Tenaris SA Q1 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to Tenaris First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Giovanni Sardagna, Investor Relations Officer. Please go ahead.

Thank you, Liz, and welcome to Tenaris 2025 first quarter conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Guillermo Moreno, newly appointed President of our US Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarterly results. Our fourth quarter sales reached 2.9 billion, down 15% year-on-year, but up 3% sequentially due to higher seasonal volumes in Canada and higher onshore sales in the US. While our average selling price declined due to market and product mix effects with lower sales of OCTG premium products in Mexico, Turkey and Saudi Arabia, in addition to lower sales of seamless line pipe for offshore projects. Average selling price in our Tubes operating segment decreased 11% compared to the corresponding quarter of 2024 and 5% sequentially. On a comparable basis, our EBITDA rose 6% and net income remained in line with the results of the previous quarter. Our EBITDA margin increased slightly to 24% due to a good operating performance and better absorption of fixed and semi-fixed costs, thanks to higher volumes. With operating cash flow of 821 million and capital expenditure of 174 million, our free cash flow for the quarter was 647 million. Following share buybacks of 237 million during the quarter, our net cash position increased to 4 billion, up from 3.6 billion at the end of last year. Now I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. I will start by mentioning a change in our management team. Guillermo Moreno, who is with us on the call today, has taken the position of President of our US operation. Guillermo has more than 35 years of experience in Tenaris. He has led our US commercial operations over the last five and a half years, prior to which he was President of our Canadian operation. We wish him all the best in his new position. We began 2025 with a good performance in the first quarter. Not only did we deliver quarter-on-quarter increases in sales and EBITDA on a comparable basis, but our free cash flow rose to $647 million as we achieved a significant reduction in working capital. In Canada, we have been consolidating our Rig Direct strategy with long-term agreements, which have given us more stability and visibility in our operation. This winter season we shipped a record quarterly volume of OCTG. In the US, we have increased deliveries and continue to extend the range of services under our Rig Direct program. These results reflect the value perceived by our customers in working closely with us under long-term agreements as they seek further operational efficiencies. They include most of the largest shale operators with a longer backlog of Tier 1 acreage and the most resilient operation. In Argentina, we began pipe deliveries for the new project which will add 550,000 barrels a day of additional oil export capacity and is expected to come into operation next year. As local operators increase their investment in this highly productive shale play, we are expanding our new fracking and coil tubing service unit with an investment in a third set of equipment which should come into operation next year. Our project backlog for offshore projects is solid and we expect to have further opportunities with a new wave of FID that we expect to be sanctioned in 2026. This backlog is made up of highly differentiated OCTG, line pipe, connector, and coating products. Here our recent success in qualifying products for high pressure 20k deep water projects in the US with Shell and BP, and the value we bring through the integration of coating technology give us an edge in tackling future challenges. In the coming months we will supply line pipe for the Ndungu and Bonga North offshore projects in West Africa. In Australia, we received a multi-year award from Chevron to supply the backfilled wells for Gorgon and Wheatstone projects in Australia. In the Middle East, we made a record quarterly level of shipment to ADNOC under our long-term service agreement as they started the new shale drilling operation. We also commenced a pipe shipment for a major gas processing facility in Algeria. The major NOCs in the region have long-term planning cycles and we expect that their operations will remain relatively resilient throughout the year. In the last conference call, we mentioned that we were heading for uncharted territories. The subsequent chain of announcements on tariffs and counter-tariffs has not dispelled this uncertainty on the global macroeconomic and geopolitical situation. This has fueled expectations for a lower level of economic activity and lower demand for oil. The price of oil has been additionally affected by the production increases announced by OPEC+. If the price of oil remains near or below $60 per barrel, there will inevitably be a slowdown in North American shale drilling activity, while long cycle sanction projects will likely continue and new project sanctioning may be subject to delays. As we face this less favorable macroeconomic and oil price environment, we are preparing for lower levels of activity ahead. We do so from a position where we expect to demonstrate the resilience and solidity of our customer portfolio, our flexible industrial and supply chain system, and our solid balance sheet. In the longer term, the outlook for our industry remains secure in a world where demand for reliable sources of affordable energy will continue to grow. I will stop here and open the floor for any questions you may have.

Our first question comes from Alessandro Pozzi with Mediobanca.

