Shell - Q4 2023

Transcript

Operator (participant)

Welcome to Shell's fourth quarter and full year 2023 financial results announcement. Shell's CEO, Wael Sawan, and CFO, Sinead Gorman, will present the results, then host a Q&A session. If you would like to ask a question, please press one. If you wish to be removed from the queue, please press two. We will now begin the presentation.

Wael Sawan (CEO)

Welcome, everyone. Today, Sinead and I will present to you the 2023 fourth quarter and full year results. We had another year of very strong performance, delivering the second-highest cash flow from operations in Shell's history, despite the external uncertainty and volatility. Starting with safety, which remains our top priority, our personal safety results last year were slightly lower than in 2022, and our teams are determined to make sure 2024 is a year of improvement. I am, however, really pleased that our process safety results set a new record for Shell, confirming our top-tier performance in the industry. We are also making good progress across the targets outlined at our Capital Markets Day, and expect more to come as we progress through 2024 and beyond. In 2023, we demonstrated our strong commitment to capital discipline by delivering at the lower end of our $23 billion-$27 billion range.

In addition, we have already achieved $1 billion in structural cost reductions, well on our way to a reduction of $2 billion-$3 billion by the end of 2025. This reduction is a first step. This is not a one-off change program. We are building the capability to continuously adapt to changes through the energy transition. The reductions will be staggered. The most significant contribution in the short term comes from focusing on where we play, which are essentially portfolio choices, and at the same time, we are emphasizing a bottom-up focus to create a leaner, more agile organization that delivers more value. We are also leveraging new technology, such as artificial intelligence, to improve the performance of our assets.

We have millions of sensors collecting over 5 trillion rows of data that our AI models, combined with our conventional models, use to monitor equipment 24 hours a day, 7 days a week, alerting engineers to anomalies from a distance. This enables us to intervene and fix issues early, improving our performance, and we continue to high-grade our portfolio and position the company for growth into the future. This past month, we agreed to sell our Nigerian onshore subsidiary, SPDC, subject to government approvals and other conditions. This is an important step for the company, and we hope to complete the deal as soon as is possible. In 2023, we saw production growth with the startup of a number of key new projects in our advantaged upstream business.

The projects which came on stream this past year, at their peak, will add over 200,000 barrels of oil equivalent a day. They are part of our larger funnel set for startup by 2025. Together, at their peak, all projects will add more than 500,000 barrels of oil equivalent a day to our production, and they will enable us to continue providing the energy security that the world needs while delivering cash flow longevity into the future. We also continue to invest to help enable the energy transition in areas where we can create value. Last year, we invested $5.6 billion in low-carbon energy, such as our Nature Energy acquisition and the CrossWind JV, which will supply renewable power to Holland Hydrogen 1, Europe's largest electrolyzer.

In short, we're working hard to deliver the energy the world needs today, and we're helping to build the energy system of the future. Our relentless focus on performance, discipline, and simplification allowed us to deliver compelling returns and create more value for our shareholders in 2023. Our shareholder distributions for the year were over 42% of our CFFO, and today, we increased our dividend by another 4%, taking our total increase over the last 12 months to around 20%. We continue to progress towards our destination of a net zero emissions business. Our preliminary results show that we have further reduced our Scope 1 and 2 emissions in 2023. We are only halfway through the timeline to our 2030 target, yet we have already achieved more than 60% of the reductions needed to reach the target.

With that, let's go to Sinead for more financial results.

Sinead Gorman (CFO)

Thank you, Wael. We delivered strong results in Q4, driven by our strong trading and optimization in LNG and robust operational performance. One of this quarter's highlights came from QGC in Australia. This quarter, they had their highest-ever LNG production, which helped deliver cargo number 1,000 since startup. Moving to our financial results, our adjusted earnings were $7.3 billion for the quarter, and $28.3 billion for the full year. In the fourth quarter, we saw $4 billion in post-tax impairments, driven by macro outlooks and portfolio choices, in line with what we announced at Capital Markets Day. We generated $12.6 billion of cash flow from operations, contributing to a total of $54.2 billion for the full year 2023, our second-best year ever.

Our strong performance allowed us to return $23 billion to our shareholders, delivering in excess of our 30%-40% CFFO range... and today, we have announced a new $3.5 billion share buyback program, which we expect to complete by the time of our Q1 results announcement in May. We have also announced a dividend increase of 4%, in line with our progressive dividend policy. Our balance sheet remains strong, with net debt reducing by $1.3 billion year-on-year. And looking forward in 2024, we will continue to target shareholder distributions of 30%-40% of our cash flow from operations through the cycle, while maintaining our focus on delivering more value with less emissions. Now I will hand back to Wael for more on what's coming next.

Wael Sawan (CEO)

Thank you, Sinead. This was another year of strong results for Shell, marked by one of our highest ever annual adjusted earnings and cash flow from operations. We achieved this and much more, despite volatility in the energy markets. In 2024, we will focus on delivery of our first sprint through performance, discipline, and simplification, building on what we have achieved in 2023. By focusing on areas where we have differentiated capabilities and core competencies, we aim to be the investment case through the energy transition. In the coming weeks, we hope you can join us for our LNG outlook and our annual ESG event, which will also cover the energy transition strategy 2024 publication. Thank you.

Operator (participant)

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.

Wael Sawan (CEO)

Thank you for joining us today. We hope that after watching this presentation, you've seen how we delivered strong results and how we continue to focus on our guiding principles. Today, Sinead and I will be answering your questions. And now, please, could we have just one or two questions each so that everyone has the opportunity? And with that, can we have the first question, please, Luke?

Speaker 16

Our first caller is Michele Della Vigna from Goldman Sachs.

Michele Della Vigna (Managing Director, Head of Natural Resources Research, EMEA)

Thank you very much, and, and congratulations on the strong results and, and the ongoing commitment on the buybacks. I wanted to ask two questions, if I may. The first one is about your lineup of new projects. You've got one of the strongest pipelines in the industry in Brazil, Gulf of Mexico, LNG Canada, but also with the full restart of Monaca and Prelude. I was wondering if there is a way to guide us on what you think could be the incremental cash flow from these assets by the time they fully ramp up, let's say by 2025, 2026. And then my second question is related to the European and the global gas market. We've mostly focused on price upside in the last few years and how to capture it, and Shell has certainly built a very good portfolio for it.

