but, it relates to Kazakhstan.
Speaker #6: Hello . Hi . I've got two questions , if I may . I wanted to ask about trading sort of full year results .
Speaker #6: I of a good one . I was sort know through throughout the , through volatile , but back , be a bit year can looking was 9.4% .
Speaker #6: But often you're willing to provide a comment about uplift—that the trading, the created of group to the 200 basis points, 400 basis points.
Speaker #6: they live in Usually that sort sort of of of that sort ranges in 2025 . speaking . the upper end Broadly of that lower end of range , Were we at what was the contribution of trading ?
Speaker #6: they live in Usually that sort sort of of of that sort ranges in 2025 . speaking . the upper end Broadly of that lower end of range , Were we at what was the contribution of the And then the other one I wanted to ask points , maybe small relates to , and there seem to be some punchy compensation Kazakhstan claims coming from the government of Kazakhstan .
Martijn Rats: There seem to be some punchy compensation claims coming from the government of Kazakhstan. Now, it's not that we've seen these, you know, we've seen these before, but I was hoping you could share some perspective on that situation.
Speaker #6: Now , it's we've seen these , you not that we've seen before , these but I hoping was you could share some perspective on that situation
Wael Sawan: Thank you, Martijn. Did you want to take the TNS one first?
Speaker #6: .
Speaker #1: you . Thank you want to Martin , did take the one first ?
Sinead Gorman: Yeah, happy to, Martijn. Thank you for that. Indeed, as you know, our trading organization continues to be a core part of Shell's proposition. We have great individuals in there. We have a great set of assets that they get to trade around, and some judgments that have to come with that as well. So indeed, we've talked before about the uplift that they provide in terms of being able to optimize across the organization or across the portfolio for us. They've continued to, over 2025, as you say, had a very good year as well. Of course, Q4 is typically softer for us in terms of trading, particularly in terms of our crude and products desk, so just about there.
Speaker #5: my Happy to Yeah . time . Thank you for that . Indeed . you As know , our trading organization continues to be a core part of Shell's proposition .
Speaker #5: We have great individuals in there . We have a great set of assets that they get to judgments that have to come with And that as well .
Speaker #5: We have great individuals in there . We have a great set of assets that they get to judgments that have to come with And that as around .
Speaker #5: indeed , we've talked So before about the uplift that they provide being able to across optimize organization or the across the portfolio . For us , they've continued to over a very good well .
Speaker #5: indeed , we've talked So before about the uplift that they provide being able to across optimize organization or the across the portfolio . For us , they've continued to over a very good 2025 , as year as Of Q4 is typically course , softer for us in for terms of particularly trading , of in terms our crude and products desks .
Speaker #5: about there and we've talked So just about that a number you of times . And you see that in as well . And that continues to be the year .
Sinead Gorman: We've talked about that a number of times, and you see that play out in CMP as well, and that continues to be the case this year. They have done more towards the lower end of that range in terms of, you said 2 to 4%, in terms of ROACE, but really pleased with what they deliver, and they're continuing to deliver this quarter as well. So thank you.
Speaker #5: case this And they have done more towards the lower end of that range . In terms of you said 2 to 4% in terms of RoCE , with what they but really pleased deliver , and they're continuing to quarter as well .
Speaker #5: deliver this So thank
Wael Sawan: Thanks, Sinead. Martijn, on Kazakhstan, it would be inappropriate, of course, of me to sort of get into details around that, given there are some legal proceedings happening at the moment. I think suffice it to say that we are disappointed that we can't see alignment between the joint venture partners and the government on some of these topics. It does impact our appetite to invest further in Kazakhstan, so we watch the situation with care. We think that there's still a lot of potential investment opportunities in Kazakhstan, but we will hold until we have better line of sight to where things end up.
Speaker #1: Thanks ,
Speaker #1: Sinead Martin on Kazakhstan the on . It would be inappropriate . Of course , of be to sort of details get into around given there's some legal that proceedings happening at the think suffice it moment .
Speaker #1: that to say we are I disappointed that we can't see alignment the joint between venture partners and the government on topics is play out .
Speaker #1: our does impact It appetite to invest further in Kazakhstan . So we the watch with care . think that situation We there's of investment opportunities potential Kazakhstan , but we will hold have still a lot line of until we sight to where things end up I leave .
Wael Sawan: I leave it to the individual joint venture sort of projects to be able to make sure that they represent the position of the joint venture partners in a unified way. But let me leave it at that at that point for now. Thank you for the question. Jake, let's go to the next question, please.
Speaker #1: it to the And individual joint venture of projects to be able to make sure that they they represent the position of the joint venture , sort partners in a unified way .
Speaker #1: But let me leave it at there at that point . For now , thank you for the question , go to the Jake .
Speaker #1: next question , Let's please .
Operator: Our next caller is Lydia Rainforth from Barclays.
Lydia Rainforth: Thanks, and good afternoon to you both. A slightly different topic, agentic AI. I think you signed up with SLB to deploy agentic AI across the upstream. So I'm just wondering, what does that look like in practice, and what are you trying to get out of that? And possibly link that to... Obviously, you already achieved $5 billion in structural cost savings. Target is 5 to 7 by 2028, so why not lift that?
Speaker #7: . And good afternoon to you Thanks both . A slightly different a genetic topic , think . I you signed up with SLB to deploy Agentic AI across upstream .
Speaker #7: So I'm just what does wondering , that look like in practice ? And what are you trying to out of get that ? And that possibly linked obviously you're already the at you've $5 billion in structural savings .
Speaker #7: cost Target 5 to 7 by So why is 2028 . not list that and then secondly , and the idea more to come , the free cash flow growth for share or target ambition of more 10% than out to 2025 or 2030 2025 , with sub 5% .