Thank you for taking my questions. I think during your opening remarks you mentioned a potential slowdown in activities in the US. I was wondering, are you really seeing companies pulling back on CapEx and what sort of level of rig count do you expect now by year-end? And you also mentioned that potentially ahead of what could be maybe a slower second half, you may be willing to take some cost-saving initiatives. I was wondering if you could maybe give us more color around that. Thank you.

Thank you, Alessandro. Effectively, as you mentioned, I think that the changes that are occurring at the geopolitical and macroeconomic level induce expectations of a lower level of economic activity and also the price of oil is reflecting this expectation and the announcement by OPEC+ oil of increasing production. The combined effect, as you can see, is a reduction in the price of oil. If this situation stabilizes at the present level—this is something that may or may not happen because everything has been moving very fast in the last couple of months; action, counteraction, and so on. Tariff on different areas have moved many variables. So if this situation stabilizes and the price of oil remains in this range, the oil companies will have to adjust the level of CapEx to the reduced level of cash flow. So we expect that gradually there will be a reduction in the level of operations, especially in the area and in projects like in the United States that could be discontinued or postponed with less effort and change. How deep this could be? Well, as we mentioned in our outlook, we do not expect this to impact the second quarter of 2025. We have a pretty solid backlog. We do not expect major changes and we continue to maintain our estimate of results in line or slightly better than what we had in the first quarter. But when we look at the second half, there is uncertainty. We may estimate the reduction in the level of drilling activity in the US, but we are confident that the projects worldwide, especially offshore, but also some programs of drilling of National Oil Companies will continue independently from the change in the temporary short-term price of oil. These projects have a horizon of 10 to 15 years and are undertaken by companies with strong balance sheets and strong financial capabilities. So there is an effect of reduction in activity. We expect this in the world of fields, to a larger extent in the US, and especially in the US oil production because, as you know, the gas is supported by the LNG demand. We do not expect such a reduction in gas. The price of gas also has different dynamics. Canada, considering that the drilling activity driven by gas has a larger share—stronger, more than 40%, 45% of the activity driven by gas—there could be a reduction, but mostly driven by oil in the second half also. In the rest of the world, we will see if this level of price stabilizes and the expectation of the economy remain at their level or get worse, there could be postponement of long-term projects. There may be launches in 2026, but this is too early to say. So there is a high degree of uncertainty if we look at the second half and into 2026.

And I mean if we look beyond Q1, Q2, is there any visibility at the moment for Q3? Do you think potentially the lower oil prices could impact Q3, or is it too early, or do you have a view on how Q3 could shape up?

As I said before, if the price remains at the present level around or below $60, gradually the CapEx of the oil companies may be reduced and we will see the first effect in Q3. But as I said, we still have high uncertainty on the evolution of the main variables. Everything is in motion, but if oil stays there, we will start to see a reduction in activity maybe in the third quarter of 2025.

Okay, thank you very much.

Our next question comes from Arun Jayaram of JPMorgan.

Yeah, good morning. Paolo, I was wondering if you could maybe give us your updated views on how the implementation of US tariffs on steel is impacting or will impact your operating results. Obviously we've seen some improvement in price in terms of the pipe logistics indices and maybe you could also highlight if you've seen any changes in imports to the US just as the section 232 quotas have been removed as part of the implementation of US tariffs.

Thank you. Well, tariffs, as you know, the 232 applies to steel is today affecting in part our operation for our import of steel and some imports of pipe into the US. Even if we produce almost all of our pipes in the US, we are still importing some of the steel bars that go to our plant in Bay City and Enbridge. We estimate the impact of this in the range of 70 million per quarter of additional tariffs on one side. On the other side, as you mentioned, the pipe logistics has been moving up and we consider that all in all, the price increase we will see reflected gradually in our contracts in the US will offset this increase in tariffs. I think this is basically the trend we can expect. I would like to have Guillermo, who is leading through this, to add some comments. Before going a little more deep into this, one brief mention on imports that you were asking for. In the first quarter, there has been a higher level of imports compared to the previous quarter. Some of this has been anticipation of the coming tariffs by an importer. They decided to raise the level of imports at this point. This happened not only in our sector but also in other areas of the economy. There has been an increase in the stocks in the entire economy in expectation of tariffs, but we will see depending on the negotiations underway, also how this will evolve in the coming quarter. But I would like to give Guillermo some additional comments on the situation and the reaction of the clients to this environment.

