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Royal Dutch Shell Plc (NYSE:RDS.A)

Q4 2011 Earnings Call

February 2, 2012 08:30 a.m. ET

Executives

Peter Voser - CEO

Simon Henry - CFO

Analysts

Teplan Justalingram - Nomura International

Iain Reid - Jefferies & Co

Jason Kenney - Santander

Paul Stetting – HSBC

Alejandro Demichelis - Merrill Lynch

Robert Kessler – Tudor Pickering Holt

Jason Gammel - Macquaire

John Rigby – UBS

Martijn Rats - Morgan Stanley

Irene Himona – Societe Generale

Oswald Clint - Sanford C. Bernstein & Co.

Alex Murray - Analyst

Iain Armstrong – Brewin Dolphin

Mark Gilman - Analyst

Colin Smith – BTB Capital

Lucas Herrmann - Deutsche Bank

Jean-Pierre de Metien - Analyst

Peter Voser

Ladies and gentlemen, a very warm welcome to you all and also those who are joining by phone and on the web. We’ve announced today our Full Year’s results and we will run you through that but we want really to concentrate and spend most of the time today updating you on portfolio and strategy and discussing a new agenda for the next tranche of growth for Shell.

So, we will review what we have achieved since 2009 then let’s look at the gross agenda going forward and then the financial framework. And of course, there will be plenty of time for questions. You know this page.

The global economy and energy markets are likely to see continued high volatility; this is the interplay between robust structural growth in energy demand and unprecedented geopolitical events such as the Arab spring, the euro-zone crisis or the Japanese earthquake.

Shell has the scale and portfolio, choices to manage it through cycle investment strategy for sustainable growth. Innovation and a competitive mindset are at the heart of what we do. We have delivered the strategic drivers that underpin our 2009 to 2012 targets, cost takeout, continuous improvement and 14 successful project startups.

Our 2011 underlying earnings increased 37% to $25 billion and cash flow from operations excluding working capital actually reached $43 billion. Our balance sheet now has improved and has a position of 13% during and ends 2011 compared to 17% at the end of 2010.

Our improving financial position gives us room to announce a measured increase in both, our investment levels and cash returns to shareholders today. We offered some $10.5 billion of dividends in 2011, which is the largest dividend in our sector and about 12% of all dividends paid into (inaudible).

Our spending 2012 will be $30 billion net to support the growth program for the medium term with almost 60 new projects on the construction and in design and this investment is underpinned by new cash flow targets for the next four years up to $200 billion for the timeframe 2012 to 2015. So, this is an ambitious program and lots to do.

Now, let me start with safety and reliable operations that’s at the heart of everything we do. Our HACC key figures are trending in the right direction, for example, 2011 TRCF and the numbers of spills are broadly similar to 2010 and our fatalities numbers have declined. However, we still had fatalities and other incidents last year and operational spill volumes increased and so we have more to do here.

I’m satisfied the way our people actually responded to the incidents like we had the fire in Bookham, the gallon spill into North Sea and also the Bonga spill in Nigeria, but still there is no doubt we have to make further improvements here, we look at these incidents and take the learnings across our global portfolio with a continuous improvement mindset here.

Now, let me look at the overall development. Rapid economic development in non-OECD countries is driving sustained and long term demand growth for all forms of energy. Demand for oil and gas overall could rise by 40% by 2030. Now, and this growth will be kind of equal or equivalent to seven North Seas which will require huge industry investment. As many traditional basins actually in decline, the challenge is much larger, replacing declines of the one side as well as meeting demand growth on the other.

Regulatory and political uncertainties combined with challenges in the net market are adding to price and cost volatility in this longer term trend and we’re seeing local pressure points from things like excess refining capacity in the Atlantic basin and the supply bubble in the North American gas market.

As a result of all of this, we’re seeing strong volatility in our underlying quarterly earnings. Our highest quarterly underlying earnings in the last three years were $7 billion in Q3 2011 or more than 2.5 times our lowest quarter in Q3 2009. These are cyclical effects in a world where volatility has increased on both volatile macro and volatile earnings are now a fact of line and we’ve to deal with that in the industry.

Now in Shell, we’re dealing with this by staying focused on the longer term trends. Shell activities provide affordable safe and reliable energy supplies for our customers worldwide. We use conservative ranges and long term assumptions for project assessment. We plan inside a $50 to $90 range for oil and $4 to $6 for US gas.

After we’re investing for growth with a strong focus on exploration and continued portfolio build into resource plays like liquid rich shales. Downstream, we’ve taken out a lot of capacity in the last few years. Now, even to optimize this reshaped portfolio to maximize profitability. Hence, we’ll have some very selective growth themes.

When climate change, we see mitigation opportunities in energy efficiency and CO2 capture and storage as well as investing in themes like bio-fuels which have CO2 advantages. On the financial side, we’re planning for a balance between attractive payout for shareholders today and investing for shareholder value in the long return.

So, let me have a look at the performance in 2009. Our underlying CCS earnings have increased by some 115% since ’09 and cash flow from operations excluding working capital movements has increased 80% versus 2009 to $43 billion. We’ve been investing for new growths and selling down non-core positions in upstream and downstream.

Underlying oil and gas production has increased as we deliver our growth plans and refining capacity has come down by net 15% due to asset sales. And for shareholders, our total shareholder return was round 70% over the last three years, a sharp increase over a period and a competitive performance by Shell.

And as you can see on the next slide, the portfolio has developed tremendously in the last few years. We will show you how this fits together in a moment. We started up three really substantial projects last year, and you know them, (Italian), Qatar, GTL and oil sands. We went ahead with bio-fuels in Brazil. And we took FID on the floating LNG in Australia. This is all part of our large sequence of startups and portfolio moves in recent years.

So, this is my introduction and now over the next 45 minutes Simon and I will take you through a recap of strategy, what we’ve delivered over the last few years and Simon will do that then I’ll update you on the outlook and Simon will also make some comments on the financial framework and then we’ll open up for questions and answers with all of you. With that over to Simon.

Simon Henry

Thanks Peter and good to be here and seeing you all again today. So, I just got to update you on delivery against the targets that we set over the past few years and hope Peter takes you through the portfolio.

We sent out three priorities for everyone in Shell back in 2009 when Peter took over and in the near-term raising our game on short term performance, delivering our growth projects particularly targeted at the Shell and working on new growth options for the next wave of investment that will grow the cash flow further into the future.

We’ve reduced our underlying operating costs with the corporate reorganization 10%, you may recall against that 2009 baseline and we built a continuous improvement mindset inside the company. So now, cost saving opportunities for multiple smaller scale initiatives into the future.

Our free cash flow before the dividend payment was $23 billion in 2011, $16 billion after the injection into working capital. And, we declared $31 billion of dividend over the last three years. Our project delivery in the last two years has gone very well and combined with the higher oil prices that’s helped us to rebalance the financial framework to free cash flow and that underpins the dividend increase that we announced earlier today. So, we’ve worked hard to generate new options and we’ve launched new projects for medium term growth.

Few words on the quarter, the current cost of supply earnings, CCS earnings for the quarter including identified items was $6.5 billion. Excluding the identified items which are primarily gains on asset sales, the CCS earnings were $4.8 billion, earnings per share increased of 16% that’s compared to the fourth quarter 2010.

On a Q4 to Q4 basis, we saw higher earnings in upstream, but weaker results in the downstream. The earnings accruals were impacted by higher oil prices and cyclical pressures in the industry downstream margins. We also had warmer weather which does reduce gas demand quite significantly for us in Europe.

Our cash flow from operations in the quarter was $6.5 billion, it was just over $7 billion excluding working capital and the dividends in the quarter were $2.6 billion of which around $1 billion were settled with new shares under the scrip dividend program. We’re offering that scrip program again for the fourth quarter 2011.

Our buybacks for the quarter was $0.3 billion and they’re all under the program to offset the dilution caused by the scrip. Now, quarterly results are important, but they’re really only a snapshot of our performance in what is very much a long term business.

Since 2009, our upstream underlying earnings have increased by $12 billion, the upstream cash flow excluding working capital has increased $15 billion. Of course, as underpinned by our $50 per barrel increase in the oil price, we’ve had higher gas realizations as a result and we’ve also seen profitable production from the new growth projects and under contribution from new projects like Pearl gas-to-liquid continued to grow and will continue grow in 2012.

So, feel good about what we have achieved, the underlying performance and the underlying potential in the upstream just for 2012. In the downstream 2011 underlying earnings were $2.3 billion above where they were in 2009 and the cash generation excluding working capital was $2.9 billion higher. And 2009 was a low point in the downstream cycle and we’ve had the benefit of an upturn since especially in chemicals.

Refining, however, remains a very difficult segment for the industry and if anything we entered a down cycle across the board in refining again in quarter four. Now, we have restructured the downstream portfolio quite considerably in the last few years. We brought in some selective growth for example in chemicals and Bio-Fuels. And I think that puts us in a lot more competitive position and more robust portfolio than in downstream overall than we were a few years ago.

Our return on the capital in service that which is generating revenue today was 25% in 2011 and that’s an increase of 10 percentage points since 2009. It’s a satisfactory level of return. This underlying figure reduces by 9 percentage points to 16% when we take into account the fact that 30% of the balance sheet on average through the year was still not yet revenue generating under construction or all unproven leases that $60 billion of capital that will move through into revenue overtime.