But what I was wondering is, in an environment where, especially for the second half of this decade, we could see an oversupplied LNG market that challenges a bit the arbitrage between the two sides of the Atlantic, does that change your contracting strategy, and how well set up is Shell to effectively successfully navigate what could be a tougher gas market for the coming years? Thank you.

Wael Sawan (CEO)

Michele, thank you for the question and for the words. Maybe I'll start by asking Sinead to address the first one, and I can take the second one.

Sinead Gorman (CFO)

Sure. No, thank you, Michele, and indeed, thank you for the recognition of what is an incredibly strong funnel going forward. You listed many of the different projects, as you say, Gulf of Mexico, LNG Canada, Monaca up and running, Prelude. But let's not forget, as you go past 2025, we have up until 2025, we said greater than 500 kboe/d in terms of new projects coming in, and let's remember that we had more than 200 kboe/d at the peak, as Wael mentioned earlier, coming through as well. But beyond that as well, we also have things like Crux coming in. We will have, the Qatari volumes, et cetera, coming in. So there's, there's a great wealth coming through.

Rather than guide to some specific CFFO dependent on price, et cetera, what I'd suggest is we look at... You saw our promise of 6% growth on free cash flows through the decade, so that's the sort of number to look at, and you can see we're easily meeting that in terms of our promises so far. And remember, in terms of sprint one, very much we're talking about a 10% growth per share. So you can see, of course, that's being easily met at the moment when we're doing things like 6.5% of the company being bought back last year in 2023. So great momentum going forward, Michele, and you're absolutely right, we have a wealth of projects to be delivered.

Wael Sawan (CEO)

Thanks, Sinead. Michele, to your second point, I think if I start just by re-emphasizing our conviction in the growing demand for LNG going into the future, I think underpinned both by, call it energy security considerations in a place like Europe, but also in, in Asia, continuing to see very strong demand, as well as to replace the declining domestic gas in, several countries. In Vietnam, for example, the Philippines and others, have become, recently importers of LNG as well. So there's quite a, quite a lot of latent demand, and I think what you will find is that as the price, as is happening at the moment, starts to stabilize again and the market fundamentals reassert themselves, you will see a lot of that latent demand starting to come back to the market.

So I think that, in the first instance, just gives a lot of confidence around the demand profile going forward. On the supply side, for the next year or so, there's very little in terms of new capacity coming in, but indeed, you see that stepping up both on the American and the Qatari side, predominantly into the second half of the decade. As Shell, as you know very well, Michele, of course, we play across the commodity exposures. And so for us, it's the ability to be able to pick up from Henry Hub and to be able to be exposed to Brent or indeed, across TTF and JKM and others.

And so it is no, no bad thing to have a period of time with more supply coming into the market because it allows us to contract on the side of offtake agreements, which we have done in the past. And so we're not looking to bet on one period or the next. What we are looking to do is to continue to build an advantaged portfolio that allows us to take advantage of those cross-commodity exposures. And that has been the power of this LNG business for us and will continue to be.

Speaker 16

Thank you for the questions. Luke, if I can go to the next question, please.

Biraj Borkhataria (Managing Director, Co-Head of European Energy Research)

Hi there, thanks for taking my questions. The first one is on the dividend, and I guess you've, you've raised your dividend, you know, two times, in, in 2Q and then 4Q. I'm trying to understand what the cycle is from here going forward. I guess if I think about the, the two reasons you'd raise a dividend, one is the underlying growth in the business, and then there's the share count reduction from the buybacks. So should we assume, you know, you do it once a year and combine both into one going forward? And the reason I ask is 'cause typically predictability is, is quite important there. And then the second question is just on the Venture Global, issues. This has been ongoing for a few months now.

We don't really have clarity on the sort of process or the timing and so on, so, you know, obviously seen the letters flying around between the various parties. And indeed, anyone who's looked at the export data can see that the project has been actually much more reliable than other projects. And if you think about the arbs between US and Europe on the gas side over the last two years, you could be talking about $multi-billions in lost earnings for Shell. So it seems like a strong sense that you have. I understand this is a legal process, but can you talk about what happens here, from here, process-wise, and then the potential outcomes thereafter? Thank you.

Wael Sawan (CEO)

Great, thank you for the questions, Biraj. Let me start with the second one and then go to Sinead on the dividend. I think you characterized the issue well. I mean, as far as I see at the moment in terms of what is publicly available, Venture Global have, I think, sold around 250 cargoes so far, 250 commissioning cargoes. And what we see is that the plant is at or near capacity and has been consistently so. So we're very much focused on continuing to enforce our legal rights and protect the sanctity of contracts that are there. I won't get into the details of the legal proceedings.

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

Sinead Gorman (CFO)

Indeed. Thank you, Biraj, and indeed, we're very much focused on ensuring we have a compelling distribution to our shareholders. Actually you saw, of course, in 2023, some $23 billion of distributions back. But you raised the point that we did too, actually increase our dividend by approximately 20% last year. What you've seen this quarter is 4%, and of course, many of you asked during Capital Markets Day last year, would we do something further? Would we do a bigger hike at this time of year, and we were very clear, no. We were very clear, we will do what we will say, and in effect, what we told you at that time was 4% progressive and that we'd be very much focused on buybacks.

That's pure and simple, just a preference towards buybacks, as you know, because of the value lens, just given where they are in terms of price, number one. Secondly, of course, that we've set the targets out there to say it is creating per share value. That's where we're focused as well, so that should help with predictability. If you look at the buyback range, it's been pretty predictable over the last couple of quarters. What you should expect from us is if we're gonna say something, we will do it thereafter. I hope that helps.

Wael Sawan (CEO)

Thanks, Sinead, and thank you for the questions, Biraj. If we can go to the next question, please, Luke.

Speaker 16

Our next caller is Oswald Clint from Bernstein.

