Welcome to Shell's Second Quarter 2024 Financial Results Announcement. Shell's CEO, Wael Sawan, will present the results and then lead a Q&A session with Shell's CFO, Sinead Gorman. We will now begin the presentation.

Welcome, everyone, and thank you for joining us today. Before going into our second quarter results for 2024, I'd like to update you on our Capital Markets Day progress, which, together with our recent energy transition strategy update, shows how we intend to generate more value with fewer emissions. If I take you back to June of last year, we committed to our guiding principles of performance, discipline, and simplification. The aim was to drive a culture shift in our organization, and we are seeing the results play out. We set four financial targets, and we're making solid progress against each and every one of them. We also talked about the importance of establishing a track record of delivery. And today, I hope you can see this track record developing and gathering momentum. In short, we're turning our words into actions. Now let me give you some examples. In our Integrated Gas business, we said we would continue to grow our LNG portfolio by increasing both our liquefaction and access to third-party volumes, and that is what we have done. We've extended existing valued partnerships like in Oman and entered into new ones, such as the ADNOC Ruwais LNG project in Abu Dhabi. We've also invested in backfill such as in Manatee in Trinidad and Tobago, and we've agreed to acquire Pavilion Energy in Singapore to increase our portfolio length. At the same time, we're working hard to achieve first production from our large LNG joint venture project in Canada by the middle of next year. These investments add significant volumes and flexibility to our leading global LNG portfolio. We also saw operational performance improve across our Integrated Gas business. Prelude, for example, significantly increased its controllable availability since its turnaround last year, while Pearl GTL in Qatar continues to build on its impressive track record. Moving to Upstream, where we want to ensure cash flow longevity. We said that by 2025, we would bring projects online with a total peak production of more than 500,000 barrels of oil equivalent a day, and we are making good progress. We have successfully started up several projects like Vito and Rydberg in the Gulf of Mexico, Mero-2 in Brazil, Block 10 in Oman, and Timi and Jerun in Malaysia. And around the end of this year, we expect to see the start-up of Whale in the Gulf of Mexico, along with Brazil's Mero-3 and Penguins in the North Sea. Looking further ahead, we have taken final investment decisions on Atapu-2 in Brazil and Sparta in the Gulf of Mexico. These investments, along with others in the funnel, will help us maintain our liquids production at roughly 1.4 million barrels a day until the end of the decade, as we communicated at Capital Markets Day, allowing us to continue to provide the energy security that the world needs. And just like in our Integrated Gas business, Upstream has also improved its operational performance, both in deepwater and conventional oil and gas. Now let's take a look at downstream and Renewables and Energy Solutions, where we said we would high-grade the portfolio to support a profitable energy transition. In chemicals and products, we have agreed to sell our Energy and Chemicals Park in Singapore and our shareholding in the PCK Refinery in Germany. In mobility, with a focus on value, we continue to high-grade our network and drive premium fuel growth, which is reflected in the improved V-Power margins. Lubricants also saw higher margins and improved performance, helping marketing adjusted earnings to grow. We said that this management team is prepared to take some tough decisions. And with the backdrop of disappointing market conditions, we paused on-site construction at our biofuels plant in Rotterdam, where we will now seek to address project delivery and ensure future competitiveness. We've also said that we will focus on areas where we have a competitive advantage. That's why in Renewables and Energy Solutions, we exited the Home Energy business in Europe last year and continue to employ a disciplined and selective approach to power. But we are growing our downstream Renewables and Energy Solutions portfolio where we see attractive returns, demonstrated by our final investment decision on Polaris, CCS in Canada. We are staying true to what we said at Capital Markets Day. We are maintaining capital discipline, improving operational performance across the board, and we are becoming more predictable, delivering on our targets, taking the structural OpEx reduction target, where we have already delivered $1.7 billion out of the $2 billion to $3 billion that we committed to deliver by the end of 2025. I'm proud of the efforts of our staff across every part of the organization and the progress that we are making. Our strong overall performance has given us the ability to continue to deliver enhanced shareholder returns. As a result, this quarter, we have again been able to exceed our distributions range of 30% to 40% of CFFO through the cycle. Now let me tell you about our financial results in the quarter. We had a strong quarter driven by good operational performance. Our adjusted earnings were $6.3 billion, and we generated $13.5 billion of cash flow from operations. In Integrated Gas, once again, we achieved high controllable availability from QGC in Australia, an asset that has been performing exceptionally well. In our Chemicals business, Shell Polymers Monaca had significantly higher utilization with all three polyethylene trains now fully operational. And in the products business, we also had strong operational performance and delivered another set of robust trading and optimization results. Before moving on to our financial framework, I'd like to come back to the structural OpEx reduction that I mentioned earlier. In the first half of this year, we've delivered an additional $700 million reduction, on top of the $1 billion reduction from last year. The majority of the contributions this year have been realized through performance initiatives across the organization, such as focusing on operational excellence and lowering overheads. The remainder was achieved through portfolio choices, and this does not yet include the impact of announced divestments like Singapore. We will continue to take costs out as we progress towards achieving the target that we have set at Capital Markets Day. Now moving on to our financial framework. Our cash CapEx outlook for the full year of 2024 remains unchanged. We continue to invest only in those projects that exceed our hurdle rates and meet our strategic intent. Our balance sheet remains strong. And today, we have announced yet another $3.5 billion share buyback program, which we expect to complete in time for our Q3 results in October. This makes it the 11th consecutive quarter in which we have announced $3 billion or more in buybacks, showing that the strong performance of the business results in compelling returns to our shareholders. To summarize, with us now a little over a year since Capital Markets Day, I'm incredibly proud of the progress that we are making against all our financial targets, the focus that we are bringing to our investments, and the improvements across the company. Today, we announced another strong set of results, making the first half of this year one of our best. And with so much untapped potential and so much more to achieve, we will continue to move forward, take bold steps, and build a track record of delivery. Guided by our principles of performance, discipline, and simplification, we aim to be the investment case through the energy transition, delivering more value with fewer emissions. Thank you.

