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Hi, everybody, and thank you for joining our Shell LNG Outlook 2026, which is actually our 10th anniversary LNG Outlook. My name is Cederic Cremers. I'm the President of Integrated Gas at Shell, and I'm joined by Tom Summers, who is our Executive Vice President for LNG Marketing and Trading.

Before we get started, I just wanted to touch on this cautionary note for a minute, which reflects the fact that we, of course, have forward-looking statements as part of this and just to recognize that they are inherently subject to uncertainty. I also want to recognize that the information that you see here was based on third-party data from consultants to which we have added Shell analysis. And also to reflect that this is an outlook on the LNG industry and market as a whole, not a specific outlook for our Shell's own LNG business. Now, I want to acknowledge the consequences that many of you are feeling as a result of the crisis in the Middle East, whether you are in the Middle East itself or whether you have family or loved ones in the Middle East or the many customers around the world that we see are impacted by the disruptions in the Strait of Hormuz and knowing how this is disrupting the energy that you need to fuel your daily lives.

So before we dive in, maybe just to summarize briefly that we'll be going through 3 different sections. First of all, we want to look back a little bit at the last 10 years since this is our 10th anniversary outlook. Tom will then take you through a little bit more what is happening in the market today and what do we see developing over the coming year. And then I'll come back and look a little bit more at the long-term trends. And so what are some of the factors that we see influencing both supply and demand over the next few decades.

So with that, as I promised, let's look a little bit back at the last 10 years. And I think we can certainly say that this has been a decade of LNG growth. We've seen 60% increase in the demand for LNG and now surpassing more than 400 million tonnes per annum. We've also seen some key developments. We've seen the U.S. emerge as the largest exporter of LNG in this time period. And on the flip side, we've seen China actually emerge as the largest importer. We've also seen Europe, in particular, increase its share of LNG in the gas market and it's been replacing Russian pipeline imports by LNG during that decade.

And perhaps the most notable development in terms of magnitude that you also see on this slide has been the increase in LNG fuel ships that we see in the market. Actually, a tenfold increase over this decade from just about 80 vessels to now more than 800. What you see in the bottom of this slide is something that I think has also been very notable over the last decade is that we've actually had 3 large shocks, whether it was COVID first, then the start of the war in the Ukraine and now the crisis in the Middle East that have all tested the resilience of the global LNG market. But I think it's also shown the strength of the LNG market in terms of how it has responded to those. And I think also you will see later from Tom how the market has actually learned from some of these crises and increased its resilience as it's moved forward.

Lastly, I think if you look over on the right-hand side of this slide, you'll see the prediction that we made about 10 years ago on the basis of that industry data of where the market might be in 2025. And despite these large shocks, you see that those long-term trends still proved to be true in terms of where the market was moving from an overall macro perspective.

So a little bit more. Also, if you look at the last decade and think about the role that LNG plays, we see that over the last decade that gas has certainly grown faster than oil and coal. And then within gas, we've seen that, in particular, LNG has been the fastest-growing factor. In this LNG outlook, for the first time, we've taken out the view all the way to 2050. And we see that those same trends still hold. If you then look at where, in particular, do we see that increase in gas and LNG demand, from a geographic perspective, it's going to be primarily in South and Southeast Asia. And then in terms of the sectors where we see, of course, in power, but also importantly, as we've shown in previous outlooks in the industry demand as well as that for transport, whether that be marine or road.

Altogether, if you take the middle of the range of the scenarios of demand outlook that we see, we expect about a 65% increase in LNG demand between now and 2050, taking the market to around 700 million tonnes per annum. So this is really a story of Asia growth plus energy security driving the growth of the LNG market in the years ahead.

With that, we now want to go to the second section. And Tom, I'll hand over to you to look a little bit more at what's happening in the market today.

Thanks very much, Cederic, and great to be joining you here today. We'll start with taking a deeper look at the impact of the Middle East crisis. And firstly, we'll look at the breadth and depth of the impact here far beyond just that of energy. We've seen this being the most substantive and material crisis in terms of energy supply disruptions when we compare against historical shocks that you'll see on the left-hand side of this chart. But it's also gone far wider than that. And on the right-hand side here, you'll see the impact on global trade across many, many different segments of our economy from metals and technology, fertilizer, petrochemicals and, of course, into core energies. The percentages that you see in the bars here are representing the share of seaborne trade that moves through the Strait of Hormuz relative to others. And so we've had things like diesel around 10%, but up to close to 50% with products such as sulfur and of course, some compounding effect with many of these together on economies around the world.

I'll dive in here and now look a little bit at what that's meant for LNG. So we'll start with looking at 2026 LNG supply expectations and how these have been reset by the crisis in the Middle East. We started the year in January and February with strong year-on-year growth compared to 2025, with much of that coming from the U.S. and from Canada in terms of driving new volumes into the market. But as the crisis took place through March and beyond, you can see there a net deficit in the year-on-year change of supplies coming into the market in 2026.

Now that change has not come unanswered, and we've seen many supplier responses through these last few months. We've seen North American exports grow and maximizing their outputs from existing facilities. We've seen the same across many legacy assets in the world, where there's been strong focus on reliability and full use of capacity. Moving volumes from the Atlantic Basin to the Pacific Basin has been a key theme we've observed so far during the crisis, and I'll talk a bit more about that later. But just as importantly has been a deferral of maintenance during this period with suppliers taking the signals from the market in terms of making available volumes today when they're most needed.

Now when we think about what we had anticipated in 2026, pre-crisis, we thought we'd see an increase in global LNG supply of just shy of 10% year-on-year. So far, that reduction in supply from the Middle East will mean that we're likely to leave this year around balanced to 2025 if we saw an early resumption in the third quarter of this year. And the right-hand side of the chart you can see there is, should this continue out through to the end of the year, then this could be a year of contraction of supply in the market. Many factors are known and ones we need to continue to monitor closely.

Now here, we'll look at the demand side and the diversity that has allowed for a resilient rebalancing in the market. Again, in January and February, we saw strong imports in Asia and Europe relative to the prior year. But since March, Asia has borne the brunt of the reductions that we've seen from the crisis in the Middle East. Europe also has been flat compared to last year, which is going to mean it's -- we'll have to draw on more supplies during the summer to meet its storage targets as it approaches winter later in the year.

Demand side responses have included drawdowns on storage, not just in Europe, but also in China, Korea and Japan. We've seen fuel switching in some markets where we've been moving into other liquids into coal and more into power, but of course, also demand curtailment in terms of drawing back on energy consumption during times of elevated prices. And finally, where buyers have had to bring more LNG to replace those supplies lost, we have seen a continued spot buying from the market. But it's important with the spot pricing to put it in context for the LNG market, which you can see from the right-hand side.

Spot makes up about 25% to 30% of the overall pricing exposure for the industry. Almost half of the market's LNG continues to be priced against oil. And whilst that has stepped up due to the Middle East crisis as well, the impact has not yet been as significant as we've seen in previous periods. And then the remainder of the LNG is linked to North American gas pricing. And we've seen the continued growth in U.S. LNG exports with LNG linked to Henry Hub prices in the U.S. So whilst LNG spot prices have increased, you can see that red line on the chart, the impact on the overall segment for LNG has not been as extreme.

So we talked a bit about supply and the demand side, and we'll look here at the logistics chain in the middle, which is our freight. So during the ramp-up in diversions of LNG from the Atlantic Basin to the Pacific Basin, we've seen historical changes compared to the last 5 years. But what's been different this time compared to that of Russia-Ukraine crisis is that the price response on freight rates has been more muted than we had previously experienced. And there's been a couple of reasons for this.

First, there's been some vessels available on the short term to participants in the market because the Middle East suppliers have not been moving the cargoes. But I think more importantly, we've seen a continued growth in the newbuild deliveries to market, as you can see from the right-hand side, reaching historical records this year. And so far, over 40 vessels delivered, but we expect it to be close to 120 new ships coming to the market by the end of this year. And this availability and resilience in the freight market has helped support the flexibility that LNG has needed to move cargoes between the basins to our customers in Asia.

Now we'll take a quick look a bit closer at those spot prices, and this is a look back over the period since 2020. And you will have heard Cederic talk about the 3 market shocks we have experienced during this period and that the industry has learned much from each of those events in terms of how it has responded for the ones that follow. So first of all, in the early 2020s, we saw the COVID pandemic. And during this time, we observed the market using the supply side corrections for U.S. exports to be curtailed. Into the Russia-Ukraine war, we have experienced a significant price shock as the European market sought to rebalance the flows that were moved from pipeline and bringing LNG instead.

We saw the need for a very rapid build-out of LNG import infrastructure, particularly in Northwest Europe. And that has set Europe well to work its way through this crisis we've now been experiencing. In particular, a very rapid build-out of FSRU vessels to import LNG into Northern Europe has enabled the market to adapt and become more resilient than it has in the past. The other thing of note during this period, of course, has been the continued supply growth that we have experienced. And the market has more LNG available today than it had in the '22, '23 period.

And finally, our customers and suppliers and all market participants have actively built more flexibility in their portfolios, being able to respond and adapt as they work their way through their responses to the market conditions that they faced. So if we look at the changes in the market in 2025 on the left and then the changes year-to-date in 2026, you can see some of the key messages that have been shared earlier. Firstly, that growth in supplies from North America, the U.S., Canada and then in third is the UAE exports. And that's been the key driving factor during '25 as well as into 2026. On the import side, in '25, we saw North Europe and Southern Europe stepping up to import more LNG than in the prior year as well as Egypt, which is responding to ever-growing demand requirements in the country.

I'll talk in a bit about the responses that we've seen from China. But you can see there more than 10 million tonnes down year-on-year as China is responding and balancing in different ways. Now year-to-date 2026, of course, big drops in changes from Qatar as well as in the UAE as the market continues to expand in North America. From an imports perspective, we are so far through the year relatively balanced with trade flows, but we've seen a slight uptick in Egypt with Europe remaining relatively flat and China down slightly compared to last year.

Now let's spend a bit of time to look at what's happened in Europe. You can see changes from 2024 to 2025. And here, LNG has stepped up to reach record levels of around 125 million tonnes of imports, which has been replacing lost Russian pipeline gas as the contracts have expired or flows through Ukraine, ending a relationship that's lasted since the early 1970s. Now Europe was well positioned for gas inventories during 2025, but there's been a sharper drawdown on inventories during the prior winter. And as you can see from the dotted blue line, the trend for this year is running towards the bottom of the 5-year range. That's going to be an important factor for the market to continue to watch as it rebuilds through the summer period.

And as Cederic mentioned earlier, one of the key themes we've seen over the last 10 years has been the growth in U.S. LNG exports. You can see from the red line here that share and percentage of European market for U.S. LNG increasing to around 25% this year. If we put that the other way around, about 70% of U.S. exports have found their way to European markets, marking a really important trade route for LNG that has evolved over the last few years.

Now I mentioned China. And here, you can see the Chinese gas balances year-on-year from 2024 to '25, and the theme has continued into the beginning of this year. We've seen China's market step up in domestic production as well as pipeline imports. Power of Siberia 1 has been reaching its 5-year plateau and domestic production has taken the lion's share of increases. These 2 have squeezed out LNG slightly over the last year, but it's important to remember the trajectory over the last 5 years and LNG now being one of the largest markets into China, as Cederic mentioned.

Now China's market has grown substantially and over 100 bcm of gas has made its way into the growth funnel for China over this last 5 years. That's equivalent to the markets of Germany and Spain put together. And on the right-hand side there, you can see that change over time for domestic production, pipeline imports and LNG imports. And one of the things we've observed so far this year is that there has been a course correction in terms of the year-to-date for China compared to what we had expected this year. And that's largely driven by China's growing role as a balancer for the global markets as it pulls more on domestic and pipeline in terms of reducing LNG reliance.

Now finally here, we'll have a quick look at how the geopolitical crisis has delayed the forecasts of record supply growth. And you can see through the chart here how we forecast in February compared to the current range of changes in supply and what that's meant for anticipated changes in demand. And as you'd expect, that drop in Middle Eastern production from February to the current has been the largest driver in the supply changes this year. But also important to note that the changes in demand have been seen predominantly in Asia, but also there in Europe as we adjust our views on how European storages will fill through the remainder of this year.

We've talked about these uncertainties in the market in last year's LNG outlook, and these remain key for this year. Geopolitical and shipping security are key. Demand response and affordability stress remains important. And as we look into the next few years ahead, LNG project start-up timing will continue to be an important factor for the industry to watch.

And with this, I'll hand back to Cederic, who will take us through looking at the market ahead. Cederic?

Thanks, Tom. And after Tom has just taken us through effectively what we see happening in the market today, particularly with one of the largest crisis we've ever seen in the energy industry. But I think importantly, the takeaway from Tom's message as well is effectively how the resilience that has been built into the LNG market and the flexibility there as well to respond to these kind of crisis. So now we want to draw you back a little bit to some of the more longer-term kind of structural drivers that we see. And as I mentioned, kind of looking out over the next 2 decades about what are those key drivers, both looking at the supply as well as the demand side of the industry.

So first of all, let's have a little bit of a look at supply. And this is the next 10-year look in terms of the supply growth. And what you see on the left-hand side is that, of course, coming out of 2025, we've seen a record number of FIDs in the LNG supply side, particularly dominated by the U.S., and we see that trend already continuing into 2026. On the right-hand side of this chart, you see basically where we expect the supply to be, and that stacked up against the range of demand outlooks that we see in the next 10 years.

Now you see that, that has shifted a little bit to the right because of some of the damage that we've seen from the current crisis in the Middle East. And as Tom said, there's still some uncertainty around that as far as future projects start-up and ramp-up goes. But I do want to draw your eye to the kind of the hashed section that you see there. That's those -- when the supply from new projects is going to come on. And you'd see that, that has increased and it's actually going to be around 200 million tonnes per annum as we get to the start of the next decade. And also importantly to note that, that is actually 70 million tonnes more than what it was last year, which is represented by the dash line that you see across there.

So certainly, I do expect that as we get towards the end of this decade or early next decade, that we are going to have periods of time when supply is going to outpace demand. But as you'll see later in this pack, I also think that this additional supply is absolutely critical for the health of the market and provides an important signal of confidence to customers in terms of the commitment and investment that they make in for LNG as well.

So just to zoom in a little bit more into North America and the U.S., where the supply has really become a major force into the market. And the key thing I want to take you away here is not just the size, but it's actually the flexibility that the market provides. It's already the #1 market, as I mentioned earlier, but also the fastest growing in the years ahead. You see there, for example, the number of cargoes and how that will increase in the years ahead. But more than the number, even more important is that actually these cargoes are destination flexible. So they can be going to different places around the world. You then see the number of offtakers, which has grown -- is expected to grow even more in the years ahead as well to represent those different places that are going to be looking for U.S. LNG and where the product would go.

Maybe more specifically to that, we do expect as we move into the 2030s that the total supply of U.S. LNG will actually be more than the demand of the Atlantic Basin. So what does that mean? That means that these cargoes will have to be moving further east in order to find markets and to find the customers that need the LNG, which will also have an impact in the years ahead of the amount of shipping that happens in our industry. And then lastly, something to call out is that we -- what you see at the bottom of this slide is the share of the U.S. gas -- feed gas that goes into LNG and a share of the total North American gas market, which does mean that I think we will see a stronger relationship perhaps in future between global LNG prices and gas prices in North America.

So as we go to demand, let's have a little bit of a look at that in terms of what that means and also the certainty and the confidence that it gives to buyers, as I mentioned earlier. If we look back in the last few years, you see that the additional supply that has been coming on has been mainly going to Europe, replacing Russian pipeline supply, as Tom talked about earlier. This means that prices have gone up there and then they've pulled away the LNG that perhaps otherwise would have been going to Asia.

Now what we see in the years ahead, you see that increase in supply that is going to be coming and really the market confidence that, that gives. I think what we see happening here is that Asia is going to be coming back into the market on top of that investment confidence that it provides the additional supply as well as the improved affordability, but on top of that, some of the structural drivers for demand growth that we see in Asia as well. First of all, of course, economic growth that we see driven on population growth as well as increasing in kind of urbanization and wealth growth in Asia, but also some of the emerging sectors such as data centers and still marine that we see looking for more LNG. And lastly, also a key driver that we see, which is the call for energy security and particularly diversification of energy supply as a key factor driving energy security.

Let's dive a little bit more into some of these key factors, both by geography and then segments for LNG demand growth over the next few decades. I want to touch here first on South and Southeast Asia. So these are countries such as Bangladesh, Thailand, Vietnam, Indonesia and the Philippines. And what we see in all of these countries that they are predicted to have strong economic growth in the years ahead, more than 5% in the cases. What you see on top of that economic growth is that we see an increase in urbanization. So basically more people moving to cities and cities in Asia that tend to be more densely populated than those in, for example, Europe or North America. We also see more people moving into the middle class, which means an increase in demand for power or for cooking or even for cooling, which are all key trends also driving the increase in gas demand in these countries.

Now critical also here is what you see in the middle of the slide. So you see the line showing the increase in gas demand in these markets in the head. But also what you see when you look at the bars at the bottom is that while some of these markets have traditionally relied on domestic gas production for their gas needs, you see that those are going to be declining in the years ahead as we see natural decline from the fields. And so what we really see is that, that supply gap in between is actually growing from both sides there and that LNG will be playing the critical role of meeting that supply -- that demand gap there.

Lastly, over on the right-hand side, you see the kind of the infrastructure that's going to be needed to import this LNG in those Asian markets. And whilst you see that there is enough capacity up to 2030, you see that there will be more capacity needed to satisfy that demand growth in the years ahead. And so an important signal, I think, as well that the supply and the improved affordability will be able to catalyze that growth in regas infrastructure as well, also recognizing, of course, that the time lines from an investment decision to starting a regas project are often shorter than those of supply projects.

We've talked a little bit about some of these key growth markets, but I also want to touch on the role that we still see that LNG will play a critical role actually in some of the transitioning markets. And I want to touch briefly on Europe and on Japan. What you see on the left-hand side here is the progressive updates year-on-year on European gas demand. And what you see is that actually each year has been revised upwards or to the right, as you can see here in this chart and also that up to 2030 or possibly beyond, we expect gas demand to now in Europe to remain roughly flat. That update and increase in gas demand has come from what we see across Europe, which is a slower pace of energy transition than perhaps expected. And whilst great gains and faster gains perhaps are being made in solar, we see vectors such as wind, hydrogen, CCS and heat pumps actually falling short of the ambitions that the continent originally had.

And then on the right-hand side, you see why LNG is going to still play a critical role. If you look at the left-hand side, total demand growth -- sorry, demand decrease for gas, you might think that, that means less of a market for LNG. But actually, we see that over the decades ahead, that LNG will continue to play a critical role in satisfying Europe's demand, primarily because we see that drop in domestic demand in Europe continuing to decrease as we move forward in the next few years and in the next decades, actually, in fact.

Let's also have a brief look at Japan, where METI has recently come out with its seventh strategic energy plan. And they've looked at multiple scenarios about how energy demand may develop in the decades ahead. But actually, interestingly, what we see is that in each of these scenarios, it calls for more LNG demand in the years ahead. It's really driven by what you see in the middle of this slide, which is that they're now predicting an increase in power demand in Japan, driven on the back of increased demand from data centers in particular.

Now the outlook for nuclear is remaining roughly stable compared to previous energy plans. But in particular, this increase in power demand, they don't expect that it can be met with an increase in renewables only, and therefore, that gas and in particular, LNG will have to step in to fill that gap and continue to provide energy security to customers in Japan. And then on the right-hand side of this chart, you see that key buyers in Japan are already responding to this with a large increase in the number of long-term contracts that are being signed, certainly when we compare it to some of the recent years.

So I just talked a little bit about data centers and use Japan as an example, but I also want to come back and touch a little bit on the marine sector, which we still see as one of the critical growth sectors for the years ahead. As you see here, we already have 900 operational LNG fuel vessels on the water today and over 700 LNG fueled vessels in the orderbook. If you add that all together, that's actually an increase of 200 compared to what we had expected a year ago. We see that increase actually across all the different sectors of vessels, but probably most critical in the container vessels and in vehicle carriers. And then over on the right-hand side, you see what that translates to in terms of increase in LNG demand. And even if we only take a year like 2035, we see that it would result in a sixfold increase in LNG going to LNG vessels, which is by 2035 means that this market would be roughly the same size as the total LNG import to India today.

So lastly, I want to talk a little bit around how we continue to improve the sustainability of the LNG industry. Today, LNG is already providing a lower-carbon alternative to customers, certainly when compared to alternatives like oil or coal. In addition, LNG and gas is helping as a complement to build out the penetration of renewables in many markets around the world. But it's important that as an industry, we continue to also develop ways to reduce the carbon intensity of the whole value chain, whether that's through reducing methane intensity or other ways to reduce the carbon intensity such as CCS. And we're even seeing already the first technologies being deployed towards seeing how we can also reduce methane slippage from the transport sector of the value chain.

And lastly, also providing the pathways to also incorporate in future low-carbon -- lower-carbon feedstocks as well. And in this case, in particular, how LNG can provide a drop-in alternative of bio-LNG, something where we already see the green shoots today in the transport sector, whether that be in trucking or in marine.

So with that, Tom, let me hand back over to you and maybe take us through in a summary of how this all comes together for our LNG outlook.