Oswald Clint (Senior Research Analyst, European Oil & Gas)

Hi, yes, good afternoon, and thank you. Yeah, the first one, just on the slides, some good slides there on progress relative to last year's targets on the free cash flow growth. You have the 6% up to 2030 and the 10%. You've price normalized those, which is helpful, but I think you've removed the numbers from the y-axes. We're playing around with it, and it looks like over $25 billion, price normalized last year, which I guess is the target for next year. So the question is, and are you surprised by this free cash flow delivery? Was there an expectation it might be front-end loaded? Certainly feels like the 2025 target is well underpinned at this stage.

And then secondly, just on integrated gas and LNG, again, probably more 2024 focus if I could. I mean, East-West spread could be a bit tighter this year, but now we have the Red Sea logistical risks, just on top of this. So could I just get your outlook around business expectations, in IG this year, especially with rerouting transportation OpEx and, or, you know, does your portfolio size help mitigate against this? Can you pass on some of these costs? Just how should investors think about, this particular issue? Thank you.

Wael Sawan (CEO)

Do you want to take the first one?

Sinead Gorman (CFO)

Sure.

Wael Sawan (CEO)

I can take the second one.

Sinead Gorman (CFO)

Yeah, no, indeed, and thanks, Oswald. Yes, you're right. We did actually remove the, the numbers, very much conscious of doing so. Largely, you're right, we're exceeding where we expected to be at this point. There's a lot of noise in there, as you can imagine. It's the typical normalization that one needs to do for working capital, et cetera. But yes, true delivery in there is mostly from a, a range of things. It's of course, the CapEx reductions that have come through. It's some OpEx coming through and of course, share count reduction. But let's not forget some of the growth that's actually coming through as well.

You saw us bring new volumes on this, this year as well, the Timi, the Vitos of this world, of course, Pierce redevelopment coming, and you can see that future build as well with the FIDs of Perdido 2, Victory coming through, just a range of them are coming, Sparta as well. So indeed, do I have confidence in terms of delivery? Yes, at the moment, and looking forward to driving it even further in terms of the things that we can control, in terms of taking out OpEx, et cetera, as we continue to deliver what we promised.

Wael Sawan (CEO)

... I think on your second, or your first quest- sorry, second question there, Oswald, just where the LNG markets are, in particular in the context of the Red Sea. By and large, we are not seeing massive amounts of disruption yet to LNG flows because of the reality that, in particular, with a portfolio like ours that's blessed with supply points on either side of the Red Sea, as well as on demand points, we are able to optimize and do swaps across the portfolio, which of course has always been our strength. We can truly, through our trading and optimization organization, create value from discontinuities. But maybe I, I won't project into the rest of the year.

I think suffice it to say that Q4 was a very, very strong quarter for us on trading and optimization in the LNG space, particularly because of the opening up of the arbs across East-West, as well as the fact that, as you know, we typically have length this season in the Northern Hemisphere season. Now, those arbs have compressed since the start of the year. The absolute prices of gas are lower at the moment. And so the question will be how much more volatility we will see, whether triggered by geopolitical considerations, higher than predicted demand in China. All of that will be an important determinant of where the LNG and the IG business particularly performs.

But, I think it's always fair to say we have good production at the moment. We're pleased with where Prelude is at after the turnaround. We're pleased with the progress we're making in Trinidad and Tobago, pleased with the progress we're making in Nigeria. And so the fundamentals around the focus on performance, discipline, and simplification are coming through, and now we'll need to see where the market goes to allow us to create the value we would hope to create from that market. Thank you for the, for the questions. If we can go to the next question, please, Luke.

Speaker 16

Our next caller is Alastair Syme from Citi.

Alastair Syme (Managing Director, Global Head of Energy Research)

Thanks. Well, Sinead, the spend and the, the RES steps up quite considerably in 2024. I mean, certainly in line with what you said at the June CMD. You know, I know you've got some strict returns criteria in this business, so the question is really, as you scale up the spend, you know, how you're finding the headroom versus those hurdle rates. And, you know, it certainly doesn't feel to me as if, as if it's getting less competitive, but maybe you've got a different perspective. And then secondly, look, I won't disappoint you all. Congratulations on turning the corner on reserves the last two years. Look, you know, I know Qatar has been a big part of that, perhaps as much as half.

While the financial terms there look pretty good, it is also, to some extent, an unusual, almost one-off situation. My question to you is, you know, how do you think about the underlying picture, and how would you think about the gap analysis sort of over the next five years, presuming you don't get another opportunity like Qatar? Thank you.

Wael Sawan (CEO)

Thank you, Alastair. Do you wanna take the first one?

Sinead Gorman (CFO)

Sure. In terms of res, I think it's a great question, Alastair. We've all seen many, many discussions in a variety of media and otherwise around the returns that are available in this space. I think what I would say is we're being very disciplined around it. So what you're seeing is between 2023 and 2022, you will have seen effectively that our CapEx did go down in terms of res spend, but it was varied. So remember, it differs depending on which region you're talking about specifically. So we can't make it a binary conversation. So what we're seeing is we walk away from things where we just don't see the necessary returns. So the last German wind auction that we discussed previously, we just couldn't get there at the end of the day.

Whereas in Australia, really seeing some decent returns coming through, and that's really where we have an integrated value chain. So we're being able to see the side of things where we have the demand in our own assets. We also have the customer book, but also we have battery power as well. So between all of the different elements with the renewables, we're able to see an end-to-end, just significant return coming through. But this is about remaining disciplined, and we will be very, very focused on that. So very much ensuring that, can we hit the harder rates? Do we believe we bring something different? And what's our confidence level in doing so?

Wael Sawan (CEO)

Thanks, Sinead. Alastair, to your question around resources, I think, the discussions you and I have also had in the past. I mean, in my mind, resources are ultimately a proxy for, for cash flow, and that's where our focus is, the quality of the resources, rather than does it sit under the, the1P or 2P. We still have a very attractive funnel of resources as, as indicated by 20 years of, 20+ years of commercial resource. By the way, that is even, post and SPDC, SPDC sale in Nigeria as well. So we will continue to have north of 20 years of commercial resource. And what's critical is it's high-quality barrels. You are talking predominantly deep water barrels, predominantly LNG barrels.