Today, we announced another strong set of results, making the first half of this year one of our best. With so much untapped potential and much more to achieve, we will continue to move forward, take bold steps, and build a track record of delivery. Guided by our principles of performance, discipline, and simplification, we aim to be the investment case through the energy transition, delivering more value with fewer emissions. Thank you.

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

We are just over a year since the first announcement, and while it's uncommon for things to go completely according to plan, it seems that it might be the case here. Can you discuss what has turned out better than you expected, what has worked well, where you aimed to be, and areas that require more attention than initially anticipated? Additionally, towards the end, you mentioned untapped performance. Is there a way to quantify that for me? Also, Sinead, regarding ex leases, the gearing level is now slightly above 5%. The free cash flow generation is impressive. How do you view the development of the balance sheet and the use of that free cash flow? Do you intend to save it for Sprint-2, or are you considering additional shareholder returns at that time?

Lydia, let me take the first one and then I'll hand over to Sinead for the second one. Look, it's been in the 12 months since the announcement in Capital Markets Day. And what I would say is we're very, very pleased with the momentum that we have been building. I mean at the time, just to sort of take us back, we said at the time that we wanted to really solidify the company to build a lean, very agile, very strong organization and one that allows us to focus on a handful of things, deliver the operational performance improvement that you see starting to come through, continue to reduce costs, which you see, including today’s structural cost reduction of $1.7 billion against the $2 billion to $3 billion target, the capital discipline that we're talking through as well as the focus on making sure that we continue to enhance the portfolio. So all that is playing out. The biggest thing that I continue to focus on with my executive committee is the culture change because we want to make sure that this is not a one-off, this has to be a new way of life. And I'm particularly pleased to see that there are multiple green shoots that we are seeing in the organization. Prioritization is starting to kick in in a much firmer way than maybe was there in the past. So for example, in our IT program, we've had to focus on a handful of key areas, and we've managed to release some 4,000 contractor staff on the back of that. So that's one step forward in the right direction with more to go. In addition to that, I would say we are looking at how we can continue to de-bureaucratize the company in areas like the standards that we have that can be a bit challenging for the organization to implement. So those are some of the things we're working. But I'd say there's a lot more to do, Lydia, and that's where the challenge is, to keep that drumbeat of focus with good results that are coming in, to make sure that we do not take our foot off the pedal. It's about the stamina that we have as a company and our ability to be able to really institutionalize these changes, that is what I would say is the biggest thing that I'm focused on with my leadership team over the coming months. Sinead?

Indeed, our debt on our balance sheet, particularly the balance sheet is incredibly strong at this moment in time. And it's important to me in the sense that it enables both us to follow through on opportunities that combine for value, but also to provide resilience in case things change. It also allows us to be confident in terms of our shareholder distributions as you alluded to. With respect to those, for me, it's all about being consistent and predictable. And as you know, we tend to look through the quarter and you've seen us do that a few times. You've seen us, of course, with Q4 with our debt levels rising as well. So you saw it go up $3 billion in Q4, and of course, now you see us come down and that will change over time. And there will be volatility to our debt levels, and that will occur naturally. As an example, with LNG Canada as we move towards and that being commissioned we see the pipeline coming first of all. And with the pipeline coming in, that will occur and that will come on the balance sheet before the first LNG cargoes. So indeed, it allows us to have a track record of consistent delivery, and you'll see that continue, Lydia.