Yes, thank you, Paolo, and good morning, Arun. As you said, in the first quarter, we saw an increase of imports after four quarters of a reduction of imports and destocking of the market. We were expecting a rebound, and this became effective in the first quarter. For the second quarter, we still expect a similar level, a little bit downward, and I think that the second half will depend a lot on what happens with activity. However, we expect that the administration will focus on the purpose of the 232, where the objective is to increase the utilization of the domestic industry. With regards to, as you said about activity, we have good visibility with our clients because of our Rig Direct program. Most of them have not so far announced any drops in rigs. However, they are in the process of analyzing. But we would expect that there will be some adjustment starting in the second half of the year.

Thank you, Guillermo. Great.

And Paolo, just for clarification, you mentioned 70 million of potential tariff cost impacts per quarter, but that would be reflected in your flat EBITDA margin guide already. So it's not affecting your margins per se.

The 70 million per quarter I mentioned will be realized gradually over the next three quarters and will also be reflected in our accounting practices under IFRS. This estimate represents the running costs we expect, but we'll reach that point slowly because these figures will be incorporated into our cost of sales over time. Additionally, our ability to increase copper production will influence our need to reduce steel imports gradually. This is a general estimate that could be seen in the fourth quarter as an impact on our costs, especially if we cannot enhance local production or if the negotiations with Mexico and Europe do not progress as we hope. Any changes in those negotiations could potentially lead to a reduction of the 25% tariff under section 232 for the specific SMEs we are working with.

Great. And my second question is, Paolo, Giovanni mentioned how the net cash balance at the company has reached 4 billion. So I wanted to get your thoughts on reinvestment opportunities. I believe that you've exhausted your share buyback authorization and thoughts on potentially at the next annual meeting in May for the company to reauthorize the buyback authorization.

Yes, as you say, we completed the buyback under the authorization that the Board of Directors had in the assembly. One of the points on the agenda is exactly to renew the authorization for a buyback of up to 10% of the outstanding shares. And then the new Board of Directors will consider what to do and whether to proceed with the program that has been carried out since last year.

Understood, thank you very much.

Our next question comes from David Anderson with Barclays.

Thank you. Good morning. Paolo, I certainly recognize all the uncertainty in the second half of the year, but if oil prices stay where they are, and if tariffs don't change from here, I'm just curious how you're seeing volumes in the second half progressing here. I certainly recognize the US is more sensitive to commodity prices, but your Rig Direct model encompasses most of the larger operators who are probably not going to change their programs too much. And then thinking about the rest of the world in that mix, I wouldn't think volume should fall too much in the second half, but could you potentially just give us a range of outcomes that you think could happen?

I think it's too early to give a prediction of the decisions of the oil company. But you are right in the consideration that our portfolio of clients mainly consists of major oil companies, companies that have large assets in shale that are developing their assets based on long-term programs. They are taking the decisions with medium and long-term horizons and are not subject to the short-term influences given by the level of cash flow, so they can plan. Our portfolio is this. We have our own stock in-house to serve this as a Rig Direct. So we expect that whatever decision they may take or whatever the trend in the market, our portfolio client should be more resilient than the rest of the market. There are other factors that we need to consider; there are components of the supply metrics in the states like imports. They may be subject to a renewal of quotas or other changes in negotiations with the different countries that are shipping their pipe to the United States. It is true that with the new 232, they have no quota, but they pay the 25%. However, I think that the administration will keep a close look at the volume coming from these countries and will consider this in the negotiations. So this is a factor. The other component of the supply matrix is also the welded pipe for local producers. At this moment, the price of hot rolled coils has increased very fast since the introduction of tariffs and the technology is increasing but not at the same pace. So there are other components of the supply chain that may be squeezed in this environment and reduce the pressure of supply in an environment of slightly reduced or strongly reducing demand, we do not know.

I appreciate the color. Thank you. A separate question; you'd mentioned offshore a few times in your remarks, and I was just wondering if we should expect that offshore component to start growing later this year into 2026. There are a number of offshore developments starting next year, and coupled with kind of longer programs that shouldn't be affected, I wouldn't think offshore should be impacted here. But I was just wondering if you are starting to see those volumes coming through your numbers later this year into 2026 and just kind of what you're hearing from your customers in terms of that potential offshore activity in 2026.