Both the upstream and downstream segments generated surplus cash after investment over the three year period that you can see on the right. This free cash flow position combined with our capital spending, the dividend, the buyback program, they all resulted in a decline in the balance sheet gearing to 13% at the end of 2011 and that compares with the recent peak of 19% at the end of the third quarter 2010, that’s only 16 months ago. So, you can see the company is well positioned to fund both growth investment and also the payout to shareholders.

Now, capital efficiency is an important part of our continuous improvement drive. We sell down non-core positions; we reallocated the dollars into growth projects. We sold $17 billion of assets in the last three years alone. We announced exist from 800,000 barrels a day of refining capacity. On the marketing side we have completed the bulk of our program to get out to markets where we have a small presence and/or a limited growth potential.

So, delivering on our targets to refocus our downstream exposure and from here we are working to improve the underlying operating performance and to generate much better returns from this overall reshaped portfolio.

In the upstream we sold 120,000 barrels of oil equivalent per day of upstream positions, where we see others can add a lot more value. At the same time we have made $15 billion of acquisitions and that includes new acreage, this is mostly being recycling cash from the downstream into the upstream, buying into immature resource positions and growth markets where we have either technology, infrastructure synergies or other advantages that can add value for our shareholders.

These deals like the North American resource plays and for example Brazil bio-fuels, so overall, 17 divestments, 15 acquisitions that’s the equivalent of a midsized, mid cap oil and gas company that we have sold and bought in the last three years. So, good progress on capital efficiency. We expect asset sales and bolt-on deals to continue as part of just our basic business model.

Few words on resources, we will report our SEC reserves position in detail in the 20-F return as usual in the middle of March. However, we would expect to see the headline reserves replacement ratio all in on an SE basis to be around 100% and the replacement ratio on an organic basis just the additions during the year of around 120 % when we take account of the impacts of acquisitions, divestments and changes in oil price and allocation of resource in production sharing contracts.

In addition to reserves, of course we look at resources, a broader definition and that’s what we use to manage the business. We have a substantial oil and gas resource base in Shell. This chart shows you just the subsets of the total resources’ possession that is an active maturation today that’s around 32 billion barrels of oil equivalent or about 27 years of current production. This is where we put the focus of activity in the upstream. We look to commercialize these barrels and return what was what was exploration or negotiation or technology success into production and cash flow.

Shell now has some 12 billion barrels of oil equivalent of resources on-stream producing today. That’s an increase of 20% in only 12 months. It is the big project coming on. There is also $3 billion up and 30% up over the last three years during which time we have produced 3.5 billion barrels. And today, we have a further 20 billion barrels of oil equivalent of resources either under construction or in development design options and they as we mature them will drive the cash low further from the middle of this decade onwards.

Looking at our targets for 2012, we made good progress on both the key targets, production and cash generation. We are on track for an increase in production in 2012. The precise outcome for the year of course will depend on external factors like temperatures, the Nigerian security situation and the pace of investment in our onshore tight gas activities particularly in North America.

Over the past two to three years our project delivery and our cost management have gone well. We have delivered on all of the strategy milestones and the targets that we set when we first talked to you back in early 2010. We have been busy with asset sales in attractive market conditions with a strategic imperative to improve the capital efficiency. We have also seen changes in the external environment for example we have had headwinds on both production and cash generation from the moratorium in the Gulf of Mexico and obviously we are spending at the low end of our potential in tight gas in North America at the moment. If you put together the divestments the Gulf of Mexico and the onshore effect those impacts together since 2009 equate to around 200,000 barrels of oil equivalent per day of production or in fact a 100,000 barrels a day since we last spoke to you in March last year.

So, effectively means we are substantially ahead of the targets that we set ourselves both on an economic basis and underlying production basis although the headline figure may be somewhat lower as you can see. We have rebalanced to surplus cash, the key strategic driver behind the 2012 target. We had in 2011 $43 billion of cash from ops and the cash surplus after investment and after returns to shareholders. Now there is more to come on the underlying cash flows those 2011 projects ramp up, they need to get the full capacity, 150,000 barrels a day still to come during 2012.

At the current macro conditions and even with the net higher capital investment that we talked about, we would expect to be in cash surplus this year after the dividend payment. However, of course, the macro picture is very different today compared to the environment we envisaged in early 2010, oil prices higher, downstream in the US gas price or in the down cycle. So, we are moving on from these 2012 targets setting a new outlook for the company, longer term and they reflect the new realities.

So, with that let me hand back to Peter.

Peter Voser

Thanks, Simon. So, there is more to come on the CFFO side and also on the production. A list of projects now in hands to deliver this growth, we are moving on from these 2012 targets as Simon just said and setting a new agenda for the medium term growths. So let me update you on the strategic priorities and you will see we are keeping the momentum on the strategic drive, we have had in the company over the last few years.

As I said, we have over 60 new projects in and options today dominated clearly by upstream. As we deliver our new projects, I expect our cash flow to be up to 50% higher in the next four years compared to the last four years. We are up to $200 billion for the 2012 to 2015 time period.

Capital efficiency is a key part of Shell’s strategy and we expect some 250,000 POE per day of assets and license expiries over the 2012 to 2017-18 timeframe. We look to adopt the operating matrix as such as oil and gas production on the very long term basis and you can see the potential here if these impacts play out, an increase of 25% from 2011 levels to 4 million barrels per day absorbing the 250, which I explained beforehand.

So let me give you more details on these themes. Simon mentioned it, continuous improvement is embedded into day to day activities in the company. This is all about operating performance, controlling costs; implementing our strategy at the rapid pace. The opportunity set her e runs into the billions of dollars. Themes like improving our reliability in downstream, reducing our drilling times in tight gas and getting more from process or efficiencies.

This has one example, our Q4 unit operation cost at our Canadian Oil Sands have fallen by $5 a barrel compared to the same period in 2010 with continuous improvement, initiatives as well as our startup of key Expansion 1. We expect to take out another $3 to $4 per barrels in the Oil Sands over the next two years.

So, let me give you some more details on the portfolio that is driving the next tranche of growth from Shell. This is all about more energy in Asia Pacific, more deepwater and tight gas in the Americas and more investments in traditional and oil and gas place. I think if you look at Shell’s growth profile in the last few years, the investment profile was really dominated by 3 large projects which was Qatargas 4, Pearl and the Oil Sands expansion. There is an import shift in our project flow here now these three are on stream with 26 projects on the construction, which will open up another way for production growths. I think this is one of the most competitive portfolios of projects on the construction in our industry today.

So, let me update on some of these new projects. Shell continues to be the leading IOC for integrated gas that’s LNG and GTL and they expect to hold onto the possession to at least the mid of the decade. We have delivered new projects in Qatar as you know in 2011 and our LNG capacity is now 20 million tons per annum. The next tranche of LNG growth for Shell is coming from Australia is 8 million tons per year under construction which is expected to lift our capacity by 40% by 2017.

Prelude FLNG which is an industry first is progressing well, the Croxfield will provide part of the gas supply for Prelude and we are discussing with Nexus to take an 80% stake in Crux and develop an FPSO over there to commercialize the liquids content. We’ve entered to the Abadi FLNG project in Indonesia and in Lebanon is a 30% stake and we have bought Bow Energy which will allow us to increase to train size in Arrow LNG.

Overall, Shell has around 50 million tons per annum of new LNG options on the study. We’ve also made progress on LNG sales. With contracts for 6 million tons per annum of LNG sales signed in 2011, linked to oil markets and valued at $100 billion dollar at today’s prices. These are portfolio deals. That means the gas isn’t linked to any particular supply project.

Now, turning to the Deepwater Gulf of Mexico, This is an important region for Shell. We are one of the largest players in the industry here. The moratorium announced in 2010 after the spill that brings delays industry wide. The moratorium ended in 2011 and the new safety standards in the regions are pretty similar to the one we have at Shell.

The slowdown in the gulf is still having an impact on our drilling program but we are really regaining momentum here. The development priorities beyond the projects which are under construction are to launch new up class developments at Rechoa and Upo discoveries and you can see the time lines we are using there. We are also getting back to work on exploration in the Gulf of Mexico with at least five wells planned for 2012.

Now, let me turn to our heartlands. We have some large projects on the way in Shell’s additional heartlands. These are place like new oil in the UK Atlantic margin and new gas investments in Asia Pacific for Shell’s LNG joint ventures there. Much of this investment is non-operated it’s an important part of maintaining Shell’s cash flows from these profitable and long life basins. So, when you put all of these together we expect to see attractive growth in upstream in the next few years. I look for financial growth here, not simply chasing the barrels. And you can see the impact this is having on our production mix which grows in the Americas, in the resource plays and steep water and grows in Middle-east and Asia Pacific integrated gas. So, those are some comments on growth plans for the next few years and you can see we have some exciting projects underway here.

Now, before I hand back to Simon on the financial side, let me also update on some of the options which we are maturing so it’s a next generation of project options and long term investments.

Some 80% of our capital investments is going into upstream. We are also investing in very selective growths in downstream as well. As you all know, Port Arthur refinery expansion in the Gulf Coast is coming on stream during the first half of 2012. We are also working on new potential chemicals capacity in the North America and in Qatar which will be integrated with the upstream gas for feedstock.

We are investing in selective growths in oil products for example in China and continued momentum in Brazil bio-fuels. I think overall, we will continue to have a measured approach to downstream manufacturing, relatively small stakes in new manufacturing assets, building just one or two at a time and positioning for low cost advantaged feed stocks and market growth potentials.