Lucas Herrmann: ...And then secondly, I mean, just, you took the idea that there's more to come. The free cash flow growth per share target or ambition of more than 10% out to 2025 or out to 2030. 2025 was sub 5%. So was that a disappointing number to you, or was it just as you expected? And basically, it does imply that there needs to be an acceleration of free cash flow growth. So when do you actually see that? Is that 2026 or is it more 2028 to 2030? Thanks.
Speaker #7: So was that a number to disappointing you , or as you And expected ? basically it does imply that there needs to be an acceleration of free cash growth .
Speaker #7: when So do you flow actually see that ? Is that 26 or is it more 28 to 30 ? Thanks .
Wael Sawan: Thank you for that, Lydia. Did you want to take that second question? I can touch on Agentic AI and how we're deploying it.
Speaker #1: Thank you for that. Thank you, Lydia. Did you want to take that second question? I can touch on AI and how we're deploying it.
Sinead Gorman: Certainly, indeed. So as you say, we had. So in terms of the free cash flow per share, it is a target, as you say, out to 2030. We also knew that it was going to be variable across the different years as well, Lydia. So you see that year to year as it comes through. And of course, in this upfront period, of course, the share buybacks are a key part of that as well, as we go through. So in terms of were we disappointed in terms of where it was for 2025? No. We knew where it was expected to come, and we've of course got a wave of different projects that are coming through.
Speaker #5: Certainly . So say , as you had so in terms cash flow of the free per share , it is a target , as you say , out to 2030 .
Speaker #5: also knew that it was going to be variable different years as Lydia . So well . you see that year to year as it comes through .
Speaker #5: this course , in upfront of And period , of course , the share a key part of well as we go through . that as So in terms of where we disappointed in it was for terms of where 2025 , knew where it no , we was come .
Speaker #5: expected to of course And we've buybacks are wave of projects that are coming through . We've still got LNG Canada , of course , that is still to to ramp up to its full capacity .
Sinead Gorman: We've still got LNG Canada, of course, that is still to ramp up to its full capacity, and we've talked about as well the number of different projects that seem to go. It is not linear. We know that that portfolio will change over time. And of course, as Wael has already alluded to, there's a lot more to come in terms of performance. So that drive on performance is certainly not over, and you will see that play out as we continue throughout the rest of the decade as well.
Speaker #5: And we've talked about, as well, a number of the different projects that seem to go—it is not linear. We know that that portfolio will change over time.
Speaker #5: And of course , as Wales already alluded to , there's a lot in terms of performance . more to come So that performance is drive on certainly not over .
Speaker #5: We'll see, and you’ll see that play out as we continue throughout the rest of the decade as well.
Wael Sawan: Yeah. And to your question then, Lydia, on to the broader bucket around the cost reduction. So I think, as you rightly said, we signposted the $5 to 7 billion. Really pleased with the momentum the team continues to drive, getting us to the lower end of that already. My expectation of the team is we do hit the higher end of that come 2028, so we will be driving towards it. And AI is one of those key elements. Agentic AI is one of those elements. Now, where are we on that journey? I'd start off by saying that the investment we have been making in data cleanup over the past few years, the investment we are making to be able to harmonize ERP systems, for example, in our trading and supply.
Speaker #1: Yeah . And to question , then , on to the bucket around the cost reduction . So I think , as you rightly said , we we signposted pleased with the 5 to $7 billion , .
Speaker #1: to drive , getting us The team to lower end of that already . My expectation of the the we do hit the higher end of that come so we will team is be 2028 , driving towards it broader and one of those key elements .
Speaker #1: AI is Agentic where Now AI is elements . are we on one of those journey ? Start off that at by saying that the investment we have been making in data cleanup over the past few years , the investment we are making to be able to harmonize ERP systems , for example , in our in trading and supply , we , in looking to modernize our Ertms , to standardize them and to make sure that they they bring the data centric allows us that to up AI scale the across .
Wael Sawan: We are looking to modernize our ERTMs, to standardize them, and to make sure that they bring the data-centric architecture that allows us to scale up AI's benefit across the organization. So this is playing out not just in upstream; it's playing out all across. In upstream specifically, it's playing very much into the subsurface space and how we high-grade our interpretation of subsurface, both for existing reservoirs, but also as we look into exploration. And it's playing up in areas like proactive technical monitoring and the maintenance that we do. I would say agentic AI is also playing up very much in our functional journey.
Speaker #1: this is So this is playing out not just upstream . It's architecture in out all across upstream . it's playing very much into the subsurface and how in high grade our interpretation of subsurface , both for existing reservoirs , but as we look exploration into .
Speaker #1: playing also in areas like technical monitoring and the proactive do , I we agentic AI is also playing up very much in our functional journey .
Wael Sawan: So as we look to continue to, not just apply automation into, into the way we work, we are challenging the way our workflows are constructed, because Agentic AI means that we can fundamentally approach those work, work outputs in a different way. So I, I find it an exciting journey for us. We are not yet banking all sorts of cost reductions coming out of Agentic AI, because, to be honest, we're still learning. There is a lot of hype around it at the moment, and we're trying to focus on where can we actually deliver, real cash gains rather than talk about it. And so I will withhold judgment as to how much it will impact the bottom line, until I can give you an honest reflection on, on the impact it can have. Thank you for that, Lydia.
Speaker #1: So as to we look continue to not apply automation into into the way we work , we are challenging the way our workflows are because a genetic constructed AI that we can means those approach work work fundamentally different way .
Speaker #1: So I find it an exciting journey for us . We are not outputs in a yet all sorts of cost reductions coming out of Agentic AI because to be honest , we're still learning .
Speaker #1: There is a lot of hype around it at the moment, and we're trying to focus on where we can actually deliver real gains, rather than just talk about it.
Speaker #1: cash And so I will withhold judgment as to how much it will impact the line until I can give you an honest reflection on the on impact it can have that , Lydia .