The first question is about CapEx guidance. The first half of the year appears to be performing below the full year guidance, which typically has some seasonality. Even with the anticipated increase in the second half, it seems you might be closer to the lower or upper end of that guidance. Can you clarify where I might be mistaken? Are there any specific inorganic opportunities you expect to accelerate in the second half? The second question is regarding Nature Energy. You acquired this business a couple of years ago for $2 billion, and you previously indicated it would contribute positively to your earnings, but recent reports suggest it has not. As we look towards CMD 2025 and consider your portfolio rationalization and competitive positioning, do you still believe biogas can deliver acceptable returns in the future? What lessons have you learned from that acquisition that could inform your strategy going forward?

Let me start with the second question and maybe hand over to Sinead for the first one. And start saying I'm a very, very firm believer in the future of biogas and biofuels, by the way, more generally, as a drop-in fuel without having to change out the capital stock, I do think something like biogas will have a massive role to play in the niche plays where it will apply. And in particular, biogas into bio LNG, which we see as the most expedient and the most affordable way to start to decarbonize, for example, the marine sector as well as the trucking sector. So strong belief in that market. Having said that, that is looking sort of a decade or two out. We see that are going to grow in a big way. And what we have done with Nature Energy is, in essence, taken a platform that allows us to win in that space. And the win is really the combination of being able to play on the production side, of course, our trading and then ultimately, our customer end. What's happened since we have acquired that platform, now of course, as you can see in the market, the prices aren't where they need to be. Natural gas prices have come down and feedstock prices have actually gone up. So it squeezed the margins in that business. We're also in a growth phase. We continue to invest to be able to bring more and more of these facilities online. We're not looking at this, Biraj, from a six to 12, to 18 months basis. I have to be looking at this in multiple years as we're building a platform really for the late 2020s into the 2030s. And that's what we continue to have conviction around that this is a great investment for that winter. I think when it comes to CMD 25, we will, as a minimum, look to continue to echo our belief in the bio market, but it's a question of where do we deploy the capital now to make sure that we can achieve the returns we expect out of that market in line with the hurdle rates that we shared in CMD 23, which was the 12% plus IRRs. So continued confidence, but we need to be able to make sure that now we set up that platform for success. Sinead?

I understand your question. You are correct that we are running low on CapEx numbers mid-year. However, this situation is quite similar to what we experienced last year. We have several payments that need to be made toward the end of the year. If you recall, last year, we were at approximately $17 billion of CapEx by Q3, but ultimately reached $24 billion, which was within our expected range. We anticipate that this year will also fall within the range of $22 billion to $24 billion, considering the pending payments for ongoing projects that need to be completed and commissioned.

Wael, if we look at the global oil demand, it appears to be increasing at least through the rest of the decade. Given this, you've consistently stated that significant changes are on the horizon. Should the company reconsider its target for liquid production to be flat, or would it be better to adjust investments to align production growth with the rise in global oil demand? That's my first question. Regarding your chemical operations, you seem to be making good progress, as indicated by the increase in net income, which is positive. When we examine the Monica chemical plant in Philadelphia, is it now operating efficiently, or do you anticipate further improvements? If improvements are expected, where do you see those coming from?

Let me address both of those questions. Regarding your first question about liquids, we firmly believe that the energy system of the future will need liquids, whether they are oil or bio-based, as well as gas and possibly other sources such as nuclear. We recognize that to succeed, we must focus on having the highest margins while keeping our costs low. Since adopting our value over volume strategy several years ago, our goal has been to refine our portfolio, eliminating lower-performing assets, ensuring we stabilize our production, and enhancing its competitiveness and profitability. We have no intention of deviating from our strategy to maintain our liquids output steady until 2030. We'll determine our approach beyond that point, but for now, our philosophy remains unchanged. In relation to chemicals, I'm pleased with the progress our team has made in the Pennsylvania Chemicals business recently. I had the chance to attend our Safety Day, which focuses on safety throughout the company. I learned that this asset has now achieved stable production. We’re operating well on all three polyethylene trains. While we see room for improvement, it will primarily come from enhancing value. We're focused on improving our product offerings and certifying more of our chemical products. We're also examining our cost structure not only at this facility but across our overhead costs as well. There are numerous low-risk opportunities we are exploring, consistent with the commitments we made during our Capital Markets Day. We remain optimistic about the future of the chemicals market and believe that some of our facilities are quite robust. Additionally, we have decided to sell certain assets, like the Energy and Chemicals Park in Singapore, to more suitable owners, such as Chandra Asri. Thus, there's a lot of activity in that area as we work to boost the profitability of our Chemicals business, despite challenging macroeconomic conditions.

If we can focus on chemicals, what will be the impact of Singapore on your chemicals and refining earnings? I'm trying to understand what kind of uplift we should expect once you finish the sale. Additionally, regarding the progress you are making towards your $2 billion to $3 billion OpEx reduction target, I believe that after the Singapore divestment is complete, there should be a significant contribution to this. Are you able to quantify this at this point?