So, let me now turn to options in upstream. We had five new exploration finds in 2011 including French, Guiana and more gas resources in offshore Australia. We are also working hard to add more acreage to our exploration portfolio. We look for acreage in established place, in frontier positions where the sub-surface is less well understood but the rewards are potentially very high. But the nature of the exploration is changing. With onshore resource plays in tight gas and liquids-rich shares which are driven by land acquisitions and drill outs alongside more traditional offshore activities.

We made a series of resource based deals in 2011 including liquids-rich shales in several countries. In total we spent some $6 billion last year on exploration activities and pulled on these during 2011 adding over 4 billion BOE of potential resources. Combining exploration and deals over the last four years we have added around 13 billion barrels of resources for some $30 billion or at the cost of some $2 to $3 per BOE.

Now, here you have got two examples of exploration appraisal progress in ’11. French Guiana, this discovery tested entirely new oil play. This oil discovery is a stratigraphic trap, it means that defining the edges of the reservoirs is complicated and this will need some careful appraisal. We think that in French Guiana the well confirms now over 300 million BOEs. We are planning two wells in this block in 2012 which have the potential to increase these estimates as we explore these new exciting plays.

As mentioned, in Australia we have continued to find new gas there with three successful wells in 2011, which could be part of future expansions of the Gorgon LNG project. Shell has a long track record in adding new oil and gas resources through exploration. Exploration has added around 15 billion BOEs in the last 10 years. Now exploration is still the lowest cost entry into new oil and gas and Shell has a global exploration program underway, the focus on large prospects in proven hydrocarbon plays, high value near field wells, resource plays like liquids-rich shale and tight gas and we make selective moves into frontier acreage positions with a set higher risk/reward tradeoffs. We stepped up our explorations spending in ’05 with positive results and we are increasing our commitment to exploration again in 2011 to 2012. So, we expect to see a 35% increase in core explorations spending in 2012 to $5 billion as we drill up our new acreage and continue to build new options.

Now this increase includes a step up in drilling in liquid-rich shales and continued investment in tight gas and CBM. Setting aside these resource plays , we expect to drill 20 to 25 key wells in 2012 compared to 18 in 2011 .The drilling plans covers both, wild cat activities on the one side and then high value near field prospects. So, that is why we are on exploration.

Now let me turn to some of the development potential that we have over the next few years. We have some of 36 projects on the drawing board for medium term growths. So, let me show you some of these. We have been working hard to build up Shell’s portfolio in tight gas and we have moved rapidly into liquids-rich shales. These are exciting themes for our industry, unlocking large resources positions, using advanced drilling technologies. In liquids-rich shales which is a relatively new play for us we are looking into our existing licenses across the world where we can produce oil from what the industry used to see as source rock.

What’s increasingly clear is that controlling our supply chain is going to be critical in tight gas and CBM. The wells joint venture we have formed with CMPC in China is making good progress. We expect to build 9 new rigs together in 2012 and ultimately to deploy about 40 rigs and support services like fracking on a worldwide basis for example in North America and in CBM plays in Australia.

This is very much the story of drilling up and commercializing the portfolio, building a longstanding and profitable gas supply business, interesting integration opportunities and building up liquids production. I expect to see total spending in these plays to be some $6 billion on a worldwide basis in 2012.

Development spending in North American tight gas will be around $3 billion in 2012 which is similar to 2011 and at the low end of our spending range of $3 billion to $5 billion per year reflecting obviously the weak pricing environment. We are moving to develop our Eagleford liquids rich position following successful appraisal there in 2011, part of just over $1 billion of development spending on the liquids-rich shales in 2012. We will also spend some $2 billion on exploration and appraisal in these themes this year is a focus of maturing our new liquids-rich portfolio which you have seen in an earlier slide.

We have quite some flexibility in how much we spend in developing tight gas and shales and spending could be in the range of $5 billion to $6 billion per year on a worldwide basis over the next few years including exploration of rigs $3.5 billion to $5 billion would be in North American gas plays. To precise annual spending levels will depend on near term pricing and obviously on our capital allocation choices overall.

Now, some of you may notice this we have been looking at ways to leverage Shell’s strong position in North America tight gas into value added product. So, Shell is assessing at the movement options for LNG Exports for GTL for gas-to-liquids and for LNG to transport. These are value chain projects which will very much play to Shell’s strengths as an integrate player.

Let me just stress, these are early days, we are looking into various value chain opportunities and it’s just too soon to say which one, all of them or none of them will go ahead. To precise timings and how we balance the opportunity between spots gas exposure and the integration will come.

Now, the one that we have launched is actually a small scale 0.3 million tons per year LNG to transport project in Canada, she is called a Green Corridor. We are installing a gas liquefaction plant at our Jumping Pound gas plant and the LNG fuel dispensing equipment at the Shell Flying J joint venture truck plazas throughout Western Canada. We’re at the same time maturing similar projects worldwide, for example, we are looking into LNG for shipping fuel out of Rotterdam and the LNG for trucks in China.

Finally, on options let me update you on Iraq. In Iraq, we are continuing this development of the giant Majnoon field. Now, let me be here very clear, Majnoon is a Greenfield project basically we started from scratch and rather different from the brownfields awarded to some companies in the first round. They are making good progress, although I have to say on the logistic side we had some challenges for the industry in Southern Iraq. We are taking the time to get this right and build it up and we are expecting to reach this commercial production of a 175,000 BOEs per day around somewhere during 2013. We signed the final agreements for our gas commercialization joint venture in Southern Iraq at the end of last year. This is a midstream gas deal, so no production entitlement and we plan to supply subsidized domestic gas to local power companies and sell LPG and NGLs at international prices.

The early stages of JV are all about upgrading and expanding the existing facilities, in the longer term we are starting a 4 million tons per annum LNG project likely to be a floating LNG to avoid congestions on what is a short coast line. As we mature this portfolio, we should be taking some 15 new FIDs in the next two years. All part of a strong pipeline of new projects to drive our financial performance into the medium term, we are maturing these and other options and we will launch new projects according to portfolio fit, profitability of these projects and affordability, which is of course, is partly linked to the development of oil prices and downstream margins. So this is an exciting portfolio, lots to do, we have it down the construction today and we have great choices for the medium term.

So, with that I hand over to Simon for more details on the financial framework.

Simon Henry

We have given the outlook for strategy and portfolio. So, I’ll spend a few minutes on the financial outlook that underpins that strategy firstly on CapEx. Our net investment in 2011 was $24 billion and that’s similar to where we were in 2010. We have taken 12 final investment decisions in 2011; last 17 over the past two years, so spending on these new projects is now building up and you can see the trend in the Q4 2011 figures. This will drive our net CapEx to $30 billion in 2012.

We have also taken on new portfolio options in 2011 and they will have an impact on CapEx too in plays like exploration, the Iraqi gas, liquids-rich shales and this will increase our feasibility expenditure costs for example in the new LNG and chemicals options. And you can see the main investments on this chart and we are putting the priority on a series of large themes, investment themes, well we get economies of scale through technology or contracting and procurement. Overall, in the portfolio we get the right diversity of political and technological risk and overall we get the right size of the portfolio, the material projects that we need to impact our own bottom line growth. And the returns on these projects are attractive for Shell and they’re attractive for shareholders, about 80% of the investment is upstream and of that 60% is in Australia and North America.

The portfolio of project that we’ve underway has an oil price breakeven on a net present value basis of less than $60 per barrel and overtime as these projects come on stream we are expecting that these attractive full cycle returns will translate into a much more competitive return on capital employed for Shell.

Now our Cash flow from operations was a $136 billion over the past four years, 2008 to 2011, during which the average oil price was $87. We are expecting cash flow from operations measure on the same basis, but $80 to $100 range to be some 30% to 50% higher than the last four years, that’s an aggregate around $175 billion to $200 billion of the two price extremes. Today’s downstream in US gas market is a clearly in the downturn, so in these figures we have assumed a return to a mid cycle downstream conditions under $5 Henry Hub in the outer years to give these projections, but we have got more conservative assumptions than the short-term.

Now this outlook, the four year outlook is underpinned by the ramp up of the projects that we have already brought on stream in the last few years and the new project startups that we have already looked at. Now we look at the free cash flow very carefully and there is no simple formula for what we choose to do with it. I expect instrumental CapEx, debt management and payout to the shareholders will all play apart. Well, I want to be clear that we see share buybacks primarily as a tool to offset the scrip dilution rather than as a primary route to return cash to shareholders.

Also I would like to be clear that we look at oil and gas production levels as an outcome of the investment decisions that we make on our long wave length basis over multiple years, they are not a primary strategy driver for the company. Capital efficiency is an important part of the strategy and we’re expecting over the coming years around a quarter of a million barrels a day of license expiries and asset sales. If those impact will play out then we would still expect to have production to average 4 million barrels of oil equivalent per day 2017 and 2018 that’s 25% higher than the 2011 levels.

Now, this chart maybe a little complex, but on the left hand side we’re showing patterns of investment of the growth potential in the upstream business. The dark bar is last year’s cash generation, the two blue bars, the historic CapEx and future CapEx. Now, we have been focusing our spending in Qatar and North America in the past few years and we are expecting substantial production and cash flow growth from these regions as a result. Ramp up of Pearl, Canada Oil Sands driving this.

Going forward we expect to see sustained high spending levels in the Americas and what that now includes the build up of deepwater and the Gulf of Mexico, liquid-rich shales and that’s offsetting a slowdown in the investment in the Oil Sands. In Asia Pacific we will be building up an Australian LNG and continuing to invest in the traditional heartland such as Malaysia and Brunei. So, cash flow there should continue to grow more quickly than production. So, overtime over the next several years I expect our Americas and Asia Pacific upstream cash flows to show significantly the strongest growth and that would reflect the higher spending level in both regions.