Wael Sawan: Let's go to Jake.
Speaker #1: to Jake . bottom Thank you for .
Operator: Our next caller is Lucas Herrmann from BNP Paribas.
Speaker #2: Next caller, Lucas Our from BNP Paribas. Herman is Paribas.
Lucas Herrmann: Yeah, thanks very much for the opportunity, and, Wael, Sinead, good afternoon. A couple, if I might, just going back to Alastair's opening question. When you think about resource and you think about resolving, you know, the, the resource issues, for want of a better word, are we sort of do you think we're really thinking about resolving for a deepwater issue in that, you know, that's your greatest strength, shall we say, or one of your greatest strengths, certainly in terms of the upstream. And obviously, the, the margins there and the, the return on capital there has the potential to be, you know, very attractive. So question one is really just back on Alastair's, what are we trying to resolve for? And question two, far easier.
Speaker #8: very much thanks Yeah , for the
Speaker #8: And opportunity . Wales , good afternoon . A , if I , just might going back to Alastair's opening when you think question , about about resource and you think Let's go the resource issues , for want of a better , are we word talking you think do really we thinking about resolving a deep for water that , you know , your strength , greatest shall we say , or one of the greatest that's certainly in terms of the strengths , upstream obviously the margins the return on there and capital there has the potential to be , you know , very attractive .
Speaker #8: So and one is really just back on question are we Alistair's what trying resolve for question two far easier think when I about this year , an LNG really about volumes and about , it's growth .
Lucas Herrmann: When I think about this year and LNG, it's really about volumes and about growth and opportunity. I mean, it looks as though you've got your incremental LNG volume coming from Calcasieu, from... I don't know how free things are around Pavilion, you know, volume coming in from Plaquemines, volume coming in from Canada, obviously. So it feels as though, you know, we're at a point now where LNG, in volume terms at least, should really start to drive improvement. And perhaps you can add to that by just commenting on where Nigeria Train Seven is, and what your thoughts on timing are there. Thanks very much.
Speaker #8: opportunity . And I mean , though you've got it looks as incremental volume coming from Calcasieu , from I don't know how free around Pavilion .
Speaker #8: things are You know , volume coming in for Plaquemines , volume coming in Canada from , obviously . So it feels as though we're at a point now where LNG volume terms at least start to really drive should you could improvement .
Speaker #8: And perhaps add to that by to is Nigeria where just Train seven on and what timing your thoughts are . There . Thanks very much .
Wael Sawan: Thank you, Lucas. I'll ask Sinead to take the second question in a moment. Let me just address the first one. When we think about the resource base that we want to sort of add to the funnel, I'll tell you we're agnostic, Lucas. I mean, we start from a position of we have a differentiated strength in deepwater. And of course, we can play into that strength. But we also have some real strengths in a bunch of basins with a bunch of technologies in our conventional oil and gas portfolio. And we have continued to hone our strengths in areas like shales. I mean, look at what we're doing in Groundbirch, look at what we're doing in the Vaca Muerta, look at what we're doing with QGC, the upstream part of our Queensland assets.
Speaker #1: Lucas . Thank you .
Speaker #1: Janette second question in a moment to take the . Let me just address the first one . When we think commenting on the resource base that we want to sort of add funnel , I'll , Lucas .
Speaker #1: agnostic we start I mean , position from a of we have a differentiated strength in deepwater . And of course we play into that but we strength , also some real strengths have in a bunch basins of of with a bunch technologies in our conventional gas portfolio .
Speaker #1: And we have continued to hone our strengths in areas like shales . look at I mean , what we're doing to the in Groundbirch .
Speaker #1: what we're Look at Vaca tell you where muerta . Look at what we're doing with Qgc . The upstream part of our of Queensland assets .
Wael Sawan: We are looking at how we can actually complement some of those strengths and create value out of it, rather than trying to be too narrow. At the end of the day, this is back to what I talked about earlier, creating value per share and finding ways to be able to actually deploy our capital in something that's going to be accretive. And so that is our - that is, that, that's called our North Star, rather than necessarily what's particular resource and in what country.
Speaker #1: so we are And looking at how we can actually of those , some of complement some those create strengths and value out of , rather than to be it narrow end of the day , back to this is talked about earlier .
Speaker #1: Creating oil and value per ways to what I find, being able to actually deploy our capital in, that's going to be something accretive.
Speaker #1: And so that is our—that is—that's, let's call it our Star, North, rather than necessarily what's a particular resource. And in what country.
Sinead Gorman: ...Thanks, Lucas. Indeed, you're asking about what is our expectation in terms of some of the LNG volumes coming through? I think two ways to take it. Of course, you're right. We have volumes that are coming up, whether that's indeed LNG Canada actually delivering it in terms of now up and ramped, ramped up and getting to its full potential. We've got some number of third-party volumes, as you mentioned, coming through, and then, of course, we'll have different items such as Qatar in the years to come. But it's more about what do we do with those. At the moment, we've quite a balanced portfolio. We don't have a lot of additional length, and we've talked about that before.
Speaker #5: Thanks , Indeed . You're asking about what is our expectation in terms of some of
Speaker #5: the LNG volumes coming through ? I think two ways to take it . Of course , you're have volumes that right . are coming up , We whether Canada actually delivering in .
Speaker #5: now up and running , ramped up to its full and getting We've got
Speaker #5: some number of Jenny . third party volumes , as mentioned , coming through . And then of we'll course have Qatar different such as you years to items in the come .
Speaker #5: But it's more about what those at the do we do with moment , we have quite a balanced don't have a lot of additional length , and we talked about that before .