And what gives me particular confidence in the coming years is you're talking about some very attractive high-margin projects coming in. You have, for example, Mero-2, that just started up in Brazil at the turn of the year. You have Mero-3 coming through, Mero-4. We have Gato do Mato after that. Vito is up and running and delivering within the first year, top quartile schedule, top quartile availability. We have then Whale coming after that, Sparta coming on top of that, even before you go into the Qatari projects. And then, of course, you have LNG Canada, that is also sort of making good progress. And LNG Canada, while it does not have a lot of, if any, bookable reserves, you can imagine how much value that is going to create.

So we continue to be very, very focused on the overall cash flow potential of this company, and as indicated by our confidence, giving a 6% per annum free cash flow growth between now and 2030, you can see the confidence that we have going through that. Of course, from now to then, we will continue to look at the right opportunities to be able to both hopefully discover resources, to acquire the right resources, all within the capital discipline that we have outlined, which is the $22 billion-$25 billion over the next two years. I think that's, that's all I wanted to cover. Maybe... Thank you for the questions, Alastair. Maybe, maybe, Luke, we can go to the next one, please.

Speaker 16

... Our next caller is Irene Himona from Société Générale.

Irene Himona (Senior Energy Analyst)

Thank you very much. My first question is really one of clarification, where you indicated that with your forthcoming annual ESG event next month, you intend to cover the energy transition strategy. At last year's CMD, obviously, you retired all the many operational targets relating to that transition, so we kind of lost visibility on what the path looks like. Can we expect you will restore that visibility at this ESG day, please, and will present the new sort of longer-term transition strategy? And then my second question, a quick one on Q4 cash flows. Very, very strong EBITDA, and then you had a $1 billion charge for derivatives and a larger $1.6 billion charge for other.

I think that may refer to these biofuel certificates, but can you perhaps remind us briefly how that works, and is there any guidance you can give us directionally for that going forward? Thank you.

Wael Sawan (CEO)

Well, I'd love to have taken the second one. I will leave that to you, Sinead, in a moment. But let me maybe, Irene, cover your first one, where, if I, if you allow me just a moment to reframe it. What we will be announcing in March is, in essence, the second leg of what we announced in Capital Markets Day 2023 in June. It's one strategy. We focused a lot more on the more value side of it in June, and we will focus a bit more on the, with less emissions when it comes to March.

The retirement of a number of targets was not to create lack of transparency, but really was an intent as we looked to transform Shell into the company we want it to be, to focus on the key targets that matter, both the financial targets as well as the carbon targets that you will have seen when we announced them in Capital Markets Day. And so what you should expect coming in, in March, is real clarity on what are the areas that we will continue to go forward with, not a whole bunch of new targets. And you know, that is not the intent here. But the intent is to get clear on where we see value opportunities.

Back to the question that was asked earlier around where we see, I think it was by Alastair, opportunities for, for investment for our low carbon spend, of which we invested $5.6 billion last year. We want to be very clear on where we see those value pools emerging, where we have particular strength to be able to compete, where we see customer demand evolving in a positive way, and where do we see regulatory support that enables the overall investment to create the value that our shareholders expect. So expect more of that, rather than a whole set of new targets. In our annual reports, you will always be updated on the progress that we are making towards the ambitions that we have set for ourselves. Sinead?

Sinead Gorman (CFO)

Indeed, and thanks, Irene. So basically, what you're asking is in terms of the cash flow from operations, excluding working capital, that's really where the question's going, what's unusual? So when you look at it, the way I always try and separate it out is what is Q4 specific and what is simply not, so that you can see they're both coming through. When I look at it in terms of what is Q4 specific, in terms of excluding working capital, it really comes down to just a number of things. It's really about timing. So this is around the German emission certificates that come through and the US biofuels program that we're part of.

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

Those two combined are just over $2 billion. Going back to that, you saw $1.5 billion that is Q4 specific. That's really around the timing, and the second bit is really price-related. I hope that gives clarity.

Wael Sawan (CEO)

Thank you, Sinead. Irene, thank you for the questions. Luke, can we go to the next one, please?

Speaker 16

Our next caller is Peter Low from Redburn Atlantic.

Peter Low (Research Analyst, Energy)

Hi, thanks. Yes, I had a question on disposals. You announced Nigeria just this month, but you've been linked to several other potential divestments in the press, and you yourself have said you're looking to kind of exit your kind of Singapore chemical refining asset. Can you perhaps sort of update us on how that program is progressing, and perhaps how large disposal proceeds could be kind of this year and in the coming years? And then the second question was on inflation. In your kind of cost reduction slide, you show that actually kind of inflation has contributed to an increase in costs in 2023. I'm just interested where in the business that's coming through and sort of what level of inflation you're currently seeing and planning for. Thanks.

Wael Sawan (CEO)

... You wanna take both?

Sinead Gorman (CFO)

Sure. In terms of divestments, you mentioned specifically SPDC and Singapore. SPDC is a great step forward, gaining momentum. Very, very pleased to see that as an outcome. That will happen in the course of this year, we hope, waiting for those approvals, et cetera. You'll also have seen we announced at the time that approximately all of the proceeds that came with it, so I'll leave the detail there, 'cause there's some financing in it as well. And in terms of Singapore, which is really the refinery Bukom and Jurong, the refining and chemicals plant together, we've confirmed that we are divesting, and we're progressing through that. So I'm hopeful to be able to update you later in the year on that, Peter.

In terms of the proceeds, I, of course, wouldn't talk about commercials at this point, but both of them are more about ensuring that it fits our strategy rather than significant cash flows coming in from divestments. So that gives you a bit of an indication. Secondly, in terms of inflation, yes, I'm glad you picked that up. If you look at our OpEx, what you actually see this year is actually that the OpEx year-on-year has come down. We're really pleased to see that, because what that means is not only do we deliver the $1 billion of structural savings that we've discussed and that we've promised as on our route to our $2 billion-$3 billion, but more importantly, what we also did was we ate inflation, and we managed to cover acquisitions coming in.