So, let me sum up just look at the overall financial framework. Our business strategy requires significant levels of capital investment through cycle and it is designed to grow earnings and grow cash flow through the business cycle. For 2012 we are expecting around $32 billion of organic spending, around $2 billion to $3 billion of asset sales. We continue to stream the whole portfolio carefully to optimize capital efficiency.

The spending levels that we see this year and into the future they will be driven by the choices that we make and the macro environment and oil and gas prices themselves are an important driver of industry costs as we see. Of course, we can afford to more flexibility on our spending levels in the up cycles. We must keep a conservative balance sheet underpinned through cycle spending and the dividend as per the policy is linked to the underlying financial performance.

With that let me hand you back to Peter.

Peter Voser

Thank you. Let me just sum up a few lines and then we can open up for Q&As and Simon will join me here. So, we have delivered the strategic drivers that underpin our 2009 to 2012 target. The global economy and the energy markets are likely to see continued high volatility. Shell has to scale and the portfolio choice is to manage through these short term ups and downs and the strategy is all about through cycle investments for sustainable growths.

Our financial position gives us room to announce a measured increase in both our investment levels and cash return to shareholders, spending of some $30 billion net in 2012 supports a growths program for the medium term with over 60 projects and options maturing 20 billion BOEs of new resources. And all of this is underpinned by new cash flow targets for the next four years to some could be up to $200 billion assignment set for the four years depending on the oil price or 30% to 50%.

I think an ambitious program ahead of us, lots to do. We want to invest like our shareholders do that means for profitable growths. So, we are on this journey now and with that let’s go for questions. Thank you very much.

Question-and-Answer Sessions

Teplan Justalingram - Nomura International

Hi, Good afternoon, I am Teplan from Nomura. Three questions actually, first is just on the quarterly numbers, clearly a difficult quarter in all products, but it seems that marketing and trading in particular were weak. I was just wondering if there were any sort of one-offs or you expect some sort of improvement into sort of 2012 in terms of marketing and trading. And secondly, just Simon you mentioned, like to startup and you got about 150,000 barrels per day to go in terms from 2011. Can you give us any indication of what the cash flow from Qatar and the expansion in Athabasca has contributed so far? And then thirdly, I guess this might be the last question on the financial framework, but I think you have outlined the financial framework and in particular its about the dividend, you talked about the dividend linked to business results, you also indicated cash flow from operation increasing up to 80%. But you are at the low end of gearing you talk about dividend growth in 2012. I was wondering two questions coming, how should one look at the dividend in terms of growth going forward in the context of what we talked about in terms of cash generation. I appreciate the capital investment is increasing. But, surely there is scope to increase that dividend by more?

Peter Voser

Okay. Thanks. I think I take the first one, you can take the second and you start with three and then I may comment on three. On the ’03 results and the outlook I think, we had the refining side and we all know the negative impact the refining margins across the world, I think on top of it clearly at Shell we have got three impact which were a little bit unique, one was we had on the 50 million charge coming from the Bukom fire which was in the quarter roughly Q4-Q4 $100 million effects-effect which were in addition to that and therefore I think the refinery results are actually in my opinion pretty much inline with what we have seen in the market. So, also third one we have no mid continent refineries and therefore the whole WTI versus the Brent kind of benefit which a lot of our peers actually had we just did not have. So, I think if you add the three back, I think you look at the refinery portfolio in a very similar way to the industry players.

Now, we had a perfect storm, after the driving season, the demand just collapsed, both in US but also in Europe, weak refining margin, over capacity, demand coming down, trading going clearly from Cotango in a back sedation so you had the whole chain actually being affected in a very short period.

Whilst normally on a marketing, trading and business thus kind of smooth out the big effect on the refining side, this quarter was just a perfect storm, everything was coming in. So, looking forward my assumption is clearly, we saw some recovery of refinery margins and do you have all these numbers already in the first few weeks. So, we will see where that goes. I am pessimistic on refining; it’s over capacity, new capacity coming on stream.

On the marketing trading side, I am more optimistic the way I see the rest of the year. But, I think we will see how this goes. But, the Q4 was real perfect storm type of example with integrated change really was under pressure in all the areas. I think, you give Qatar for numbers.

Simon Henry

Thanks, the three big projects what we have said on the production potential is total and this includes the first phase of Athabasca as well as 450,000 barrels a day. In the fourth quarter we were around 300,000 barrels a day. So, there is 150,000 more to come from that activity. As per 180,000 in Qatargas and 115 or so in Athabasca we had some downtime on the first part of Athabasca, expansion was running okay.

GTL was about 110,000 barrels a day. So, steady ramp up, still you can see quite a lot to come. What we said on the cash flow side contribution, $70 a barrel those three projects would deliver $5 billon dollars of cash in a given year because oil price was higher. But we actually drove it about just under $2.5 billion from those three projects last year, about $800 million in the fourth quarter.

I am being kind with you in terms of going out at the moment, we are not going to give this information every quarters we go forward. It is important in terms of the ramp up and you can see the potential we still have to come. So, if you want on dividend.

Peter Voser

No, you go in.

Simon Henry

Dividend, just how do we think about? I think we have to say dividend isn’t just the Christmas. It is some thing that reflects our long term strategic priorities and ability to pay the dividend.

I have been say, for now nearly three years, this is first time I have been able to announce a dividend. So, I am very please today.

Peter Voser

Same for me.

Simon Henry

Same for Peter Voser, Chief Executive. In 2009 you as investors were asking and quite rightly asking could we afford the capital investment program we had and could we afford the dividend we had, $10.5 billion. We took decisions to maintain both of those through the last three years. Remember credit crunch, how many of competitors led alone industry at large, half cut a dividend all their investment program in that three year period.

We start with both, investors are now benefiting both in terms of dividend growth and in terms of the underlying financial performance that we have delivered and the growth potential ahead of us because we maintained the investment program.

We are still the largest dividend payer in Europe last year, we may end up second this year. But, we will still be right at the top $10.5 billion plus and that is a very significant contribution and commitment from the business. And we should not forget either that actually re-investing the cash in the business is the best way to create value. As long as those are the right projects with competitive returns we will create more value over along the period of time but those choices. Peter.

Peter Voser

Just summering the policy at the end, we are looking at the growing dividend but as Simon said we will take a clear view on the long term options, which we have on how we can generate, lets say, value for the shareholders and we will therefore take our cash flow and earnings expectations into account.

I think, I am pleased where we are now. We have moved back into the growing the dividend whilst at the same time offering a lot of options. So, I think I am having actually balance sheet which is fit to face whatever the next six months will be.

I go first there and then I come back so.

Iain Reid - Jefferies & Co

Hi, it’s Iain Reid from Jefferies. Peter you showed the production breakdown by theme earlier of your 4 million barrels a day, I just wonder of that how much is North American dry gas and I wonder if you can give us some sensitivity if for instance North America gas price remain at least so and so level, how much would you cut off that 4 million barrels a day of what you have announced there?

And secondly, just coming back on the dividend, you say that dividend is not for Christmas but share buyback can be in the sense that you can turn it off and on to reflect the environment. So, I wonder why are you not, you know, you said earlier that share buybacks are not your preferred methodology apart from wiping out the scrip value. I wonder why it’s not the case because your peers in North America use that very extensively so and so. It seems strange that he has kind of taken one-off the table?

Peter Voser

I think on the gas side as we have said, we have a certain framework between lets say $3 billion to $5 billion dollars on what we could spent going forward at the moment, we spent at the lower end, we expect the certain price recovery later in the period as we said to enter the up five in the overall magnitude of 15. These all will drive our investment levels and therefore we will drive our production outlook for 2017 and 2018.

I would say today if the price recovers in the way I have just described, I think you will not see an impact on the four million barrels. I would also say if we lower actually the tight gas and shale gas investments, we will most probably switch some of their money either into liquids-rich shale where we get more oil exposure, lets say, 60% oil exposure 40% gas and therefore we would add barrels through that, or if you have more money being freed up, which we don’t want to spend in the US, with the options which we have in the follow and we have delivered more options that we think we can actually do ourselves. Some of them we will have to monitor. We could actually then develop that.

So, I think in the way I look from a macro picture, I think we will manage those four million barrels in whatever shape or form. The only thing I am not going to do is exactly x-gas because I don’t know how much gas there will be but we will go for the four million barrels.

Simon Henry

Thanks, couples of words on buyback, just to reiterate. It is our policy to use buybacks to offset the scrip dividend that means that the current rate the scrip take up around $3 billion per year.

We are not like our American friends and there are some restrictions on how quickly we can do this. We can only buyback these shares as a result of the withholding tax restrictions around the Asia and we can only buyback a quarter of the liquidity on any given day.

We have been running flat out and still only made a billion plus in the second half of last year and we are not going to do it when the market is not attractive either.

So, where there isn’t actually a limit on our buybacks this year other than how quickly we can do them, we have the cash available but policy wise, at the moment we don’t see by back as a major priority in terms to return to shareholders.

Jason Kenney - Santander

Hi, this is Jason Kenney from Santander. So, your cash flow forecast in the 30% to 50% increase depends very much on the downstream moving back to mid cycle earnings. And I am wondering roughly what you would be expecting to earn mid cycle earnings from downstream vision. And if you would say today’s kind of conditions what that percentage increase would be relative to the 30% lower level?

And then the second question would be, the sustainability of the integrated gas reserve which was quite special in the fourth quarter. I mean you have spoken about Qatar already, but are you willing to guide a bit more on integrated gas earnings for the next year over the medium term?