Yep. Thank you, David. Before passing to Gabriel for a review of the short-term landscape, let me tell you that the overall invoicing we are getting from the sale of Connect, CTG, line pipe, and coating is very rarely very relevant for Tenaris. So it's a very important component of our overall positioning. Gabriel, can you give a view?

Sure. Thank you, Paolo. Good morning, David. Indeed, the offshore market, as Paolo was saying, is very important for Tenaris, and I would say with a high degree of resilience in an environment of high uncertainty. Tenaris is an absolute leader in this space, as we mentioned in some of the opening remarks. For example, we have been selected to be the supplier of choice for one of the most recent FIDs in the quarter, which is the Shell Bonga project in Nigeria. Here we're going to deliver a full supply of subsea pipelines and risers. We will also deliver insulation coating services that we will produce in our coating facility in Port Harcourt, Nigeria. We are also going to be the leading supplier of OCDG for the 25 west dad required for this development. This is one of the main examples of the contracts of the backlog that we have for offshore, which is quite high. This has been an area of strength for Tenaris in 2024 and will be in 2025, and even some of this backlog goes into 2026. We don't expect the short-term volatility in oil prices to affect the development of the projects that are already sanctioned. These projects have been sanctioned with a horizon of a long span—a decade or more. And also it is important to mention that many of these deepwater breakevens have been very competitive in the range of 30 or even lower than that. So we expect the offshore to be a very resilient segment for Tenaris into the rest of 2025 and even into 2026.

Thank you, Gabriel.

Thank you. Appreciate it.

Our next question comes from Sebastian Erskine from Redburn Atlantic.

Yeah, hi, good morning. Thanks for taking my questions. The first one, I just had a question on the cost structure. I noticed in the first quarter kind of quite a large 9% sequential step down in unit labor costs and to a lesser extent on raw materials. Is there anything specific you can flag on that of what we can expect in terms of a quarterly cadence going forward to the end of the year?

Thank you, Sebastian. I think that we have seen a pretty stable evolution of key components with a slightly down trend for iron ore. Scrap went up slightly following the increases in hot rolled coil in the US, but basically in an environment where economic growth or the dynamics of the economy is turning more sour, we do not see that we should have cost impact. On the contrary, if there is an economic slowdown in some parts of the world, we should see some reduction from where we stand today in our basic input. And then you were mentioning the variance of labor; as you know, we are in the process of restructuring some of our operations to increase productivity and to continuously proceed in achieving savings and increasing productivity in our operations. This may have an impact gradually on the overall labor cost in our position.

Appreciate the color there. Thank you. And then just the second one on Mexico, I mean the situation sort of appears to have further deteriorated with Pemex. So growing supply debt. I mean, could you give us an update on sort of where you see some movement to the upside in that geography and given some of the commentary of your peers being quite negative?

Well, two points. On one side, we've been able to reduce our exposure to Pemex through operations that allow us to substantially reduce our exposure, and you see this in the increase in the reduction in our working capital and in the cash flow. On the other side, when we look at the operation of Pemex, I maintain the position that I told you in the last quarter, I mean the situation of Pemex has been continuously deteriorating. Today they are arriving at the level of rigs operations that is extremely low. I think we are in the range of 16 rigs, and the level of production is in the range of 1.6 million, going to 1 million, even lower because there has been for a few quarters a reduction every month of production; it may be dry for a while, but it's there. So today the situation is clearly very difficult, but in my view, it is unsustainable. The government came out and presented a plan for refinancing, to some extent, Pemex and designing an energy plan that would bring back resources to Pemex and a plan for getting back to drilling and to the development of resources. This is supposed to happen, but we do not know when this plan will materialize. For the time being, we have listened to the President of Mexico and explored the lines of these plans. But we do not see the action in Pemex to implement this yet. But I'm confident that, I mean Mexico could not leave Pemex in the situation that it is now, and there will be, at some moment in the coming quarters, action following the planning that is being presented.

Thank you very much. I'll hand it back now. Thank you.

Our next question comes from Stephen Gengaro with Stifel.

Thank you. Good afternoon. Good morning, everybody. Excuse me. So I had a question about the raw material costs in the US market versus the pricing. And I'm just sort of thinking back to prior periods where when the market was strong enough and raw material costs were higher. I think you generally managed to offset the increase. And today it's a little bit different with the potential for lower activity. How do you think those two items balance themselves out in the second half of the year? Do you think you can manage through it to hold margin, or do you think the input cost in the face of potentially lower demand will be a headwind on margins in the second half of the year?