Sinead Gorman: We're a little bit tighter, and therefore, we haven't had as many opportunities to be able to deploy some of that trading capability that we have had in the past in different positions around the world. Some of those volumes will continue to come in the time period. But also, if you look at it, we've talked about actually having a growth in terms of our LNG sales of 4 to 5% coming through over the next period per annum, actually through to 2030. Actually, what we saw in this last year was our sales grew by 11%. So you can see that sales side of things absolutely there and continuing to grow, and we need the volumes to be able to match that. So of course, yes, some of those volumes will start coming through as well.
Speaker #5: We're portfolio . tighter We therefore we haven't had bit opportunities to be able to deploy that trading as many some of capability that we have had in the past in different around the world .
Speaker #5: Some volumes will continue to come in the time of those also , if you look at it , we talked about actually having a terms of our growth in sales of 4 to 5% coming through over the next period per annum , actually to 2030 .
Speaker #5: Sales side, that thing is there. And absolutely continuing to grow. And we need the sales to be able to match that. Of course, yes, some of those volumes coming in will start to come through as well.
Wael Sawan: Thanks, Sinead, and thank you, Lucas. Jake, can we take the next question, please?
Speaker #1: Thanks . Thank you . Jake , can we take the Lucas ?
Operator: Our next caller is Doug Leggate from Wolfe Research.
Speaker #2: Our next is Doug Leggate from Wolfe Research .
Speaker #2: caller you .
Doug Leggate: Hi, good morning, everybody. Thank you. Or good afternoon. Thanks for taking my questions. Wael, I know this reserve number; you've kind of inherited that. It's been flogged to death today, but I wanna ask you a direct question. As you inherited the portfolio several years ago now, do you believe legacy Shell has underinvested? And if so, how do you fix it in short order, whether through M&A or without a step up in CapEx? That's my first question. And my second one is probably for Sinead, and it's just going back to the recommitment to the buyback. Going back to your strategy there, you had assumed a flat crude oil price. Can you maintain that 10% free cash flow growth per share without the help of a flat crude oil price or without leverage? Thanks.
Speaker #8: Hi . Good everybody .
Speaker #8: morning Thank
Speaker #9: afternoon . Good questions my . Well , I know this reserve number . You've kind of inherited that it's been to flogged But I want to ask you a direct death today .
Speaker #9: . question inherited the portfolio several years Now , legacy ago . do you shell believe has And if underinvested ? how do In short so , order , through M&A or whether without a step in CapEx ?
Speaker #9: That's my first question . And my for second one is probably Shinade . And it's just going back to to the recommitment buyback the , going back to your strategy day , you had assumed a flat oil price .
Speaker #9: Can maintain you that 10% free cash flow growth per share without the help of a flat oil price without leverage ? or Thanks .
Wael Sawan: Good. Let me take the first one then, Doug. Look, I mean, I don't often look back, and if I were to look back, I would say, I wish we hadn't walked away from Guyana when we did. That, that's the honest truth. How do we resolve the issue going forward? Look, at the end of the day, I think we play to our strengths. I mean, today, we can underwrite a production flatline on liquids, and we have said we're growing our gas by 2% between now and 2030. And what we are finding is, as we really focus on understanding our reservoirs, really focus on making sure that we are going after every drop, that is really unlocking value.
Speaker #1: Let me take the first one . Then Good . . Doug , look , I , I mean , I often look back and look if I were to if I , I would look back , say I wish we hadn't walked away Guyana did that .
Speaker #1: when we That's the honest truth . we how do we resolve the issue going , at the end of the think day , I forward today mean , strengths .
Speaker #1: when we That's the honest truth . we how do we resolve the issue going , at the end of the think day , I forward today ?
Speaker #1: to our I underwrite Look a production flat line liquids , and we have said we're growing we can gas by 2% between now and 2030 .
Speaker #1: And what we are , as we is finding really focus on on of our reservoirs , really focus on making sure that we every drop that is really unlocking value .
Speaker #1: I mean , going after remember reservoirs were barely scratching the surface of 25 to 30% recovery . You add 1 or 2% recovery from these , these reservoirs , and you can without sustain outlays .
Speaker #1: I mean , going after remember reservoirs were barely scratching the surface of 25 to 30% recovery . You add 1 or 2% recovery from these , these reservoirs , and you can without sustain massive Now , having said all that , that doesn't mean we don't play with seriousness in opportunities .
Wael Sawan: I mean, remember, these reservoirs were barely scratching the surface of 25 to 30% recovery. You add 1 or 2% recovery from these reservoirs, and you can sustain without massive capital outlays. Now, having said all that, that doesn't mean we don't play with seriousness in other opportunities. And so how are we going to look at that? One, we need to keep doing what we're doing inside the fence and do the best that we can to unlock those resources.
Speaker #1: And so how other are we going to one ? need to keep We look at doing doing what we're inside the do the can to unlock those best that we resources .
Wael Sawan: Number two, we will leverage the strength of this company to be able to be out there, to partner with the likes of Venezuela, with the likes of Libya, with the likes of Iraq, with the likes of Kuwait and others, as they look to be able to open up with partners that they trust and partners that have worked with them for a long, long time. We continue, by the way, to focus on our own exploration capabilities, which we have recently had a full reset of the exploration team, changed out the leadership of that team, and we're starting to see the early stages of success in terms of really securing some exciting acreage in a place like Angola. We secured more acreage in South Africa, acreage in the Gulf. So that's the other, call it value-accretive way of doing it.
Speaker #1: two , Number we will leverage the strength of this company to be able to there to partner be out likes of Venezuela , with the likes of Libya , with the likes of Iraq , with of Kuwait and the likes others as they look to open be able to up with they trust partners that have them for a worked with long , long partners that time .
Speaker #1: We by the way , and focus on to continue , our own exploration capabilities , which we have recently had a reset of the full exploration team , changed out the leadership of that team , and we're with the starting to the the early stages of success in terms really securing some of exciting acreage in a place like Angola .