Peter Voser

It’s a mid cycle although they integrate to gas.

Simon Henry

The downstream $8 billion of cash generation excluding working capital last year, the capital employed in the downstream remains around $70 billion of which a lot is actually in the working capital, clearly we need to grow that both in chemicals and in the downstream and do better from the refining.

The figures we have just given the $175 billion to $200 billion are not particularly dependent on downstream even they’re full time 832 still quite majorities obviously upstream. So, it is not fully depended on downstream. It does depend on a pick up two there years out, but it is not significant contributor toward the growth that we expect to see compared to the 136 that we have just seen.

What is a reasonable rate of return what we previously told we have to get above cost of capital return on capital at the bottom of the cycle? We are not there today, our actual return were about 7% on a FIFO accounting basis. So, we know we need to do better. Some of the things we have talked about today of what we expect to help us get that.

Peter Voser

Thanks Jason. And I pretty much – that I will not give you guidance in terms of numbers for the integrated gas. But I think it is, you can really see the strategy coming to life with clearly bringing the integrated gas project on stream not just Qatar gas, bringing all the others on the stream.

Running the LNG business on a 90% long term contract basis, with roughly 80% oil price linked and I think these are parts of our strategy which you now will see obviously the earning coming in. And then don’t forgot GTL is coming into that line as well and therefore you will see growths that line assuming oil price roughly at the same levels you will see growth because GTL will just come more in 2012.

But very pleased about the strategic drivers there, it’s really, which we push as you have heard from the presentation. Okay, we will see.

Unidentified Participant

Thanks, you gave the range of cash flow outcomes on a $80 to 100 price range. How does your CapEx numbers look going forward on a range of different outcomes? And could I also ask in terms of the cash, sort of apportionment, you had a 3% increase in dividend for 2012, the 20 percent increase in terms of organic CapEx. So, is that, that’s preference in terms of, that how your cash will be utilized over the next four, five years?

Peter Voser

CapEx, you see what we have $30 billion for 2012 given the 17 FIDs which you have taken you have already seen in the second half that the CapEx was ramping up. So, we came down in the first half as the new projects came onstream and then we went down.

So, the CapEx for 2012 is really what we give as a guidance. Going forward I would just say, as we said we will structure our priorities also along the affordability line. So, quite clearly, if you are in an $80 world, most probably you wouldn’t expect that cost for CapEx to go up. If you are in a $100 world, we may bring more options in and we therefore could look at more CapEx going forward.

But I think this will be, we will play overtime and we will see how it develops. I think, with the cash flow outlook which we have given, we have enough buffering there to actually deliver the gross and we will have now for the first time and that’s what I said we previously we had three big projects driving our spend, now we are looking at much more and more flexibility. So, we can react also fast. Hence typically in the past I said when you go into these big projects you need an 18 months, 24 months kind of timeframe before you actually see lower costs coming in to your own capital expenditure.

So, that should happen a little bit faster and if you are in lower oil price world, you need to balance that. So, I think lets look at the 13, 14, 15 later when we are there. I think we have an ambitious program but we will optimize the cash flow clearly in such a way that we can deliver value, short, medium and long term to shareholders.

Simon Henry

Just on the dividends there, 2.5% dividend increase reflects the discussion I said before we reached the point where we can consider an increase again and we are very pleased and proud we can do that.

Organic CapEx, think of the relative return typically for every dollar of CapEx we spend, we expect back $1.30 to $2 of that present value. So, that’s how we create value and this is the quality that ultimately we should be judged against, how we choose to allocate that against the opportunities available to us. So, that is no mechanical calculation, there will be no mechanical calculation, there will be our reflection on a quarterly basis with the board does the underlying strength of the financial position of the company both in terms of ongoing financial ratios, cash generation and the balance sheet itself for affordability at any given time. Clearly, the balance sheet is much stronger than it was and can sustain in the current microenvironment the level of investment in divided we talked about.

Peter Voser

Next question?

Paul Stetting – HSBC

Paul Stetting from HSBC. You commented earlier about seeking capital efficiency, but if we take your financial framework it seems to me that the high end of oil prices, you are probably going to be net cash position towards the end of your planning position at period. With cash earning probably half a percent maximum, low-risk bonds earnings maybe 1% or 2%. That doesn’t seem to be particularly good return to shareholder. The area that you do seemed have some flex on CapEx it appear to American dry gas which it current prices as probably also zero return business on total very short lead time business. You commented at the buyback you’re sort of prohibitive or find it difficult because of the restrictions of your share structure, in the past when you share structure has caused you problem you done something about it, is the end of you can do it your share structure to at least give you a buyback as a weapon because at the moment it seems to me as that you trapped by it?

Peter Voser

I would like to give you all the assurance that we are talking to the respective Inland Revenues and governments to deal vis-to-vis holding tracks. It’s not that particularly easy time to talk about taxes. Nevertheless, we are trying and I’m not going to promise anything. I will just say that we are working on it if it comes you will see us go very fast into a one chair structure which then will actually give us all the flexibility which we need. So, we are working on it. It is no, its more a Dutch issue than it is a British issue and we are really working on it but tax and budgets at the moment are not an easy game so but working on it so.

Paul Stetting – HSBC

Everything you say is truthful.

Peter Voser

Yeah, absolutely.

Alejandro Demichelis - Merrill Lynch

Yes, Alejandro Demichelis from Merrill Lynch just to follow up on the CapEx. Should we be thinking that the $30 billion is the minimum that will allow you to grow? And then if you get that $200 billion of operating cash flow we should be thinking about a much higher level of CapEx?

Peter Voser

I think we have outline to you how we want to run the cash flow and how to grow them I just don’t want to be dragged in and now starting to predict 13, 14 and 15 I think its too early we have given you framework which would allow us to grow in such a way and I think if you look actually compare it to our competitors, if you take Chevreux and Exxon they are actually quite higher on that side. Start much earlier we could really harvest for a while and clearly our big spending. So, I think we will deal with this year and come back. But, I am pretty convinced that which we’ve outlined to you today, we can achieve these growth aspirations and can we do more, most probably yes. Well, the oil change and cost will go up over the next 3, 4 years if we are constantly on the $10 dollar oil price could also happen but I think then our cash inflow will also change so I think this is a dynamic framework which I just don’t want to go into giving you long term projections at this stage on the CapEx side, you want to add anything?

Simon Henry

No, not really other than the oil price does determine the unit CapEx cost through the cycle so oil price stays at 110 than you may have to spend a bit more to get the same outcome. This is question on the phone as well.

Peter Voser

Next one, phone. Thank you. Can we have question from the phone?

Operator

Thank you, sir. And the first question comes from the Robert Kessler, please go ahead with your question.

Robert Kessler – Tudor Pickering Holt

Good morning gentlemen. Good morning over here, I hope you can here me okay. I had three questions truly about the 2012 budget. Firstly how much of your budgeted for Alaska exploration and is there chance to my understood that budget for 2012. Second question is as the $5 million exploration budget can you put that onshore versus offshore right, I understand, of course, liquids directed and the community exploitation and delineation to gas and acreage drives the growth there in your exploration budget. But just curious, just the offshore piece of that exploration what that looks like year-on-year. And then the third question would be of the $6 billion 2012 downstream budget how much of that is associated with the completion of the Port Arthur project?

Peter Voser

Did I understand last one is how much of the CapEx in downstream is allocated with the completion of the Port Arthur?

Robert Kessler – Tudor Pickering Holt

Yeah. That’s the question, thank you.

Peter Voser

I will take one can you take 2 and 3. Okay, on Alaska and I think if some of you have more questions Marvin is, as he is camping in Washington on a regular basis, I think he will have a lot to say about that. We’re pleased with the progress so far, I think we’re getting the permits, we are doing a lot of work together with the regulators and these authorities to prepare the drilling campaign. So I cautiously optimistic that we will start to drill in July, August and September, we’ve a $10 program for the next two years and we are preparing ourselves for that. We’ve stepped up to go into that.

Now although, we have given to you today for the long term outlook with the short term outlook does not include Alaska. So, if you’re successful there, if you drill and we develop and we got volumes that would all be on top of it now I can tell you already, you will not get Alaska production before 2017 or 2018, it’s going to be most probably later.

But, this is not part of what you have seen here so. Also not exploration wise what we would spend the next two years that not in yet at this stage.

Simon Henry

Okay, the $5 billion of exploration, at the moment about $2 billion will go into onshore unconventional activity not all of that is North America at least half a billion dollars will be outside North America and China plus some of the plays that we showed on the chart earlier. So, imagine Turkey, Oman elsewhere. Of the $6 billion in downstream how much pulled off. Well answer is none really, it’s an equity associate, its already financed for the construction of Port Arthur which is beginning. Some of the units are already in warm standby and we are seeing the units by the middle of the year they should be on full production. So, no further capital injection to Motiva required. Okay.

Robert Kessler – Tudor Pickering Holt

Thanks for that – I mean of the $2 billion that are how much would that have been for 2011 for the onshore spend?

Simon Henry

It was quite a bit high because there is a lot of acreage acquisition, you just sat of actual activity is probably about the same. It was 400 or so in China the rest in North America but with a significant shift what the activity is from gas to liquids-rich and in last year in particular quite some significant spend acquiring the acreage that the Peter has referred to.

Robert Kessler – Tudor Pickering Holt

Okay thanks go back to the backend and come forward to join after so.