I'm going to, unfortunately, be able to say very little, as you can imagine, we're going through a divestment at this moment in time. What I can say to you, of course, is that with respect to the Singapore divestment, it's one that doesn't fit our portfolio, but of course, it fits and the buyer is very well given the specialty and the focus in that area. It is not one that we are finding attractive to us at this moment in time. And remember, our chemicals portfolio overall is currently in a breakeven state for this quarter, roughly speaking. So you're correct that with the divestment, we will, of course, take OpEx side, and you will see that flow through in terms of that $2 billion to $3 billion. It's not in those numbers yet, of course. So what you've seen from us so far is hitting $1.7 billion in terms of that target towards $2 billion to $3 billion for OpEx. And of course, in that $1.7 billion, what we're seeing at the moment is more of a move towards the non-portfolio elements. But we will have Singapore flowing through when that deal completes. So we're expecting that deal to complete more or less at the end of the year into Q1. So you'll see that flow through then, and we'll be able to give you more details at that point.

I guess, kind of one big question I have. Balance sheet-wise, given the performance here, the cash balance, the net debt, and I know you'd like to keep a healthy cash balance, but seems like improvement is probably a little ahead of schedule. Just curious how you're thinking on what the right cash balance is as you look at the overall cash returns. And then the other question I had was on Slide 8 where you lay out the growth projects here. Is there anything we should think about given performance to date and what's left to come online as an overall impact on any changes in the way you're thinking about volume performance, volume growth, or lack of volume shrinkage maybe?

Thank you for those two questions. Let me start with the second one and then hand over to you, Sinead. Very little that has changed, Roger, from what we described in Capital Markets Day. At the time, what we said was we expect it to bring online at peak around 500,000 barrels of oil equivalent per day. Today, we update the fact that, indeed, that is 250,000 barrels of oil equivalent per day has already been brought online, and the rest to come through between now and 2025. So no major changes there. And those are, by the way, good, high-margin barrels, in particular in our deepwater space that you see those coming through in the Gulf of Mexico as well as in Brazil and beyond, by the way, in places like Oman and the like. And so very little to add to that. And we continue to focus very much on the opportunities, in particular in the basins where we see we have competitive advantage to look at opportunities for tiebacks, backfills, to recent, for example, announcements, Jerun, which is the Malaysian gas field, which was brought on stream just a couple of weeks ago. We've just recently taken a final investment decision on Atapu-2 and another FPSO in that block in Brazil, not to mention all the LNG opportunities that we've mapped out there from the Pavilion volumes we're bringing in, the Ruwais LNG in Abu Dhabi, the FID on the Manatee project in Trinidad, Tobago. All of that is giving us that next wave of growth that we very much look forward to that takes us to the end of the decade and continues that healthy balance on our liquids while looking to grow our LNG volumes by 20% to 30% by that date. Do you want to talk about cash?

There are two key aspects to consider. First, there is a cash component and second, the overall strength of our balance sheet. Regarding balance sheet strength, we have a very robust balance sheet, which makes us comfortable with our current debt levels. This does fluctuate from quarter to quarter, but given the current levels, it's a reasonable situation. We anticipate that leases will increase as Pavilion and LNG come online, which, due to our strong balance sheet, allows us to manage distributions effectively. You mentioned cash specifically. We do hold a significant amount of cash, which factors into our net debt. The reason for maintaining this cash is straightforward: the debt we have now carries very attractive rates, many of which are hedged, so it doesn't make sense to pay it down at this time. Consequently, our net debt position presents a gearing level of about 17%. I feel confident in our current position and acknowledge that it may fluctuate a few billion each quarter.

Congratulations on the strong results. I have two questions. The first is regarding your buyback. You are currently generating significant free cash flow, and you've reduced net debt by $5 billion in the first half. What gives you the confidence to potentially raise the buyback amount from the current $3.5 billion? Secondly, with your successful exploration efforts in Namibia, what are your next steps there? What would you need to proceed to a final investment decision for development in the coming years?

Do you want to take buyback questions…

Indeed, we have said time and time again that we will look through the quarter, and I think that's very, very key for us. When I'm looking through the quarter, I'm looking at, of course, the cash generation in the quarter, but also, of course, beyond that, it's very much about ensuring that we have the discipline to be able to execute quarter after quarter. And we're continuing to build that track record, as you know. We're seeing that predictability 11 quarters above $3 billion, of course, at this moment in time. And when we speak to our owners, to our investors, specifically around this topic, what we see is they’re very happy with those levels of distribution because they see that drumbeat coming through. Now five quarters into a 10-quarter sprint and of course, there's a lot more running room. So what you will see, of course, is complete transparency and making sure that when we move our share buyback number, it will be clear what has changed. The fundamentals will be there.