Thanks, Cederic. So before we end the presentation, we'll come back to our chart comparing the market today and out to 2050. What you heard from Cederic earlier is that we have a significant amount of supply coming to the market under construction today, around 200 million tonnes that will be delivered by the middle of next decade. Now out to 2050 compared to today, we see a growth of around 65%, and that will take us to a median of around 700 million tonnes by 2050.

Now the range does widen as we get further out, and you can see some different projections for different demand assumptions on the chart. But what we'll see on top of that 200 million tonnes of supply already under construction is we need about another 200 million tonnes of investment to start to meet that gap between the supply and the demand ranges you see on the chart. That's also to manage the offsets that we'll get from existing facilities that will have natural decline over the same period. So on the right-hand chart there, you can see the growth from '25 to '50 and the supply gap that sits in the middle there where we will need that further investment to meet the difference.

Now when we think about this all together and what the industry has experienced over the last 10 years, it has been a period of turbulence and the market has adapted incredibly well, showing resilience in the system to continue to supply energy to where it's needed most. We've seen growing supply diversification, increases in supply expansion, both in the U.S. and other supply points around the world. We've also seen a changing in the market balancing mechanisms, China emerging as one of the key global market balances between its domestic production, its pipeline imports and its LNG imports. But Europe continues that role as well in terms of being both a source of base demand for LNG and flexibility to flex up and down depending on the signals for demand and the available supply dynamics.

So those 2, combined with that supply side flexibility that we're now seeing emerging from the U.S. continue to provide that market with the flexibility that it needs. And our customers and other market participants are building their own portfolio flexibility, offering pathways to optimize their energy flows, not just within LNG, but more broadly across the energy complex. This supply expansion is providing competitiveness for the future. And whilst we navigate some extreme events over the last 5 or 6 years, the affordability of LNG continues to be an incredibly important factor for buyers to maintain their confidence in growing their market infrastructure and their reliance on LNG imports.

We see emerging segments that Cederic talked about in transportation, both on the road and at sea, as this broadens the use of LNG globally and continues to impress year-on-year with the growth compared to what we've seen in prior outlooks. But as important through this is making sure that we enable and encourage the balanced transition that the market needs, lowering the intensity of the products that we produce and ensuring that we continue to deliver an economic viable proposition to our customers. So hopefully, you've seen through this period some really interesting facts and changes from the LNG outlook over the last 10 years. We continue to be well focused on the market ahead as well as navigating some of the challenges that we've experienced over the last few years.

With that, I'll thank you for joining us today, and we'll close out here. Thanks very much.

Thank you. Bye-bye.

Welcome to Shell's First Quarter 2026 Financial Results Announcement. Shell's CFO, Sinead Gorman, will present the results, then host a Q&A session. [Operator Instructions] We will now begin the presentation.

Welcome to Shell's First Quarter 2026 Results Presentation. I'm pleased that amid heightened volatility this quarter, we delivered strong results through our relentless focus on operational performance and the strength of our integrated global portfolio. Yet again, our staff rose to the challenge, and we're able to deliver this safely and effectively, navigating another quarter of uncertainty.

Let me first take you through our Q1 results before I come back to the impact of the Middle East conflict in more detail. We delivered a strong set of results with adjusted earnings for the quarter of just under $7 billion, and we generated over $17 billion of cash flow from operations, excluding working capital. Our working capital outflow for the quarter was some $11 billion, reflecting the impact of higher commodity prices on inventory and receivables.

We would expect a significant amount of this outflow to reverse over time. Now turning to our businesses in more detail. In Upstream, we delivered strong operational performance across the board. For example, in Brazil, we achieved record production levels. In Nigeria, at Bonga, we completed a turnaround 10 days ahead of plan. And in the United States, our Mars platform became the first asset in the Gulf of America to reach 1 billion barrels of oil production.

In Integrated Gas, the continued ramp-up of LNG Canada helped to offset the impact of cyclones in Australia and the shutdown of production in Qatar. LNG trading and optimization results were broadly in line with the previous quarter, reflecting price lags in our term contracts.

Chemical margins remain depressed, but the team remains focused on making the business free cash flow positive, and we are seeing some encouraging signs. In Products, the results were driven by impressive refining performance with utilization of 99% and by significantly higher trading and optimization contributions.

Marketing also had another great quarter despite the pressure of higher feedstock prices in March. Lubricant sales were seasonally higher, whilst overall segment results were also helped by our ability to optimize product flows across the different marketing businesses. Overall, this was a strong set of results in a period of volatility and uncertainty stemming from the conflict in the Middle East.

While the Middle East is home to around 1/5 of Shell's hydrocarbon production, impacts have varied by country. Our Heartland position in Oman accounts for around 10% of our global volumes, volumes that don't pass through the Strait of Hormuz. The most significant effects for Shell have been in Qatar. At Pearl GTL, Train Two was damaged, but thankfully, nobody was hurt. We currently estimate it will take around a year to return this Train back into service. The repair costs are expected to be well below $0.5 billion on current estimates.

And Pearl GTL Train 1 as well as the LNG train in which we hold an interest through the QatarEnergy's LNG N4 JV are start-up ready, subject to our ability to move products through the Strait of Hormuz. Whilst much of the organization has been focused on delivering despite the impact of the Middle East conflict, we have also been able to make important progress on our portfolio in line with our strategy.

In lubricants, we announced the divestment of our Jiffy Lubes network for $1.3 billion, monetizing an asset that was not core to our business. In Upstream and Integrated Gas, we added new acreage in the United States, Kazakhstan and Venezuela as we continue to focus on resource longevity. And last week, we announced the strategically important acquisition of ARC Resources. ARC is a high-quality, low-cost operator in Canada's Montney Basin, complementing our existing positions at Groundbirch and Gold Creek. With this combination, we are adding highly contiguous acreage as well as long-duration, top quartile, low carbon intensity production.

ARC provides us with new growth opportunities, a liquid-rich portfolio and LNG upside. This deal accelerates our strategy, sustaining material liquids production, growing our integrated gas business, extending reserve life and increasing our expected compound annual production growth rate to 2030 from around 1% to 4% compared to 2025.

And importantly, this transaction meets our high bar for M&A with long-term value creation through double-digit returns and an increase in our long-term free cash flow, all whilst preserving our balance sheet strength given the 75% share, 25% cash ratio of the deal. With the ARC acquisition, cash CapEx for the full year 2026 is expected to be between $24 billion and $26 billion, including some $4 billion for the ARC acquisition. For 2027 and 2028, cash CapEx remains at $20 billion to $22 billion as we will absorb ARC's ongoing cash CapEx into our existing guidance.

Moving to the rest of our financial framework. At the end of Q1, our net debt position was $52.6 billion, reflecting the working capital outflows I mentioned earlier as well as the impact of some noncash variable shipping lease components. Excluding leases, our net debt was some $22 billion. Our balance sheet is strong with the flexibility we need to operate in today's volatile environment.

Turning to our shareholder distributions. Today, we are rebalancing our shareholder distributions by announcing a $3 billion share buyback program for the next 3 months as well as a 5% increase of our dividend. This is in line with our existing 40% to 50% of CFFO through-the-cycle distribution policy, which remains sacrosanct and shows our dynamic approach to capital allocation.

So to conclude, Q1 showed Shell's resilience and ability to deliver strong results in a volatile macro environment. These results reflect the strength of our integrated business model and reinforce the importance of our ongoing efforts to simplify the organization, high-grade our portfolio and build a stronger Shell for the long term.

Our Annual General Meeting 2026 will be on May 19, and we ask our shareholders to vote against the alternative resolution. By doing so, our shareholders will be endorsing this management team and our Board. And I hope you've had a chance to see our LNG strategic spotlight, which sets out both the growth we see in global LNG demand and how we plan to meet it.

As always, Our AGM provides an opportunity for our shareholders to engage directly on our progress in delivering more value with less emission.

[Operator Instructions]

Thank you for joining us today. We hope that after watching this presentation, you've seen how we delivered a strong set of results in the first quarter, underpinned by continued strong operational performance. And now Sinead and I will be answering your questions. So please, could we just have 1 or 2 questions each so that everyone has the opportunity. With that, could we have the first one, please, Luke?

Our first caller is Matt Lofting from JPMorgan.

And my congratulations on the strength of financial performance amidst macro volatility in the first quarter. I had 2 topics to put forward, one fiscal and one perhaps more industrial. First, on distributions and capital reallocation. I wondered if you could expand on the degree to which today's shift towards dividends over share buybacks is value-led, factoring multiples, macro conditions as opposed to feeling a greater need to post M&A to funnel implied annualized net cash flow savings to the balance sheet?

And then second, I wanted to just pick up on Integrated Gas performance and wondered if you could speak to the role and magnitude of price lagging effects within performance because it sort of struck me that in the conditions the industry is experiencing, downstream perhaps acts as a faster response lead indicator in Q1, whereas IT margins and performance are slower burn and perhaps still to come [indiscernible] price lags and monetizing dislocations enabled by the working cap feeds through.

Thanks, Matt. So let me maybe use your second question just to talk about the performance this quarter. touch on distributions, but then hand over to you, Sinead, to maybe go through that. Firstly, just to say how incredibly proud I am of the entire company. Indeed, as you say, with the backdrop of uncertainty and volatility, this was a great quarter. And I think it's the momentum that I'm particularly proud of.

The momentum that we have built up, we have said that we are going to methodically transform this company to be a leaner, much more competitive one. And what you have seen us do is drive a significant improvement in operational performance. You saw that, for example, Matt, this quarter through some of the IG performance. LNG Canada stepped up when Napatri volumes were out. And indeed, what you will see is that price lag effect play into the second quarter for IG results because of the term contract nature of that pricing.

But every part of the business, upstream, chemicals, products, marketing has had a very strong quarter. You've also heard us talk about both cost and capital discipline. And again, you see that continue through. And we've talked about high-grading the portfolio. Last year, we did the sale of onshore Nigeria. We sold Singapore chemicals and products. And of course, just last week, we welcomed ARC into the Shell family, subject to completion as well, really building a foundation for long-term growth in an asset base that is very complementary to ours.

So really happy with where we are, but we are not done. My expectation of my organization is to step up at least 1 or 2 more gears, and we are developing the plans to do so, and we will continue to drive that forward. The other thing we have talked about and have said consistently is everything that we do is in service of long-term shareholder value creation.

Our 40% to 50% CFFO cash returns are sacrosanct. And what we have said is we will be dynamic in our capital allocation to create value for our shareholders through the cycle. And this quarter is an example of that. We bumped up the divi by 5%, showing the underlying confidence that we have in this company to be able to operate irrespective of the external environment. It's our 18th quarter of a $3-plus billion buyback. And indeed, what we have also done is we have been able to create capacity to be able to leverage that capacity at a down point in the cycle to lean even heavier into buybacks when we have the opportunity to do that. So we are thinking long term and acting in service of that shareholder value creation over the longer term. Sinead, do you want to add more on the distributions maybe?

Indeed, and thank you for that, Matt. I think the only thing I would really add is to say in terms of the balance sheet because balance sheet and distributions are intrinsically linked. From my perspective, I'm incredibly comfortable with the balance sheet. You know that by now. And in effect, that extra cash that we're putting on to the balance sheet or the additional cash is for additional buybacks in the future when the opportunity presents itself. Looking forward to that as well.

Our next caller is Michele Della Vigna from Goldman Sachs.

And again, congratulations on the strong results. I wanted to ask 2 questions, if I may. The first one is on Frontier exploration. It's not something that has created a tremendous amount of value in the industry or at Shell in the last few years. But I was wondering if you think that AI and all of the improvement in computing power could actually change that and make it into a key driver for you to continue to expand your reserve life and your visibility on longer-term growth?

And then secondly, as the leading oil product marketer in the world, I was just wondering if you started to see some early signs of demand distractions, perhaps in areas where prices have been especially strong like jet fuel across your global business.

Yes. Thanks, Michele. And let me take both of those. I think on exploration, let me maybe just broaden it beyond just frontier exploration because I do think, and I've mentioned in the past, we have made a hard reset in our exploration department from a leadership perspective. We have restocked the funnel with some very exciting opportunities in places like Angola, the Gulf of America, recently Alaska and more.

But what we are also doing is fundamentally challenging our workflows to make them much more data enabled in the way we execute those workflows. And so we have been embedding AI as a core part of the way that we are able to look at, in particular, our existing reservoirs where we do have basin mastery and where we have sufficient and significant amounts of data that allows us to be able to really understand what other opportunities we have to tap into. And of course, for frontier exploration, we are using some of those same data-enabled workflows to be able to unlock more opportunities.

Too early to say how quickly that success will materialize, but we are leaning heavily into it. On your second question around the broader macro, I think what we see at the moment is a mixed picture. The hard facts are we are -- we have dug ourselves a hole of close to 1 billion barrels of crude shortage at the moment, either because of locked-in barrels or unproduced barrels. And of course, that hole is deepening every single day.

So the journey back will be a long one. And you're beginning to see that on the overall refining complex. So it depends on the country, it depends on the region. We are seeing indeed some demand curtailment to the tune of, say, 5% in areas like jet in the airline industry. But that's the only thing that you can expect people to do is either drawing down on stocks, fuel switching or in essence, demand curtailment. We continue to see resilience in many parts of the world, but the question will be how will that pan out in the coming months. Too early to speculate on that. Thanks for the questions, Michele.

Our next caller is Alastair Syme from Citi.

I'm trying to figure out in both refining and chemicals in this environment, how it plays out in the coming period. I mean you've got a quite a large footprint to Asia -- in Asia. Can you talk to both businesses about access to feedstock, how you can run the assets and where margins are sitting?

Yes. I mean, again, we'll touch on that. Actually, our footprint, in particular, in Asia is more limited these days, Alastair, after, in particular, the sale of our Singapore chemical and refining footprint that we had there. But the same question that you had applied, of course, into Europe as we are trying to make sure that we keep our refineries fed with crude, which, of course, when you have a 12% to 15% cut in overall supplies just becomes difficult or if you can get access to the crude, it's tough to be able to create value unless the cracks afford you that opportunity.

One of the biggest benefits we have, not just for our refining and chemicals, but also for our mobility organization is, of course, the strength of our trading and optimization capability. I think if there is a capability around the world that is able to take advantage of volatility, it is our capability. And you see our people are unlocking value. Q1 shows you that.

I think that's really key. I think on this broader question around chemicals, this -- what you have heard us say also in the past is we are going to do everything we can to be able to do the self-help that we need in our Chemicals business. And hopefully, you see some of that playing into Q1 results. We have taken out and plan to continue to take out hundreds of millions of dollars from OpEx and CapEx in chemicals.

We're improving the reliability. Q1, excluding working capital, was free cash flow positive. So good early signs. We're not there yet. Q2, you'll have a bit more of a tailwind, and that's partly because the margins are improving. And of course, you have the lag price effect also playing in chemicals. What we have also looked at is that this is an opportune time now to be able to build momentum around the plans that we laid out in Capital Markets Day.

And that's specifically to progress either the sale or some form of capital market transaction, in particular of our U.S. chemicals business, the predominance of our capital employed. And so we are leaning into that. But we will only move forward on that if we see long-term value creation for our shareholders. So we lean into it, and we will see what the results are, but it's a good time to be doing that now. Thanks for the question, Alastair.

Our next caller is Doug Leggate from Wolfe Research.

Wael, I wonder if I could go back to the Alaska question real quick and go back maybe a year or 2 ago when you said you had no intention of going back to areas of exploration that you weren't already in. But you kind of walked away from Alaska several years ago, and now you're one of the high bidders on the new lease round. Can you just frame for us what you're thinking? Is frontier new area exploration back on the table? And what are your thoughts on Alaska specifically? And I've got a quick follow-up for Sinead.

Yes. Go for the follow-up, Doug, and then I'll address the first one and pass the second one to Sinead. Go for it.

My follow-up is just on the pace of the expected pace of the working capital wind down. Obviously, it's a big headwind this quarter, but obviously transitory. But Sinead, I think you also said at the strategy update that you didn't expect the leases to continue to increase but yet they have continued to increase. So I'm just wondering if you can walk us through the dynamic of what's going on there.

Yes, Doug, thanks for the questions. Let me take the first one. I think if you look at our history in Alaska, of course, it was much more offshore Alaska. What we have gone into is onshore Alaska, and it's important to recognize how we've gone into it. We have -- we are not an operated venture. We are a non-operated player in that, and Repsol is in the lead because Repsol has deep experience in Alaska.

They have it and they've inherited, of course, from the acquisition of Talisman. They have production coming on stream -- either already come on stream or imminently in some of those areas. These are not frontier areas. These are well-proven producing resource basins, which is what gives us the comfort to be able to play and why we have been comfortable going in as an NOV partner, as a non-operated venture partner rather than an operated venture so that we can double down on Repsol's experience in that regard. Sinead?

Yes. Thanks, Doug. Two parts. You mentioned upfront, first of all, working capital and then you move to leases. And I think just on working capital, one of the things I would say is, yes, there is a sizable amount of working capital, of course, for us this quarter at over $11 billion. A significant proportion, the majority of that is actually, of course, price related. So therefore, as prices change, you will see that flow back in, and that was in sort of our pre-prepared remarks that I made earlier as well.

So looking forward to that coming back in. With respect to the leases, indeed, how we use leases, our leases are predominantly in service of the underlying businesses of both our deepwater business through either the FPSOs or the rigs or secondly, through ships and vessels, some pipelines as well. But those are the 2 areas that you typically see them flow through. So they're normally either in our upstream or related to the various trading businesses.

So our leases, as you've said, are quite a significant amount. You saw it go up this quarter. Why did it go up this quarter? It was predominantly one lease that came through. It was the Baltic lease. You've seen some of it, I think, in news reports from other people as well. But what occurred in effect is it's a variable lease, which we have some hedges in place against, et cetera.

But the way you have to account for that lease under IFRS 16 is you have to take the pricing on the spot rate and you value the whole of the future lease at that, and that's what hits. Therefore, you saw gearing being impacted up 1%, and you saw the actual number just over EUR 3 billion going up on our gearing. Now of course, I somehow doubt personally that, that will occur throughout the whole length of that, but that is the accounting approach of it. So indeed, we use leases to continue to increase value. But this one is one that is simply an accounting artifact.

Our next caller is Lydia Rainforth from Barclays.

And again, congratulations on the strong operating performance. I've got 2 questions, and they are slightly linked a little bit. But on the first one, clearly, the share price is up this year, but maybe not as much as we would have hoped and particularly compared to some of the others. So a very simple question. Are you feeling a little misunderstood at the moment in terms of the strategy side?

And then secondly, if I come back to the spending on the CapEx side and a little bit on the ARC acquisition, I mean are we -- when you think about -- you spent $16 billion and it closes some of the gap to 2035, but not all of what you want to. I agree, you've got a lot of time, you've got a lot of cash, you've got a lot of options. But are we actually now thinking that underlying the kind of CapEx you need to be for the business is a bit higher than you've given previously?

Yes. Thanks, Lydia. I think let's tag team on this one, Sinead. I'll give a bit of a perspective and then share with you. I've learned, Lydia, not to be disappointed or excited by the market. What I've learned to do is to make sure that we focus on what it is that we can control and what is it that we can control at the moment. I think our operational performance, in particular, in times of volatility, leveraging our trading does mean that we are able to create real value and drive cash at times like this, which is something which I think we can do better than I would argue anyone else.

This affords us the opportunity to be able to continue to strengthen our overall financial framework. And we have huge confidence in where this business is going. Of course, ARC adds a level of growth that is a decadal growth for us. And if we take a final investment decision on LNG Canada Phase 2, that's even more opportunity for growth. But what we can do is make sure that then we are allocating capital in the best way possible.

And that is through the cycle. And so for me, what excites me about the mispricing, as you call it, misunderstanding is that it affords us a unique opportunity to continue to lean in on buybacks as and when the opportunities come in. And the best example of this is just look at what we've done over the last 4 years.

In the last 4 years, we have bought back $65 billion of shares, and we bought it against that average price at a premium that essentially translates to 20-plus percent IRR, just doing the basic math of 2 billion shares bought back over this period and where the share price has gone. Those are the opportunities when we talk about being value hunters that we want to go for, and we will wait patiently to create those opportunities on a life cycle basis. Sinead?

Indeed, I think exactly where I would have gone to as well. And I would have said, just to add, Lydia, we've taken that extra cash. We just -- the additional cash we put to the balance sheet, and I told you we would use it to buy additional shares when the opportunity arose. So feel free to keep mispricing and misunderstanding us. We'll very happily buy back the shares, and that's what we'll do at that point.

You talked about the second question, if that's okay, the spending and CapEx. And I think what you were saying is we've -- through ARC, we've looked to close the gap to 2035. And do we believe that we'll need to increase our spend levels, I think what I would simply say, Lydia, is that since we had our Capital Markets Day, which wasn't that long ago, as you know, we've managed to close the gap that we've mentioned to 2030, and we've got considerable way there, actually, most of the way there to 2035.

If you combine that with what this company seems to do every single month in terms of increasing production and ensuring that we go after every single barrel, I'm pretty comfortable that there will be no gap that we need to follow through on. In terms of spend levels, our spend level, $20 billion to $22 billion is the CapEx that we put forward. We've told you that with ARC, we will go up this year, as we've said already '24 to '26, and we've told you that we will absorb the additional ARC CapEx, assuming it closes for 2027 and 2028.