Jason Gammel - Macquaire

Jason Gammel from Macquaire. Given the prominence of tight oil in the capital spend program moving forward in the Eagleford in particular, I was hoping you could let us know what the existing production was in the play and how much acreage you have in the Eagleford if possible broken down between black oil condensate-rich gas and dry gas? And that so much detail just give more afterwards and second of all on the Motiva expansion. We know what the incremental distillation capacity is should be able to share with hydro cracking and coking capacity that’s being added at Motiva are?

Peter Voser

First of all I think second one I need to check. I’m not sure so we will get the number two you so. You want to take the first one.

Simon Henry

Yeah Eagleford overall most of our liquid activity today is on Eagleford is a little bit elsewhere (Utacurran) and Canada but most of its Eagleford about 14 rigs quarter million acres, 250,000 about 60% of it is condensate-rich that’s where we are focusing the activity this year is that right? Marvin.

Jason Gammel - Macquaire

Thanks.

Simon Henry

So, on Port Arthur I can’t give you hydro cracking update specific on capacity. John.

John Rigby – UBS

Thanks John Rigby from UBS, two questions one on exploration and one sorry again on the buyback. On exploration it seems to me over the whole cycles and issues they report last decade one of the things you needed to fix was exploration I mean that was one of the problems you ran into it seems to me and $5 billion is big number and so and I guess one of the issues of exploration you don’t be turning it off and turning back again because you want to people deployed and you want expertise and so on. So, as you look at going forward do you have the pipeline of opportunity to keep level loading that exploration through the next 5 or 6 years at the same rate as you are doing in 2012? I guess this is the first question and then if I look at I think you quoted some cost of resource adds which I think was a mix actually of acquisition and exploration, but if you do quick bit of mathematics it would suggest that you can probably self support yourself at $5 billion on resource adds organically is that true? Is that an aspiration internally to do that and the second point is on the buyback you said you try to everything you could to give yourself the opportunity to do buyback if that was possible, which will leave the one thing you could do is stop doing the scrip dividend which would give you the opportunity to buy back start either not buyback stock at all and therefore you would be flat and then start to use that cash to actually reduce your share initiative is that being something you talked about?

Peter Voser

Okay I think on the -- you take the second one, I’ll try to first one so. Yes indeed it was to make sure we did acquisition in the exploration, we have all the said where we can and we want to some niche acquisition were part of the game. I wouldn’t rule that out going forward. The pipeline and then having the right people, having actually to structure, we reviewed this extensively in 2011 in order to make sure that if we step up the spending like we have done a few years ago in 2005. But, there we have the people but we also have connection to people to mature. The barrel through the hydrocarbon maturation funnel and that's exactly what we have now tested and checked. And I think from that point of view, we could go on two days.

The other thing which I said earlier on which is I think important to understand, not everything needs to be developed in Shell. We have done this in the past, we are good in finding and de-risking but then comes decision if you do it or if you monetize at that stage and we have done that in the past. And then, I would not rule out that but I want the options which we can generate in order to grow longer term with our organic growth plus strategy through exploration and that’s what we are really driving here.

So, even if we find things we de-risk it we can form down, we can completely monetize and we have done both. And it’s actually also you need to think through resources from change in the whole industry. Another staff is driven today with global partnerships where you need to have international access to get access to resources in the certain country or you do like -- we do with CMPC and having actually things on a 100% on your basis on the exploration side you de-risk it gives you actually quite a bit of trading chips, which are quite useful and things you need in order to diversify your portfolio going forward as well.

So, actually the exploration guys they normally get a gross target minus so they have to prove to the two of us every year that they can monetize because that’s the only way you can actually keep them pushing to spend the money in the right way and Marvin can sing a song about that because that's how he gets his budget approved. So, he always has to come back and show how he can monetize this as well.

Simon Henry

Okay, thank you. One other thing on exploration that one which you think would be invited deliberately it’s actually quite difficult to be specific with you now as the nature of the business is changed. We used to drill wells and add resources we now have this big resource business, onshore business. This year we will drill 20 to 25 key wells maybe another 25 or so traditional type exploration wells and 250 or so onshore it’s an order of magnitude bigger in terms of activities. So, I’ve given you number of wells with traditional metrics is quite difficult as even difficult for something comes we're now in about comparing with really are offers and payers opportunities. So, we trying to help by saying actually sometimes you acquire a company sometime you require acreage then you need seismic and drill it. With, all the cost together the last four years $30 billion and 13 billion barrels not include these resources and doing a acquisitions. So, that’s the best overall view we can the what is cost to bring barrels in. Sorry, but it's an important point and I don’t want you to think that with dodging and weaving.

Buying back the stock clearly the answer is yes, but again the scrip dividend is part of the long term policy to our shareholders, some of our shareholders like it clearly 30% absorb being taking it up. We don’t want to switch it on, switch off for short term reasons. If I would start with no doubt and cash piling up then I think we would have that discussion. But, as of today we are not. So, it’s not something that we’re looking at it at the moment.

Peter Voser

Good, thank you next question?

Martijn Rats - Morgan Stanley

Hello, its Martijn Rats from Morgan Stanley, I have two questions. So, one relates to production. You're talking about 4 million barrels today so if you see it’s very encouraging one but at the same time the industry has a history of missing that, right. And therefore, I'm sure you must have considered that when you set that target. Therefore, I wanted to ask is this is a very significantly downward risk target, of course actually some upside function in this still. So, I was wondering if you had any thoughts about that?

Peter Voser

To show and answer is that I don’t want to burn my fingers. So, that gives you the answer.

Martijn Rats - Morgan Stanley

Okay, fair enough. The second question relates to the comment just made that every dollar in CapEx creates 1.3 to 2.3 dollars in value. That's an interesting one because at the same time Shell like many other large hold companies has not traded well below net asset value for many, many years. And I think you do pull among most of us the discount could easily be something at 40%. If you apply that 40% discounts to that 1.3 to 2.3 figure roughly get back to a dollar again. And therefore you could say a dollar in CapEx in stock market value creates a better door and therefore there is no net sort of positive impact on value at least from a stock market perspective. Now, you can say well maybe the stock market might now be efficient, that's not a prevalent. And at the same time I was just wondering whether this is something you would be considering when you are setting as CapEx plans and when you truly have the right trade or between the dividend growth and the CapEx plan.

Peter Voser

Okay, he can explain it and I can till tell you these discussions are quarterly discussions, not just among the two of us but also with the Board. So, this goes around our head so under that the value got which we see I have actually related to my top 200 leaders back in November and took them through the logic of the value gap which we still see in our stock and it’s about time now to go off to these things. And we have an outline of various processes which we go through and projects not just growth but also underlying assets to prove that our assets can do more. So, this is very much also how we drive out performance inside the company not just when we think about on dividend structures and fixed structures etc.

Simon Henry

I said, $1.30 to $2 that we would expect to get. With $2.30 I’ll be very pleased of course. And the key thing is indeed embedding that thinking in the organization and there are three people in the audience actually; Marvin who spends most of the money, (Martin Bedslar) who actually looks after Malcolm’s money and Ruth Cairnie who is head of strategy who actually helps me decide who gets the money in the first place.

On all of them the individuals their targets they are expected to know what they need to do to close the gap that you refer to. I think we say then that there are one or two big explanations. One of them is your ability to deliver value from the current assets. Continuous improvement, operational excellence and just do that better than anybody else the return capital. We know where the gaps are. We are working on them and all our asset managers are with us on this. What work do they need to do.

The second thing is the capital that we invest we need to compensate amongst others that it really is going to deliver that much value and unfortunately 10 years ago we lived in a trust me world. I could stand here and you would not believe me. We now live in the show me and verify and prove it quarter after quarter world. So, we know and we’ve been saying for sometime you need to judge us quarter by quarter as the current projects come on, show the quality of the current projects and believe that the new projects, the Gogan, the Prelude, the On-shore gas, the Deepwater are going to be as good as the current wave.

And then you got to believe we can replicate it and grow over time with the new opportunities. That’s what the strategy is built around, that’s how we play it internally and that’s we fully accept, we have to prove it, we have to show it quarter by quarter which is why in the fourth quarter is a kick into the system. We know what the impact is both on external perception and what we need to do internally.

Martijn Rats - Morgan Stanley

Come back to you afterwards. Oh, I forgot, I’ll come back.

Irene Himona – Societe Generale

Thank you. This is Irene Himona at Societe Generale. Coming back to the dividend if I may, so two questions, first of all you have a new dividend policy or you introduced a new policy back in 2010 and today we are seeing the first increase since ’09. Prior to you coming in the pattern used to be an increase in the Q4 dividend leaving the subsequent three quarters flat. Is there anything to read in the fact that you now increasing the first quarter dividend for next year related to that is the word you use in relation for the dividend which is affordability, I mean clearly there is no each affordability today you have 13% gearing and there would be no issue affordability your mid cycle scenario when you are net of cash. What is the stress case that the board is concerned about over the next 6 to 9 months that might indeed create an issue affordability?

Peter Voser

As I was CFO during that time I think I take the first one. As far as I remember, but I am happy to check you’ve always announced maybe JJ knows that – you always announced in Q4 for Q1 so we have no change this time so but that will check back that’s the policy at least I have used maybe earlier it was different but I think that we have used over the last few years is that right.

Simon Henry

Okay

Peter Voser

But I will still check so if I had one year where I didn’t follow that pattern so much you know I think.