Michele, your question around Namibia, indeed we have progressed well on both the exploration wells as well as the appraisal wells. We are, at the moment, evaluating. It's a complex subsurface, as I've said in the past, there is no shortage of volume. The question is going to be the commercial producibility and the mobility of those molecules. What's very helpful is that there are a number of players in the region, all of whom are active in the spot. So we are all learning as we go to be able to really better understand the reservoir and the contours of the reservoir. What would be required, what we would need is line of sight towards the sort of returns that we would expect. This is, of course, a relatively new area to invest in. And so you need quite a bit of infrastructure to be able to make it work. And we need to be able to assure ourselves that we have investable projects in the sort of return ranges that we indicated in Capital Markets Day 23. And so that's why we're taking our time thinking through it, making sure that we have a good enough picture before we commit our shareholders' capital to that development. And time is our friend here as we learn from both our own analysis and the analysis of others and the activities about this as well.

I have two quick questions. Building on your increasing cash balance, Sinead, I want to ask you and Wael for an update on the internal mood. You mentioned you're halfway through your 10-quarter sprint. Has the initial inertia in the company shifted to excitement? Additionally, how challenging is it to communicate to your staff that they need to tighten their belts while the cash balance keeps increasing? I’d also like to delve deeper into where you see the most potential for savings in your operating expenses, especially in the areas not driven by your portfolio. Will there be a point when you can detail where these savings, mentioned in the presentation, originate from, whether by project or at least by segment? Do you think that’s feasible as we approach the Capital Markets Day next year?

Let me start and then Sinead can add if she wants. It's great to be part of a winning team. After our recent Capital Markets Day and energy transition strategy, we've developed a clear vision for the company’s direction, and our staff recognizes the momentum. Our Board is also aware of this progress, but we remain vigilant as there is still much work ahead to realize the company's full potential. To me, costs are a result of this transformation. We are focused on evolving the company's culture to compete effectively in the years to come. Competition is changing, not just within the oil and gas industry but across sectors; we need to integrate digital and AI capabilities into our operations. Currently, around 30% to 40% of our global workforce is in Shell business operations in locations like Curacao, India, and Kuala Lumpur. We are learning how to utilize emerging technologies in ways we hadn’t before, which is increasing our productivity, reliability, and helping us lower costs. In terms of where we see improvement, it's all about competitiveness. We aim to be a competitive company—not just generating cash but striving to excel. Competitiveness means we can't have everything we desire, so we're being intentional with our spending, especially in IT. We've simplified some standards significantly—cutting them by 60% to 70%—which empowers our organization to thrive. We're working to streamline how the organization functions by consolidating roles at the management level and encouraging team members to cover multiple markets. Additionally, we are promoting multiskilling among frontline staff to break down silos that can slow workflows and hinder employee satisfaction. This overview highlights our cultural shift. For example, our travel spending is currently at 60% of what it was in 2019; while it's a small figure in the grand scheme, it amounts to a couple of hundred million dollars, indicating our commitment to discipline. We also aim to expedite capital projects, ensuring we advance promising initiatives quickly and abandon those lacking strong fundamentals early on. The overall mood remains positive, but I acknowledge the strain that organizational changes can place on employees. We are striving to transition as efficiently as possible while providing the necessary clarity as we embark on this next phase. Sinead, do you have anything to add?

I think you said it very comprehensive. The only one line sentence, I would say, it's exciting, and there's so much more to go.

Two quick ones, please. First, you struck me looking at the numbers this morning that if we combine the key integrated gas and upstream businesses, in aggregate, they've beaten consensus now for four straight quarters, averaging about 10% over that period. So I wondered if you could talk about the sources of that and the extent to which you think that reflects the enhanced delivery and operational performance that you've talked about driving through the company? And then secondly, specifically on LNG. I think you showed in the slide deck that Shell has now filled the prior gap that existed into '25, '26 on purchases versus sales. Part of that is the Pavilion transaction. Could you talk about what made that an attractive asset for Shell and particularly, perhaps linking into the flexibility point that, Wael, you mentioned during your opening comments?

Which one do you want to take, Sinead?