Speaker #1: We secured acreage in acreage in South Africa , acreage in the Gulf . And so that's the other called creative value way of doing And then it .
Wael Sawan: And then selectively, we will continue to look at the right M&A opportunities with that high bar that I have referenced, but it needs to be able to, justify itself to be a value-accretive deal. Otherwise, we don't do it, and we have the time to be able to, to play that out into the coming years. Hopefully, that helps, Doug. Sinead?
Speaker #1: selectively , continue to look M&A right opportunities at the that high bar that I have referenced . But it be to itself to justify be a value accretive deal .
Speaker #1: Otherwise we don't do it and we have the time to able be to to play that out into the years coming . Hopefully that helps .
Speaker #1: Doug , Sinead .
Speaker #5: Indeed . good to hear from you . You ask a Doug , can be taken from two different angles , one of which is just the confidence in terms of where we're going to for confidence comes 2030 .
Sinead Gorman: Indeed. Doug, good to hear from you. You ask a question that can be taken from two different angles, one of which is just the confidence in terms of where we're going to for 2030. So indeed, that confidence comes from two aspects: It's from performance and, of course, from returns. On the performance part, I think Wael has talked to us about driving the company hard, ensuring that every asset delivers on what it can, and actually going even further than that. So you heard about the wave of projects that are coming, so you hear on that aspect of it as well. The other is about, effectively, return of capital and return on capital. So in terms of that, you know, if I take you through it in terms of return on capital, we are clearly entering into a phase of capital reallocation.
Speaker #5: from two It's from aspects . indeed , that performance . And of course , think returns . On the while it's talk to us about from driving the company hard , every asset delivers performance part .
Speaker #5: on what So going I ensuring that even further than So you heard about that . the wave of that are coming . So you hear on that it as well .
Speaker #5: The other aspect of is effectively about capital and return of return on capital . So in that , if I take you through it in terms of return on capital , we are clearly entering into a phase of capital reallocation .
Speaker #5: You see it in what we're doing . You see , on where we moving our are capital in to allocating it more towards the upstream and gas areas versus where it in the more and that's about integrated well .
Sinead Gorman: You see it in what we're doing. You see where we are moving our capital to, in terms of allocating it more and more towards the upstream and integrated gas areas, versus where it would have been in the past as well. So that's about return on capital. In terms of return of capital, so let's take you through. We've talked about it before, so what's our thinking in that? How do we go about it? We've got 40% to 50% in terms of distributions, which is sacrosanct. You've heard us talk about it more and more, so I don't need to go into that in great depth. But what we also have is, we have a very healthy balance sheet. Our balance sheet is sitting at, you know, some 20% in terms of gearing.
Speaker #5: on capital of return of capital . So let's take you talked about through . So We've before . So what's thinking in that .
Speaker #5: How do we about go it . We've got 40 to 50% in terms of distributions , which is sacrosanct . You've heard us it more and talk about more .
Speaker #5: So that our great depth . what But also we into have a very healthy balance have is we sheet . Our I don't balance sheet need to go is at some gearing .
Sinead Gorman: Now, remember, we've had a range of 10% to 30%. You always say to me, "Let's look back over time." So over the 10 years, we've gone between 10% and 30%. So sitting at some 20%, is very healthy. I'm very comfortable with that, and of course, I'm even more comfortable with that because during that time, we've managed to buy back 25% of the shares of this company and done so at a price that averages out at some 20% lower than today's share price as well. So you can see the creation of value there. But of course... You know, one of the things that you ask is, how is that going to be in terms of net debt? If you look at the 3-year period, actually, our net debt is roughly the same level as it was before.
Speaker #5: So, over time, we've had—remember, a range. Now, I always say to look back over ten years. In terms of you, we've gone sitting between 10% and 30%, always around 20% over time.
Speaker #5: So sitting at some is very healthy . I'm very that . And of even more course , I'm comfortable with that because comfortable with that time we've managed to back 25% of the shares of this company and done so at a price that averages out at some 20% lower than share buy price as well .
Speaker #5: So you can see the creation of value there . But course , you know , of one of the things that you ask is how is that going to be in terms of net If you look at the three year period , actually our today's net debt roughly is level as the same it was what has happened , before .
Sinead Gorman: But what has happened, of course, is that our, what you see as the gearing, has changed, and that gearing has gone up roughly 2%. Where does that 2% come from? Well, actually, interestingly, three-quarters of that 2% is down to those distributions that we just talked about, that our shareholders tell us time and time again that they love and they appreciate the way forward we're doing on that. And actually, the last bit of it, the remainder, comes from, interestingly, the Netherlands pension reform, if you remember back a few quarters ago, which is a bit specific to us, but that, that had an impact in terms of equity as well. So I'm very comfortable with where we are in terms of a balance sheet perspective and where we are from a net debt.
Speaker #5: of course , is that But see as the gearing has changed and that has gone roughly 2% , that 2% come where does up actually , three quarters of gearing from ?
Speaker #5: those distributions that we 2% is down to that are about shareholders . Tell and time Well , again that they love appreciate the way forward that .
Speaker #5: And we're doing bit of it , the actually , the comes from Netherlands interestingly , the and they on pension reform , if you is a bit back a few remember specific to us , quarters ago , which had an terms of So I'm very as where we are in terms comfortable with of a equity impact in balance sheet where we net debt .
Speaker #5: And we're doing bit of it , the actually , the comes from Netherlands interestingly , the and they on pension reform , if you is a bit back a few remember specific to us , quarters ago , which had an terms of So I'm very as where we are in terms comfortable with of a equity impact in balance sheet where we perspective and And at net when I look debt relative to the flow , the cash of this CFO company , it is incredibly healthy .