And I would remind you that in there, in every year so far, we've been able to do small-scale or inorganic opportunities as well. You know our run rate is well below that. So I'm very comfortable that we can continue to maximize value within the CapEx spend that we have and be able to deploy capital to where it's best placed.

Our next caller is Alejandro Vigil from Santander.

The first one is about the strong marketing results this quarter. In the statement, you quoted the trading and optimization was pretty good. If there is also a component of savings in the quarter that could be recurrent for the coming quarters. That would be the first one. And the second one is about Venezuela. You have been very active in Namibia in terms of gas projects there. If you can elaborate about the opportunity there.

Thanks. I will Alejandro take the second one. Maybe Sinead, do you want to take marketing and more broadly, how you see the next quarter as well?

Absolutely.

Look, Venezuela, as we've talked about in the past, outstanding resource, but we will play in the areas where we have competitive advantages, competitive strengths. We have a long and proud history in Venezuela, and we're pleased to have the opportunity to be able to contribute to the Venezuelan people. Where we think we have particular, call it, advantages is when it comes to offshore gas.

And so indeed, we have been in discussions with the Venezuelan government on opportunities to be able to monetize some of that gas, which has been long stranded out there and ideally find a pathway to be able to monetize it through Atlantic LNG in Trinidad and Tobago. That is where our priority is.

Our current heads of agreement also encompasses some other areas which we are looking at onshore, but those are opportunities which I think will take quite some time to gestate. So we're very much focused on those offshore gas opportunities for now, and we'll need to work through the coming months to be able to bring them to life. Sinead?

Yes. And in terms of results overall, so first of all, you mentioned marketing had a great quarter. It did, absolutely without a doubt. It was good in-moment decision-making, frankly, to be able to optimize. And if I look at our lubricants business, they did a fantastic job, particularly when they lost actually some of their supply from Pearl in March as well.

So just some really good decisions there. Of course, mobility, a little bit tougher, as you can expect with higher prices. And let's just talk about Q2 going forward then and what do we see from that. You've seen some of our numbers that we have given a bit of an advanced look on. What we see for a company like ours is that integrated nature really plays out.

So you've got the benefit of the assets from both in upstream and integrated gas against that of downstream. And then you add on top of that, of course, the layering of that capability of trading and optimization, and that's where it really comes through. So whilst we will see things like an integrated gas, we will see some more challenges in the second quarter in terms of the volumes coming through because of what's occurring in Qatar, we also see the benefit of the price lag coming through as well.

If I then look at downstream and particularly marketing, which is what you referred to, marketing, of course, and particularly mobility, when prices are high, that's when it's a little bit more challenging, you see the squeeze of the margins coming through, but those get offset, of course, in other parts of the business. So you end up across the integrated portfolio having a very much advantageous position is the way I would put it.

Our next caller is Josh Stone from UBS.

Just one question on Australia because there was some news overnight that the government is looking at requiring exporters to reserve 20% of exports in the domestic market on the East Coast. So are you able to provide any initial comments of how that might impact your business and your assets in the country, particularly interested in the [ Crux ] gas field given where that's backfilling [indiscernible], I don't believe there's a domestic route for that project, but just curious as what you're seeing there.

Yes. Thanks, Josh. I think long story short, early days. We have indeed -- we're still in the process of absorbing the announcement, not massively surprising, by the way, but there's still quite a few details we are still awaiting, including the implementation. Remember, we are already at close to 15-plus percent of our overall production goes into the domestic market.

So the requirement of 16% or so going into the domestic market is not a massive difference for us. Crux indeed is locked into LNG term contracts eventually or even flexible contracts because it goes into our portfolio. So we hope to be able to have more than enough gas to be able to supply Crux LNG. I think this is the Australian government trying to find the right balance between LNG exports and domestic support, something which we have been doing for quite some time. And I think this is to bring the entire industry on the same page. Thanks for the question, Josh.

Our next caller is Christopher Kuplent from Bank of America.

Well, I think 5% [ DPS ] growth is the headline we are missing because it's quite a significant shift from, I think, the last few years where you've been warning about, I think you once call it the sugar rush of giving the market a quick increase in dividends. But you're publishing today, in my view, is significant. So maybe you can talk around that a little bit and explain to us the comments you've already made together with Sinead now on saving firepower to do more share buybacks in the future, cutting them today and instead raising the dividend. Is that a new template? Should we now expect DPS to be raised more often than once per year?

Great question, Christopher. Again, I think it's one maybe we tag team on, Sinead, give you the floor first, and then I can supplement.

Happy to. And thanks, Chris. It gives me a good opportunity to probably debunk some of the myths that I've seen coming through on some of the write-ups as well. You articulated well. But let me just, first and foremost, get us to the point to remind you that everything we do is in pursuit of long-term value creation. That's the start. Remind you that 40% to 50% is sacrosanct in terms of the distributions, and that's what we're staying within.

So when you talk about either distributions or the balance sheet, they're intrinsically linked between the 2. So back to the dividend and you use the term sugar rush because we have used that before. We take the dividend incredibly seriously. With the dividend, what are we doing here? That 5% increase is reflecting the confidence we have in the long-term duration of the cash flows of this company. That's what it's doing.

Secondly, what are we doing on the share buybacks? Look, pleased that some of the hard work is showing up in the share price, but some of it, we still think they're undervalued. I used the word egregiously before, less egregiously than before, but not all of it has made its way in. So we're continuing to do share buybacks and continuing to do $3 billion, and that's a significant amount. But what we're also doing is taking that extra or additional cash, and we're allocating it to the balance sheet. But that's been allocated to the balance sheet in service of giving us the ability to do additional share buybacks when the moment is right.

This is about dynamic capital allocation. It's that rebalancing that's occurring. It's not a rebasing, it's rebalancing that's occurring, and we're moving that across.

Thank you very much, Sinead. Very little to add, Christopher. I mean the point I'd make is it was a quarter ago when we stood -- when Sinead and I stood here, share price was around 15-plus percent lower than what it is today. If we are going to be prudent, long-term value-oriented capital allocators, not looking at how we are able to indeed build the capacity to be able to not just do what we've done, but hopefully even do more and find those opportunities when there is a mispricing or when we feel that the market is just not being able to fully understand the underlying value, which we asymmetrically are able to see through the cash flow dynamics we see into the future.

And all of this is still built on what we think are further opportunities that we still have to be able to drive top line improvement, improve the bottom line through cost takeout and, not to mention the great opportunities we are having, whether it is through some potential negotiated deals, Venezuela was mentioned, but there are others or just organically unlocking more from what we have. All of that underpins that confidence we are showing. But if you want to be that long-term value-oriented company, then we have to be able to not be procyclical, and we have to have the courage to move in times like this, which is why I'm really proud of where the Board's decision was on this one.

Our next caller is Lucas Herrmann from BNP Paribas Exane.

A couple, if I might. The first one, I'm going to need some help, I think, with the Integrated Gas business, given there are so many moving parts going into the next quarter. Obviously, we've got an extra 2 months or I shouldn't say obviously, but it's likely we'll have an extra 2 months when the GTL facilities are both out of action. And I presume you had some inventory that you were at least able to use and benefit from as you went through March.

So to what extent does that impact the sensitivity to moves in prices? And aligned with that, I've had a month down in Qatar, but it looks as though you're [ going to talk ] about LNG now [indiscernible] your [ Q4 Train 5 ], whichever. How does that impact -- so really just help about thinking between price and sensitivity between outages, et cetera, et cetera, how I really should be thinking about the integrated gas business.

And then, Wael, if I could, can I just come back to the comments you made about chemicals, particularly North America, which I'd say are the most conducive towards moving to a place where maybe you can find agreement with other parties. Just as you sit here today, I mean, what's happened to oil suggests that ethane margin businesses are going to be better positioned, should we say, near term, medium term, depends in part on view on price. Are you actually -- are you seeing greater interest or are people that you've been in conversation with around chemicals in recent months over the last year, knocking on doors again? Why the more upbeat tone? That was it.

I'll take the second one and then maybe, Sinead, if you want to take the first. I think why the upbeat, there's a couple of things at play, Lucas. I think, one, as we continue to fine-tune the operation and the reliability of the asset, you are just seeing much more the full potential of the asset, which allows us then to move into the market as well.

So we've had a very good run over recent months and expect that to continue. So that's a good point to be thinking about if you do not see the strategic fit of chemicals into your portfolio, it's a good time to be able to act when you -- when you've derisked quality operations. I think the second point you touched on is exactly right. Ethane-based crackers, in particular, one like this one, which is already significantly advantaged at the lowest end of the cost curve in the right ZIP code in the U.S. with the right fiscal environment is attractive.

And we know the attractiveness has gone up. And of course, that tailwind does mean that you can move from discussing bottom-of-cycle conditions at a transaction to potentially more mid-cycle conditions, which is what as a minimum, we would need to be able to see. I would also say that capital markets transaction is another option we continue to have, of course, and we will develop that seriously to be able to make sure that we can balance those 2 options and do what's best for our shareholders at the end of the day.

I hope one of them works out, but we will make sure that it neither does because it's not creating the value for our shareholders that we don't execute. But we are going to be very focused on creating the optionality now. Sinead?

Thanks, Lucas. Indeed, Integrated Gas in Q2 is slightly more complex. So 2 aspects to it. First and foremost, Pearl, and then let's talk about LNG. Both sit within the Integrated Gas segment as well. So on Pearl, indeed, this is really about the 2 trains. One train will definitely be out for the quarter, that is clear. That's one that is damaged and needs to be repaired, and we've talked about that previously.

The other train could be up and running, but it's more about the ability, as you say, to be able to evacuate through the Strait. And I'll leave you to make the assumption of when that will actually be and how long that will take to clear all of those vessels and actually be able to move it through. So that will be a loss in terms of the income coming through from that perspective.

Then we have the LNG side of things. Of course, our LNG business across the world is doing very well in terms of keeping those volumes up, making sure that they're performing to the best that they can. But they do have the lost volumes in terms of Qatar gas, as you say, from that train that you mentioned previously. Again, if the Strait were open, that will be able to be flowing, but it is not at this moment in time. However, the compensating impact of that, and by the way, you see that in the forecast we gave you in terms of the production and the volume numbers.

But the compensating impact to that is, of course, where we see the price lag coming through. And that's typically, as you know, the 3 months. Interestingly, TTF, JTM volatility is still less than we saw during Ukraine and Russia, but we do see the volatility there as well. So you do see that coming through in Q2, which helps versus the lost volumes.

Our next caller is Biraj Borkhataria from RBC.

I had 2, please. The first one is just the performance in your lubricants business. It was particularly strong this quarter. It looks like the Q1 EBITDA was 30% higher than the highest result in the last few years. So I'm just trying to understand, given Qatar supplies some of the base stocks, how we should think about the sustainability of that result? Is it a sort of temporary phenomenon and a mismatch between cost and the revenues? Or is there something genuinely changing in that market?

And then secondly, just thinking about at the group level, if I look at your OpEx, and this is a very simplistic way to look at it. But in absolute terms, it looks like the momentum has stalled a little bit. I know there's always some seasonality here, but for the last couple of quarters, group OpEx is starting to increase year-on-year. I think when you first took over in 2023, there was very clear momentum there. So just trying to understand, is it just inflation eating away at some of the underlying gains? Or is there something else to note there?

Thank you very much for that, Biraj. I'll take the second question and then Sinead, if you want to touch on the [indiscernible] question. So where are we on our journey? I think, firstly, maybe just the context around us. So we're seeing at the moment, somewhere in the range of 5-plus percent inflationary pressure on supply chains, depending on which supply chain specifically.

If you look at subsea equipment, FPSOs, you're seeing a lot more than that in other areas, slightly lower. So we're working really hard to be able to offset some of those bumps. Important to also recognize that, of course, of the $5 billion to $7 billion OpEx reduction that we talked about in Capital Markets Day 2025, we are already at $5.1 billion of that, the majority being non-portfolio related, so structural.

And what you will also see is that we are very much going after the top end of that range now. So our organization is geared towards delivering the $7 billion. That will happen, of course, over the coming quarters. It's not linear, and that's important. Just to sort of compare Q1 '26 to Q1 '25, you're talking less than a 2% increase in overall OpEx, which if you look at the overall market inflation, you would say we're eating a significant portion of that inflation. And that just shows you the momentum we have in the base, not to mention some of the additional efforts, initiatives that we have that will bring the total down even further towards that $7 billion structural cost reduction. Sinead?

[indiscernible] I would have on the OpEx side, of course, we've brought in a lot of new volumes as well. So if you talk about the Ursa acquisition, you talked about the one in Brazil, you talked about Nigeria, those also came with additional OpEx, which partners would have had as well. So great to see good OpEx being used to actually generate other cash flows as well. You asked about lubricants in particular, Biraj.

And yes, it was an incredibly strong quarter. I absolutely agree with you. A number of things sort of feeding into that as well. Because it's an interesting one, as you say, if you were to look at it and say, actually, they lost some of their feedstock towards the end of the quarter. It was towards the end of the quarter. There were some inventories in place, of course, that they were able to do. But actually, as a result of that, we saw some advanced listings from customers because they saw the problem and we're worried about it.

So we actually got the benefit of some advanced cash flows coming in on that as well. We also saw stable base oil coming through. They managed to reduce their OpEx. So back to your original question, I would say our lubricants team have been very focused on reducing OpEx as well and driving that down. So some just really hard work but being able to eke out just more and more every single quarter.

In saying that, Q2 is going to be more difficult for them because they do not have that premium product that they've had before, working very well with customers to find alternatives and to make sure that where it's specifically needed, we get it to the right customer, et cetera. Great combined work across the industry, I would say. But I do agree Q2 will be more challenging. Outside of this and what is occurring with Pearl, I would say our lubricants business is really focused on driving higher and higher returns. So if you were to take the Qatar situation out, I would say that they will continue to be able to drive increasing and improved returns.

Thank you for that, Sinead. Biraj, thank you for those questions.

Our next caller is Martijn Rats from Morgan Stanley.

A lot of questions have already been asked, but let me ask you 2 more. I was wondering if you could say a few words about LNG Canada and your continued ownership of the current stake. There have been some press reports in the last couple of weeks that there might be some sort of part of a sell-down. And the other one, I recognize it might be a bit tricky. If you don't want to answer it, I would totally appreciate it. But I wanted to raise this issue. Oil exports from the United States have been very, very high over the last couple of weeks, not only of crude oil, but also for refined product. And as a result, we've seen these steep declines in gasoline inventories, distillate inventories are the lowest since 2005.

And you sort of -- you look at some of that data and it raises the specter of return to the pre-2014 situation, there was some sort of export ban in place. And I was wondering if you had any thoughts on how that could impact Shell. And I'm asking it because quite often with these things, you can have sort of counterintuitive things where like something goes up, something else goes down and it all -- when you restart thinking through, it could be sort of quite complex. If that were to happen, is there a particular impact on Shell that we should keep in mind?

Yes. Thanks for the questions, Martijn. I'll take the second one and if you want to talk about LNG Canada, Sinead. Look, I won't speculate as to what, if any interventions might take place, but I will confirm what you are seeing, which is, of course, when you have 12% to 15% of the world's crude disrupted, there is going to have to be different offsets. And what you are indeed seeing, in particular, is many of the refineries in the U.S. are leaning towards more jet, more diesel to be able to meet the growing demand, in particular from Europe that had depended a bit more on Middle Eastern supplies.

And so you see some of those experts coming through. You do see stock draws. And the question is how long this lasts and how much of a problem do we build? Back to my earlier analogy, we've drilled a hole, 1 billion barrels worth of a hole, and we're going deeper and deeper. So to come back, it's just going to take us a lot longer. From a Shell-specific perspective, the majority of our exposures tend to be around our trading and optimization and the positions that we are taking to be able to satisfy our customers. All the narrative that we have, both in private and in public seems to indicate a U.S. government recognizing that exports are not the way to go. And so that is very much our base case that there will not be any export bans.

And thanks, Martijn. You asked about LNG Canada and primarily about the rumors in the market about a selldown. Look, LNG Canada is a great asset as far as we're concerned. But more importantly, it's about the integrated value chain that we see. So what we're always looking for is that integration. We're looking for the ability to be in the upstream to be able to benefit from the liquefaction of that aspect. So the steel in the middle and then being able to actually realize the prices outside of the country, so be able to ship it and of course, trade around it as well.

So that integrated value chain is key. What you're hearing is a consideration from Shell in terms of the midstream element of that do we need to have our funds locked up fully in the midstream part and the steel part? Or can we still benefit from it? And can we reallocate that capital elsewhere? It's a consideration, and that's what you're seeing being considered or being talked about in the press at the moment. But to be clear, we still want to have exposure to the full integrated value chain.

Thanks, Sinead. Martin, thanks for those questions.

Our next caller is Kim Fustier from HSBC.

I had a follow-up on Pearl GTL, if I may. Do you have insurance coverage for the up to $500 million of repair costs on Pearl? And in terms of the 1-year repair time line, are you confident there's going to be enough contractor capacity to sort of simultaneously carry out the repairs on Pearl, while 2 LNG trains are also being rebuilt and the Qatari LNG expansions are also ongoing.

I also wanted to ask you about the -- I believe, the force majeure you declared on some LNG customers back in March because of the disruption in Qatar. I mean, given the vast scale of your LNG portfolio, is there any possibility to absorb the shortfall commercially? Or were the effect of volumes just too large? And I think you've disclosed the 2.4 million tonnes per annum of equity LNG production in Qatar. And then on top of that, you've got the LNG supply contract. Could you quantify those, please?

Yes. Thank you. I'll touch on a couple. And then maybe, Sinead, if you want to take the Pearl GTL insurance one and the FM as well. Just on the 1-year repair time, I was on site, Kim, just 2 weeks ago, had the opportunity to see where the team was. Super job by the team. All the debris has been taken out already. They had isolated the unit that was damaged. We have already put in long lead item request and we have a plan for execution. The scope is a limited, well-understood, well-contained scope. And so I have no doubt that we will be able to have the capacity to be able to execute that scope.

Indeed. And Kim on that when you talked about whether we have insurance or not, just our overall ethos or philosophy around this, Shell typically self-insures, but it very much depends on the requirements in the country and our JV partners' preferences. So I won't really comment on an asset-by-asset basis. That's up to the local rules and regulations.

But fundamentally, it sits within what we are comfortable with asset by asset. You already covered the contractor liability and availability or availability rather than liability. Force majeure, indeed, with respect to how do we handle force majeure, I would just simply say we follow what is in the contracts, and we are very thoughtful about what we need to do in discussion with the party who is actually operating and running the asset as well. So I won't get into the details on those, of course, because it's very much contractual. I'll leave it for those who operate them to comment on it.

Our next caller is Maurizio Carulli from Quilter Cheviot.

Congratulations on the sound and solid Q1 results. One question, if I may, being Shell the #1 LNG operator has a privileged view of the LNG market as a whole. So can you give us your opinion if the current Middle East crisis is going to cause any long-term changes in the characteristics of the LNG market and the way in which it operates?

Maurizio, thank you for the question and for your recognition of the performance. I think a couple of things I'd say. Undoubtedly, in the short term, the tightness of the market is real because you have 20% of the volumes are out. It's important to recognize it's different than oil. In oil, for example, the outages in the Middle East mean 12% to 15% of the market is impacted.

While 20% of the LNG market is impacted, that's just 3% of the overall gas market. And so it is much more sort of contained, call it, across the entire commodity in that context. If you look longer term, we absolutely continue to have conviction in the role of LNG for a few reasons. If anything, over the last 3 to 4 years, the one thing we see that everyone is starting to really get now is that national security is anchored on energy security, that national strategies, whether they are digital AI strategies, industrial strategies, environmental strategies are all built on energy strategies.

And therefore, the importance of having diverse supplies of energy to be able to underpin security and broader strategies is key. And LNG plays an incredibly important role in that. It is versatile. It is reliable, and it gives these countries the ability to have secure energy available to them. So we do see a trajectory of, say, 600 million to 800 million tonnes by 2050, resilient demand that is continuing to be there for LNG.

It will go through cycles in the short, medium term. But longer term, we have very strong convictions. Not all LNG is going to be the same. This is why we really like Canadian LNG because it will be premiumized given the proximity to the Asian markets and having a diverse portfolio like we do, we have supplies from over 10 countries and supply to over 30 countries. That is where the real premiumization of that LNG can play up. And you see it quarter in, quarter out through our LNG results. Thank you for that question. Let's go to the next caller, please.

Our next caller is Jason Gabelman from TD Cowen.

I wanted to go back to something that was discussed about feeling good about closing that 300,000 to 400,000 barrel per day gap in the early 2030s. It sounds like some of that is still dependent on organic opportunities developing. So how much of that have you closed thus far? And how much of that do you think will close moving forward as a result of positive exploration success or other organic opportunities?

And then my second question is on the Power segment, which I know is less of a focus now. But that segment generated outsized earnings in 2022 as a result of the high energy prices, there's been some restructuring since then in the business. So do you still see the same earnings capacity in that business in this type of environment? And conversely, does that -- do the higher prices enable potentially additional restructuring opportunities?

Jason, thank you for those 2 questions. I'll take the first one and then ask Sinead to address the second one. Look, I don't like to use the word gap because it almost starts to drive a volume over value mentality. I mean just look at what we have done since we put out there exactly what our production numbers were through to 2035. At the time, we had talked about 1.4 million barrels per day in 2030, around 150,000 to get there. we have now been able to, in a short period of time, show a trajectory for growth in our oil and gas production from 2025 to 2030 to the tune of 4%, up from 1%, making us one of the leaders in the industry in terms of that growth trajectory subject to the closing of the ARK acquisition.