I'm happy to take the second one. Wael, for the first one, on IG, Integrated Gas and upstream and the strong delivery over the last four quarters. I'll put first and foremost on to a lot of hard work, a lot of focus and this performance culture that we have spoken about, Matt, starts with a fundamentally different cadence, a different performance cadence that Zoe as the Head of the Integrated Gas Upstream division is really driving with her team, really just getting back to what they call the brilliant basics. Getting back to what we need to be able to do to drive the fundamentals right, how do we maintain our assets, are we doing the right walks around the facilities to be able to make sure that we pick up any issues before they happen, how do we leverage proactive technical monitoring and so on and so forth. So really good work in that space. In addition to that, what I would say is really focusing on the big assets that were potentially weakening as in the past. Prelude, you've seen from the charts we provided to you is now running at the IG average utilization and availability levels, which is great news. Queensland Gas company outstanding performance there. Pearl GTL continues very, very strong performance. Deepwater is running well. Conventional oil and gas is running well. So across the patch, what you are seeing is more and more consistent delivery, something we talked about 12 months ago and something that I think is coming through in the results quarter after quarter. The only other thing I'd add is continued focus on the costs that we talked about earlier. As we drive competitiveness, that team is really looking at how do we hone in on the costs that actually add value and really sharpening their focus on that, and you're again seeing the results of that come through. Indeed, the Pavilion, what you're seeing on that slide really is showing there was a number of things in there. There was first for that gap basically to 2025 and the Pavilion acquisition adds 6.4 MTPA of additional supply that helps deliver against the 15% to 25% growth we talk about in there about purchase volumes. So we've got that aspect of it. But we also, of course, have the Ruwais LNG project, which also shares on MTPA, which will help to deliver against the future growth that will come as well. So you'll see roughly speaking between now and 2025 about 2 MTPA coming in. That's helpful, of course, because we have reduced length as you're aware, coming into sort of the end of this year and into next year, which helps us just build as we go longer term. But of course, that's always helpful as those opportunities are given more and more to us. So an attractive acquisition to us as we come through, particularly as we see price normalizing in terms of really back towards prewar levels, so back to 2022 levels. And of course, we're also seeing with that a little bit of the seasonality less pronounced. So we're seeing less volatility, as a result, and therefore, less trading optimization opportunities that combined with reduced length in the portfolio has been a little bit more balanced over the next couple of quarters, that’s what we would expect potentially to see, but it depends on the opportunities that come through and how quickly we get Pavilion in. But clearly, from our perspective, if we look through the quarters, that’s how we manage the company, it's a long-term look, and you can see that as well in how we actually deliver on the distributions as well.

I want to touch on the RES business, because I guess, personally, I probably tended to ignore it. It's been very steady, or it had been very steady. This is the first quarter where we've actually seen a relatively sizable loss. And sitting at this desk, it's incredibly difficult to get a sense of what the number would look like. So I wonder whether you could give us any help in terms of how we should think about numbers, profit/loss, whatever going forward? And also help us or help me better understand what comprises the $17 billion, $18 billion or so of capital that's tied in in that business? And another slightly abstract question, but I'm sure you're conscious or you've seen E&I look to divest a part of its mobility business over the course of the last several weeks at I'd say, a pretty attractive multiple. It obviously highlights the inherent value in your business, not least the marketing business, of which I know you're aware. Where does it leave you in terms of thinking of ways of perhaps more rapidly or more aggressively realizing the potential of the marketing assets, which obviously our stock markets trade at substantially higher multiples than the parent does?

Regarding the RES portfolio, your question has two components. Firstly, on the results, you are correct that this quarter reflected numbers that align more closely with the medium-term expected range based on previous guidance. However, the past few quarters have experienced significant volatility, leading to unexpectedly high results. This quarter, factors such as various issues in Europe, including limited volatility in gas and lower generation, contributed to minimal trading optimization opportunities. The second part of your question concerns the capital employed. There is a mixture of assets we have invested in, like wind farms and solar projects, along with a considerable amount of working capital in the mix. This working capital introduces volatility, particularly in relation to the trading optimization business. Consequently, you will observe variations, which is why the results fluctuate from quarter to quarter.

Sinead, I'm not sure if you can hear me. I would like to understand what the baseline level of profitability in that business will be moving forward. Should I consider the profitability from Q3 as a guideline, thinking we might be doing roughly three to four times that amount for the foreseeable future?

So Lucas, what you've observed in the last couple of quarters has been high. I would say that Q2 is essentially close to zero or slightly negative, which is the average we would anticipate given the market's volatility.

Lucas, to your second question on mobility in general. As you know, what we have said in this first sprint is, first and foremost, we want to change the culture of the company, reduce costs, and get tighter on capital. And we want to rebuild the confidence in some of the underperforming parts of our business, one of which at the time we felt was marketing, including the mobility, and that's why we have spent a lot of time, and we've talked about this as well, on how we can enhance that. So we're doing a few things in the mobility business, which in my mind are no regret. That's a business that today is a ROACE that's under 10% and is a business that should be looking at a ROACE that's closer to double-digit mid-teens. And so what we're trying to do there, and you, by the way, start to see some of that coming through in the second quarter results, is really focused on a value over volume strategy, and you've seen that with enhanced margins. We're looking at premiumization, so setting more of the premium products that we can. We've taken costs out of that business of late, and that's helping us start to really improve the bottom line. And we are indeed also divesting tail assets that no longer have a place in our portfolio. We've announced Pakistan as an example, South Africa, Mexico, and others. So what we're doing in this sprint is really getting these businesses to their full potential. That, of course, does not exclude, which we will always be looking at, how do we continue to create maximum value and unlock value for our shareholders from holding some of these assets or not. And that's something for a future date to discuss. But at this stage, it's all about how do we turn around that business to its full potential.