And there were quite a few of those with Nature Energy, with Volta, and many other things, including new production, which drives cash flow as well, so significant performance by the business, which is pleasing to see. What are we seeing on inflation? It is considerable. We're beginning to see that come down, of course, as you go into 2024. Our own view on that is specifically that it'll probably be between 3%-7%, roughly speaking. But the way we structure our company, we're very much comfortable that we will be able to try and absorb that with our contracts and the, the variety of things we'll do. We'll see how it plays out in the year. It's very much sticky in certain areas other than rather than others. Where do we see it specifically, Peter?

We're seeing it more in some of the electrical installations and some of the fabrication areas specifically, and of course, RES, without a doubt, the renewable space is there. But that gives you a bit of a feel. I think fundamentally the message to take away is that we've done exactly what we said. We've been able to deliver the structural savings, be able to eat inflation, and be able to absorb new production coming in or acquisitions coming in.

Wael Sawan (CEO)

Thanks, Sinead, and thank you, Peter, for the questions. Luke, can we have the next question, please?

Speaker 16

Our next caller is Giacomo Romeo from Jefferies.

Giacomo Romeo (Managing Director, European Integrated Oil & Gas Equity Research)

Yes, thank you. First question is on your payout level in 2023, which came above the upper end of the 30%-40% range. I'm just trying to frame this and understand sort of what's your approach, and are we allowed to talk about 40% as a soft ceiling like we used to with the previous range? And under what circumstances you'd be considering keeping it above that level? Second question is on Namibia. Just wanted to check what's your work plan for this year. I think there's one more exploration well. And I just wanted to check what's your plan in terms of activity on PEL 39 this year.

Wael Sawan (CEO)

Thanks, Giacomo. You wanna take the first one?

Sinead Gorman (CFO)

Sure. Thanks, Giacomo. My preference is definitely not to introduce any new targets or anything else in. Let's keep it to the fact that if we say something, we're gonna do it, Giacomo, and that's what you see coming through. So 30%-40% is through the cycle. That's very much what we've said in Capital Markets Day, and that's what you will continue to see us deliver. What is our thinking around that? We have a 4% progressive dividend, as you know, very attractive returns overall. Our shares remain undervalued by any metric that you want to look at, and therefore, we're looking to preferentially allocate towards those. Really clear of why we would do that. When you're sitting at, you know, 15% free cash flow yield, of course, we're going to be going after the shares.

Comfort in terms of leaning on the balance sheet when I need to lean on it, but fundamentally, what I'm doing is looking through the quarter, so it's not specifically just on the individual quarter. I'm making sure that I take a pragmatic approach to it and basically have confidence in what are the cash flows going forward of the company, hence the fact you saw the distributions that you saw so far.

Wael Sawan (CEO)

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

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

Speaker 16

Our next caller is Josh Stone from UBS.

Joshua Stone (Executive Director, European Integrated Energy Equity Research)

Hi, thanks, and good afternoon. Two questions, please. Firstly, just with the recent elections in the Netherlands and the potential impact on Shell, you know, I appreciate coalition talks are still ongoing, but do you see any risk to an impact to your green investments in the country? I'm particularly interested in, you know, the biofuel and hydrogen projects. Do these continue regardless of the regulatory environment, or, or, or could we see a slowdown because of changing mandates? And then second question on Nature Energy, maybe can you just talk about how that business is performing versus your expectation and how the integration with the wider business is going, and if you've learned any lessons in the biogas market in particular? Thank you.

Wael Sawan (CEO)

Thanks. I'll take the first one if you wanna take the second one.

Joshua Stone (Executive Director, European Integrated Energy Equity Research)

Sure.

Wael Sawan (CEO)

I think what's critical to say is all of our investments, irrespective of the country, I think have to be resilient to multiple administrations, multiple governments coming in and coming out, Josh. I mean, that's the reality. For the specific projects that you talked about in the Netherlands, of course, the underpinning of the regulatory support is EU support, not just the Dutch support. A lot of what we tap into are the renewable energy directive, number 1 and number 2, and potentially one day number 3. Those are what create some of the broader support for those projects. And so far, we don't see any moves away from that. And that's going to be a key determinant of the success of those projects.

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

Sinead Gorman (CFO)

Yeah. And with respect to Nature Energy, it's quite early to tell at the moment, so we're into the first year of it, not even finished the first year so far. What we're seeing is a lot of learnings going back and forth, because what you may remember is when we actually bought Nature Energy, we said we would actually fold some of our renewable natural gas activities within Europe into it as well. So it's a great opportunity for us to be able to see the information flow in both directions and actually learn from the team there, as well as them to see the trading opportunities that we have as well.

So early days, information flowing, making sure we actually get in place both the standards that we want to have from both sides, and making sure that we have the ability to be able to move the molecules where we want. So looking forward to provide some updates into the future as well.

Wael Sawan (CEO)

Thanks, Sinead. Thanks, Josh. Luke, can we get the next question, please?

Speaker 16

Our next caller is Lydia Rainforth from Barclays.

Lydia Rose Emma Rainforth (Managing Director, European Integrated Energy Equity Research)

Thank you, and good afternoon, everyone. Well, I say I've got two questions, but on this first one, there is obviously a lot of free cash flow within the business, and it is quite remarkable how much you're generating. And Sinead, I agree with that statement, that your shares are undervalued. Did you ever think about giving an annual number for the buyback? And clearly, I can take 40% of my forecast and get to a number, but just from your side, why not have the confidence to give an annual number? And this is vaguely linked, but on the acquisition side, we obviously have seen a lot of acquisitions across the globe.

Is there any point where you think, "Actually, we're missing out on this?" And then secondly, on the chemical side, on the Pennsylvania cracker, where are you now in terms of the specification of some of those products? And it does appear that it's gonna be difficult to meet that cost of capital hurdle. So when you're thinking about that process of what would you... Would you do it again, effectively, or how would you not make that sort of investment and when it looks like it's not gonna make the return? Thank you.

Wael Sawan (CEO)

Yeah, thank you very much, Lydia. I think inherently three questions here. I'll take the last two, start with those, and then come back to you, Sinead, on the free cash flow generation. I think let me start with Monaca, then go to the acquisition. On Monaca, you'll recall the last update I provided was that the first two polyethylene trains, two of three, were running well. They are running at or above capacity and continue to do so, which is pleasing to see. I also updated you at the time that there was equipment issues on the third train.