And so we will always be looking at opportunities to create value. And of course, those opportunities will have an effect into the 2030s as well through into 2035. We do think that some of the exploration opportunities will contribute, both some of the, call it, more frontier opportunities. But also remember, we have a lot of opportunities to explore near our existing assets in many of the theaters in which we play.

That will create value. But also, we also have a lot of negotiated opportunities. Venezuela, we're positioning for plays in a place like Kuwait, in Libya and multiple other locations. Nigeria, we have some really exciting growth options. It's not the time now to sort of update on where all of those are. Suffice it to say that what we said was we were going to be developing 1 million barrels per day between '25 and 2030. We've already produced -- we've already, sorry, delivered 1/4 of that.

We have the other 3/4 and then add on top of that close to 400,000 barrels per day that will be coming from ARC. And so it just shows you the strength of the portfolio that's coming through and the underlying cash flow that gives us the confidence both to be able to grow the dividend today, but also, as I said, to then have the countercyclical way to lean into our buybacks even more when the opportunity comes up. Sinead?

Jason, I'll keep it short. First of all, indeed, our renewables or res sector had a very good quarter. That was primarily down to our trading colleagues indeed being able to maximize value through, frankly, actually what happened in January, which was a cold winter in the U.S. We've almost forgotten about that since then. But looking forward, what do we expect to see? We do expect to see the mix is shifting towards, as we talked about before, strategically towards flex assets, which will allow us to drive more and more of that ability to indeed be able to maximize returns going forward. And outside of that, of course, you see some small-scale dilutions that are still occurring in some of our original renewables asset base as well.

Our final caller is Mark Wilson from Jefferies.

You won't be surprised to know that most of my questions have been answered. So an anecdotal question. One of your peers spoke to a vessel being able to pass the Strait. I just wonder if you have seen anything like that and/or how many vessels you have on the inside of it.

Yes, we still have a few, Mark, that are on the inside. I won't give specific numbers, you'll appreciate because of the importance of keeping that confidential. We are getting a lot of signals from different governments. And what we are trying to do is to exercise prudence. I spoke to a crew just last week, a crew that has been caught there for a couple of months.

Most important thing is they feel well looked after, they feel safe. I asked them how they're keeping busy. They are playing cards at night. They are connecting. I just pray that we are able to continue to see that safe space they are in, and we will wait until we feel that it is absolutely safe to traverse them out of the straits. We will not do anything until we have that full conviction. There are lives at stake, and we will want to make sure that we handle that as we have handled all of our priorities at the moment, it starts with the safety of our people through this very difficult period. Thank you for the question, Mark.

And as that was the last question, let me thank you for your questions and for joining the call. In conclusion, we have delivered a strong set of financial results in this quarter, supported by another quarter of strong operational performance across the businesses. We're living through a period of heightened uncertainty and volatility, but Shell has experience operating within and navigating these conditions as we continue to deliver more value with less emissions. Wishing everyone a pleasant end of the week. Thank you very much on behalf of both Sinead and myself.

Welcome to Shell's Fourth Quarter and Full Year 2025 Financial Results Announcement. Shell's CEO, Wael Sawan; and CFO, Sinead Gorman, will present the results, then host a Q&A session. [Operator Instructions]

We will now begin the presentation.

Welcome, everyone. Today, Sinead and I will present Shell's Fourth Quarter and Full Year 2025 results.

2025 was another year of consistent delivery and real progress. We continue 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, 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 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. 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 billion 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 billion to $22 billion, and we ended 2025 in the middle of that range. 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 and 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. 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 multiyear effort. We also completed the Adura joint venture in December, which as of today is the U.K. North Sea's largest independent producer and unlocks additional value. And finally, in Chemicals & 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. This record was supported by last year's start-up of LNG Canada, where ramp-up to full capacity is continuing. Beyond our 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 1/4 of that new production.

We have also further strengthened our deepwater position by increasing our interests in the Gulf of America, in Brazil and in Nigeria. And we took final investment decisions for the Kaikias waterflood in the Gulf of America and for Gato do Mato, now renamed to Orca in Brazil. In addition, we have expanded our footprint for exploration by acquiring acreage in Angola, South Africa, and the Gulf of America.

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. 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. 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. At CMD23, we said we would invest between $10 billion to $15 billion in low-carbon energy solutions between 2023 and 2025, which we have delivered on. 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 target. Starting with our target to halve 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 are on track, delivering 9% in 2025 compared with 2016. 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.

Thank you, Wael. Our financial results in the fourth quarter of 2025 were lower due to noncash 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 noncash tax adjustments in 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. 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 America and Brazil.

In Downstream and Renewables & Energy Solutions, Mobility and Lubricants delivered higher margins through increased sales of premium products, whilst also reducing operating costs. As a result, both businesses continue 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 & 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 & Energy Solutions business performed in line with expectations.

Now moving to our financial framework. Our cash CapEx range for 2026 remains at $20 billion to $22 billion. 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.

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. We are showing more discipline and making great progress to deliver more value with less emissions. And 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.

[Operator Instructions]

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.

And 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?

Our first caller is Alastair Syme from Citi.

I feel obliged to kick us off on reserves. You've listed a huge amount of portfolio refocus in the Upstream. But I guess, to Shell, we've had 3 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 is 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? How do we frame the time line around hurry? And how can you counter the market concerns that the business is simply shrinking?

Yes. Thank you very much, Alastair. I'll suggest I kick off and then maybe, Sinead, bring you in. Yes, 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 billion to $7 billion range. 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-plus 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. 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 deepwater 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 derisk 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 out to 2035. 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 derisking 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 liquidating the 1 million barrels per day of new capacity we're bringing in. Last year, we brought 1/4 of that. We have another 750,000 barrels per day to bring online. We have exciting new projects like Bonga South West, that is also coming in the post 2030 time frame. 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?

Yes, 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/P are important metrics, but it's only one metric as we look at the depth of our portfolio. So let me go specifically on R/P. So roughly speaking, we were at about 7.8 years, as you know, now, which came down from 9. How did we -- what were the decision-making between coming down from 9? 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, 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 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 move towards deepwater, what did that do? The fact that we put it into deepwater and that was Gulf of America, 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/P or the impact on the R/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.

And 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.

Our next caller is Josh Stone from UBS.

Just a question on the buybacks. I'm curious as when you set the buyback, how much of a close call that was this quarter? Because 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 are 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 for the question, Josh. Sinead?

Yes. 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 on 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. 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 was 52%, but 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.

Our next caller is Irene Himona from Bernstein.

I had two, please. So first, can you please speak around the key financial impacts of the Adura joint venture in the U.K. 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 digit. 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 at CMD25 of the restructuring intention for Chemicals? So how far has that progressed?

Thank you very much, Irene. I'll take the second one. Maybe you want to start with the first one on Adura?

Certainly. Indeed, Adura really pleased, Irene, to see that actually up and running with our partner on the 1st of December. Teams are doing well there. It's really is a stand-alone 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 stand-alone entity, you see a lot of the normal aspects pulling out. You see the production reduced coming through in our outlook or that production -- sorry, production being reduced in our Q1 outlook as well. So you see that in the Upstream numbers. 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 stand-alone 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 stand-alone producer, independent in the North Sea now, and they're looking at many more opportunities and are driving hard to be able to return to the shareholders the dividends that they've rightly promised us.

Thanks, Sinead. Irene to your second question around group ROACE and then the Chems. So a couple of points maybe. Firstly, in my response to Alastair'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. 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% points on ROACE as well between '24 and '25. 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. 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. Q4 was a bit more difficult as well because we had a planned downturn 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 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. 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. And that's very much our intent and what we're focused on.

Our next caller is Biraj Borkhataria from RBC.

My first one is just on operating costs. You've 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 the size of that business and the contribution and I guess, the outlook. 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 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. 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 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.

Biraj, thank you for those questions. Let me take the second one and maybe give you the first one, Sinead.

Look, 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 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 billion to $27 billion. We took it down to $22 million to $25 million in CMD23. We took it down to $20 million to $22 million in CMD25, 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 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 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, 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, and the GOA. 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 on -- 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. 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?

Indeed. Thanks, Biraj. You're absolutely right in terms of cost being a focus over the last period, but it's been cost 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 have talked to 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 boss on making sure we do actually deliver on that as well.

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 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. And remember, that Res portfolio with 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 half of them actually within the last year as well. So more to come.

Our next caller is Paul Cheng from Scotiabank.

Wael, can you talk about the new opportunity set. It 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 opening up of these countries will compound the oil market oversupply? And if that is the case, how will it shape your capital allocation outlook, if any?

Thanks for the question, Paul. Look, I'd start maybe first from a longer-term perspective. So we continue to see growth in energy demand for -- well, 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 barrel per day tick, at least for the coming few years. And remember, we're losing around 5% of overall supply due to depletion. So every single year, you're having to refill 6 million barrels per day. So longer term, the fundamentals continue to be very constructive, I would say, on oil.

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 balanced 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. Most importantly, I think we are very well positioned to be able to play in 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. 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.

Our next caller is Michele Della Vigna from Goldman Sachs.

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 U.S. 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 U.S. is the largest producer in the world. So just wanted to have, if possible, some of your thoughts on that.

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 on 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. 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 5-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 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? 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 access -- significant access to U.S. 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. 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.

Our next caller is Kim Fustier from HSBC.

I wanted to go back to Chemicals. Last quarter, you talked about cutting several hundred millions of 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. You've talked about that and yet we're seeing Shell continuing to put assets up for sale in 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.

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.

I think you just said 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 or many other assets apparently that we're selling as well that I wasn't aware of.

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 cost 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.

Our next caller is Martijn Rats from Morgan Stanley.

I've got two questions, if I may. I wanted to ask about trading. Sort of full year results is always sort of a good one. I know throughout the year, it 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 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. There seem to be some punchy compensation claims coming from the government of Kazakhstan now. It's not that -- we've seen this before, but I was hoping you could share some perspective on that situation.

Thank you, Martijn. Did you want to take the T&S one first?

Yes, 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 desks. So just about there.

And we've talked about that a number of times. And you see that play out in C&P 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.

Thanks, Sinead. Martijn, on Kazakhstan, it would be inappropriate, of course, of me to sort of get into details around that given there is 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 is -- 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. And 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 there -- at that point for now.

Our next caller is Lydia Rainforth from Barclays.

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 linked to that, obviously, you're already at the -- you already achieved $5 billion in structural cost savings. Target is $5 billion to $7 billion by 2028. So why not lift that?

And then secondly, I mean just 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 -- 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 '26? Or is it more '28 to '30?

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?

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 where 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. We've still got LNG Canada, of course, that is still to ramp up to its full capacity, and we talked about it 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'll see that play out as we continue throughout the rest of the decade as well.

Yes. 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 billion 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. Agenetic 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 trading and supply, 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. So as we look to continue to not just apply automation into the way we work, we are challenging the way our workflows are constructed because agenetic AI means that we can fundamentally approach those work outputs in a different way.

So 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 the impact it can have.

Our next call is Lucas Herrmann from BNP Paribas.

A couple, if I might. Just going back to Alastair's opening question. When you think about resource and you think about resolving the resource issues for want of a better word, are we -- do you think -- we're really thinking about resolving for a deepwater issue in that, that's your greatest strength, should we say one of your greatest strengths certainly in terms of the Upstream. And obviously, the margins there and the return on capital there has the potential to be very attractive. So question one is really just back on Alastair's, what are we trying to resolved for?

And question two, far easier. 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 incremental volume coming from Calcasieu from -- I don't know how free things are around Pavilion, voluming in from Plaquemines, volume coming in from Canada, obviously. So it feels as though 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 7 is and what your thoughts on timing are there.

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. And so we are looking at how we can actually complement some of these 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 -- let's call it our North Star rather than necessarily what particular resource and in what country.

Sinead?

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 in terms of up and -- ramped up and getting to its full potential. We've got a 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 we do with those.

At the moment, we have quite a balanced portfolio. We don't have a lot of additional length, and we talked about that before. 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 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.

Our next caller is Doug Leggate from Wolfe Research.

Wael, I know this reserve number, you've kind of inherited that. It's been flogged to death today. But I want to 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 day, you had assumed a flat real oil price. Can you maintain that 10% free cash flow growth per share without the help of a flat real oil price or without leverage?

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'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 flat line 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 of our reservoirs, really focus on making sure that we are going after every drop, that is really unlocking value. 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 and 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. 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 acreage in -- more acreage in South Africa, acreage in the Gulf. And so that's the other, call it, value accretive way of doing it. 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 play that out into the coming years. Hopefully, that helps, Doug.

Sinead?

Indeed. Doug, good to hear from you here. You asked 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 it's, of course, from returns. On the performance part, I think Wael has talked to that, that's 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, if I take you through it in terms of return on capital, we are clearly entering into a phase of capital reallocation. You see it in what we're doing. You see on where we are moving our capital to in terms of allocating it 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 distribution, 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 also we have is we have a very healthy balance sheet. Our balance sheet is sitting at some 20% in terms of gearing. 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, 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. But what has happened, of course, is that our -- what you see is the gearing has changed, and that gearing has gone up roughly 2%. Where does that 2% come from? Well, actually, interestingly, 3/4 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, so 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 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. And 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. So we're comfortable with the position of where we're at.

[Operator Instructions] Our next call is Henry Tarr from Berenberg.

The question probably is a follow-on from that. And 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 going to be allocated towards exploration? And do you have a plan to sort of improving some of the returns there?

Henry, 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 make 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 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.

And 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, 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 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 go. 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.

Our next caller is Christopher Kuplent from Bank of America.

Wael, 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 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?

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 2 or whether it's a farm down there?

Do you want to start with that one?

Yes. No, absolutely. Thanks, Christopher. And indeed, you know what I will always say on anything is 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 looking at making sure that, that performance is delivered.

I think what you're seeing is a commentary in the press about reallocation of capital and speculation as to whether we would look to get out of anything, which is , say, parts or elements of it. 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 this 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. 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 over 9x EBITDA as well. So it's those sorts of things that we will continue to look to do.

And to Sinead's point there, Christy, that focus on capital reallocation, I would say, is an important now area of my 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. 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.

Now as we look at some of the other opportunities, I'm sure things will continue to evolve. 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 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 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.

Our final caller is Ryan Todd from Piper Sandler.

Maybe if I could ask one on an asset that you mentioned earlier and has also been in the news, Bonga South West. I think reports have suggested that you're targeting the 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 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?

Ryan, thank you for that question. Let's start with Nigeria. I was there, I guess, a couple of 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 support 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, which means we already have now kicked off 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 Adura. 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. Of course, where we continue to have a lot of music is in Brazil and in the Gulf of America, 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 has -- 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.

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 the 12th of March. And on the 16th of 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.

Welcome to Shell's Third Quarter 2025 Financial Results Announcement. Shell's CFO, Sinead Gorman, will present the results, then host a Q&A session alongside Shell's CEO, Wael Sawan.

[Operator Instructions]

We will now begin the presentation.

Welcome to Shell's Third Quarter 2025 Results Presentation. This quarter, we delivered another strong set of results. Our adjusted earnings were $5.4 billion, and we generated $12.2 billion in cash flow from operations. The quarter-on-quarter improvement was driven by strong performance across our businesses with all demonstrating positive momentum. This quarter clearly illustrates our focus on performance, discipline and simplification is laying the foundations of a winning performance culture across Shell.

So let's start with performance. In Integrated Gas, strong operational delivery drove higher liquefaction volumes, which in turn enabled a higher contribution from LNG trading and optimization this quarter. The start-up of LNG Canada where 13 cargoes were delivered from Train 1 in Q3 contributed to these volumes, and there's more to come with the expected startup of Train 2 later this quarter.

Welcome to Shell's Third Quarter 2025 Results Presentation. This quarter, we delivered another strong set of results. Our adjusted earnings were $5.4 billion, and we generated $12.2 billion in cash flow from operations. The quarter-on-quarter improvement was driven by strong performance across our businesses with all demonstrating positive momentum. This quarter clearly illustrates our focus on performance, discipline and simplification is laying the foundations of a winning performance culture across Shell.

So let's start with performance. In Integrated Gas, strong operational delivery drove higher liquefaction volumes, which in turn enabled a higher contribution from LNG trading and optimization this quarter. The start-up of LNG Canada where 13 cargoes were delivered from Train 1 in Q3 contributed to these volumes, and there's more to come with the expected startup of Train 2 later this quarter.

In Upstream, our strong operational performance resulted in higher production. Together, Brazil and the Gulf of America made up more than half of our liquids production in Upstream. In Brazil, we achieved our highest ever quarterly production. And in the Gulf of America, we reached our highest quarterly production level since 2005. Both were supported by successful project ramp-ups such as the Whale project in the Gulf of America, which reached nameplate capacity with wells producing above the investment case expectations. This was achieved in less than half the expected time, showing the benefit of our design one, build many philosophy.

And we also saw numerous examples of operational excellence in other parts of the company. In marketing, the business delivered its second highest quarterly adjusted earnings in over a decade, as we continue to capture more value through growing margins of our premium products. Chemicals & Products results also improved quarter-on-quarter with stronger crude and products trading, whilst chemicals continues to face challenges with weak margins.

Moving to our second focus area, simplification, where the organization is making real progress. At our QGC asset in Australia, for instance, production reached an all-time high in the third quarter. This was supported by a reduction of almost 90% in well site permits ensuring operations are not only safe and fit for purpose, but also allowing the team to free up time for even more value-added activities.

We're also simplifying our portfolio, just as we said we would at Capital Markets Day. We continue to maintain a relentless focus on value over volume, high-grading the portfolio, where we see the opportunities to do so. And you can see this in our mobility business. Year-to-date, we've divested or closed some 400 lower-performing retail sites. Beyond mobility, we have completed the divestment of the noncore interest in the Colonial Pipeline, which generated around $1 billion in proceeds. And we also completed the sell-down of five Savion solar projects as part of our power strategy, where we are allocating capital to part of the value chain that offer higher returns and where we have differentiated capabilities.

Our third focus area is discipline. We take our responsibility as custodians of shareholders' capital extremely seriously. And that is why we made the difficult but value-driven decision to not restart the construction of our HEFA biofuels facility in Rotterdam. And we continue to apply that rigorous value-driven lens to all of our investments. Our disciplined approach to capital allocation allows us to remain resilient throughout the cycle while continuing to invest in growth within our $20 billion to $22 billion cash CapEx range such as the HI gas development project in Nigeria, where we took a final investment decision this month.

Looking at our financial framework more broadly. In Q3, our net debt decreased as we continue to maintain a strong balance sheet. We also continue to deliver attractive shareholder distributions. And at the end of Q3, our 4-quarter rolling shareholder distributions were 48% of CFFO, in line with our target range of 40% to 50% of CFFO through the cycle. And today, we announced another $3.5 billion share buyback program, which we expect to complete by the time of our Q4 results announcement. This marks the 16th consecutive quarter in which we have announced $3 billion or more in buybacks. Once this program is completed, we will have repurchased more than 1/4 of our shares over the last four years.

So to summarize, in Q3, we delivered strong financial results, improving our performance quarter-on-quarter. This improvement was driven by strong operational performance across the company and we'll keep delivering on what we say, focusing on performance, discipline and simplification. So we can continue to deliver more value with less emissions. Thank you.

[Operator Instructions]

Thank you for joining us today. We hope that after watching the presentation, you've seen how we delivered a strong set of results in the third quarter and how our principles of performance, discipline and simplification are guiding us in our actions. Today, we also released updated guidelines on how to model Shell, which you can find in our slide pack. We hope you find them useful. And now Sinead and I will be answering your questions. So please could we have just one or two questions each so that everyone gets the opportunity.

With that, could we have the first one, please, Luke?

Our first caller is Matt Lofting from JPMorgan.

Congratulations on the strength of performance in 3Q. Two questions related to operational performance, if I could, please. First, I thought the performance in the Upstream business across Brazil and the Gulf of America looked like it was a highlight of the third quarter. How sustainable do you see that performance going into 2026 and beyond.

And then secondly, in the IG business, to what extent was the third quarter improvement in trading supported by operational outperformance versus greater market opportunity? In other words, is there any change to the new norm market conditions that we referenced in the summer?

Appreciate that, Matt. Thank you very much. I'll take the first question and ask Sinead to address the second one. Very proud of the work in both Brazil and in the Gulf of America. I think it goes back to a journey we've been on now for a few years, really trying to go back to what we've called the brilliant basics, rigor in the way that we are executing the turnaround. So this quarter, we still had turnarounds in both Brazil and in the Gulf, and those have gone to plan below schedule -- faster than scheduled plan as well as actually below budget. So really pleased with that.

But also just the rigor in the way that the teams are following through on all the different operational metrics that we are focused on at the moment. And so I think across the patch, I see that strength, not by the way, just in those two big bases, but also across our conventional oil and gas portfolio. In terms of how much is this sort of sustainable? I believe that the improvements we have are very much sustainable. Of course, we will continue to want to bring those facilities down for maintenance on the annual basis that we typically do. But we've also seen some of the tailwinds that come from new projects. In Brazil, you have Mero-3 and Mero-4 that started up this year. And in a place like the Gulf, we've had Whale startup, actually start up and do much faster ramp-up than maybe traditionally we have seen in many of our deepwater projects. And so across multiple measures, very pleased with that momentum and looking forward to sustaining and improving it because we know there's more to do there. Sinead?