Sinead Gorman: Actually, when I look at net debt relative to the cash flow, the CFFO of this company, it is incredibly healthy, not only from our perspective, but also relative to our peers as well. We're comfortable with the position of where we're at.
Speaker #5: Not our are from . perspective , A but also relative to as well . So we're with the comfortable of where we're at .
Speaker #1: Thank you . Thank you for the
Wael Sawan: Thank you, Sinead. Thank you for the question. Jake, let's take the next question, please.
Speaker #1: Question, Jake. Let's take the next, please—our peers.
Speaker #2: Thank
Operator: Thank you. As a reminder, please, can we keep questions to one per analyst? Thank you. Our next caller is Henry Tarr from Berenberg.
Speaker #2: reminder , please , you . keep to one per analyst ? questions question , you . Our next caller is from Berenberg Ta .
Speaker #10: Hi , and thanks for taking my question probably question follow on that . from guess And I is a then you've talked about securing acreage .
Henry Tarr: Hi, and thanks for taking my question. The question probably is a follow-on from that. I guess then, you've talked about securing acreage. Are you happy with sort of recent exploration performance? And I guess then, as you think about resource beyond 2035, is more capital gonna be allocated towards exploration, and do you have a plan to sort of improving some of the returns there? Thank you.
Speaker #10: with happy Are you recent exploration performance
Speaker #10: ? And I . then as you think beyond resource 2035 is The allocated towards exploration ? for sort plan of improving some you have a of the returns there ?
Speaker #10: Thank you .
Speaker #10: Thank you . And do
Speaker #1: And we of the reset , what we . As part done is not just put new leadership in new targets in , but we are also made really sure that restraining only from capital that into to something is fit the for purpose .
Wael Sawan: We thank you for the question. As part of the reset, what we have done is not just put new leadership in, new targets in, but also made sure that we are really restraining the capital that we're putting into exploration to something that we feel is fit for purpose. So this is not a, an open bucket, let's go back to the swashbuckling days of exploration everywhere. We need to be able to prove to ourselves that we can create value out of that. So you asked me for my report card on exploration. I'd say it's mixed. Really pleased over the last year, where we had a good step up in commercial discoveries, in basins which are familiar and known to us.
Speaker #1: this is not So a exploration bucket . back to the swashbuckling Let's go of that we exploration . Everywhere . need to We to prove to be able we're putting that we that create value that .
Speaker #1: And so you out of asked me for the can report card on on exploration . I'd mixed . Really pleased . year where last had a good step commercial up in basins discoveries in , which are Over the and known familiar to , smaller us volumes , but highly valuable us to barrels that allow tie back .
Wael Sawan: Smaller volumes, but highly valuable barrels that allow us to tie back into existing hubs. Less pleased with the fact that we haven't found the bigger plays that allow us to, to potentially create big new hubs. And so that's the space we need to continue to work on to improve. That first bucket is motoring on well, and I think we have filled the funnel with good opportunities. I think we've really started to fill the funnel for the second bucket, with some exciting ones. I mentioned the likes of Angola, which I'm really keen to sort of see where we can get to with that. And that's one that we need to be able to, to go.
Speaker #1: pleased with the existing Less we bigger haven't found plays that allow us to to the into fact that hubs new potentially that's the space we need to .
Speaker #1: continue to work on to improve . That first bucket is And so motoring hubs and I think we have filled the funnel with good opportunities .
Speaker #1: I think we've really started to fill the funnel for the with some I exciting ones . likes of which I'm really keen to is see where we can get second bucket to with that's and able sort of But I would characterize our pursuit resources as being not of one that is dogmatic around or M&A or MD new , a business development .
Wael Sawan: But I would characterize our pursuit of resources as being not one that is dogmatic around exploration or M&A or NBD, new business development. We will look at where best to deploy that capital, depending on track record, on that risk-adjusted return, where we think we can create value, and we will pivot depending on where that value can be created. Otherwise, we will start to have tunnel vision down one pathway, rather than keeping options open and creating value through whatever is in the money at that point in time. Thank you for the question, Henry. Jake, let's go to the next question, please.
Speaker #1: exploration will look at where best to deploy that capital , depending on track that risk adjusted we think we can record and we will value pivot depending on where that be Otherwise we will start to have tunnel vision down one pathway rather than open and keeping options creating value through in the money .
Speaker #1: that At whatever is time . Thank you for the Henry . Jake , let's go to the next created . Please
Speaker #1: that At whatever is time . Thank you for the Henry . Jake , let's go to the next created . Please one that we need to be
Speaker #2: caller from Copeland Bank America of . Our
Speaker #2: is
Speaker #2: is
Operator: Our next caller is Christopher Kuplent from Bank of America.
Speaker #11: Thank you . Yeah . Well , I wanted to ask you about the state of the M&A market , not what point in about to I get you , you're agnostic on lots of buy .
Christopher Kuplent: Yeah, thank you. Well, I wanted to ask you about the state of the M&A market. Not what you're about to buy, I get you. You're agnostic on lots of levels, but I guess it'd be interesting to hear from you. You've been in a number of data rooms, what deals that are currently being signed, what they are telling you, whether this is a buyer's or a seller's market, particularly when we speak about the assets that you're looking for, i.e., resources that are yet to be developed. Whether it's the Namibian farm down that we've seen from Galp or others, where do you think the bid-ask is currently sitting?
Speaker #11: I , I guess
Speaker #11: I , I guess
Speaker #11: from to hear you . You've been in a value can question , data levels , rooms . What number of deals that are currently signed , are being telling you , whether this is a buyer's or a seller's interesting speak , particularly about when we assets the looking for , i.e. resources that are yet to be developed , whether it's the Namibian farm down from Galp or others , where do you bid that we've seen currently ask is And if may squeeze another in opportunity for Sinead to fake news deny us what's happening LNG , tell Canada .