I'm pleased to report that that piece of equipment now has been installed, a compressor that we needed to put into place, and is in the process of being started up and will ramp up through the course of the coming weeks. So that allows us, hopefully, to stabilize the plant from thereon. Our focus right now is on volume, on just pushing the volume through the plant. And why is that? That's because the differentials at the moment between the gas price and the product price are significant. So even before we get very forensic around the potential grades that we have, that we can actually crack out there, the real focus is on just getting flow through, and that's what the team is focused on for the coming months.

And then over time, of course, we will continue to optimize value through the opportunities that we have technically to do so. On your question around acquisition, I think the worst thing you can ever do is get FOMO when others are acquiring. We set out a very clear strategy at middle of last year, and if anything, we stand today in a position where we are very pleased with not just the progress we are making, but the momentum that we are building towards that strategy. And we are absolutely convinced that that strategy, if we can, if we can continue to deliver on the pace we are delivering, will unlock significantly more value than any other acquisition. And of course, you see that playing through. You see it through the stability of our cash flow generation.

I mean, our Gulf of Mexico business, this last quarter produced at a record high, the highest in over 2 decades. Our Queensland Gas Company, asset base is producing at a record high, the highest since it started up 10 years ago. So the quality of the CFFO is strong. Yes, there's more to do to get Prelude and Monaca up and running. At the same time, Sinead has already alluded to the growth in CFFO coming from the 200,000 barrels per day and new projects that will be coming through. Cost is coming down, CapEx discipline is showing. So I think you see all the credentials to be able to really focus on unlocking that, that value from the first sprint, and we're only 2, 2 quarters into a 10-quarter sprint.

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

Sinead Gorman (CFO)

I think that's a perfect answer to the first question as well. I think, very... My, my sort of brief response would be, when we set a target, you can see that we're looking at performance, not promises. We will meet it and hopefully beat it. You can see that preferences to not set a huge number of additional targets along the way. Just look at our track record. If you look back over the last, you know, however many quarters, six quarters, whatever it may be, it's a very tight range in terms of the buyback. So hopefully, it gives you complete predictability in terms of what's going forward, Lydia, as well. But fundamentally, I'll always look at the performance of the company in the quarter and looking forward as well.

That's why you see a $3.5 billion share buyback at this point. So thank you.

Wael Sawan (CEO)

Thanks, Sinead. And maybe a fine point there, Lydia, as well. You'd asked me, would we do Penn Chem again? I think, what we will continue to do is to be very clear where every single dollar of capital is going to be prioritized. Does it go into a buyback, or does it go into other projects? We have said we're going to keep our capital employed in chemicals flat through the decade. So of course, that's a key consideration. And we will make sure that we do less of what we would call the mega, mega projects. That is very much the philosophy that we are adopting. Small and replicable is beautiful, and we see it in the context of a Vito, to a Whale, to a Sparta.

And so more and more of our capital expenditure is going to be in areas where we feel we can really get our hands around those opportunities, and only in exceptional cases where we truly see value add will we go for the bigger projects. Thank you for the questions. If we can go to the next question, please, Luke.

Speaker 16

Our next caller is Christopher Kuplent from Bank of America.

Christopher Kuplent (Managing Director, Head of European Energy Equity Research)

Thank you. Good afternoon. Just, one each, if I may. Wael, maybe you can tell us where your, as you call it, ten-quarter sprint so far is, frustrating you. Where have you not made, progress, as you would have hoped? I appreciate it's early on asking you that question, but if you can give us a bit of color, and maybe, my particular hobby horse, your experience from, what you did in Pakistan, is that, is that a model that you're hoping to roll out elsewhere, when you think about cutting the tail in your retail network? One for you, I'm really sorry, Sinead, but I do have trouble calculating a 42% CFFO payout ratio on 2023.

It seems like you're giving yourself a lot of credit for working capital inflows, et cetera. So, is it fair to assume that the underlying payout ratio is significantly higher, once you go below the CFFO headline? That to me would be a very bullish interpretation, going forward when working capital changes perhaps go the other way. Thank you.

Wael Sawan (CEO)

Thanks, Chris. Let me cover the first one, and then have Sinead cover the second one. Look, I think I just outlined earlier, Chris, the strong confidence I have, but also humility to recognize indeed we are early in the journey. What are the frustrations? Let me sort of provide a couple of maybe live examples rather than just talk theoretically. So one of the things that gives me confidence... Well, let me step back. What we are doing well, clearly, on the cost reduction side is the portfolio. And, you know, we are moving, maybe I'll pick up your retail question there.

We are looking at every option for those tail markets or for those tail assets to be able to monetize them, or shift the structures around them, shift them into trademark license agreements or the like, to really make sure that our capital employed and our energies and our focus are on the right area. So we will continue to do that. The real focus, and we always knew the hard yards, come from the structural cost reductions, and there we are really making progress in a number of areas. I'll give you one simple one, but I think is iconic in the bigger scheme of things. Our asset managers have historically had some 1,800 standards that they need to be complying by.

So we spent time last year really focused on how do we simplify those standards, and we have reduced that requirement by 70%, while still living up to all of our safety and reliability expectations. But that's down from 1,800 to 500 standards. Now, I wish we could do that in a week. I wish we could do that in a month, but that takes work because we really need to go back and de-bureaucratize a lot of the activities we have. And so I wish it could be faster, but there are other areas where I look and say, "Actually, teams are getting it." Places like the Gulf of Mexico, I talked about their record production.

I would also reference how they're being able to, for example, challenge the way they do work, reducing their overall people movements offshore by some 35%, allowing us to reduce our demand on helicopters by 50%. Just small examples of where you see the momentum starting to build. I'm sure I speak on Sinead's behalf as well. Both of us would love to see that to go even faster, but we also recognize we have to take an entire organization along, and some of it is unpacking things which we have ingrained into our business for a long, long time. So this is a transformational journey, which is both exciting, but also, of course, one that is going to take its time. Sinead?