Thanks. And thanks, Matt. Indeed, last quarter, we talked about integrated gas, and we talked about it moving towards a new normal. And how fast it was it's a new normal absent any opportunities to be able to trade around additional length or a variety of things that could occur in the market. So what did we see in Q3? In Q3, we saw very strong as well, put its operational performance, not just on upstream, but also on our integrated gas business as well. And that gives us length and therefore, the ability to trade around those. In addition, of course, there were some arbs opening up in terms of the different price lines between both Asia and Europe as well, which give the results that you see, which we're really pleased with. It's not a given, and we're so proud of the team for what they managed to deliver this quarter.

When we then look at Q4 and beyond, what do we see in Q4? So already, we're seeing some of those opportunities, but nowhere near the amounts that we had before, and we don't see any one-off helps. Of course, as we look to 2026, what we're seeing at the moment, the spreads aren't there. We'll see how it plays out as the year continues.

Luke, let's have the second question, please.

Our next caller is Lydia Rainforth from Barclays.

I have two questions, please. The first one, artificial intelligence. We do seem to be seeing an acceleration in recent months of agents of the tech available. How are you thinking about AI deployment cross-sell? I know you've been doing it for a while, but how far through the journey are you? And when you think about what it means to the cost base, does it make a difference there in terms of where you are with the plan?

And then secondly, can I do a big picture? I'm sorry about this, but what are you seeing demand-wise, because clearly, within the market that's competing seriously between is there an [indiscernible] versus market starting to tighten next year versus inventories not showing up? How do you see that given all the demand base you have? And how does the buyback fit into sort of that uncertainty?

I have 2 questions, please. The first one, artificial intelligence. We do seem to be seeing an acceleration in recent months of agents of the tech available. How are you thinking about AI deployment cross-sell? I know you've been doing it for a while, but how far through the journey are you? And when you think about what it means to the cost base, does it make a difference there in terms of where you are with the plan?

And then secondly, can I do a big picture? I'm sorry about this, but what are you seeing demand-wise, because clearly, within the market that's competing seriously between is there an [indiscernible] versus market starting to tighten next year versus inventories not showing up? How do you see that given all the demand base you have? And how does the buyback fit into sort of that uncertainty?

Lydia, thank you for those questions. Let me address them both, starting with the AI question. I think the reality is we are every single day learning the potential that AI brings to our business and continuing to grapple with that and what it means. It's requiring us to relook at workflows, the way we do work in general and how we can improve. And so I think we're at the cusp of some exciting things ahead, and we're challenging ourselves as a team, as a company, to be able to embrace some of those opportunities.

I spoke a moment ago to Matt's question about some of the improvements in the Gulf of America, for example. The platforms like Olympus in the third quarter of this year, but also Ursa, you'll recall, we deepened our interest in Ursa buying Conoco share. Those two platforms had outstanding performance this past quarter. A large part of that is driven by our ability to detect issues before they materialize on the platform. And that is very much leveraging AI, leveraging our data capabilities and being able to bring those signals to the front line, so they can intervene before a trip happens on a facility.

So it is already helping us today in the way we are driving business outcomes. We're also using AI and trading more and more and looking at how we can leverage some of those split-second decisions to be able to make sure that we can create value and we optimize across the portfolio.

The last thing I'd say about AI is, of course, beyond how we use it for ourselves. We are in constant communication with many of the hyperscalers. You'll have heard about our deal with Google here in the U.K., where we provide them the low carbon renewable energy that allows them to be able to run their data centers. So we are in service of many of these hyperscalers and looking at the opportunities to do the same in the U.S. through our Savion entity. So really exciting space that we're getting our minds around and continuing to drive value out of.

To your broader question around demand, what we see at the moment is indeed headwinds on the supply-demand fundamentals going into 2026 and a highly credible scenario that there is an oversupply in 2026. Of course, what we've seen in the last quarter or two is significant uptake in Chinese storage, and we have seen a lot more oil on water. So that has, in a way, sort of pushed out some of the oversupply. And of course, there's the macroeconomic or the geopolitical reality that we see as well, which puts a premium on prices. And so I think in the short to medium term, there are headwinds. Longer term, we continue to have strong conviction in crude prices going forward.

In LNG, we see a balanced outlook for the next year or so as we continue to see that supply-demand balance in good shape. And then, of course, longer term, we continue to be very bullish as well on LNG, and we can talk about that a bit more.

Finally, on your point around buybacks. I think in the context of the macro that we are going to be seeing what we have said, what we have already guided and continue to hold on to is our 40% to 50% distributions from CFFO is sacrosanct. And we very much intend to be able to continue to be within that range. And of course, we have positioned the company to be able to do that and to weather any potential downturns that emerge over the coming months a year or so. Thanks, Lydia, for the question.

Luke, can we go to the next question, please?

Our next call is Jason Gabelman from TD Cowen.

Yes. I wanted to ask about the outlook for the LNG segment, particularly with LNG Canada ramping up and then Pavilion kicking in. And if I recall correctly, you had mentioned that Pavilion wouldn't really contribute this year. So should we expect to see any uplift from those two items in 4Q and how should those impact results in 2026?

And then my follow-up is just on kind of the resource hopper and at the Investor Day, you had talked about needing more long-cycle liquids in the 2030s, a couple of quarters since that Investor Day. How is the organic opportunity set shaping up to fill that resource hopper versus your outlook for inorganic?

I'll take the second question and then ask Sinead to address the first one. Look, briefly, where are we? We have, of course -- we continue to drive what is a strong organic funnel. We've talked in Capital Markets Day around 1 million barrels per day of oil equivalent between now and 2030 to bring online at breakeven prices of just sub $35. And so there is a lot of work to do to be able to bring that across and to be able to drive the outcomes we want from that.

Beyond that, I spoke at the previous quarterly call around exploration, how we've continued to really sort of tighten the team, get much more focused on the basis where we think we have a competitive advantage, leverage some of the capabilities we have also digital and AI to be able to drive that forward. And I'm pleased with what I'm seeing from that team, and I'll have a bit more to be able to update, hopefully, as we get to Q4 on that.

I think in the broader context, we've also done some inorganic moves. We've deepened in Brazil in Gato do Mato as you know. We've deepened in Nigeria, deepwater. Not too long ago, we deepened in Ursa. So we are already moving with some of these bolt-on opportunities to be able to create value, while, of course, continuing to look at other opportunities that are attractive. But like I've said in the past, our bar is high and we will continue to hold ourselves to that high bar to make sure that we are able to generate value for our shareholders from any capital dollars that are spent in that space. Sinead?

Indeed. And thanks, Jason. You were asking about the LNG segment or integrated gas for us. We've talked a little bit about the new norm in the previous question as well that came through from Luke -- sorry, from Matt. When we look at that segment, of course, we're looking at both the operational capability and then the trading opportunities that come with it. On the operational side, the team is, of course, focusing very hard to make sure that we get all of our assets fully running. And you asked specifically about LNG Canada. And of course, we're more than 13 cargoes, of course, now out on Phase 1 in terms of the first string.

So what we're looking at there is, of course, is when do we actually ramp up the next train as well. And that will come between now and year-end. So teams focused on that. But of course, as you say, it takes -- it's not the first cargo or the second cargo that matters. It's actually having those up and running fully and therefore, being able to rely on them and have the ability to trade around them. So you're right, that will be more into and the second half of next year.

Pavilion very similar. We talked about it last quarter, if you remember, I talked about the fact that we're looking forward to getting those contracts in. We've got everything integrated into the portfolio at the moment, but actually how we manage them and utilize them, we need some of those to roll off and be able to have freedom on those volumes. And that will happen indeed towards the second half of 2026 as well. So we expect to see that coming.

Thank you, Sinead. Thank you for the questions, Jason. Luke, let's go to the next question, please.

Our next caller is Martijn Rats from Morgan Stanley.

Two questions, if I may. They're -- both a bit about sort of specific line items in the financial statement. I noticed that the line item, underlying OpEx was up sort of 10% year-on-year. And I was wondering what lies behind this. Of course, I know there's inflation in the system, there's inflation, almost everywhere, and it can be hard to fight. But 10% still struck me sort of as a reasonably noteworthy number. Maybe a year ago, this number was just luckily very low for some reason or another, but I was hoping you could say a bit about it.

The other thing I also wanted to ask you is, could you elaborate a little bit on the sale of the stake in the Colonial pipeline. Because the context around the question is that the trading is clearly very important for Shell that has become more important for Shell as the years has gone by. And I can totally see how an individual pipeline or a pipeline system might not be the highest returning asset. So you could say, okay, part of the disposal program. At the same time, assets like that, I would imagine, are precisely the type of assets that really help the trading business. So there's probably some sort of trade-off there. And I was wondering how that type of consideration come into discussion about some of the disposals, particularly this one.

Sure. Thank you for that, Martijn. Do you want to take those two Sinead?

Happy to. Thanks, Martijn. Two very different questions, but as you say, into the nitty-gritty

of our numbers. On the underlying OpEx, just a couple of things are really flowing through there. What you're seeing, of course, is a combination of, as you say, inflation, although we're doing really well to eat inflation, there's also new assets coming in as well. So a lot of that is about phasing. So what you're seeing is the likes of LNG Canada coming in with the full OpEx coming in, of course, because it's also just started up. So you have a lot of those ramp-up costs. You have the same, of course, when you're -- with respect to Chemicals and Monaca, all coming through whilst the platforms are still or the assets are still ramping up as well. So that's two things that come through.

We've also been very, very focused -- sorry, on that as they ramp up, of course, you see those big costs hitting, but of course, you don't see the full operational performance yet. So that's one thing. You also have the same in terms of the divestments, there's also phasing around that. Of course, we've not seen the actual impact of all of the divestments coming through yet, so particularly the refinery and chemical plant in Singapore. We, of course, have cost as we handed those over and as we helped and the setup for the buyer the same with Nigeria. So those don't flow through yet as well.

So a little bit of that is phasing. And secondly, of course, is in terms of marketing, we've actually had a higher impact in terms of advertising or marketing, very, very focused knowing exactly where we want to make a difference, and that's what you're seeing in terms of some of the marketing performance come through actually very well where we've been able to push some of those premium products, and it's coming out in our actual numbers. But costs are if you do it year-on-year, they're actually the 9-month costs are 4% dying at the end of the day. So doing really well and continually driving the team towards that $5 billion to $7 billion target that we gave, which we have no doubt we will be into that range. It's just how fast and how hard we can go. That's the first one on OpEx.

And it's Colonial Pipeline that you asked. It's a great question, Martijn. We've had this discussion quite a few times about what do we need for our trading business. And from our trading side of things, you've got a bunch of traders who are very focused on the maximizing return and maximizing the use of capital, as you can imagine, which is rather helpful. From their perspective, they look at where are their touch points, where are their control points where they can maximize value. And for us, Colonial was not one of those. So it was just one that was in a long list of assets where they looked at it and said, I can put my capital elsewhere, that was really the rationale behind that, and you'll see small numbers of those come through where you can see us reallocating capital and that's everything about our story at the moment, as you know, is reallocating capital to that best return that we can get. They brought the opportunity to us. We managed to execute it this quarter.

And that's a good point. Indeed, it was the traders who brought that opportunity to us. Thank you, Sinead, and thanks for the question, Martijn. Luke, let's go to the next one, please.

Our next caller is Kim Fustier from HSBC.

I have two, please. Firstly, on LNG Canada. I wondered if you could give any color on how you're managing the feed gas from Western Canada. So maybe just a rough split between your equity tight gas production versus grid supplies and your ability to shift from one to the other depending on prices?

And the second question is on Chemicals. I wondered if you could give an update on the restructuring of your chemicals business. I also understand that Monaca will have a turnaround in the fourth quarter. So what remains to be done in terms of works at Monaca?

Kim, I'll address both. I think on the first one, of course, we have had in the third quarter a number of days where AECO pricing went negative. And so to step back and remind you of the model, we actually use the Shell trading organization to source feedstock for our equity interest in LNG Canada. And we use on the other side, Shell's trading capability to be able to place those LNG cargo or equity LNG cargoes.

And so what our traders are doing are -- is looking at what is the best option to be able to create value for the enterprise. And so recently, we got up to roughly 100,000 barrels of oil equivalent per day capacity in Groundbirch, our Canadian feed gas. And we turned down quite a bit of it. We were running at around 70,000 to 75,000 barrels of oil equivalent per day because we could drive quite a bit of the flow coming out of third parties, and it was more -- it was better economics for us to do so.

And so I was out in Calgary just a few weeks ago and just sitting in that control room and seeing how those decisions to be able to shut off a well and to be able to source third-party supply are being made on the spot with the traders sitting by the side of the operator to maximize value. Exactly the model I would have liked to see and really looking at how we can create value through that integrated interface between asset and traders in the business.

So we'll hopefully continue to see that. And of course, that will ramp up with Train 2, which as Sinead has already said, actually is days away at the moment, and we look forward to the first LNG cargo from that.

To your second point around chemicals and chemicals update, indeed, I think you touched on Monaca's planned maintenance in the fourth quarter. More work to do to really get ourselves to the point where we are running at full capacity in that asset. But if -- if I maybe take that question, if you don't mind, Kim, and just step back for a moment. We said in Capital Markets Day 2025 that we have $45 billion of capital employed that is underperforming for us. $25 billion of that is sitting in chemicals and $20 billion is sitting in res.

On the chemical side, of course, the deep trough we find ourselves in means that what we have done in terms of the cost take at over the last few years is still not enough to get us into free cash flow neutrality. And I said at the last call that I instructed the team to take the next set of cash preservation measures, which they have now outlined, there's a clear plan to go after them. And we have a trajectory to take out a few hundred million dollars more over the coming months from both the OpEx and CapEx.

I don't expect that to sort of feature in Q4 already. And you'll remember, of course, Q4 in both chemicals and products is traditionally a weaker quarter for us. So I don't expect that to flow through. But I do hope to see it coming through in 2026.

On the other side of it, on the res side, in particular, power where we have the bulk of the capital, we have been doing a lot of work to be able to reshape the nature of the capital employed in that portfolio away from renewable generation capital-intensive assets towards more trading backed assets. You heard yesterday in the news, we will have announced the withdrawal from Atlantic Shores, the offshore wind project in the U.S. We've sold some of our B2C platforms in the U.S., including Inspire, and we have also sold out of Cleantech in India, 49% equity interest not to mention the Savion a joint ventures that Sinead mentioned in the video.

So lots of good progress to start to reallocate that capital and put it into the much more productive share that allows us to get back towards that 10% across our segments that we are aiming to get to. So hopefully, Kim, that gives you just chemicals, but a bit more broadly how we're thinking about that unproductive capital that we have.

Thank you for that question. Let me now turn Luke to you for the next question, please.

Our next caller is Biraj Borkhataria from RBC.

Two, please. Just going back to LNG Canada. Have there been any further discussions on Phase 2 of the project? And I just wanted to update where we are there. I saw us put on the top of the list for Carney's major project review. So any color that would be helpful.

And then just on the cancellation of the biofuels project. I'm trying to get a sense of how much of this was project specific? And how much of this was sort of related to your view on the end market and policy risk because obviously, there is elevated policy risk in a bunch of ways right now. The alternative for you is to just keep deploying more capital to the buyback which, obviously, the value proposition is fairly obvious. So just trying to understand how the investment committee is thinking about political risk across the various FIDs you have in the hopper?

Yes. Thanks for that, Biraj. I'll take the first one and then Sinead, if you want to address the second one. LNG Canada Phase 2, look, I think the biggest things we're keeping an eye on at the moment is the joint venture is working with the various contractors to be able to at least frame a quality decision for us at some point next year and see what that looks like.

What are some other important factors that we will have to sort of consider when we get to that decision point. Clearly, the support of both the federal and the provincial governments in Canada will be important. And I think as you rightly inferred there, we do see very strong support at the moment, both at the provincial and the federal side. So that's good news. We're very appreciative of that support, and that is enabling for a future investment.

But we're also looking carefully at the broader dynamics. You know our views that we are strong believers in the future of LNG demand through to 2040 and beyond. And we're also conscious of the significant investment that is taking place, the number of FIDs this year, in particular in the U.S. is unprecedented. You're talking of the 70 million tonnes per annum of capacity that's been FID-ed. 60 million is sitting in the U.S.

Now if we then think about future investment opportunities in liquefaction, it is about making sure that we are delivering to the demand destination from the right supply sources. Where Canada features is, of course, they have a transportation advantage vis-a-vis the U.S. it takes 10 days to ship from Canada to Asia versus 25% from the Gulf. So there's an advantage there. And that's why we're trying to understand what that overall balance of new supplies coming in, at least in the medium term and how that features in our broader calculus because not all supply is equal, and we want to make sure that we get access to the best supply for our customers and also cost advantage supply to make sure that they can create value for themselves as well from that. So lots to consider over the next several months there, Biraj. Sinead?

Thanks, Biraj. Two parts in the way to your question. So first and foremost, about the half a plant and the decision to stop. As you know, when we paused, we paused because we wanted to look at the ability, both internally to execute and ensure that we got something that was -- what we thought was the appropriate return. And then, of course, how we play out broader into the market. We took our time. It's a big decision to make and looked at it in every possible way and decided not at the moment to stop, right decision to be made.

We continue to be very bullish about trading in biofuels in the prompt. But yes, the supply and demand fundamentals should play out further. We need to see how they play. And of course, we do need stable policy. And that's the second part of your comment in a way was about how are we looking at political risk or just policy risk, you could go beyond that.

You mentioned the investment committee that we have, that we sit on and that we discuss -- we're discussing all of our projects, not only as a stand-alone opportunity as a capital allocation decision, but looking at them in the aggregate. So how much concentration risk do we have to different aspects. And it's exactly as you say, we're not just looking at country. We're looking at themes whether that might be around changing regulatory decisions, et cetera, and making sure that we understand what could go on and how bad could it get or how good could it get? So exactly that, cutting the data in every way we can to inform the best quality capital allocation decision.

Thanks for the question, Biraj. Luke, next question please.

Our next caller is Doug Leggate from Wolfe Research.

While I wonder what's the path back to profitability for the Chemicals business? And I'm wondering, is the Chemicals business -- should we consider it core for Shell going forward? That's my first question. And my quick follow-up. I don't know if you're able to talk to this. But obviously, one of your large peers had a different outcome with Venture Global, is there any recourse for Shell to revisit the arbitration that you had? What's the path forward for that as well?

Thanks for that, Doug. Let me take both of those, starting with the Venture Global one. I think first, just to say deeply disappointed in the outcome of the arbitration tribunal, and we have a lot to reflect on and to learn, if I'm honest, in terms of how we can do -- to do better, because we deeply believe in our case, and we need to be able to continue to explore all pathways to protect our rights. And that is something, of course, we're looking at. So let me just leave it there out for now.

On the path back to profitability for Chems, I would firstly just acknowledge once again the depth of the trough that we find ourselves in. And that's been just very challenging to navigate. We have already been working on a reduction of OpEx over a number of years, but it is just not enough. We were hoping that this is a typical cycle, and therefore, we would see the upside sooner than we are seeing it at the moment. We just don't see a line of sight to when that up cycle is going to come. And therefore, we have decided to really go after that cash preservation that I mentioned.

The path towards free cash flow neutrality is squeezing more out of the OpEx juice and more out of CapEx. And that's where my previous reference to hundreds of millions more that we would look to be able to take out in the coming months to be able to at least get back to -- to stopping the bleeding from that unit. And I know my team is very, very focused on doing that, the plan has been established and now we're going into execution mode to be able to affect that. Thanks for the questions, Doug. Luke, next questions, please.

Our next call is Christopher Kuplent from Bank of America.

In the same vein, perhaps. Can you comment on renewables and where you see the role here, considering where the M&A market is, the PPA market, where do you see capital allocation and opportunities perhaps. Just quoting one example is not just a gigawatts, but it's also your JV in Brazil that's crying out for fresh equity injections. So how do you feel about adding more commitments into that overall, I suppose, low carbon area. And as a second brief mop-up question, could you give us an update on the Venezuela and Trinidad situation and how you so far have been dealing with that?

Let me take the second one and then ask Sinead to address the first one. On the second one, clearly, worrying. Our first focus is our staff and the well-being of our staff in case the situation escalates, which we hope it doesn't. Clearly, the Dragon license, which was granted by OFAC to the Trinidad and Tobago government, through which, of course, Shell would be implementing that license.

We still have to figure out exactly what's happening there. So we're assessing the situation closely, working with the government in Trinidad and Tobago and making sure that we are able to then determine how to move forward. But I'd say, very early days to be able to judge exactly how this will play out, and we are on a wait and see mode at the moment to see what happens. Sinead?

Indeed. And thank you, Christopher. In terms of renewables, as you remember, when we talked about renewables in Capital Markets Day, we talked about our role in it and how we would play. And there's two aspects to your question because you brought in both biofuels and, of course, the gigawatts, the electrons side of it. So looking at both in unison there.

In terms of the biofuels side, I talked a little bit about half of our view on let's see where supply and demand goes to into the future and about where we see the sort of trading in the prompt you alluded to, of course, a joint venture or a company that we are invested in, in Brazil as well. Of course, it's a listed company, so I always look to the company to speak for itself.

But just priority is there for them to look at really all of the different options that they have in terms of the turnaround and to ensure it's value accretive, and we see their management team doing a superb job on that as well. So making sure it's aligned with all of our goals as well.