Thank you, Stephen. Frankly, I do not think that our main concern at this moment should come from raw materials. The tariffs, the changes, the retaliation, and the uncertainty on the reciprocal tariffs are creating some gap between the price situation within the United States and the pricing in the international market. This is very true for hot rolled coils to some extent also for scrap and some raw materials. But at this moment I would say our concern is more the overall level of economic activity and the risk of a recession and some downtrend in the overall level of activity. This is more of a concern. Also, we have five steel shops operating worldwide, some operating in the US, the other in regions in Latin America, and Europe. I think we can manage this change in value and these gaps from the prices internally in the States or outside in the rest of the world. Also, Tenaris has a highly differentiated product. The raw materials have an impact on our overall cost, but it is not the same impact that you may have in companies that are focused on lower value-added products like long or flat products to some extent. So it's important, but at this moment, I don't think this is our major concern.

Great, thank you. And the other question I wanted to ask about is, given the Rig Direct model that's in place, can you just give us a sense if we do see a reversal in price at all as a result of low activity, what's sort of the timing on when we would see that start to show up in the numbers? Would it be third quarter, would it be later? Just based on the Rig Direct model and the relationships you have with your key customers.

Well, this question is not easy to project in the second half. Also because of the change in tariffs, the uncertainty on quotas, and what will the US Administration do to limit imports into the states; this is a very important factor to determine the dynamic. Up to now we have seen the pipe logistics growing slowly but moving on even this month. Here maybe Guillermo, you can add some color on the factors that may influence pricing in the medium term.

Yes, as you said, I mean since the beginning of the year the prices in the market have increased by around 10%. And as you know and we have discussed in previous calls, because of the formulas of our direct long-term agreements, we have some inertia. So we don't expect any—if there is a reduction in the prices, we don't expect any impact in the third quarter; eventually, it could start to affect our P&L in the fourth. However, I think it's too early to say. As we said before, still we have not heard from any of our clients about a reduction in their activities, though we are expecting them to come out probably in May. I think that in one month we will have better visibility on their decisions regarding the second half, but I don't see any impact; on the contrary, I mean due to the inertia of our formulas, prices in Q3 should go up because so far we have seen that increase.

Thank you.

Thank you.

Our next question comes from Derek Podhaizer with Piper Sandler.

Hey, good morning. Just to kind of wrap up all the conversations around tariffs and the impact on pricing and obviously we have an activity outlook that has deteriorated over the last three months. But I remember last quarter you discussed reaching a 25% margin target in the back half of the year. Obviously, we now have this potential activity roll in the US, but considering the pricing increases and considering the tariffs, we're going to keep an eye on section 232 quotas. Do you still think a 25% EBITDA margin is a good target for the second half of the year?

Well, I think many things happened between that estimation and today. I mean the changes have been substantial. Today we are looking at the price of oil in the range of below $60. This, no doubt, will have an impact on us. Still considering all the factors that we mentioned, stability of our portfolio, differentiation in the market that could be most affected by the slowdown, I think we should be able to maintain over time our margin between 20% and 25%, but it will be difficult today to stay at the 25% margin rate with this environment in the second half of this year. But we will still stay, let's say, within this range looking at the environment as it is today.

Great. I appreciate the color, the comments there. Then just maybe if we can expand so the North America revenue was up 10% quarter-over-quarter. I know that includes Mexico, obviously, with your region which has clearly deteriorated, so I'm surprised to see the strength there. You talked about Canada seasonal recovery, but you also mentioned the increased sales through US Rig Direct. I just wanted to get your take, maybe if we can expand on that. Have you seen maybe a front-loading of budgets as your largest E&P operators look to order steel, OCTG ahead of the tariff impact and potentially other impacts that could be coming throughout the year? Just maybe some thoughts on why you had such a strong quarter for North America driven by the US side, just considering Mexico was such a drag?