Sinead Gorman (CFO)

Yeah. Indeed, and thanks, Chris. In terms of the question of just your point on the calculation of the payout ratio, we actually haven't changed it year on year. So as you know, if you look back at the previous year, so 2022, where we had actually working capital outflows and quite substantial ones as well, we calculated it on the back of that. When we looked at it in 2023, where we had inflows, we looked at it in that. So working capital, you're right, does vary with us. It goes in and out across the period, but we keep it pretty consistent. What I'm probably more interested in, regardless of how I calculate it, is just simply put, am I giving a compelling return to my shareholders or not?

I think with $23 billion across the year, we've definitely done exactly that in terms of that mix. And I hope we can look through that to continue to, regardless of the working capital, so like the working capital inflow this quarter or not, I'm still looking through it to be able to say, "Do I have confidence in the future cash flows of the company to be able to continue to distribute?" Which is why the $3.5 billion. So hopefully, you'll see that tight range that I mentioned before and that track record coming through. Happy to work the details of the calculation with you through IR at any point. Thanks.

Wael Sawan (CEO)

... Thanks, Sinead, and thank you, Chris, for the questions. Luke, let's go to the next question, please.

Speaker 16

Our next caller is Martijn Rats from Morgan Stanley.

Martijn Rats (Managing Director, Global Oil Strategist and Head of European Oil & Gas Equity Research)

Hi, hello. I've got two, if I may. If you look at sort of the 4 key results and also the full year 2023 results, I have a question about sort of trading and optimization, because previously you've indicated that trading and optimization is sort of a 2-4 percentage point sort of uplift to return on capital for the company at large. But so sort of backing this out is always, like, tremendously difficult, but it looks to me like in 2023, it was either at or possibly even above that range. And I was wondering if that is indeed the case.

The reason why I'm asking is that if it is indeed the case, it must become a it is a very, very large share of the company's sort of overall earnings. And the other one I wanted to ask is about the disposal of onshore Nigeria. If you could say a few words on how that might impact sort of earnings, cash flow, sort of going forward. What are the, you know, what are the implications of that we should take into account from a modeling perspective?

Wael Sawan (CEO)

You wanna take both?

Sinead Gorman (CFO)

Yeah, happy to. So indeed, thanks, Martijn. And in terms of trading and optimization, particularly this quarter, we saw a really good result from our LNG trading and optimization. It's a pretty exceptional quarter. Q4 tends to be very good, as you know, for them, so we saw that repeated again. You're right, we said 2%-4% in terms of Capital Markets Day, in terms of the uplift that comes through. It's very difficult to guide quarter-on-quarter, of course, because there is that volatility that comes through. The way I tend to look at it is, it tends to be linked to either the opportunities that we have or, in effect, weather.

What we tend to see, of course, is that, with respect to the LNG side, set up for the Northern Hemisphere, that Wael mentioned earlier, Q4 and Q1 tend to be the stronger ones. Not surprising, it's gas at the end of the day, so this is about the winter there, and of course, about the volatility and arb opportunities, which were very strong, as he already alluded to as well in Q4. What we see in chemicals and products, and particularly on the product side, of course, is that although there's a weather, weather element of that, so of course, with gasoline driving season, et cetera, and diesel, you see much more it's about, the opportunities that come about. Q4 tends to not be there, and that's why we get that volatility over it.

So we see that 2%-4% is a pretty good representation, which you're right, IG is- tends to be on the higher end of the 2%-4%, within that range, and you tend to see the chemicals and products more middle to lower end of it, so it gives that blend across it. In terms of the disposals, you, you talked about particularly, Nigeria. What are you talking about there? Well, in terms of the reserves, just to give you a bit of a feel, it's less than 5% of our reserves. But as we know, when we talk about any of these barrels, it's less than 100 kboe/day, as an example. But of course, it depends on price, and it depends on your ability to get paid as well as it comes through.

So each barrel is not created equal, and I think that's very much the case in terms of Nigeria. We're not worried about in terms of the impact coming out of the cash flows. Actually, when you look at the disposals we have announced and the disposals we've already done, that growth element that Wael and myself have both talked about, whether it's Timi, Vito, LNG Canada, all of those different ones coming through, they more than exceed the cash flows from the divestments, which is the key point to take away here. But thank you, Martijn.

Wael Sawan (CEO)

Thanks, Sinead. Thank you, Martijn, for the questions. Luke, can we go to the next one, please?

Speaker 16

Our next caller is Lucas Herrmann from BNP.

Lucas Herrmann (Managing Director, European Energy Equity Research)

Yeah, thanks very much, and afternoon to both of you. I wonder if I could push you a bit on chemicals or a little bit more on chemicals, or maybe you could help me out. So Wael, looks like you lost about $2 billion at the EBIT level on chemicals this year. The losses, you know, were larger in the fourth quarter than they were in the third, despite your indicated margin being improved and, you know, the comment that two of the three trains, et cetera, at Monaca are working. Can you help me understand, you know, as Monaca comes on, hopefully as Singapore goes out, how do I think about the progress that, you know, one might expect to see in terms of EBIT, you know, cash flow improvement across that business?

Which chunks of the business are actually making money at the present time, if any? Just walk me through the business and give me... Help me determine, yeah, how to think about the profitability or otherwise, the ones we're likely to see, you know, as we go through this year. Try and leave the macro behind, which I don't think is gonna help you greatly, unfortunately.

Wael Sawan (CEO)

Very good. Was that it, Lucas? Have I missed anything that you wanted to ask as well?

Lucas Herrmann (Managing Director, European Energy Equity Research)

No, that was probably far too long anyway, Wael, but appreciate any insights.

Wael Sawan (CEO)

Tell you what, I'll give a perspective and then invite Sinead to also add if needed.

Sinead Gorman (CFO)

Sure.

Wael Sawan (CEO)

Look, I think, of course, the performance of chemicals has been something that is very much in the spotlight for us. And we haven't tried to sugarcoat that, even as far back as Capital Markets Day. And we still realize we have a long journey to go there. I'd say there are three key levers that we are pulling there, Lucas. One is indeed the fundamental is making sure that the $14 billion or so of capital employed in Shell Polymers Monaca, the PanChem facility, are generating the return. You don't see a lot of that coming through in Q4, you're right, because Q4 was actually...