Moving back on to the electron side for a moment, and you talked about the gigawatts aspect there. What you can see us doing, of course, and what we talked about was moving from being 80% in producing assets or solar wind, different aspects like that, and 20% in trading and shifting that focus between now and sort of 2030 much more towards 20% into the producing assets and 80% into the trading side. That continues to move forward. While talk to a number of those different actual capital reallocation that's occurred, whether that was around Cleantech that he mentioned, and Savion, of course, the opportunity where we actually diluted our stake in some of the producing fields of the solar fields and actually kept the electrons. And that's about really where is our strategy going to. It's making sure that from a strategy point of view, we're very much focused on considering how can trading maximize the value from the flow, and that's what you see us doing. We continue to look for opportunities in things like gas-fired combined cycle power plants as well. You saw us do one of those last year. And of course, we continue with some of the battery investments we're doing as well. So that process continues and really good progress, I would say, well.

Yes. Thanks, Sinead. Christopher, thank you for those questions. Luke, next question, please. .

Our next caller is Michele Della Vigna from Goldman Sachs.

Congratulations on all of the rejuvenation of your E&P portfolio through all of the FIDs and stake increases in the last year. I wanted to say really on that topic. And I wanted to ask you, what do you think is the scale of inorganic investment that you'll need to continue this 1% hydrocarbon production growth well into the next decade? And if there's any area in your portfolio and particularly that you would like to deepen in scale?

Yes. Thank you, Michele, for that question. I think -- thank you for the recognition on what already has been, I think, a successful strategy of bolt-ons, focusing on areas where we do have competitive advantage. And actually, in all of them, where we ourselves operate and so it is deepening of our existing interests. I mentioned earlier, some of the potential headwinds that we see coming into 2026 on oil prices, for example.

And of course, we have been positioning the company over the last few years through cost reductions, performance enhancements, portfolio high grading. For the specific moment to be able to actually be resilient through a potential downturn. And what we have been doing, of course, is preferentially allocating distribution capital to our buybacks. And so in a world where there might be softness in the future, I think it creates real opportunities for us, both on the buyback side, but also to look at other inorganic opportunities, which, by the way, over the last several months, we have seen more of those come through our desk, albeit none of them at an attractive enough level to be able to cross that high bar. But I really hope we get to see some good opportunities come through in 2026.

I'm not going to give a particular scale of opportunity because at the end of the day, what we have said and what I've said in the past that we've maintained is we want to be value driven. We want to look at the right opportunities and make sure that we are creating shareholder value using free cash flow per share accretion as an important north star for us. And so we will be pragmatic in the approach we take as we look at these opportunities. We know that between now and 2030, the requirement to be able to sort of maintain liquids flat we've, by and large, we're almost there. So this is not about 2030 where we have high confidence. It's about building that funnel for the 2035-plus where we indicated in the Capital Markets Day chart that there was a gap of somewhere in the range of 350,000 barrels a day and which we hope to be able to fill organically and where it makes sense inorganically. And so we will continue to position ourselves for that and continue to make sure that we create -- or that we make the best choices from a capital allocation perspective on behalf of our shareholders.

Indeed. And I think that's the opportunity that we have well because actually, we're in the best place to do it in the sense of a very healthy balance sheet at the moment. So gearing is healthy, as you know. I mean, we've talked about it before, it's below 19% as of today. And of course, it came down this quarter. It does oscillate up and down. And that's what we talked about. We're very comfortable with that ability to take it up or down. And you've seen us leaning on the balance sheet from time to time. You've seen us leaning on the balance sheet sometimes for distributions. This quarter, we didn't have to, but we have done so in previous quarters. We're very comfortable with that

And if you look at where our gearing has actually been, it's actually range between sort of 10% and 30% over time. So comfortable where it is today. Those moments when we have to lean in it, we can lean on it for a variety of things, whether it's distribution, as you said or inorganic. And of course, we will see debt as a result move. And actually, I would expect, of course, our gearing to our debt, net debt to go up next quarter, largely because what do I see? I see that sort of Q4 being one of those quarters where we always have some unusuals coming through.

So we've had really strong performance from our Upstream and Integrated Gas business. The performance is superb this quarter, and that's actually helped us to be able to deliver on just bringing that net debt down. But of course, for Q4, I think everyone's getting boring of -- bored of me talking about this, but we have those unusuals that come through. So those unusuals are quite a broad range, but they add up to several billion, whether it's the German and U.S. biofuels and certificates, the emission certificates payments that come through the German mineral oil tax, et cetera, but it adds up to a couple of billion, of course, next quarter.

And of course, beyond that, what we also see is the ability to have some of those opportunities, which help push up our CapEx levels a little bit into that quarter. And of course, at the same time, we see downstream typically being a little bit weaker in Q4. The data book says it all. You can go back and look at the last couple of years and see Q4 coming through as well on that, and it's really twofold. It's two different stories. One is chemicals and products, which is normally trading-related where it's a bit weaker into the quarter. And of course, we have a few turnarounds which were mentioned earlier by one of your colleagues will also hit in Q4 as well.

But then, of course, on our marketing. Marketing has been doing superbly well. But of course, Q2 and Q3 are driving season. So it is seasonality coming into Q4, where you would see it be a little bit weaker. So I look forward to in Q4 making sure that our performance is good, understanding that those items will drive down some of the cash flow and looking forward to seeing whether what opportunities we have as well, including potentially working capital build, depending on where the macro is, but that links back exactly to where you were going to, which is we have the balance sheet available to actually lean on for whether it's distribution or whether it's to lean on for inorganic opportunities as well. So yes.

Thank you very much, Sinead. And thank you for the question, Michele. Let's go to the next question, please, Luke.

Our next caller is Josh Stone from UBS.

A couple of questions. One, just following up to date on the fourth quarter. Thanks for taking us through all those building blocks, particularly on the Integrated Gas because in an earlier question, at this time, you're sounding quite conservative. And yet I look liquefaction volumes should be up. Why would the ramp-up of those volumes not help you optimize margins in the fourth quarter? Are there other things in integrated gas we should be aware of? And can you just remind us where we are on the hedging impact there and the potential headwind there that was inside these numbers this quarter?

And then second question on Namibia, there were some headlines earlier in the summer that you're expecting to resume exploration drilling next year in the midyear. So -- can you talk a little bit about what areas you're thinking about targeting? And maybe just more generally, your willingness to add more capital to this country, given what you know so far about the basin.

Josh, I'll take the second one and ask Sinead to address the first one. On Namibia, indeed, we -- like we said in the past, we had -- we like the volumes we found. We were challenged by the high gas oil ratios and of course, just the movability of the fluid. And so -- what we have also been doing is just spending time to really understand what our appraisal program has resulted with the subsurface data points we have, not just ours, but also leaning on what others have been doing in the basin to be able to maximize our knowledge set.

We continue to have appetite, of course, to invest in Namibia, but it's going to have to be at a level where it meets our high hurdles for investment opportunities. And so we are very willing to invest in an appraisal well for a new horizon if we have an investable case for it, and that's what the team is assessing at the moment. And we should be in a position to be able to decide that in the coming weeks.

More broadly, I would say, we continue to look at those options for basins where we think we can be differentiated in the way that we are able to play in that basin. For example, in deepwater, where we can leverage our knowledge of the North Atlantic to be able to potentially create opportunities like the well we're drilling at the moment in Sao Tome and like other wells we're drilling as well in the Gulf of America. So looking forward to continuing to see what comes out of that. Sinead?

Indeed. And thank you, Josh. So back to Integrated Gas. No, you're absolutely right in the sense that when we talk about the normal, we're always talking about whether we can deliver higher operational performance and then what opportunities we can find in the market as well beyond that. So when I look at Q4, indeed, we're looking at strong operational performance. So we're looking at the team doing what they've said they're going to do and making sure they continue on the ramp-up of LNG Canada and other assets. But then we're looking at what do we see in terms of the availability of those lengths, so hopefully, we will have some. But in terms of the arbs and what are the opportunities to be able to trade around those.

What I was mentioning earlier on was that we're seeing some of it at the moment, but less in Q4 than we did in Q3. So there is that sort of notice board. Those are closing at the moment, and you can talk about Brent versus Henry Hub and also it's a fun item there, but it is closing a little bit.

You also mentioned then the impact in terms of the runoff by the way, in terms of the losses of the legacy positions. So I think I've positioned probably back almost a year ago, but I said we'd run through 2025. We're still seeing those legacy positions expire over this year. That impact is less pronounced than it was at the start of the year. That's just some really good work from the trading team in terms of effective risk management, but you will see that in Q4 as well.

So looking to see what can we actually capture upside in the portfolio in terms of both net length and what's in the market as well? But of course, there is weakness versus downstream versus where integrated gas is. So as I outlined earlier, we're expecting to see downstream being weaker than it was in Q3 versus integrated gas, where we would not see it be able to capture some of the opportunities that we have seen this quarter, but we're looking at strong operational performance as well. So it's a tale of two halves there.

Thanks, Sinead. Thanks for the questions, as well there, Josh. Luke, let's go to the next question, please.

Our next caller is Alastair Syme from Citi.

While coming back on the portfolio because it seems you get a lot of questions on this now. Look, I've made the observation that the industry as a whole looks like it's delevered in the cycle. So I get your point about looking for opportunities in a down cycle. But I'm wondering if you think this down cycle needs to be quite deep for those opportunities to really emerge that you need?

And then the sort of the second part of this is do you think these new positions -- or do you think there'll be new positions in geographies? Or do you think that ultimately Shell can add more value by deepening in existing positions?

Alastair, thank you for those questions. Look, I think who knows exactly how things play out. But what is clear is if I compare where we have been over the last few months to say, one or two years ago. We are getting a lot more proposals that are interesting, though, like I said earlier, not yet meeting that high bar that we hold ourselves to. That tells you that expectations of breakeven points around some of these transactions have come down from what maybe we had seen a year, 1.5 years ago.

How far they come down? Question mark. We are, of course, looking at long-term strategic imperatives. We see ourselves as we look into the 2030s, we continue to see an important role for crude, and we continue to see ourselves one thing to have a portfolio that's able to serve our customers as we do as well for LNG. And so what we will continue to do is look at those opportunities that create long-term value, and they need to be at a price point that is interesting enough for us.

Now exactly where we play typically, I'd say we want to look at where we can create incremental value beyond what the current owners can do, in particular, if you want to have to pay a premium for it. And so -- and that's why I talk about the high bar partly it's because of the price point and partly because it is not easy to be able to justify M&A, in particular, when it has to compare where it has to compete against the alternative of buybacks.

And so what we're trying to do is to keep that tension in. And if it is affiliated with one of our existing positions, then there's much more likelihood we can create incremental value out of it, in particular now that we have really addressed some of the performance issues in the strength of our portfolio, like in deepwater, like an integrated gas, like in marketing. Those areas where we believe we have a comparative advantage are firing on not all cylinders yet but on many cylinders. And while we know we have a lot more to do, we think we can now create more value out of some of those assets that others hold than maybe what they hold. The question is whether we can get to a price point that's attractive enough to transact. Let me ask you, Luke, then for the next question please.

Our next caller is Peter Low from Rothschild & Co Redburn.

And maybe just one more on Upstream. You took FID on the HI gas project in Nigeria in the quarter. It's the sort of project we don't necessarily have great visibility on from the outside. I was wondering if you could give some examples of any other projects you're maturing at the moment that could potentially reach FID in the next 12 months or so?

Thank you for that question. I'll say a few words and please pitch in Sinead as well if you want to. So HI is one of those projects which will feed into Nigeria LNG our equity interest, and there's 1 or 2 of those behind as well that we are looking to mature to be able to grow the potential feedstock into Nigeria LNG. That, of course, builds on the Bonga North opportunity. And just even staying within that space, there is the potential one day for Bonga Southwest, which would be a new FPSO in Nigeria and therefore creating an exciting opportunity for us to grow there.

In places like Brazil, what we're seeing at the moment is the opportunity to be able to develop a new hub like Gato do Mato, which we FID-ed recently, but also given the massive license that sits in the 2P field, as an example, there are opportunities there to be able to look beyond and that's what the team is looking at in Mero, in 2P, what can we do to be able to maximize production out of those. And those could be very interesting opportunities to tie back.

There are opportunities as well that we continue to mature in the Gulf of America, tiebacks to existing facilities. One specific facility we're looking at how we can beef up is Appomattox. We have ullage there. We have capacity, which we are in the process of developing some opportunities to be able to go after. Ursa and Mars are other opportunities we look at.

And then you can go to places like Oman, where we continue to look to bring some FIDs through -- they're more localized FIDs. We're talking sub 20,000 barrels per day each one. But as you add them up, they are part of that funnel that I referred to earlier, which when you add it all up, it gets you to the 1 million barrels plus per -- of oil equivalent per day at those sub-$35 breakevens. And so Peter, there are many of those opportunities that we continue to be able to bring into the portfolio. And to be honest, that create the most value for our shareholders at the end of the day. Anything you want to add, Sinead?

I think that was well.

Thank you. Luke, let's go to the next question, please.

Our next caller is Ryan Todd from Piper Sandler.

Maybe first, your operational execution, particularly in the Upstream and Integrated Gas business continue to be really impressive. If we think about it in context of the outlook that you've provided to the end of the decade and even beyond, you've laid out a plan that allows you to largely hold volumes flat to 2030, if you think about how well your assets seem to be performing and the success that you've had in getting more out of your existing asset base, particularly in places like the goal from Brazil, how does this inform your confidence in the ability to meet or maybe even exceed the plan that you've laid out?

And then maybe one on LNG. If you think about global gas and LNG demand in the coming years, you've been optimistic, at least over the longer term and the demand will respond at least at a price to growing capacity additions. LNG demand this year out of some of the big Asian players has been a bit disappointing. How are you thinking about global demand, particularly in Asian markets? And what are some of the moving pieces that you're watching there?

Thanks for that, Ryan. I'll try to address both pretty quickly. LNG, what I would say is, of course, you're going to go through the cycles. You saw strength in Europe this year. You're seeing weakness in Asia after quite some stock building and weather patterns. What are we looking at? We're looking at new supply projects and what that means for the overall complex in the latter part of the decade. We continue to see positive signals on transportation in particular, big marine shipowners are looking more and more for LNG as a solution and, of course, trucking.

And we're looking at what happens in the broader geopolitical space. Russia, how that plays vis-a-vis China and others. And so we are well positioned given the breadth of our portfolio of supply points and our multiple customer touch points to be able to navigate that space and, of course, to weather any storms while looking at the long term to build the portfolio that we think we can continue to lead in as the premier LNG player in our sector.

On the Upstream, look, we continue to make progress in our portfolio. As I said, I'm proud of the team, but I wouldn't, at this stage, yet say that we are at the full potential of this company. We still leave money on the table, and we are relentlessly going after that, whether it is in the -- in our turnarounds, whether it is in the reliability of our assets, whether it is in areas like water injection, we have more to do. And the more we can derisk that, of course, the less we need new molecules to be able to address the 2030 ambition.

I will not, at this stage, sort of make a prediction as to where we get to by 2030. But what I will say is I'm very pleased with the progress we're making across the patch to be able to deliver on that objective, and to start to position ourselves for the latter -- for the next decade as well. Thank you for those questions. We can go to the next question, please, Luke.

Our final caller today is Mark Wilson from Jefferies.

A lot of emphasis on allocating capital to the best return. So I'd like to ask you about the U.K. North Sea business combination and your forward plans with that? Is -- do you consider that an investment area? And obviously, combined with that expectations for fiscal changes in the U.K. and how strategic you see that U.K. North Sea portfolio?

Yes. I'd say on the U.K., firstly, excited by the Adura JV and hope that kicks off before end of the year. So good progress there. Look, at the end of the day, we have been very clear. When we invest in the upstream. We're looking for predictable and progressive tax systems that allow us to be able to make sure that the investment we are making is one that we can see the returns on. And the reliability of that fiscal setup is key to us.

Now what Adura will do is, I think it takes the best of both. It takes the best of Equinor the best of Shell, puts it together has a nice development runway with the projects that are already sanctioned, but also has a great asset base to be able to go for follow-up opportunities if the conditions are right. But the conditions need to be right to attract that marginal dollar of capital. And so without speculating on where the budget goes in November, we continue to be hopeful that the fiscal situation is improved. And at the end of the day, that predictability and reliability come to play so that we can make the investments that allow for indigenous production to be able to serve the needs of the U.K. longer term.

And just to add on that a while because the second part of that about capital allocation as well. So I think as we've discussed previously, the whole idea of capital allocation, you emphasized very clearly earlier, we have decisions on where we put the capital, whether it's organic opportunities, inorganic opportunities, whether we look to share buybacks, et cetera. And that decision criteria is key to us, the framework we use, which is really where Mark was going to at the end of this question as well.

So we do look at both the performance of the company in the quarter, but we also look at the macro and where it's going to as well. And of course, that's sort of the decision criteria when we look at the buyback versus actually putting capital to some of our assets as well.

We keep coming back to the fact that on a distribution policy perspective, 40% to 50%, as you said, is sacrosanct. And we want to remain within that range and that's what we will do. And of course, then we look at how do we fund it, whether it's the free cash flow or whether we are looking to lean on the balance sheet, as we've said. So we have a large range of different capital allocation decisions as we go through, but always focused on what we've said consistently, 40% to 50% of distribution is sacrosanct, and we look forward to growing the business as we can.

Thanks, Sinead. And thank you, Mark, for that question as well. I think we're at the end. So thank you all for your questions and for making time to join the call. In conclusion, we delivered a strong set of results despite the continued volatility we see. Our strong delivery this quarter has enabled us to enhance another $3.5 billion of buybacks. And as we close out this year, we will continue to focus on performance, discipline and simplification. Wishing everyone a pleasant end of the week. Thank you all again for joining us today.

Welcome to Shell's Second Quarter 2025 Financial Results Announcement. Shell's CEO, Wael Sawan; and CFO, Sinead Gorman, will present the results, then host a Q&A session. [Operator Instructions]

We will now begin the presentation.

Welcome, everyone, and thank you for joining. Today, Sinead and I will present Shell's second quarter results for 2025. Starting first with the broader external context, the macro continued to be challenging on multiple fronts against the backdrop of geopolitical and economic uncertainty, we saw knock-on effects on both physical trade flows as well as commodity prices and margins more broadly.

In spite of this, we delivered a robust set of results with strong operational performance while continuing to further our strategy and progress against the key targets outlined at our Capital Markets Day in March.

Let's start with cost, where we have demonstrated once again that we will deliver what we say. In the first half of 2025, we achieved some $800 million in structural cost reductions. This brings the total since 2022 to $3.9 billion, putting us firmly on track for our target of $5 billion to $7 billion by the end of 2028.

What I'm particularly encouraged by is the fact that the majority of these savings come from what we call non-portfolio reductions, essentially changing the way we work as opposed to costs that are taken out as part of divestments or other portfolio choices. We have delivered efficiencies throughout our operations in maintenance activities across our supply chains and in the corporate center. And all of this has resulted in cost takeout of almost $2.5 billion, which is more than 60% of the total structural cost reduction since 2022.

Now let's turn to our portfolio, where we've also made considerable progress delivering on our strategy to strengthen our world-class businesses. A major milestone for us was the start-up of LNG Canada in which Shell has a 40% working interest. Its strategic location on the country's West Coast brings feedstock advantages and greater marketing flexibility, including transit routes to Asia that are more than 50% shorter than those from the U.S. Gulf Coast.

At CMD '25, we said that we will grow LNG sales between 4% to 5%, and LNG Canada is expected to play a big part in that having shipped its first cargo in June.

To support future growth, we also took final investment decisions on projects in Egypt as well as Trinidad and Tobago. These will increase feed gas supply to our leading LNG portfolio over time. We also said that we would grow production while continuing to sustain liquids. And in the second quarter, we continue to do that, especially in our deepwater assets. In Brazil, we have some of our most competitive barrels in terms of operating cost and carbon footprint.

This quarter, we started up Mero-4 and agreed to increase our working interest in Gato do Mato. And in Nigeria, we deepened our interest in the Bonga field where we have been delivering top quartile operational performance.

At CMD '25, we also said that we would high-grade our Downstream Renewables and Energy Solutions business, which we have continued to do this quarter. In Chemicals, we completed the divestment of the Energy & Chemicals park in Singapore, and in mobility, with a value over volume lens, we announced divestments of our retail networks in both Indonesia and in Mexico. So despite the more challenging macro conditions, we have been able to make important progress on our strategy.

And with that, let me hand over to Sinead to provide some more details on our Q2 financial performance.

Thank you, Wael. In Q2, we delivered a robust set of results in what was a more challenging macro environment than Q1, as Wael alluded to. Our adjusted earnings for the quarter were some $4.3 billion, and we delivered $11.9 billion of cash flow from operations. Integrated Gas and Upstream both delivered strong operational performance in a quarter with higher planned maintenance, weaker margins and fewer trading and optimization opportunities.

Chemicals & Products faced another challenging quarter, impacted by continued weak margins and unplanned downtime in Chemicals and a lower contribution from trading and optimization, which saw oil markets experience a disconnect between market volatility and supply-demand fundamentals.

Marketing, on the other hand, recorded its best Q2 results in nearly a decade. Both Mobility and Lubricants had another strong quarter, with Mobility entering the driving season, benefiting from its portfolio high-grading, and an increase in premium fuels margin contribution.