Simon Henry

So, don’t read too much into the timing but it is a quarterly discussion we don’t only discuss it until the end of January. What was the stress case, what we heard about well we’ve be pretty resilient against anything going to $70 to $80 for a period of time. How long that period might be that it would determine house rest we might get but that’s not really the point what we are looking at is once you increase the dividend we don’t want to keep, all we going to pull it back again. So we have to be that much more careful about going up in the first place. We still think it represent pretty attractive payout than for the shareholder and still 40% in our earning last year so its not an easily covered dividend in the event the price comes off and we need to get balance sheet in the better place but the rating agency is also bit tougher than the once where that AA rating means lot to us so its all of those things we balance and they wouldn’t want to give oil price case but you know we look at 50 to 90 on the range and I’m not sure we see right at the bottom of that one over the next 12 months, but we could certainly see it in the middle of that range.

Peter Voser

Could come to you and then go back somewhere there.

Oswald Clint - Sanford C. Bernstein & Co.

Hi, Oswald Clint, Sanford Bernstein, just want to focus back again on the liquids-rich shales and lot of comments made by them, you got 15 liquids-rich shales globally just wondering are those the top 15 that you find within the screening process and how do you, they’re in the exploration do you think that these like exploration prospects whereby one in four, one in five of these will be successful so how should we think about that and then secondly I guess related to the four million barrels in 2017 maybe if you could talk about the decline rates in this production that’s embedded with that maybe with that context of today’s decline rate what it will be in 2017 and maybe actually what it was five years ago. Thank you?

Peter Voser

On the second question, we always used 4% to 6% and we have been in that range for a long time and we are not going to give you 2017 number but that’s the range which we have used in that sense.

On screening and adding it is clearly something which we are pursuing on the worldwide basis and we have given you some insights and the screening or the prioritization has not finished, we are working further on potential opportunities. And then, I think we have given you today what the potential is in all of these place over the longer turn and I think I leave it at that at this stage before we go deeper basin per basin or prospect per prospect but this screening exercise and the adding exercise is still ongoing and we will be forced coming during 2012 and 13 when we actually add more acreage but I can just go as far as saying that in our existing acreage across the world and license as a permit we have got quite a high number of potential possibilities and we are looking at them. Some country are further advanced and some others. I think we are very much advanced in North America and in Latin America as we went into Argentina, we are looking at Colombia, we are looking at other areas, US and Canada, I think in the rest of world the pace has been somewhat slower but is now picking up.

Simon Henry

Just start comment on the decline rate if it helps this is another area that goes lesser you to translate in a single headline number again because the unconventional that you have no decline to keep drilling or they have enormous decline if you don’t so take that piece of portfolio out that depends on how much we spend. The rest of the portfolio still in the 4 to 6 range but it got closer to fuller than 6 then it used to be. So it’s back to then it was because of the amount of long life asset in the portfolio that’s the shape of the portfolio is changing overtime. Today’s unconventional production less than 10% it could grow towards 20% and then what I just said start to make much bigger impact on decline overall.

Peter Voser

Okay, one on the line on the phone.

Operator

Thank you, we have a question from Alex Murray please go ahead with your question.

Alex Murray

Hi, good afternoon everyone, thanks for taking my questions. First question, could you elaborate a little bit on the economics of the gas project and in particular will it be possible only things to the LNG part of the project always a domestic gas (inaudible) as well. And second question, coming back to prior comments on buyback and share structure, would you consider simplifying the share structure by merging your two classes of shares or keeping only one then? Thank you.

Peter Voser

Thank you Alex for the question and the second one the answer is yes, if it is holding taxes so often, we would go rather faster or sooner than later into one’s share structure. But we need to sort out the tax issue there. That’s something which we try to do back in 2004 when we brought two companies together, but we haven’t been able to do it so far.

On the Iraq side, I think we look at this project in two stages and therefore we look also to profitability and post parts are profitable. So, the first one is what we are doing now which is domestic assets export of LPG etcetera and then the second one there could be longer term an energy play, but the longer term is quite a few years down the road and from that point if you have been clearly focusing on the first part of that first part have to go and pass through our profitability hurdles which we are have internally in the company. So, we are now looking at one big project by one part is really an option for the very, very longer term.

And thanks for the question. And then I think one left, yeah?

Iain Armstrong – Brewin Dolphin

Iain Armstrong, Brewin Dolphin. Do you have an implicit assumption that there’s going to be a well established export market for LNG in the US given you put in so much money into Shell gas? It strikes me that everyone’s trying to do this. You put in money into a market which is already in surplus with the assumption that the gas price is going to get higher. Are you making some assumption that US GDP is going to suddenly accelerate over the next few years?

Peter Voser

No, I do agree there’s too much gas around at the moment. And I think that’s why we say we look at possibility to change to hanging up exposure into liquids exposure and I gave you a few examples. I think I would also distinguish between the US and Canada. So, if I look at Canada, I would see the export of LNG through the western Canadian side as something which will happen and we are working on that with our partner CMPC, Mitsubishi and Cogas.

So, I think that’s an option. I think you will also see some exports coming out of LNG of the US, where I still believe that this is going to be limited, given the fact that there is potential to generate actually more out of that gas locally. So, gas to liquid, gas to chemicals which will actually use the gas and produce the energy inside the America less dependant on imports more jobs generating capabilities. And I think whilst I can see is some LNG plans will go ahead. I wouldn’t think that these exports will be at such magnitude that they will have impact on the global market point one and point two, I think it will be limited in capacity because I think the more value chain integration will actually happen in the US.

So, bringing petrochemicals back into the US is certainly a theme of the politician, every businessman in that part of the industry is thinking about and is interest to point out. Thanks for the question.

And there is two on the phone, okay.

Unidentified Participant

Thank you, its (Neil Morphine) at (Battenberg). In terms of maturing new growth options you spoke about recycling downstream disposals into upstream acquisitions. Given the fact that your disposal target is sort of slow in coming down, is it fair to assume, you’re now happy with the portfolio or where do you still gaps and just secondly related to that kind of just confirm that 4.25 million in 2018 ex-disposal is all from the existing portfolio does not assume any further acquisitions, thank you?

Peter Voser

Okay, you can take the second, I’ll take the first. I think your question was about the downstream portfolio or overall the whole company.

Unidentified Participant

The overall portfolio?

Peter Voser

Okay, I think you never come on end to end on the portfolio management in the optimization. You will always have asset which you will push out and that's why we say, on the average $2 billion to $3 billion is just something we will always do. And therefore I distinguish between major portfolio rationalization exercises on the ongoing business. We have just gone through a major rationalization on the refining and marketing assets and downstream and I think we have concluded that at the same time we are improving operational performance etcetera. So, we're moving down there. Will there be no refinery or not marketing assets being sold, there will be some the etches we will do, some markets we cannot actually grow in economy or scale in the marketing side most probably will go out. The same will be true also on the upstream side, you have monetization options like I described on the exploration side but you will also have late mature assets which we may not be the best operate in which will sell them. So, you will see a turnover there.

Second question?

Simon Henry

Second question is really on the 4 million or 3.2 last year. We expect 250,000 of further divestments and license expiries so, starting points with 295. You have look at the 60 projects, the 26 under construction and the other 30 plus that are in design and that's what drives the 4 million barrels. So, of the 26 projects that peak production which one will happen at the same time is about it’s over 900,000 barrels. And it's close to 2 million barrels within those under design. So, we’ve listed the projects you can see the potential scale. Therefore, we need to develop and mature those projects we do not actually need to buy anything more that doesn't may be one. It doesn’t may be one develop exploration either because in that timeframe it is possible to bring the field on the stream. But, the target is not heavily dependant on either exploration success or additional acquisitions, what is really dependant on is level of CapEx in the environment we actually see and good project execution.

Peter Voser

Thank you. We can go to the phone one?

Operator

Thank you. We have a question from Mark Gilman. Please go ahead with your question.

Mark Gilman

Guys good afternoon, can you here me all right?

Peter Voser

Yeah, I can hear you Mark, good afternoon.

Mark Gilman

Very good, just three kind of specific questions if I could. You recently put into place and explore to our joint venture with Tullow, which very little detailed associated with it. So, could you put some color on exactly what type of prospect that's going to pursue and whether it includes any of the Tullow's existing licenses. Secondly, you recently indicated and announced and I believe this project probably made a major contribution to your 2011 reserve add. A Sizeable lay in EOR project given the fact that the fiscal terms there are traditionally not entirely favorable with there modification in those terms associated with the agreement on the EOR project. My third question relates to the substantial commitment that you made at least over a number of years to exploration of Nova Scotia, is there a particular new playing type that you wanted to be focusing on that was reflected by your decision to make this commitment. Thanks very much.

Peter Voser

Okay, I'll take two and three, you can take one. The Tullow hookup is really targeted at joint prospects where we both see potential and we look at bidding together. It's not really based around farming either way them to us or us to them, which is still possible but it’s not in the nature of the venture. It’s likely to be in areas where one or other of us has some IP advantage, knowledge of the base or otherwise. So, expect to see more in the areas that Tullow clearly has that expertise. Elsewhere we have many other partners around the world. This is not uncommon in the oil and gas industry that you have partners for exploration in particular basin areas.

Simon Henry

Yeah, Mark, on the Malaysia, you are one which potentially could be first your offshore project by using chemicals as well. I am very excited about it. Thirty years extension of the license together with PETRONAS and I can only say as much as the terms which we have received for these extensions are attractive for the technology and the innovation we bring into the project from our side but also attached to it there is actually in R&D, joint R&D going to happen between the two parties for the longer term to develop more. So, in very attractive terms there.