No. You know our business model; we sell on Rig Direct, and we invoice directly when they use the pipe in the rig, and today more than 95% of our clients are operating this way. So in the end, we are very precisely copying the exact level of operation. There is no room for anticipating stocks in most of our sales. There are maybe line pipes, but also in this, I don't think the company had the space for anticipating orders. So we are just following the activity curve. Our current has been resilient. I mean, the level of their operation after consolidation by the different companies has to some extent been solid. Now in Canada, we had a record season— for us, it has been a record quarter and the record season also for Canada. The level of drilling has been high. Our Rig Direct model in Canada is expanding. So also in Canada, we are tracking the level of operation. We do not see any anticipation of sales. Now, on this ground, we are making our forecast for the second quarter, and it is a positive forecast because we have a portfolio, and we think we can predict, pretty well, the combination of volume and price in that region. When we look ahead in the second half of the year, this is much more difficult because the company will recalculate, probably during the coming three or four months, and they will maybe reorganize, re-plan some of the development, and we will see this happening, but probably during the quarter, the second quarter. At the end of the second quarter, we will understand better the perspective for the second quarter. We will also better understand if the administration will limit imports to some extent and if the expectation of the economy and oil will continue to be as they are today, which is a pretty pessimistic point of view for the future.

Great. Thanks for all the comments. I'll turn it back.

Our next question comes from Jamie Franklin with Jefferies.

Hi there. Thank you for taking my questions. Just a couple of clarifications. So I wanted to come back on costs firstly, and last year at the Q2 results, you gave a target for $200 million in cost savings to be realized by 1H25. Can you please quantify approximately how much of that has already been recognized as of 1Q25 results? And secondly, regarding the decline in sales in South America in the quarter, the press release mentions lower prices in Argentina; could you please just elaborate on that and any further color you could give us on possible timing of orders in Argentina later this year, please. Thank you.

Thank you, Jamie. Well, on the first point, I think we have been able to capture more than half of the $200 million savings that we planned in the middle of last year. This is coming from different sources; productivity increases, efficiency in our plant, some reorganization of our supply chain to also reduce the cost of input. We're proceeding, and we expect that this will contribute in the end. It will contribute to our margin because these savings are getting into our IFRS cost of sales over time, not immediately, because this is the logic of it. So we will proceed in this sense, and we think we will get the expected reduction by the end of the second. Talking about Argentina, the overall level of price, what is going down is the mix because we are combining line pipe project and OCTG. In the line pipe project, we have a lower level of price for this. These are welded products like the Vemos line pipe project and so on. In the case of the OCTG, we are reflecting the formulas in the majority of our contracts, considering the pipe logistics as a key factor. One of the factors; there are others in some of the contracts, but mainly this will be pipe logic. And for instance, we may see increase of some percentage point in this. There has been a change of mix in Argentina because the rigs in the Vaca Muerta space have been increasing, and they are today in the range of 43, 44— I think now. They were in the range of 31 a year and a half ago, I mean two years ago. So the increase is there in the Vaca Muerta space. But in the southern part of the country, YPF and the other companies have been selling less productive assets to focus on Vaca Muerta. This has reduced the number of rigs operating in the south so when you look at the overall number you see an increase that appears to be more limited. Probably also during the rest of 2025, we will see slight increases in the level of rigs. But in terms of price, I think overall we will follow the pipe logistics, and you will see the price apart from the mix between welded and seamless.

That's great. Thank you.

Our next question comes from Daniel Thomson with BNP Paribas.

Hi, good afternoon. Thanks for taking my question. Just a follow-up on the shareholder returns comments and thinking around the balance sheet. Obviously, the share price has taken a significant step down on the lower oil price environment already. And given your positive longer term outlook, your buybacks could represent one of the most attractive uses of cash here. So I just wondered how the lower share price factors into your thinking on repurchases and the pace of those repurchases that you've demonstrated under the existing program relative to maybe wanting to maintain a more defensive cash balance into the potentially weaker period. And the second one's a bit more straightforward, just on the mechanics of any reauthorization. What is the timeline between any reauthorization being issued in May and actually beginning with the implementation of the buyback? Are there any subsequent approvals required after that May meeting or not? Thank you.

Thank you, Daniel. Well, as I was saying before, the extension of the authorization of the buyback is on the agenda of the General Assembly. We expect it to be approved. Then it will be up to the new Board of Directors to consider the different factors, the situation, perspective for venture acquisitions, possible use of cash, and decide which course of action to take. We will bring all this evidence to the Board. After the General Assembly and the assumption of the new authority in the Board, the Board will consider this and see which is the best use of cash that we have in the company.

All right, thank you.

Thank you.

That concludes today's question and answer session. I'd like to turn the call back to Giovanni Sardagna for closing remarks.

Thank you, Liz. And well, we would like to thank you all for joining us today in our conference call. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.