My first question is on the German biofuels plant cancellation. Clearly, one of those capital projects that did not offer you the returns required. Just wanted to understand what was the role behind that decision, the role of the technology chosen initially, has been a problem versus the parent oversupplied European biofuels market, and also how you see that market evolving in the next few years? My second question, clearly, you're very successfully moving to deliver the 20% to 30% LNG growth, which you targeted last year. Of course, globally, the LNG markets will have something like 45% of new capacity in the next two or three years. Can you share your thoughts around the impact you see on Integrated Gas from what may well be material weakness in spot gas prices for a couple of years?

Let me address both questions. Starting with biofuels, I want to reiterate our strong belief in the biofuels business. Currently, it is a very profitable sector for us. Last year, we blended approximately 9.7 billion liters into various products for customers worldwide, with about a third sourced from Raízen, our joint venture with Cosan. We remain confident in this business. However, we recognize that we cannot overlook the complexities in plant engineering and the market conditions. We have integrated a value tracking system as part of our cultural evolution aimed at becoming superior capital allocators. This system has indicated that, given current market conditions and some challenges at the facility, including engineering and execution issues, it was necessary to pause rather than stop. We want to reflect on whether this is the best use of our capital or if we should consider other options, especially since asset prices have declined and we can obtain the necessary molecules through different means. Currently, we are selling about ten times what we produce. Therefore, I wouldn't separate the two issues too starkly; instead, it is the totality of the value proposition that we are considering. Regarding market trends, there is a significant question mark in my opinion. Central to this market are mandates. Given the weakening of certain mandates and the oversupply in the market, it is evident that steel or biorefining may not yield substantial profits at this moment. However, we can still derive value throughout the entire value chain, and we are strategically positioning ourselves in parts of that chain where we can generate long-term value and ensure effective capital deployment. On the LNG side, my role does not allow me to focus solely on the next few years. Rather, I assess whether this energy vector is a strategic one for us. With a growth trajectory of 50% projected by 2040, LNG stands out as a credible solution for achieving both energy security and decarbonization in specific sectors. I remain very optimistic about LNG's potential. We will experience cycles, but these cycles are beneficial for us as we operate in both the short and long terms, with multiple supply and demand points. This enables us to take advantage of lower-priced supply during downturns and sell to customers during peak periods, contributing to the portfolio that has generated significant value and established us as a leading global LNG player. I believe that when I analyze different timeframes, this business remains robust. We are committed to maintaining a balanced approach; for instance, we have agreements linked to Henry Hub and Brent markets, and we secure long-term contracts to minimize short-term market volatility while retaining some spot exposure. Consequently, I believe we can create opportunities that many others cannot, which aligns with our success in the Pavilion Energy deal.

The first one’s on marketing. At the time of the 2Q update note, you expected earnings to be in line with 1Q. What ended up coming in better than you had expected, which led to the strong results? And then perhaps just quickly on the dividend, you've kind of committed to the 4% per annum growth but the share count is annualizing 6% lower, thanks to the buyback. Will that be a consideration when the Board considers the next increase? And is it too simplistic to simply think of it as one of those numbers plus the other?

Yes, absolutely. I might need to ask the second question again if the team could type it up for me. Regarding the marketing aspect, Peter, I am really pleased with how the results came through, particularly the premium volumes, which were very strong towards the end of the quarter. The difference between our quarterly update and what you observed was higher, which indicates we are heading in the right direction. Similar to other segments, there are variances as we close the books. In our chemicals and products business, for example, we manage trading flows between the segments, which is common. We observe this in our renewables business, our chemicals and products sector, and marketing as well. When we provide our expectations, it’s important to note that the books haven’t been closed, and allocations are still pending. At the top level at Shell, we aim for accuracy, and high trading is distributed accordingly. So yes, marketing performed slightly better, but overall, I am very pleased with these results. Not only the premium volumes but also, as Wael mentioned earlier, the progress the business is making in refining the portfolio and focusing firmly on operational excellence. As for the second question regarding share buybacks and their impact over time, the answer is no, you cannot directly link the two. We have been very transparent about our 4% dividend, which is quite aggressive. Regarding share buybacks, it's about where we allocate capital for the highest value. We aim for consistency in this approach. This marks the 11th consecutive quarter of over $3 billion in share buybacks since Q3 of last year, with $3.5 billion allocated as well. We will continue with this strategy and allocate resources accordingly. Additionally, if we need to borrow, as we did in Q4, that will reflect in our actions. While the share price currently is what it is, we will continue pursuing buybacks.

Two questions, please. First, I just wanted to ask about liquids trading in your product division. It was another good quarter for Shell and liquids trading. Can you just talk about what some of the drivers for that were you appear to have outperformed some of your peers at least. Is this strip more byproducts or crude and anything to think about for the outlook on that part of the business? Second, I want to follow up on CapEx. Clearly, you have been reducing some investments inside the organization, and I appreciate this is seasonality as well. But how comfortable would you say, Shell is at this rate of spending, do you think this level of activity is enough to sustain cash flow?