Now moving to our financial framework. Our cash CapEx outlook for the full year 2025 remains unchanged, and we continue to prioritize the highest return opportunities. Given our cash generation and balance sheet strength, we're announcing another $3.5 billion share buyback program today. which we expect to complete in time for our Q3 results announcement in October.

This is the 15th consecutive quarter in which we have announced $3 billion or more in buybacks. And at the end of Q2, our 4-quarter rolling shareholder distributions were 46% of CFFO, in line with our target range of 40% to 50% of CFFO through the cycle.

And with that, let me hand back to Wael.

Thank you, Sinead. To summarize, we delivered a robust set of results in Q2 in a challenging geopolitical and macroeconomic environment. We remain focused on executing our strategy. transforming our portfolio and delivering on our key targets. We're confident that our strategy is the right one. And every day, I see the momentum building across our organization to drive performance, discipline and simplification in order to deliver more value with less emissions. Thank you.

[Operator Instructions]

Thank you for joining us today. We hope that after watching this presentation, you've seen how we continue to make meaningful progress on the delivery of our targets, while strengthening our world-class portfolio. Today, Sinead and I will be answering your questions. And now please, could we have just 1 or 2 questions each so that everyone gets the opportunity.

With that, could we have the first one, please, Luke?

Our first caller is Matt Lofting from JPMorgan.

A couple, if I could, please. I wanted to start with trading, but perhaps you could frame in the context of the more challenged environment that you referred to in the opening remarks during the second quarter, how you see the outlook 3Q and beyond on those trading optimization businesses? And if it's possible, perhaps break down the pieces between liquids and products and then gas in IG.

And then secondly, I just wanted to ask about the Upstream business. Another consensus beat in the second quarter this morning, something of a trend around that over the last 4 to 6 quarters. I wonder if you could sort of zoom in on the Upstream business, talk about what areas of that business stand out to you in terms of delivery and how sustainable you see that going forward?

Thanks, Matt. Let me start maybe with the second question first and then have Sinead, if you want to address the first one. Very proud of the way the team has been responding in the Upstream space. Remember, this is a high-graded portfolio. Over the years, what we have done is really focus on trying to increase our cash flow per barrel, really focus on the basins where we have an advantaged position. Most recently, of course, there was a divestment of onshore Nigeria that's added to that portfolio high grading that we have.

So what's the team doing? We've been very focused on going back to what we call the brilliant basics. And what we mean by that is just the blocking and the tackling that is required to be able to create value. It starts with reliability, availability, the operation improvements that we have, teams really getting into the rigor of all the operations we need. And you've seen that come through, not just in operations but also in maintenance. Second quarter, of course, is one of the highest maintenance quarters typically for us, and the majority of our turnarounds or maintenance activities have ended either on plan, on budget or slightly better. So really good performance.

I've also seen a lot of drive to be able to create that next level of competitiveness in Upstream. I was just in the U.S. last week and looking at the Gulf and our operations in the Gulf of Americas. A real focus these days on cost, how we optimize the supply chain, how we enhance our planning so that we are able to leverage a much leaner supply chain, whether it's shipping, trucks or the like. And all of it was much more of a value-focused mindset, while delivering safe outcomes. In every part of the Upstream organization, I'm seeing more and more of that. And that to me is a great signal of the culture change that we're seeing as we drive performance, discipline and simplification in the company, Matt. Sinead?

Indeed. And thanks, Matt. So with respect to trading, it definitely had a decent contribution for us across this quarter. So pleased with the results. You can't have sort of one homogenous conversation about trading because each of the segments contribute slightly differently. So let's take them one by one, which is what you requested.

So in terms of our Renewables segment, it's pretty much the norm. You always see it at the sort of level for the seasonality that we see. With respect to talking about normal, really moving on to LNG. What we see with our IG segment is really, this is more of the new norm. So this is where we're seeing volatility having changed coming out of the war. So we saw a lot of volatility around the time of the Russia-Ukraine conflict, Of course, this is more towards that norm. And of course, from our perspective, we have less volatility and a bit of a change in our portfolio mix as well.

Moving over to our products -- Chemicals & Products segment. With respect to Products, in particular, good results coming through. Traders doing well, being able to take advantage of what they saw there. On the crude side, it came through a little bit differently. So of course, we saw just a disconnect between what was market volatility and what we saw in underlying fundamentals and therefore, had a basically a prudent approach and chose to risk off slightly, which meant that we didn't have the same contribution we would expect to see coming through on crude as a quarter aspect.

And we would expect to see our traders being picking up as you run through the rest of this year. So that gives you a bit of a view across the whole of the trading segment, but looking forward to seeing what they can deliver for us as usual as we end out the year.

Our next caller is Lydia Rainforth from Barclays.

Two questions again, if I could. Firstly, on gearing. How much higher are you willing to take the gearing level? If we're at about that 19.5%, at $70, that might feel okay, but it does feel like [indiscernible] to that $3 billion a quarter buyback for more than 15 quarters. So at some point, you have to think about slowing that.

And then secondly, on the Chemical side. It will -- on planned maintenance here. So when I go back to CMD '25, [indiscernible] capital employed was a big focus and then big gap to close to get to optimal performance. So what's going on there? And is it proving a little bit harder than you expected?

Lydia, thank you for those. I'll, again, maybe start with the second question and then hand over to you, Sinead. On Chemicals, I think firstly, of course, the macro continues in what has been an incredibly prolonged trough and one that could potentially run for a lot longer as well. Of course, we're seeing the supply coming out of China, more supply coming out, but other parts of the world as well. So it just does mean that we're going to have to live with this reality for quite some time.

What have we done to respond to that? I think firstly, what we've talked about is making sure that we continue to focus on high-grading our portfolio. You've seen us move now this quarter. On April 1, we completed the sale of our Singapore Chemicals and Refining assets. And we look at also the opportunities to be able to high grade and selective closures in Europe.

We've also announced more broadly that we will be looking in the U.S. at what we can do, but that takes time. And we've talked there about the strategic and partnering opportunities. But that's one bucket that we've been looking at on the portfolio side and executing what we have said we were going to do.

I think the second bucket for us is also looking at what we can do in terms of self-help. We've been driving down the cost structure there. We've been looking at how we can optimize even further to unlock value, and that's helped us some. But the reality is it's just not enough. We are continuing to see sort of a negative free cash flow there. And so I have instructed the team to take the next level of measures that will potentially bridge that gap and move us closer towards free cash flow neutrality.

There are multiple levers we're pulling, but I think we have to move now to the stage where we have to stop the bleeding, and that is what we're going to be focused on. This will be something that the team is very focused on while we continue to drive the reliability improvements and the like.

And at the heart of it all, of course, is making sure the assets keep running. Shell Polymers Monaca, of course, has had a couple of good quarters. The last one was a bit more challenged. We need to make sure that we are running that asset at capacity. So more for us to do and more for us to deliver in the Chemical space, even though the macro continues to be very challenged. Sinead?

Yes. Thanks, Lydia. And with respect to gearing and how high will we go, let me take it a little bit differently and say how I think about it. So the thought process is very much about around the trade-off between value and risk. And it's that trade-off between buying back our shares at a very attractive yield, whatever metric you want to use, versus leaning on the balance sheet and any risk that comes with that.

Now of course, when your balance sheet is sitting at a gearing, as you say, of 19.1%, there's a lot of space there, obviously as well. And of course, you're talking about that attractive yield we just discussed.

Where we went to net debt, of course, this time, the gearing went up roughly just under 0.5%, which is about $1.7 billion equivalent. So what is it? What was in that? Probably worth unpacking that a little bit because what you saw was, roughly speaking, about $1 billion of inventory build, and roughly speaking, about $0.5 billion related to leases. So in other words, Mero-4 coming on. So you can see most of that net debt increase was actually about things that add cash and add value later on.

So I'm very comfortable with where my balance sheet is, very comfortable with where the gearing is as well. So what does that mean for us? It means that I need to focus in on what have we told you. We've told you about that 40% to 50% is related to basically our cash flow. That's a promise, that's a sacrosanct to us in terms of that return. So we're focusing on that and make sure we continue with predictability going forward.

Thanks, Sinead. I like that sacrosanct. All right. Lydia, Thank you for that question. Luke, let's go to the next one.

Our next caller is Martijn Rats from Morgan Stanley.

Two questions for me as well. Given -- this was a rather strong result in marketing. I was wondering if you could say a few words about what you think the state of global oil demand is because, of course, as the year has progressed, many of us have been expecting quite soft oil demand, tariffs, GDP below trend, mostly seeing downgrades to estimates for oil demand growth this year. But this was a strong result and refining margins are strong. And you see more than we on that. So I was hoping you could say a few words on that.

And then secondly, I wanted to sort of pick you up on the previous comment on the extended sort of tough market conditions in Chemicals. There seems to be, at least from my esteemed colleagues here in our Chemical team, some enthusiasm about anti-involution in China. To be honest, I didn't realize that, that was a term before, but there seems to be some measures on the part of the Chinese government to start shrinking excess capacity in both chemicals as well as in refining and that could perhaps remove some of that excess capacity. And therefore, I was just wondering if you had any perspective on whether that can perhaps, at some point, bring a bit of solus to the chemicals earnings.

Thanks for those two, Martijn. Let me pick them up, starting with your second one maybe very quickly. Indeed, I mean we pick up the same. But at the end of the day, what we can control is our own reality. And what we find at the moment is there's been a discussion on this for quite a few quarters now. It hasn't materialized. And this is why we needed to escalate our own interventions to the next level of levers that we have. Clearly, if there is a move in that space, it would impact the chemicals market and the chemicals margins. just given the scale of production coming out of China at the moment. So we will watch that with interest. But I'm not in a position to speculate, of course, on where it might go.

I think on the broader marketing and to your point around global oil demand. So year-to-date, we've seen roughly 1 million barrels per day of oil product demand growth. That's pretty robust. And it's being -- and that is despite some of the headwinds that we have seen, of course. We'll have to really understand what the impact of the tariffs might be in the second half of the year. Of course, we also have to keep a close eye on where OPEC+ goes as they continue to ease some of the production cuts that were in place. The other big question is how the U.S. responds, of course, to Russia in terms of potential sanctions that have been talked about.

That is a lot that I can't control, we can't control as a company. So what we have tried to focus on is what we can control. And really, the investment thesis that we are building, Martijn, is one that is trying as much as possible to be nonprice dependent. What do I mean by that? And maybe just a moment to unpack it a bit further. We have been in the sort of mode of one thing to transform the company for just over 2 years now.

And we have made excellent progress, right? I mean you've seen today our structural cost reductions in which the majority of our nonportfolio are nearing $4 billion. A couple of years ago, we thought we would be at $2 billion to $3 billion by the end of 2025, we're at close to $4 billion middle of 2025. That gives you a sense of the culture change happening in the company. We are really looking at how we are more and more disciplined in our capital allocation. You've seen that. You've seen that both in terms of the quantum and where our capital is going. You've seen us continue to drive operational enhancements in our business. That is what we can control.

Sinead has already alluded to the strength of the balance sheet, and that is another element that we can make sure we have strengthen as we go into choppy waters. But at the heart of it, what we have also promised is a 10% free cash flow per share growth between now and 2030 on a CAGR basis. The attraction of that is just over half of it is coming from buybacks. Again, something we can control. And then the remainder is coming from the transformation of our downstream renewables business, some of the OpEx cuts that we have alluded to. So a lot of it is nonprice dependent. That is what we can control and what we're trying to drive towards. And that, in my mind, is the heart of the investment thesis that we are trying to drive, all while we deploy capital to build that run rate for the 2030s and build that cash flow growth that we will expect into the next decade.

Thank you for the questions, Martijn. Luke, let's go to the next question, please.

Our next caller is Josh Stone from UBS.

Two questions, please. First, on the cost savings. You had great success at bringing down costs. And if I look at the numbers divisionally, it looks like the Upstream has been a big component of that compared to some other parts of the business, also matching some of your earlier comments on that. But when you look at the opportunities from now, where do you see the most room for further improvement? Are you running out of steam in the Upstream at all? Or is that still an area of focus?

And then second question on acquisitions. Last time, you told us you want to be value hunters and you've been connected with a couple of companies this quarter. So I'm interested to see how you think the hunt is going? And any comments around your appetite to do deals today?

Yes. Again, maybe let me touch on those, starting with the cost runway. As you said, Josh, I think we've made good progress. But as I said at Capital Markets Day, we started the journey with a top-down target. Where we are today is with a bottom-up reality. We are seeing a lot more of the cost -- structural cost reduction ideas coming from the shop floor, from the assets. I was recently in Malaysia. The offshore assets there have a funnel of 150 opportunities to be able to go after. They're going after each one of them. That to me is the change that I had been hoping to see and maybe it was surprised to the upside as to how quickly that materialized in the organization.

Where will the reductions come from going forward? Everywhere. Yes, Upstream has done -- has delivered, but it's important to recognize the Upstream is also the consolidation of some of the functional costs, the functions are on their own journey to simplify, to automate where we can't apply AI. There's a significant push for us to be able to go after the next wave of opportunities in our supply chain.

We spent over $40 billion a year, massive opportunities if we are able to standardize our requirements to be a lot more commercial in how we pursue that. And we continue to simplify the organization. We are trying to, in essence, deconstruct the complexity that we have placed on the organization and rebuild it bottoms up with much more of a risk-based approach in the way we look at how we do work. So I'm still excited by those opportunities. And I do see a line of sight towards that $5 billion to $7 billion of cost reductions that we have already signaled, we are going to be delivering by 2028.

I think on the acquisitions, I'd say not much has changed since the last time we all spoke. The bar continues to be high. As I've said in the past, we will make the appropriate moves at the right points in time when we see value. We've made 3 such moves in the recent past. We increased our operator -- our equity interest in Ursa, a platform in the Gulf of Americas which we operate. We've increased our equity interest in Gato do Mato in Brazil, a project that we operate. We've increased our interest in Bonga in deepwater Nigeria, an asset that we operate.

And so we have selectively used some of the flex we have in our capital budget to be able to build off those positions in areas where we think we have competitive advantages. Do we look at what's happening in the market and keep an eye on the opportunities? Of course, we do.

But as I said, the bar is high and that bar is as a minimum, competing with our own buybacks, buying back at a very attractive yield, our own shares in the market. And so our capital allocation thesis is one that is going to continue to be dynamic, that is looking at creating inherent shareholder value. I'm not trying to be dogmatic about trying to get to a certain target or otherwise. And that is what we will continue to hold on to.

Thank you for that -- those questions, Josh. Let's go to the next one, please, Luke.

Our next caller is Michele Della Vigna from Goldman Sachs.

Congratulations on the strong results. Two questions, if I may. First, I was just wondering if you could comment a little bit more on the resilience of your current buyback program to temporary lower moves in the oil price. Some of your peers are starting to show that if oil went to $60 or below, probably the quantum would change. How would you feel about that?

And then secondly, I wanted to come back to LNG. It was very helpful, the comment that this rate of earnings in the Integrated Gas business is probably the new normal. But I was wondering if you could perhaps expand a bit more into some of the moving parts for the next 1 to 2 years, including the contract expiries, the growth in LNG Canada, the unwinding of some of the hedges taken on during the Russia-Ukraine conflict and also what is probably going to be a more oversupplied LNG market?

Thank you for that, Michele. Do you want to touch on the first one, Sinead?

No, absolutely. So -- no, absolutely, thank you. And I think we've talked about it a little bit with Lydia's question as well. So we can look at it in different ways. So from a static point of view, where are we? You know as well as I do that we have a balance sheet, which is very strong. We're sitting at below 20% in terms of gearing. And of course, we can look at it from that perspective. And each quarter, we do look at how are we going to take a decision quarter-by-quarter. But we also need to look at it from a dynamic perspective as well. And we've got -- the reality is it's not just static, it is dynamic, and it's not just impacted by the macro.

Of course, what we have to do is -- and you've heard me say this a few times that we have to look through the quarter in terms of that cash flow volatility for that specific quarter. But beyond that, we have to look to the long term -- medium-term and long-term fundamentals. So are they going to persist or not? So where do we believe the macro is going to go?

That means, of course, that whilst I consciously have been repositioning the balance sheet in terms of its strength, we also have the ability to look at different levers, and those levers are quite broad. You know we have OpEx levers and CapEx levers, and we've discussed those, but there are other factors to consider as well. And those include things like the divestment proceeds from strategic moves that we've made as well. All of that allows us to have considerable predictability in terms of our results. So remember, we're at the moment in terms of that 40% to 50% distribution level, we're at 46%. In terms of gearing, we're at 19%. So I'm very comfortable where we are.

Do you want me to take the LNG one?

Sure, please go ahead.

Sorry, apologies. In terms of the LNG side of things as well, we've a little bit gone into it. Our thinking is where LNG is at the moment, it feels much more like the new representative of the norm. Why is that? There's a number of things there. We talked about volatility earlier and the fact that the volatility has changed. If you were to look back to 2019 and then look back to just at the war, you could see a difference, and we're now back to pre-war in terms of volatility. But beyond that, of course, there's a number of things that come into play as well.

There is the product mix that we have as well, and our product mix changes. So we have flat price coming through. That, of course, has dropped. You also see, of course, where are volumes are coming from. Some of those legacy contracts have rolled off, also so to some of the hedges that we have. So our portfolio mix is very key. And you'll see that change as we see some of the molecules coming in and the change in those contracts. So it's really about that portfolio mix.

Excellent. Thank you very much, Sinead. Michele, thank you for those questions. Luke, let's go to the next one, please.

Our next caller is Biraj Borkhataria from RBC.

The first one was on LNG Canada. There were some reports around issues -- some issues with the ramp-up. Could you just unpack that a little bit and let us know whether there's any implications for the timing and ramp-up of either Train 1 or Train 2?

And then the second question, just a very specific one on the cash flow this quarter. CFFO, the headline numbers were flattened by the one-off sort of cash return from the NAM JV. Could you give a sense of what we should expect going forward, whether it's sort of once a year and if there's anything penciled in for 2026?

Thanks, Biraj. Let me take the first one and then ask Sinead to address the second one. LNG Canada, super proud of the team. I mean this is a massive project. We brought the first part of Train 1 on stream. It's been running steady and stable. It's -- we're essentially churning out a cargo at the moment every 8 days. And as we progress the ramp-up of Train 1, that moves to 1 every 4 days and so on and so forth as you get into Train 2.

The ramp-up profile is very much in line with what we had expected. So indeed, I've read the article. I still scratch my head as to some elements of it. Suffice it to say, we are very pleased with the momentum that we're seeing in LNG Canada and the work that the team is doing there. And very much looking forward to, as we get sort of over the next month or 2 to start to see Train 2 as well ramping up. So indeed, excited by the opportunities that brings.

Maybe a couple of points around LNG Canada since we're on it. I think important to recognize the iconic nature of this project. We're talking about significantly shorter transit routes to get us to Asia. Of course, this is predominantly uncontracted volumes for us that allows us to be able to trade around that. And that's particularly important back to Sinead's point earlier, because we have gone back to the pre-2022 volatility and mentioned the fact that the earnings of this quarter are more sort of the new normal, it's important to have some of that optionality so that when volatility comes into the market, we can use some of these cargoes to trade around. But I do think LNG Canada is a critical part of our overall portfolio going forward and does, of course, create a bit of an offset for some of those advantage contracts, which have rolled off, as you're fully aware of. Second point, please.

Absolutely. And Biraj, you're correct in terms of the non-dividend. Just to remind you that what in effect has occurred is a 0 impact on cash. So in terms of free cash flow or net debt, 0 impact. But you're right, it did flow through 2 different parts: CFFO and CFFO ex working capital. So it was a working capital move as well. But just to make sure there's no flattery on our free cash flow nor on our bottom line in terms of the net debt. And ultimately, what will occur in the next year or so will be up to NAM as a joint venture to decide on dividends each year. So whether they go ahead with that, I can't comment.

Thank you, Sinead. Biraj, thank you for that. Luke, can we go to the next question, please?

Our next caller is Doug Leggate from Wolfe Research.

Wael, I wonder if I could ask you about the commentary around LNG. I think if I heard Sinead correctly, she said this is the new normal. But in your preview, you said trading and optimization will be significantly lower than Q1 '25. And obviously, there's a lot of questions over what the spot market could look like over the next 5 years. So what level of confidence do you have that LNG trading can come back to, I guess, what you would call normalized levels? That's my first question.

My follow-up is on cash flow very quickly, and that is, Sinead, you talk often about cash flow from operations, but you've got $2-plus billion below the operating line on interest and lease costs Where does that factor into your comfort with the buyback program?

Super. Thank you for that, Doug. Let me take the first one and then hand over to Sinead for the second one. I think -- so where is the LNG market, right? I'd start off with, of course, prices are now sort of steadying at around the $10 to $12 per million Btu. Again, roughly what we had seen in the pre '22 time frame. The volatility similarly is sitting in that space for different reasons, by the way. Today, we see, for example, strength in Europe. We see maybe weakness in China, in particular on the industrial demand side. So the way that those trades around the world are playing up is changing. But there is no question that the attractiveness of LNG as a versatile, resilient energy form continues to be something that's key, and we continue to believe that there's a very exciting runway for LNG growing by 60% between now and 2040.