Those units were down in Q4, as we were looking to complete all the maintenance work on the cracker itself before we were about to bring up the third train, and to repair things that we had discovered through the startup process. And so, that startup of those units was, I think, towards the tail end of last year in the December period, and have gone through into the January period. And as I earlier said, the third train is in the process of starting up, so don't expect much, at least for the first few weeks coming out of it until we've ramped it up. What we have said, and we haven't changed our guidance, is that you should expect $1-$1.5 billion of EBITDA from Monaca, when it's up and running, which is not going to be in 2024.

It's more likely to be in 2025, 2026. That's when, that's when you should expect that. The second key lever that we're using is the that we're deploying, of course, is the portfolio one. You talked about Bukom. I won't address that. That, of course, is bleeding, and therefore, the sooner we can move on that portfolio move, the better. We're also looking to high-grade our portfolio through something like the recent announcement on Rheinland, where we are shutting down one of the crackers and converting it into a high-quality base oil units that will supply roughly 40% of Germany's needs. So that portfolio transformation is also ongoing. And then thirdly, there's a cost component. We just need to get sharper on cost.

And so what we're doing there is, for example, reducing our IT spend there, as part of a broader corporate focus program on IT, where we have, in essence, reduced some 35% of our IT contractors, some 3,000 people since middle of last year, and really getting much sharper on where we want to focus our scarce IT dollars. We have recently announced a significant downsizing of the commercial team in chemicals, down by some 25% headcount. So, there's a lot of actions to be able to do what we can control or fix what we can control. The margins aren't great. I mean, that's obvious, and I don't know how long that lasts, but what we have to be able to do is to do the best that we can within the constraints that we have.

And so we are focused on that. We also haven't changed the guidance that, against the indicative chemical margin that we presented in Capital Markets Day, we expect to deliver around $3-$4 billion of earnings coming out of the chemicals and products portfolio. So that's where we are, and there is no shortage of attention nor effort to be able to get this to be the best business that it can be within the constraints of what the business is today, while we continue to look at options to do even better. Sinead, would you have wanted to add anything?

Sinead Gorman (CFO)

I think one sentence would be, you're completely right. It is loss-making at this point in time, and that's why you can see my confidence and our confidence as we talk about the free cash flow into the future of the company. By stopping that loss-making side of things, by turning it around, by doing the divestments, by getting Monaca up and running, it just gives us that runway, Lucas, into the future in terms of being able to just see that free cash flow growth. I think you've covered it all.

Wael Sawan (CEO)

All right. Thank you very much, Lucas, for the question. Luke, can we go to the next question, please?

Speaker 16

Our final caller today is Jeoffrey Lambujon from TPH & Co.

Jeoffrey Lambujon (Managing Director, Equity Research)

Hi, everyone, and thanks for squeezing me in. My first is a follow-up on one of the projects you mentioned earlier, LNG Canada. Could you provide a status update there, whether in terms of completion and startup timelines or however you'd characterize it, as you see things today? And then my second question is on the structural cost reductions, which, as you mentioned, are already well in flight following a strong 2023. I know you referenced that this is gonna be an ongoing initiative even beyond the 2025 timeframe that bounds the near-term target. But could you comment on how you're thinking about sources for and timeline of deliverability for these reductions over the near term? Just at least as far as the visibility that you have and can share. Thank you.

Wael Sawan (CEO)

Thank you very much, Jeffrey. I'll take the first one and then let Sinead address the second one. LNG Canada, you'll have... Or we also addressed this last year. We have seen, of course, the Coastal GasLink pipeline completed mechanically last year, and ready and available to ramp up through the course of 2024. The facility itself at Kitimat is now just over 90% complete, as per the report from the joint venture. So they're making good progress, and I would expect that we would expect that later this year, they would start up the commissioning of the plant. That, of course, takes several months, well into 2025. But it's comforting to see the progress that is being made.

Of course, once we start producing, those commissioning cargoes will be made available from day one to our foundational customers, as you would expect. So, pleased with the progress, but this is no doubt, this is a very complex facility that's going to be ramped up, and therefore, we are going to be to watch it and to support the team as they do that through the course of the coming 12-18 months.

Sinead Gorman (CFO)

Yeah. And thanks, Jeffrey. You asked about OpEx. You heard me talk about how pleased I am in terms of the progress to date, you know, $1 billion after only 7 months. Great progress. We talk about it in terms of where we play and how we play. In terms of where we play, the portfolio moves are the predominance of that at the moment, and you can see, of course, us ramping up with Pakistan coming through, Nigeria coming through, and many others that you will see flow through as well. So you'll see some of the OpEx come down. The reason I don't give you timing on that is, of course, it's dependent on approvals and when that will actually occur. So we expect those to happen towards the back end of this year, more than likely, 2024.

The how we play, that's the difficult stuff, that's the bottoms up. Very much in terms of three areas I'd look at: leaner corporate center, Wael already alluded to IT and taking out contingent workers there, but across all of the functions, making sure it's fit for purpose. We, of course, look at it in terms of pacing the growth in terms of our downstream and res business. They're really going after things. Wael talked about chemicals, et cetera, and the, the thoughts of taking cost out there. But of course, also you see us in terms of low-carbon fuels, where we've got this mixture of actual growth coming through with Nature Energy, but of course, moving away from some of the aspects of hydrogen into mobility in California, as an example. So you'll see a bit of a mix there.

Finally, we're looking at continued improvement, of course, in our upstream business, where you see the aspects of, you know, going after hards, where we spend money in terms of maintenance, making sure it's really bang for our buck, et cetera. So those ones you will see come through in the course of the year, but the big, meaty ones will be probably towards the end of the year. But what I hope you're seeing on all of this is, we've given you a promise in terms of $2 billion-$3 billion. We're already $1 billion through there, so indeed, it's about performance rather than the promises, so we're really continuing to drive that hard.

Wael Sawan (CEO)

I think that's a great way to end. Jeffrey, thank you for the questions, and hopefully, the theme of today you'll have taken is, this is a company that is truly delivering now on its sprint, and we are building the track record that we said we want to build. Thank you all for your questions. Thank you for joining the call. Wishing you all a very pleasant end of the week. Thank you for your time.