I'll address the second question regarding CapEx first. The level of spending is not linear, so the first half of the year shouldn't be seen as a straightforward indicator for the second half. We are definitely comfortable with our current standing and have a solid CapEx range of $22 billion to $25 billion. This isn't about under-investing; we are making substantial investments across various projects, including those in waste management like the LNG side, Pavilion, and Refine 2, the hydrogen plant in Germany, along with Polaris for CCUS in Canada. We are committing considerable resources to the company, and I'm confident in our cash flows. During our CMD, we shared several targets, with two tied to free cash flow, which we are actively managing. As for your second question regarding liquid trading, our Chemicals and Products segment had a strong Q2, driven by both crude and product sales. However, products performed slightly worse than crude due to lower volatility, as tensions in the Middle East and Red Sea were somewhat less intense compared to the previous quarter. We'll have to monitor how this evolves in the future, but I'm not ready to make any predictions just yet.

I have two questions regarding low carbon businesses. First, about hydrogen, you've made a final investment decision on hydrogen electrolyzers in Germany. Is this investment primarily motivated by the new legislation, essentially focusing on cost avoidance rather than revenue generation? I'm also interested to know why you're producing your own green hydrogen instead of sourcing it through tenders like one of your competitors. Second, you've approved the Polaris CCS project in Canada. Can you explain the business model and rationale behind this investment? Additionally, from a broader perspective, how does CCS fit within your strategy as you reduce investments in renewable power and pause biofuels?

Let me address the second question and then hand it over to Sinead for final thoughts on the refined too. Regarding CCS and its role in our overall strategy, I want to clarify your broader inquiry about our various low carbon initiatives. We have committed to investing between $10 billion and $15 billion in the low carbon sector from 2023 to 2025. These are emerging businesses, so we must be mindful of the business cases we pursue. Importantly, our aim is to create value for shareholders, which means we need to ensure we can generate accretive value from these investments. We are learning through this process, and there have been instances where we decided to step back from certain ventures, like our Power Home business or our shift away from hydrogen mobility. We are focused on identifying the most promising opportunities right now, which include biofuels and renewable natural gas through our Nature Energy platform. Green hydrogen is also significant, provided there is adequate regulatory support. Sinead will elaborate on that. We are optimistic about power trading, particularly with flexible generation, battery storage, and combined cycle gas turbines, as we see value in these areas. In terms of CCS, we view it as a crucial element of our decarbonization efforts aimed at achieving a 50% reduction in Scope 1 and 2 emissions. The Polaris project in Canada, linked to our Scotford asset, is expected to capture around 650,000 tonnes per year. We favor this initiative because we have successfully implemented similar projects in Canada before, such as Quest, making it a lower-risk investment. The business model in Canada allows us to create value from this investment through credits. Our strategy focuses on monetizing these opportunities and selling low carbon products to our customers at a premium. Would you like to add anything?

Absolutely, I think it's a great point to conclude on, Kim. Regarding refine 2, it's important to note that we have already completed refine one in Germany. This ties back to what Wael mentioned about focusing on our differentiated capabilities and our understanding of this technology. Germany offers an ideal scenario with its commitment to green hydrogen through various incentives, making it valuable for use. We have two paths we can pursue: one is to sell directly to customers for revenue, which we envision as a long-term goal. Currently, our focus is on generating green hydrogen for our facilities and our petrochemical production. This accounts for roughly 10% of our hydrogen needs. Utilizing green hydrogen not only helps us avoid certain costs but also reduces the carbon footprint of our products, enhancing their attractiveness to customers and allowing us to sell them at higher prices. This strategy aligns with government incentives, and Germany's stable regulatory environment supports our efforts. Our proven capabilities and previous experience with similar projects give us confidence, even though this initiative is larger in scope. Overall, it connects our needs and capabilities, ensuring we create value and meet our targeted hurdle rates.

And then to the point around why don't we buy it? I mean, I think the opportunity to continue to develop, I mean we are the biggest player in LNG. One day, these low carbon gases will actually backfill the needs of our customers there. And so what a fantastic opportunity to use our own demand to be able to develop that capability in a way that actually is accretive from a returns perspective. So Kim, thank you for that question. And let me thank you all for your questions and for joining the call. In conclusion, we have delivered yet another strong quarter. We announced another $3.5 billion of share buybacks, which makes this 11 quarters in a row with announced buybacks at least $3 billion. We're building a track record of delivery and are progressing well in our first sprint to deliver more value with fewer emissions, and we are aiming to be the investment case through the energy transition. We have a lot more to do and look forward to engaging with you in future sessions like this. Wishing you all a happy end of the week. And for those taking a summer break, be safe, be well, and hopefully, we'll see you after the summer. Thank you, everyone.