But then let's get specifically then on what we mean by this is a normalized quarter. So given that we start to look more like the pre-2022 realities, at that level of volatility, at these price points, what you see this quarter in terms of trading is indeed much more of what the new normal looks like. Q1 had some real exciting arbitrage opportunities that played out. Hopefully, we see more of those in the future. What I'm trying to say is, at the end of the day, we have to be able to plan on the basis of what we see and then, of course, take advantage of the opportunities as they come.

As arbitrage opportunities come, we'll try to take them. But in terms of the baseline planning for us, we think this is more of a reflective quarter and it allows us to be able to then continue to position the portfolio for strength as we go into the coming quarters. There is more supply coming into the portfolio through LNG Canada, through Pavilion and so on and so forth. But remember, we've also lost supply, some very advantaged supply contracts that we had in the past. And that's what we're looking to be able to offset and over time, be able to continue to improve on. Sinead?

And on the second one, Doug, absolutely. Of course, I consider all cash movements into free cash flow as well. So whether that is just a CFFO bit, but of course, the CapEx impact, which obviously comes off that as well. And of course, anything that flows through from an interest point of view or from leases. So all of that gets considered whenever we -- just what are we going to do in terms of value versus risk decisions each and every quarter. And those lease payments that you referred to in there as well. I mentioned this one earlier, Mero-4 being one, but of course, there are more leases that come into our portfolio, like the one that I mentioned earlier.

So that is very much just a consideration that comes through. But of course, it's all about value. And of course, those lease payments are ones that actually generate future cash as well. So we utilize those underlying assets. So yes, part of the consideration doesn't change where I stand in terms of 40% to 50% being sacrosanct in terms of distribution, in terms of CFFO, and being very comfortable with where my balance sheet is now.

Thank you for that, Sinead. Luke. Let's go to the next question, please.

Our next caller is Alastair Syme from Citi.

Monaca, how far away are you from being profitable on this asset? And you alluded to potentially looking at JV structures and a strategy. Why does bringing in a partner help improve the performance of the business?

And my second question is on biofuels. I mean a year ago, you hit the pause button on the Rotterdam project. I'm wondering if sort of 1 year on, you've got any reflections on what you want to do with that project and indeed, probably your biofuel strategy as a whole, given that politicians still seem intent on raising mandates?

Thanks for those 2 questions, Alastair. Let me touch on those. On Monaca, what we have said indeed is we will look at strategic and partnering opportunities for the whole of the U.S. What we have reflected on is we have a terrific asset at that, advantaged in many ways, right? It's uniquely located in a part of the world where we are able to reach a significant portion of the customers that need that product. We have fiscal advantages there from the state. We have access to an attractively priced resource as well.

The issue is it's our only one, our only major facility. And that's why we said we're not the natural owner of that asset. Ideally, you want to be able to leverage that with 2, 3 other plants and create optimization opportunities as we do, for example, with our LNG facilities around the world, where we can meet our customer demands through different channels at different points in time, take advantage of opportunities when one plant is shut down to supply from the other one and so on and so forth. Not to mention the obvious synergies on costs and the like.

And so what we are looking at is, again, not dogmatically but looking at how we can unlock more value, having reached the conclusion that we are not the natural operator and owner of that asset. What I would say is, of course, the conditions in the market mean that it's not easy to be able to transact on something like that immediately, but we continue to have discussions, and we'll update you, of course, in due course as appropriate.

Little to say on our Rotterdam facility at this stage. We continue to review the options. Of course, we are looking at the backdrop of the market. We see it's a market at the moment that is, I'd say, challenged, challenged because of excess supply coming in from the U.S., from Asia, but also there's been some backtracking on mandates here in Europe. And so I think to what you implied in your question, it is a weaker market.

Having said that, this is one of the first levers you would look at for decarbonization and the desk that we have, the trading desk that is continuing to be able to source bio products and sell into some of our own shorts, which are in the mobility space does very well in this market. And so we are being selective around where we deploy capital to make sure that we continue to unlock value in a value chain where we continue to believe we are advantaged.

Let me pause on that one and go back to Luke, please. Thanks, Alastair.

Our next caller is Paul Cheng from Scotiabank.

Wael and Sinead, just curious that you haven't talked much about exploration. But in order for you to sustain the nickel production or maybe at some point that maybe that to even grow it, this is a depicting asset base. So do you think you have the right size of the exploration program? Or do you think that you need to step it up? And if you do want to step it up, where is the focus is going to be? And how big the increase may need to be in order for you to perhaps be able to use it to replace more of your resource?

Second question is on -- I want to go back into trading, but in a different angle. In the U.S., we do have a President, who love to trade day and night on many [indiscernible] and unfortunately, that often times, when he trades, they will impact the market condition. So from that standpoint, that's not really tradable. And when you guys manage your trading business, how do you take that into consideration?

If that means that you will take maybe a risk down compare that to previously and correspondingly, your future trading results, everything else equal will be lower than what it was in the past? Or that you think you will be able to handle and manage and doesn't really impact your future results and you don't have to change the way how you manage your trading operation.

Thank you, Paul. Let me start with the first question and then ask Sinead to address the second one. Exploration, I think our program -- our exploration program is rightsized at the moment. We went through a significant reset, I would say, of our exploration department, capability, the funnel because the hard truth is while we have had some good progress in certain areas, it hasn't delivered what we had wanted. So we have rightsized the spend. We have refocused. We have challenged ourselves to raise the bar on how we can deliver better results for every dollar we're spending in exploration.

The areas where we continue to invest in our basins where we have established track records like the Gulf of America, areas like Malaysia, like Oman, where we have also significant assets and more. And we also selectively look at opportunities. Of course, you know we have Namibia. There, we are looking at what others are doing, continuing to learn and positioning ourselves in case something interesting comes up.

And so our exploration portfolio, I think, is one now that is getting grounded into a better place. We have some exciting wells coming in the next, I'd say, 6 to 12 months, which I'm looking forward to seeing what will come out of that. While always recognizing, of course, exploration, we play the long game. But the levels that we are investing in, and I'm -- I think are the right ones, and I'm very confident in this reset that the team has now put into place. I'm very confident in the quality of leadership that we have, and I'm excited by the opportunities that are coming through. Sinead?

Thank you, Paul. You're really asking about sort of the impact on trading with geopolitical uncertainty and how we handle that, et cetera. So this is one of those moments where having a very high-quality trading team matters, and we do. Our capability, I do believe, is second to none. And that team has the ability to be able to focus in on what matters, and they will make the calls quarter-to-quarter.

They have fundamentally an excellent set of assets, which they can optimize around. And for them, it's all about making sure that we have those assets up and running and being able to provide the molecules that they can then optimize and put into the right place to take advantage of that.

And then secondly, of course, you have on the other side of it, their ability to make judgments, depending on whether or not they're going to trade around fundamentals or whether it's something else that's coming through. And what we've seen is they will make a different call quarter-by-quarter. But overall, we've seen the Capital Markets Day guidance at the 2% to 4% ROACE uplift in the medium term being held and no earnings losses in any quarter, that hasn't changed.

Of course, I talked about it earlier, in terms of crude. They made a call to be more prudent this quarter and to be focused in on the fact that they wanted to trade around fundamentals rather than being able to understand what that volatility was, which did seem to be based on fundamentals. And that was the judgment they took and we support them. So we're looking forward to seeing what they deliver for us in the next couple of quarters of full support.

Thank you, Sinead. Thank you, Paul, for those questions. Luke, let's go to the next question, please.

Our next caller is Lucas Herrmann from BNP Paribas.

A couple of relatively straightforward questions, or maybe one's a little abstract. But Sinead, to you, straightforward, divestments this year. Can you just remind me where we are in terms of -- well, let's start with you. Where do you think you'll be divestments for the full year? And where are we on things like Colonial and something you're expecting to come in at the present time?

And the slightly off the wall, Wael, is Zabazaba or OPL 245, I only mentioned it because a number of projects that have been sitting in the portfolio for a long time are starting to come to life. And I wonder whether that's something that one should be thinking about as well? That was it.

Thank you, Lucas. Let me maybe start with the second one, and then Sinead, if you want to address the divestments. Of course, we're looking deep into our funnel of opportunities. And it helps there, Lucas, that we have now really focused our portfolio, in particular, in a place like Nigeria, I think for everyone's benefit, the licenses and the blocks that you refer to are deepwater Nigeria blocks.

We are looking at opportunities within the deepwater space to continue to expand. Of course, you know we FID-ed Bonga North. There is the potential for the next phase in Bonga, what we call Bonga Southwest, which would require its own FPSO. That's something which is still work in progress.

There are other tieback opportunities, but there's also greenfield opportunities, like [indiscernible] and others which are in the area. OPL 245, of course, is one that Eni operates, and we will, of course, defer to them to come up with a plan for that opportunity to see whether it's investable or not.

But I think to your broader question, Lucas, we are -- in particular, as we see our well costs continue to be attractive vis-a-vis the competitors, as we continue to look at how we have simplified the funnel of project opportunities on the back of something like a Vito, Whale, Sparta, we're learning more and more have to be able to create more value with less resource. And I think we are looking at how we can apply that in different fields, including in Nigeria deepwater.

And on divestments, Lucas. So the thinking on divestments for this year was that, not that it was going to be a core part or a needed part of the underlying sort of financial framework. You can see that with the perspective of where we are in gearing. So for us, it was more about actually that sort of capital reallocation across the portfolio and cleaning up different aspects of it in line with our strategy.

So that's very much what we've been focused on doing. And you've seen that on a couple of things. You see it in our renewables portfolio in particular. So we've, of course, just announced a JV with -- in terms of Savion and [indiscernible] with respect to Savion. So you'll see some proceeds come through on that later on.

We also, of course, announced divestment of Inspire, which was a B2B -- sorry, B2C in the U.S. that needs to come through as well. But these are not massive amounts of money in the sense of the greater scheme of things, but it's more about aligning with our strategy. Of course, Bochum is already done, as you know. And beyond that, of course, there's some mobility and portfolio upgrading that we're doing, which is Mexico, Indonesia and of course, South Africa that still has to come through as well.

But again, it's less about the proceeds. It's more about taking things that don't fit our strategy off the books and actually being able to redeploy OpEx, CapEx, et cetera, elsewhere. Colonial is the one that's still to come. And that's hoping to come. I would imagine, we'll see what closes out, but probably in Q3, Q4. So we will see that come through before the end of the year and see those proceeds as well.

Thank you, Sinead. Thank you for the questions, Lucas. Let's go to the next question, please.

Our next caller is Irene Himona from Bernstein.

I had two questions, both on marketing. First of all, lubricants, I can see first half earnings are up substantially on flat volumes. So your unit EBITDA is up materially. I wonder if you can talk around what is driving that? And is it sustainable? And then in mobility, again, your unit EBITDA margin is the highest in a very long time. I think you referred in your space to better premium product margins, but mobility includes other things like convenience and e-mobility, et cetera. You no longer disclose those margins by segment on a quarterly basis. Can you talk around the different moving parts, please? And whether you anticipate the margin improvement to be sustainable?

Do you want to take it?

Happy to. So in terms of lubricants, well, actually just our marketing segment full stop did really well this quarter. Really pleasing to see just the change that's coming through. So specifically on lubricants, you're correct, margin doing well, which is that premium products growth. Very much the teams are pushing that and making sure we focus on where can we differentiate. Of course, we've also had stable base oil pricing. So that's helped a lot. OpEx is very much under control, and they are line by line, making sure that they reduce OpEx there and focusing on where it actually adds value.

In terms of mobility, which you asked about. Again, it is the premium brands coming through. We did take away the sort of breakdown because we weren't seeing that as being particularly useful. But in terms of premium fuels, it's up over 1% quarter-on-quarter. We're seeing Europe doing very well and Americas. The convenience retail is beginning to differentiate, but that depends on where you are. So it's different across the different areas. What I think is probably most key about that and the teams are doing in mobility is they're not trying to play the same aspects in each area. They're looking at how can they make the most money and extract the most value, and it's country by country, and that's what you're seeing come through. So slightly different tweak and strategy for each one of them, and it's playing out in the overall numbers.

And I'd maybe just add, I think there's more to go. I'm excited by what the marketing team has been doing. 2, 3 years ago, when we came together in CMD '23, we laid out a vision for that business. We reset the expectations and they have followed through on it and have pushed even beyond that. And I think there's more to do. But it's a great example of how we're going about trying to turn around some of our underperforming businesses.

I mean we were clear in Capital Markets Day '25, $45 billion of our capital employed is returning nothing at the moment or close to nothing. And so this is the opportunity for us. If we can truly unlock the full potential of those businesses, and if not, how we recycle capital, we allocate that capital to the higher-returning businesses, therein lies an exciting opportunity that we have.

Irene, thank you very much for those questions. Luke, let's go to the next question, please.

Our next call is Christopher Kuplent from Bank of America.

One quickly to mop up on the quarter, again, marketing. It's also outperforming on much less CapEx than you told us about as their budget at the CMD in March. So I wondered whether you can give us a steer on that, considering the very light run rate for the first half.

And then one for you, Sinead, and I can see your eye rolls already -- eyes roll already. The question around buyback, balance sheet, payout, I think you've given us many ways to show you're comfortable. But let me ask you a mean question. You've had, for a number of years, a 30% to 40% payout ratio and paid out above that. Can we therefore assume that if you stood above 50% that you'd still answer in the same way, pointing to balance sheet strength in that hypothetical scenario, of course?

Would you like me to take both?

Yes, why not take both.

I would never eye roll, Christopher, of course. So let me take them both slightly -- the first one, in terms of mobility CapEx. You're right, it's light on CapEx at the moment into the sort of middle of this year. What we've asked the team to focus on is really extracting the maximum return they can. They've had a lot of CapEx in the past and they now need to show that they can return against this. They also need to put the right opportunities to us to show the right returns, and then we're willing to release more. But 80% of the cash CapEx is into 10 key markets for mobility. So that focus is working, and you're seeing that. So let's encourage that to continue and be able to extract even more results from that.

So your second part, which was around the buyback and the comfort level around us. So you're right. I mean, we have moved from 20% to 30% to 30% to 40% to 40% to 50%. I am saying that 40% to 50% is sacrosanct. Where are we standing at the moment, we're sitting at 46%, as you know, in terms of that on a rolling 4 quarter basis.

You're asking specifically the question of, will we move above 50%? That's really what's underlying there. To be able to do that, we need to believe it's the best capital allocation decision for the quarter or for the company, actually, more importantly, and then in that specific quarter. And we've had that conversation a little bit. I've alluded to it earlier as well. That is a competition that we have, apts between Wael and myself, at the Board level, et cetera. Just thinking through quarter-to-quarter, what is that value versus risk decision that we need to make.

And of course, we look at the company performance. We look at the macro, and I said it before, short term isn't just the point, it has to be about what our belief is and whether that macro will continue to persist into the medium term and the long term, and we'll see what goes about that. So no eye roll, I promise. But I'm just saying to you, I do believe in the strength of the balance sheet, I will lean on it and we will make the decision that is appropriate for the company on a value lens.

Let me maybe help you, Sinead, because I think you've been asked the question every which way. What I would say is the following. The 40% to 50% that Sinead has described as sacrosanct is one that we have been very, very clear on. This is one that we're going to be committed to through the cycle. We're going to generate our free cash flow through all the improvements that we have talked about, and we have said very clearly that we will continue to preferentially allocate towards buybacks because we do believe that is the best capital allocation decision for us at this point in time. So we're absolutely committed to it. And you've seen us continue to deliver on that.

I would also say that we still have a lot more to unlock from this company. There is a lot more to come, whether it is from the OpEx opportunities that we see, which are moving faster than planned. We still, as I mentioned a moment ago, have unproductive capital that we need to be able to do better on. We still have businesses that we are looking to take to the next level of outstanding performance. Indeed, we -- I think Sinead touched earlier on some potential strategic divestments that we have coming through, which will bring in proceeds.

So we are in a position where we have the capital to be able to actually stand there and make some choices. And what we are looking at every time we take one of those choices is what is the best use of that capital to unlock intrinsic shareholder value. Again, not being dogmatic, but looking at, at that point in time, what is it? And at some point, we will be looking at more buybacks. At other points, we are looking at acquisition, as we've done with the last 3 that I've mentioned. Those are all the right steps at that point in time, but we don't want to sort of give a blanket answer other than to say, please trust us to allocate in the best way that we think is there for our shareholders.

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

Our next caller is Ryan Todd from Piper Sandler.

Maybe one on -- in the Gulf of Mexico or at least at Whale, the project, it looks like the ramp if that project went very well. Can you talk about this in the context of improving operational performance overall, but also maybe specifically in the basin, the Gulf of Mexico, which seems to continue exceeding expectations. How does that improvement and maybe even the change in administration play into how you think about opportunities for sustaining volumes or growth going forward there?

And then maybe on refining, distillate markets are really tight, which have been sustaining margins. Can you maybe talk about how you think about refining market dynamics looking into 2026 and whether your portfolio is now where you want it to be there?

Ryan, thank you for those questions. Let me address them. Very pleased with Whale ramp up. You'll recall we started with this template on Vito. We then carried it across to Whale, and we're in the process of carrying it across to Sparta as well. It's achieved nameplate -- Whale has achieved nameplate capacity within 5 months of first oil delivery, which is outstanding, right? The wells have delivered what we had hoped. The performance all the way through the project, whether it was the drilling of the wells, the construction was all very much as per plan.

I think to your point around the underlying operational performance, why is Whale different than maybe the old model of projects we had. We have looked as much as possible to be able to simplify the setup to really get much more rigorous in the way we maintain our equipment and not allowing for redundancies and the like, but really making sure that we are focused on delivering with the equipment that we have. I do think it is symptomatic of the improvement that we have seen in the Gulf of America across our asset base, by the way.

We're seeing it in everything from what we call, well reservoir and facilities management to producing more out of our existing wells and infrastructure. We're seeing it in the stability of our planning sequence when it comes to turnarounds and the like. We're seeing it in the cost structure. We're seeing it in the availability and reliability stats. So across the patch, this is starting to really become much more structural and intrinsic in the way we're driving the business.

A part of your question was also what all this means with the change of the administration. Clearly, with the Big Beautiful Bill, there is also now a much steadier lease sale schedule that's planned for the next 15 years to a year, which, of course, is critical to be able to keep these facilities full. And that gives me a lot more comfort that we will see that, that opportunity to continue to tie back to many of our facilities.

And with new hubs like Whale and Sparta and some terrific ZIP codes, that does mean that we will have many of the key hubs that allow us to be able to continue to bring new volumes in. So a good story and I think a great example of how performance discipline and simplification are coming to life. Sinead?

Sorry, I want to go to the refining, apologies. On refining, 2026. Look, the current reality is that, that market of course, went through a challenging period for the first half of the year. You'll have seen the July numbers and what you're seeing in strength with margins moving to double digits at the moment. In particular, it's diesel that is in short supply. Inventories are relatively low at the moment. So you could have a more robust market for all products for the second half of the year.

But it will all depend on where geopolitics goes. It all depends on where the tariffs impact will go. Where we sit, I mean, I think the portfolio we have is the portfolio that we think allows us to optimize as well as we can. We have the critical hubs in our portfolio, the Dutch hub, the German hub. We have Canada, we have the U.S. And those are the ones that we are optimizing around.

Our traders don't just depend, by the way, on the refineries. They depend very much on the flow of third-party products. They depend on our shipping length. They depend on our blending storage. It's all these arteries that are allowing us to be able to create value out of that market, and I think we are well positioned to continue to do that.

Thank you for the questions there. Luke, let's go to the next question, please.

Our final caller today is Peter Low from Rothschild and Co. Redburn.

The first was just on CMP. This was the first quarter without Singapore. I think in the past, you suggested that was a heavily loss-making asset. We didn't maybe quite see the step-up we might have expected in that division, given that dropped out. Was that simply a result of the issues of Monaca or is there any reason to think that the benefit of that disposal might just take a little bit longer to come through?

And then just say quickly on working capital. You had a build in the first half. In recent years, it looks like you typically have a bit of a seasonal release in the second half, particularly in 4Q. Are you expecting something similar this year?

So I'll be very short on this one, if you don't mind, Peter. In terms of -- the first one, in terms of CMP and Singapore, basically, it's just that we only completed in Q1 -- sorry, on the first month of this quarter. And of course, that has to play out. Obviously, the settlement amounts that always happen in any transaction, those flowed through in Q2 as well. So you will see that, particularly on OpEx really flowing through and some of the losses that we would have had later in the year. So we'll see some of that play out.

In terms of working capital, we did have a small build, as you say, it will depend quarter-to-quarter, it will depend on the opportunities. For us, what we use working capital for, it's about opportunities. It's the same as any dollar, whether it's deploying it for OpEx, CapEx, distributions, et cetera. We think through very carefully where we use it. And for our working capital, we'll make a choice as to what we want to do on inventory and what opportunities we see, and that will very much depend on market conditions.

So a quite difficult one to predict. Of course, we have given a certain amount to our trading team for them to be able to deploy, but we will have those discussions with them depending on the market conditions. So looking forward to seeing what they can come up with.

Thank you, Sinead, and thank you, Peter. And thank you all for your questions and for joining the call.

In conclusion, we delivered a robust set of results in a challenging geopolitical and macroeconomic environment. We continue to remain focused on executing our strategy, transforming the portfolio that we have and delivering on our key targets. And we're confident that our strategy is the right one to deliver more value with less emissions.

Wishing all of you a very pleasant end of the week and hopefully, a well-deserved rest for many. Thank you very much.