Christopher Kuplent: And, if I may, squeeze in another opportunity for Sinead to deny fake news, tell us what's happening with LNG Canada, whether it's FID of Phase Two or whether it's a farm down there. Thank you.
Speaker #11: Whether think the two , or it's a farm down you . there .
Speaker #1: You want to start with that one ?
Wael Sawan: You wanna start with that one?
Speaker #5: Yeah . No , . Thanks , And Christopher .
Sinead Gorman: Yeah, no, absolutely. Thanks, Christopher. And indeed, you know what I will always say on, on anything similar to Argentina, of course, you see a lot of news coming through. We will look at every opportunity to deploy our capital sensibly, and to maximize value. So we have no, what is it? Sacred cows, holy cows, we've used both expressions, or I've used both expressions throughout. But in terms of LNG Canada, what I would say is, we're not divesting from assets that we have high conviction in. So very much in LNG Canada, we're, we're looking at making sure that that performance is delivered. I think what you're seeing is, commentary in the press, about reallocation of capital and speculation as to whether we would look to, to get out of anything, which is say, parts or elements of it.
Speaker #5: indeed , what I will always you know anything similar to Argentina . Of on on a lot of news coming through . We will look at every opportunity to deploy our and sensibly to maximize So we have no value .
Speaker #5: capital cows . We've both expressions or I've used used expressions . But in ? is Sacred cows , Holy not both divesting from say we have high conviction in .
Speaker #5: So very much an LNG We're we're looking at that Canada , what delivered . what you're performance is seeing is Canada . the press about capital and reallocation of speculation as to whether I would look to Right . get out to of anything , which is , say , or of elements it .
Sinead Gorman: The way I think about it is just pure and simple, where are the returns on every part of our asset base, and therefore, is there somewhere where I should have my money tied up? And that's what Wael and I spend our time looking at, or is there somewhere else it could go? And that's actually true across the whole of the portfolio. We will look to maximize the value of every dollar we have sitting there. So if it's low-returning assets or if there's a better place to put it, we will do that. And you saw it, for instance, with the Colonial Pipeline. Now, we were able to realize value from our stake in the Colonial Pipeline. It wasn't a strategic control point for us. We were able to actually exit at some, you know, over 9x EBITDA as well.
Speaker #5: is just think about it pure and commentary in simple , where the on every part of our asset base and therefore parts my money should have tied up .
Speaker #5: what I And that's spend our time looking somewhere where I is there somewhere else it could at . Or returns And that's true across the the will look to whole of maximize the value of every dollar we have sitting if it's low returning it's a better there .
Speaker #5: put it , we go ? And you saw instance , with the Colonial Pipeline . We were place to able to realize value from our it , for Colonial we would wasn't a Pipeline .
Speaker #5: strategic control point for So We were able to actually exit out us . some or if over nine times portfolio , we well .
Speaker #5: So, EBITDA is sort of things that we will continue to—it's those.
Sinead Gorman: So it's those sorts of things that we will continue to look to do.
Speaker #1: And to Seanad's
Wael Sawan: ...And to Sinead's point, there, Chris, that focus on capital reallocation, I would say, is an important now area of mine and Sinead's focus in this part of the journey that we're on as a company. Because we believe there is over 15% of the capital employed that we have, the $225 billion, that we could actually redeploy into higher return opportunities, which we want to actively be looking at. To the heart of your question, and that, of course, plays into it, as we redeploy some of that into, for example, M&A opportunities in upstream and beyond. I would say the market is somewhere in the middle at the moment.
Speaker #1: there , Chris , the that
Speaker #1: that focus point , capital reallocation , I would say is an important look to area of my of in this part of the now journey that we're on as a company and on there is a because over 15% of the capital have .
Speaker #1: The $225 billion that we could actually into higher redeploy opportunities , return which which we want to actively looking at be your the heart of the to question to of course , And that , plays into it as we redeploy some of that example , M&A into , for opportunities upstream in beyond and , I the market would say middle at the It used to is at the in the higher end of is somewhere the 60 to 70 we're range , and now the lower closer to end of that , moment .
Wael Sawan: It used to be at the higher end of the 60 to 70 range, and now we're closer to the lower end of that 60 to 70 range. And it's sort of in that space, so it is not out of what we have seen, call it mid-cycle conditions in the past. I think there's different things at play. I mean, there's one interpretation of the subsurface by different players. There's desperation by some to be able to create investment cases for themselves. And what you have seen us do is to look at all of these, and where we have been able to win is where we have had a real differentiated advantage, like the bolt-ons that we did in 2025.
Speaker #1: 60 to 70 range . employed that we is not out of what we seen have midcycle , call it the in it's the conditions in past think there's play .
Speaker #1: Things that I, the one by different subsurface players. There's by some to be desperation to create able-to-investment cases for interpretation of themselves.
Speaker #1: And what you have seen us do is to look at all of and these different we have differentiated advantage , like the had a that we Now , as we look in 2025 .
Speaker #1: at some of the other . I'm sure continue to I those . will for the most important thing But for me is to broader of frame strategic When we do these accretion .
Wael Sawan: Now, as we look at some of the other opportunities, I'm sure things will continue to evolve, and, and we'll see how we will compete for those. But the most important thing for me is to keep that broader frame of strategic patience, accretion when we do these deals, and making sure that we, we can add value to the barrels that we're bringing in, not simply adding resource for the sake of being able to satisfy a KPI in, in our books. And that's the approach that we will continue to use. It is fair to say that this will take more of our time, of course, as we get that performance muscle much more embedded into the organization. Thank you for that question, Chris. And let's go, Jake, to the next question, please.
Speaker #1: patients we we and can value to barrels that we're the bringing add in , not simply resource for able to being satisfy a in our adding books .