On the recent Canadian exploration tender, this is a new area. It’s not much explored but we see obviously some value in it. It’s a new lead for how to play there and therefore we have gone in for the acquisition or acquisition or the work program say of the four plays. So, this is not like in other countries where you do upfront payments like you are used to in the United States. This is actually a promise of work program and we will go through those in the years to come.

I think Marvin’s really most probably 2013, ’14 seismic beforehand so I think we go into some uncharted territories and waters but obviously we have got some expectations there. Thanks Mark.

And then last one in the room? Go ahead and then one more on the phone and then we close.

Colin Smith – BTB Capital

Colin Smith from BTB Capital. Your chart sort of implies, I think, that you are looking for that 1.5 million barrels a day of production out of the Americas 2017/2018. And that looks like it’s up about a million from where we are today. If you go through the major projects, I add up 350,000 barrels a day which leaves a pretty big gap and there is quite a lot on the project under construction but it does kind of feel like an awful lot of that is going to have to come from shale or unconventional of one source or another.

I wonder if you could just comment if that’s sort of roughly right particularly in the context of the question that Martijn asked which is you didn’t really have to set a four million barrel a day target today with the other things you’ve talked about and then the past this is bit of a graveyard for forecasts for many large CAP companies and that obviously does include yourself not when you were CEO of course. So, I’m just curious as to why you kind of felt it was important right there? Thank you.

Peter Voser

I’ll take the second one. I think the way I want to be measured and therefore also the company want to be measured is actually on the two elements which is cash flow and long-term growth and production is obviously a function for that and I think also what we have experienced inside the company is the target which we had for 2012. It does focus to mine, when the cash flow does it as well by the way and I know we are a brilliant industry in doing all the right stuff but we have never been great in forecasting production gross and volumes, but nevertheless I think if you asked a shareholder to spend 30 billion net and you promised to the shareholder certain gross rates of cash flow part of that is also a long term outlook of production.

And I think that’s what I really wanted to have as a framework for discussions with the shareholders but also with internally as key drivers. As I said earlier, I always like challenging targets. On this one I was particularly sensitive because of the past record. So, I was reviewing this inside out and I can tell you there were hesitations inside the companies as well to go out with that because we all know things can change five, six years down the road but I just don’t think you can spend 30 billion at every year without actually the world what you get for it. So, it’s a very simple thing.

I am happy to be measured against that and I will drive it and I think we driven it the last three years projects are on stream, its coming through. Yeah, we did a forecast at Q4 2011 was warm and the whole production came down. That’s fine, that’s one quarter. We look a little bit long term quietly and yeah, we will drive it. So like I said before you will not get gas in North America because that one will change. But I have enough in the portfolio to get to the four million including the 250 which we take out through the sales and the licenses.

So, I’m happy to take the challenge.

Simon Henry

But Martijn says, I don’t want time to master it too much but if you think Americas is where the growth potential is they stole another 100,000 to come in the oil sands we already said that, 250 we talked about liquids-rich shales that’s from zip and we have set up three BCF gas before obviously the balance of those two will need to be considered. And we just said there is another 150 plus to come in the Gulf of Mexico. So, some really projects driving real growth there is potentially more to come in the out tech though, it's got a asset which is different. Sorry, Melvin.

Peter Voser

One on the phone, can we have one on the phone?

Operator

Your next question comes from (inaudible). Please go ahead with your question.

Peter Voser

Is he on or we lost him?

Operator

(Inaudible) your line is open.

Peter Voser

Okay, let's wait and see if he comes back in the meantime I'll take Lucas. You had one question.

Lucas Herrmann - Deutsche Bank

Sorry, this is Lucas Herrmann from Deutsche. Now, Peter just coming back on your last point I agree with you entirely in the context of balancing production with CapEx, that you're indicating. As a shareholder that I'm myself if the CapEx is this and the production is that and what I end up at the end of the day is a stock with 5% dividend yield, which is growing at - going to grow at 2%. And we can although pay what cost of capital is but, ballpark in the sense probably going to be 9 or 10. How do you get, I mean I'm going to struggle to justify the valuation, I'm going to struggle to justify ordeal stuff one. But, I guess the key question with that therefore is, how does the board determine the 2%, is it appropriate level when the growth you're looking at seems near an underlying 3-4% at 4 million barrels, that's in terms of production.

The growth in terms of cash flow even using 2011 as a base there seems to nearer 3-4% of an equivalent oil price. Why is 2% the appropriate number or 2.3% the appropriate number of different growth at this stage. What confidence is that giving me in the statements you're making on growth, on return etcetera. What confidence does it show the board has and the statements the company is making on cash flow growth or production growth etcetera.

I'm great admirer of what you've achieved over the last three years. But, I'm obviously slightly surprised at the reticent modify the dividend by slightly more of this point?

Peter Voser

I mean I can repeat all, we already said how we look at it, look as we have I think delivered the last two years. We are about to now embark on the delivery of the next few years as usual we had long discussions at the board level on the right dividend levels. We looked at we haven’t talked too much about the payout ratios compared to the competitors. We are miles above most of the others as well and you all know most probably Total which is coming close. I still remember 2009 discussions with all of you wherein all the meetings I had one question is kind of afford dividend, are you going to cut the dividend. So growing the dividend is key in our discussions and I think that the board is behind that statement but we also want to grow the resilience of the company. We have delivered that now and we will deliver the next step as well in order to actually increase the flexibility to go forward and actually deliver our dividend policy which is growing a dividend policy attached to our cash and earnings projections. So, I think as I said being the biggest having maintained it, I think, we delivered actually on what we said we will deliver and we are going forward. So, I do think actually shareholders should take a certain let’s say creditability out of what we are delivering and having a measured approach to dividend rise at the same time I have to say also a measured approach to CapEx increases because you all think it has gone up quite a bit.

When I do refer you to all the competitors, look at the others they have actually gone up miles more and one is actually also quite smaller than we are and the payout of dividend is actually quite small. So, I think we are trying to deliver on all the fronts and all the pieces and I think that with that there is a gross dividend policy there and that’s what we are delivering and I have said this I think personally too many times and so it’s fascinating that after this discussion here if you are in the States and all the dividends and all the discussion because you either do buyback or you readily invest on CapEx and you go in order to deliver growth. So, we are trying also to balance the various needs of our shareholders and I think we are here to deliver growth and I think we have a fantastic story because we used the time bringing the projects on stream but we use that time to build actually the pipeline to go forward.

And I think the cash flow growth you’re seeing again I would like to see anybody matching those growth rates over the next few years they are there. And the dividend policy will follow, but it will be a measured application of the dividend policy.

I can’t invite you for a discussion to the board, but I think it will be a good one to have, so.

Good. One more on the phone and then I close.

Operator: Thank you. The question comes from Jean-Pierre de Metien. Please go ahead with your question.

Teplan Justalingram - Nomura International

Iain Reid - Jefferies & Co

Jason Kenney - Santander

Paul Stetting – HSBC

Alejandro Demichelis - Merrill Lynch

Robert Kessler – Tudor Pickering Holt

Jason Gammel - Macquaire

John Rigby – UBS

Martijn Rats - Morgan Stanley

Irene Himona – Societe Generale

Oswald Clint - Sanford C. Bernstein & Co.

Alex Murray

Iain Armstrong – Brewin Dolphin

Mark Gilman

Colin Smith – BTB Capital

Lucas Herrmann - Deutsche Bank

Jean-Pierre de Metien

Yes. Good afternoon gentlemen. I have three questions. First question’s regarding the DD&A chart. I noticed that significantly decrease in 2011 15.3 in 2010, 13.2 in 2011. How do you see this figure out in 2012. My second question I think the licensees expected to expire from in 2017. Can you give us timetable for all those licensees expected to expire and the contribution in terms of proven results in 2011 and my last question is regarding the mix between oil and gas in 2017. What maybe the big mix compared with the joint oil and gas mix. Thank you.

Peter Voser

It wasn’t too easy that’s to hear all the question but I will try the DD&A charge went down in 2011, largely because impairments were in 2010. The underlying depreciation charge is just under $12 billion per year it almost three quarter upstream quarter downstream and we expect no real change substantially into 2012 so that’s the DD&A. Anything else on top either impairments or the effect of the asset divestment. I did not quite catch the second question. I think it was about proven reserve contribution basically there were three main areas of contribution in 2011 there were in the Grand Birch activity in Western Canada in the Oil Sand expansion and in Prelude in Australia. Those were the three main additions but there are other left less than half of the additions the rest were spread right across the portfolio overall quite a significant contribution coming through now from the unconventional activity. Oil and gas mix in 2017 or 2011 was 52 oil 48 gas we have said sometime 2011 was the inflection we will produce more gas than oil this year whatever the circumstances I think and we expect the share of gas to grow how quickly grow will depend on the growth in the onshore gas by the middle of the decade and so in the contributing to 17 and 18 will have more big LNG coming the stream so probably you didn’t go more make a difference will of course there will have various other gas development but offset by liquid rich shales deepwater maybe the Arctic so well it probably increase from low 50s it will not go to 60 and beyond in terms of gas oil and we are saying of the gas production today about three quarters is actually priced against oil exposure so our total exposure in terms of price exposure very much oil linked not gas. I think that was everyone. Thank Simon. I think it could be closed with that thank you very much coming and that said we’ve got, the plate is full to deliver over the next few years. We'll go after that and thanks for your support.

And I'd like to invite you if you have time, some drinks outside and some little snacks I’d guess, is that still in the Rochester JJ. And so, we'll be happy to engage further outside there and Martin, Ruth and Marvin are there as well and obviously all the IR people. So, thank you very much for coming.

Simon Henry

Thank you.

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