Speaker #1: And KPI that's the approach that we will use . continue to It is fair more of our that this to say course , as we that performance muscle much more the embedded into organization question , Chris , and go to the next Please question .
Speaker #1: time . .
Operator: Our final caller is Ryan Todd from Piper Sandler.
Speaker #12: Thanks . Maybe if I could ask one on an asset that you mentioned Great . and has earlier the news , Bonga , southwest think , I reports have you're a 2027 FID there in you talk also been in hurdles you need to clear over the next to reach 12 to 18 months maybe more broadly , could FID , and then you talk about the broader resource targeting opportunity in and other , you know , existing basins within your Nigeria .
Ryan Todd: Great, thanks. Maybe if I could ask one, on an asset you mentioned earlier, and has also been in the news, Bonga South West. I think reports have suggested that you're targeting a 2027 FID there in Nigeria. Can you talk about what hurdles you need to clear over the next 12 to 18 months to reach FID? And then maybe more broadly, could you talk about the broader resource opportunity in Nigeria and other, you know, other kind of existing basins within your portfolio like that, and what may or may not have changed to make things more attractive in, some of those areas?
Speaker #12: Nigeria
Speaker #12: Nigeria
Speaker #12: other have changed to or may not more attractive make things in some of those areas .
Speaker #12: and
Speaker #1: Ryan , thank you Let's start with for that
Wael Sawan: Ryan, thank you for that question. Let's start with Nigeria. I was there, I guess a couple weeks ago now, to meet the president and was very encouraged by the real drive to be able to support investment in the resource base of Nigeria. Of course, you know what we've done on the onshore, having exited that. That's opened up our opportunities now much more in the offshore. Bonga South West is a material resource. And what were the conditions precedent? A key condition precedent was a set of fiscal supports to be able to make this an investable project, which I was very pleased that the president was committed to providing in the coming days as part of a gazetting process that needs to happen.
Speaker #1: Nigeria . I was there what may , I guess , a couple of ago weeks now
Speaker #1: meet the to president and was encouraged by question . drive to Can to very support investment in in the resource base of
Speaker #1: course , you of know what we've done on the on onshore , having exited that's that , opened up Nigeria , now much in the more in the opportunities offshore Bonga southwest is a real material the resource .
Speaker #1: our So and so it it what is an is just now on on all sides to be make follow through able to this the We need it .
Speaker #1: And what were the conditions key a precedent was set of fiscal to be able to make this an investable project , supports which I was pleased very condition that the president to , was committed providing to in as part of a that needs the coming gazetting process to days which happen , we means have now kicked off feed as you indeed , say , looking to develop that into hopefully investable project .
Wael Sawan: Which means we already have now kicked off a FEED, and indeed, as you say, looking to develop that into hopefully what is an investable project. So now it really is just follow through on all sides to be able to make this the project we need it to be. It's important to recognize that there is a lot behind those funnels in deepwater Nigeria for us. We have a project called Bosi. We have projects like Nnwa-Doro. These are all projects that now are starting to make their way through the funnel as the investment climate opens up in Nigeria, and we are talking about hundreds of thousands of barrels there. And so we are actively going after those and developing them.
Speaker #1: to be project . important that there is a It's behind those funnels in deepwater For us . We have a project called have projects like Doro .
Speaker #1: projects Bosi . that These are now are their way We funnel . through the As the investment climate opens all Nigeria , and we are about hundreds of thousands of barrels there .
Speaker #1: So, and we are going after developing them course, where we continue to have a lot of music. Is in Brazil of and in the America, we have where a recognize resources.
Wael Sawan: Of course, where we continue to have a lot of momentum is in Brazil and in the Gulf of Mexico, where we have existing resources. Some of the discoveries that I've mentioned are in the Gulf, that tie back into our existing asset bases as well. We're excited by areas like Oman, where we have significant access to gas resources in the blocks that we operate. We're building out in Malaysia at the moment, and so on and so forth. So this is a portfolio that continues to create opportunities for us, and we are making sure that what is within our reach, we are maximizing the value from, while at the same time looking at those exploration and M&A opportunities that I referenced earlier.
Speaker #1: Some of the Gulf of Mexico assets that I've mentioned are starting to make tie-backs to existing asset bases. We're accessing significant resources by utilizing infrastructure and gas we operate.
Speaker #1: the that I've Some of Gulf of mentioned starting to make are in the that tie back asset bases as existing We're by existing access to significant resources gas Gulf in the building out in Malaysia Oman , where at the into our so on forth .
Speaker #1: So and so is this is portfolio that a that continues to to those and create for us . discoveries And we are sure is within our reach , we value that what maximizing the the same , while at time looking at those making and exploration M&A opportunities that I referenced are .
Speaker #1: Let me close off and thank you questions and for your joining the call on well . conclusion , . In solid set of results delivered a in 2025 , and looking ahead to 2026 , believe we are well positioned we that remains investment case with an the cycle .
Wael Sawan: Let me therefore close off and thank you for your questions and for joining the call on behalf of both Sinead and myself. In conclusion, we delivered a solid set of results in 2025, and looking ahead to 2026, we believe we are well-positioned with an investment case that remains robust through the cycle as a result of the actions that we have taken and continue to take. Lastly, I'd like to highlight a number of upcoming publications, including our annual report release on 12 March, and on 16 March, we will publish our annual LNG Outlook, the LNG Strategic Spotlight, as well as the response to the 2025 AGM shareholder resolution. Wishing you all a pleasant end of the week. Thank you very much for joining.
Speaker #1: As a result of the actions that we have taken and continue to we . I'd like to Lastly , highlight take of upcoming publications , annual our including report on release the 12th of March and will the 16th of March .
Speaker #1: publish our annual LNG on outlook . We The LNG Strategic the Spotlight , response to the shareholder resolution a pleasant end . Wishing you week .
